CryoLife has entered into a definitive agreement to acquire Jotec AG. A press release states that the combination of CryoLife and Jotec will create a company “with a broad and highly competitive product portfolio focused on aortic surgery, and will position CryoLife to compete strongly in the important and growing endovascular surgical markets.”
Pat Mackin, chairman, president, and chief executive officer of CryoLife, said, “We believe this acquisition will enable CryoLife to deliver sustained, high single-digit revenue growth, while also diversifying our revenues into a significantly larger addressable market. Jotec has a technologically differentiated product portfolio addressing the US$2 billion global market for stent grafts used in endovascular and open repair of aortic diseases.”
“Their advanced product portfolio has allowed them to achieve a 17% revenue CAGR over the past five years, significantly outpacing the growth in the overall European market. We expect the acquired portfolio to continue to post double-digit growth outside of the USA for at least the next five years. In addition, the acquisition will leverage our global infrastructure and accelerate our ability to go direct in Europe, and will foster considerable cross-selling opportunities between the CryoLife and Jotec product portfolios. The transaction will also drive gross margin expansion and accelerate our trajectory towards 20% or higher operating margins. We believe this will position CryoLife to deliver growth in non-GAAP EPS at a CAGR of at least 20% over the next five years.”
Mackin added, “We also expect the Jotec new product pipeline and R&D capabilities to drive longer-term growth beyond the five-year horizon, particularly as their most innovative products enter the US market. We plan to utilise CryoLife’s clinical and regulatory expertise to gain FDA approval for these products, which we believe will allow for entry into the US market.”
Thomas Bogenschütz, CEO of Jotec, commented, “CryoLife is ideally positioned to accelerate adoption of our products through its highly complementary and global cardiac and vascular surgery business. We are looking forward to working with CryoLife’s team to drive growth of our existing business, expand into new geographies, and accelerate our R&D initiatives in key markets such as the USA.”
Jotec generated revenue of approximately €41 million in 2016, representing compound annual growth of approximately 17% over the preceding five years. Jotec generated revenues of €43 million, or approximately $51 million at current currency exchange rates, for the twelve months ended 30 June, 2017.