- Boston Scientific will acquire the remaining shares of Farapulse for approximately $295 million, according to a Thursday announcement. The deal includes an additional $92 million in payments if certain clinical and regulatory milestones are hit as well as revenue-based payments for the next three years.
- The medtech giant has been an investor in the cardiac ablation device maker since 2014 and previously owned 27%. The $295 million buyout will give Boston Scientific 100% ownership. The deal is expected to close in the third quarter of 2021.
- The deal adds the Farapulse Pulsed Field Ablation (PFA) system to Boston Scientific's electrophysiology portfolio and moves the company into an increasingly competitive PFA space. Evercore analysts were not surprised to see Boston Scientific enter the market alongside Medtronic and Johnson & Johnson. The analysts added, "While we haven’t publicly heard from [Abbott Laboratories,] we suspect that [Abbott] is likely working in this area as well."
In a year that has seen a flurry of medtech M&A, Boston Scientific has been a top spender. The Farapulse buyout is the company's third acquisition in 2021. Boston Scientific spent $925 million in January for the cardiac wearables maker Preventice Solutions and $1.07 billion in March to buy Lumenis' global surgical business from a private equity firm.
The trio of deals comes as Boston Scientific has built up its cash reserves during the economic volatility of the coronavirus pandemic. As of March 31, according to the company's latest 10-Q filing, Boston Scientific had approximately $2.02 billion in cash and cash equivalents.
Scott Olson, senior vice president and president of the company's rhythm management business, said in Thursday's announcement the acquisition makes Boston Scientific more competitive in an electrophysiology market it values at $6 billion and growing double digits year-over-year.
Evercore analysts wrote that adding a competitive product like the Farapulse PFA system was "critical" as the company is currently in fourth place in the electrophysiology market, behind Abbott, J&J and Medtronic.
The Farapulse PFA System, which is a non-thermal ablation device for the treatment of atrial fibrillation and other cardiac arrhythmias, received CE Mark for Europe in the first quarter, and an investigational device exemption trial for the U.S. began in March.
Certain features of the system could further expand the PFA market, according to Evercore analysts. For example, because the system does not come into contact with tissues, it lowers the risk of thermal-energy-induced tissue damage.
"We think this safety angle could further expand the market, and create a new incremental $1-2 billion market opportunity by 2030," the analysts wrote.