Another Buyout for Merit Medical - Analyst Blog
December 27 2012 - 6:50AM
Zacks
Merit Medical
Systems (MMSI) recently disclosed that it has completed
its previously announced acquisition of Thomas Medical Products
from GE Healthcare, a division of General Electric
(GE) for cash payment of $167 million. The acquisition is expected
to be immediately accretive to adjusted net earnings of Merit
Medical.
Malvern, Pennsylvania-based Thomas
Medical specializes in catheter-based vascular access delivery
devices for diagnostic and therapeutic procedures in
electrophysiology, cardiac rhythm management, interventional
cardiology and interventional radiology applications, primarily on
an OEM basis. Post acquisition, Thomas Medical will operate as
Malvern Division under Merit Medical. Thomas Medical expects to
declare revenues of $37 million in 2012 with annual gross and
operating margin of 55% and 44%, respectively.
Accordingly, the recent acquisition
will enhance the cardiology business of Merit Medical. Further,
Thomas Medical will increase Merit Medical’s existing OEM business
(approaching $100 million in annual revenues). The enhanced
portfolio should act as a growth catalyst for Merit Medical.
The acquisition should allow for
innovation and new product development, on the basis of extended
intellectual property. Also, substantial geographical expansion is
on the cards for Merit Medical in major economies such as China,
Japan, Russia and Gulf States as the company capitalizes on Thomas
Medical’s direct sales network and global dealer presence.
Merit Medical financed the
acquisition with the help of Wells Fargo (WFC) by
expanding its existing credit facility to $275 million.
This is Merit Medical’s second
acquisition in two months, the first being the acquisition of
Medigroup’s assets in November. While the Medigroup buyout was
targeted at expanding Merit Medical’s dialysis business, the recent
acquisition underlines the company focus on its cardiology
franchise. As a provider of disposable medical devices for
cardiology, radiology, endoscopy and other interventional and
diagnostic procedures, these acquisitions are a strategic fit for
Merit Medical.
We believe that a diversified
product pipeline coupled with recent acquisitions should propel
growth going forward. We have a long-term ‘Outperform’
recommendation on Merit Medical which carries a short-term Zacks #1
Rank (Strong Buy). Other medical sector Zacks #1 Rank stocks are
Thoratec (THOR) and Cantel
Medical (CMN).
CANTEL MED CORP (CMN): Free Stock Analysis Report
GENL ELECTRIC (GE): Free Stock Analysis Report
MERIT MEDICAL (MMSI): Free Stock Analysis Report
THORATEC CORP (THOR): Free Stock Analysis Report
WELLS FARGO-NEW (WFC): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Cantel Medical (NYSE:CMD)
Historical Stock Chart
From Jun 2024 to Jul 2024
Cantel Medical (NYSE:CMD)
Historical Stock Chart
From Jul 2023 to Jul 2024