Johnson & Johnson and Shockwave Medical announced that they have entered into a definitive agreement under which Johnson & Johnson will acquire all outstanding shares of Shockwave for $335 per share in cash. This corresponds to an enterprise value of approximately $13.1 billion, including the cash acquired. Both companies’ boards of directors approved this deal.
This acquisition further extends Johnson & Johnson MedTech’s position in cardiovascular intervention and accelerates a shift into higher-growth markets. The deal follows Johnson & Johnson MedTech’s successful acquisitions of Abiomed (a leader in heart recovery) and Laminar (an innovator in left atrial appendage elimination for patients with non-valvular atrial fibrillation).
Cardiovascular intervention is one of the fastest-growing global medical technology markets, with significant unmet patient needs. By adding Shockwave, Johnson & Johnson will expand its MedTech cardiovascular portfolio into two of the highest-growth, innovation-oriented segments of cardiovascular intervention – coronary artery disease (CAD) and peripheral artery disease (PAD).
These acquisitions complement Johnson & Johnson’s established global leadership position in electrophysiology through the Biosense Webster portfolio. And following the close of the transaction, Johnson & Johnson MedTech will be a category leader in four high-growth cardiovascular segments.
Shockwave is a leading first-to-market provider of innovative intravascular lithotripsy (IVL) technology for the treatment of calcified CAD and PAD. And IVL is a minimally invasive catheter-based treatment for calcified arterial lesions, which can reduce blood flow and cause pain or heart attack. IVL also helps restore blood flow by cracking calcium lesions using sonic pressure waves. It is used in CAD and PAD, often combined with stenting.
Shockwave offers the only commercially available IVL technology and has safely, simply, and effectively treated about 400,000 patients globally. Along with its leading IVL platform, Shockwave also recently acquired Neovasc, a company that has developed the Reducer System (a novel product focused on symptom relief of refractory angina). The Reducer System has a growing commercial presence and it is currently undergoing clinical studies in the U.S. and is CE marked in the European Union and the United Kingdom.
These are the benefits of the deal:
1.) IVL is the only technology that can treat intimal and medial calcification, and Shockwave offers the first and only commercially available IVL platform for CAD and PAD. This deal will complement Johnson & Johnson MedTech’s leadership positions in heart recovery (Abiomed) and electrophysiology (Biosense Webster), making it a category leader in four of the largest and highest-growth medtech markets within cardiovascular intervention.
2.) Shockwave’s IVL and Abiomed’s Impella heart pump platform are critical in complex percutaneous coronary intervention (PCI) procedures. Specifically, IVL is used in about 30% of high-risk PCI cases using Impella today. This clinical compatibility – combined with Johnson & Johnson MedTech’s established global commercial infrastructure – offers numerous opportunities to accelerate the adoption of these segment-leading technologies to patients in need.
3.) Shockwave benefits from a strong pipeline focused on continued innovation and expansion of its product portfolio in CAD and PAD. Over the coming years, IVL could potentially be used in new indications, including carotid artery disease and structural heart disease. Shockwave is also evaluating its Reducer System technology in clinical studies to treat patients with refractory angina.
4.) This acquisition accelerates Johnson & Johnson MedTech’s ongoing efforts to increase its presence in high-growth markets with unmet needs while expanding its reach and scale globally. The proposed deal adds a high-performing business in an underpenetrated category with a strong pipeline and an attractive growth and margin profile. The deal is expected to accelerate revenue growth for Johnson & Johnson and Johnson & Johnson MedTech. Shockwave will likely become Johnson & Johnson MedTech’s thirteenth priority platform, as defined by annual sales of at least $1 billion.
5.) The deal will accretive to the operating margin for Johnson & Johnson and Johnson & Johnson MedTech. And Johnson & Johnson expects the transaction to be operationally accretive upon closing, but considering the impact of financing costs, is expected to dilute adjusted earnings per share by approximately $0.10 in 2024 and roughly $0.17 in 2025.
Under the agreement, Johnson & Johnson will acquire all outstanding shares of Shockwave for $335 per share in cash through a merger of Shockwave with a wholly owned Johnson & Johnson subsidiary. Johnson & Johnson expects to fund the transaction through cash on hand and debt.
Following the transaction’s completion, Shockwave will operate as a business unit within Johnson & Johnson MedTech, and the financials will be reported within Johnson & Johnson MedTech’s Cardiovascular portfolio, previously referred to as Interventional Solutions.
Along with his current responsibilities for Abiomed as the Global Head of Heart Recovery, Michael Bodner will assume responsibility for the business upon close. Isaac Zacharias, who has 6 years with Shockwave, most recently serving as President and Chief Commercial Officer, will transition to become Worldwide President of Shockwave, reporting to Michael Bodner. And Doug Godshall, Shockwave’s President and Chief Executive Officer, will advise through the transition.
The deal is expected to close by mid-year 2024, subject to Shockwave’s shareholder approval, applicable regulatory approvals, and other customary closing conditions. Following completion of the transaction, Shockwave’s common stock will no longer be listed for trading on the Nasdaq Global Select Market.
KEY QUOTES:
“With our focus on Innovative Medicine and MedTech, Johnson & Johnson has a long history of tackling cardiovascular disease – the leading cause of death globally. The acquisition of Shockwave and its leading IVL technology provides a unique opportunity to accelerate our impact in cardiovascular intervention and drive greater value for patients, shareholders and health systems.”
– Joaquin Duato, Chairman and Chief Executive Officer of Johnson & Johnson
“Shockwave offers a truly differentiated opportunity to further enhance our leadership position in medtech, expand into additional high-growth segments, and ultimately transform the future of cardiovascular treatment. Shockwave’s IVL technology for treating CAD and PAD, and its strong pipeline, are in a class of their own. We look forward to bringing Shockwave’s solutions into Johnson & Johnson MedTech and the hands of more physicians around the world.”
– Tim Schmid, Executive Vice President and Worldwide Chairman of Johnson & Johnson MedTech
“Shockwave has transformed the treatment of complex calcified arterial disease through the pioneering development of intravascular lithotripsy, and it is our mission to make this remarkable technology available to patients worldwide. As part of a larger, more diverse organization, with broad expertise and a core focus on improving patient outcomes, we are confident we will be able to further solidify IVL as the global standard of care for patients. I am deeply grateful to our team members and colleagues whose efforts have made today’s milestone possible; their accomplishments and passion have been extraordinary. I could not think of a better partner and home than Johnson & Johnson as the Shockwave team prepares to write its next exciting chapter.”
– Doug Godshall, President and CEO of Shockwave
