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Bruker to Expand Molecular Diagnostics Arm With Hain Buyout

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Bruker Corporation (BRKR - Free Report) recently announced its decision to acquire Germany-based Hain Lifesciences GmbH, a developer, manufacturer and distributor of molecular diagnostics (MDx) solutions. The acquisition is expected to boost Bruker’s microbiology and diagnostics business.

However, financial terms of the deal have been kept under wraps. The transaction is expected to close during the fourth quarter of 2018, subject to customary closing conditions and required regulatory approvals.

Hain Lifesciences at a Glance

Notably, Hain is an infectious disease specialist with a broad range of MDx solutions for the detection of microbial and viral pathogens with respect to antibiotic resistance testing as well as human genetic diseases.

Hain’s offerings include consumables and instruments for DNA sample preparation, the GenoType assay portfolio for tuberculosis detection, for sexually transmitted disease (STD) testing and for HIV viral load testing. Further, there are other infectious disease and human genetic disease MDx tests. Hain’s new Fluorocycler XT is a real-time PCR (polymerase chain reaction) system with a proprietary, novel assay format for Liquid Array syndromic panels. The first Liquid Array assay namely the FluoroType MTBDR 2.0 for detecting the M. tuberculosis complex expects its CE-IVD labeling before the end of 2018.

Strategic & Financial Implications of the Deal

Bruker is highly optimistic about the acquisition agreement and expects the same to be well-aligned with the company’s strategic plan. In fact, the to-be-acquired company’s molecular diagnostics solutions of bacterial and viral infections are expected to compliment Bruker's MALDI Biotyper and IR Biotyper microbiology platforms.

Significantly, Hain is already a profitable company and in the ongoing year 2018 alone, the company is estimated to register $38 million revenues.  Bruker anticipates to acquire an 80% majority interest in Hain with options for the remaining 20% to be exercised after 2021. 

Post Hain’s business integration, Bruker predicts the combined entity to work as Bruker-Hain Diagnostics. At present, Bruker expects the deal to be immaterial to the company’s 2018 adjusted operating margin expansion and earnings per share (EPS) guidance.  For 2019, the consolidation is likely to be accretive to Bruker's non-GAAP EPS by $0.01-$0.02.

Recent Developments in Microbiology and Diagnostics Arm

Bacteria analysis and the identification of microorganisms to the species level and beyond are key tasks in microbiology. Although current sequencing technologies provide more precise insights to biochemical analysis, the procedures are still very slow and expensive. Keeping this in mind, Bruker developed the MALDI Biotyper, a revolutionary approach to the analysis of microorganisms. Earlier, the company launched MALDI Biotyper STAR-Carba in vitro diagnostics kit, the first CE-IVD marked assay for mass spec-based antibiotic resistance testing in the market.

The other recent launches within MALDI group include MALDI PharmaPulse for high throughput related to the direct discovery on Rapiflex mass-spec system and Rapiflex MALDI-TOFTOF for detailed protein characterization at life science research and biopharmaceutical laboratories. Bruker also unwrapped MALDI imaging systems, used in drug development.

Earlier in 2018, Bruker introduced Bologna workflow for rapid and cost-effective diagnosis of bloodstream infections or sepsis. Recently, the company unveiled scimaX, its new magnetic resonance mass-spec system with both electrospray and MALDI sources under full computer control. This has applications in biopharma, drug discovery and in phenomics or metabolomics research.

Share Price Performance

Over the past year, shares of Bruker have rallied 23.7%, comparing favorably with the industry's increase of 6.5%.

Zacks Rank & Key Picks

Bruker currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader medical space are Integer Holdings Corporation (ITGR - Free Report) , Intuitive Surgical (ISRG - Free Report) and Masimo Corporation (MASI - Free Report) .

Integer Holdings has an expected long-term earnings growth rate of 15%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical’s expected long-term earnings growth rate is 14.7%. The stock carries a Zacks Rank #2 (Buy).

Masimo’s expected long-term earnings growth rate is 14.8%. The stock has a Zacks Rank of 2.

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