AtriCure ($ATRC) is set to acquire California-based surgical ablation device maker Estech in a deal worth at least $34 million and almost double that amount overall.
According to the agreement, the Ohio atrial fibrillation specialist will give Estech 2.1 million shares, or $34 million, of AtriCure's common stock up front and another potential $26 million in milestones down the line. For loss-heavy AtriCure, taking on Estech will add to its operating expenses, but that's an outlay it hopes will pay off in the long run. The deal is expected to close in the next several weeks.
AtriCure has seen a steady upswing in revenue reflecting sales of its open-heart products. These include its Synergy Ablation System, which was the first of its kind approved to treat atrial fibrillation, and its AtriClip left atrial appendage closure device. The company pulled in a sizable public offering early this year and was one of FierceMedicalDevices' hottest takeover targets in 2013 due to an electrophysiology surge at higher-profile companies like Medtronic ($MDT) and Johnson & Johnson ($JNJ).
And the deal with Estech can only expand AtriCure's growing presence in the field. Estech's COBRA line of ablation systems uses the company's patented temperature-controlled radio-frequency tech, giving the devices more versatility during surgery, the company touts.
AtriCure isn't likely to see an immediate improvement in its losses, which have grown along with its revenue due to increasing operating expenses--quarterly losses were up to $1.8 million earlier in 2013 versus $1.3 million the previous year. The Estech deal won't stop the bleeding there right away, but AtriCure says the transaction should become profitable for the company at large in 2015.
"This acquisition demonstrates our commitment to providing the most robust suite of products and solutions for our physician customers to treat the broadest set of patients suffering from Afib and Afib-related complications," AtriCure CEO Mike Carrel said in a statement. "Afib remains a large and growing market. Our ongoing investments in R&D, physician education and training, clinical science and commercial execution are major steps to capitalize on this market opportunity."
- here's the release
Special Report: Med tech's hottest takeover targets for the rest of 2013 - AtriCure