TranS1 ($TSON) already makes devices designed to treat spinal degeneration, but the North Carolina company will expand its minimally invasive surgical tool offerings with plans announced this week to snatch up Baxano for $23.6 million in stock and cash.
TranS1, whose devices treat patients with lower back problems, needs the vital new revenue Baxano's products would bring. TransS1 booked more than $14.5 million in revenue in 2012, but lost nearly $30 million, with only a small number of that from one-time charges. TransS1 hasn't made a profit yet, and the company sees Baxano's focus on minimally invasive spinal surgical tools as a crucial way to grow and become successful in the long-haul.
TransS1 CEO Ken Reali said he sees Baxano as offering the old "complementary strategic fit," that will help it carve out a leadership role in a growing spinal surgical tool area.
"Minimally invasive treatments are the fastest growing segment of the spine market," Reali noted in a statement. Overall, that market could be worth as much as $3.9 billion over time, the companies estimate.
Baxano president and CEO Tony Recupero, meanwhile, said in a statement that he sees the combined company helping to build Baxano's product reach.
Baxano, based in San Jose, CA, is an 8-year-old enterprise with at least one major product approved for use--its iO-Flex system, instruments that allow surgeons to target lumbar spinal stenosis in the spine's central canal, lateral recess and neural foramen. The company generated $9.4 million in revenue in its 2012 fiscal year, up from just under $4 million in 2011. Back in 2010, the company made waves after raising $30 million Series C venture round from investors including Kaiser Permanente and Three Arch Partners to support iO-Flex's commercial rollout.
The deal calls for paying for Baxano with $550,000 in cash and 10.4 million shares of TranS1 common stock. Baxano shareholders get to own 27.6% of the company, with current TranS1 shareholders holding the rest. If all goes well, the deal will close in the 2013 second quarter.
- read the release
- here's the Silicon Valley Business Journal's take
Special Report: Baxano - Top 5 Medical Device VC Deals, H1 2010
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