01—Abstract
Summary
Summary of the 8-K filed January 8, 2024. Cited figures are marked; the original filing is the authoritative source.
On January 8, 2024, Boston Scientific (BSX) announced a definitive agreement to acquire Axonics, Inc. (Nasdaq: AXNX), a medical technology company focused on sacral neuromodulation (SNM) devices for overactive bladder and fecal incontinence, plus the Bulkamid urethral bulking system for stress urinary incontinence.
The purchase price is $71a per share in cash, implying an equity value of approximately $3.7 billion and an enterprise value of approximately $3.4 billion, after netting roughly $0.3 billion of cash and short-term investments as of September 30, 2023. The deal is expected to close in the first half of 2024, subject to customary closing conditions, including regulatory approvals. Strategically, the acquisition gives Boston Scientific its entry into the sacral neuromodulation market, which management describes as a high-growth adjacency with a U.S. opportunity it estimates at about $800 million in 2022, growing to $1.6 billion within five years.
Axonics expects preliminary 2023 net revenue of approximately $366 millionb, up about 34% year over year, with gross margins near 75%. Boston Scientific expects the deal to be immaterial to adjusted EPS in 2024 and accretive thereafter, and immaterial to total company adjusted operating margin in the first two years, reaching accretion in year three. GAAP EPS is expected to be more dilutive due to amortization and acquisition-related charges.
For investors, the key considerations are the valuation relative to Axonics' growth profile, the execution risk of integrating a new therapy area, the dependence on regulatory clearance and closing timing, and the GAAP dilution from purchase accounting. The Axonics 2023 revenue figure is preliminary and unaudited, so the final number may change.
02—Key points
Key Highlights
- Boston Scientific agreed to acquire Axonics for $71 per share in cash, implying an equity value of about $3.7 billion and an enterprise value of about $3.4 billion.
- Axonics expects preliminary 2023 net revenue of about $366 million, up roughly 34% year over year, with gross margins near 75%.
- The deal gives Boston Scientific entry into sacral neuromodulation, which it estimates is a $800 million U.S. market in 2022 expected to reach $1.6 billion within five years.
- Boston Scientific expects the transaction to be immaterial to 2024 adjusted EPS and accretive thereafter; GAAP EPS will be more dilutive due to amortization and acquisition-related charges.
- Expected to close in the first half of 2024, subject to customary closing conditions and regulatory approvals.
- Management expects the deal to be immaterial to total company adjusted operating margin in the first two years, with accretion in year three.
- Axonics' 2023 revenue figure is preliminary and unaudited, and the final reported number may change.
03—Questions
Frequently Asked Questions
What is Boston Scientific paying for Axonics?
Boston Scientific will pay $71 per share in cash, reflecting an equity value of approximately $3.7 billion on about 51.7 million fully diluted shares and an enterprise value of approximately $3.4 billion after netting about $0.3 billion of cash and short-term investments as of September 30, 2023.
Why is Boston Scientific making this acquisition?
The company says the deal expands its urology portfolio and gives it entry into sacral neuromodulation, a high-growth adjacency for treating overactive bladder and fecal incontinence. It also expects Axonics' growth profile to be highly accretive to its Urology business in 2024.
What is the expected financial impact on Boston Scientific's earnings?
Adjusted EPS impact is expected to be immaterial in 2024 and accretive thereafter. GAAP EPS will be more dilutive than adjusted EPS because of amortization expense and acquisition-related net charges.
When is the transaction expected to close, and what could delay it?
The deal is expected to close in the first half of 2024. Closing depends on customary conditions, including receipt of required regulatory approvals and clearances, which may not be satisfied at all or in a timely manner.
How strong is Axonics' business?
Axonics expects preliminary 2023 net revenue of about $366 million, up roughly 34% from 2022, following growth of 62% in 2019 and 52% in 2020 from a small base. Its R20 neurostimulator, approved by the FDA in January 2023, is a rechargeable SNM device with a battery life of 20 or more years. The 2023 figure is unaudited and may change.
04—Continue