Integra Buys Bankrupt Rival

Yesterday, Integra LifeSciences Holdings Corp. (IART - Snapshot Report) announced that it purchased almost all the assets of implant maker Innovative Spinal Technologies Inc. through a court approved auction for $9.25 million in cash. 

The acquired company, which dealt with spinal implant products focused on minimally invasive surgery (MIS) and motion preservation techniques, filed for Chapter 7 bankruptcy protection in May 2009. Innovative Spinal Technologies, which generated approximately $2.2 million revenues in 2008, stopped operations in January this year. 

The transaction, which is expected to be neutral to Integra's earnings in 2010, significantly expands its portfolio. The acquisition, apart from adding a minimally invasive spinal implant system to the product portfolio, significantly broadens its pipeline.
 
The Paramount MIS/Open minimally invasive lumbar fusion system, acquired through this transaction, is expected to be launched by Integra in the first quarter of 2010. The Paramount system is designed to allow surgeons to fuse vertebrae in the lower part of the spine while making small surgical incisions. 

Integra LifeSciences is a global leader in regenerative medicine that focuses, through its wide portfolio of products, on improving the lives of patients. However, the company faces tough competition across its different segments. In neurosurgery, its main competitors are Medtronic (MDT - Analyst Report), Johnson & Johnson (JNJ - Analyst Report), and B. Braun. In the reconstructive surgery segment, Integra competes with Wright Medical (WMGI - Analyst Report). The orthopedic segment witnesses competition from Johnson & Johnson, Wright Medical, and Stryker Corp. (SYK - Analyst Report). 

Acquisitions have been a major growth strategy for the company. Through product expansion and acquisitions, Integra's consolidated revenues increased from $42.9 million in 1999 to $654.6 million in 2008, at a compounded annual growth rate of 35.4%. The company's broadened product portfolio includes more than 15,000 products. However, acquired products cater to competitive niches. As a result, integration risk is a concern for the company. At times, these acquisitions have an adverse impact on the bottom-line due to numerous one-time expenses. 

The latest acquisition did not have a significant impact on Integra's price. The company closed Monday at $35.24, up 20 cents.

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