Ecolab Inc. ECL has completed the sale of its global surgical solutions business to Medline for approximately $950 million in cash. Medline had announced a definitive agreement to acquire Ecolab's global surgical solutions business, including the Microtek product lines, on Apr 30, 2024.
Following the sale, Ecolab will continue serving hospitals through its infection prevention and instrument reprocessing businesses, which provide environmental hygiene programs and cleaning and sterilization solutions for instruments.
Significance of the Sale
Per Ecolab, the completion of this sale marks a strategic shift for the company, enabling it to focus on its core competencies in infection prevention and instrument reprocessing.
The proceeds from the transaction will bolster Ecolab's balance sheet, enhancing its ability to invest in attractive growth opportunities and return capital to shareholders. Ecolab intends to repurchase up to an additional $500 million of its stock during the second half of 2024. This move is expected to occur through various means, including open market purchases and privately negotiated transactions, depending on market conditions.
Ecolab plans to repurchase shares in the open market through privately negotiated transactions. As of Jun 30, 2024, Ecolab had approximately 285 million shares outstanding.
Industry Prospects
Per a report in Future Market Insights, the global infection prevention industry market is expected to be worth $48.5 billion in 2024. It is anticipated to reach $55.4 billion by 2034 at a CAGR of 3.1%.
The robust growth is likely due to increased surgical and clinical procedures requiring intense infection prevention. The global rise in surgeries is driven by the prevalence of lifestyle-related illnesses, increased obesity, and a higher incidence of severe injuries among athletes, particularly those affecting the spine and elbows. These factors have led to a heightened demand for infection prevention kits. Positive clinical outcomes associated with effective infection control also contribute to their demand.
A Recent Development
In June, Ecolab's Purolite resin business, in collaboration with Repligen Corporation, launched the DurA Cycle protein A chromatography resin for large-scale purification processes. This new affinity resin, designed for the commercial manufacturing of monoclonal antibodies, aims to reduce costs for biological drug developers. DurA Cycle is the latest in a series of innovations from Purolite, following the launch of two other resins in the past 18 months to tackle complex drug purification challenges.
Price Performance
Shares of Ecolab have increased 21.1% so far this year against an 18.3% decline of the industry. The S&P 500 has witnessed a 16% rise in the same time frame.
Image Source: Zacks Investment Research
Zacks Rank & Other Key Picks
Currently, Ecolab carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space are Universal Health Service UHS, Quest Diagnostics DGX and ABM Industries ABM. While Universal Health Service sports a Zacks Rank #1 (Strong Buy), Quest Diagnostics and ABM Industries carry a Zacks Rank #2 each. You can see the complete list of today’s Zacks #1 Rank stocks here.
Universal Health Service has an estimated long-term growth rate of 19%. UHS’ earnings surpassed estimates in each of the trailing four quarters, with the average being 14.58%.
Universal Health Service has gained 41.1% compared with the industry's 34.8% rise so far this year.
Quest Diagnostics has an estimated long-term growth rate of 6.20%. DGX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 3.31%.
Quest Diagnostics shares have gained 3.7% so far this year compared with the industry’s 10.2% rise.
ABM Industries’ earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 7.34%.
ABM's shares have risen 24.1% so far this year compared with the industry’s 11.9% increase
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