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Hologic (HOLX) to Buy Mobidiag, Boost Diagnostics Testing Arm

Hologic, Inc. HOLX recently entered into a definitive agreement to acquire Finnish-French biotechnology company Mobidiag Oy for an enterprise value of nearly $795 million. This development is likely to strengthen Hologic’s diagnostics business and accelerate growth post-COVID.

Notably, the transaction is anticipated to close early in the fourth quarter of fiscal 2021, subject to the receipt of certain regulatory approvals and other customary closing conditions.

Financial Terms of the Deal

The transaction includes a cash payment of nearly $714 million for Mobidiag’s equity and net debt of around $81 million.

For investors’ note, Mobidiag generated revenues of $42 million (€35 million) in 2020.

Hologic expects the acquisition to prove dilutive to its adjusted earnings per share by around 10 cents in fiscal 2022, slightly dilutive in 2023, accretive thereafter.

Mobidiag at a Glance

Mobidiag is a developer and marketer of polymerase chain reaction (PCR)-based tests for acute care conditions such as gastrointestinal and respiratory infections, antimicrobial resistance management, and healthcare associated infections. The company offers two automated instruments platform, Amplidiag and Novodiag, which deliver rapid turnaround times ranging from 50 minutes to two hours.

The Novodiag platform combines real-time PCR and microarray capabilities to offer high-level multiplexing. Notably, the highly multiplexed assays enable clinicians to spot the person responsible for an infection quickly, accurately and efficiently.

Hologic plans to invest in assay development and expects to finance the transaction with cash on hand and borrowing on its existing line of credit.

Significance of the Acquisition

The Hologic management believes that Mobidiag has created a differentiated platform that deals with many of the historical challenge faced in multiplexed point-of-care molecular testing. Per management, the acquisition will strengthen Hologic’s international capabilities and diagnostics businesses by expanding into the fast-growing acute care adjacency.

The acquisition will offer an exceptional new platform for growth, which will generate long-term value by allowing Hologic to tap into the acute care market, which is estimated to double over the next five years.

Industry Prospects

Per a report by Grand View Research, the global molecular diagnostics market size was valued at $36.2 billion in 2020 and is expected to reach $49.3 billion by 2028, at a CAGR of 3.9%. Rising demand for Point-of-Care testing, more need for self-testing diagnostics, and increased consumer awareness about faster diagnostics are driving the market.

Recent Notable Acquisitions

In March, Hologic acquired Diagenode -- a developer and manufacturer of molecular diagnostic assays and epigenetics products -- for nearly $159 million. The buyout strengthens Hologic’s molecular diagnostics business by expanding its international capabilities, improving regional time-to-market and offering a broader differentiated test menu.

In February, Hologic acquired Biotheranostics Inc. -- a leader in molecular oncology -- for around $230 million. The acquisition allows Hologic to tap into the rapidly-growing oncology market.

Price Performance

Shares of the company have surged 79.8% in a year’s time compared with the industry’s growth of 35.3%.

Zacks Rank and Other Key Picks

Currently, Hologic carries a Zacks Rank #2 (Buy).

Other similar-ranked stocks from the broader medical space include Asensus Surgical, Inc. ASXC, Cantel Medical Corp. CMD and ConforMIS, Inc. CFMS, each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Asensus Surgical has a projected long-term earnings growth rate of 71%.

Cantel Medical has an estimated long-term earnings growth rate of 19%.

ConforMIS has a projected long-term earnings growth rate of 42%.

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