CareFusion Unveils New Technologies - Analyst Blog


CareFusion Corp. ( CFN ) unveiled a number of technologies that will lead to better medication management with improved safety, efficiency and cost of intravenous (IV) medications. These technologies will be capable of tracking IV medication, both used and unused. Following the announcement, shares of the company rose 1.4% to $40.24 but started moving sideways therafter.

The first technology comes under the Pyxis brand, known as the Pyxis IV system. This technology is capable of locating IV medications across the hospital and determining the status of its delivery process.

The next technologies come under the Alaris brand of infusion systems. First is interoperability with EHR systems, which enable infusion pumps to receive medication orders from the Electronic Health Record (EHR) and pre-populate the infusion parameters. After that, the infusion data is sent back to the EHR for clinical documentation and surveillance.

CFN also introduced Alaris Infusion Viewer for Charge Capture. It is a software application for the Alaris System that captures infusion data to support accurate billing and improved reimbursement opportunities. The infusion data is attached to specific patients and can be used to make decisions in assigning billing codes, helping hospitals to adhere to guidelines from the Centers for Medicare and Medicaid Services outpatient prospective payment system.

Further, CareFusion unveiled U.S. FDA-cleared SmartSite VialShield needle-free closed system transfer device (CSTD) that is available for all vial sizes. It is the only CSTD that achieves a closed system without the need for additional components when used in conjunction with Alaris IV sets. The system protects health care personnel and patients from exposure to hazardous drug vapor, spillage, spraying or surface contamination during drug reconstitution, transport and administration.

Apart from the above-mentioned technologies, CFN launched CareFusion SmartWorks, which is an enterprise-platform for CareFusion technologies. SmartWorks facilitates a common source of data with a single architecture across all CareFusion devices to standardize interoperability between devices and health care information technology (HCIT) systems.

Recently, CFN revealed that it has signed an agreement to acquire Vital Signs division of GE Healthcare for $500 million that will not only expand its Specialty Disposables business under the Procedural Solutions segment internationally but establish itself as a leader in the $3 billion market for respiratory and anesthesia consumables.

The acquisition is expected to result in synergies of $10 to $15 million per annum on a pretax basis by fiscal 2017. It is expected to be neutral to modestly accretive to CareFusion adjusted earnings per share in fiscal 2014 and accretive in fiscal 2015 by 5 to 8 cents, excluding amortization of acquired intangible assets, non-cash inventory valuation step-up charges, and nonrecurring restructuring, integration, and tax charges. Further, CFN expects continued earnings accretion in fiscal 2016 and beyond.

CareFusion will acquire the Vital Signs business in the U.S., China and other countries by Dec 31, 2013. The company expects to finalize the remainder of the transaction during its third quarter, ending Mar 31, 2014.

CareFusion, a Zacks Rank #3 (Hold) stock, posted flat adjusted earnings per share of 44 cents for the first quarter of fiscal 2014 compared with the comparable quarter a year ago, but exceeded the Zacks Consensus Estimate of 40 cents. Adjusted net earnings fell marginally by 3% to $96 million from $99 million a year ago.

Revenues in the quarter dipped marginally by nearly 1% (both in reported and constant currency) to $830 million, topping the Zacks Consensus Estimate of $818 million. The decrease was driven by fall in Medical Systems revenues.

For fiscal 2014, CFN continues to expect revenues to grow between 1% and 4% on a constant currency basis. Adjusted earnings are also expected to lie in the previously guided range of $2.30 to $2.40 per share.

The guidance is based on an assumed weighted average outstanding share count of approximately 215 million, which includes the impact of expected share repurchases during fiscal 2014.

Better-ranked stocks in the medical products industry include Bio-Rad Laboratories, Inc. ( BIO ), Hill-Rom Holdings, Inc. ( HRC ), and NuVasive, Inc. ( NUVA ). All of them carry a Zacks Rank #1 (Strong Buy).

BIO-RAD LABS -A (BIO): Free Stock Analysis Report

CAREFUSION CORP (CFN): Free Stock Analysis Report

HILL-ROM HLDGS (HRC): Free Stock Analysis Report

NUVASIVE INC (NUVA): 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.

This article appears in: Investing , Business , Stocks

Referenced Stocks: BIO , CFN , HRC , NUVA

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