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OPKO Health (OPK) Inks Agreement to Sell Its Ireland Facility

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OPKO Health, Inc. (OPK - Free Report) recently announced that its subsidiary, EirGen Pharma, Ltd., has inked a definitive agreement with Horizon Therapeutics Public Limited Company (HZNP - Free Report) to sell one of its facilities in Waterford, Ireland to the latter. For investors’ note, the facility houses EirGen’s sterile-fill-finish business.

The transaction, which requires $65 million in cash less certain adjustments, is expected to close in roughly a month, subject to governmental consent in Ireland and required closing conditions.

With the closing of the latest deal, OPKO Health is expected to strengthen its Pharmaceutical business on a global scale.

Rationale Behind the Deal

Per OPKO Health’s management, the company will be able to focus EirGen’s business on oral solid dose products post sale of the facility. As the facility will cease to be a core component of the company’s ongoing operations and business strategy, the latter will be able to monetize the asset.

This is expected to provide a meaningful return on OPKO Health’s invested capital, thereby improving its balance sheet by reducing expenses and boosting efficiency.

Industry Prospects

Per a report by Future Market Insights, the global oral solid dosage pharmaceutical formulation market is expected to grow from $493.2 billion in 2017 to $926.3 billion by 2027-end at a CAGR of 6.5%. Factors like cost effectiveness and ease of manufacturing, and trouble-free packaging and transportation are likely to drive the market.

Given the market potential, the sell-off decision to focus on its oral solid dose product line is likely to provide a significant boost to OPKO Health’s business globally.

Notable Developments

Of late, OPKO Health has witnessed a few notable developments across its business.

The company, in May, transferred the licensed rights to RAYALDEE in Japan from Japan Tobacco Inc. to Vifor Fresenius Medical Care Renal Pharma.

OPKO Health reported impressive first-quarter 2021 results in April, where it recorded robust revenues from its Pharmaceuticals business. The uptick was driven by an increase in sales at OPKO Chile and FineTech.

Also in April, BioReference Laboratories, Inc. (a full-service laboratory with a core genetic testing business and an OPKO Health company), announced its renewal as the COVID-19 testing provider for Major League Soccer (“MLS”), which began on April 17 along with the 2021 MLS season.

Price Performance

Shares of the company have gained 40.7% in the past year compared with the industry’s 18.3% growth and the S&P 500's 35.7% rise.

Zacks Investment ResearchImage Source: Zacks Investment Research

Zacks Rank & Key Picks

Currently, OPKO Health carries a Zacks Rank #3 (Hold).

A couple of better-ranked stocks from the broader medical space are Veeva Systems Inc. (VEEV - Free Report) and National Vision Holdings, Inc. (EYE - Free Report) .

Veeva Systems’ long-term earnings growth rate is estimated at 15.8%. The company presently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

National Vision’s long-term earnings growth rate is estimated at 23%. It currently sports a Zacks Rank #1.

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