Blog Coverage Integra Set to Acquire Derma Sciences; Announced Outlook 2017

LONDON, UK / ACCESSWIRE / January 12, 2017 / Active Wall St. blog coverage looks at the headline from Integra LifeSciences Holdings Corp. (NASDAQ: IART) (“Integra”) and Derma Sciences Inc. (NASDAQ: DSCI) (“Derma”). Integra announced on January 10, 2017, that it has entered into a definitive agreement to acquire Derma for $7.00 per share of Derma’s common stock. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

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Breaking down the Agreement

Integra will pay a total of approximately $204 million in cash for the common stock and a price of $32.00 per share for outstanding shares of Series A Convertible Preferred Stock while a $48.00 price is offered for Series B Convertible Preferred Stock. The purchase price from Integra reflects a 40% premium to the share price at the market close on January 10, 2017 and a 45% premium to the 30-day volume-weighted average share price of $4.83. The transaction has been approved by the board of directors of both companies and is expected to close in Q1 2017.

About the Two Companies

Integra LifeSciences Holdings is the world leader in medical technology, where it focused to limit uncertainty for surgeons. The solutions provided by Integra extend from orthopaedic extremity surgery and neurosurgery to reconstructive and general surgery. Founded in the year 1989, this New Jersey-based medical firm employs more than 3,300 employees worldwide.

Derma Sciences offers a portfolio of solutions to assist clinicians with solutions to assist with tissue regeneration, right from the start of the wound to the wound closure. The firm is a specialty medical device company where it operates through two segments, which are:

Advanced Wound Care Products (which includes product line of MEDIHONEY, TCC-EZ, AMNIOEXCEL, and AMNIOMATRIX).
Traditional Wound Care Products (which includes a product line of branded gauze sponges and bandages, retention devices, paste bandages and other compression devices).

The Allograft Product Portfolio

Derma, in its acquisition of BioD on August 05, 2016, acquired the allograft products produced by the Company. BioD, based in Cordova, Tennessee, produced the product line from human placental tissue and included treatments for chronic wounds, resorbable adhesion prevention, and soft tissue repairs. The deal was executed for about $78 million, including milestones and earn-outs. The $7-per-share deal includes this product line acquired from BioD where the funding would be generated from Integra’s existing credit line.

Integra’s advanced wound care strategy

Under terms of the agreement, Integra will acquire the amniotic tissue-based technology from Derma. The acquisition is set to strengthen the Company’s 3×3 wound care strategy. The ‘3×3’ strategy is collective name for the three product families from Integra, which are:

Engineered collagen matrix
Acellular Dermal Matrix
Human Amniotic Tissue

Peter Arduini, CEO of Integra, views this agreement as an expansion drive in the advanced wound care market. The addition of a complementary portfolio of wound care solutions, according to Arduini, would bring in greater value for shareholders. Integra, in an attempt to expand its wound care portfolio, announced an agreement with AlloSource on April 26, 2016 where it gained access to acellular dermal matrices, derived from donated human dermis.

Outlook

Integra, in its outlook for FY17, expects the revenue growth to be between 7% and 8.5%. The expected growth rates imply a revenue range of $1.05 billion to $1.07 billion inclusive of an unfavorable impact of approximately 1% from foreign currency. The Company expects to generate Q4 2016 GAAP and adjusted diluted EPS to be around the mid-point of the prior guidance range of $0.32 to $0.35, while $0.50 to $0.53 is expected in a post-stock split. Including the negative impact of two cents expected from foreign currency, the full-year 2017 EPS are expected to be in the range of $1.91 to $1.97. This acquisition of Derma is not accretive to the 2017 guidance and assuming a closing date in the Q1 2017, Integra expects to add $65 million in revenue from the acquisition and to be dilutive to adjusted EPS by about $0.03 during 2017.

Stock Performance

On Wednesday, the stock closed the trading session at $43.35, declining 3.45% from its previous closing price of $44.90. A total volume of 1.15 million shares have exchanged hands, which was higher than the 3-month average volume of 555.46 thousand shares. Integra LifeSciences’ stock price advanced 9.58% in the last month, 8.24% in the past six months, and 34.63% in the previous twelve months. Furthermore, on a year-to-date basis, the stock gained 1.06%. Shares of the company have a PE ratio of 55.79. The net market capital for the firm stood at $3.20 billion at yesterday’s closing price.

Derma Sciences’ share price finished yesterday’s trading session at $6.95, soaring 39.00%. A total volume of 21.03 million shares exchanged hands, which was higher than the 3 months average volume of 38.60 thousand shares. The stock has advanced 72.03% and 100.87% in the last six months and past twelve months, respectively. The stock currently has a market cap of $196.48 million.

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