Bioventus (Nasdaq:BVS) amended the agreement for its pending acquisition of CartiHeal to defer a large chunk of payments.
Durham, North Carolina-based Bioventus announced in April that it agreed to acquire the orthopedic implant maker in a deal worth at least $315 million.
An amendment to the acquisition agreement reduces the closing payment to $50 million in addition to the $50 million deposited into escrow last year. The remaining $215 million of the purchase price will instead be paid to CartiHeal stockholders upon the earlier achievement of certain milestones or the occurrence of certain installment payment dates.
Bioventus will defer the bulk of the acquisition payment into five tranches, beginning in 2023 and ending no later than 2027, according to a news release. Interest on each tranche of the deferred portion will accrue at an 8% annual rate until such tranche is paid.
Approximately $135 million payable to CartiHeal’s stockholders upon the achievement of $100 million in trailing 12-month sales will now be payable upon the achievement of $75 million in trailing 12-month sales, Bioventus said.
Bioventus expects the acquisition to close by the end of July 2022, with an up-front payment of approximately $108 million (a combination of the $50 million closing payment, $50 million in escrow and $8 million in transaction-related fees and expenses). The company plans to finance the payment due at closing with additional debt.
Payments for the deferred amount are anticipated to be made through Bioventus’ free cash flow and expansion of its existing credit facility.
“CartiHeal represents an important breakthrough for the treatment of osteoarthritis and osteochondral defects of the knee with significant long-term potential, and we are excited to have reached an amendment that we believe will be favorable to our stakeholders and enable us to complete the acquisition,” Bioventus CEO Ken Reali, Bioventus said in the release. “The ability to defer a significant portion of the upfront cash consideration allows us to continue investing in our near-term strategy for growth while maintaining financial flexibility. Bioventus possesses multiple short- and mid-term growth drivers that are further enhanced by CartiHeal, and we continue to work towards realizing the potential of our portfolio to deliver sustained double-digit growth and margin expansion.”