CareFusion reported strong first-quarter fiscal 2015 results
wherein both earnings and revenues improved year over year and also
exceeded our expectations. We believe that revenues will continue
to accelerate riding on synergies from the Vital Signs acquisition
and continued momentum in the Dispensing Technologies business.
CareFusion's products are considered among top-spending priorities
of healthcare providers and the company is poised to grow on new
product launches. Moreover, the impending merger with Becton,
Dickinson is expected to generate significant synergies going
forward. However, the company remains exposed to pricing and
utilization headwinds in certain end-markets. Additionally,
regulatory concerns and intensifying competition will remain an
overhang on the stock. As such, we recommend the shares as Neutral
and set a target of $63.00.
San Diego, CA based CareFusion Corp was incorporated on Jan 14,
2009 in anticipation of spinning off from leading nation-wide drug
distributor Cardinal Health. The spinoff was completed on Aug 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
CareFusion reported total revenues of $3.8 billion in fiscal
2014, reflecting year-over-year growth of 8.2%. The company has two
reportable segments - Medical Systems and Procedural Solutions.
The Medical Systems segment (57.3% of total revenues in the
first quarter of fiscal 2015) 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 (42.7%) 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
CareFusion is currently in the process of being acquired by
Becton, Dickinson for $58.00 per share in cash and stock, or a
total of approximately $12.2 billion. The deal, revealed by the
companies on Oct 5, 2014, is expected to close by mid-2015. As a
result of the proposed merger, CareFusion suspended its current
share buyback programs.
CareFusion's fiscal year ends on Jun 30.
CareFusion Corporation (CFN): Read the Full
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