After restructuring its heart valve operations and culling one of its programs last year, LivaNova has decided to sell off the flagging business to the Swiss healthcare-focused investment firm Gyrus Capital, for a base purchase price of €60 million, or $73 million U.S.
The transaction includes LivaNova’s entire portfolio, including its sutureless Perceval aortic valve replacement, as well as about 900 employees across locations in Vancouver, Canada and Saluggia, Italy, outside Turin.
The deal has yet to officially settle on the company's heart valve business in France; that decision will be made through a binding offer delivered by a Gyrus affiliate, which won't increase the total purchase price. In addition, LivaNova has signed on to reimburse Gyrus up to €37.5 million ($45.6 million U.S.) over the next seven years for certain expenses related to the cleanup and disposal of hazardous waste at the Saluggia campus.
“The LivaNova HV business is a global player in surgical heart valves with world-class products and compelling growth opportunities,” said Guy Semmens, managing partner at Gyrus, which specializes in carve-out transactions.
“This business fits squarely within our strategy to invest in transformational projects in the healthcare and sustainability sectors,” Semmens said. “We believe that, with a focus on the core products, this new independent company can maximize its potential through our investment in its products and people.”
In October of this year, LivaNova delivered new, promising data from its Perceval valve, showing fewer complications and stronger clinical outcomes compared to traditional implants built on a stent frame.
Those who received the Perceval valve had fewer strokes, aneurysms, heart attacks and deaths after one year in an international study, with a combined rate of 5.2% compared to 10.8% among those who received stented valves. LivaNova’s valve also saw fewer cases of new atrial fibrillation, at 4.2% versus 11.4%.
“We are committed to making this the leading company dedicated to heart surgeons and their patients by providing the best solutions to fight structural heart disease,” said Christian Mazzi, who has been named CEO of the future, to-be-named company, after the deal closes in the first half of 2021.
“We plan to leverage the strong foundation in mechanical valves and build out the growth engine with the Perceval aortic valve and Memo 4D mitral repair ring, while investing in research and development to pursue new products and partnerships,” Mazzi added.
LivaNova, meanwhile, plans to use the deal as an opportunity to refocus efforts on its neuromodulation and cardiovascular platforms, and dedicate new resources toward their pipelines.
In November 2019, the company moved to restructure and simplify its international heart valve portfolio and manufacturing network, after seeing declines in revenue from its biological and mechanical offerings over the past five years.
This included closing its plant in Minneapolis, Minnesota, which had served as a hub for its investigational Caisson mitral valve replacement system. The Caisson program was canceled due to competitive market conditions and rising costs in maintaining its portfolio; at the time, LivaNova said it expected to lay off about 150 employees.
In its most recent earnings report, LivaNova’s heart valve business brought in $21.1 million across the third quarter—down about 27% compared to the same quarter last year, with declines hastened by COVID-19’s impact on cardiac surgery volumes. In the first quarter of 2020, heart valve sales reached $25.2 million, up 0.6% compared to 2019.
Editor's note: This story has been updated to correct and clarify the terms of the deal regarding future reimbursements over the Saluggia location and the decision on LivaNova's French heart valve business.