) completed the acquisition of Hemerus Medical, a Minn.-based
company that develops technologies for the collection of whole
blood, and processing and storage of blood components. Notably,
Haemonetics earlier paid $1 million in this regard and waited for
Hemerus to receive approval from the US Food and Drug
Administration (FDA) for SOLX red cell storage solution.
According to its plan, following the recent FDA approval for
Hemerus' New Drug Application for the SOLX' whole blood
collection system for 8-hour storage, the company closed the deal
paying another $23 million. Haemonetics is going to pay another
$3 million upon further FDA approval of the SOLX solution for
24-hour whole blood storage prior to processing. In addition, it
has also committed to pay an additional $14 million on future
sales of SOLX-based products. We note that Hemerus'
solutions are largely accepted in the European Union markets as
the company previously received CE Mark for SOLX as the world's
first 56-day red blood cell storage solution.
Haemonetics is optimistic about this acquisition and expects
successful integration of the Hemerus' SOLX collection
system. The company believes SOLX to complement the portfolio of
its newly added whole blood collection; filtration and processing
product lines. Earlier in Aug 2012, Haemonetics acquired the
transfusion medicine business of
), which includes blood collection, filtration and processing
With the acquisition of the transfusion medicine business of
Pall Corporation, Haemonetics forayed into the $1.2 billion whole
blood collection market. With the integration process on track,
performance of this business during the last reported quarter has
been satisfactory. The company reported $55 million of revenues
from this acquired whole blood business in the quarter.
Manual whole blood collection accounts for the vast majority
of the nearly 60 million red blood cells collection procedures
performed annually worldwide. The entry into the whole blood
market precedes the planned launch of its automated whole blood
product. Automated whole blood collection is considered an
important growth driver for the company.
Low global penetration and demand outstripping supply provide
a positive long-term thesis for investing in the blood processing
and supply chain management industry. A stable cash balance
coupled with strong free cash flow generation has enabled
Haemonetics to target acquisitions. We are also encouraged by the
recovery in the Plasma business and the company's focus on
emerging markets to drive growth. However, the uncertain economic
scenario continues to pose challenges for Haemonetics. Moreover,
competition from rivals is on a rise. Haemonetics currently
retains a Zacks Rank #3 (Hold).
Other Stocks to Consider
While we prefer to remain on the sideline on Haemonetics,
other medical device stocks worth a look are
). Both these stocks carry a Zacks Rank #1 (Strong Buy).
HAEMONETICS CP (HAE): Free Stock Analysis
HEALTHSOUTH CP (HLS): Free Stock Analysis
NUVASIVE INC (NUVA): Free Stock Analysis
PALL CORP (PLL): Free Stock Analysis Report
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