Summary: Getinge completed the acquisition of Paragonix Technologies for $477 million to expand its organ transport solutions and leverage Paragonix’s growth in the US market. The acquisition is expected to initially impact earnings negatively but become accretive by 2028.

Key Takeaways:

  • Paragonix Technologies has seen significant growth in organ preservation products, with potential for global expansion through Getinge’s infrastructure.
  • The acquisition reflects a strategic move to capitalize on the shift towards advanced organ transport technologies in the growing transplant market.

Getinge announced that it had entered into an agreement to acquire Paragonix Technologies, a provider of organ transport products and services, for a total purchase price estimated at $477 million, including upfront and currently estimated earn-outs.

Transaction Completion and Payment Details

All conditions have now been fulfilled, and the transaction was completed. Getinge paid approximately $253 million in cash upon completion of the acquisition, on a cash and debt-free basis. The earn-out payments are expected to be paid between 2024 and 2026 if agreed upon regulatory and financial performance milestones are achieved and may exceed $224 million in aggregate.

The initial payout related to the acquisition has been financed through a bridge loan provided by SEB. The acquisition is expected to have a slightly negative impact on Getinge’s adjusted earnings per share in 2024. Getinge anticipates a positive contribution to adjusted earnings per share starting in 2028.

Market Growth and Technological Shift

Growth in the transplant market is expected to be driven by a volume increase due to demand and the transition from traditional methods (such as ice storage) towards new technologies as the average cost of transplant cases increases. The heart and lung segments have already experienced this trend, and similar development is expected for the abdominal segment.

Paragonix Technologies’ organ preservation devices and services have seen growth, with 136% growth in 2023. The company’s products for heart and lung preservation are designed to reduce severe complications by over 50% and reduce 2-year mortality by 43% compared to traditional methods. Paragonix also recently launched offerings targeting the abdominal segment and has a pipeline of additional products, along with a portfolio of digital solutions and services.

Nearly all of Paragonix Technologies’ sales are in the US, and Getinge believes there is untapped global potential. Getinge and Paragonix aim to capture global demand growth together, supported by Getinge’s global commercial infrastructure.