Edwards Lifesciences To Buy CASMED To Boost Critical Care Arm

Edwards Lifesciences Corporation (NYSE:EW) entered an agreement to purchase CAS Medical Systems, Inc. (“CASMED”) for an equity value of around $100 million in an all-cash transaction. Notably, CASMED is a leading medical technology company involved in non-invasive monitoring of tissue oxygenation in the brain. Subject to customary closing conditions, the transaction is expected to be completed in the second quarter of 2019.

Per Edwards Lifesciences, integration of CASMED’s FORE-SIGHT technology with its hemodynamic monitoring platform, along with the company’s predictive analytic capability, will strengthen Edwards Lifesciences’ position in smart monitoring technologies. We believe that the buyout is likely to boost top-line contributions from the Critical Care arm.

However, Edwards Lifesciences is awaiting a 510(k) clearance in the United States for a smart cable and software module that allows for compatibility between CASMED's FORE-SIGHT sensor and the HemoSphere hemodynamic monitoring platform. Notably, this technology was already granted a CE mark in Europe.

Market Potential

Per a report by Market Research Hub, North America holds a large share in the global brain tissue oxygen monitoring systems market, and is backed by rising demands for neurosurgery, advanced healthcare facilities and dominance of major players. The brain tissue oxygen monitoring systems market is also expected to witness improved performances in the Asia Pacific, and the Middle East and Africa regions. Given bountiful opportunities in the niche market, the buyout decision seems to be fit.

A Glimpse of the Critical Care Arm

Critical Care portfolio includes pulmonary artery catheters, disposable pressure transducers and advanced monitoring systems. The portfolio also includes a line of balloon catheter-based products, surgical clips and inserts.

Critical Care sales totaled $178.1 million in the fourth quarter of 2018, up 8.4% year over year. The upside can be attributed to solid growth across all product categories, primarily led by HemoSphere advanced monitoring platform and consistent strength in Enhanced Recovery. Moreover, the company continued to deliver impressive performance in the United States.

Furthermore, in the last December, Edwards Lifesciences announced that the HemoSphere advanced hemodynamic monitoring platform received FDA approval for the Acumen suite of intelligent decision-support solutions.

Share Price Movement

Edwards Lifesciences has been gaining investor confidence on consistently positive results. Over a year, the company’s share price has outperformed its industry. The stock soared 36.4% compared with the industry’s 9.9% rally.

Zacks Rank & Stocks to Consider

Edwards Lifesciences currently carries a Zacks Rank #3 (Hold). A few better-ranked stocks in the broader medical space are Penumbra, Inc. (NYSE:PEN) , Amedisys, Inc. (NASDAQ:AMED) and Abbott Laboratories (NYSE:ABT) .

Penumbra’s long-term earnings growth rate is expected at 20%. The stock presently carries a Zacks Rank #2 (Buy).

Amedisys’ long-term earnings growth rate is projected at 18.8%. The stock currently carries a Zacks Rank #1 (Strong Buy).You can see the complete list of today’s Zacks #1 Rank stocks here.

Abbott’s long-term earnings growth rate is expected at 11.7%. The stock presently carries a Zacks Rank of 2.

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