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McKesson (MCK) to Acquire RxCrossroads for $735 Million
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McKesson Corp. (MCK - Free Report) recently announced that it has entered into an agreement to buy RxCrossroads from CVS Health Corp. (CVS - Free Report) . RxCrossroads is a provider of tailored services to pharmaceutical and biotechnology manufacturers. The transaction is valued at $735 million. The deal will be entirely funded by cash on hand. The acquisition is expected to close in fourth-quarter 2017.
We believe that the buyout will enhance McKesson's existing commercialization solutions for manufacturers of branded, specialty, generic and biosimilar drugs, including comprehensive patient support services, custom pharmacy solutions and third-party logistics. This would also allow the company to expand end-to-end offerings for manufacturers. RxCrossroads will become part of the company's Specialty Health business. McKesson expects this transaction to prove accretive to adjusted earnings per share by approximately 20 cents within the third year following the close of the transaction.
In recent times, McKesson has been witnessing increased price competition in the independent retail pharmacy channel, which eventually resulted in reduced volumes. The company continues to face market competition for selling generic pharmaceuticals in the United States. However, the company expects to overcome the independent pharmacy sell-side pricing impact by the end of 2018. Furthermore, cutthroat competition in the niche markets, currency headwinds and reimbursement issues remain challenges.
In the last three months, McKesson has been trading below the industry. The company has lost 14.0% as against the industry’s gain of 1.8%. The current level is also lower than the S&P 500’s rally of only 4.7%.
Zacks Rank and Key Picks
Currently, McKesson carries a Zacks Rank #3 (Hold).
Inogen has a long-term expected earnings growth rate of 17.50%. Notably, the stock represents an impressive one-year return of 99.5%.
Luminex has a long-term expected earnings growth rate of 16.25%. Additionally, the stock represents an impressive one-year return of 20.3%.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
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McKesson (MCK) to Acquire RxCrossroads for $735 Million
McKesson Corp. (MCK - Free Report) recently announced that it has entered into an agreement to buy RxCrossroads from CVS Health Corp. (CVS - Free Report) . RxCrossroads is a provider of tailored services to pharmaceutical and biotechnology manufacturers. The transaction is valued at $735 million. The deal will be entirely funded by cash on hand. The acquisition is expected to close in fourth-quarter 2017.
We believe that the buyout will enhance McKesson's existing commercialization solutions for manufacturers of branded, specialty, generic and biosimilar drugs, including comprehensive patient support services, custom pharmacy solutions and third-party logistics. This would also allow the company to expand end-to-end offerings for manufacturers. RxCrossroads will become part of the company's Specialty Health business. McKesson expects this transaction to prove accretive to adjusted earnings per share by approximately 20 cents within the third year following the close of the transaction.
In recent times, McKesson has been witnessing increased price competition in the independent retail pharmacy channel, which eventually resulted in reduced volumes. The company continues to face market competition for selling generic pharmaceuticals in the United States. However, the company expects to overcome the independent pharmacy sell-side pricing impact by the end of 2018. Furthermore, cutthroat competition in the niche markets, currency headwinds and reimbursement issues remain challenges.
In the last three months, McKesson has been trading below the industry. The company has lost 14.0% as against the industry’s gain of 1.8%. The current level is also lower than the S&P 500’s rally of only 4.7%.
Zacks Rank and Key Picks
Currently, McKesson carries a Zacks Rank #3 (Hold).
A few better-ranked stocks in the broader medical sector are Inogen Inc. (INGN - Free Report) and Luminex Corporation . Both the stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Inogen has a long-term expected earnings growth rate of 17.50%. Notably, the stock represents an impressive one-year return of 99.5%.
Luminex has a long-term expected earnings growth rate of 16.25%. Additionally, the stock represents an impressive one-year return of 20.3%.
Zacks' Hidden Trades
While we share many recommendations and ideas with the public, certain moves are hidden from everyone but selected members of our portfolio services. Would you like to peek behind the curtain today and view them?
Starting now, for the next month, I invite you to follow all Zacks' private buys and sells in real time from value to momentum...from stocks under $10 to ETF to option movers...from insider trades to companies that are about to report positive earnings surprises (we've called them with 80%+ accuracy). You can even look inside portfolios so exclusive that they are normally closed to new investors.
Click here for Zacks' secret trade>>