Varian Medical Systems, Prime Healthcare Ink Technology Deal

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CA-based medical instruments maker, Varian Medical Systems, Inc. (VAR) entered into an agreement with one of the largest privately-owned hospital networks in the U.S. – Prime Healthcare Services. Per the contract, VAR will be the exclusive technology supplier for image-guided radiotherapy and radiosurgery to Prime Healthcare.

Valued at approximately $20 million, the seven-year agreement aims at enhancing and extending radiotherapy and radiosurgery cancer treatment capabilities at Prime Healthcare.

VAR booked $11 million of the total amount in the second quarter of fiscal 2014, with the remainder to be booked in accordance with the company's policies over the agreement term.

Per the deal, Prime Healthcare acquired four VAR TrueBeam cancer treatment systems for deployment at sites across its system. The technologically advanced TrueBeam synchronizes imaging, patient positioning, motion management and treatment delivery, thereby allowing fast and accurate treatment of tumors.

In addition, Prime Healthcare is planning a system-wide installation of VAR’s Eclipse treatment planning and ARIA information management softwares. The network will be centrally managed by VAR's FullScale cloud-based oncology IT data hosting solution launched in Oct 2012. VAR’s FullScale oncology IT portfolio comprises a flexible set of comprehensive IT solutions designed to meet the requirements of a modern cancer treatment center.

By investing in such state-of-the-art systems and cutting-edge technology, Prime Healthcare aims to achieve cost savings and improved patient outcome. Building on its commitment to create an integrated healthcare delivery system, Prime Healthcare continues to upgrade and modernize its cancer treatment services and systems.  

In the last reported quarter, VAR’s Oncology Systems segment witnessed mid-single-digit growth on new multi-year agreements with large hospital systems. Apart from its agreement with Prime HealthCare, VAR cut a similar deal with UnityPoint Health in Apr 2014 to exclusively supply software and devices for image-guided radiotherapy and radiosurgery.

VAR booked a small portion of the estimated $20–$25 million UnityPoint Health order in the second quarter of fiscal 2014. Going forward, VAR has more of such multi-year deals in the pipeline in order to administer integrated, accountable and coordinated care.

Zacks Rank

VAR currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the medical instruments industry include Alphatec Holdings, Inc. (ATEC), RTI Surgical Inc. (RTIX) and Luminex Corporation (LMNX). All these stocks sport a Zacks Rank #1 (Strong Buy).

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