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Boston Scientific (BSX) Set to Acquire Relievant Medsystems

Boston Scientific, Inc. BSX recently entered into a definitive agreement to acquire the privately held medical device company, Relievant Medsystems, Inc. Together, the teams will explore opportunities to bring Relievant’s Intracept system to a wider population living with chronic low back pain.

The transaction is expected to close in the first half of 2024, subject to the satisfaction of customary closing conditions. The acquisition is intended to expand Boston Scientific’s existing neuromodulation portfolio.

More on the News

The acquisition transaction includes an upfront cash payment of $850 million and undisclosed additional contingent payments based on sales performance over the next three years. Relievant is expected to generate sales of more than $70 million in 2023 and deliver year-over-year growth above 50% in 2024.

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On an adjusted basis, the transaction is expected to be immaterial to adjusted earnings per share in 2024, slightly accretive in 2025 and increasingly accretive thereafter. On a GAAP basis, the transaction is expected to be more dilutive due to amortization expenses and acquisition-related charges.

Financial Details

The acquisition transaction includes an upfront cash payment of $850 million and undisclosed additional contingent payments based on sales performance over the next three years. Relievant is expected to generate sales of more than $70 million in 2023 and to deliver year-over-year growth above 50% in 2024.

On an adjusted basis, the transaction is expected to be immaterial to adjusted earnings per share in 2024, slightly accretive in 2025 and increasingly accretive thereafter. On a GAAP basis, the transaction is expected to be more dilutive due to amortization expense and acquisition-related charges.

Industry Prospects

Per a report by Fortune Business Insights, the global chronic lower back pain treatment market was valued at $2.21 billion in 2022 and is expected to witness a CAGR of 9.5% by 2030.

Recent Performance of the Neuromodulation Unit

The company’s Neuromodulation business develops and manufactures devices to treat various neurological movement disorders and manage chronic pain. In the last reported second quarter of 2023, operational net sales growth was primarily driven by growth within the deep brain stimulation franchise, having witnessed continued momentum from new product launches in the United States and procedure recovery in Europe.

Recently, BSX received FDA approval for the Vercise Neural Navigator 5 software, which, combined with Vercise Genus Deep Brain Stimulation Systems, can help provide clinicians with data for efficient programming in the treatment of Parkinson's disease. Further, Spinal cord stimulation sales growth is expected to improve in the second half of the year, with strong trialing in the second quarter, backed by the company’s recent presentation of clinical evidence at Aspen.

Price Performance

In the past six months, Boston Scientific shares have rallied 10.9% against the industry’s fall of 6%.

Zacks Rank and Key Picks

Boston Scientific currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are Haemonetics HAE, Quanterix QTRX and Intuitive Surgical ISRG, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Haemonetics stock has risen 22.8% in the past year. Earnings estimates for Haemonetics have increased from $3.74 to $3.82 in 2023 and remained constant at $4.07 in 2024 in the past 30 days.

HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 19.39%. In the last reported quarter, it posted an earnings surprise of 38.16%.

Estimates for Quanterix’s 2023 loss per share have remained constant at 97 cents in the past 30 days. Shares of the company have surged 200.6% in the past year compared with the industry’s rise of 0.3%.

QTRX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 30.39%. In the last reported quarter, it posted an earnings surprise of 55.56%.

Estimates for Intuitive Surgical’s 2023 earnings have remained constant at $5.57 per share in the past 30 days. Shares of the company have increased 53.3% in the past year compared with the industry’s growth of 2.8%.

ISRG’s earnings beat estimates in three of the trailing four quarters and missed in one, the average surprise being 4.19%. In the last reported quarter, Intuitive Surgical delivered an earnings surprise of 7.58%.

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