PSS World Medical Inc.
), a leading distributor of medical supplies and equipments to
office based physicians, has agreed to sell off its specialty
dental business to privately-owned equity firm, Beecken Petty
O'Keefe & Company ("BPOC") for $68 million.
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PSS WORLD MED (PSSI): Free Stock Analysis
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The deal is expected to close in October 2012, subject to certain
terms and conditions. Per the terms of the deal, both the companies
have agreed to transfer customers and employees in an organized
Management at PSS World Medical is optimistic about selling off its
specialty dental unit to BPOC, based on its expertise in the
healthcare industry. Chicago-based BPOC invests in middle-market
healthcare companies via buy-outs and recapitalizations, and
manages institutional and individual portfolios as well.
The divestment deal is in accordance with PSS World Medical's
restructuring initiative, announced at the end of the first quarter
of fiscal 2013. The company is realigning its businesses in order
to leverage revenue growth, improve operating margins as well as
enhance management execution and overall customer service.
The dental specialty business was a part of PSS World Medical's
Physician business. In the last reported quarter, sales from the
Physician business (including Laboratory) grew 7.3% led by
acquisitions as well as solid gains from disposables and lab
diagnostics, including pharmaceuticals and store brand equipment.
Despite the segment reporting solid growth, the company has decided
to monetize dental specialty unit to focus more on its core
business operations. It plans to utilize the amount generated from
this divestment to expand its four focused business segments viz.
Physician, Laboratory, Dispensing, and Home Care & Hospice.
With a market size opportunity of $7 to $9 billion, the company
expects to expand its Physician business by 25% in the next five
years based on innovative and cutting-edge solutions to improve
caregivers' clinical success as well as financial health.
However, the company faces stiff competition from other companies
Owens & Minor Inc.
). PSS World currently has a short-term Zacks #4 Rank (Sell
Florida-based PSS World Medical distributes diagnostic and
pharmaceutical products and healthcare information technology (IT)
to front-line caregivers in the U.S. It also provides professional
and consulting services to physicians to improve patient care. With
a market cap of $1.13 billion and 4000 employees, the company has
distribution centers located in all 50 states throughout the