Plymouth-based Entellus Medical, maker of products for minimally invasive facial and throat procedures, ratcheted up its financial guidance for the year after announcing plans to acquire a fast-growing private company that makes a new device for nasal-obstruction treatments.
Entellus has announced a definitive agreement to acquire California-based Spirox Inc. in a cash-and-stock deal that includes $25 million up front and 3.4 million shares of Entellus common stock, valued at $56.5 million based on Monday's closing price, plus future performance payments.
The deal is expected to close later this summer, pending approval from shareholders and regulators.
Entellus, which was the only Minnesota company to complete an initial public offering of stock in 2015, closed at $16.61 Monday, up 4.5 percent.
If the deal to acquire Spirox goes through as expected, Entellus is projecting 2017 full-year revenue of as much as $95 million this year, which would be growth of about 26 percent. Before the deal was announced, Entellus was guiding to revenue growth of up to 18 percent this year.
Spirox is the owner of a fast-growing technology called the Latera Absorbable Nasal Implant, which was launched commercially last July following regulatory clearance from the U.S. Food and Drug Administration.
The Latera is an absorbable polymer implant implanted by an otolaryngologist or a plastic surgeon to support the upper and lower nasal cartilage in a patient with a nasal airway obstruction.
A joint news release from the companies Friday estimated that about 1 million people in a year in the U.S. get a surgical treatment for nasal obstructions, and 70 percent of them could benefit from a lateral wall intervention using a Latera implant.
The Latera has generated more than $6 million in revenue so far, and Entellus projects a compounded growth rate of 40 percent through 2020 for the device.
Spirox is a privately held firm whose institutional investors include New York-based equity firm KKR & Co., whose American health care team leader Jim Momtazee will join the Entellus Medical board as part of the transaction. Spirox CEO Duke Rohlen will also join the Entellus board.