Boston Scientific has moved to acquire the remote cardiac monitoring developer Preventice Solutions, a company it has partnered with and invested in since 2015.
On paper, the transaction features a cash payment of $925 million, plus an additional $300 million tied to the achievement of certain commercial milestones. However, Boston Scientific has built up a 22% stake in Preventice, which is expected to lower the net payments to $720 million upfront and about $230 million in milestone money, respectively.
Preventice’s portfolio includes the BodyGuardian line of wearable heart monitors for adults and children—including short- and long-term patches, Holter devices and multi-channel ECGs—which are connected to a cloud-based analysis platform monitored by both human technicians and artificial intelligence algorithms. Its newest monitor, the bandage-sized Mini Plus, is a waterproof device with a 16-day battery life and multiple electrode options.
Over 2020, the Minneapolis-based company has seen its net sales grow 30% up to $158 million, as the COVID-19 pandemic has placed new value on remote technologies that allow as many patients as possible to remain outside of the hospital.
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At the same time, that shift in the landscape has put a dent into Boston Scientific’s cardiovascular sales, focused on procedure-reliant interventional devices, electrophysiology hardware and heart valves.
In a preliminary sales report presented earlier this month, Boston Scientific posted a 7.9% overall drop in 2020 cardiovascular division sales compared to 2019, amounting to $3.88 billion. That came alongside 12% declines in its cardiac rhythm management and electrophysiology businesses, as many hospitals and patients postponed care over the course of the year.
“This acquisition will provide Boston Scientific with a foothold in the high-growth ambulatory electrocardiography space, which strongly complements our recent entrance into the implantable cardiac monitor market and will serve as an important component of our category leadership strategy in cardiac diagnostics and services—a nearly $2 billion market anticipated to grow double digits annually,” said Scott Olson, president of Boston Scientific’s rhythm management division.
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The medtech company’s peripheral interventions segment, however, delivered a total gain of 13.3%, driven entirely by its $4.2 billion buyout of BTG in August 2019. Boston Scientific would go on to recover $800 million from that deal last December, by carving out BTG’s specialty pharmaceuticals division and selling it to the European pharma group Serb.
Meanwhile, Preventice raised $137 million in a series B round last July—including investments from Boston Scientific as well as Vivo Capital, Novo Holdings, the Merck Global Health Innovation Fund and the Samsung Catalyst Fund—to help expand its sales force and develop new clinical evidence and AI programs for its products, which have been used with more than one million cardiac patients.
“Boston Scientific has been a key investor in Preventice for more than five years and we believe the company has the commercial reach, diagnostics expertise and operational infrastructure to bring these advanced monitoring technologies to more patients worldwide,” Preventice CEO Jon Otterstatter said. The companies expect the deal to close by mid-2021.