Leidos (LDOS) Acquires IMX To Expand Health Business

Leidos Holdings Inc. (NYSE:LDOS) announced that it has completed the acquisition of IMX Medical Management Services (“IMX”) and its affiliated businesses. IMX will complement the medical services provided by QTC Management, Inc. (“QTC”), which is a wholly-owned subsidiary of Leidos.

Leidos’ Benefits From the Acquisition

QTC provides more than 3,000 independent medical examinations and medical record reviews per day to key federal customers across 50 states. The buyout of IMX will boost Leidos’ capability of independent medical evaluations, medical record reviews, and medical and vocational case management for insurance carriers, employers, law firms, third-party administrators, and the state and local government.

According to the 2018 U.S. Census, between 2010 and 2030, the number of individuals aged 65+ is projected to increase from 39 million to 73 million, a growth rate nearly 5 times more than the 17% expected increase in total population. As life expectancy continues to increase in the United States and seniors account for a higher percentage of the total U.S. population, the overall demand for medical checkup and medical reviews is expected to increase.

Hence, the combined company will be able to provide medical evaluation services in the commercial market and Federal space.

Acquisition to Boost Revenues

Leidos’ Health business currently contributes nearly 18% to its entire business sales. We expect this acquisition to increase the share of revenues from Leidos’ health business over the long term.

Price Performance

In the past six months, shares of Leidos have gained 30.8% against the industry’s 3.6% decline.

Zacks Rank & Other Key Picks

Leidos currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Other top-ranked stocks in the same industry include General Dynamics Corporation (NYSE:GD) , Lockheed Martin Corporation (NYSE:LMT) and Wesco Aircraft Holdings (NYSE:WAIR) , each holding a Zacks Rank #2.

General Dynamics’ long-term growth is currently projected at 8.7%. The Zacks Consensus Estimate for 2019 earnings per share has moved up 0.9% to $11.86 over the past 90 days.

Lockheed’s long-term growth is currently estimated to be 7.1%. The Zacks Consensus Estimate for 2019 earnings per share has moved up 4.5% to $21.20 over the past 90 days.

Wesco Aircraft’s long-term growth estimate currently stands at 12%. The Zacks Consensus Estimate for fiscal 2019 earnings per share has moved 1.2% north to 85 cents over the past 90 days.

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