UPDATE: Nov. 16, 2020: Medtronic said Monday it completed its 7 euros-per-share tender offer for French spinal surgery specialist Medicrea, four months after announcing the deal. Medtronic said Medicrea's integrated platform "has seen rapid growth this year despite elective surgery restrictions resulting from COVID-19," but did not elaborate.
With the acquisition completed, Medtronic claims it's the first company in spinal surgery offering AI-driven planning, personalized implants and robot-assisted delivery.
- Medtronic announced Wednesday it intends to acquire French spinal surgery technology company Medicrea through an all-cash tender offer. The deal is expected to close by the end of this calendar year and Medtronic expects the deal to boost earnings come fiscal year 2023.
- Medtronic believes the addition of Medicrea's AI-driven surgical planning tools and 3D-printed personalized spinal implants will bolster its position in spine surgery, which it's grown since integrating Mazor Robotics over the last year and a half.
- It's Medtronic's first publicly announced acquisition since the COVID-19 pandemic took hold. Although Medtronic is facing a drop in sales due to deferred elective procedures in recent months, CEO Geoff Martha has indicated the company won't abandon its intent to do more tuck-in deals and will look to be opportunistic while asset prices are down.
Medtronic is continuing its streak of bolstering its surgery businesses through M&A and outside partnerships. This year alone, the company announced the acquisition of British surgical tools company Digital Surgery, as well as a licensing and development agreement with Canadian robotics developer Titan Medical.
Similar to the Digital Surgery acquisition, Medtronic's interest in Medicrea appears to be driven largely by AI capabilities. Among Medicrea's key products is its UNiD ASI pre-procedure platform for surgeons that the company says uses predictive modeling algorithms to measure and digitally reconstruct a patient's spine.
Based in Lyon, France, where it 3D prints patient-specific titanium implants, Medicrea says it has 175 employees worldwide, include a contingent in New York City, and has more than 30 FDA-cleared implant products.
Medicrea's sales in the first half of this year, reported last week, totaled 13.2 million euros, down about 18% from last year. Like other medical device makers, Medicrea cited the impact of deferred elective surgeries due to the pandemic, but said it saw a strong rebound in June procedures and revenues, with sales during June representing sequential improvement of 75% over May and up 3% over the prior year.
Medtronic is putting up 7 euros per Medicrea share, which it said represents a 22% premium over the closing price of the shares on Tuesday, an offer approved by the boards of both companies.
The tender offer will likely be filed with French regulators in September and will be opened once foreign investment approval is secured in France, but will remain subject to the OK from U.S. regulators, the companies said. The offer won't be complete until Medtronic gains control of at least two-thirds of Medicrea shares.
The addition of Medicrea follows a big investment in the future of its spinal surgery business via Israeli company Mazor Robotics. Since completing the $1.7 billion acquisition of Mazor at the end of 2018, Medtronic has reported that the use of the surgical platforms has in turn prompted more sales of its spine implants.
Elsewhere in the market, Zimmer Biomet received FDA clearance last year to use its Rosa One robot-assisted surgery platform for minimally invasive and complex spine surgeries, building on the system's brain and knee applications.
Stryker, whose Mako robot-assisted surgery platform for hip and knee procedures is centered around procedure personalization, has expressed interest in adding a spine application. Stryker also committed to invest up to $500 million last year in two companies, Mobius Imaging and Cardan Robotics, to add intra-operative imaging, robotic surgery and navigation capabilities to its spine division.
As for Medtronic's in-development soft tissue robot, the company said on its quarterly earnings call in late May that the shift to remote work has delayed certain testing of the technology. Medtronic declined to give an update on its timeline.
Medtronic is scheduled to have a conference call with investors Aug. 25 upon reporting financial results from its first quarter of fiscal 2021.