Why Boston Scientific Is Buying Preventice Solutions For $925 Million

By Annie Baker ● Jan 22, 2021
  • Boston Scientific (NYSE: BSX) recently announced that it entered into a definitive agreement to buy Preventice Solutions for $925 million. These are the details.

Boston Scientific (NYSE: BSX) recently announced that it entered into a definitive agreement to buy Preventice Solutions, a privately-held company that offers a full portfolio of mobile cardiac health solutions and services, ranging from ambulatory cardiac monitors — including short and long-term Holter monitors — to cardiac event monitors and mobile cardiac telemetry. The deal consists of an upfront cash payment of $925 million and up to an additional $300 million in a potential commercial milestone payment.

Boston Scientific has been an investor in Preventice since 2015 and it currently holds an equity stake of approximately 22% — which is expected to result in a net payment of approximately $720 million upon closing and a milestone payment of up to approximately $230 million. Preventice recorded net sales of $158 million last year, a 30% growth rate from the previous year.

Cardiovascular disease is known as the leading cause of mortality globally, accounting for nearly 17.9 million annual global deaths and highlighting the need for early detection and management for individuals who may be at risk of a cardiac event.

And physicians may ask at-risk patients to wear an external cardiac monitor to assess how their heart is functioning — which may lead to the diagnosis of a potential heart rhythm problem known as an arrhythmia. And the recordings taken by the monitor can then help physicians develop an optimal and personalized treatment plan.

The Preventice product portfolio includes the BodyGuardian family of remote, wearable cardiac monitors for adult and pediatric patients. And the monitors use a fully-integrated cloud-based platform supported by an independent diagnostic testing facility, where clinical technicians and artificial intelligence (AI) algorithms provide insights that may lead to improved clinical diagnoses and outcomes. And Preventice’s integration of AI and human expertise is designed to enhance physician efficiency and experience.

The newest remote monitoring system within the Preventice BodyGuardian family, the BodyGuardian MINI PLUS has multiple electrode options intended to enhance rhythm detection is waterproof, repositionable, and can be used in all modalities of short and long-term monitoring, as determined necessary by physicians. And these remote monitoring systems are combined with BeatLogic deep learning algorithms – a type of AI – that detect, classify and interpret variations in heart rhythm data with high beat detection sensitivity and positive predictive value.

The acquisition is expected to close by mid-2021, subject to customary closing conditions. On a GAAP basis, the transaction is expected to be less accretive (or dilutive as the case may be) due to amortization expense and acquisition-related net charges except for a one-time gain on the company’s previously held equity investment in Preventice to be recorded at the closing of the transaction.

KEY QUOTES:

“This acquisition will provide Boston Scientific with a foothold in the high-growth ambulatory electrocardiography space, which strongly complements our recent entrance into the implantable cardiac monitor market and will serve as an important component of our category leadership strategy in cardiac diagnostics and services – a nearly $2B market anticipated to grow double digits annually. We are confident that by adding the broad technology portfolio and expertise of Preventice, our combined teams can continue to deliver rapid growth in these highly-attractive markets while also establishing an important adjacency to our core cardiac rhythm management and electrophysiology businesses.”

— Scott Olson, senior vice president and president, Rhythm Management, Boston Scientific

“We have been humbled to provide thousands of physician practices with services based on near real-time clinical data to enable the diagnosis and management of more than one million cardiac patients, without needing to interrupt their daily activities. Boston Scientific has been a key investor in Preventice for more than five years and we believe the company has the commercial reach, diagnostics expertise and operational infrastructure to bring these advanced monitoring technologies to more patients worldwide.”

— Jon Otterstatter, chief executive officer of Preventice Solutions