Henry Schein (HSIC) Enters Orthopedic Market With New Buyout
Henry Schein, Inc. HSIC recently announced its plans to enter the upper- and lower-extremities specialty segment of the orthopedic market, aligned with its long-standing strategy of investing in high-growth market opportunities. In line with its plans, the company signed an agreement to acquire a majority interest in TriMed.
HSIC also entered into a strategic relationship with Extremity Medical LLC.
Transaction Details
The deal is subject to regulatory clearances and closing conditions. It is scheduled to close in the first quarter of 2024. Henry Schein anticipates that the deal will be neutral to non-GAAP profits per share in 2024 and accretive thereafter. The financial details were not provided.
Few Words on TriMed and Extremity Medical
Headquartered in Santa Clarita, CA, TriMed is a global developer of solutions for the orthopedic treatment of lower extremities (foot and ankle) and upper extremities (primarily hand and wrist).
Extremity Medical LLC is an advanced medical device company intended to develop new products for fusion, fixation, and motion preservation in the orthopedic treatment of the lower extremities and wrists
Strategic Efforts
Collaboration with the TriMed and Extremity teams will offer Henry Schein a platform to position itself as a prominent producer and supplier in the orthopedic market's Foot and Ankle, Hand and Wrist extremity sectors. Henry Schein believes that the skilled leadership team is well-positioned to benefit from the current integrated delivery network and ambulatory surgery center customers.
The strategic relationship will enable Extremity Medical to expand its reach, ultimately improving patient care and outcomes. Per management, entering the extremity segment with the complementary portfolios of TriMed and Extremity Medical will extend Henry Schein’s Brasseler Medical orthopedic cutting accessories and revision instrument solutions.
Image Source: Zacks Investment Research
Management also noted that upper and lower extremities are among the fastest-growing segments of orthopedics, representing a total addressable market of more than $5.5 billion. Through its strategic acquisitions, Henry Schein is confident that it will accelerate the reach of TriMed and Extremity on a global basis.
Industry Prospects
Per a report by Grand View Research, the global orthopedic devices market size was estimated at $72.9 billion in 2023 and is projected to witness a CAGR of 5.3% from 2024 to 2030. The market is driven by a high incidence of orthopedic disorders, such as a growing aging population, degenerative bone disease and an increasing instance of road accidents. The early onset of musculoskeletal disorders caused by sedentary routines and obesity is projected to fuel growth.
Expansion Through Acquisitions and Partnerships
Niche acquisitions and partnerships have consistently supported Henry Schein’s revenue growth. Its robust acquisition strategy helps it to pursue targets that provide access to additional product lines.
To accelerate the implementation of its 2022-2024 BOLD+1 Strategic Plan, the company invested $417 million in business acquisitions during the third quarter of 2023 and $668 million year to date. It also committed more than $1 billion in capital to announced acquisitions year to date.
In October 2023, Henry Schein completed the acquisition of Shield Healthcare. In August 2023, Henry Schein announced an agreement to acquire Shield, which will create an offering with more than $300 million in annual revenues that distributes medical supplies directly to patients in their homes across the United States.
Price Performance
In the past year, HSIC’s shares have dropped 8.9% against the industry’s rise of 9.2%.
Zacks Rank and Key Picks
Henry Schein currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader medical space are Haemonetics HAE, Insulet PODD and DexCom DXCM. While Haemonetics and DexCom each carry a Zacks Rank #2 (Buy), Insulet sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Haemonetics’ shares have increased 11.6% in the past year. Earnings estimates for Haemonetics have increased from $3.82 to $3.86 in 2023 and $4.07 to $4.11 in 2024 in the past 30 days.
HAE’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 16.1%. In the last reported quarter, it posted an earnings surprise of 5.3%.
Estimates for Insulet’s 2023 earnings per share have increased from $1.61 to $1.90 in the past 30 days.
PODD’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 105.1%. In the last reported quarter, it delivered an average earnings surprise of 77.4%.
Estimates for DexCom’s 2023 earnings per share have increased from $1.23 to $1.41 in the past 30 days.
DXCM’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 36.4%. In the last reported quarter, it delivered an average earnings surprise of 47.1%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Henry Schein, Inc. (HSIC) : Free Stock Analysis Report
Haemonetics Corporation (HAE) : Free Stock Analysis Report
DexCom, Inc. (DXCM) : Free Stock Analysis Report
Insulet Corporation (PODD) : Free Stock Analysis Report
