Markets

CONMED Inks Agreement to Acquire SurgiQuest; Stock Gains

Shares of CONMED CorporationCNMD surged 8.2% ($3.14) to close at $41.48 on Nov 16, following the announcement of a definite agreement to acquire SurgiQuest. The deal, which is valued at $265.8 million, is expected to close in the first quarter of 2016.

SurgiQuest, founded in 2006, is known for its AirSeal System - an integrated access management technology for use in laparoscopic and robotic procedures. The system has been used in over 250,000 procedures globally.

Clinical data has affirmed that the AirSeal System helps to cut down procedure time and is also helpful in lessening post-operative pain. Post completion of the acquisition, the AirSeal System will be added to CONMED's Advanced Surgical portfolio.

CONMED does not expect this transaction to have any effect on its fiscal 2015 results. However, in fiscal 2016, the acquisition is expected to add $55-$60 million to CONMED's revenues. Additionally, the transaction, once completed, is expected to generate net cost savings of $15 million on an annualized basis. CONMED also expects the acquisition to provide double-digit accretion to the company's earnings in fiscal 2016.

We believe that the acquisition of SurgiQuest will somewhat help to address CONMED's dwindling top line. In the last reported quarter, net sales fell 3.3% to $169.2 million and also lagged the Zacks Consensus Estimate. The addition of AirSeal System to its product portfolio will help CONMED gain a competitive edge over its peers.

However, CONMED is subject to reimbursement-related risks. A tough hospital spending environment, pricing pressure in the orthopedic industry and an unfavorable foreign exchange rate prevail as major headwinds.

Zacks Rank and Key Picks

Currently, CONMED carries a Zacks Rank #5 (Strong Sell). Better-ranked stocks in the medical space are EDAP TMS SA EDAP , Natus Medical BABY and Masimo MASI . All the stocks sport a Zacks Rank #1 (Strong Buy).

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days . Click to get this free report >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

CONMED CORP (CNMD): Free Stock Analysis Report

MASIMO CORP (MASI): Free Stock Analysis Report

NATUS MEDICAL (BABY): Free Stock Analysis Report

EDAP TMS SA-ADR (EDAP): Free Stock Analysis Report

To read this article on Zacks.com click here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story

CNMD NTUS MASI EDAP

Other Topics

Stocks

Latest Markets Videos