Back to top

Analyst Blog

Varian Medical Systems Closes Velocity Software Acquisition

VAR CYNO

 ZacksTrade Now

California-based medical instruments maker Varian Medical Systems, Inc. (VAR - Analyst Report) recently completed its acquisition of certain assets of Velocity Medical Solutions, LLC, which was announced last month. However, since the announcement of completion of the acquisition, shares of VAR dropped 1.0% to close at $83.94 yesterday.

Velocity Medical is a privately-held Atlanta-based developer of specialized software for cancer clinics. The acquisition involves the purchase of Velocity’s software that enables clinicians to aggregate unstructured treatment and imaging data from diverse systems, which can be used to make more informed treatment decisions. VAR expects this buyout to boost its offering of data-driven clinical decision-making support services for clinicians.

The two companies remain tight-lipped regarding the financial terms of the deal. Nevertheless, VAR announced that it plans to continue the development of this oncology software platform with the Velocity team in Atlanta, GA.

The Velocity software has already been used at over 200 cancer treatment centers globally. Post-acquisition, VAR expects its global sales, service and support network to contribute to faster and deeper market penetration for the Velocity product.
 
In January this year, VAR also inked a 3-year, $515 million deal with Toshiba Medical Systems to supply its medical imaging components for integration into Toshiba's imaging systems in order to jointly develop new product technologies for the imaging market.

Recent Earnings

For the first quarter of fiscal 2014, VAR reported a 5.8% rise in net earnings per share to 91 cents from 86 cents in the prior-year fiscal quarter, which also inched past the Zacks Consensus Estimate by a penny. With this, VAR also met its own guidance of a 6–7% rise in earnings per share to 87–91 cents for the said quarter.

Revenues in the quarter grew nearly 5.0% to $711.5 million, but lagged the Zacks Consensus Estimate of $718 million.

Growth in revenues was attributable to the continued strong demand for Oncology services as evidenced by a 2.7% rise in net orders for Oncology Systems to $489.6 million during the quarter.

Revenues from X-Ray Products segment went up 9.1% to $145.0 million in the quarter, driven by market traction for VAR’s X-Ray Imaging components, also contributing to overall revenue growth.

For fiscal 2014, VAR expects revenues to grow by 6–8% compared with the earlier guidance of 6–7%. However, the company reiterated its earnings per share guidance between $4.22 and $4.34 for the year. The current Zacks Consensus Estimate of $4.29 lies within the guided range.

Zacks Rank

Currently, VAR has a Zacks Rank #2 (Buy). Other stocks performing well in the medical instruments industry include Cynosure, Inc. (CYNO - Snapshot Report), Syneron Medical Ltd. and Delcath Systems, Inc. . All three stocks sport a Zacks Rank #1 (Strong Buy).
 

Read the Full Research Report on VAR
Read the Full Research Report on ELOS
Read the Full Research Report on DCTH
Read the Full Research Report on CYNO


Zacks Investment Research

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
CTPARTNERS… CTP 13.33 +3.49%
SAIA INC SAIA 45.65 +1.00%
VASCO DATA… VDSI 13.57 +0.67%
AMEDISYS IN… AMED 20.18 +0.10%
FIRSTSERVIC… FSRV 55.66 -0.13%