Roche Holdings AG (RHHBY Quick QuoteRHHBY - Free Report) is set to acquire privately-held healthcare technology and services company Flatiron Health, Inc.

Both companies signed a definitive agreement whereby Roche will acquire all shares of Flatiron Health. Roche currently has an existing equity stake of 12.6%.

Roche will pay $1.9 billion for the acquisition. The transaction is expected to close in the first half of 2018.

New-York based Flatiron Health is a market leader in oncology-specific electronic health record software, as well as the curator and developer of real-world evidence for cancer research.

Per Roche, Flatiron Health is best positioned to provide the technology and data analytics infrastructure needed. Upon the closing of the deal, Flatiron Health will continue its current business model, network of partnerships and overall objectives.

Roche has been active on the acquisition front. In December 2017, Roche entered into a definitive merger agreement with Ignyta, Inc. at a price of $27 per share or total value of $1.7 billion in an all-cash transaction.

Roche has a strong presence in the oncology market. In particular, the company dominates the breast cancer space with strong demand for its HER2 franchise drugs.  Apart from its strong breast cancer franchise, Roche’s oncology portfolio also boasts drugs like Avastin and Tarceva for lung cancer.

Roche’s stock has lost 3.6% in the last six months as against industry's gain of 7.2%.

However, we remind investors that competition from Amgen’s (AMGN Quick QuoteAMGN - Free Report) and Novartis’ (NVS Quick QuoteNVS - Free Report) biosimilars loom large on Roche’s key drugs.

Zacks Rank & Stock to Consider

Roche carries a Zacks Rank #3 (Hold).

A better-ranked stock from the health care space is Exelixis (EXEL Quick QuoteEXEL - Free Report) , carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Exelixis’ earnings per share estimates have moved up from 72 cents to 77 cents for 2018 in the last 60 days. The company delivered positive earnings surprise in the last four quarters, with an average beat of 572.92%.

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