Medical device maker Boston Scientific Corp. (BSX: Quote) agreed Thursday to acquire privately-held Cameron Health, Inc. for a total consideration of up to $1.35 billion. The deal, which subject to relevant antitrust clearance, is expected to close in the second or third quarter of 2012.
The deal will help Boston Scientific gain access to the world's first and the only commercially available subcutaneous implantable cardioverter defibrillator - the S-ICD System, which is implanted beneath the skin.
It is a replacement for the traditional ICD's, which is implanted near the heart among blood vessels with thin, insulated wires passing through the venous system into the heart. Both the defibrillators are used in cardiac patients at risk of sudden cardiac arrest to boost the heart rate with minor shocks.
"We believe that the S-ICD System represents a breakthrough treatment for patients at risk of sudden cardiac arrest and strengthens our ability to deliver value to physicians, their patients and healthcare systems around the world," Boston Scientific CEO Hank Kucheman said in a statement.
Under the deal, Boston Scientific has agreed to make San Clemente, California-based Cameron an upfront payment of $150 million when the deal closes, and another $150 million payment to be made when the U.S. Food and Drug Administration approves the S-ICD System.
The bulk of the consideration, an additional $1.05 billion, will be paid on achievement of certain revenue-based milestones over a six-year period after the FDA approval.
Boston Scientific noted that it anticipates FDA's U.S marketing approval for the S-ICD System to come in the first half of 2013. The marketing application was filed in December 2011 by Cameron. The system has already been approved for marketing in several of the European countries since 2009.
The S-ICD System is restricted under Federal law for investigational use only and is not currently for sale in the U.S.
Boston Scientific looks to boost its revenues from the sale of cardioverter defibrillator's that has been hit ever since last year's DoJ investigation into hospital practices and a negative article on it in medical journal related to safety and overuse of the devices.
"The S-ICD System was designed to eliminate the complications associated with transvenous leads, creating an important new treatment option for patients at risk of sudden cardiac arrest," said Kevin Hykes, President and CEO of Cameron Health.
Boston Scientific expects the deal to negatively impact its 2012 adjusted earnings by $0.01 per share, and be nearly break-even per share in 2013 to adjusted earnings. It expects to fund the payments for the deal through cash flow of its business.
"We expect that the S-ICD System, combined with recent ICD and CRT-D launches, upcoming pacemaker launches, and the recently acquired WATCHMAN left atrial appendage closure device, will create a compelling and highly differentiated portfolio of arrhythmia management products," Kucheman added.
BSX closed Thursday's regular trading session at $5.93, up $0.20 or 3.49% on a volume of 11.87 million shares. In the past 52-week period, the stock has been trading in a range of $5.01 to $7.91.
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by RTT Staff Writer
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