Teleflex Acquires Palette Life Sciences For $600M Upfront, Expands Interventional Urology Portfolio

Teleflex Incorporated TFX has agreed to acquire privately-held Palette Life Sciences AB for an upfront cash payment of $600 million at closing and up to an additional $50 million upon achieving certain commercial milestones. 

The acquisition is expected to complete in Q4 of 2023. It will expand the Teleflex Interventional Urology portfolio, which includes the UroLift System, to include Non-Animal Stabilized Hyaluronic Acid (NASHA) spacer, and tissue bulking products that improve patient outcomes in urology and urogynecology disorders, colorectal conditions, and radiation oncology procedures. 

Also Read: Teleflex Recalls Certain Arrow Peripheral Catheter System Citing Risk Of Separation, Leakage.

A key product of Palette Life Sciences is Barrigel, a NASHA spacer designed to reduce radiation delivered to the rectum during prostate cancer radiation therapy while increasing tumor control and patient quality of life.

Barrigel received FDA marketing clearance in May 2022, is cleared for marketing in Australia, and is CE Marked.

Palette Life Sciences is estimated to generate 2023 net sales of approximately $56 million.

"We expect the acquisition will be immediately accretive to adjusted gross margin and will enhance our adjusted operating margin in the near term. We believe Palette Life Sciences will be a meaningful contributor to our growth in the coming years. In 2024, we expect this business will achieve year-over-year revenue growth in the high-teens to low 20% range, which gives us further confidence in our ability to deliver on our 2023-2025 LRP financial objectives," said Liam Kelly, Chairman, President & CEO of Teleflex.

The Palette Life Sciences portfolio also includes Deflux and Solesta, which are NASHA-based tissue bulking agents designed to treat pediatric vesicoureteral reflux and fecal incontinence, respectively.

Assuming a December 1, 2023 close, the transaction is expected to be dilutive to the Company's adjusted EPS in 2023 and 2024 by approximately $0.15 and $0.35, respectively.

Beginning in fiscal year 2025, Teleflex expects the acquisition to be increasingly accretive to adjusted EPS.

Price Action: TFX shares are down 0.62% at $254.50 on the last check Wednesday.