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BD (BDX) to Expand Base in Pharmacy Automation With New Buyout

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Becton, Dickinson and Company (BDX - Free Report) , popularly known as BD, along with Frazier Healthcare Partners, recently announced a definitive agreement for the former to acquire Parata Systems for $1.525 billion. The transaction is expected to close by the end of the first half of BD's fiscal year 2023, upon the satisfaction of customary closing conditions, including receipt of regulatory clearances.

It is worth mentioning that the transaction is expected to be immediately accretive to BD’s revenue growth, adjusted operating margin and adjusted earnings per share, and improve its ability to achieve its long-range targeted growth.

The latest buyout is anticipated to significantly expand BD’s presence in the global pharmacy automation space and complement its Medication Management Solutions business unit.

Rationale Behind the Buyout

Parata Systems’ portfolio of pharmacy automation solutions aids a growing network of pharmacies to lower costs, boost patient safety and enhance patient experience. On the back of automation and advanced software, pharmacists will be able to dedicate more time to higher-value clinical work and patient interactions to help improve medication adherence, medication safety and patient outcomes.

Following the buyout, BD’s Medication Management Solutions business unit will be complemented with a new set of technologies across the care continuum, including acute care health systems, retail pharmacies, long-term care and home settings.

Per BD’s management, the addition of Parata Systems is expected to aid BD to advance its 2025 growth strategy around smart, connected care and enabling new care settings.

Industry Prospects

Per a report by MarketsandMarkets, the global pharmacy automation market is anticipated to reach $8.2 billion by 2027 from $5.6 billion in 2022 at a CAGR of 7.9%. Factors like growing focus on automation to reduce labor costs and increasing specialty drug dispensing are likely to drive the market.

Given the market potential, the latest buyout is expected to significantly strengthen BD’s business worldwide.

Recent Developments

This month, BD announced its plans to unveil a new cell sorting technology — BD FACSDiscover S8 Cell Sorter — at the recently concluded International Society for Advancement of Cytometry CYTO 2022 conference.

In May, BD announced the U.S. launch of its new, fully automated, high-throughput infectious disease molecular diagnostics platform, BD COR MX instrument. The instrument, which has received the FDA’s 510(k) clearance, is a new analytic instrument option for the BD COR System.

The same month, BD announced the expansion of its strategic partnership with Babson Diagnostics to move blood sample collection into new care settings, including enabling patients to collect blood samples at home for diagnostic testing.

Price Performance

The BD stock has gained 5.9% over the past year against the industry’s 4.5% fall and the S&P 500's 5.2% decline.

Zacks Investment Research
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Zacks Rank & Stocks to Consider

Currently, BD carries a Zacks Rank #4 (Sell).

Some better-ranked stocks in the broader medical space are AMN Healthcare Services, Inc. (AMN - Free Report) , HealthEquity, Inc. (HQY - Free Report) and Masimo Corporation (MASI - Free Report) .

AMN Healthcare, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 1.1%. AMN’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 15.6%.

You can see the complete list of today’s Zacks #1 Rank stocks here.

AMN Healthcare has gained 7.8% against the industry’s 63.7% fall in the past year.

HealthEquity, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 19.4%. HQY’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average beat being 1.4%.

HealthEquity has lost 16.2% compared with the industry’s 63.7% fall over the past year.

Masimo, carrying a Zacks Rank #2 at present, has an earnings yield of 3.3% against the industry’s negative yield. MASI’s earnings surpassed estimates in the trailing four quarters, the average beat being 4.4%.

Masimo has lost 33.6% compared with the industry’s 16.1% fall over the past year.