Medtronic Buys Smith & Nephew's Gynecology Business For $350M
Medtronic has acquired Smith & Nephew’s gynecology business, including a minimally invasive surgical solution, for $350 million. Senior executives from both companies remarked that the acquisition will complement Medtronic’s existing surgical portfolio and grant the business greater innovation opportunities and geographic reach.
The Truclear system is a hysteroscopic solution that removes abnormal uterine tissue for diagnostic biopsy or to treat severe cases of abnormal uterine bleeding (AUB). According to a Smith & Nephew press release, the system generated $56 million in revenues in 2015, representing one percent of the company’s overall earnings.
Smith & Nephew completed five acquisitions in 2015, mostly focused on expanding its robotic surgery and sports medicine businesses. Smith & Nephew CEO Oliver Bohoun commented during a February earnings call that the company had responded to a challenging market by restructuring the company and re-focusing resources in key strategic areas. The proceeds of this most recent sale will be put toward a share buy-back program, which will start in July 2016.
“The sale of our gynecology business demonstrates our disciplined strategic approach to capital deployment and to crystallizing value through divestiture at the right time,” said Bohoun, noting that the interest from potential buyers reflected the strong market value of a gynecological business that will benefit from Medtronic’s focused and synergistic platform.
Medtronic’s recent merger with Covidien has freed up $9.8 billion in cash, which CEO Omar Ishrak told Bloomberg would be put toward repaying debt, repurchasing stocks, R&D, and acquisitions. Medtronic has come under fire recently from critics who claim the acquisition was executed for tax-saving purposes, but Ishrak argued that the savings were being passed on to early stage research and technology, and “giving oxygen to the medical technology industry.”
Once the deal with Smith & Nephew is complete, the gynecology business will be folded into and reported under Medtronic’s Surgical Solutions division, within the Minimally Invasive Technologies Group. Chris Barry, senior VP at Medtronic and president of the surgical solutions division, said the acquisition will spur innovation in gynecological surgery, an area he said is underrepresented in the medical technology industry.
“We believe gynecology is one of the most underserved specialty procedure areas. Smith & Nephew has developed a rapidly growing business that expands minimally invasive treatment options for gynecology patients,” said Barry. “This acquisition expands our existing GYN portfolio and we believe creates opportunities to further explore and develop global therapies and solutions that improve GYN surgery.”