Alphatec is pulling out of its agreement to acquire EOS Imaging because of negative impacts on the market caused by the novel coronavirus [COVID-19].
Carlsbad, CA-based Alphatec said based upon its assessment, it concluded that a “material adverse effect” has occurred, resulting in circumstances that are no longer conducive to the completion of the transaction described in the terms of agreement. Instead, Alphatec said the door is open for the two companies to collaborate.
The surgical spine specialist announced in late February that it would pick up EOS Imaging for $88 million, plus debt retirement for $33.9 million, in a combination of cash and equity.
Paris-based EOS Imaging develops low dose 2D/3D full body and weight-bearing imaging, rapid 3D modeling of EOS patient X-ray images, web-based patient-specific surgical planning, and integration of the surgical plan into the operating room.
“This has been a difficult, disappointing decision,” Pat Miles, Alphatec’s chairman and CEO said in a release. “Both companies have worked so hard and so cooperatively, over many months, to bring this transaction together. While the acquisition is no longer feasible as contemplated, I continue to believe that Alphatec’s and EOS’s interests are best served through a strategic collaboration. I have shared my belief with EOS leadership, and look forward to the opportunity to continue to explore ways that our companies can work together to bring informed operative experiences to spine.”
In a release from EOS, the company said it “disagrees with Alphatec’s analysis and considers that while COVID-19 pandemic has a short-term impact on EOS, in line with our industry, this crisis does not impact the long-term perspective of the company.
The board of EOS said it is currently assessing all available options.
Alphatec isn’t the only company that has terminated a merger during the pandemic. Organovo, terminated its merger agreement with Tarveda Pharmaceuticals earlier this month.
Elective surgeries have been hurt significantly by COVID-19. Billerica, MA-based Conformis had to furlough nearly one-third of its workers due to a decline in procedures. However, the company was recently able to bring back the furloughed workers thanks to a $4.7 million loan it received form the Paycheck Protection Program. Even larger medtech companies like Medtronic aren’t immune to negative impacts on business. The Dublin-based company said its U.S. weekly revenue has declined about 60% year-over-year on average, excluding any impact from customer bulk purchases.
Some companies have had to rethink their strategy altogether. Obalon, a developer of devices aimed at treating obesity, recently announced it was mulling over strategic options because of negative effects on its business because of COVID-19.
The San Diego, CA-based company said these options could include equity or debt financing; a sale of the company; a business combination; or a merger or a reverse merger with another party.