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Syneos Health (SYNH) Announces a $7.1 Billion Merger Agreement

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Syneos Health recently entered into a definitive agreement to be acquired by a private investment consortium in an all-cash transaction of approximately $7.1 billion. The consortium of private investment firm affiliates includes Elliott Investment Management, Patient Square Capital and Veritas Capital.

The all-cash transaction represents a 24% premium to SYNH’s unaffected closing stock price on Feb 13, 2023, which is the last trading day before media speculation regarding the company.

The transaction is expected to be completed in the second half of 2023, subject to the approval of Syneos Health shareholders and the satisfaction of other customary closing conditions, including regulatory approvals.

Details of the Agreement

For Syneos Health, this agreement marks the comprehensive review of opportunities available to the company. It includes interests from multiple parties, backed by the assistance of independent financial and legal advisors.

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Syneos Health’s board of directors unanimously approved the merger agreement, affirming that it is in the best interests of the company and all stakeholders. In addition, it intends to hold a Special Meeting of Stockholders to recommend SYNH’s shareholders vote in favor of it. Per a representative of Syneos Health’s management, the merger will enable the company to accelerate its growth strategy, enhance customer delivery and evolve the organization toward a tech-enabled future.

The transaction is not subject to a financing condition. Upon completion, Syneos Health will become a private company, and the shares of SYNH’s Class A common stock will no longer trade on the Nasdaq. However, the company expects to maintain its headquarters in Morrisville, NC.

The news of the merger was declared simultaneously on the day of Syneos Health’s first quarter 2023 earnings release. Citing the pending transaction, SYNH did not provide its financial outlook for 2023.

Is the Merger Deal a Strategic Decision?

In recent times, Syneos Health is suffering in terms of its core Clinical Solutions segment (comprising 75% of total revenues in 2022) sales, largely due to lower net awards and backlog conversion delays. The company is also experiencing delays in large pharma award decisions, with net awards being impacted by greater-than-normal delays. This is majorly denting SYNH’s business growth.

In the just-reported first quarter, the Clinical Solutions segment recorded revenues of $1.01 billion, down 0.5% year over year on a reported basis. Amid such a situation, we believe the decision to get its business acquired is strategic.

Recent Developments

Earlier in March 2023, Syneos Health announced the launch of the Medical Affairs Digital Amplifier, which is designed to drive smarter and more effective scientific exchange. The digital asset underscores SYNH’s continued focus on Medical Affairs to ensure that its customers and clinicians have access to the latest education to optimize patient outcomes.

In the same month, Syneos Health entered into a strategic partnership with KX, the maker of kdb, the world’s fastest time series database and analytics engine. Through the collaboration, Syneos Health and KX will improve clinical trial efficiency, reduce costs and speed the time to market for life-changing therapies for patients.

Price Performance

In the past six months, shares of Syneos Health have increased 21.8% compared with the industry’s rise of 54%.

Zacks Rank and Key Picks

Syneos Health currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the overall healthcare sector are Penumbra (PEN - Free Report) , Accelerate Diagnostics (AXDX - Free Report) and SiBone (SIBN - Free Report) . Penumbra sports a Zacks Rank #1 (Strong Buy), while Accelerate Diagnostics and SiBone each carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Penumbra’s stock has risen 134.8% in the past year. Earnings estimates for Penumbra have increased from $1.25 to $1.47 in 2023 and $2.33 to $2.51 in 2024 in the past 30 days.

PEN’s earnings beat estimates in all the past four quarters, delivering an average surprise of 109.42%. In the last reported quarter, it posted an earnings surprise of 109.09%.

Estimates for Accelerate Diagnostics’ 2023 loss per diluted share have remained constant at 65 cents in the past 30 days. Shares of the company have increased 10.2% in the past year compared with the industry’s rise of 9.1%.

AXDX has an estimated earnings growth rate of 14.47% for 2023 against the S&P’s growth rate of 6.47%. In the last reported quarter, Accelerate Diagnostics delivered an earnings surprise of 12.50%

Estimates for SiBone’s 2023 loss per share have narrowed down from $1.63 to $1.61 in the past 30 days and $1.44 in the past 7 days. Shares of the company have increased 75.5% in the past year compared with the industry’s rise of 9%.

SIBN’s earnings beat estimates in three of the trailing four quarters and missed the same in one, the average surprise being 11.11%. In the last reported quarter, SiBone delivered an earnings surprise of 21.95%.

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