Teleflex To Sell Certain Respiratory Assets For $286 Mln; Backs FY21 Adj. EPS View

Teleflex Inc. (TFX), a provider for healthcare supplies and services, announced Tuesday its definitive agreement to sell a significant portion of its Respiratory business to Medline Industries, Inc. for $286 million in cash, reduced by $12 million in working capital not transferring to Medline.

The divesting Teleflex respiratory product lines include oxygen and aerosol therapy, active humidification, non-invasive ventilation, and incentive spirometers, which generated $139 million in revenue in 2020.

The transaction is expected to close early in the third quarter of 2021, subject to customary regulatory approvals and other closing conditions.

The company expects the sale to be accretive to pro-forma revenue growth profile, as well as adjusted gross and operating margins longer term.

According to the company, the sale of a significant portion of Respiratory business will enable it to focus further on executing in core market segments to drive long-term sustainable growth and increase shareholder value.

Further, Teleflex maintained 2021 full year adjusted earnings per share guidance range, despite the dilution from the sale of the respiratory assets.

In 2021, the respiratory product lines that will be divested were expected to generate net revenue approximately flat with the $139 million generated in 2020.

The company estimates a revenue headwind of $28-32 million and adjusted earnings per share dilution of $0.10-$0.15 in 2021 or approximately 1% of 2021 adjusted earnings per share, net of a manufacturing services agreement that it plan to enter into with Medline upon the initial closing of the sale transaction.

Teleflex intends to use the divestiture proceeds to pay down debt, augmenting its financial flexibility to support its growth strategy.

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