Bacterin to Purchase the Outstanding Common Stock of X-spine Systems, Inc., Creating Xtant Medical (press release)
Bacterin website X-Spine website see all M&A in Orthopedics
Bacterin to Acquire X-spine Systems for $86M
Bacterin International entered into an definitive agreement to acquire X-spine Systems, Inc., a manufacturer for surgical spinal procedure devices, for an approximate enterprise value of $85.9 million, or 2.0x 2014 revenues of $42.2 million, or 11.7x 2014 EBITDA of $7.3 million.
Under the terms of the agreement, the total consideration Bacterin will pay for the outstanding capital stock of X-spine is comprised of $60 million in cash and the issuance of 4.24 million shares of Bacterin common stock at an issue price of $4.00 a share. Additionally, concurrent with the deal’s closing, the combined company will change its name to Xtant Medical Holdings.
The transaction positions Xtant as a comprehensive supplier for spine surgery procedures that offers both hardware and biologics with pro forma revenues and EBITDA for 2014 of approximately $77.5 million and $3.9 million respectively. X-spine offers numerous products for the treatment of spinal disease, with an emphasis on less-invasive treatments for the degenerative spine. X-spine’s implants and instrumentation are highly complementary to Bacterin’s orthobiologics portfolio, and expands Bacterin’s breadth of product offerings and distribution capabilities, and strengthens the company’s overall customer relationships.
The deal will be funded by an amended and restated $42 million senior secured debt facility with OrbiMed at an annual interest rate of 14% plus LIBOR (minimum 1%) and $65 million in convertible senior notes with a maturity July 2021.
PRESS RELEASE
Combines Bacterin’s strength in orthobiologics with X-spine’s expertise in hardware offering complementary product lines focused on orthopedic and spine surgical procedures.
- Pro forma revenue and EBITDA for the combined company for the 12 months ended December 31, 2014 was approximately $77.5 million and $3.9 million, respectively.
- Strategic combination to offer complementary product lines to more comprehensively serve customers for a wide range of orthopedic and spine surgical procedures.
- Expands distribution footprint to over 300 field sales representatives, and over 50 national accounts and regional health system/IDN contracts.
- Bacterin International Holdings, Inc. to be renamed Xtant Medical Holdings, Inc.
- A management call will be held tomorrow morning at 8:00 AM ET.
Bacterin International Holdings, Inc. (OTCQX: BONE), a leader in the development of revolutionary bone graft material, announced today that it intends to purchase the outstanding shares of privately held X-spine Systems, Inc., a global medical device manufacturer of leading products for spinal surgery, headquartered in Miamisburg, Ohio, in exchange for approximately 4.24 million shares of Bacterin common stock and approximately $60 million in cash, subject to customary working capital adjustments, and including the extinguishment of approximately $13 million of X-spine debt. The transaction will position the combined company as a comprehensive supplier for spine surgery procedures that offers both hardware and biologics through a more substantial national distribution footprint.
“This transaction joins two strong and growing organizations and reinforces the strategic initiatives outlined earlier this year to expand our product offerings, strengthen customer relationships and expand our distribution capabilities. We are excited to leverage further our combined operating platform and exceptional talent to drive, significant and ongoing value for our stockholders. With the addition of X-spine, we will have a stronger financial profile with over $80 million of revenue and positive EBITDA,” said Dan Goldberger, Bacterin’s CEO.
X-spine has numerous products for the treatment of spinal disease, with an emphasis on less-invasive treatments for the degenerative spine, X-spine’s state-of-the art spinal implants and instrumentation are highly complementary to Bacterin’s leading orthobiologics portfolio. The great majority of spinal procedures using X-spine’s product portfolio could use an orthobiologic that Bacterin currently offers.
“We look forward to broadening our success through a combination with Bacterin and accessing their outstanding portfolio of regenerative medicine products. This transaction will increase the scope of our organization with a new, diversified portfolio of products focused on the orthopedic and spine markets. Furthermore, we will be able to offer those diversified products to our established customer base, representing an accessible revenue growth opportunity for the combined business. I look forward to working with Dan and his team to open the next chapter of our mutual success,” said Dr. David Kirschman, X-spine Systems’ president and CEO.
Transaction Details
The transaction will be funded by an amended and restated $42 million senior secured debt facility with OrbiMed and $65 million of convertible senior notes.
William Blair & Company, L.L.C. served as financial advisor to Bacterin in conjunction with the transaction.
New Company Name and Additions to Management Team
Concurrent with the closing, Bacterin International Holdings, Inc. will change its name to Xtant Medical Holdings, Inc. Dr. David Kirschman, currently X-spine CEO, will join the management team and serve as Executive Vice President and Chief Scientific Officer of Xtant Medical Holdings, Inc. He will also be President of X-spine Systems, the hardware subsidiary. Dr. Kirschman will also be appointed to the Xtant Medical Holdings, Inc. Board of Directors.
Conference Call Details
Bacterin will host a conference call to discuss the transaction on Tuesday, July 28, 2015 at 8:00AM ET. Management will reference a presentation, which will be available in the investor section of Bacterin’s website and on the website of the Securities and Exchange Commission, at www.sec.gov.
Conference date:July 28, 2015, 8:00 AM ET
Conference dial-in:877-269-7756
International dial-in:201-689-7817
Conference Call Name:Bacterin’s Management Update Call
Webcast Registration: CLICK HERE
About Bacterin International Holdings, Inc.
Bacterin International Holdings, Inc. (OTCQX:BONE) develops, manufactures and markets biologics products to domestic and international markets. Bacterin’s proprietary methods optimize the growth factors in human allografts to promote bone growth, subchondral repair and dermal growth. These products are used in a variety of applications including enhancing fusion in spine surgery, relief of back pain, promotion of bone growth in foot and ankle surgery, promotion of cranial healing following neurosurgery and subchondral repair in knee and other joint surgeries. For further information, please visit www.bacterin.com.
About X-spine Systems Inc.
X-spine is a medical device manufacturer that provides class-leading products for the treatment of spinal disease. With an emphasis on less-invasive treatments for the degenerative spine, X-spine offers state-of-the art spinal implants and instrumentation to an expanding global market. For more information, please visit www.x-spine.com.