Johnson & Johnson (JNJ) to Acquire Auris Health for $3.4B

Johnson & Johnson’s JNJ robotic surgery and medical device division, Ethicon entered into a definitive agreement to acquire Auris Health, Inc., a developer of robotic technologies focused on lung cancer, for approximately $3.4 billion in cash. If certain milestones are achieved, Auris could also receive as much as $2.35 billion more from the deal. The transaction is expected to close by the end of the second quarter of 2019, subject to customary closing conditions.

J&J’s stock has gained 6.5% in the past year compared with growth of 9.9% recorded by the industry.

 

With this acquisition, J&J will gain access to robotics along with potential for growth and expansion into other interventional applications. According to J&J, Auris’s technology will help the former develop a digital solution addressing different parts of patients’ lung-cancer treatment. Auris developed the Monarch Platform, a medical device that can help physicians access nodules in patients’ lungs to diagnose and target treatments.

Upon completion of the deal, Frederic Moll, M.D., CEO and Founder of Auris Health, and a visionary in the field of surgical robotics, will be joining J&J.

J&J will continue to make investments to make the surgical experience better by connecting digital solutions. In this endeavor, Auris’s technology will support J&J’s vision of becoming a world leader across the continuum of surgical approaches, including open, laparoscopic, robotic and endoluminal.

J&J previously forayed into surgical robotics by forming Verb Surgical, a joint venture with Alphabet’s Verily unit, in 2015. Last year, J&J acquired Orthotaxy, a privately held developer of robotic-assisted surgery software.

J&J struck several deals, which should boost the top line. In June 2017, J&J acquired Swiss biotech Actelion for $30 billion, which diversified its revenues in the pulmonary arterial hypertension (PAH) category and will bolster long-term growth. In February 2017, J&J acquired Abbott’s ABT vision care business, Abbott Medical Optics for $4.325 billion, which has strengthened the former’s Medical Device segment.

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Zacks Rank and Stocks to Consider

J&J currently has a Zacks Rank #3 (Hold).

Some better-ranked stocks from the same space are GlaxoSmithKline GSK and Bristol-Myers Squibb BMY. While GlaxoSmithKline sports a Zacks Rank #1 (Strong Buy), Bristol-Myers carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank  stocks here.

GlaxoSmithKline’s earnings per share estimates have increased from $2.86 to $2.95 for 2019 and from $2.94 to $3.01 for 2020 in the past 60 days. The company delivered a positive earnings surprise in two of the trailing four quarters, with average of 3.74%.

Bristol-Myers’earnings per share estimates have increased from $4.07 to $4.16 for 2019 in the past 60 days. The company delivered a positive earnings surprise in all the trailing four quarters, with average of 14.26%.

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