Apollo Endosurgery acquired by Boston Scientific: fairness opinion by Piper Sandler
Deal terms
Implied value per share by method vs. $10.00 offer
Ranges as disclosed in the banker’s summary of analyses; the red line marks the per-share consideration.
Opinion of Piper Sandler to the target board
Discounted cash flow assumptions
Range based on the mean and median; terminal value at December 31, 2032 discounted back to September 30, 2022
Selected public companies (16)
AirSculpt Technologies, Inc. · Alphatec Holdings, Inc. · AtriCure, Inc. · Axonics, Inc. · Butterfly Network, Inc. · Establishment Labs Holdings Inc. · Inari Medical, Inc. · iRhythm Technologies, Inc. · Neuronetics, Inc. · OrthoPediatrics Corp. · Paragon 28, Inc. · SI-BONE, Inc. · Sight Sciences, Inc. · Silk Road Medical, Inc. · TELA Bio, Inc. · Treace Medical Concepts, Inc.
| Multiple | Peer low | Peer median | Peer high | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / LTM Revenue | 1.8x | 7.5x | 16.1x | 7.5x–7.7x | $8.86–$9.09 |
| EV / 2022E Revenue | 1.7x | 7.1x | 15.2x | 7.1x–7.3x | $8.91–$9.13 |
| EV / 2023E Revenue | 1.4x | 6.0x | 12.0x | 5.9x–6.0x | $9.37–$9.47 |
| EV / LTM Gross Profit | 2.6x | 11.0x | 22.1x | 10.6x–11.0x | $7.17–$7.40 |
| EV / 2022E Gross Profit | 2.5x | 10.4x | 20.9x | 9.9x–10.4x | $7.15–$7.50 |
Selected precedent transactions (24)
| Date | Target | Acquirer | Multiple |
|---|---|---|---|
| 2021-10-06 | Baylis Medical Company Inc. | Boston Scientific Corporation | — |
| 2021-09-23 | BK Medical Systems | GE Healthcare Inc. | — |
| 2021-09-13 | Itamar Medical Ltd. | Zoll Medical Corporation | — |
| 2021-08-24 | Fotona Holdings (Netherlands) B.V. | Vitruvian Partners LLP | — |
| 2021-08-06 | Intersect ENT, Inc. | Medtronic public limited company | — |
| 2021-01-21 | Preventice Solutions, Inc. | Boston Scientific Corporation | — |
| 2021-01-19 | Bardy Diagnostics, Inc. | Hill-Rom Holdings, Inc. | — |
| 2020-12-17 | Solmetex, LLC | Avista Capital Partners LP | — |
| 2020-07-15 | Medicrea Technologies SA | Medtronic public limited company | — |
| 2019-12-20 | Clinical Innovations, LLC | Laborie, Inc. | — |
| 2019-03-12 | Osiris Therapeutics, Inc. | Smith & Nephew Plc | — |
| 2018-10-18 | Medical Instrument Dev. Labs., Inc. | HOYA Medical Singapore Pte. Ltd. | — |
| 2018-10-01 | Cianna Medical, Inc. | Merit Medical Systems, Inc. | — |
| 2018-09-11 | Invuity, Inc. | Stryker Corporation | — |
| 2018-03-12 | Cogentix Medical, Inc. | Laborie, Inc. | — |
| 2017-12-07 | Entellus Medical, Inc. | Stryker Corporation | — |
| 2017-10-18 | Clinical Innovations, LLC | EQT Partners AB | — |
| 2017-06-19 | NOVADAQ Technologies Inc. | Stryker Corporation | — |
| 2017-03-30 | Symetis SA | Boston Scientific Corporation | — |
| 2017-02-13 | ZELTIQ Aesthetics, Inc. | Allergan public limited company | — |
| 2016-12-19 | Surgical Specialties Corporation | Vivo Capital, LLC | — |
| 2016-07-06 | DFINE, Inc. | Merit Medical Systems, Inc. | — |
| 2016-06-07 | LDR Holding Corporation | Zimmer Biomet Holdings, Inc. | — |
| 2016-01-05 | Ellipse Technologies, Inc. | NuVasive, Inc. | — |
| Multiple | Low | Median | High | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / LTM Revenue | 2.9x | 6.8x | 12.5x | 6.8x–7.1x | $8.09–$8.41 |
| EV / FTM Revenue | 2.4x | 5.6x | 9.8x | 5.5x–5.6x | $8.33–$8.41 |
| EV / LTM Gross Profit | 3.9x | 9.9x | 20.4x | 9.9x–10.6x | $6.75–$7.16 |
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| Historical Trading Analysis (informational only) | Reviewed historical intraday prices and trading volumes over the 52-week and 26-week periods ended November 25, 2022; low/high closing prices of $3.49-$9.11 (52-week) and $3.49-$7.27 (26-week), vs. $10.00 Merger Consideration. | $3.49–$9.11 |
| Premiums Paid Analysis (informational only) | Reviewed 48 med tech M&A transactions and 286 healthcare M&A transactions announced since January 1, 2015 with EV > $50 million. One-week-prior premiums for Med Tech Transactions: max 88%, 75th pct 48%, mean 34%, median 29%, 25th pct 18%, min 2%; Healthcare Transactions: max 1622%, 75th pct 77%, mean 64%, median 39%, 25th pct 21%, min (30)%. Implied premium of the Merger Consideration was 68% based on the price one week prior. | — |
Total fee currently estimated at approximately $12.15 million, contingent upon consummation of the Merger, except for $1.0 million payable for rendering the fairness opinion, which is creditable against the total fee and was not contingent on closing or conclusions reached. Piper Sandler received approximately $1.34 million as joint bookrunner in Apollo's October 2021 follow-on offering; no revenue from Boston Scientific in prior two years.
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | Year 4 | Year 5 | CAGR |
|---|---|---|---|---|---|---|
| Revenue | $130M | $170M | $211M | $256M | $304M | 23.7% |
| Revenue growth | 34.0% | 30.8% | 24.1% | 21.3% | 18.8% | |
| EBITDA | $-8.0M | $10.0M | $27.0M | $43.0M | $62.0M | — |
| EBITDA growth | — | — | 170.0% | 59.3% | 44.2% | |
| EBITDA margin | -6% | 6% | 13% | 17% | 20% | |
| Implied EV / EBITDA | — | 61.5x | 22.8x | 14.3x | 9.9x |
Year-1 growth is against LTM at announcement ($97.0M revenue, $-19.0M EBITDA); later years are year over year.
Apollo management prepared a Near-Term Forecast (FY2022-2025) in October 2022 and, on November 7, 2022, supplemented it with an Out-Year Forecast (FY2026-2032), together the "Financial Projections," approved by the Board for Piper Sandler's use. Revenue grows from $21 million in Q4 2022 and $97 million in 2023E to $449 million in 2032E; Adjusted EBITDA moves from $(5) million in Q4 2022 and $(19) million in 2023E to $111 million in 2032E; unlevered free cash flow from $(9) million in Q4 2022 to $63 million in 2032E. Key assumptions included a flat 25% tax rate, global margin expansion, capex peaking in 2026-2027, no additional equity financing, and cash flow effects (but not revenue/profit) from a contemplated strategic partnership.
Process notes
Other Medical Devices and Supplies fairness opinions
- SeaSpine Holdings / Orthofix Medical 2022
- Abiomed / Johnson & Johnson 2022 · 55.9x EV/EBITDA
- Intersect ENT / Medtronic 2022
- Intricon / Altaris 2022 · 16.8x EV/EBITDA
- NuVasive / Globus Medical 2023 · 10.6x EV/EBITDA
- Cardiovascular Systems / Abbott 2023
All Medical Devices and Supplies opinions → · Piper Sandler opinions