Bioventus picks up partner CartiHeal in acquisition deal worth up to $450M

In a deal nearly two years in the making, Bioventus has opted to acquire fellow orthopedic devicemaker CartiHeal—less than a week after CartiHeal announced its flagship cartilage repair implant Agili-C had been approved by the FDA.

The Agili-C implant is designed to treat cartilage lesions and osteochondral defects in and around the knee joint. Clinical studies of the device have found that it can lead to greater improvements in pain level, quality of life and other overall outcomes than the current standard of care, which requires either the surgical removal of damaged tissue or the creation of microfractures in the bone.

The acquisition option was baked into a July 2020 agreement between the two companies, where Bioventus made a $15 million equity investment in CartiHeal. The deal gave Bioventus the option to buy up the rest of the Israeli startup as soon as Agili-C had secured FDA approval.

Two years later, those planted seeds have borne fruit, and Bioventus has made good on the deal.

Bioventus is offering $315 million up front to buy up the remaining shares of CartiHeal. Down the line, once CartiHealth achieves $100 million in trailing 12-month sales, Bioventus will pay out another $135 million, bringing the deal’s potential total to $450 million.

Bioventus said it plans to finance the acquisition with additional debt and that it expects to close the deal sometime in the second quarter of this year, pending certain closing conditions. Once the deal is sealed, Bioventus will begin rolling out CartiHeal’s Agili-C technology in a limited market release in the third quarter of 2022.

“CartiHeal represents an important breakthrough for the treatment of osteoarthritis, and we are excited to bring this complementary product into our growing portfolio of medical devices. CartiHeal addresses an unmet need in joint preservation and cartilage regeneration for approximately 675,000 U.S. patients annually, representing an estimated $1.3 billion market opportunity for Bioventus,” said Bioventus CEO Ken Reali.

Bioventus’ latest acquisition comes almost exactly one year after Reali mapped out an accelerated growth plan for the North Carolina-based company that would usher it into a “new normal” amid the dwindling effects of the COVID-19 pandemic.

That began with the purchase of Bioness, a maker of devices and programs to treat pain from orthopedic and other injuries. That deal added up to $110 million, split between a $45 million upfront payment and $65 million doled out in milestone payments.

Not long after, in July, Bioventus scooped up ultrasonic surgical device developer Misonix in a stock and cash deal that clocked in at $518 million and which Bioventus predicted would add nearly $80 million in revenue for 2021.