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Coloplast Announces Agreement to Acquire Kerecis and Raises Long-term Growth Expectations

July 7, 2023

Coloplast Kerecis

Coloplast has signed an agreement to acquire Kerecis, an innovative, fast-growing company in the biologics wound care segment, for up to USD 1.3 billion (around DKK 8.9 billion), of which USD 1.2 billion (around DKK 8.2 billion) is an upfront cash payment

  • Kerecis represents an attractive opportunity to strategically strengthen Coloplast’s presence in the advanced wound care market by entering the high-growth, US-centric biologics segment
  • With a mission to improve wound care treatment, Kerecis has developed and patented a clinically differentiated, sustainable, and scalable technology platform based on intact fish skin
  • Produced with minimal processing, the fish skin retains its similarity to human skin, resulting in improved wound healing. The technology is backed by compelling evidence from multiple clinical trials and has already been used to treat tens of thousands of patients
  • Since the launch of its product offering in 2016 Kerecis has become the fastest growing company in the biologics wound care segment, with DKK 510 million in revenues and reaching break-even in FY 2021/221)
  • Due to a highly cost-efficient production setup, Kerecis has an attractive gross margin level, accretive to Coloplast’s gross margin. Kerecis has strong potential to expand its profitability driven by continued growth and scalability
  • Revenue growth assumptions: Kerecis is expected to grow around 50% in FY 2022/23. The company is expected to continue its strong growth trajectory with an estimated three-year CAGR of around 30% until FY 2025/26
  • EBIT margin assumptions2): Kerecis’ EBIT margin is expected to be around 10% in FY 2022/23 and to continue expanding to around 20% in FY 2025/26. In the following years, the EBIT margin is expected to be in line with Coloplast’s long-term guidance of more than 30%
  • The acquisition is expected to accelerate Coloplast’s group organic growth with around 1%-point contribution as of FY 2024/25. The acquisition is expected to be margin dilutive short-term
  • As a result of the acquisition, Coloplast raises its long-term organic growth guidance to 8-10%, from previously 7-9%. The long-term EBIT margin guidance is unchanged at more than 30%, however, the EBIT margin in the Strive25 period is now expected to remain below 30% and includes around 100 basis points dilution p.a. from Kerecis (incl. PPA amortisation)
  • The transaction is expected to be increasingly EPS accretive from FY 2026/27
  • Following the expected acquisition, Kerecis will operate as a stand-alone business unit under its own identity and brand, with integration focused on business support and other selected areas to support the company’s strong growth outlook and continued expansion
  • The total enterprise value for 100% ownership of Kerecis amounts to up to USD 1.3 billion (around DKK 8.9 billion), consisting of USD 1.2 billion (around DKK 8.2 billion) upfront cash payment and an earnout potential of maximum USD 100 million (around DKK 680 million)
  • The transaction is expected to be financed through an equity capital raise
  • As of today, 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%, and is anticipated in Q4 2022/23

See Full Press Release at the Source: Coloplast announces agreement to acquire Kerecis and raises long-term growth expectations

Press Release by: Coloplast

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