New M&A Pits Integra Against Medtronic & Stryker in ENT Market

Integra LifeSciences has signed an agreement to acquire Acclarent from Johnson & Johnson MedTech’s Ethicon for $275 million. The deal, which is expected to close in 2Q24 also calls for an additional $5 million if certain regulatory milestones are met.

The acquisition would become part of Integra’s Codman Specialty Surgical (CSS) division.

Irvine, CA-based Acclarent is one of the largest balloon sinus dilations in the Otorhinolaryngology space, according to BTIG analysts. If the deal were to go through, then Integra would be competing against two companies that aren’t pushovers in the ENT space.

“While we believe there are cross-sell opportunities with ENT instrumentation and the rest of the CSS portfolio, areas such as navigation and shavers are also going up against companies such as Medtronic and Stryker who have very established presences in these peripheral ENT growth areas,” BTIG analyst Ryan Zimmerman wrote in a research note.

Additionally, Zimmerman wrote, “In our view, it remains to be seen whether this will be a favorable acquisition but when we assume an HSD growth contribution in mid-FY24, we see Integra's overall revenue growth accelerating by 10bps in FY25 when the transaction turns organic. We will add in Acclarant sales to our model as the transaction gets closer to completion.”

Acclarent derives its revenues from U.S. product sales, which generated about $110 million in 2022 and gross margins in line with Integra’s company average. The company maintains R&D facilities in Irvine and Haifa, Israel, and uses third-party manufacturers.

“The ENT segment is an anatomical adjacency to neurosurgery. For example, this acquisition will provide opportunities for ENT and neurosurgeons to closely collaborate on tumor care using skull base approaches,” said Mike McBreen, president of the CSS division. “Acclarent’s strong commercial capabilities, R&D expertise, advanced portfolio, and deep clinical knowledge will be important assets to Integra, allowing us to deliver future innovation not only within ENT, but also across our other CSS technology platforms.”

Johnson & Johnson first acquired Acclarent for $785 million in 2010.