Merit Medical Systems
) recently disclosed that it has completed its previously
announced acquisition of Thomas Medical Products from GE
Healthcare, a division of
) for cash payment of $167 million. The acquisition is expected
to be immediately accretive to adjusted net earnings of Merit
Malvern, Pennsylvania-based Thomas Medical specializes in
catheter-based vascular access delivery devices for diagnostic
and therapeutic procedures in electrophysiology, cardiac rhythm
management, interventional cardiology and interventional
radiology applications, primarily on an OEM basis. Post
acquisition, Thomas Medical will operate as Malvern Division
under Merit Medical. Thomas Medical expects to declare revenues
of $37 million in 2012 with annual gross and operating margin of
55% and 44%, respectively.
Accordingly, the recent acquisition will enhance the
cardiology business of Merit Medical. Further, Thomas Medical
will increase Merit Medical's existing OEM business (approaching
$100 million in annual revenues). The enhanced portfolio should
act as a growth catalyst for Merit Medical.
The acquisition should allow for innovation and new product
development, on the basis of extended intellectual property.
Also, substantial geographical expansion is on the cards for
Merit Medical in major economies such as China, Japan, Russia and
Gulf States as the company capitalizes on Thomas Medical's direct
sales network and global dealer presence.
Merit Medical financed the acquisition with the help of
) by expanding its existing credit facility to $275 million.
This is Merit Medical's second acquisition in two months, the
first being the acquisition of Medigroup's assets in November.
While the Medigroup buyout was targeted at expanding Merit
Medical's dialysis business, the recent acquisition underlines
the company focus on its cardiology franchise. As a provider of
disposable medical devices for cardiology, radiology, endoscopy
and other interventional and diagnostic procedures, these
acquisitions are a strategic fit for Merit Medical.
We believe that a diversified product pipeline coupled with
recent acquisitions should propel growth going forward. We have a
long-term 'Outperform' recommendation on Merit Medical which
carries a short-term Zacks #1 Rank (Strong Buy). Other medical
sector Zacks #1 Rank stocks are
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