Teleflex announces intent to separate into two publicly traded companies

Teleflex (TFX) Board of Directors has authorized Teleflex management to pursue a plan to separate the company’s Urology, Acute Care, and OEM businesses into a new, independent, publicly traded company via a distribution of newly issued shares of NewCo to shareholders that is tax-free for U.S. tax purposes. RemainCo, with approximately $2.1 billion in revenue in 2024, will focus on attractive, high-growth end markets addressing emergent procedures performed primarily in the hospital setting across the Intensive Care Unit, Emergency Department, Catheter Lab, and Operating Room. The product portfolio will be highly complementary with significant breadth across the hospital, with leading market positions and opportunities for growth across three core product categories: Vascular Access, offering devices that facilitate a variety of critical care therapies and other applications with a focus on helping reduce vascular-related complications. These products primarily consist of our Arrow branded catheters, catheter navigation and tip positioning systems, and our intraosseous access systems. Post-separation, Vascular Access will also include our emergency medicine portfolio, including our hemostatic products branded under our QuikClot trade name. Interventional, offering devices that facilitate a variety of applications to diagnose and deliver treatment of coronary and peripheral vascular disease. These products primarily consist of a variety of coronary catheters and structural heart support devices used by interventional cardiologists, interventional radiologists and vascular surgeons. The Interventional product category will also include the Biotronik Vascular Intervention business, significantly expanding our portfolio in both coronary and peripheral cath lab procedures. Surgical, offering single-use and reusable devices designed for use in a variety of surgical procedures, primarily consisting of metal and polymer ligating clips, fascial closure surgical systems used in laparoscopic surgical procedures, percutaneous surgical systems, a powered bariatric stapler, and other surgical instruments used in ear, nose and throat and cardiovascular and thoracic procedures. Following the separation, RemainCo is expected to generate constant currency revenue growth of 6%+. The separation is expected to be accretive to Teleflex adjusted gross margin and neutral to Teleflex adjusted operating margin initially, partially as a result of higher anticipated investment in R&D. RemainCo will have a simplified and nimble operating model with a streamlined manufacturing footprint, transitioning from 19 manufacturing facilities anticipated at Teleflex as of year-end 2025 to 7 facilities at RemainCo post-separation with the remaining 12 expected to transfer to NewCo. This simplification will provide opportunities for margin improvement over time and will create capacity for additional focused R&D investment. The transaction is also expected to be accretive to EPS growth, with RemainCo anticipated to deliver double digit EPS growth in the first full year following the separation. Liam Kelly will continue to lead RemainCo as its Chairman, President and CEO. NewCo, with approximately $1.4 billion in revenue in 2024, is also expected to benefit from a simplified operating model, increased management focus, and a tailored investment and capital allocation strategy. NewCo will be better positioned to identify, invest in, and capitalize on opportunities unique to its businesses, with established leadership positions across three categories: Urology, to include the company’s Interventional Urology and bladder management portfolios. Key brands and products include the UroLift System, a minimally invasive technology for treating lower urinary tract symptoms due to benign prostatic hyperplasia in men 45 years of age or older, Barrigel, the company’s hyaluronic acid gel-based rectal spacing product used in connection with radiation therapy treatment of prostate cancer, and the Rusch brand of catheters and bladder management products. Acute Care, to include the majority of Teleflex’s Anesthesia product category, as well as the company’s Respiratory product category, portfolio of intra-aortic balloon pumps, and select other products. Anesthesia products will include our airway management portfolio consisting of laryngoscopes, supraglottic airways, and endotracheal tubes, as well as our pain management portfolio, consisting of epidurals, catheters and disposable pain pumps for regional anesthesia, designed to improve patients’ post-operative pain experience. OEM, focused on the design, manufacture, and supply of devices and instruments for other medical device manufacturers. The OEM segment specializes in custom extrusions, micro-diameter film-cast tubing, diagnostic and interventional catheters, balloons and balloon catheters, film-insulated fine wire, coated mandrel wire, conductors, sheath/dilator introducers, specialized sutures and performance fibers, bioabsorbable sutures, yarns and resins. Following the separation, NewCo is expected to generate low-single digit constant currency revenue growth with a mid-50% adjusted gross margin profile. Over the medium term, NewCo will have the potential to improve growth into the low-single-digit to mid-single digit range as the UroLift business recovers, Barrigel growth remains strong, and the OEM business seeks to return to historical growth empowered by greater flexibility to further expand customer base and enhance capabilities. Teleflex intends to initiate an executive search for key management positions at NewCo shortly. The NewCo Board of Directors, management and headquarters will be announced as they are finalized. The transaction is intended to take the form of a distribution of newly issued shares of NewCo to shareholders that is tax-free for U.S. tax purposes. The company expects the transaction to be completed mid-2026.