Quick Take
McKesson (NYSE:MCK) has announced an agreement to acquire Medical Specialties Distributors [MSD] for $800 million.
MSD has developed a distribution network for medical-surgical and infusion supplies and biomedical services.
MCK continues to acquire firms to expand its footprint and position itself as healthcare supply and device delivery extends away from hospital environments to the home.
Target Company
Stoughton, Massachusetts-based MSD was founded in 1984 as a distributor for medical products services to businesses and individuals.
Management is headed by CEO Tom Burke, who has been with the firm since 2016 and was previously SVP and General Manager at Cardinal Health (CAH) and CEO of Novis Pharmaceuticals.
Below is an overview video of MSD:
(Source: TheMSDLLC)
MSD’s primary offering categories include:
- Healthcare Products - Patient care supplies, infusion therapy, medical device equipment
- Biomedical Services - Medical device fleet management
- Technology Solutions - Ecommerce, equipment management and integrations
Market & Competition
According to a 2017 market research report by MarketsAndMarkets, the global medical supplies market is expected to reach $136.63 billion by 2021.
This represents a CAGR of 6.8% from 2016 to 2021.
The main drivers for this expected growth include increasing hospital-acquired infections, the rising number of surgeries, increasing incidence of diseases, growing geriatric population and demand for better medical products and solutions.
Major competitive vendors that currently provide medical supply distribution include:
- Becton, Dickinson (BDX)
- Cardinal Health
- Baxter International (BAX)
- Thermo Fisher Scientific (TMO)
- Halyard Health (HYH)
- 3M (MMM)
Amazon (AMZN) was rumored to be interested in moving into the healthcare products distribution space, but no company announcements have been made.
Acquisition Terms and Rationale
McKesson disclosed the acquisition price as valued at $800 million. Management didn’t file an 8-K and said only that it ‘expects the transaction will be modestly accretive to Adjusted Earnings per diluted share in
