Intersect ENT’s Q2 Results Miss Expectations; Shares Jump on Acquisition News

Ear, nose, and throat (ENT) medical technology company Intersect ENT, Inc. (XENT) missed second-quarter revenue and earnings expectations.

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Having said that, shares of XENT jumped 11.6% in response to the news that it will be acquired by Medtronic Plc. (MDT), a global medical device company. XENT shares closed at $27.37 on August 6.

The company’s adjusted loss for the quarter stood at $0.49 per share, versus the adjusted loss of $0.65 per share reported in the prior-year quarter. However, the reported loss was wider than the Street’s expectations of a $0.43 per share loss. (See Intersect ENT stock charts on TipRanks)

Additionally, revenue climbed a whopping 180% to $27.35 million, compared to the year-ago period, but missed the consensus estimate of $28.02 million.

Moreover, the company’s SINUVA segment delivered solid revenue, due to improved access and coverage, as well as a shift in sinus procedures towards ambulatory surgery centers.

Thomas A. West, President and CEO of the company, said, “During the quarter, our PROPEL franchise experienced healthy sequential growth, SINUVA scored another record quarter, and our Global Navigation and Balloon portfolio provided encouraging contributions to our top-line.”

West added, “We believe our comprehensive portfolio of products will continue to bring innovative treatment solutions to patients worldwide.”

Concurrent with the second-quarter results, Intersect ENT revealed its all-cash acquisition by Medtronic. Per the terms of the deal, MDT has agreed to buy all of the outstanding shares of XENT for $28.25 per share, representing an enterprise value of $1.1 billion.

Commenting on the deal, West said, “After years of pioneering technology to help patients heal following sinus surgery, we welcome the integration of Intersect ENT’s portfolio into Medtronic. We are looking forward to the global impact we can make as part of Medtronic, bringing these essential products to more patients than ever before.”

The deal is expected to close at the end of Medtronic’s current fiscal year, and is subject to XENT’s shareholder approval and certain closing conditions.

In response to these developments, BTIG analyst Ryan Zimmerman maintained a Buy rating on the stock with a price target of $32, implying 16.9% upside potential to current levels.

Commenting on the acquisition price, Zimmerman said, “We think that this is a good price for XENT, not as rich as our implied price target (PT), but still a good price.”

The analyst added, “We view XENT as attractive on various clinical catalysts and multiple product drivers. We would be buyers into and after the print as recovery dynamics improve through the year.”

Overall, XENT stock has a Moderate Buy consensus rating based on 2 Buys and 3 Holds. The average Intersect ENT price target of $27.08 implies 1.1% downside potential to current levels. Shares have gained almost 28% over the past year.