Mednax Inc. (NYSE:MD) , a FL-based provider of neonatal, anesthesia, maternal-fetal, and other pediatric physician services recently announced the acquisitions of South Carolina-based ‘Medical Anesthesia Consultants’ and Florida-based ‘Anesthesia Associates’. Since the announcement, share price dropped 0.8% and reached to $64.50 on yesterday's close.
The company declared that the latest acquisitions have been executed entirely in cash and are expected to prove immediately accretive to earnings. However, the financial terms of the deal have not been disclosed yet.
Buyout Synergies
The Medical Anesthesia buyout is likely to expand Mednax’s portfolio within the ‘McLeod Health System’ platform which currently includes the services of neonatology, pediatric intensive care and newborn hearing screen.
In this regard, we note that Medical Anesthesia is a physician practice group and a leading provider to multiple facilities like McLeod Regional Medical Center, McLeod Seacoast, McLeod Loris, McLeod Dillon and McLeod Health Cheraw within the McLeod Health system.
On the other hand, Mednax also exclusively broadened its base in Florida with the acquisition of Anesthesia Associates, a private practice and provider of subspecialty anesthesia services. Notably, with this takeover, Mednax has gained access to the Collier Boulevard and the Pine Ridge campuses of the Physicians Regional Healthcare system where the Anesthesia Associates currently provides its services.
Our Take
Mednax diversifies its core business and fortifies its market position through strategic tie-ups and acquisition of practices in various locations. In the recent past, the company has witnessed several remarkable developments, including the takeover of FL-based maternal-fetal Practice, Nevada-based ‘Associated Anesthesiologists’ and VA-based pediatric cardiology practice. Notably, with the latest acquisitions, Mednax adds 12 physician group practices in 2016.
Meanwhile, we note that the sentiments for the ‘U.S. General Anesthesia Drugs Market’ represent a lucrative scenario for the company, as it is forecasted to reach $2 billion by 2020, growing at a CAGR of 3.8% (Markets And Markets). Buoyed by this huge market prospect, Mednax, with its new partners, is set to gain significant market traction in the long haul.
Zacks Rank & Key Picks
Currently, Mednax has a Zacks Rank #3 (Hold).
Better-ranked stocks in the broader medical sector include Baxter International Inc. (NYSE:BAX) , Masimo Corporation (NASDAQ:MASI) and CryoLife Inc. (NYSE:CRY) . Notably, all the three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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