Medical technology company, SeaSpine Holdings, has entered into an agreement to acquire privately held 7D Surgical. Shares of SeaSpine rose 3% in Monday’s extended trading session.
SeaSpine Holdings’ (SPNE) Senior Vice president and Chief Financial Officer, John Bostjancic said, “Once closed, the transaction is expected to contribute to revenue through the addition of the 7D customer base, as well as the opportunity to place additional systems on a capital efficient basis by allowing hospitals to acquire them over time through the purchase of SeaSpine’s spinal implants and orthobiologics.”
Bostjancic further added, “The transaction also increases our flexibility with respect to hospital purchase commitments. We expect the acquisition to be immediately accretive to revenue and revenue growth.”
Subject to customary closing conditions this transaction is expected to close in 2Q. 7D Surgical investors will receive about 4.29 million SeaSpine shares equal to $82.5 million in value and a further $27.5 million in cash..
The stock transfer represents about 13% of outstanding SeaSpine stock. The company expects to finance the cash part of the deal through cash in hand of about $88 million.
Significantly, the 7D system which improves surgical workflow with its machine vision based registration algorithms can complete the patient registration process in less than than 30 seconds in comparison to the present norm of 30 minutes. (See SeaSpine stock analysis on TipRanks)
On March 22, BTIG analyst Ryan Zimmerman reiterated a Buy rating on the stock with a target price of $25 (36.3% upside potential). Commenting on the 7D Surgical acquisition, Zimmerman said, “We think the acquisition provides investors with an indication of confidence in SPNE’s ability to sell MvIGS combined with what SPNE sees as a platform technology. Over time the acquisition will morph SPNE into a broader, procedurally integrated solutions provider beyond core implant manufacturing.”
Turning to rest of the Street, the stock has a Strong Buy consensus rating alongside an average analyst price target of $25.40 (38.5% upside potential) based on 5 unanimous Buys. Shares have rallied 194% over the past year.
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