St. Jude Medical (STJ) recently entered into a definitive agreement to acquire LightLab Imaging (a subsidiary of Goodman Co.) for about $90 million in cash. This acquisition will provide St. Jude access to LightLab’s Optical Coherence Tomography (OCT) technology.
Earlier, in May 2010, LightLab received the US Food and Drug Administration (FDA) approval for its Optical Coherence Tomography (OCT), a diagnostic coronary imaging technology capable of producing ten times greater image resolution, at a much higher speed, than intravascular ultrasound imaging systems (IVUS).
In terms of new products, the FDA approved LightLab’s C7-XR Imaging System and companion C7 Dragonfly Imaging Catheter, which allows clinicians to see and measure vessel characteristics that are hard to see using older technologies. These products are also approved in Europe and are currently under review in Japan.
St. Jude expects the newly acquired OCT platform to contribute an additional $20 million to cardiovascular segment revenue in the second half of 2010. According to the company, the OCT market may grow at a double-digit compound annual growth rate (CAGR) over the next 5 years owing to the IVUS technology displacement and market expansion for coronary imaging.
The LightLab acquisition is expected to close in the second half of 2010, following which St. Jude will offer the OCT as well as its existing Fractional Flow Reserve (FFR) technology, which was acquired earlier through its acquisition of Radi Medical Systems in 2008. St. Jude believes that the combined technologies will provide medical practitioners with comprehensive lesion assessment capability.
This acquisition does not change St. Jude’s outlook for consolidated earnings per share (EPS) for 2010.
We currently have a Neutral rating on St. Jude.
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