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Tuesday, 11 September 2018 11:08

Stryker to acquire struggling surgical device maker in $190 million deal

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KALAMAZOO — Stryker Corp. plans to acquire a financially struggling San Francisco-based medical technology company that produces advanced surgical devices.

The Kalamazoo-based Stryker (NYSE: SYK) said this morning it signed a definitive agreement to buy all the outstanding shares of Invuity Inc. (Nasdaq: IVTY) for $7.40 per share in a deal valued at $190 million. Stryker will commence a tender cash offer to Invuity shareholders.

Formed in 2004 and a public company since June 2015 following a $47.8 million IPO, Invuity developed and markets lighted instruments that improve visualization during surgical procedures. The company’s products have a variety of clinical applications such as spine, orthopaedic and general surgery. The devices are designed to improve surgical precision, efficiency and safety in minimally invasive procedures.

In a quarterly report filed in August with federal securities regulators, Invuity said it had sold devices to 935 hospitals through the second quarter of 2018, compared to about 825 a year earlier, and the company’s products had been used in about 433,000 surgical procedures.

“Invuity’s innovative products in the single-use lighted instrumentation and enhanced energy markets provide best-in-class illumination and help make surgery safer,” Spencer Stiles, Stryker’s group president for Neurotechnology, Instruments and Spine, said in a statement. “I look forward to the work we will do together to advance Stryker’s mission of making healthcare better.”

The deal could close in the fourth quarter, pending acceptance of the offer by Invuity shareholders, and would have an “immaterial impact” on Stryker’s earnings, the company said.

Despite a promising technology and growing sales, Invuity has incurred repeated, albeit narrowing, losses amid high operating costs.

The company reported $10.5 million in sales for the second quarter of 2018, up 8 percent from a year earlier, with a net loss of $8.9 million. Midyear sales totaled $20 million, an increase of nearly 7 percent from the first half of 2017, with a net loss of $20.1 million.

As of the second quarter, Invuity had an accumulated deficit of $206.3 million, according to its quarterly financial filing with the U.S. Securities and Exchange Commission. The company told regulators in the filing that cash and equivalents, short-term investments, expected sales and funding from a revolving line of credit “will not provide sufficient funds to enable the Company to meet its projected operating requirements for the next twelve months.”

The company said in the filing that it intended to seek additional funding through public or private financing, additional credit lines, or “collaborative arrangements with strategic partners.”

In May, Invuity also implemented a corporate restructuring to streamline operations and improve productivity. The restructuring would reduce Invuity’s annual operating expenses by $6 million, Interim President CEO Scott Flora told investors last month in a conference call.

A new sales strategy also focused the company on breast and women’s health procedures, rather than an approach that had been “too scattered to make the impact we need,” said Flora, who took over in February after the resignation of Invuity’s previous CEO.

Invuity projects 2018 sales of $46 million, versus $39.6 million in 2017.

Read 1431 times Last modified on Tuesday, 11 September 2018 11:19

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