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Boston Scientific (BSX) Announces Vertiflex Acquisition

Boston Scientific Corporation BSX recently closed the acquisition of Vertiflex, Inc., a private company that manufactured and commercialized the Superion Indirect Decompression System. The acquisition, which was initiated on May 9, is part of Boston Scientific’s strategy of expanding the pain management portfolio.

The transaction has been valued at $465 million in upfront cash and additional payments contingent on commercial milestones for the next three years.

More About the Acquisition

The Superion Indirect Decompression System is a minimally-invasive device designed to enhance physical function and eradicate pain in patients suffering from lumbar spinal stenosis (LSS). The complication is the narrowing of spinal canal, which can result in compression of nearby nerves.

With this consolidation, the Superion Indirect Decompression System has been incorporated to the pain management portfolio of Boston Scientific, which already comprises spinal cord stimulation and radiofrequency ablation. The system is the only FDA-approved, commercially available and minimally-invasive interspinous spacer.

The addition of Vertiflex’s device to the pain management portfolio of Boston Scientific provides physicians with additional non-opioid pain management solutions that can improve the quality of lives of increasing number of chronic pain patients.

Market Prospects

Per Allied Market Research, the global medical devices market is expected to reach a worth of $303 billion at a CAGR of 7.1% between 2012 and 2017. Hence, this acquisition is strategically-timed.

Recent Developments

Boston Scientific’s recent acquisitions have added numerous products to its portfolios.

In late 2018, the company closed the acquisition of Millipede (within Structural Heart). With the completion of BTG acquisition, the company expects to gain an enhanced category leadership position in interventional oncology, arterial and venous therapies. Earlier, the company completed three tuck-in acquisitions — Claret Medical, VENITI and Augmenix. These acquisitions all target high-growth markets, enhance the company’s category leadership strategy, leverage existing lobal capabilities and further enhance short-term and long-term growth profile. The Augmenix acquisition will enhance the company’s category leadership strategy in Urology. Meanwhile, the integration of Claret Medical will broaden the company’s structural heart portfolio. Other important tuck-in acquisitions of 2018 are Cryterion, nVision, and Securus.

Price Performance

In the past year, the company’s shares have outperformed the industry. The stock has improved 29.8%, against the industry’s 5.4% rise.

Zacks Rank and Key Picks

Boston Scientific currently carries a Zacks Rank # 3 (Hold).

Some better-ranked stocks in the broader medical space are Cerner Corporation CERN, Penumbra PEN and Bruker Corporation BRKR. While Cerner sports a Zacks Rank #1 (Strong Buy), Penumbra and Bruker carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cerner’s long-term earnings growth rate is expected to be 13.5%.

Penumbra’s long-term earnings growth rate is projected at 21.5%.

Bruker’s long-term earnings growth rate is estimated at 11.7%.

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