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Model N (MODN) Acquires Deloitte's Unit, To Expand in Life Sciences

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Zacks Equity Research
·3 min read
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Model N MODN recently concluded the acquisition of Deloitte’s life sciences pricing and contracting solutions business and underlying technology. The company paid $60 million in cash for the transaction. The buyout was announced in December 2020.

San Mateo, CA-based Model N is engaged in providing revenue management solutions for companies in the life sciences and technology sectors.

The company has massive growth opportunity in two verticals, as enterprises continue to shift away from legacy processes that were expensive and error prone. Model N’s revenue cloud solutions provide higher returns on investment and close gaps in the end-to-end revenue management process.

Model N, Inc. Price and Consensus

 

Model N, Inc. Price and Consensus
Model N, Inc. Price and Consensus

Model N, Inc. price-consensus-chart | Model N, Inc. Quote

 

The buyout of Deloitte’s life sciences pricing and contracting solutions business will aid Model N to expand its presence in the life sciences vertical and boost its total addressable market by adding the pre-commercial segment. This is expected to contribute to Model N’s top line in the long term.

One of the most notable buyouts by Model N is Revitas in January 2017 for an undisclosed sum.

Spending on Revenue Management Systems Bodes Well

Worldwide revenue management system market is projected to witness a CAGR of 10.7% between 2021 and 2026 and reach $29.9 billion, driven by growing demand for competitive pricing and strict requirements to comply with regulatory compliances, according to a report from Industry Research.

The revenue management software market is significantly underpenetrated, which provides a massive revenue opportunity for the company. Also, the company is looking to offer most of its solutions as Revenue Management-as-a-Service (RMaaS), which will be a key catalyst in the long haul.

Model N is also making steady progress in its transformation to a Software-as-a-Service (SaaS) based model, which is boosting the top line.

In fourth-quarter fiscal 2020, subscription revenues of $29.7 million (72% of total revenues) increased 8% year over year, driven by strong go-to-market execution and new logo additions.

These opportunities augur well for Model N. The company has presence in more than 120 countries and clinched deals from some of the biggest names in tech and pharma sectors like Broadcom AVGO, Microchip Technology MCHP, AstraZeneca AZN, Johnson & Johnson and Seagate.

Nonetheless, coronavirus crisis-triggered weak spending across small and medium businesses owing to restricted economic activity as well as weak job market are likely to put pressure on adoption of Model N’s revenue management software solutions in the near term, at least.

At present, Model N carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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AstraZeneca PLC (AZN) : Free Stock Analysis Report
 
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Broadcom Inc. (AVGO) : Free Stock Analysis Report
 
Model N, Inc. (MODN) : Free Stock Analysis Report
 
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