CareFusion Corporation (CFN): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
CareFusion is well positioned to benefit from current trends in healthcare, which focuses on safety, care and cost containment. Its products are well tuned with top spending priorities of healthcare providers. Further, its strategy to expand globally through acquisitions is perfectly timed given the static capex environment in the U.S. In the most recent quarter, both earnings and revenues beat the Zacks Consensus Estimate, despite being nearly flat on a y-o-y basis. However, the transition of product line to Pyxis ES platform is taking a toll on the company's business. We are also concerned about continued pressure on margins. As such, we recommend the shares as Neutral and set a target of $42.00.

Overview:

San Diego, California based CareFusion Corporation was incorporated on January 14, 2009 in anticipation of spinning off from leading nation-wide drug distributor Cardinal Health. The spinoff was completed on August 31, 2009. The company offers products in the areas of medication management, infection prevention, operating room ("OR") effectiveness, respiratory care and surveillance and analytics. These products help hospitals improve the safety and quality of care.

CareFusion manages the clinical and medical products businesses of Cardinal Health. The initial part of CareFusion's business was formed by established healthcare companies acquired by Cardinal Health, including respiratory care systems maker VIASYS Healthcare Inc. in 2007 and skin-antiseptic products maker Enturia, Inc. in 2008. Afterwards, CareFusion has grown through a number of acquisitions, which include Medegen (produces needleless access valves and administration sets) in May 2010, Vestara (developer of technology solutions for pharmaceutical waste) in April 2011, Rowa (German based producer of robotic medication storage and retrieval systems) in August 2011, PHACTS in April 2012 (provider of inventory and pharmaceutical costs management), UK Medical Holdings (distributor of specialized medical products) in June 2012, and Intermed (respiratory technologies provider in Brazil) in November 2012. CareFusion's businesses have two reportable segments - Medical Systems and Procedural Solutions.

The Medical Systems segment (65.6% of fiscal 2013 revenues) deals with medical equipments. The segment manufactures capital equipment and related products for medication management, including infusion and medication dispensing technologies, supply dispensing technologies and respiratory technologies. Its infusion systems products include IV medication safety and infusion therapy delivery systems, such as dedicated disposables, software applications and related patient monitoring equipment (Alaris brand). Its dispensing technologies products include automated dispensing machines and related applications for distributing and managing medication and medical supplies (Pyxis and Rowa brands). Its respiratory technologies products include respiratory ventilation equipment and dedicated circuits for respiratory therapy, and equipment for respiratory diagnostics (AVEA, Vela, and LTV Series brands).

The Procedural Solutions segment (34.4%) deals with disposable products and reusable surgical instruments. The segment manufactures single-use skin antiseptic and other patient-preparation products, non-dedicated IV infusion administration sets and accessories, reusable surgical instruments and non-dedicated ventilator circuits and other disposables used for respiratory therapy. Its business lines are infection prevention, medical specialties, and specialty disposables. The infection prevention lineup includes single-use skin antiseptic (ChloraPrep brand) and other patient-preparation, hair-removal and skincare products and non-dedicated disposable IV infusion administration sets and accessories (MaxPlus, MaxGuard and SmartSite brands). The medical specialties lineup includes surgical instruments (V. Mueller and Snowden-Pencer brands), interventional specialty products, such as diagnostic trays and biopsy needles, drainage catheters and vertebral augmentation products. The specialty disposables lineup includes disposable ventilator circuits and oxygen masks used for respiratory therapy (Air Life brand).


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CAREFUSION CORP (CFN): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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