Boston Scientific to Acquire Axonics, Expands Sacral Neuromodulation Market Presence

Boston Scientific, in a strategic move to broaden its medical device portfolio, has announced the acquisition of Axonics for $3.7 billion in cash, with a per-share price of $71. The deal, disclosed on January 8, 2024, positions Boston Scientific to enter the high-growth sacral neuromodulation market, a domain where it will contend with established players like Medtronic.

Sacral neuromodulation involves delivering electrical pulses to the sacral nerve through an implanted device in the lower back, facilitating communication between the brain and bladder to address conditions such as overactive bladder and fecal incontinence. This market is particularly crucial, with nearly 30 million Americans aged 40 and older experiencing symptoms of overactive bladder and 19 million grappling with fecal incontinence, according to estimates cited by Boston Scientific.

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Axonics, based in Irvine, California, has gained prominence for its innovative devices, including the rechargeable R20 and recharge-free F15 systems designed for sacral neuromodulation. The FDA approved the fourth generation of the R20 device in January 2023. Additionally, it offers Bulkamid, a water-based gel addressing bladder leaks in women by restoring urethra closure.

Analysts view the acquisition as a strategically fitting move for Boston Scientific's urology business, constituting about 14% of its estimated 2023 sales. The addition of Axonics' expertise and product portfolio is expected to invigorate Boston Scientific's urology division, filling a growth gap within its existing portfolio.

Axonics reported a commendable 34% surge in net revenue to $366.1 million in fiscal year 2023, as per preliminary results disclosed on January 8. Boston Scientific anticipates Axonics' revenue growth to be highly accretive to its urology business in 2024. While there may be an immaterial impact on adjusted earnings per share in 2024, it is projected to be accretive thereafter. The impact on GAAP earnings per share may vary due to factors like amortization expense and acquisition-related net charges.

Market analysts, including BTIG analyst Marie Thibault, don't foresee significant competition in bidding for Axonics. With a 27% market share in the sacral neuromodulation market and approximately 14,000 individuals implanted with its systems in 2022, Axonics has carved a significant niche. Thibault notes “We do not anticipate competitive bids given the size of the deal, limited adjacencies with other large-cap MedTech peers, and potential overlap with Medtronic’s existing business.”

The acquisition is expected to be completed by Boston Scientific in the first half of 2024, marking a pivotal step in the company's strategic expansion into the sacral neuromodulation landscape.