OrthoPediatrics (KIDS) acquired Vilex and Orthex (collectively, Vilex), including its Orthex Hexapod circular fixation technology and CORA-based x-ray planning software, for USD $60MM, comprising $50MM in cash and the remainder in stock.
Vilex markets fixation products for primarily foot and ankle indications, targeting pediatric patients as well as adults. The company generated 2018 revenue of $11.8MM, primarily within the U.S., with $2.9MM of net income. Of that, Orthex Hexapod contributed $3.1MM, increasing 50% year-over-year since its FDA clearance in 1Q16. The remainder of 2018 revenue derived from Vilex’s adult systems.
Orthex Hexapod treats pediatric congenital deformities and limb length discrepancies such as fibula and tibia hemimelia, radial clubhand, ankle equinus, Blount’s disease, genu recurvatum and multiapical deformities. Remaining products treat pediatric conditions such a flatfoot reconstruction, subtalar arthroereisis and arthrodesis procedures of small bones.
Hexapod offers easily calibrated struts and hydroxyapatite coated pins designed to reduce infection risk, and is accompanied by point and click software to simplify deformity correction planning.
Mark Throdahl, President and CEO of OrthoPediatrics, commented, “This transaction closes the biggest gap in our Trauma & Deformity product offering, [increasing] our coverage of the Trauma & Deformity market from 60% to 80%.” The transaction adds a number of foundational products in pediatric foot and ankle surgery ahead of the 2H19 PediFoot system launch, and expands the company’s surgeon base to deformity correction surgeons who treat children but may not practice in pediatric hospitals.
Throdahl identified acquisitions as a key growth initiative for OrthoPediatrics in his 1Q19 earnings commentary. The company has identified about 30 opportunities, comprising mostly bolt-on acquisitions of novel products with minimal risk, like the Vilex purchase.
KIDS plans to identify a potential buyer for Vilex’s product line that is focused on the adult orthopedic space. The transaction could include an exclusive license of Orthex technology for adult foot/ankle applications.
Source: OrthoPediatrics Corp.