HealthTech M&A Case Study Series: Medtronic + Digital Surgery

Executive Summary

The acquisition of Touch Surgery was a strategic move for Medtronic. The company was looking to expand its digital surgery business, and Touch Surgery was a leading provider of surgical training and simulation software. The acquisition gave Medtronic a foothold in this growing market and helped the company to position itself for future growth.

Medtronic did not disclose the purchase price for Touch Surgery, but it is estimated to have been between $100 million and $200 million. This suggests that Medtronic was willing to pay a premium for Touch Surgery's revenue growth potential.

Touch Surgery's annual revenue was estimated in 2020 as $10 million. The company's revenue had been growing steadily in the years leading up to the acquisition, and it is likely that revenue continued to grow in the years after the acquisition.

Overall, the acquisition of Touch Surgery is a positive development for Medtronic. The acquisition will allow Medtronic to expand its digital surgery portfolio, strengthen its position in the surgical market, and position the company for future growth in digital surgery.

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Financials:

$100M to $200M million estimated sale price

$10 million annual revenue estimated

x10 to x20 revenue multiple estimated

EBITDA unknown

The Deal

Medtronic acquired Touch Surgery in February 2020 for an undisclosed amount. Touch Surgery is a London-based company that develops surgical training and simulation software. The acquisition will allow Medtronic to expand its digital surgery portfolio and offer surgeons a more comprehensive set of training and simulation tools.

Touch Surgery's software is used by surgeons around the world to train for a variety of procedures, including knee replacement, hip replacement, and hernia repair. The software allows surgeons to practice their skills in a safe and controlled environment, and it provides feedback on their performance.

Medtronic is a global leader in medical technology, and the acquisition of Touch Surgery is part of the company's strategy to expand its digital surgery business. Medtronic believes that digital surgery has the potential to improve patient outcomes and reduce costs.

The acquisition of Touch Surgery is a significant development in the field of digital surgery. It is a sign that major medical technology companies are taking digital surgery seriously, and it is likely to accelerate the adoption of digital surgery solutions.

Here are some of the benefits of the acquisition for Medtronic:

Expands Medtronic's digital surgery portfolio: Touch Surgery's software is a valuable addition to Medtronic's digital surgery portfolio. The software provides surgeons with a comprehensive set of training and simulation tools, which can help them improve their skills and outcomes.

Strengthens Medtronic's position in the surgical market: The acquisition of Touch Surgery will strengthen Medtronic's position in the surgical market. Medtronic is already a leading provider of surgical devices, and the acquisition of Touch Surgery will give the company a stronger foothold in the surgical training and simulation market.

Positions Medtronic for future growth in digital surgery: The acquisition of Touch Surgery positions Medtronic for future growth in digital surgery. Digital surgery is a rapidly growing market, and Medtronic is well-positioned to capitalize on this growth.

The Rationale

"We remain focused on investing in our business – both organically and inorganically through tuck-in acquisitions and minority investments – to keep our industry-leading pipeline of breakthrough innovations flowing. And we have increased our cadence of acquisitions.

From January to August 2020, we announced three major transactions: Digital Surgery, Medicrea, and Companion Medical. With the acquisition of Digital Surgery, the leader in surgical artificial intelligence, we are positioning Medtronic to lead in data and analytics – the next big frontier in surgery."

Source: Medtronic Annual Report Fiscal Year 2020

Here are some of the factors that contributed to Touch Surgery's revenue growth:

The growth of the digital surgery market: The digital surgery market is a rapidly growing market. This is due to a number of factors, including the increasing adoption of telemedicine, the aging population, and the rising cost of healthcare.

The increasing popularity of surgical simulation: Surgical simulation is becoming increasingly popular among surgeons. This is because surgical simulation can help surgeons to improve their skills and outcomes.

Touch Surgery's innovative technology: Touch Surgery's technology is innovative and easy to use. This has made the company's software popular among surgeons.

Touch Surgery's strong marketing and sales team: Touch Surgery has a strong marketing and sales team. This team has been able to effectively market Touch Surgery's software to surgeons and other healthcare professionals.

Overall, Touch Surgery's revenue growth was due to a number of factors, including the growth of the digital surgery market, the increasing popularity of surgical simulation, Touch Surgery's innovative technology, and Touch Surgery's strong marketing and sales team.

Nelson Advisors work with Founders, Owners and Investors to assess whether they should 'Build, Buy, Partner or Sell' in order to maximise shareholder value.

> HealthTech M&A - Buy Side, Sell Side, Growth & Strategy services for companies in Europe, Middle East and Africa. Visit www.nelsonadvisors.co.uk

> HealthTech M&A Newsletter from Nelson Advisors - HealthTech, Health IT, Digital Health Insights and Analysis. Subscribe Today! https://lnkd.in/e5hTp_xb

> HealthTech Corporate Development - Buy Side, Sell Side, Growth & Strategy services for Founders, Owners and Investors. Email lloyd@nelsonadvisors.co.uk

> Healthcare Technology Thought Leadership from Nelson Advisors – Market Insights, Analysis & Predictions. Visit https://www.healthcare.digital/