CHADDS FORD, Pa., May 5 /PRNewswire-FirstCall/ --
- HealthTronics is a Leading Provider of Urologic Products and
Services
- All Cash Transaction with Purchase Price of $223 Million Plus Assumed Net Debt
- Acquisition Accretive to 2010 Adjusted Earnings Per
Share
- Diversifies Endo Revenue Stream and Product Offering in
Urology
Continuing to diversify, move into new growth areas beyond
pharmaceuticals, and strengthen its commitment to improved patient
outcomes in urology, Endo Pharmaceuticals (Nasdaq: ENDP) today
announced that it has signed an agreement to acquire HealthTronics,
Inc. (Nasdaq: HTRN), a leading U.S. provider of urological products
and services. The acquisition expands Endo's product offerings to
urologists with the addition of lithotripsy, benign prostate
hyperplasia (BPH) and prostate cancer therapies, as well as
anatomical pathology services for the detection and diagnosis of
cancer and other conditions.
"Beyond diversifying our revenue base, the acquisition of
HealthTronics further positions Endo as a preferred healthcare
provider of multiple medical solutions and delivery mechanisms that
help improve patient outcomes in the field of Urology," said
Dave Holveck, president and CEO of
Endo. "This strategic acquisition immediately elevates Endo
from a pharmaceutical company to a diversified partner to
physicians and payers in the treatment and diagnosis of urological
and pain-related conditions. This deal will also enhance our
ability to deliver long-term, sustainable growth for our
shareholders in an evolving healthcare environment."
Under the terms of the merger agreement, Endo will commence an
all cash tender offer to acquire 100 percent of the outstanding
shares of HealthTronics for approximately $223 million or $4.85 cash per HealthTronics share plus the
assumption of approximately $35
million in net debt. HealthTronics shares that are not
acquired in the tender offer will be purchased at the same price in
a second-step merger. HealthTronics will operate as a
wholly-owned subsidiary of Endo. The transaction has been
approved by the boards of directors of both companies.
HealthTronics president and CEO James
S.B. Whittenburg stated, "This transaction achieves
significant value for our shareholders and going forward, enables
us to expand our offerings as a leading provider of urological
products and services. Together with Endo, we are better
positioned to fulfill our mission of bringing services and
technology that both improve patient care and enhance physician
practice economics thus enhancing the value of the channel
HealthTronics has established with leading urologists."
The consummation of the tender offer is subject to the
satisfaction or waiver (in accordance with the terms of the merger
agreement) of certain conditions, including: (i) a minimum of the
majority of outstanding HealthTronics shares on a fully diluted
basis having been tendered into the offer, (ii) the expiration or
termination of the waiting period under the Hart Scott Rodino
Antitrust Improvements Act, (iii) the absence of any law
prohibiting the offer or the merger or any litigation or
governmental action challenging or seeking to prohibit the offer or
the merger, (iv) there not having been a material adverse change
with respect to HealthTronics, and (v) other customary conditions.
The tender offer is not subject to a financing condition.
In addition, Mr. Whittenburg and other key HealthTronics
executives have entered into employment agreements, to be effective
upon closing of the offer, providing for their continued employment
with the combined company following the transaction. Mr.
Whittenburg has been named company group president and will
continue to lead HealthTronics.
Medical Enterprises Group
In addition, Endo announced that it has acquired the exclusive
right to negotiate the acquisition of Medical Enterprises Group,
developer of the SYNERGO® system, an innovative, minimally invasive
therapy to treat non-muscle invasive bladder cancer. Endo believes
that, if consummated, its acquisition of Medical Enterprises Group
would enhance Endo's current portfolio of commercialized and
pipeline therapies in this therapeutic category. The Medical
Enterprises Group opportunity is indicative of the kind of
investment Endo intends to pursue to enhance its product offerings
in the field of urology. The SYNERGO system delivers heat
using a radiofrequency ablation catheter and, while monitoring the
temperature of the bladder, circulates a cooled chemotherapeutic
solution to the tumor site. In 2000, SYNERGO received CE
(Conformite Europeene) Mark approval and Israeli Ministry of Health
approval. It is not currently approved for use by the U.S.
Food and Drug Administration (FDA). On June 25, 2008, the FDA Gastroenterology and
Urology Devices Panel unanimously recommended FDA approval with
conditions for SYNERGO.
Financial Guidance
The Company is raising its financial guidance for 2010 annual
total revenue and adjusted diluted earnings per share, in
anticipation of the consummation of the HealthTronics transaction.
Endo now estimates revenues of between $1.63 billion and $1.68 billion dollars. As
well, the Company now estimates adjusted diluted earnings per share
to be between $3.20 - $3.25 per share
this year. The Company also now estimates reported (GAAP) diluted
earnings per share to be between $2.06 to
$2.14 per share, reflecting charges associated with the
expected consummation of the HealthTronics transaction. For
an explanation of Endo's reasons for using non-GAAP measures, see
Endo's Current Report on Form 8-K filed today with the Securities
and Exchange Commission.
Reconciliation of Projected
GAAP Diluted Earnings Per Share to Adjusted Diluted Earnings Per
Share Guidance
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Year Ending
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December 31,
2010
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Projected GAAP diluted income per common
share
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$2.06
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To
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$2.14
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Upfront and milestone-related payments to
partners
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$0.20
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$0.15
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Amortization of commercial intangible
assets
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$0.59
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$0.59
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Costs incurred in connection with
continued efforts to enhance the cost structure of the
Company
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$0.05
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$0.05
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Indevus related costs and change in fair value of
contingent consideration
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$0.01
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$0.01
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Costs related to the acquisition of HealthTronics,
Inc.
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$0.41
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$0.41
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Interest expense adjustment for ASC 470-20
and
the amortization of the premium on debt acquired from
Indevus
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$0.15
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$0.15
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Tax effect of pre-tax adjustments at the
applicable tax rates and certain other expected cash tax
savings as a result of the Indevus and HealthTronics
acquisitions
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($0.27)
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($0.25)
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Diluted adjusted income per common share
guidance
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$3.20
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To
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$3.25
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The company's guidance is being issued based on
certain assumptions including:
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- Certain of the above amounts are based on
estimates and there can be no assurance that Endo will achieve
these results.
- Includes all completed business development
transactions as of March 31, 2010 and the announced
acquisition of HealthTronics, Inc.
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About HealthTronics
HealthTronics, Inc. is a premier urology company providing an
exclusive suite of healthcare services and technology, including
urologist partnership opportunities, surgical and capital
equipment, maintenance services and anatomical pathology services.
The company's product portfolio includes a full line of
urology equipment and products, including lithotripters, surgical
lasers for treatment of BPH, and anatomical pathology services.
As a service provider, HealthTronics offers the latest
technology in lithotripsy services and prostate therapy services,
including BPH treatments and prostate cancer treatments. For
more information, visit www.HealthTronics.com.
About Endo
Endo Pharmaceuticals is a specialty pharmaceutical company
engaged in the research, development, sale and marketing of branded
and generic prescription pharmaceuticals used to treat and manage
pain, bladder cancer, prostate cancer and the early onset of
puberty in children, or central precocious puberty (CPP). Its
products include LIDODERM®, a topical patch to relieve the pain of
postherpetic neuralgia; Percocet® and Percodan® tablets for the
relief of moderate-to-moderately severe pain; FROVA® tablets for
the acute treatment of migraine attacks with or without aura in
adults; OPANA® tablets for the relief of moderate-to-severe acute
pain where the use of an opioid is appropriate; OPANA® ER tablets
for the relief of moderate-to-severe pain in patients requiring
continuous, around-the-clock opioid treatment for an extended
period of time; Voltaren® Gel, which is owned and licensed by
Novartis AG, a nonsteroidal anti-inflammatory drug indicated for
the relief of the pain of osteoarthritis of joints amenable to
topical treatment, such as those of the hands and the knees;
VANTAS® for the palliative treatment of advanced prostate cancer;
SUPPRELIN® LA for the treatment of early onset puberty in children;
and VALSTAR™ for the treatment of BCG-refractory carcinoma in
situ (CIS) of the urinary bladder in patients for whom
immediate cystectomy would be associated with unacceptable medical
risks. The company markets its branded pharmaceutical products to
physicians in pain management, urology, endocrinology, oncology,
neurology, surgery and primary care. More information, including
this and past press releases of Endo Pharmaceuticals, is available
at www.Endo.com.
Advisors
Citi acted as financial advisor and Skadden, Arps, Slate,
Meagher & Flom LLP acted as legal advisor to Endo for this
transaction.
Conference Call and Webcast Information
Endo's management team will host a conference call and audio
Webcast on Wednesday, May 5 at
5:30 p.m. EDT to discuss this
transaction. Interested parties may call 866-783-2141 (domestic) or
857-350-1600 (international) and enter code 17184946. Please dial
in 15 minutes prior to the scheduled start time. A replay of the
call will be available until 11:59 p.m.
EDT on May 19 by dialing
888-286-8010 (domestic) or 617-801-6888 (international), passcode
90830373.
A simultaneous audio Webcast of the call may be accessed by
visiting www.endo.com. A replay of the Webcast will be available
until 11:59 p.m. EDT on May 19. The replay can be accessed by clicking on
"Events" in the Investor Relations section of the Website. Please
connect to the Website at least 15 minutes prior to the start of
the conference call to ensure adequate time for any software
download that may be necessary.
Forward Looking Statement
This press release contains forward-looking statements
regarding, among other things, the proposed business combination
between Endo and HealthTronics, Endo's and HealthTronics' financial
position, results of operations, market position, product
development and business strategy, as well as estimates of Endo's
future total revenues, future expenses, future net income and
future earnings per share. Statements including words such as
"believes," "expects," "anticipates," "intends," "estimates,"
"plan," "will," "may" "intend," "guidance" or similar expressions
are forward-looking statements. Because these statements
reflect our current views, expectations and beliefs concerning
future events, these forward-looking statements involve risks and
uncertainties. Investors should note that many factors could affect
the proposed business combination of the companies, future
financial results and could cause actual results to differ
materially from those expressed in forward-looking statements
contained in this presentation. These factors include, but are not
limited to: the risk that the tender offer and merger will not
close, the risk that Endo's business and/or HealthTronics' business
will be adversely impacted during the pendency of the tender offer
and merger, the risk that the operations of the two companies will
not be integrated successfully, Endo's ability to successfully
develop, commercialize and market new products; timing and results
of pre-clinical or clinical trials on new products; Endo's ability
to obtain regulatory approval of any of Endo's pipeline products;
competition for the business of Endo's branded and generic
products, and in connection with its acquisition of rights to
intellectual property assets; market acceptance of our future
products; government regulation of the pharmaceutical industry;
Endo's dependence on a small number of products; Endo's
dependence on outside manufacturers for the manufacture of a
majority of its products; Endo's dependence on third parties
to supply raw materials and to provide services for certain core
aspects of its business; new regulatory action or lawsuits relating
to Endo's use of narcotics in most of its core products; Endo's
exposure to product liability claims and product recalls and the
possibility that they may not be able to adequately insure
themselves; the successful efforts of manufacturers of branded
pharmaceuticals to use litigation and legislative and regulatory
efforts to limit the use of generics and certain other products;
Endo's ability to successfully implement its acquisition and
in-licensing strategy; regulatory or other limits on the
availability of controlled substances that constitute the active
ingredients of some of its products and products in development;
the availability of third-party reimbursement for Endo's products;
the outcome of any pending or future litigation or claims by third
parties or the government, and the performance of indemnitors with
respect to claims for which Endo has been indemnified; Endo's
dependence on sales to a limited number of large pharmacy chains
and wholesale drug distributors for a large portion of its total
revenues; a determination by a regulatory agency that Endo is
engaging or has engaged in inappropriate sales or marketing
activities, including promoting the "off-label" use of its
products, the risk that demand for and acceptance of Endo's and
HealthTronics' products or services may be reduced; the risk of
changes in governmental regulations; the impact of economic
conditions; the impact of competition and pricing and other risks
and uncertainties, including those detailed from time to time in
the companies' periodic reports filed with the Securities and
Exchange Commission, including current reports on Form 8-K,
quarterly reports on Form 10-Q and annual reports on Form 10-K,
particularly the discussion under the caption "RISK FACTORS" in
their annual reports on Form 10-K for the year ended December 31, 2009, which were filed with the
Securities and Exchange Commission. The forward-looking statements
in this press release are qualified by these risk factors. These
are factors that, individually or in the aggregate, could cause our
actual results to differ materially from expected and historical
results. The companies' assume no obligation to publicly update any
forward-looking statements, whether as a result of new information,
future developments or otherwise.
Additional Information
The tender offer described in this document has not yet
commenced. At the time the tender offer is commenced, Endo will
file a tender offer statement on Schedule TO with the SEC.
Investors and HealthTronics shareholders are strongly advised to
read the tender offer statement (including an offer to purchase,
letter of transmittal and related tender offer documents) and the
related solicitation/recommendation statement on Schedule 14D-9
that will be filed by HealthTronics with the SEC, because they will
contain important information. These documents will be available at
no charge on the SEC's website at www.sec.gov once such documents
are filed with the SEC. A copy of the solicitation/recommendation
statement on Schedule 14D-9 (once it becomes available) may be
obtained free of charge from HealthTronics' website at
www.healthtronics.com or by directing a request to HealthTronics at
9825 Spectrum Drive, Building 3, Austin,
Texas 78717, Attn: Corporate Secretary. In addition, a
copy of the offer to purchase, letter of transmittal and certain
other related tender offer documents (once they become available)
may be obtained free of charge from Endo's website at www.endo.com
or by directing a request to Endo at www.endo.com, or Endo
Pharmaceuticals, 100 Endo Boulevard, Chadds Ford, PA 19317, Attn: Corporate
Secretary's Office.
SOURCE Endo Pharmaceuticals