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TransEnterix's MST Medical Buyout to Boost Senhance Platform

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TransEnterix's MST Medical Buyout to Boost Senhance Platform

TransEnterix (TRXC) acquires Israel-based MST Medical, which will boost surgeons' effectiveness and make procedures quick and error-free.

TransEnterix, Inc. TRXC recently announced that it has acquired Israel-based MST Medical Surgery Technologies Ltd. The acquisition is likely to strengthen the Senhance platform by boosting effectiveness of surgeons as well as making procedures quicker and error free.

Financial Terms

The transaction will be completed in two phases. In the first tranche, MST Medical will receive $5.8 million in cash and 3,150,000 shares of TransEnterix common stock. In the second phase, TransEnterix will pay $6.6 million in cash or stock within a year of closing.

Acquisition to Enhance R&D

The latest development is likely to increase TransEnterix’s R&D exposure in the global MedTech sector

TransEnterix announced plans to transfer MST Medical’s R&D team to a newly formed subsidiary — TransEnterix Israel, Ltd. The company is also poised to benefit from MST Medical’s flagship technologies of advanced visualization, scene recognition, artificial intelligence, machine learning and data analytics.

In the second quarter, the company’s R&D expenses were $5.3 million compared with $5.1 million a year ago, primarily due to increased personnel and project expenses.

Senhance Platform Gets a Boost

For investors’ notice, Senhance is TransEnterix’s flagship robotic surgical system that rakes in strong profits every quarter.

With the latest development, the Senhance platform will leverage on MST Medical’s IP portfolio and R&D team to deliver digital laparoscopy and reduce surgical variability.

Meanwhile, the company sold four Senhance Systems — one in the United States and three sold in the EMEA region in the last reported quarter. For the third quarter, management anticipates three Senhance sales in the third quarter, one in the United States and two in EMEA.

Price Performance & Zacks Rank

Shares of TransEnterix increased 23.5% in a month’s time, outperforming the industry’s rise of just 2.2%. The current return is also above the S&P 500’s rise of 0.8% in the same time frame. The stock has a Zacks Rank #3 (Hold).

 

Wrapping Up

The acquisition of MST Medical will fortify TransEnterix’s foothold in EMEA (Israel).

Apart from the latest development, the Senhance platform has been in the limelight globally, throughout this year.

In the recently reported second quarter, the company received FDA five 10-K clearance for expanded indications for Senhance to include laparoscopic inguinal hernia repair and laparoscopic gall bladder surgery. This enables Senhance to be used for the most common abdominal surgeries including procedures in general surgery and gynecology.

Earlier this year, the company received approval from the Taiwanese FDA for the Senhance system.  The company expects commercial momentum to rise in 2019 and beyond.

Key Picks

A few better-ranked stocks in the broader medical space are athenahealth ATHN, Masimo Corporation MASI and Veeva Systems VEEV.

athenahealth has a long-term expected earnings growth rate of 17.6%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Masimo’s long-term earnings growth rate is projected at 14.8%. The stock carries a Zacks Rank #2.

Veeva Systems’ long-term earnings growth rate is projected at 19.3%. The stock carries a Zacks Rank #2.

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