Deals that were in the pipeline prior to the Covid-19 pandemic are still closing, particularly on the technology side of health care. OrthoPediatrics Corp. (NASDAQ: KIDS) announced its acquisition of Israeli orthopedic device maker ApiFix Ltd. on April 1 for approximately $36 million.
OrthoPediatrics provides products to the pediatric orthopedic market, such as trauma and deformity correction, scoliosis and sports medicine, in the United States and 41 countries. It went public in October 2017, raising $52 million as a company serving the previously neglected field of children’s orthopedics and implants. Revenues in 2019 were up 59%, to $76.6 million, compared with $45.6 million for all of 2017.
ApiFix offers a minimally invasive deformity correction system for non-fusion treatment of progressive adolescent idiopathic scoliosis. It is one of only two non-fusion technologies approved by the FDA. Its unique technology is supported by 46 U.S. and international patents granted and 25 patent applications.
ApiFix is the company’s second acquisition, but represents its 35th surgical system.
Orthopediatrics made its first major acquisition in June 2019, buying Vilex in Tennessee, Inc. and its subsidiary, Orthex, LLC for $60 million. Together the companies addressed the adult and adolescent orthopedic markets. The Orthex Hexapod technolgy received FDA approval in March 2016 for the treatment of pediatric congenital deformities and limb length discrepancies.
Orthex was the real target in that deal and OrthoPediatrics sold off the Vilex Adult business to Squadron Capital in December 2019 for $25 million. The Orthex deal expanded OrthoPediatrics’ reach from 60% to 80% of the trauman and deformity correction market, and opened up a $200 million market opportunity.
On the fourth quarter earnings call in early March, OrthoPediatrics CEO Mark Thordahl noted that the Orthex technology and all its products were “gaining considerable attention from both existing and new hospital accounts” and helped open discussions with major pediatric centers about becoming their provider of choice.
With the coronavirus pandemic shutting down virtually all elective surgeries around the country for the next few months, those discussions have likely slowed down. Still, the need hasn’t and it will be even more pressing when this present crisis passes.
