Vascular Solutions acquires Snare product line from Radius
Vascular Solutions Inc. (vascularsolutions.com) has acquired the assets related to the EXPRO Elite and MICRO Elite Snare products from Radius Medical Technologies Inc. and its subsidiary, Radius Medical LLC, for $6.5 million. Vascular Solutions has been selling the EXPRO Elite and MICRO Elite snares in the U.S. under a distribution relationship with Radius since 2008, while in international markets Radius has been selling the products through a network of independent distributors.
Sales of the products were $1.6 million during the last four quarters, consisting of $1.3 million in sales in the U.S. and $750,000 in sales to distributors in international markets. Effective immediately, international sales of the snare products will transition to Vascular Solutions’ existing international distribution network and U.S. sales will continue to be sold through Vascular Solutions’ direct sales force.
Also included in the asset acquisition are the QUATTRO Elite and SYMPRO Elite snares and the Oracle retrieval system, all of which are either recently launched or in development.
Vascular Solutions expects to transfer the manufacturing of the products from Radius’ facility in Boston to Vascular Solutions’ existing facility in Minnesota over the next six months. The aggregate acquisition price of $6.5 million consists of $5 million paid in cash at closing and $1.5 million payable in cash upon successful completion of the transfer of the manufacturing processes.
In addition, Radius will be entitled to receive a cash earn-out payment following each of calendar years 2011, 2012 and 2013, in each case in an amount equal to 25 percent of net sales for that calendar year in excess of a target amount. The target amount is $2 million, $2.5 million and $3 million for calendar years 2011, 2012 and 2013, respectively.
“We are excited about owning the EXPRO Elite and MICRO Elite snares and capturing the entire margin on the sale of the product while adding international sales,” Howard Root, CEO of Vascular Solutions, said. “Upon completion of the manufacturing transfer we expect to be able to both improve our gross margin and adopt more competitive pricing to gain market share in the existing $35 million snare market.
“We also look forward to launching the QUATTRO Elite and SYMPRO Elite snares either late this year or early in 2011 and to explore the possibilities with the Oracle retrieval system. We expect the acquisition will be accretive to our earnings by approximately $0.02 per share in 2011, with only modest transition and integration costs in the fourth quarter of 2010.”
The acquisition will be accounted for as a business combination in the fourth quarter of 2010. On a preliminary basis, approximately $1 million will be allocated to the earn-out value, thereby increasing the total estimated purchase price to $7.5 million. Approximately $150,000 of the acquisition price is expected to be allocated to the tangible assets acquired in the transaction, with $3.2 million allocated to intangible assets and the remaining $4.2 million allocated to goodwill. The intangible assets are expected to be amortized at the rate of approximately $80,000 per quarter.