Boston Scientific Corp. (BSX) reported that it has come to terms to buy privately-held Rhythmia Medical Inc., a maker of mapping and navigation systems used in heart surgeries, for up to $265 million to gain access to its three dimensional technology and attempt to capitalize on the burgeoning electrophysiology market.
The transaction is expected to close in the next three days. No financial details related to Rhythmia were disclosed.
"Electrophysiology is a $2.5 billion market and growing at a double-digit pace, representing a key growth opportunity for us," said Chief Executive Hank Kucheman of Natick, Massachusetts-based Boston Scientific.
Headquartered in Burlington, Massachusetts, Rhythmia’s technologies are used in heart treatment procedures utilizing electricity, such as catheter ablations where small amounts of energy are used to destroy tissue and improve heart function. Atrial fibrillation, or “Afib,” – the most frequently diagnosed irregular heartbeat condition in the United States – is often treated with an ablation procedure. Afib patients run a high risk of stroke because blood is not pumped consistently due to the irregular and rapid heartbeat.
Rhythmia’s mapping system is not yet cleared by the U.S. Food and Drug Administration, nor does it have a CE Mark for marketing in Europe. Boston Scientific anticipates those hurdles to be overcome in 2013 to allow for a limited launch with a full-scale market launch in 2014. To that end, BSX does not expect any material impact on earnings during 2013 or 2014.
Per the agreement, Boston Scientific will pay $90 million to Rhythmia initially and up to $175 million more upon specific regulatory, commercial and sales-based milestones being met through 2017.
This is the second acquisition for Boston Scientific in three weeks. In September, the company bought privately-held BridgePoint Medical Inc., which makes a catheter-based system used to treat clogged arteries. In March, Boston Scientific acquired Cameron Health for an upfront payment of $150 million in a deal that could be valued as high as $1.4 billion if all contingent milestones are achieved.
Shares of BSX closed Monday at $5.75 per share. It has a 52-week low of $4.79 and a high of $6.41. Shares are up about 15 percent in 2012, but have suffered a steep fall from highs of $46.10 in 2004. The company will be releasing earnings from its most recent quarter on October 18.
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