Hologic (HOLX) has decided to acquire Canada-based privately owned Sentinelle Medical for $85 million. Sentinelle is also eligible to receive two-year contingent earn-out depending on its incremental revenue growth in the two years following the closure of the transaction.
The deal is expected to be completed in the third quarter of the calendar year and is subject to approvals. Hologic expects this acquisition to be neutral to fiscal 2011earnings. Sentinelle had recorded revenues of $15 million in 2009.
Hologic is a leading developer, manufacturer, and supplier of premium diagnostics, medical imaging systems and surgical products dedicated to serving the health care needs of women. The acquisition of Sentinelle, a leading provider of Magnetic Resonance Imaging (MRI) breast coils, tables and visualization software, should enable Hologic to strengthen its position in the women’s health care market.
Hologic operates in four segments − Breast Health, Diagnostics, GYN (Gynecology) Surgical, and Skeletal Health. The segments contributed 45%, 33%, 16% and 6% respectively to the total revenues of $1.6 billion in fiscal 2009.
Since its inception, Hologic has grown through several acquisitions, significant among them being the acquisition of Third Wave Technologies in fiscal 2008. In addition to creating an industry giant in the field of women’s health products, this acquisition has enabled the company to further expand its offerings into the clinical molecular diagnostics market utilizing Third Wave’s Invader chemistry technology. This technology gives Hologic the opportunity to explore new diagnostics for women’s health.
The expansion into the molecular diagnostic market has allowed the company to accelerate growth in cervical cancer screening. Hologic is on the lookout for more such opportunities, which should contribute to growth.
We are currently Neutral on the stock.
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