McKesson Corporation (MCK) recently announced that its division, McKesson Specialty Health, signed an agreement to acquire a majority stake in Oncology Rehab Partners. The financial terms of the agreement were not disclosed.
Oncology Rehab Partners provides comprehensive rehabilitation services for oncology patients to institutions such as hospitals and cancer centers.
The services provided by Oncology Rehab Partners assist millions of cancer survivors who suffer from debilitating side-effects caused by treatments.
The acquisition will strengthen McKesson’s portfolio of innovative clinical, business and technology solutions for oncology care providers. Further, the acquisition will enable McKesson to offer solutions to support cancer care providers at every stage of patient care – from clinical decision-making, prehabilitation, treatment and rehabilitation.
We note that McKesson has been actively pursuing deals and acquisitions to drive growth. In Feb 2014, McKesson acquired a majority stake in Germany-based drug distribution company Celesio for approximately €23.50 per share. Celesio provides logistics and services in the pharmaceutical and healthcare sector with operations in approximately 14 countries.
The deal will allow McKesson to gain a foothold in Europe, thereby geographically expanding its core operations further. The combined company is expected to generate annual revenues in excess of $150 billion with operations in twenty countries.
Last month, McKesson expanded its distribution agreement with Rite Aid Corporation (RAD).
The new agreement spans for five years up to March 2019. The agreement will allow both the companies to leverage each other’s expertise. As per the terms of the expanded agreement, McKesson will be responsible for sourcing and distribution of generic pharmaceuticals for Rite Aid as a part its proprietary One Stop Generics program. Further, Rite Aid stores will benefit from McKesson’s daily direct-to-store delivery service model for brand and generic pharmaceutical products.
McKesson currently carries a Zacks Rank #2 (Buy). Other stocks that currently look attractive include Cardinal Health, Inc. (CAH) and CR Bard Inc. (BCR). Both carry a comparable Zacks Rank #2.
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