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Henry Schein to Buy Marrodent Stake, Expand in Poland

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Keeping in line with its strategy of growth through rapid expansion internationally, Henry Schein Inc (HSIC - Free Report) has agreed to acquire 80% ownership of Marrodent, a Poland-based distributor of dental consumables, equipment and dental laboratory supplies. However, all the financial terms of the agreement have been kept under wraps.

This deal in fact paves the way for Henry Schein to fortify its market position in Poland by foraying into the emerging dental markets in the region. In this regard we note that Henry Schein has been serving the animal health customers in Poland since 2014.

Additionally, with this deal, Henry Schein will be able to strengthen its operations in various sectors across 27 countries. The deal is anticipated to close by the fourth quarter of fiscal 2016, after a thorough scrutiny by Poland's competition authorities.

Coming to share price movement, Henry Schein witnessed a nominal decline of 0.01% to close at $163.79, following the news. However, a further analysis reveals a strong one-year return of 20.9% in share price, much better than the S&P 500’s 11.4% over the same time frame.

As per management, the deal should help Henry Schein tap into the bountiful dental market opportunities in Poland, which currently has as many as 26,000 practicing dentists and around 20,000 dental offices.

Our Take

A glimpse at the global market trends reveal projections that hint at ‘dental consumables market’ growth at a CAGR of 6.8% to $35.3 billion by 2021 (Markets And Markets). Further, we are also impressed with the company’s promising performance in the last reported second quarter 2016 registering a 4% rise in global Dental sales on a year-over-year basis.

Buoyed by the strength in these trends, we presume Henry Schein, with its latest collaboration with Marrodent, will significantly gain traction in the dental care and related ancillary markets.

Zacks Rank & Key Picks

Henry Schein currently has a Zacks Rank #3 (Hold). Better-ranked medical stocks are IDEXX Laboratories Inc. (IDXX - Free Report) , Masimo Corp. (MASI - Free Report) and Quidel Corp. (QDEL - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy).

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