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Philips (PHG) to Buy Vesper Medical, Expand Vascular Portfolio

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Koninklijke Philips PHG recently announced that it has inked an agreement to acquire Wayne, PA-based Vesper Medical, for an undisclosed amount. The transaction is expected to be completed in the first quarter of 2022.

Vesper is a leading provider of minimally-invasive peripheral vascular devices. The acquisition expands Philips’ diagnostic and therapeutic devices portfolio by adding an advanced venous stent portfolio for the treatment of deep venous disease.

Vesper’s addition will help Philips offer a complete procedural solution for the treatment of peripheral artery disease. It already offers live 2D/3D interventional imaging combined with intravascular ultrasound (IVUS) catheters to provide the visualization and guidance essential for optimal diagnosis and treatment.

Moreover, Philips offers peripheral atherectomy devices to remove blockages and peripheral therapy devices, including the Stellarex drug-coated balloon to treat lesions.

Through the acquisition of Intact Vascular in 2020, Philips offers Tack implantable dissection repair device that restores blood flow in small limb vessels. The addition of a venous stenting solution from Vesper will help Philips address the primary cause of chronic deep venous disease.

Koninklijke Philips N.V. Price and Consensus

Koninklijke Philips N.V. Price and Consensus
Koninklijke Philips N.V. Price and Consensus

Koninklijke Philips N.V. price-consensus-chart | Koninklijke Philips N.V. Quote

Undoubtedly, the deal will expand Philips’ total addressable market and customer base. Upon completion of the transaction, Vesper will be added to Philips’ Image-Guided Therapy business, which is part of the Diagnosis & Treatment operating segment.

In the last reported quarter (third-quarter 2021), on a comparable basis, Diagnosis & Treatment sales increased 10% from the year-ago quarter to €2.15 billion.

Supply-Chain Constraint Hurts Prospects

Philips’ shares have underperformed the Zacks Medical Products industry as well as peers like Maravai LifeSciences MRVI, Quidel QDEL and BioRad Laboratories BIO.

While Philips’ shares have declined 36.2%, stocks in the Zacks Medical Products industry have declined 4.1%. Quidel’s shares have lost 21.5% year to date.

Meanwhile, Maravai LifeSciences and BioRad Laboratories have returned 40.8% and 24.2%, respectively.

Philips’ underperformance can be attributed to headwinds caused by global supply-chain challenges and Sleep & Respiratory Care recall consequences. In the last reported quarter (third-quarter 2021) comparable sales decreased 8% year over year due to these factors.

Markedly, in June, Philips recalled some Bi-Level Positive Airway Pressure (Bi-Level PAP), Continuous Positive Airway Pressure (CPAP), and mechanical ventilator devices in the United States. Philips identified health risks with the polyester-based polyurethane (PE-PUR) sound abatement foam component in these devices that might degrade and become toxic.

This Zacks Rank #3 (Hold) company expects supply-chain constraints to hurt fourth-quarter 2021 results. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Nevertheless, Philips benefits from strong demand for Image-Guided Therapy, Diagnostic Imaging, Ultrasound and Hospital Patient Monitoring system. Increased interest in telehealth solutions like tele-ICU, tele-radiology, tele-pathology, tele-dentistry services bodes well for Philips. An expanding Personal Health product portfolio is a key catalyst.

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Koninklijke Philips N.V. (PHG) : Free Stock Analysis Report

BioRad Laboratories, Inc. (BIO) : Free Stock Analysis Report

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