Medical device company Kensey Nash Corp. said Tuesday it acquired the assets of bone cement maker Norian for $22 million in cash.
Kensey Nash is acquiring Norian from Synthes, which is itself being bought by health care giant Johnson & Johnson for $21.3 billion. Kensey Nash said it expects to get about $1 million in revenue from Norian in its fiscal fourth quarter, which ends June 30. It expects the deal to boost its fiscal 2012 profit by 15 cents per share and its revenue by $14 million. Kensey Nash will take over manufacturing of Norian's products, and Synthes, a Swiss company, will distribute them.
In morning trading, shares of Kensey Nash rallied $1.98, or 8.1 percent, to $26.39.
Kensey Nash said it paid Synthes $11 million upfront, and will pay another $11 million when manufacturing is transferred from Norian's facility in West Chester, Pa., to Kensey's Exton, Pa., facility, or 18 months after closing.
Synthes agreed to sell Norian last year as part of the settlement of an illegal marketing case. In 2010, Synthes plead guilty to criminal charges related to unauthorized testing of a Norian product that is used to fill bone defects. Norian trained surgeons to use the product on patients who were having spinal surgery. Three patients died on the operating table before the testing was stopped. In 2010, Norian and Synthes agreed to pay $23 million in fines — the maximum amount — for failing to report the deaths to the Food and Drug Administration, and for lying to investigators. The unauthorized tests involved about 200 patients between 2002 and 2004.
Tuesday was the deadline for Synthes to divest its Norian assets.
Kensey Nash said it expects to earn between 31 cents and 33 cents per share in the fiscal fourth quarter, including transaction and amortization expenses connected to the Norian deal. It forecast $18.7 million to $19.2 million in revenue. While Norian will add to its sales, the company said it expects less sports medicine and spine revenue because orders have been lower than it anticipated, and the launch of a cartilage repair device was delayed.
Analysts expected a profit of 44 cents per share and $18.7 million in revenue, according to FactSet.
The company says it now expects an adjusted profit of $1.52 to $1.54 per share in fiscal 2011, down from its previous estimate of $1.70 to $1.75 per share. It pared its revenue guidance to $71.6 million to $72.1 million from $71.8 million. Analysts were calling for a profit of $1.66 per share and revenue of $71.8 million on average.
In fiscal 2012, Kensey Nash called for net income of $1.85 to $1.90 per share and $90 million in total revenue. That was above analysts' estimate of $1.75 per share in profit and $75.5 million in revenue prior to the Norian deal.