) has forged a new agreement with Bupa Care Homes to take over
the entire outstanding share capital of SurgiChem Limited, a
wholly-owned subsidiary of Bupa. The cash transaction is valued
at $19.6 million, subject to certain adjustments and clearance
from the UK competition authorities.
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OMNICELL INC (OMCL): Free Stock Analysis
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SurgiChem, based in Stockport, U.K. with 21 employees, is a
provider of medication adherence packaging systems and solutions
to the UK community and home care markets.
Omnicell, a leading provider of medication and supply management
solutions to healthcare systems, serves a niche industry but
faces stiff competition in the market. However, it expects to
shield itself by pursuing a three-pronged strategy of domestic
expansion, selective acquisitions and targeted international
The MTS Medication Technologies subsidiary has consistently
yielded encouraging results for Omnicell. This has prompted the
company to further penetrate the non-acute care market on the
back of strategic investments.
Medication non-adherence is gradually emerging as a potent issue
in public health care systems. The market holds underlying
opportunities as both healthcare systems and community pharmacies
are of the view that medication adherence is a key to delivering
better clinical outcomes and financial results. Poor adherence
increases chances of medical complications, to the extent of
death and morbidity. It can shoot healthcare expenses up by as
high as $290 billion annually and cause 125,000 deaths in a year.
The present scenario of the market, has encouraged Omnicell to
undertake such an acquisition. It is expected to set a platform
for the company to provide comprehensive solutions, as its MTS
brand of products and the SurgiChem products complement each
other well in addressing the medical adherence problem in the
U.K. This integration is expected to widen the range of products
and services across the UK medication adherence packaging market.
The acquisition will widen Omnicell's scope within a niche
segment by increasing penetration levels in the overseas market.
We believe that such selective buyouts, particularly outside
U.S., will help Omnicell generate impressive revenues and ease
the pressure on margin expansion in the long run.
Currently, Omnicell carries a Zacks Rank #4 (Sell). Investors
interested in the industry can look at stocks like
Align Technology Inc.
) sports a Zacks Rank #1 (Strong Buy) while
Cardinal Health, Inc.
) carry a Zacks Rank #2 (Buy).