Catheter Precision (VTAK) is cleaning house. The medical device company announced Thursday it's selling off its atherectomy catheter business to focus squarely on what it believes will drive future growth: cardiac electrophysiology. The market wasn't thrilled, sending shares lower on the news.
Why Ditch the Atherectomy Tech?
Catheter Precision reached an agreement to sell its atherectomy catheter technologies, along with the FDA approvals and patents that go with them, to a strategic buyer. The thinking here is pretty straightforward: the company wants to improve capital efficiency and concentrate its resources on its electrophysiology platform, which management sees as the higher-growth opportunity.
By shedding this non-core asset, Catheter Precision hopes to accelerate execution across its electrophysiology product lineup. The smart part? They're keeping some skin in the game through royalties and equity, so if the atherectomy tech takes off under new ownership, they'll still benefit.
The Deal Structure
Here's what Catheter Precision is getting in return. First, an upfront cash payment of $15,000 when the deal closes. Second, a 5% equity stake in the acquiring company with anti-dilution protection covering up to $5 million of additional capital invested in the buyer. And third, a ten-year royalty agreement based on net sales of the divested technologies.
It's a structure that provides immediate cash while maintaining upside exposure if the atherectomy business flourishes down the road.
