What happened
Shares of Bioventus (BVS +0.12%) were sinking 11% as of 10:46 a.m. ET on Monday. The decline came after the company announced that it exercised a call option to acquire CartiHeal. Bioventus previously made a $15 million equity investment in CartiHeal in 2020 and acquired an option at that time to purchase the rest of the privately held company.
NASDAQ: BVS
Key Data Points
So what
Why didn't investors like this deal? Probably because of the financial terms.
Bioventus is paying $315 million to buy CartiHeal. The price tag will increase by another $135 million, though, if and when CartiHeal achieves $100 million in trailing-12-month sales. Bioventus intends to take on additional debt to fund the purchase.
This added debt is likely concerning to some investors. Bioventus' long-term debt totaled nearly $340 million at the end of 2021. That's a hefty debt load for a company that generated less than $10 million in profits last year.
However, the CartiHeal acquisition does appear to be a pretty good fit for Bioventus. CartiHeal recently won U.S. Food and Drug Administration (FDA) premarket approval for its Agili-C implant for treating knee-joint surface lesions. The product should be complementary to Bioventus' lineup of joint therapies.
Image source: Getty Images.
Now what
With today's drop, Bioventus' share price is down more than 30% from the highs set last summer. What could turn things around for the healthcare stock? A successful launch of Agili-C could help. Bioventus hopes to conduct a limited market release of CartiHeal's product in the U.S. in the third quarter of this year.
