Haemonetics Corporation HAE recently inked a definitive agreement to sell its manufacturing operations in Fajardo, Puerto Rico, to GVS, S.p.A (a provider of advanced filtration solutions for critical applications). Per the agreement, all intellectual property rights to Haemonetics’ proprietary blood filters, currently manufactured at the Fajardo facility, will be retained by the company. In turn, GVS will be given access to certain operating assets, including manufacturing equipment and inventory and a sublease to the facility.
Apart from this, the companies have agreed to enter a long-term supply and development agreement. Per the terms of the deal, Haemonetics will provide exclusive rights to GVS to utilize the Fajardo facility to manufacture and supply the blood filters currently produced for Haemonetics.
With the recent developments, Haemonetics aims to strengthen its blood filtration market on a global scale. Notably, the blood filtration business is a subsegment of the company’s broader Blood Center business.
Rationale Behind the Deal
Per Haemonetics’ management, the collaboration with GVS will enable Haemonetics to upgrade its efficiency and help it deliver reliable and cost-effective products. The alliance is also expected to boost the R&D wing of the companies, paving the way for the introduction of products, ideas and solutions for the blood filtration market.
For investors’ note, the agreement is expected to close in the second quarter of calendar 2020, subject to the satisfaction of customary closing conditions.
Per a report by Grand View Research, the global blood preparation market size was valued at $36.7 billion in 2018 and is estimated to see a CAGR of 5.6% between 2019 and 2026. Factors like rising demand for blood and its components in surgical procedures and increasing use of plasma in pharmaceutical industries are expected to drive the market.
Given the market potential, the collaboration seems well-timed.
Of late, Haemonetics has been witnessing a slew of activities across its business.
The company inked a definitive agreement with GPI Group in May to sell certain blood donor management software solution assets within its Blood Center business unit.
In April, Haemonetics acquired enicor GmbH, which is the manufacturer of a new generation whole blood coagulation testing system ClotPro. Notably, the ClotPro system is a viscoelastic diagnostic device offering more assays, unlike any other hemostasis analyzer currently available in the market.
Shares of the company have lost 5.2% in the past year compared with the industry’s 1.4% fall and the S&P 500’s 9.4% rise.
Zacks Rank & Key Picks
Currently, Haemonetics carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Aphria Inc. APHA, Illumina, Inc. ILMN and QIAGEN N.V. QGEN.
Aphria’s long-term earnings growth rate is projected at 24.6%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Illumina’s long-term earnings growth rate is estimated at 11%. The company presently has a Zacks Rank #2.
QIAGEN’s long-term earnings growth rate is estimated at 12.2%. It currently sports a Zacks Rank #1.
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