Entellus Medical acquired by StrykerCorp.: fairness opinion by Piper Sandler
Deal terms
Implied value per share by method vs. $24.00 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
Selected public companies (5)
Intersect ENT, Inc. · Invuity, Inc. · MiMedx Group, Inc. · Penumbra, Inc. · Tactile Systems Technology, Inc.
| Multiple | Peer low | Peer median | Peer high | Range applied | Implied per share |
|---|---|---|---|---|---|
| EV / projected 2017 revenue | 3.4x | 4.5x | 10.3x | — | $14.73–$20.71 |
| EV / projected 2018 revenue | 2.6x | 3.7x | 8.8x | — | $15.43–$21.62 |
| EV / projected 2019 revenue | 2.0x | 3.1x | 7.5x | — | $16.31–$22.48 |
| EV / projected 2017 gross profit | 4.9x | 6.1x | 16.0x | — | $14.85–$20.58 |
| EV / projected 2018 gross profit | 3.8x | 5.1x | 13.4x | — | $15.72–$21.62 |
| EV / projected 2019 gross profit | 3.0x | 4.2x | 11.3x | — | $16.47–$22.52 |
Other analyses
| Analysis | Summary | Implied per share |
|---|---|---|
| Historical Trading Analysis | Reviewed historical closing prices and trading volumes for Entellus common stock over the 1-year period ended December 5, 2017: closing price on December 5, 2017 of $16.26; 1 week prior (November 28, 2017) $15.99; 4 weeks prior (November 7, 2017) $16.15; 120 trading day VWAP $17.09; 1-year VWAP $15.61; 1-year intraday high $20.34 and low $11.47; 1-year closing high $20.30 and low $12.04, versus Merger Consideration of $24.00. | $11.47–$20.34 |
| Selected Business Combination Transactions (review) | Piper Jaffray reviewed the financial terms, to the extent publicly available, of certain business combination transactions it deemed relevant; no specific transactions or multiples are set forth in the excerpted section. | — |
Fee amounts not disclosed in the provided sections; the Board approved an amendment to the Piper Jaffray engagement letter on November 29, 2017 extending its term.
Management projections
| Projection year | Year 1 | Year 2 | Year 3 | Year 4 | CAGR |
|---|---|---|---|---|---|
| Revenue | $151M | $182M | $211M | $243M | 17.2% |
| Revenue growth | 24.8% | 20.5% | 15.9% | 15.2% | |
| EBITDA | $9.0M | $19.0M | $34.0M | $49.0M | 75.9% |
| EBITDA growth | — | 111.1% | 78.9% | 44.1% | |
| EBITDA margin | 6% | 10% | 16% | 20% | |
| Implied EV / EBITDA | 77.4x | 36.7x | 20.5x | 14.2x |
Year-1 growth is against LTM at announcement ($121M revenue, $-6.0M EBITDA); later years are year over year.
Entellus management prepared several sets of unaudited forecasts: Base Case Forecasts, Updated Base Case Forecasts, Final Base Case Forecasts and Resourced Case Forecasts (the latter provided to the Board on December 6, 2017). The Board concluded the Resourced Case Forecasts rested on assumptions unlikely to be realized (no product development delays, significant global reimbursement improvement, improved sales-force effectiveness, greater balloon-based adoption) and instructed Piper Jaffray not to use them; Piper Jaffray used the Final Base Case Forecasts, including projected 2017-2019 revenue and gross profit, for its forward-looking analyses. Forecast metrics included non-GAAP Adjusted EBITDA, EBIT and Free Cash Flow, with pro forma amounts related to the Spirox, Inc. acquisition; specific dollar figures were not included in the excerpted section.
Process notes
Other Medical Devices and Supplies fairness opinions
- NxStage Medical / Fresenius Medical Care AG & Co. KGaA 2017 · 29.7x EV/EBITDA
- Exactech / TPG 2017 · 15.0x EV/EBITDA
- Spectranetics / Philips 2017
- Miramar Labs / Sientra 2017
- ZELTIQ Aesthetics / Allergan 2017 · 32.9x EV/EBITDA
- C. R. Bard / Becton Dickinson 2017 · 20.1x EV/EBITDA
All Medical Devices and Supplies opinions → · Piper Sandler opinions