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Omnicell to Buy Ateb, Expand in Adherence Tools Market

BAX NXTM BVX

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Omnicell, Inc. , a major provider of medication, supply management solutions and adherence tools to healthcare systems and pharmacies, recently inked a deal to buy pharmacy-based patient care solution provider Ateb, Inc and its Canadian affiliate, Ateb Canada Ltd. Ateb also offers medication synchronization to independent and chain pharmacies in the U.S. and Canada.

In this regard, we should take a note that Omnicell has been doing reasonably well over the recent past, courtesy of its strong fundamentals and strategic executions. The company also recently reported encouraging third-quarter results wherein earnings beat the Zacks Consensus Estimate and revenues met the mark. Accordingly, in the past six months, Omnicell’s share price traded above the broader Medical product market.

Omnicell has gained 10.7%, much better than the loss of 7.2% for the broader Medical Products industry over the last six months. We believe the latest agreement to buy Ateb, part of its strategic initiative to expand through strategic partnerships and acquisition of new technology, should boost the company’s share price.

Ateb’s portfolio supports the Omnicell mission of improving health of patients with chronic conditions by facilitating access to medication adherence solutions. When an adherence pharmacy is implemented, pharmacists must lay the groundwork by matching medication refills for patients, which requires a software platform. Medication synchronization involves the pharmacist coordinating the refill medications so patients can pick them up on a single day each month.

The number of Americans affected by at least one chronic condition requiring medication therapy is estimated to increase to 157 million by 2020. The combination of Omnicell’s medication adherence packaging and Ateb’s Time My Meds med sync solution and Patient Management Access Portal will allow outpatient pharmacists to easily establish and scale adherence programs, as patients seek added support in managing their conditions.

Management claims that the acquisition demonstrates Omnicell's commitment to support the growing shift in how patients receive services along the entire continuum of care, elevating the role of pharmacists in improving overall patient safety and outcomes.

As per a Market Research report, the global medication adherence market is expected to grow at 17.5% CAGR during 2016–2022. Based on the rising demand for advanced medication adherence systems and growing aged population, Omnicell is trying to strengthen its position in this market.

In the recently concluded quarterly report, Omnicell’s medication adherence segment reported growth of 8.9% year over year. The company's buyouts like MTS Medication Technologies and SurgiChem Limited are included under this segment. Meanwhile, Omnicell is working hard to expand the medication adherence segment through acquisitions and a series of product launches.

Key Picks

Stocks that warrant a look in the medical sector are NxStage Medical Inc. (NXTM - Free Report) , Baxter International Inc. (BAX - Free Report) and Bovie Medical Corporation (BVX - Free Report) . NxStage Medical and Baxter International sport a Zacks Rank #1 (Strong Buy) while Bovie Medical carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NxStage Medical surged 22.5% over the last one year compared to the S&P 500’s 6.9% over the same period. The company has a four-quarter average positive earnings surprise of 50.00%.

Baxter International rallied 18.3% over one year, much higher than the S&P 500. It has a trailing four-quarter average positive earnings surprise of 27%.

Bovie Medical recorded a 116.5% gain in the past one year, way better than the S&P 500. The company has a trailing four-quarter positive average earnings surprise of 28.7%.

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