Patterson Dental, the core business under Patterson Companies (PDCO), has acquired Mercer Mastery, a unit of Mercer Advisors. The deal was completed on Jul 31 but no financial details were disclosed.
Patterson Dental acquired the entity to leverage its software products portfolio with Mercer’s flagship product, the OnTrack dental practice performance software system. The software is a cloud-based business intelligence system that enhances practice performance of dentists. Management also plans to extend the use of this software across its other businesses (Veterinary and Rehabilitation) in the long term to boost revenues.
The acquisition will not have any financially material impact on Patterson. However, the acquisition is in line with the company’s long-term strategy to grow through internal expansion and acquisitions.
One of the two largest distributors of dental offerings in North America, Patterson Dental provides a wide range of consumables, equipment and software, and value-added services to its customers. Although patient demand for dental services was tepid at the height of recession, Patterson should benefit from the gradual recovery in the dental market.
We also remain upbeat about the prospects of the dental equipment business (especially CEREC) and the distribution agreement with Sirona Dental Systems (SIRO). Further, the company’s promotional activities should result in higher demand for this product category moving ahead.
In July, the company had also entered into an agreement to buy the largest veterinary distributor located in UK, the National Veterinary Services Limited (NVS) for $135 million. The acquisition is expected to expand the geographic reach of its Veterinary business. The deal is slated to close this month. Upon the completion of one year after the closure of the deal, it is projected to boost PDCO’s earnings by 4–5 cents (including one-time expenses)
PDCO currently has a Zacks Rank #2 (Buy). Other medical stocks that are worth considering include Henry Schein (HSIC) and The Cooper Companies (COO). Both these stocks also carry a Zacks Rank #2 (Buy).
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