Roper Industries Inc.
) recently acquired two medical solution providers namely Strategic
Healthcare Programs (SHP) and Innovative Product Achievements (IPA)
for an unknown amount.
Santa Barbara-based SHP's Software-as-a-Service (SaaS)-based
analytics platform delivers software and informatics solutions to
more than 3000 post-acute healthcare organizations. Suwanee-based
IPA manufactures automated surgical scrub dispensing equipment for
more than 650 hospitals throughout North America.
Roper Industries plans to integrate both the companies into the
Medical & Scientific Imaging segment. The company expects the
acquisitions to contribute meaningfully to 2015 earnings.
Of late, Roper Industries has been actively pursuing strategic
acquisitions. In July, the company acquired Los Gatos-based
FoodLink and integrated it within its subsidiary iTradeNetwork, its
leading SaaS solution provider to the global food and beverage
The combination will help Roper Industries to leverage FoodLink's
strengths in warehouse management, food safety and traceability
solutions in the long run. Per Roper Industries, the merger created
the industry's largest end-to-end supply chain data, commerce and
Over the years, acquisitions have been an integral part of Roper
Industries' growth story. In 2013, the company completed the
acquisition of Managed Health Care Associates (MHA) for $1.0
billion. The company also bought 100% shares of Advanced Sensors,
Ltd for $54 million in cash.
In 2012, Roper Industries acquired six businesses for $1.47
billion. In the ongoing third quarter, the company has spent $303
million on acquisitions. However, this has negatively impacted its
asset quality and debt levels. As of Jun 30, 2014, goodwill and
intangible assets were $6.52 billion or 79% of total assets. Total
debt was $2.34 billion at the end of the second quarter.
Nevertheless, Roper Industries has a superior track record of
acquiring high-margin businesses, particularly companies providing
medical solutions. Successful integration of the
acquisitions has contributed meaningfully to top-line and margin
growth. In 2013, acquisitions contributed 7% of revenue growth and
8% of order growth.
In the recently concluded second quarter, acquisitions contributed
5% of both revenue and order growth. Revenues increased 13% year
over year to $885.2 million, which comfortably beat the Zacks
Consensus Estimate of $874.0 million. We believe that Roper
Industries will continue to pursue strategic acquisitions that will
not only boost its product portfolio and market share but also
Accretive acquisition along with a strong backlog will help Roper
Industries to face growing competition from Danaher Corp. (
), Dover Corp. (
) and Ingersoll-Rand Plc (
) over the long run.
Currently, Roper has a Zacks Rank #2 (Buy).
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