Hologic, a medical device company agreed to buy Mobidiag Oy for an enterprise value of $795 million. The deal includes $714 million (€600 million) to be paid in cash for Mobidiag’s equity and net debt of $81 million.
Hologic (HOLX) intends to finance the acquisition with existing cash and by borrowing on its line of credit. The transaction, which awaits regulatory approval, is anticipated to close in the fourth quarter of fiscal 2021.
Mobidiag, a privately held, commercial-stage Finnish-French developer of innovative molecular diagnostic tests and instrumentation, develops and markets PCR-based (polymerase chain reaction) tests for severe conditions including gastrointestinal and respiratory infections, antimicrobial resistance management, and healthcare related infections. The Amplidiag and Novodiag platforms are automated instruments, which deliver quick turnaround times ranging from 50 minutes to two hours. Notably, Mobidiag recorded revenue of $42 million (€35 million) in the 2020 calendar year.
Hologic’s plan of investing in assay development to drive growth of the Novodiag platform is likely to be $0.10 dilutive to Hologic’s adjusted EPS in fiscal 2022, slightly dilutive in 2023, and accretive thereafter. (See Hologic stock analysis on TipRanks)
Hologic’s International Group President Jan Verstreken commented, “Acquiring Mobidiag will further strengthen our international and diagnostics businesses by enabling us to expand into the large, fast-growing acute care adjacency with a near-patient testing solution that offers ease of use, multiplex capability and rapid turnaround time. We believe that Mobidiag has developed a differentiated platform that addresses many of the historical challenges of multiplexed point-of-care molecular testing.”
Following the deal announcement, Needham analyst Michael Matson reiterated a Hold rating.
Matson said, “We believe the Mobidiag acquisition adds a new testing vertical for HOLX, expanding its mostly high volume/reference laboratory-based high-throughput testing (i.e., Panther platform) offering to include sample-to-answer and point-of-care hospital testing for rapid diagnostics (Novodiag platform).”
Furthermore, “Given the financial windfall that has resulted from HOLX’s COVID-19 test sales,” the analyst expects “HOLX to remain active with M&A.”
“We believe that HOLX shares are fairly valued considering its post-COVID-19 earnings power,” Matson added.
Hologic shares have exploded 79% over the past year, while the stock still scores a Strong Buy consensus rating based on 6 Buys versus 1 Hold. That’s alongside an average analyst price target of $96, which implies 31% upside potential to current levels.
Furthermore, Hologic scores a “Perfect 10” from TipRanks’ Smart Score rating system, indicating that the stock has strong potential to outperform market expectations.
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