January 3, 2025
Bioventus Inc. BVS announced the completion of its earlier-announced divestiture of the Advanced Rehabilitation business of its subsidiary, Bioness, yesterday. In October 2024, BVS inked a definitive agreement to sell its business to private equity firm, Accelmed Partners (“Accelmed”).
Per Bioventus’ management, the divestiture of the Advanced Rehabilitation business is expected to reduce the company’s annual revenues by approximately $50 million and annual adjusted EBITDA by approximately $6 million.
The latest divestiture is expected to enable Bioventus to continue improving its focus and execution within its core businesses and enhance liquidity via the receipt of approximately $20 million of net closing proceeds.
Following the announcement, shares of the company gained nearly 1.2% till yesterday’s closing.
Historically, the company has gained a high level of synergies from its various acquisitions and divestitures. We expect market sentiment on the stock to continue to remain positive around this announcement, too.
Bioventus currently has a market capitalization of $694.9 million. It has an earnings yield of 4.3%, favorable than the industry’s negative yield. In the last reported quarter, BVS delivered a break-even earnings surprise.
Per Bioventus, the divestiture is expected to enable it to focus on execution within its core, while also enhancing its liquidity.
Accelmed’s management believes that Bioness’ Advanced Rehabilitation products are critical for helping patients with stroke and other neuromuscular conditions in their rehabilitation journey. Management also intends to invest in developing and extending the product line to continue improving patients’ lives as it believes that there is a significant opportunity for growth.
Per a report by Grand View Research, the global medical rehabilitation services market was estimated at $254.82 billion in 2023 and is expected to witness a CAGR of approximately 6.1% between 2024 and 2030. Factors like the increasing number of patients with neurological, musculoskeletal and cardiologic conditions and the growing incidence of road traffic accidents are likely to drive the market.
Given the market potential, the latest divestiture is expected to be a significant milestone for Accelmed and also enable Bioventus to streamline its business.
In November 2024, Bioventus reported its third-quarter 2024 results, wherein it recorded a solid uptick in its overall revenues driven by strength in Pain Treatments and Surgical Solutions.
Shares of the company have gained 110.1% in the past year against the industry’s 7.8% decline. The S&P 500 has returned 26.5% in the same time frame.
Currently, BVS carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Cardinal Health, Inc. CAH, ResMed Inc. RMD and Boston Scientific Corporation BSX.
Cardinal Health, carrying a Zacks Rank #2 (Buy) at present, has an estimated long-term growth rate of 10.2%. CAH’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 11.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health’s shares have gained 11.8% compared with the industry’s 0.7% growth in the past year.
ResMed, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 14.8%. RMD’s earnings surpassed estimates in each of the trailing four quarters, with the average being 6.4%.
ResMed has gained 36.3% compared with the industry’s 9.6% growth in the past year.
Boston Scientific, carrying a Zacks Rank of 2 at present, has an estimated long-term growth rate of 13.8%. BSX’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 8.3%.
Boston Scientific’s shares have rallied 53.7% compared with the industry’s 9.6% growth in the past year.
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