DENTSPLY SIRONA Inc. XRAY recently acquired Byte — a fast growing clear aligner company — in an all-cash deal for $1.04 billion. The buyout will not only enable DENTSPLY to boost scale with respect to its SureSmile clear aligner business but also strengthen its connection with dental professionals.
Notably, the deal was funded by cash on DENTSPLY’s balance sheet and completed on Dec 31, 2020.
It is worth mentioning that Byte has maintained its leadership position in the rapidly-growing direct-to-consumer, doctor-directed clear aligner market. The company’s innovative business model, which has been created on doctor-directed care, offers outstanding outcomes for patients with mild to moderate orthodontic needs.
This buyout is likely to provide a boost to DENTSPLY’s Technologies & Equipment segment.
Significance of the Acquisition
The combination of two companies will ensure expansion of patient access to quality care and lend support to the success of the acquirer’s dental partners worldwide. The collective strengths of both the companies will help DENTSPLY to unlock incremental growth, while capitalizing on growing demand for clear aligner solutions.
Notably, the buyout is accretive to DENTSPLY’s revenue growth rate and adjusted earnings per share (EPS) immediately. In fact, with respect to adjusted EPS, the transaction is expected to deliver accretion of 5 cents in 2021 and be incrementally accretive beyond 2021. Moreover, DENTSPLY anticipates combined clear aligner revenue run-rate in excess of $300 million by the end of 2021.
Market Prospects
Per a report by Grand View Research, the global clear aligners market (worth $2.2 billion in 2019) is anticipated to witness a CAGR of 23.1{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49} from 2020 to 2027. Hence, this buyout is a well-timed one for DENTSPLY.
Price Performance
Shares of the Zacks Rank #3 (Hold) company have lost 5.5{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49} in a year’s time against the industry’s growth of 16{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49}.
Stocks to Consider
Some better-ranked stocks from the broader medical space are Merit Medical Systems, Inc. MMSI, Patterson Companies, Inc. PDCO and IDEXX Laboratories, Inc. IDXX, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Merit Medical has a projected long-term earnings growth rate of 12.6{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49}.
Patterson Companies has an estimated long-term earnings growth rate of 9.6{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49}.
IDEXX Laboratories has a projected long-term earnings growth rate of 15.8{09c3c849cf64d23af04bfef51e68a1f749678453f0f72e4bb3c75fcb14e04d49}.
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DENTSPLY SIRONA Inc. (XRAY) : Free Stock Analysis Report
Merit Medical Systems, Inc. (MMSI) : Free Stock Analysis Report
Patterson Companies, Inc. (PDCO) : Free Stock Analysis Report
IDEXX Laboratories, Inc. (IDXX) : Free Stock Analysis Report
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