In continuity of its strategic investment plans,
Henry Schein, Inc.
) recently announced the acquisition of a 60% stake in
BioHorizons, a U.S based manufacturer of advanced dental implants
with sales of $115 million. However, the financial terms of the
agreement remain undisclosed.
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Post the takeover, BioHorizons will continue to operate as an
independent company. The transaction involves a two-step process:
a recapitalization through which Henry Schein will lend
approximately $145 million to BioHorizons to fund distribution to
shareholders, which will occur prior to the deal's closure,
followed by the equity investment.
The transaction is expected to be sealed by the end of the year,
subject to regulatory approval. Henry Schein expects the
acquisition to be dilutive to its earnings per share by 3-5 cents
in 2014 and accretive by 3-4 cents in 2015.
The acquisition of BioHorizon marks Henry Schein's entry into the
global implant market, which is estimated to touch $4.2 billion
by 2016. Combined together, the U.S and Canadian markets alone
reveal a potential of $1.5 billion in 2016, up from $1 billiion
Foreseeing the opportunities in the implant market, Henry Schein
has also made investments in CAMLOG Biotechnologies AG, a leading
manufacturer of implants in Europe.
As the Dental business of Henry Schein contributes a major
portion of revenues, the company wants to expand this business
through strategic investments like BioHorizon and others.
The current demographic tailwinds, greater consumer awareness and
high success rates in implant procedures are some of the few
drivers noticed in the implant market. Modern-day digitization in
dental implants also supports performance of the sector
participants by increasing patient comfort and enhancing their
overall dental experience.
One of the largest provider of health care products and services
to office-based dental, animal health and medical practitioners,
Henry Schein expects that such strategic investments will
eventually fortify its foothold in two of the largest implants
markets, namely the U.S and Germany.
The investment in BioHorizon provides Henry Schein the chance to
strengthen its portfolio in the biologics market, a critical
adjunct to the implant market. This is expected to be greatly
beneficial for dental practice as the company already offers its
customers a wide array of products and services associated with
Henry Schein is optimistic about this investment sufficing its
dual objective of providing innovative and modern techniques in
oral healthcare and gaining a prominent position in the dental
Additionally, the animal health arm of Henry Schein recently
acquired an 80% stake in privately-held Medivet S.A., a leading
distributor of animal health products and services in Poland.
We believe apart from organic investment, such inorganic
developments will also boost operational growth for Henry Schein
in the long term.
Currently, Henry Schein carries a Zacks Rank #3 (Hold). Investors
interested in the industry may consider stocks like
Align Technology Inc
Merit Medical Systems, Inc.
). All these stocks carry a #1 (Strong Buy).