Henry Schien, Inc. HSIC recently announced the completion of its acquisition of North American Rescue (NAR), a U.S.-based survivability and casualty-care medical products maker that caters to the defense and public-safety markets. This acquisition is expected to bolster Henry Schein Medical, the company’s medical business in the United States. This is also part of the company’s efforts to focus on adding more high-margin products to its portfolio.
The Deal at a Glance
Financial terms the deal, which was first announced in January, remain undisclosed. Henry Schein noted that NAR has a huge customer base and serves all branches of the U.S. military; various U.S. military departments and federal agencies; militaries of allied foreign countries; federal, state and local law enforcement departments; emergency medical service providers and fire departments plus community preparedness organizations including school districts besides commercial and community centers.
NAR provides products to treat and overcome the three most common causes of preventable combat deaths, namely hemorrhaging, tension pneumothorax and inadequate airway.
The company serves nearly 60% of its sales to the U.S. government. In fiscal 2018, NAR generated sales of approximately $184 million, reflecting a diversified portfolio of proprietary medical products.
Per Henry Schein, the deal is strategic and comes with a unique value proposition. The company believes that addition of NAR’s business will offer multiple areas with growth prospects and potential business synergies for Henry Schein Medical. Post integration, NAR will be able to sell more Henry Schein Medical and Henry Schein-branded products through its existing channels.
According to the company, NAR will help expand its Medical group geographic footprint, customer base, product offering and margins in both the United States and internationally, as it plans to advance the NAR business across the globe.
As stated earlier, Henry Schein expects NAR to be neutral to its 2019 earnings per share and be accretive thereafter.
Share Price Performance
Over the past six months, Henry Schein has underperformed its industry. The stock has plunged 31.7% against the 3.9% rise of the industry.
Henry Schien currently carries a Zacks Rank #5 (Strong Sell).
A few better-ranked stocks in the broader medical space are ABIOMED, Inc., ABMD, Varian Medical Systems, Inc. VAR and Masimo, Inc. MASI, each currently carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ABIOMED’s long-term earnings growth rate is expected at 27.67%.
Varian’s long-term earnings growth rate is projected at 8%.
Masimo’s long-term earnings are predicted to grow 15.60%.
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