Teleflex to Acquire Palette Life Sciences

Rhea-AI Summary

Teleflex Incorporated announces acquisition of Palette Life Sciences AB for $600 million, expanding its Interventional Urology portfolio. The acquisition includes the biodegradable rectal spacer Barrigel®, which reduces radiation during prostate cancer therapy. The transaction is expected to be completed in Q4 2023.

Positive

• The acquisition of Palette Life Sciences will enhance Teleflex's Interventional Urology portfolio.
• Barrigel®, the biodegradable rectal spacer, has received FDA marketing clearance and is expected to positively impact patient care.
• Teleflex expects the acquisition to further its strategic vision and provide differentiated technology to urologists and related specialties.
• In 2024, Teleflex expects the acquired business to achieve year-over-year revenue growth in the high-teens to low 20% range.

Negative

• None.

Acquisition will add Barrigel®, a biodegradable sculptable rectal spacer, to Teleflex’s Interventional Urology portfolio

WAYNE, Pa., July 26, 2023 (GLOBE NEWSWIRE) -- Teleflex Incorporated (NYSE:TFX), a leading global provider of medical technologies, today announced it has entered into a definitive agreement to acquire privately-held Palette Life Sciences AB for an upfront cash payment of $600 million at closing, and up to an additional $50 million upon the achievement of certain commercial milestones. The acquisition is subject to customary closing conditions, including receipt of certain regulatory approvals, and is expected to be completed in the fourth quarter of 2023.

The acquisition will expand the Teleflex Interventional Urology portfolio, which includes the UroLift^® System, to include Non-Animal Stabilized Hyaluronic Acid (NASHA) spacer and tissue bulking products that improve patient outcomes in urology and urogynecology disorders, colorectal conditions, and radiation oncology procedures. Palette Life Sciences is estimated to generate net sales of approximately $56 million, on a standalone basis, in 2023. Assuming a December 1, 2023 close of the transaction, the acquisition is not expected to significantly impact Teleflex’s 2023 revenue.

“As part of our strategy to deliver long-term durable growth, Teleflex is focused on deploying capital for innovative products and technologies that can meaningfully enhance clinical efficacy, patient safety and comfort, reduce complications, and lower the overall cost of care,” said Liam Kelly, Chairman, President and Chief Executive Officer of Teleflex. “The acquisition of Palette Life Sciences will allow us to incorporate this exciting technology into our Interventional Urology business unit and bring urologists, radiation oncologists, and other specialists more innovative technologies that can positively impact patient care. The transaction is consistent with our strategy to acquire assets that are accretive to Teleflex’s growth rate. We expect the acquisition will be immediately accretive to adjusted gross margin and will enhance our adjusted operating margin in the near term. We believe Palette Life Sciences will be a meaningful contributor to our growth in the coming years. In 2024, we expect this business will achieve year-over-year revenue growth in the high-teens to low 20% range, which gives us further confidence in our ability to deliver on our 2023-2025 LRP financial objectives.”

A key product of Palette Life Sciences is Barrigel^®, a NASHA spacer designed to reduce radiation delivered to the rectum during prostate cancer radiation therapy, while increasing tumor control and patient quality of life.¹ Barrigel^® is easily sculpted, highly visible on transrectal ultrasound (TRUS), biodegradable, reversible, and offers one-step assembly in all sites of service. It is estimated that there will be 288,000 new cases of prostate cancer diagnosed in the United States in 2023, with an incidence rate that has increased by 3% per year since 2014.² Barrigel^® received FDA marketing clearance in May 2022, is cleared for marketing in Australia, and is CE Marked.

With urology being a growing market segment showing positive trends, Teleflex expects the acquisition to further its strategic vision and play a role in providing differentiated technology to urologists and related specialties. Teleflex’s strong peer-to-peer education, patient outreach, and clinical platform already established for the UroLift^® System can provide an immediate benefit for clinicians and a strong runway for clinical adoption of the Barrigel^® product.

The Palette Life Sciences portfolio also includes Deflux^® and Solesta^®, which are NASHA based tissue bulking agents designed to treat pediatric vesicoureteral reflux and fecal incontinence, respectively.

Financial Summary
Assuming a December 1, 2023 close, the transaction is expected to be dilutive to the Company’s adjusted earnings per share (excluding non-recurring purchase accounting items and other acquisition and integration related costs) in 2023 and 2024 by approximately $0.15 and $0.35, respectively.

Beginning in fiscal year 2025, and thereafter, the Company expects the acquisition to be increasingly accretive to adjusted earnings per share (excluding non-recurring purchase accounting items and other acquisition and integration related costs).

Teleflex plans to finance the acquisition through borrowings under its revolving credit facilities and cash on hand.

The Company intends to discuss this acquisition in more detail on its upcoming second quarter 2023 earnings conference call scheduled to be held on Thursday, August 3, 2023 at 8 a.m. ET.

About Teleflex Incorporated
Teleflex is a global provider of medical technologies designed to improve the health and quality of people’s lives. We apply purpose driven innovation – a relentless pursuit of identifying unmet clinical needs – to benefit patients and healthcare providers. Our portfolio is diverse, with solutions in the fields of vascular access, interventional cardiology and radiology, anesthesia, emergency medicine, surgical, urology and respiratory care. Teleflex employees worldwide are united in the understanding that what we do every day makes a difference. For more information, please visit teleflex.com.

Teleflex is the home of Arrow^®, Deknatel^®, LMA^®, Pilling^®, QuikClot^®, Rüsch^®, UroLift^® and Weck^® – trusted brands united by a common sense of purpose.

Forward-Looking Statements
Any statements contained in this press release that do not describe historical facts may constitute forward-looking statements. Any forward-looking statements contained herein are based on our management's current beliefs and expectations, but are subject to a number of risks, uncertainties and changes in circumstances, which may cause actual results or company actions to differ materially from what is expressed or implied by these statements. These risks and uncertainties are identified and described in more detail in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K.

Teleflex, the Teleflex logo, Arrow, Deknatel, LMA, Pilling, QuikClot, Rüsch, UroLift, and Weck are trademarks or registered trademarks of Teleflex Incorporated or its affiliates, in the U.S. and/or other countries.
© 2023 Teleflex Incorporated. All rights reserved.

Barrigel, Deflux and Solesta are trademarks or registered trademarks of Galderma Holding S.A.

References:

1. Mariados NF, Orio PF, Schiffman Z, et al. Hyaluronic acid spacer for hypofractionated prostate radiation therapy: a randomized clinical trial. JAMA Oncol. 2023; e1-e8.
2. Statistics for Prostate Cancer. 2023. American Cancer Society.

Contacts:
Teleflex
Lawrence Keusch
Vice President, Investor Relations and Strategy Development

investor.relations@teleflex.com
610-948-2836

FAQ

What is Teleflex Incorporated acquiring?

Teleflex Incorporated is acquiring Palette Life Sciences AB.

What is the upfront cash payment for the acquisition?

The upfront cash payment for the acquisition is $600 million.

What is Barrigel® and how does it impact patient care?

Barrigel® is a biodegradable rectal spacer that reduces radiation during prostate cancer therapy, improving patient care.

When is the transaction expected to be completed?

The transaction is expected to be completed in the fourth quarter of 2023.

What are Teleflex's expectations for revenue growth from the acquired business?

Teleflex expects the acquired business to achieve year-over-year revenue growth in the high-teens to low 20% range in 2024.