SurModics acquires Ireland-based balloon catheter maker Creagh Medical Ltd. for €32 million

Tuesday, November 24, 2015

SurModics, Inc. announced that it has acquired an Ireland-based developer and manufacturer of balloon catheters, Creagh Medical Ltd. for €32 million.

The transaction includes an upfront payment of €18 million and milestone payments of up to €12 million based on achievements from revenue and value-creating operations. No other term of the agreement was however disclosed by the company.

The company expects to generate revenues in the range of $3.5 million - $4 million from the Creagh Medical business in fiscal 2016. The acquisition is expected to be accretive to adjusted earnings per share starting from fiscal 2017.

SurModics intends to update its guidance for fiscal year 2016 by the end of the first quarter of fiscal 2016. We remind investors that the company had earlier provided its outlook for fiscal 2016 with its fourth quarter 2015 results. The company had guided towards fiscal 2016 revenues in the range of $56 million - $60 million.

Our Take

SurModics' decision to acquire Creagh Medical should help the company achieve its target of  transforming its Medical Device business from being a provider of coating technologies to a provider of whole-product solutions to medical device customers in the interventional vascular market.

We expect investors to focus on the company's efforts to develop its SurVeil drug coated balloon product. The company expects to commence patient enrolment in the first-in-human study on the SurVeil drug-coated balloon product in the U.S. in the second quarter of fiscal 2016.

SurModics currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the health care sector are Achillion Pharmaceuticals, Inc. ACHN , Anika Therapeutics Inc. ANIK and Corcept Therapeutics Incorporated CORT , each  with a Zacks Rank #1 (Strong Buy).