3D Systems (NYSE:DDD) has made about 50 acquisitions in the last three years making its way through different segments of the consumer segment of the 3-D printing industry. The ability to supplement the organic growth with acquisitions has enabled the company to grow at an exceptional rate and to broaden its products mix. The 3-D printing sector has been trending down since the start of the year and these stocks have lost substantial value. However, more recently, the sector has started to make a turnaround and 3-D printing stocks are making good progress.
Another Addition to the Portfolio
3D Systems has most recently acquired Medical Modeling Inc. The company is the world's only 3-D printing-to-modeling provider in the medical devices segment. It has the capability with both biocompatible plastic and direct metal. The main application of this technology is in the field of surgical planning and implants. Medical imaging historically has been used for the diagnosis only. However, Medical Modeling has used the medical imaging to create custom solutions for the patients, and the use of medical modeling in the treatment these days have changed how reconstructive surgery is being done. VSP (Virtual Surgical Planning) is a product developed by Medical Modeling. This process allows the surgeons to plan the surgery in a virtual mode in order to increase the success rate. The surgeon remains in contact with the Medical Modeling engineers throughout the process and gets the desired results. Once the surgical plan is completed, the custom instruments can be created. (You can read further about VSP here).
The earlier products of the company were ClearView and AccuDental. ClearView is the premier offering of the company - this product offers the image processing of CT/CBCT input data. Once the medical imaging is done, the files are sent to the machines where the models are created. The 3-D printing technology is being extensively used in the dental implants segment, and the company's AccuDental procedure will allow 3D Systems to enhance its position in this segment. The product is focused on the guided implantation.
The transaction will be accretive to the net income. The use of 3-D printing and medical imaging is increasing in the healthcare sector and these products will go a long way in establishing 3D Systems in the medical devices and equipments segment. As I have said before, the medical devices segment is almost as important as the consumer segment as the application and use of this technology is extremely helpful in different procedures.
At the end of last month, the company announced that its ProJet 3510 MP and VisiJet's Stoneplast dental materials were available with 3Shape Implant studio. The studio software allows the dental surgeons to design and print fully functional dental implant drill guides. The integration of the company's proprietary material and printer will further enhance its position in the segment. The recent movements by the company in the medical devices segment shows that 3D Systems is focusing on this lucrative segment of the 3-D printing industry.
According to the American Academy of Implant Dentistry, the global prosthetic supplies market is expected to reach $4 billion by 2018, and the dental implants market in the U.S. is expected to reach $5 billion. It is clear that this segment of the market is set to experience strong growth over the next five years. I believe 3D Systems' efforts to increase its presence in the segment are timely and it should bring substantial benefits to the company.
The current position of the medical equipments in the 3-D printing industry is quite small and the majority of the revenue comes from the consumer printers and the industrial printers that are mainly used for prototyping. However, as the surgeons look for precision and higher success rate in surgery, the use of the 3-D printing and medical imaging will increase. As a result, I believe the economic benefit from this segment will grow substantially over the next five years.
3-D printing stocks are going to remain volatile in the short term due to the pessimism about the technology becoming mainstream from some sections of the market. Another reason for the high volatility is short-term traders. However, I believe in the long-term prospects of the technology and I expect 3-D printing to further grow its roots over the next few years. I believe 3D Systems is making very good acquisitions and it is important that the company has a presence in the medical devices segment.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Business relationship disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. IAEResearch is not a registered investment advisor or broker/dealer. This article was written by an analyst at IAEResearch and represents his/her personal opinion about the companies mentioned in the article. The article is for informational purposes only and it should not be taken as an investment advice. Investors are encouraged to conduct their own due diligence before making an investment decision. I am not receiving any compensation (other than from Seeking Alpha) for this article, and have no relationship with the companies mentioned in the article.