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Endo Pharmaceuticals completes $2.9 billion acquisition of American Medical Systems
06-21-2011
by Jeffrey Bouley  |  Email the author
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CHADDS FORD, Pa.óDotting the i's and crossing the t's on a deal announced in mid-April, Endo Pharmaceuticals announced June 20 the completion of its acquisition of American Medical Systems Inc. (AMS), a provider of devices and therapies for male and female pelvic health, for approximately $2.9 billion in cash.
 
"Closing on this acquisition marks another milestone in the transformation of Endo and accelerates our strategy of building a diversified healthcare company, better able to respond to the changing economics that drive the U.S. healthcare environment," says Dave Holveck, president and CEO of Endo. "AMS accelerates our overall growth, and we are very excited about the potential of its current commercial portfolio, as well as potential new product introductions."
 
As has been noted since the spring, the acquisition continues Endo's planned evolution from a product-driven company to a healthcare solutions provider. In addition, the deal is expected to strengthen Endo's core urology franchise while diversifying revenue, earnings and cash flow. Finally, bringing AMS into the fold fulfills Endo's strategy to increase the scale of its devices and services business segment.
 
When figures were being bandied about in April, Endo expected the transaction to be immediately accretive to adjusted diluted earnings per share upon closing and accretive by 60 cents per share in 2012.
 
Endo sees a solid future in comprehensive healthcare solutions across its branded pharmaceuticals, generics devices and services with the addition of AMS, but particularly in the areas of pain and urology. Endo seeks to be "the premier partner to healthcare professionals and payment providers, delivering an innovative suite of complementary diagnostics, drugs, devices and clinical data to meet the needs of patients in areas such as pain, urology, oncology and endocrinology."
 
AMS reportedly has a leading position in several product categories that have shown revenue growth in the "mid-to-high single-digit range," which Endo anticipates will continue over the long term. These include a broad range of products for erectile dysfunction prostheses and male and female incontinence, as well as the GreenLight laser technology for enlarged prostate treatment. The company also has a strong pipeline of new products that will enhance the commercial portfolio and growth trajectory over the next few years, according to the companies.
 
Endo also reports that AMS is well-positioned for a continued increase in procedure volumes and a steady increase in the use of minimally invasive surgical procedures.
 
This anticipated revenue and earnings growth, combined with strong margins and solid free cash flow generation, make AMS "a compelling strategic fit for Endo," Holveck says.
 
AMS has an experienced management team, who average between 15 and 20 years in the medical device industry, according to Endo, which says the new company complements existing platforms in several areas, with strong manufacturing capabilities to support its existing portfolio and growth profile and a highly regarded sales force with an excellent reputation in the urology space.
 
Endo is a specialty healthcare solutions company, focused on high-value branded products and specialty generics, while AMS is known for providing medical devices and therapies that help restore pelvic health, and Endo says it is recognized as "a technology leader for developing minimally invasive and more cost effective solutions, serving urologists, urogynecologists and gynecologists." AMS has three business segments: men's health, women's health and benign prostatic hyperplasia therapy, with approximately 73 percent of its sales in the U.S. and the remainder coming from its international presence in Europe, Canada and the Asia Pacific and Latin America regions.
 
In addition to AMS, Endo's wholly owned subsidiaries include HealthTronics Inc. and Qualitest Pharmaceuticals.
 
 
Code: E06221101

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