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Henry Schein's (HSIC) New Deal Boosts Ambulatory Surgery Market

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Henry Schein, Inc. HSIC recently announced a new investment in Stradis Medical, LLC (“Stradis Healthcare”), which will strengthen Henry Schein’s foothold in the ambulatory surgery market. Notably, the financial terms of the transaction were kept under wraps.

The transaction is projected to be neutral to Henry Schein’s 2021 diluted earnings per share, accretive thereafter.

For investors’ note, Atlanta-based privately held Stradis Healthcare offers medical device packaging and custom procedure kits and trays to surgical centers, oral surgeons and private practices nationwide. Notably, it is the only independent sterile medical kitting companies in the United States, with facilities in Atlanta and in Waukegan, IL.

The recent investment will boost Henry Schein’s focus on growing ambulatory surgery market.

Significance of the Investment

The addition of Stradis Healthcare to the Medical group will enable Henry Schein to develop a unique kitting, contract packaging and serialized pharmaceutical organization that will progress the mission of health care delivery by creating efficiencies and savings for providers as well as facilitating high-quality patient care.

Per management of Henry Schein, the majority investment in Stradis Healthcare will fortify Henry Schein’s prospects in the ambulatory surgery market and boost offering by combining product portfolios and capabilities together.

The majority-ownership partnership will allow Henry Schein to provide customized solutions to practitioners, medical device companies and healthcare distribution partners at the same time also creating new business opportunities.

Industry Prospects

Per a report by MarketsandMarkets, the global ambulatory surgical centers market is projected to reach $7.2 billion by 2025 from $2.1 billion in 2020, at a CAGR of 27.6%. Growing requirement to curtail escalating healthcare costs, shift from inpatient to outpatient surgical procedures as well as growing demand for IT solutions such as mhealth and telehealth for better management is driving the market.

Other Notable Partnership

In March 2021, Henry Schein collaborated with Black Coalition Against COVID-19 (“BCAC”) to advance its commitment to accelerate vaccine equity. The collaboration supports the company’s advocacy for vaccine equity and the vital role primary-care physicians and other office-based health care practitioners play in escalating COVID-19 vaccinations nationwide.

In January 2021, Henry Schein acquired a majority ownership position in Prism Medical Products, LLC (PRISM). The partnership expanded Henry Schein Medical’s continuum-of-care delivery model and facilitated direct interaction with patients.

Price Performance

Shares of the company have gained 36.5% in a year’s time compared with the industry’s growth of 46.8%.

Zacks Rank and Key Picks

Currently, Henry Schein carries a Zacks Rank #3 (Hold).

A few other better-ranked stocks from the broader medical space are DENTSPLY SIRONA, Inc. XRAY, Invacare Corporation IVC and McKesson Corporation MCK, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

DENTSPLY SIRONA has a projected long-term earnings growth rate of 7%.

Invacare has an estimated long-term earnings growth rate of 57%.

McKesson has a projected long-term earnings growth rate of 7%.

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