More buyout deals in the medical testing market could reach out and touch Beckman Coulter Inc. in the near term, according to an analyst who recently started following the Fullerton maker of testing equipment and supplies.
Bruce Jackson of RBC Capital Markets wrote in a report that Beckman, which he said has “turned the corner following a change in its lease accounting and a corporate reorganization,” could figure into recent merger and acquisition activity in the medical testing sector.
Beckman more likely would be a buyer rather than an acquisition target, according to Jackson.
“The more likely near-term outcome is that Beckman will be a consolidator itself, looking for opportunities to expand its test menu and build its capabilities in molecular diagnostics, a high margin growth opportunity,” Jackson said.
The analyst cited several deals, including Siemens AG’s buys of Diagnostic Products Corp. in July and Bayer AG’s diagnostics division in January for a combined $7.1 billion. General Electric Co. also said it intended to spend $8.1 billion for Abbott Laboratories Inc.’s diagnostics division.
Still, don’t count Beckman out as an acquisition target. Jackson previously wrote that Beckman would be an attractive addition to a larger company that was looking to enter the medical testing market through Beckman’s “access to the heart of the hospital market and its automation expertise.”
Beckman “could also be a target for a life sciences company that was interested in moving out of the research lab and into the hospital,” Jackson wrote.
A company spokeswoman said Beckman has no plans to be acquired.
Overall, Jackson said the underlying trend supporting the deals “is the convergence of life sciences, in-vitro diagnostics, diagnostic imaging and information technology. The goal is to link all of these things together, and ideally be able to control the electronic patient record and the content.”
The thinking was that as automation and systems integration become in-creasingly important, companies such as General Electric are better positioned to compete effectively long term in the laboratory space, he wrote.
Down on UnitedHealth
A.M. Best Co., the insurance rating service, said it wasn’t changing its ratings on UnitedHealth Group Inc., parent of Cypress-based PacifiCare Health Systems, following UnitedHealth’s release of its 2006 financial results and the restatement of results for 2003-2006.
A.M. Best downgraded UnitedHealth’s issuer credit and debt ratings in November, as well as the issuer credit and financial strength ratings of some of its subsidiaries. The agency didn’t disclose the names of the subsidiaries.
A.M. Best said in a release that its ratings action reflected UnitedHealth’s announcement that charges for accounting certain stock options were going to be significantly larger than originally expected, and that the health plan operator made additional management changes.
UnitedHealth’s restatement earlier this month brought $1.5 billion in charges relating to accounting for backdated stock options. Even though UnitedHealth’s restatement was in line with earlier estimates, other questions still remain, including whether the Internal Revenue Service would agree with the company about the tax bill, and whether penalties would be owed to the IRS.
A.M. Best is concerned that “fines and legal issues currently pending could have a material financial effect on the organization. Additionally, (we remain) concerned that fines and legal issues currently pending could have a material financial effect on the organization.”
UnitedHealth also faces a formal investigation by the Securities and Exchange Commission and a review by the U.S. Attorney for the Southern District of New York.
Meanwhile, it looks like UnitedHealth is continuing to broaden its reach in the market.
Last week, the company said it plans to buy Sierra Health Services Inc. for more than $2.4 billion to expand in the fast-growing Las Vegas area and boost its Medicare business.
Familiar Rival
Valeant Pharmaceuticals International, the Aliso Viejo-based drug maker whose products include Diastat AcuDial, a treatment for outpatient, or non-hospitalized, emergency seizures, could see a new rival, thanks to British drug maker Amarin Corp., which it previously bought a business unit of.
Amarin said it acquired a worldwide license from Elan Corp. of Ireland to develop a nasal version of lorazepam, a drug used to stop continuous seizure activity and acute repetitive seizures,a bout or cluster of seizures in which the person is conscious in between them. Such types of seizures account for about 40,000 deaths a year in America.
Amarin is going to use technology from Elan that allows improved absorption of poorly water-soluble compounds by the body.
Diastat AcuDial is the only Food and Drug Administration-approved outpatient emergency drug for those seizures. Diastat AcuDial is syringe-based and administered into a patient’s rectum.
In 2004, Valeant spent $38 million for Amarin’s U.S. unit and most of Amarin Pharmaceuticals Inc.’s products. In that deal, Valeant picked up Zelapar, a drug that’s used as a side treatment for Parkinson’s disease that the FDA cleared last summer.
Nurse Deal
Nurses at Fountain Valley Regional Hospital and Medical Center, Irvine Regional Hospital and Medical Center and Garden Grove Hospital Medical Center,who are represented by the United Nurses Associations of California/Union of Health Care Professionals,approved a three-year contract with parent company Tenet California Health Systems, which has a regional office in Santa Ana. The deal includes wage increases of 5.25% for the first year and 5% each for the second and third year.
