AngioDynamics Inc. will double its vascular access market presence and gain a foothold in the cardiology space by acquiring Navilyst Medical Inc. for $372 million in a deal announced Jan. 31.

AngioDynamics and Navilyst, and to a lesser extent TeleFlex Medical, have been vying neck-and-neck to occupy the number two position in the global vascular access market behind market leader Bard, which is much larger, but this deal establishes AngioDynamics/Navilyst as the clear number two competitor, a company spokesperson told “The Gray Sheet.”

Privately held Navilyst provides vascular access products such as peripherally inserted central catheters (PICCs) and chronic dialysis catheters, allowing access to the blood stream of patients needing chemotherapy, intravenous antibiotics, nutrition, blood sampling or other therapy. The firm also makes fluid management products, such as closed fluid systems and contrast management systems for angiography and angioplasty procedures.

“This is a broad portfolio of respected brands [that] enhances our competitive position and creates a clear number two vascular access franchise with very competitive product lines when compared to the market leader,” said AngioDynamics CEO Joseph M. DeVivo during a Jan. 31 conference call with analysts.

In addition, Navilyst’s Namic fluid management brand, comprising various catheters, syringes, pressure monitoring lines and guidewire insertion tools, provides “a foothold in the cardiology market, creating opportunities to drive peripheral vascular product sales and better serve these clinicians and their institutions,” the company said.

AngioDymamics believes that Namic’s “dominant market position” in fluid management in the cath lab will help the firm “round out and build into the future a strong peripheral vascular channel that will call on the cath lab, will call on the vascular surgeons and radiologists.”

The deal “creates a clear number two vascular access franchise with very competitive product lines when compared to the market leader [Bard]” –

AngioDynamics CEO Joseph M. DeVivo

Headquartered in Marlborough, Mass., Navilyst generated roughly flat sales of $149 million in 2011. Fluid management products represented 61% of sales while vascular devices accounted for the remaining 39%. Meanwhile, AngioDynamics had roughly flat corporate revenue of $216 million in the fiscal year ended May 31, 2011, with vascular products representing 69% of sales. The firm expects the Navilyst transaction to be accretive to net sales growth, and is forecasting pro forma sales of $360 million in fiscal 2013.

Complementary Strengths, Assets

AngioDynamics’ vascular products unit, which focuses on the peripheral vasculature, offers its own line of angiographic catheters, angioplasty balloon catheters, dialysis catheters and PICCs. But the firm stresses that the Navilyst deal would greatly enhance the scale of those offerings while also filling some gaps. Within the category of vascular access ports, for instance, AngioDynamics offers titanium varieties, but not plastic or valved catheter ports, while Navilyst does.

“The combined company will offer a more compelling portfolio of products,” DeVivo explained. “I view [it] as a foundational deal where we are investing in the core of the business to become a better company.”

Navilyst’s product line also includes its Pressure Activated Safety Valve (PASV), designed to permit fluid infusion and reduce the risk of blood reflux into the catheter during increases in central venous pressure that occur with exercise or involuntary responses such as coughing, according to Navilyst. “Valve catheters are an important part of the vascular access market … so this is a very important technology,” DeVivo said. Down the road, AngioDynamics aims to integrate PASV with its Vortex port for blood sampling and diagnostic applications, the firm noted.

AngioDynamics also is highlighting Navilyst’s BioFlo, a non-stick polymer designed to minimize the accumulation of thrombus for PICCs, ports and dialysis catheters, as an important addition. BioFlo is approved for use in Canada and Europe and a 510(k) submission is pending at FDA.

Navilyst’s microcatheters also could augment AngioDynamics’ growing radiofrequency ablation products within its oncology/surgery business, such as its NanoKnife soft tissue surgical ablation system, according to the company.

Deal Includes Cash, Stock

Under the terms of the definitive acquisition agreement, AngioDynamics will pay 63% of the purchase price in cash ($238 million) and the remaining 37% in stock. The resulting issuance of 9.5 million shares of AngioDynamics stock will give private equity firm Avista Capital Partners, former owner of Navilyst, a 27% stake in the combined company.

Avista, which acquired the business from Boston Scientific in 2007, also will gain two seats on AngioDynamics’ board of directors. (See Also see "Boston Scientific Sells Fluid Management, Venous Access Units" - Medtech Insight, 17 December, 2007..)

AngioDynamics calls the Navilyst purchase price a “very fair valuation,” particularly since acquired tax assets reduce the “effective purchase price” by approximately $80 million, to $292 million. That’s “less than two-times revenue,” noted AngioDynamics Exec-VP and Chief Financial Officer D. Joseph Gersuk.

AngioDynamics also notes that it expects to generate net cost savings of $5 million-$7 million in fiscal 2013 under the deal, which is set to close by May 31.

“AngioDynamics has core competencies in our catheter assembly, electromechanical assembly and extrusion, where Navilyst has a very powerful vertically integrated injection molding core competency, which will help us rationalize our vendor base and also be able to improve on our cost,” DeVivo said.

“We do think that when we put the two businesses together, we’ll begin to start to drive some improvements in the gross margin by virtue of the sourcing parts and component parts to each other’s facilities,” Gersuk said. Navilyst’s manufacturing facility, in Glenn Falls, N.Y., is only four miles from AngioDynamics’ Queensbury facility.

AngioDynamics Doubles Vascular Access Biz With Navilyst Acquisition

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