Cooper Companies Arm Acquires Recombine Assets for $85M

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A division of The Cooper Companies Inc. COO , CooperSurgical (CSI), recently acquired the commercial assets of New York-based Recombine Inc., for approximately $85 million. Recombine specializes in carrier screening, a kind of genetic testing performed on individuals that helps in predicting the chances of having a child with genetic disorders.

Recombine's carrier screening platform - CARRIERMAP -- helps in detecting almost 300 genetic diseases. The testing is commonly ordered by a gynecologist/obstetrician or infertility specialist and is ideally performed before or during early pregnancy.

Once couples are found to be carriers of the same disorder, they can undergo a pre-implantation genetic diagnosis (PGD) which helps in lowering the risks embryos may suffer from inherited genetic disorders.

As of Apr 30, 2016, Recombine had trailing twelve month revenues of approximately $20 million which is forecasted to grow double digits going ahead. The acquisition is expected to be neutral to Cooper's earnings in fiscal 2016, but is forecasted to be accretive afterwards.

The latest deal follows the acquisition of Plymouth, MI-based Genesis Genetics, which Cooper Companies had announced in early April. Genesis specializes in pre-implantation genetic screening (PGS) and PGD tests. The acquisition significantly reduced competition for Reprogenetics, another company that has been acquired by CooperSurgical.  

All the three acquisitions (Reprogenetics, Genesis and Recombine) are expected to expand Cooper Companies' presence in the fertility market. Moreover, these buyouts expand Cooper's international presence by opening up markets in the Spain, the U.K., Japan, Peru, South America, the UAE, South Africa, Jordan and Taiwan.

Cooper Companies believes that CSI's long-term growth will be driven by the fertility segment, which reported revenues of $31 million, up 24% from the year-ago quarter. Management forecasts CSI revenues at around $355-$365 million, compared with the previous $325-$335 million range for fiscal 2016.

We believe accretive acquisitions will boost Cooper Companies' competitive position in the women healthcare space against the likes of Johnson & Johnson's JNJ Ethicon Endo-Surgery, Boston Scientific BSX , Olympus and Covidien.

Zacks Rank & A Key Pick

Currently, Cooper Companies carries a Zacks Rank #2 (Buy). Another favorably ranked stock in the medical sector is Halyard Health HYH , which sports a Zacks Rank #1 (Strong Buy).

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This article appears in: Business , Investing , Stocks
Referenced Symbols: JNJ , BSX , COO ,

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