Medical device maker Integra LifeSciences announced today it will purchase Acclarent, a leader in ear, nose and throat (ENT) technologies, from Johnson & Johnson’s Ethicon division for $275 million upfront plus future regulatory milestones. The deal values Acclarent at approximately 2.5 times sales, with the company generating $110 million in revenues during 2022.
For Integra, the acquisition provides an opportunity to significantly expand its footprint beyond neurosurgery and establish the company as a major player in the attractive ENT specialty devices segment. The global ENT market is projected to grow at a 5-6% clip annually, adding an estimated $1 billion in addressable market opportunity for Integra.
Acclarent brings to Integra pioneered balloon dilation platforms for treating chronic sinusitis as well as novel treatments for Eustachian tube dilations. Its flagship products are the only FDA-approved stents for maintaining sinus openings after surgery. Acclarent also provides image guidance systems to assist surgeons with minimally invasive procedures.
The company maintains strong brand awareness and deep clinical relationships after rebuilding its commercial presence following a period of declining sales between 2017-2020.
Integra management sees substantial room for additional share gains in ENT given Acclarent’s leadership in balloon dilation and the generally fragmented supplier landscape in ENT today. The global sinus dilation devices market alone is projected to reach $3.5 billion by 2030, providing a sizable growth pipeline for Acclarent’s portfolio.
Strategic and Financial Benefits
The acquisition furthers Integra’s strategy to complement its legacy strength in neurosurgery with scaled positions across faster-growth clinical applications adjacent to its core.
Integra aims to replicate its #1 share in dural repair for neuro procedures by becoming one of few dominant players in ENT. The company believes the combination of its commercial infrastructure and Acclarent’s innovative portfolio can support above-market growth for the foreseeable future.
Financially, Acclarent is being acquired at an attractive upfront valuation of 2.5 times sales. Integra management expects the deal will be immediately accretive to earnings per share after closing.
Acclarent generated gross margins in line with Integra’s overall company average in 2022, providing opportunities for further margin expansion from operating leverage as the business scales.
The transaction also comes at a time when medtech valuations have declined from their pandemic peaks, enabling Integra to obtain Acclarent at what it believes to be an opportunistic price.
Cultural and Portfolio Fit
Integra CEO Jan De Witte highlighted the cultural alignment between both organizations and focus on restoring patient lives as key rationales behind the deal.
De Witte said, “Acclarent’s culture of pioneering technologies aligns with Integra’s legacy of innovation to transform care and restore patients’ lives. We are looking forward to welcoming the Acclarent employees to the Integra team. Together, we can make a profound impact on the future of ENT and neurosurgery.”
Acclarent will operate as part of Integra’s $1.3 billion Codman Specialty Surgical division focused on neurosurgery. Integra sees substantial opportunities for its neurosurgery and ENT sales teams to collaborate on treating certain brain tumors by leveraging skull base surgical approaches.
Integra also gains access to a robust ENT product development pipeline, including next-generation surgical staplers, powered sinus surgery technologies, and potential new indications for Acclarent’s balloon dilation platforms.
Acclarent’s R&D and regulatory expertise will help accelerate Integra’s internal efforts to bring new generations of minimally invasive surgery products to market.
Smooth Post-Close Integration
Integra expects to retain Acclarent’s entire workforce as part of ensuring a smooth organizational transition after the deal closes. The company aims to operate Acclarent as an independent business unit during the near-term while integrating back-office functions.
Manufacturing operations will continue to be outsourced to third parties and Integra anticipates no supply chain disruptions to Acclarent’s product availability.
The transaction is projected to close by the second quarter of 2024, subject to customary antitrust and regulatory clearances globally. Transition services agreements will provide additional support for up to four years following deal closure.
By maintaining continuity of strategy, personnel and manufacturing, Integra hopes to achieve targeted revenue and cost synergies from the integration of Acclarent, while continuing its above-market growth trajectory in the ENT segment. The addition of Acclarent’s portfolio and innovative roadmap makes this transaction an important step forward in Integra’s strategy to complement leadership in neurosurgery with scaled positions in some of medtech’s most attractive and fastest-growing markets.
