Varian (VAR) Acquires Evinance To Boost Oncology Segment

In a bid to overhaul its Oncology Systems segment, Varian Medical Systems, Inc. (NYSE:VAR) recently acquired Montreal-based privately-held Evinance Innovation, Inc. — a clinical decision support (CDS) software company. The deal was initiated last September, wherein Varian had stated that it will utilize Evinance’s patented technology to offer better services to its clients.

CDS provides physicians and patients with the latest clinical information. It comprises a variety of tools to enhance evidence-based decision making in clinical workflow. This enhances the quality of care for patients undergoing cancer diagnosis.

Rationale Behind the Deal

Merging the Evinance platform with 360 Oncology will provide visual-care pathways and compliance tracking based on the National Comprehensive Cancer Network (NCCN). This, in turn, will help meet Varian’s long-term target to consolidate the company’s footing in providing multi-disciplinary integrated cancer-care solutions. The acquisition is likely to diversify the company’s Oncology Systems business by integrating clinical workflow, decision support and adherence tracking while delivering comprehensive cancer care.

Varian Medical Systems, Inc. Price and Consensus

Varian Medical Systems, Inc. Price and Consensus | Varian Medical Systems, Inc. Quote

Furthermore, it will provide clinicians with a platform for visualizing a patient’s journey while applying evidence-based guidelines.

Recent Developments in Oncology

Varian’s ARIA Oncology information system has received Office of the National Coordinator for Health Information Technology (ONC-Health IT) Certification via Drummond Group LLC — an Authorized Certification Body (ABC). ABC has been empowered to test software for compliance with the requirements of the federal government's program.

Notably, this certification followed a testing of the ARIA software complying with applicable standards and certification criteria of the Department of Health and Human Services (HHS).

Market Prospects

Per a survey by Transparency Market Research (TMR), global companion diagnostic tests in the oncology market are expected to value $13.6 billion by the end of 2025, up from $3.5 billion in 2016. Between 2017 and 2025, the market is projected to grow at a CAGR of 16.8%. Rising demand for personalized healthcare, along with targeted therapies, has escalated growth of global companion diagnostic tests in the market.

Considering the solid prospects, Varian’s latest developments in the Oncology segment buoy optimism. This is also in line with the company's effort to establish itself as one of the premier cancer care providers.

Price Performance

Over the past year, Varian has outperformed the broader industry in terms of price. The stock has appreciated 41.4% compared to 22.8% growth recorded by the industry.

Zacks Ranks & Stocks to Consider

Varian carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are Centene Corporation (NYSE:CNC) , Bioverativ Inc. (NASDAQ:BIVV) and athenahealth, Inc. (NASDAQ:ATHN) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Centene’s projected long-term growth rate is 14.4%. The stock has rallied 15.7% in the past six months.

Bioverativ has an expected long-term growth rate of 14%. The stock has surged a whopping 106.2% in three months’ time.

athenahealth has an expected long-term growth rate of 20.7%. The stock has gained 6.8% over the past three months.

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