- Boston Scientific said Monday it has agreed to acquire Axonics, maker of devices to treat urinary and bowel dysfunction, for $3.7 billion in cash, or $71 per share.
- The acquisition allows Boston Scientific to enter the high-growth sacral neuromodulation market, where it will compete with companies such as Medtronic.
- Stifel analyst Rick Wise, in a note to clients Monday, called the deal a highly complementary fit to Boston Scientific's urology business, which generated about 14% of its estimated 2023 sales.
Sacral neuromodulation delivers electrical pulses to the sacral nerve via a device implanted in the patient’s lower back, to restore communication between the brain and bladder in the treatment of overactive bladder and fecal incontinence.
Nearly 30 million Americans age 40 and older have symptoms of overactive bladder, while 19 million have fecal incontinence, according to estimates cited by Boston Scientific.
Axonics’ devices include the rechargeable R20 and recharge-free F15 systems for sacral neuromodulation. The fourth generation of the R20 device received Food and Drug Administration approval last January. The company also sells Bulkamid, a water-based gel to treat bladder leaks in women by adding bulk to tissue to restore the closing of the urethra.
“[The] Axonics acquisition is a logical tuck-in that should provide a shot in the arm to the company's Urology division, one of the few areas in [Boston Scientific’s] portfolio that lacked a clear growth leader,” Truist analyst Richard Newitter said in a research note.
Irvine, California-based Axonics reported a 34% jump in net revenue to $366.1 million in fiscal year 2023, in preliminary results released Monday.
Boston Scientific said it expects Axonics’ revenue growth to be “highly accretive” to its urology business in 2024, with an “immaterial” impact on the company’s adjusted earnings per share in 2024 and accretive thereafter. The impact on GAAP earnings per share is expected to be less accretive, or more dilutive, due to amortization expense and acquisition-related net charges.
BTIG analyst Marie Thibault said she does not expect other bidders to emerge for Axonics. The company had a 27% market share in the sacral neuromodulation market, with 14,000 people implanted with its systems in 2022, Thibault said, citing Axonics' latest update.
“We do not anticipate competitive bids given the size of the deal, limited adjacencies with other large-cap MedTech peers, and potential overlap with Medtronic's existing business,” Thibault wrote Monday in a note to investors.
Boston Scientific said it expects to complete the purchase of Axonics in the first half of the year.