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AmerisourceBergen's (ABC) New JV to Boost Oncology Care
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AmerisourceBergen Corporation , along with TPG Inc. (TPG - Free Report) , recently announced that they have agreed to acquire OneOncology, a network of oncology practices, from General Atlantic. TPG, AmerisourceBergen and OneOncology’s affiliated practices, physicians, and management team will form the new joint venture (JV) to acquire OneOncology from its existing shareholders, including current majority owner General Atlantic.
AmerisourceBergen will be acquiring a minority interest in the JV, representing approximately 35% ownership in OneOncology, while TPG will be acquiring a majority interest. OneOncology’s affiliated practices, physicians and management team will also retain a minority interest in the company.
The transaction is expected to close by the end of September 2023, subject to the satisfaction of customary closing conditions, including the receipt of required regulatory approvals.
Upon closing, the minority interest in OneOncology is expected to contribute a few cents to AmerisourceBergen’s adjusted diluted earnings per share in the first 12 months following closing. The company will provide more details regarding the transaction on its second quarter fiscal 2023 earnings call on May 2.
The latest agreement will likely give a significant boost to AmerisourceBergen’s specialty pharmaceuticals business.
Rationale Behind the JV
The formation of the JV is expected to build on AmerisourceBergen’s key strategic imperatives and areas of focus. It will likely deepen the relationships with a network of community oncology practices and expand solutions for community oncology practices.
Per AmerisourceBergen’s management, the investment in OneOncology will likely enable AmerisourceBergen to deepen its relationships with community oncologists and expand on its solutions in the specialty.
TPG’s management feels OneOncology’s physician leadership and partnership model will likely provide access to the latest clinical pathways, research and technology to deliver personalized care with improved patient outcomes and experiences.
Industry Prospects
Per a report by Research and Markets, the global specialty pharmaceuticals market was estimated to be $68.34 billion in 2022 and is anticipated to reach $331.75 billion by 2027 at a CAGR of approximately 37.2%. Factors like the increasing prevalence of chronic and rare diseases and the growing demand for specialty drugs to treat complex or serious chronic conditions are expected to drive the market.
Given the market potential, the latest agreement seems to have been timed well.
Notable Developments
In February, AmerisourceBergen announced its first-quarter fiscal 2023 results, wherein it witnessed a strong segmental performance. The expansion of both gross and operating margins was also seen. Per management, AmerisourceBergen delivered a solid performance by playing a crucial role in the healthcare system while maintaining execution throughout its business. Apart from this, the company's AB Health Ventures — a dedicated corporate venture capital fund — is focused on investing in and collaborating with emerging healthcare startup companies involved in transforming healthcare for people and animals worldwide.
In January, AmerisourceBergen announced the completion of its acquisition of PharmaLex Holding GmbH.
Price Performance
Shares of AmerisourceBergen have gained 4.9% in the past year compared with the industry’s 2.6% rise and the S&P 500's 3.8% fall.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Currently, AmerisourceBergen carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks in the broader medical space are IDEXX Laboratories, Inc. (IDXX - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .
IDEXX Laboratories, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 18%. IDXX’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 3.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
IDEXX Laboratories has gained 4.4% against the industry’s 6.8% decline in the past year.
Henry Schein, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 8.1%. HSIC’s earnings surpassed estimates in three of the trailing four quarters and matched the same in the other, the average beat being 2.9%.
Henry Schein has lost 4.3% against the industry’s 2.6% rise over the past year.
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AmerisourceBergen's (ABC) New JV to Boost Oncology Care
AmerisourceBergen Corporation , along with TPG Inc. (TPG - Free Report) , recently announced that they have agreed to acquire OneOncology, a network of oncology practices, from General Atlantic. TPG, AmerisourceBergen and OneOncology’s affiliated practices, physicians, and management team will form the new joint venture (JV) to acquire OneOncology from its existing shareholders, including current majority owner General Atlantic.
AmerisourceBergen will be acquiring a minority interest in the JV, representing approximately 35% ownership in OneOncology, while TPG will be acquiring a majority interest. OneOncology’s affiliated practices, physicians and management team will also retain a minority interest in the company.
The transaction is expected to close by the end of September 2023, subject to the satisfaction of customary closing conditions, including the receipt of required regulatory approvals.
Upon closing, the minority interest in OneOncology is expected to contribute a few cents to AmerisourceBergen’s adjusted diluted earnings per share in the first 12 months following closing. The company will provide more details regarding the transaction on its second quarter fiscal 2023 earnings call on May 2.
The latest agreement will likely give a significant boost to AmerisourceBergen’s specialty pharmaceuticals business.
Rationale Behind the JV
The formation of the JV is expected to build on AmerisourceBergen’s key strategic imperatives and areas of focus. It will likely deepen the relationships with a network of community oncology practices and expand solutions for community oncology practices.
Per AmerisourceBergen’s management, the investment in OneOncology will likely enable AmerisourceBergen to deepen its relationships with community oncologists and expand on its solutions in the specialty.
TPG’s management feels OneOncology’s physician leadership and partnership model will likely provide access to the latest clinical pathways, research and technology to deliver personalized care with improved patient outcomes and experiences.
Industry Prospects
Per a report by Research and Markets, the global specialty pharmaceuticals market was estimated to be $68.34 billion in 2022 and is anticipated to reach $331.75 billion by 2027 at a CAGR of approximately 37.2%. Factors like the increasing prevalence of chronic and rare diseases and the growing demand for specialty drugs to treat complex or serious chronic conditions are expected to drive the market.
Given the market potential, the latest agreement seems to have been timed well.
Notable Developments
In February, AmerisourceBergen announced its first-quarter fiscal 2023 results, wherein it witnessed a strong segmental performance. The expansion of both gross and operating margins was also seen. Per management, AmerisourceBergen delivered a solid performance by playing a crucial role in the healthcare system while maintaining execution throughout its business. Apart from this, the company's AB Health Ventures — a dedicated corporate venture capital fund — is focused on investing in and collaborating with emerging healthcare startup companies involved in transforming healthcare for people and animals worldwide.
In January, AmerisourceBergen announced the completion of its acquisition of PharmaLex Holding GmbH.
Price Performance
Shares of AmerisourceBergen have gained 4.9% in the past year compared with the industry’s 2.6% rise and the S&P 500's 3.8% fall.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Currently, AmerisourceBergen carries a Zacks Rank #3 (Hold).
A couple of better-ranked stocks in the broader medical space are IDEXX Laboratories, Inc. (IDXX - Free Report) and Henry Schein, Inc. (HSIC - Free Report) .
IDEXX Laboratories, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 18%. IDXX’s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average beat being 3.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
IDEXX Laboratories has gained 4.4% against the industry’s 6.8% decline in the past year.
Henry Schein, carrying a Zacks Rank #2 at present, has an estimated long-term growth rate of 8.1%. HSIC’s earnings surpassed estimates in three of the trailing four quarters and matched the same in the other, the average beat being 2.9%.
Henry Schein has lost 4.3% against the industry’s 2.6% rise over the past year.