Alere (ALR), a medical products company focused on integrating rapid diagnostics with health management, recently revealed that it has taken over Epocal, Inc., which is a seller of know-how that facilitates testing for electrolytes and blood gas from a point near the patient.
Following adjustments, Alere paid about $166 million to take over Epocal, including a payment of $15 million for accomplishment of two milestones. If certain products are delivered using the Epocal setup, then further payments of $75.5 million may take place.
Alere set up a definitive agreement with Epocal in 2009 to purchase its equity in entirety, contingent upon the completion of fiscal milestones such as gross margin on or before October 31, 2014.
Diagnostic tests are shifting closer to consumers and into the home testing market, as more diagnostic tests are being developed to monitor patients rather than only diagnose. Alere's strategy of combining disease management with point-of-care testing (POCT), in a manner that encourages patients to take responsibility over their overall health care, is viewed as a prudent approach while at the same time ensuring affordability.
In addition to growing its revenues through a combined strategy of continued acquisitions and measured organic growth, the company is committed to improving its operating margin. Further, its product pipeline is strong, which has been developed through a combination of internal R&D as well as serial acquisitions. One of the company’s competitors is Abaxis (ABAX).
We currently have a Zacks Rank #4 (Sell) on Alere. We are more optimistic about ResMed Inc. (RMD) and Conceptus, Inc. (CPTS), which carry a Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy), respectively, and are expected to do well.