Abbott already churns out a variety of catheters, stents, imaging systems and other technologies used to remove plaque buildups from blood vessels and keep the blood flowing through the newly cleaned arteries, but it’s still on a mission to bulk up those offerings.
The medtech giant has made plans to acquire Cardiovascular Systems, a Minnesota-based maker of atherectomy devices, the duo announced Wednesday evening. Under the terms of the deal, Abbott will pay out $20 for each share of Cardiovascular Systems, adding up to a total buying price of about $890 million.
That’s about a 50% premium over the company’s share price before the deal was announced; it closed Wednesday afternoon at $13.31. In after-hours trading following the acquisition announcement, however, the stock price jumped to around $19.50, and it continued climbing as the markets opened Thursday.
Neither company offered a specific timeline for the deal’s closing, but, in a letter (PDF) sent to employees and filed with the U.S. Securities and Exchange Commission, Cardiovascular Systems CEO Scott Ward said it will “take time” to secure all the necessary regulatory and shareholder approvals—spanning “the next few months,” at least.
Once completed, the company’s devices will join Abbott’s range of vascular disease-focused products. That’ll include not only Cardiovascular Systems’ existing guidewires, catheters and plaque-blasting devices used in atherectomies, but also a line of minimally invasive blood clot-removal technologies currently under development—since Abbott “has expressed interest in CSI’s product pipeline,” Ward wrote in the employee letter.
“The acquisition of CSI will add new, complementary technologies to Abbott’s leading vascular device offerings,” Lisa Earnhardt, executive vice president of Abbott’s medical devices business, said in the announcement. “CSI has a talented and experienced team and a leading atherectomy system that will allow Abbott to provide physicians more tools to help patients live fuller lives.”
Alongside the news of the acquisition, Cardiovascular Systems also published an earnings report for the second quarter of its fiscal year 2023. For the period, which ended Dec. 31, the company reported revenues of $61.5 million, an almost 4% increase compared to the same quarter the previous year. Though that added up to a gross profit margin of 70%, CSI registered an overall net loss of $7.9 million—an improvement from the $9 million deficit reported a year earlier.
Abbott’s own most recent earnings report arrived at the end of January and saw the medtech giant scrape out a year-over-year increase of 1.3% in its 2022 sales, even as the formerly high-flying demand for its COVID-19 tests plummeted in the final months of the year.
As COVID-related sales continue to slip, however, Abbott has predicted that 2023 will culminate in a significant drop in its earnings per share from continuing operations—from $5.34 in 2022 to somewhere between $4.30 and $4.50 this year.
The Cardiovascular Systems buy isn’t expected to affect that forecast in either direction, according to this week’s announcement.