Devices & Diagnostics

With the $1.7B Spectranetics deal, Philips bolsters therapy business

Royal Philips is pushing further into the therapy business with its purchase of Spectranetics, a Colorado Springs company, that makes image-guided catheters that deliver laser energy to treat blockages in the peripheral vascular region.

By Arundhati Parmar on June 28, 2017 1:27 pm

Philips has been known for its light bulbs and in the healthcare world for its medical imaging equipment.

Philips Lighting is now a separate public entity while Royal Philips, having jettisoned that business, is busy expanding its presence in healthcare. The company has made strides into the connected health world and in telemedicine and is a major player in the sleep apnea market. But with Wednesday’s $1.7 billion deal (or 1.9 billion euros) to buy Spectranetics, a public company, the Dutch company is pushing firmly into the realm of delivering therapies.

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The offer represents a 27 percent premium over Spectranetics June 27 closing price. The cardiovascular company trades on the Nasdaq.

Spectranetics makes several laser atherectomy catheters to relieve blockages with laser energy in both coronary and peripheral arteries, as well as drug-coated balloons. It’s Stellarex drug-coated balloon is CE-Marked and is being reviewed by the Food and Drug Administration.

The laser-based treatment is an alternative to relieving blockages by inserting peripheral vascular stents.

The Colorado Springs company saw revenue increase to $270.8 million in 2016 from nearly $246 million in 2015. In that time period, Spectranetics suffered a loss although it narrowed to $58.1 million from $59.5 million in 2015.

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“Today’s exciting announcement follows a series of bolt-on acquisitions to strengthen our portfolio across the health continuum,” said Frans van Houten, CEO of Royal Philips, in a news release. “Building on the successful integration of the Volcano acquisition in early 2015, we are now accelerating our strategic expansion into therapy devices with the agreement to acquire Spectranetics.

Back in December 2014, Philips announced that it was buying Volcano, a San Diego, California-based company that makes imaging catheters to be used in minimally invasive diagnostics and treatment of coronary artery disease and peripheral vascular disease.

Once the Spectranetics transaction is completed, the company’s 900 employees will become part of Philips’ Image-Guided Therapy Devices business. Philips is projecting that the company’s EBITDA – earnings before income tax, depreciation, and amortization – will be positive by 2018.

Photo: erhui1979, Getty Images