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Boston Scientific (BSX) to Broaden Stent Portfolio With Buyout

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Boston Scientific Corporation (BSX - Free Report) recently agreed to purchase the majority stake in M.I.Tech Co., Ltd from Synergy Innovation Co., Ltd. This latest investment is aimed at broadening Boston Scientific’s stent portfolio within the broader MedSurg business globally.

The purchase price has been fixed at $230 million per the current exchange rate. The transaction is expected to be closed in the second half of 2022, subject to customary closing conditions.

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M.I.Tech is a publicly-traded Korean manufacturer and distributor of medical devices for endoscopic and urologic procedures. The company’s HANAROSTENT technology is a family of conformable, non-vascular, self-expanding metal stents. This HANAROSTENT series of M.I.Tech has been distributed by Boston Scientific in Japan since 2015.

Financial Terms in Detail

Boston Scientific’s agreement to purchase a 64% stake in M.I.Tech includes a purchase price of KRW 14,500 per share or a total consideration of KRW 291.2 billion or approximately $230 million at current exchange rates, subject to closing adjustments.

The impact of this acquisition on BSX’s GAAP and adjusted earnings per share is expected to be immaterial in 2022.

Importance of the Deal

According to Boston Scientific, M.I.Tech’s product offerings complement the company’s existing stent portfolio, including the differentiated AXIOS Stent and Electrocautery Enhanced Delivery System and the flexible and conformable Agile Esophageal Stent System.

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Boston Scientific noted that, in many cases, non-vascular gastrointestinal and airway stent placement is minimally invasive and aids faster patient recovery compared to surgery.  M.I.Tech’s HANAROSTENT technology features a unique hook-cross nitinol design intended to provide a natural and flexible fit within a patient's anatomy as well as flared ends to help prevent stent migration.

BSX's Inorganic Growth

We are impressed with Boston Scientific’s recent acquisitions that have added numerous products (though many are under development) with immense potential. These, in turn, should help boost the top line in the long term. The company is optimistic about recently acquired Israel-based Lumenis that develops and commercializes energy-based medical solutions. The acquisition expands Boston Scientific’s Urology portfolio with its differentiated laser technology.

Apart from this, Preventice Solutions (which offers new-generation detection algorithms, a broad portfolio with BodyGuardian MINI and establishes a strong position for Boston Scientific in the field of cardiac diagnostics) grew 20% on a full-year pro forma basis in 2021, driven by the company’s differentiated portfolio and strong execution. Within Electrophysiology, the early launch of Farapulse has been progressing well in Europe.

In February 2022, Boston Scientific completed the purchase of Baylis Medical Company for an upfront payment of $1.75 billion. The acquisition is expected to expand the company’s electrophysiology and structural heart product offerings with the addition of the radiofrequency NRG and VersaCross Transseptal Platforms as well as a range of guidewires, sheaths and dilators.

The company closed the acquisition of Devoro during the fourth quarter of 2021 and is currently looking forward to launching its arterial and venous offerings in the second half of 2022.

Share Price Performance

Over the past year, Boston Scientific has outperformed the industry it belongs to. The stock has lost 15.8% compared with the industry’s 31.8% fall.

Zacks Rank and Key Picks

Currently, Boston Scientific carries a Zacks Rank #3 (Hold).

A few better-ranked stocks in the broader medical space are Alkermes plc (ALKS - Free Report) , AMN Healthcare Services, Inc. (AMN - Free Report) and Medpace Holdings, Inc. (MEDP - Free Report) .

Alkermes has an estimated long-term growth rate of 25.1%. Alkermes’ earnings surpassed estimates in the trailing four quarters, the average surprise being 350.5%. It currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Alkermes has outperformed the industry in the past year. ALKS has gained 11% against the industry’s 46% decline in the said period.

AMN Healthcare has a long-term earnings growth rate of 1.1%. The company surpassed earnings estimates in the trailing four quarters, delivering a surprise of 15.6%, on average. It currently flaunts a Zacks Rank #1.

AMN Healthcare has outperformed its industry in the past year. AMN has gained 0.7% against the industry’s 53.5% fall.

Medpace has a historical growth rate of 27.3%. Medpace’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.1%. It currently has a Zacks Rank #2 (Buy).

Medpace has outperformed its industry in the past year. MEDP has declined 26% compared with the industry’s 53.5% fall.

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