Teleflex Completes the Acquisition of Acquisition of Palette Life Sciences
Teleflex Incorporated (NYSE:TFX), has successfully completed the acquisition of Palette Life Sciences AB for $600 million upfront, with the potential for an additional $50 million contingent on certain commercial achievements. Palette Life Sciences will expand the company’s interventional urology portfolio with new innovative products and is expected to generate approximately $56 million in net sales in 2023, but have a minimal impact on Teleflex’s revenue growth this year given the timing of the close. Teleflex is paying a high multiple for the business (11.6x current year sales including milestone payments) and is confident in the ability to leverage its urology call points with UroLift® to drive sales synergies and accretion in the future.
The acquisition expands the company’s Interventional Urology portfolio. The acquisition brings Barrigel®, a biodegradable sculptable rectal spacer, into Teleflex’s Interventional Urology portfolio. Barrigel®, based on Non-Animal Stabilized Hyaluronic Acid (NASHA), is designed to minimize radiation exposure to the rectum during prostate cancer radiation therapy and is the only such product currently on the market. By doing so, it enhances tumor control and improves the overall quality of life for patients undergoing such treatments. Besides Barrigel®, the Palette Life Sciences portfolio also includes two other innovative NASHA-based products – Deflux® and Solesta®. These tissue bulking agents have been specifically designed to address pediatric vesicoureteral reflux and fecal incontinence, respectively.
Teleflex anticipates that the acquisition of Palette Life Sciences and the addition of Barrigel® to its portfolio will have both immediate and long-term benefits. Given its strong sales presence and clinical capabilities with the UroLift® System, Teleflex believes it can achieve sales synergies through the combination of the two companies. The UroLift System is an innovative approach to addressing lower urinary tract symptoms caused by benign prostatic hyperplasia (BPH). This minimally invasive procedure entails inserting permanent implants via a transurethral outpatient method. These implants serve to gently separate the prostate lobes, alleviating pressure on the urethra, all without the need for cutting, heating, or the removal of prostate tissue. The device does approximately $300 million in revenue per year at the current run rate.
The acquisition of Palette Life Sciences is expected to be dilutive to Teleflex’s adjusted earnings per share in 2023 and 2024, with approximately $0.15 and $0.35 dilution, respectively. However, beginning in fiscal year 2025 and beyond, the company expects the acquisition to be increasingly accretive to adjusted earnings per share. The acquisition was financed through a combination of borrowings under Teleflex’s revolving credit facilities and available cash.