Bioventus IPO Brings In $104M to Support Growing Medical Device Business

Medical device maker Bioventus is the latest North Carolina life sciences firm joining the public markets, raising $104 million from its initial public offering.

On Thursday, Durham-based Bioventus offered 8 million shares priced at $13 each. That price was less than the company planned. When Bioventus set initial IPO terms last week, it proposed selling 7.35 million shares in the range of $16 to $18 per share. Bioventus shares will trade on the Nasdaq exchange under the stock symbol “BVS.”

Bioventus develops and markets medical devices and biological products that address orthopedic conditions. The company was initially the biologics and clinical therapies unit of United Kingdom-based Smith & Nephew, a medical equipment company. In 2016, Smith & Nephew spun out Bioventus as a separate company with financial backing from healthcare investment firm Essex Woodlands. 

Bioventus splits its operations into three divisions: osteoarthritis joint pain treatment and joint preservation; bone graft substitutes; and minimally invasive fracture treatment. According to the IPO filing, the osteoarthritis joint division accounts for more than half of the company’s revenue. 

For the nine months ending Sept. 26, 2020---the most recent financial figure available from the IPO filing---Bioventus reported $222.5 million in sales. That’s an 8.2% decrease compared to the same period in 2019. In 2019, the most recent full year for which Bioventus reported financial data, the company generated $340.1 million in sales, a more than 6.5% increase over 2018. Like many companies, Bioventus’s business last year was affected by the COVID-19 pandemic. 

“Since March 2020, various governmental orders and public health advisories, including ‘shelter-in-place’ orders and quarantines, have reduced or prevented patient access to hospitals and physicians,” Bioventus said in its IPO filing. “As a result, the number of both elective and non-elective procedures have been reduced and our sales have decreased.”

In response, the company took the precaution of borrowing $49 million last March to maintain financial flexibility. That money was repaid last September, the Bioventus said.

The Bioventus IPO marks the company’s second attempt to go public. In 2016, the firm filed IPO paperwork but withdrew those plans. Now that it is public, the company, Bioventus Inc., plans to use the IPO cash to purchase shares in a limited liability company, Bioventus LLC. Proceeds from that purchase will be applied in several ways. More than $9 million will go to former CEO Tony Bihl, who retired last year. That cash represents money due to him under the company’s equity compensation and management incentive plans. The new cash could also support future acquisitions, Bioventus said. For example, the company has a partnership with CartiHeal, an Israel-based company developing an implant for treating defects to knee cartilage and the bone underneath it. The partnership includes an option for Bioventus to acquire CartiHeal and its scaffold implant technology.

According to the IPO filing, Essex Woodlands is Bioventus’s largest shareholder, owning 33.6% of the company after the IPO. Smith & Nephew owns a 14.4% post-IPO stake.

Bioventus can still bring in more cash. The company has granted its underwriters 30 days to purchase up to 1.2 million additional shares of its Class A common stock at the IPO price. If the underwriters fully exercise that option, Bioventus’s IPO haul could reach $119.6 million.