On the 6th of January 2025, Stryker (NYSE: SYK) announced its acquisition of Inari Medical, Inc. (NASDAQ: NARI). The deal will see Stryker buy out the outstanding shares of the target at a purchase price of $80 per share, valuing the entire stake at $4.9bn. Under the terms of the agreement, a tender offer was made for Inari’s shares, which the board of directors of both companies unanimously approved. If the deal passes antitrust regulations and other customary conditions, Stryker will commence in a second step merger to purchase any remaining shares not tendered in the first offer at the same price. Following the announcement of the transaction, Inari’s shares jumped 30% during regular trading hours and a further 21% in extended trading hours. The deal is expected to close by the end of the first quarter of FY 2025.
Stryker, a global leader in medical technologies, aims to leverage Inari Medical’s expertise in the venous thromboembolism (VTE) market to expand their own product offerings. Founded in 2011, Inari specializes in peripheral vascular diseases, but especially in treating VTE (where blood clots form in veins among other vascular diseases). The company offers mechanical thrombectomy solutions without thrombolytic drugs. Stryker CEO, Kevin Lobo, has stated that Inari is highly complementary to Stryker’s Neurovascular business and will “accelerate Stryker’s impact in endovascular procedures". From Inari’s perspective, the collaboration will position the company to continue global expansion and accelerate development of new solutions. Inari will bring a leading peripheral vascular position in the VTE fast growing market for Stryker. Ultimately, this deal falls in line with Stryker’s planned “active deal pipeline” for the next year, where the firm will focus on acquiring smaller high growth assets.
This deal comes amid a surge in demand for medical implant devices as operations deferred by the pandemic for elderly adults in US are now commencing. Elderly patients are more likely to develop VTE due to age related factors such as reduced mobility and changing blood composition. The global demographic trend of an ageing population acts as the primary driver for the VTE market, projected to grow at a CAGR of roughly 4% from 2024-2034. Medical device companies, such as Inari Medical, expend on research and development activities to create innovative solutions and treatments. These include oral anticoagulants, injectable thrombolytics, and mechanical thrombectomy devices. Products like such drive market growth and offer improved treatments for patients globally.
Inari Medical’s revenue numbers have been and are expected to grow aggressively for the next few years. The previous forecasting period saw turnover increase by 21% year-on-year while experiencing an operating loss of $13.6mn. It is projected that Inari will generate $603mn in annual sales for 2024, representing a 22% increase from 2023’s figure. The firm’s high growth and negative earnings are illustrative of a company in their growth phase. Interestingly however, based on the projected FY 2024 revenue figures, Inari Medical is being valued at a lower revenue multiple than that of the industry average. Margin pressures due to negative earnings could be suppressing valuations, but Inari Medical has stated they expect to break even for Q4 of FY 2024 due to robust demand for medical devices.
Ultimately, this deal not only positions Stryker for enhanced growth but also highlights the broader industry trend of targeting innovative, high-growth assets in response to shifting demographics and rising healthcare demands. As both companies work toward finalizing the transaction, the partnership is set to deliver value through expanded global reach and cutting-edge solutions in vascular health.
Written by: Ethan Lok
Sources: MergerLinks, Reuters, Stryker, NASDAQ, Future Market Insights
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