Bioventus Sheds Wound Business to LifeNet

Bioventus is shedding its wound business to LifeNet Health for about $85 million. The deal is expected to close one week before the end of May.

The divestiture comes after months of trying to find funding sources to acquire CartiHeal, a developer of implants for the treatment of cartilage and osteochondral defects in arthritic and non-arthritic knee-joints.

News of the proposed divestiture sent Bioventus shares up 10%.

The deal includes the skin substitutes TheraSkin and TheraGenesis, to LifeNet Health. The transaction includes a total cash consideration of $85 million, including $35 million in cash at close, a $5 million cash payment deferred 18 months, and $45 million in potential earn-out payments. At the time of close, the company said it expects to net about $30 million after fees and expenses which will be used to repay existing debt.

Bioventus and LifeNet Health have also signed a Sales Agent Agreement under which LifeNet Health will have exclusive rights to sell SonicOne ultrasonic wound debridement products in the US and Canada.
“The sale of our Wound business will enhance our liquidity and enable a greater focus on execution,” said Tony Bihl, Bioventus’ interim CEO.

Bioventus spent a good part of 2022 seeking to acquire CartiHeal for $315 million with an additional $135 million payable contingent upon the achievement of $100 million in trailing 12-month sales. (Editor’s note: It could be argued M&A plans were officially kicked off in 2021, when Bioventus elected to make a $50 million escrow payment to CartiHeal – signaling its intent to move forward with the deal.)

Just a month removed from announcing it would acquire the Kfar Saba, Israel-based company, the firm nixed a $15 million sale of senior notes meant to fund the deal, citing market conditions.  Bioventus would then amend the structure of the deal.

Near the end of February, the company would back out of the acquisition and enter into a settlement agreement with CartiHeal after it could not find an alternative source to fund the deal.