A Medical Device Daily
Hologic (Bedford, Massachusetts), a provider of diagnostic and digital imaging systems directed towards women's health, reported that it has agreed to acquire Suros Surgical Systems (Indianapolis), a developer of devices used for minimally invasive biopsy and tissue excision, for $240 million, plus a two-year earn-out. The transaction will be structured as a merger of a Hologic acquisition subsidiary into Suros Surgical, Suros becoming a wholly owned subsidiary of Hologic.
The closing consideration will consist of $132 million in cash and an additional $108 million payable, at the election of Hologic, in cash, shares of Hologic common stock or a combination thereof. The earn-out will be payable in two annual cash installments equal to the incremental revenue growth in Suros Surgical's business in the two years following the closing.
The transaction is expected to close by the end of the second calendar quarter, subject to customary closing conditions.
Suros manufactures minimally invasive surgical technologies focused on breast biopsy and tissue removal. Suros Surgical's Automated Tissue Excision and Collection (ATEC) line of products include percutaneous, automatic vacuum-assisted breast biopsy systems, ancillary breast biopsy devices and biopsy site markers.
In addition to more conventional image guidance compatibility, the ATEC system, according to Suros, “has become the market leader in MRI-guided breast biopsy technology as well.“
“The three-year partnership we have had with Hologic has laid solid groundwork for aligning our two companies,“ said Jim Pearson, president and CEO of Suros. “We believe our customers and employees will see significant benefits resulting from the combined efforts of two dynamic organizations.“
Jack Cumming, Hologic's CEO and chairman, said, “Biopsy is the most widely accepted method for determining the presence or absence of cancer following detection of a breast abnormality. An estimated 1.8 million biopsies were performed last year in the United States of which approximately 80% revealed benign lesions . . . This acquisition should further strengthen our capabilities within women's healthcare by enabling our sales force to offer customers a comprehensive portfolio of product offerings in breast cancer detection.“
Suros' revenue in calendar '05 was around $27.2 million, representing 71% growth over the previous year. Hologic said it expects sales related to this acquisition in '06 to be more than $40 million and for the transaction to be accretive to earnings in FY07.
Pearson billed the merger as “a natural fit. Our expertise in breast biopsy combined with Hologic's resources should further accelerate the adoption of our technology and ultimately benefit physicians and improve patient care.“
Hologic's core business units are focused on osteoporosis assessment, mammography and breast biopsy, and mini C-arm and extremity MRI imaging for orthopedic applications.
Suros bills itself as the industry leader in commercially available MRI-guided vacuum assisted breast biopsy with its ATEC system.
Several Indiana-based venture capital groups participated in the early investment of Suros, including Periculum Capital, Rose Hulman Ventures, Twilight Ventures, and individual angel investors. Subsequent investors included River Cities Capital Funds of Cincinnati, Sightline Partners (Minneapolis) and Morgan Stanley Venture Partners (New York). A total of $19 million has been raised by the company since 2000.
Hologic will release its second quarter FY06 operating results during a conference call April 25.