Kerecis Acquisition: Key Details, Impact, and What Comes Next

Coloplast's acquisition of Kerecis marks a significant move in the advanced wound care market. By integrating Kerecis' innovative fish skin technology, Coloplast aims to enhance its product offerings and strengthen its market position, particularly in the U.S. biologics segment. This strategic acquisition is expected to drive long-term growth and profitability for Coloplast.

What Is Kerecis?

Founded in 2010, Kerecis specializes in using fish skin for tissue regeneration. Its core products include MariGen, SurgiClose, SurgiBind, GraftGuide, Shield, and Kerecis VET. The company differentiates itself by pioneering the use of fish skin and fatty acids in wound care, offering sustainable solutions sourced from wild Atlantic cod and processed with renewable energy. Kerecis' products are effective in treating various wounds, including diabetic, venous, trauma, and surgical wounds.

Who Acquired Kerecis?

Coloplast plays a crucial role in the healthcare industry by developing products and services that address intimate medical conditions. Their key offerings include innovative solutions in ostomy care, continence care, wound care, and interventional urology. Additionally, Coloplast Professional provides educational resources for healthcare professionals. With a global presence in 45 countries and over 13,000 employees, Coloplast has established itself as a significant player in the intimate healthcare sector.

When Was Kerecis Acquired?

Coloplast completed the acquisition of Kerecis on August 31, 2023. This acquisition was initially announced on July 7, 2023, and comes at a time when the biologics wound care segment is experiencing significant growth, particularly in the U.S. market. The timing aligns with industry trends towards sustainable and innovative wound care solutions, positioning Coloplast to capitalize on this high-growth market and enhance its long-term growth expectations.

Why Was Kerecis Acquired?

• Market Expansion: The acquisition of Kerecis allows Coloplast to significantly strengthen its presence in the advanced wound care market by entering the high-growth, U.S.-centric biologics segment. Kerecis is expected to grow around 50% in FY 2022/23 and continue its strong growth trajectory with an estimated three-year CAGR of around 30% until FY 2025/26.
• Technology Integration: Kerecis has developed a patented, clinically differentiated technology platform based on intact fish skin, which is minimally processed, sustainable, and scalable. This technology retains its similarity to human skin, resulting in improved wound healing, and is backed by compelling evidence from multiple clinical trials.
• Competitive Advantage: The acquisition provides Coloplast with a unique and sustainable technology that has already been used to treat tens of thousands of patients, demonstrating its effectiveness and market acceptance. Kerecis' strong commercial execution and cost-efficient production setup, which leads to an attractive gross margin level, further strengthen Coloplast's competitive position in the biologics wound care market.

Acquisition Terms

• Acquisition Price: Up to USD 1.3 billion, consisting of USD 1.2 billion upfront cash payment and an earnout potential of a maximum of USD 100 million.
• Payment Method: The transaction is expected to be financed through an equity capital raise.
• Key Conditions or Agreements:
  • 77% of Kerecis’ shareholders have committed to sell their shares to Coloplast.
  • Closing of the transaction is subject to customary regulatory approvals and an acceptance threshold of at least 90%.
  • The transaction is anticipated to close in Q4 2022/23.
  • Following the acquisition, Kerecis will operate as a stand-alone business unit under its own identity and brand.
  • Integration will focus on business support and other selected areas to support the company’s strong growth outlook and continued expansion.

Impact on Kerecis

The acquisition of Kerecis by Coloplast brings notable changes to its operations and management. Kerecis will continue to operate as a stand-alone business unit under its own identity and brand, ensuring that its unique culture and innovative approach remain intact. Fertram Sigurjonsson, the founder and CEO of Kerecis, will continue to lead the team, providing continuity and stability. Integration efforts will focus on business support and selected areas to bolster growth and expansion, while Kerecis' financials will be included in Coloplast's Advanced Wound Care business area.

In terms of product offerings, the acquisition significantly enhances Coloplast's portfolio by incorporating Kerecis' patented fish-skin technology, which is minimally processed and sustainable. This technology will now be part of Coloplast's advanced wound care solutions, allowing the company to enter the high-growth U.S. biologics segment. While specific employee reactions are not detailed, leadership statements reflect a positive outlook. Customer reactions, though not explicitly mentioned, are likely favorable given the proven effectiveness of Kerecis' products in treating various wounds.

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