Hamilton Thorne Announces the Acquisition of Gynetics Medical Products N.V.

Rhea-AI Summary

Hamilton Thorne completes acquisition of Gynetics, strengthening its footprint in the Assisted Reproductive Technology market and expanding product offerings in the European IVF market.

Positive

• The acquisition of Gynetics adds a profitable portfolio of premium consumables to Hamilton Thorne's existing product offerings, increasing recurring revenue. The transaction is expected to be immediately accretive to revenue and Adjusted EBITDA.

Negative

• None.

• Strengthens Hamilton Thorne footprint in consumables within the Assisted Reproductive Technology market

• Expands expertise, manufacturing, and product offerings in consumables in the ever-growing European IVF market

Beverly, Massachusetts and Toronto, Ontario--(Newsfile Corp. - October 10, 2023) - Hamilton Thorne Ltd. (TSX: HTL) ("Hamilton Thorne" or the "Company"), a leading provider of precision instruments, consumables, software, and services to the Assisted Reproductive Technologies ("ART") research and cell biology markets, today announced that it has completed the acquisition (the "Transaction") of Gynetics Medical Products, N.V. and Gynetics Services B.V. (collectively, "Gynetics").

Gynetics, based in Lommel, Belgium is a leading manufacturer of a wide range of innovative, high-quality In Vitro Fertilization ("IVF") devices in the global IVF market. The Transaction reinforces Hamilton Thorne's consumables product offerings and provides the Company with additional profitable operations in the well-established European ART market. For the trailing twelve months ending May 31, 2023, Gynetics had revenues of approximately €4.6 million (US$4.9 million) and Adjusted EBITDA of approximately €2.3 million (US$2.5 million). During this period, approximately 20% of Gynetics sales were made to Hamilton Thorne.

Key Benefits of the Transaction:

• Addition of a profitable portfolio of premium consumables with recurring revenue, that is highly complementary to Hamilton Thorne's existing product offerings
• Diversifies and increases product offerings through the addition of own-branded embryo transfer catheters and ovum pick up needles that are used in the IVF clinic procedure room as well as the laboratory
• Opportunity to expand Gynetics product offerings into additional international markets and increase direct sales through existing Hamilton Thorne sales channels
• Financed through an expansion of existing credit facility, cash on hand, and share consideration to the seller
• Expected to be immediately accretive to revenue and Adjusted EBITDA

"We are excited to welcome Gynetics to the Hamilton Thorne family. This acquisition enhances our presence in the very attractive European ART market, further diversifies our revenue base, and increases our percentage of recurring revenues through the sale of additional consumable products, including Gynetics' ovum pick up needles and embryo transfer catheters," said David Wolf, President and Chief Executive Officer of Hamilton Thorne. "Gynetics is a well-established and respected provider of premium clinical and laboratory consumables in the European ART market that shares our total commitment to the highest standards in customer service and quality. From our existing business relationships, the Gynetics staff is well known to us. I am particularly pleased that all Gynetics' employees will join our team and help drive the growth of the existing Gynetics business."

Acquisition Details

Pursuant to the Transaction, Hamilton Thorne indirectly acquired 100% of capital stock of Gynetics based on an enterprise value of approximately €18.3 million (US$19.4 million) or approximately 8 times Gynetics' trailing twelve-months Adjusted EBITDA ending May 31, 2023. The nominal purchase price, paid at closing, of approximately €18.7 million (~US$19.8 million) takes into account certain working capital and other adjustments.

On closing, Hamilton Thorne paid consideration of approximately €14.0 million (US$14.8 million) in cash, plus the issuance of an aggregate of 5,007,117 common shares (the "Consideration Shares") of Hamilton Thorne stock at a deemed issuance price of C$1.335 per share with a deemed aggregate value of approximately €4.7 million (~US$4.9 million). The cash component of this transaction was financed with a drawdown of US$8.0 million from its acquisition line of credit facility with its existing senior lender and cash on hand. The line of credit converts post-closing to a secured five-year term loan which bears interest at a fix rate of approximately 8.0% per annum, and amortizes over the life of the loan.

The Consideration Shares will be subject to a 5-year escrow pending final calculation of any closing adjustments and to satisfy any possible indemnity claims.

Francesco Fragasso, CFO of Hamilton Thorne commented, "Our overall liquidity continues to be very strong with over US$8.8 million cash on hand and approximately a 1.7 post-closing leverage ratio (TTM EBITDA to Senior Debt) on a pro-forma basis. Given this cash on hand, the cash flow generated by our business, and our borrowing capability, we have enough dry powder to continue our aggressive acquisition program."

The Transaction is subject to receipt of final acceptance from the Toronto Stock Exchange in accordance with its policies.

About Hamilton Thorne Ltd. (www.hamiltonthorne.ltd)

Hamilton Thorne is a leading global provider of precision instruments, consumables, software and services that reduce cost, increase productivity, improve results and enable breakthroughs in Assisted Reproductive Technologies (ART), research, and cell biology markets. Hamilton Thorne markets its products and services under the Hamilton Thorne, Gynemed, Planer, IVFtech, Embryotech Laboratories, Tek-Event, Microptic, and Gynetics brands, through its growing sales force and distributors worldwide. Hamilton Thorne's customer base consists of fertility clinics, university research centers, animal breeding facilities, pharmaceutical companies, biotechnology companies, and other commercial and academic research establishments.

About Gynetics. (www.gynetics.be)

Gynétics Medical Products is a leading, international manufacturer of a wide range of innovative, high-quality IVF devices in the global IVF market.

Note on Financial Statements and Non-IFRS Measures

The historical financial information of Gynetics included in this press release is based on their preliminary unaudited financial statements for their trailing twelve months ending May 31, 2023 (the "Gynetics Financial Statements"). The Gynetics Financial Statements were prepared in accordance with Belgium generally accepted accounting principles. Accordingly, readers are cautioned that such results have not been reconciled to IFRS and may be subject to adjustment.

The reference to Adjusted EBITDA refers to earnings before interest, income taxes, depreciation, amortization, share-based compensation expense, acquisition, integration, and restructuring costs, impairment of intangibles, and other exceptional, non-recurring, or non-operational charges, expenses, gain, or income. Adjusted EBITDA is not a recognized measure under IFRS and does not have a standardized meaning under IFRS, and the method of calculation may differ from the methods used by other issuers. Investors are cautioned that Adjusted EBITDA should not be construed as an alternative to net and comprehensive earnings determined in accordance with IFRS as an indicator of performance, or as an alternative to cash flows from operating, investing and financing activities. Rather, these measures are provided as additional information to complement those IFRS measures. For further information on the Company's use of Adjusted EBITDA as a measurement, see the Company's most recent Management Discussion and Analysis for the Quarter ended June 30, 2023, a copy of which is available under the Company's profile on SEDAR+ at www.sedarplus.ca.

Forward-Looking Statements

Certain information in this press release may contain forward-looking statements, including, without limitation, with respect to the integration of Gynetics into the Company's operations, the development of future product offerings, executed future margins, revenues and Adjusted EBITDA as a result of the Transaction, the ability of the Company to expand into different markets, the expansion of the Company's existing credit facility and the terms thereof, the Company's anticipated acquisition program and the impact of the Transaction on the Company. This information is based on current expectations and assumptions that are subject to significant risks and uncertainties that are difficult to predict. Actual results might differ materially from results suggested in any forward-looking statements. The Company assumes no obligation to update the forward-looking statements, or to update the reasons why actual results could differ from those reflected in the forward-looking statements unless and until required by securities laws applicable to the Company. Additional information identifying risks and uncertainties is contained in filings by the Company with the Canadian securities regulators, which filings are available at www.sedarplus.ca.

For more information, please contact:

David Wolf, President & CEO
Hamilton Thorne Ltd. 
978-921-2050
ir@hamiltonthorne.ltd

Francesco Fragasso, CFO
Hamilton Thorne Ltd.
978-921-2050
ir@hamiltonthorne.ltd

Glen Akselrod
Bristol Investor Relations
905-326-1888
glen@bristolir.com

To view the source version of this press release, please visit https://www.newsfilecorp.com/release/183484

FAQ

What did Hamilton Thorne acquire?

Hamilton Thorne acquired Gynetics Medical Products and Gynetics Services, leading manufacturers of In Vitro Fertilization devices.

What are the benefits of the acquisition?

The acquisition adds a profitable portfolio of consumables, diversifies and increases product offerings, and provides an opportunity to expand into international markets.

How was the acquisition financed?

The acquisition was financed through an expansion of the existing credit facility, cash on hand, and share consideration to the seller.

What are the financial details of the transaction?

Gynetics had revenues of approximately €4.6 million and Adjusted EBITDA of approximately €2.3 million for the trailing twelve months ending May 31, 2023. Hamilton Thorne paid approximately €14.0 million in cash and issued 5,007,117 common shares as consideration.

Is the transaction immediately accretive to revenue and Adjusted EBITDA?

Yes, the transaction is expected to be immediately accretive to revenue and Adjusted EBITDA.