On Thursday, Canaccord Genuity sustained its Buy rating and $15.00 price target for Bioventus Inc (NASDAQ:BVS), following the company's announcement that it has finalized the divestiture of its Advanced Rehab business. The completion of the sale to Accelmed Partners aligns with Bioventus' projected timeline, which targeted the end of 2024 to early 2025 for the closure of the transaction.
The stock, which has doubled in value over the past year and currently trades at $10.75, has shown strong momentum with an 82% gain in the last six months. According to InvestingPro data, analysts maintain a bullish stance with price targets ranging from $13 to $17.
In October, Bioventus disclosed the signing of a definitive agreement to sell the Advanced Rehab business, which includes devices designed to support recovery of leg or hand function. This segment of the company features products such as the L100, L300 Go, L360, H200, Vector Gait, and the Bioness Integrated Therapy System (BITS).
The Advanced Rehab business was initially obtained through the acquisition of Bioness in 2021, along with a peripheral nerve stim (PNS) business, which Bioventus will retain within its Pain Treatments portfolio. With a market capitalization of $704 million and robust gross margins of 67%, Bioventus demonstrates strong operational efficiency in its core business segments.
The divestiture signifies a strategic move for Bioventus, as the Advanced Rehab business was a relatively minor component of the company's financial profile. Canaccord Genuity views this action as a positive development, suggesting it will allow Bioventus to concentrate more on its portfolio, potentially improving margins and reducing debt.
Furthermore, it is expected to free up resources and time for the company to focus on growth areas such as Ultrasonics, PNS, and international expansion. InvestingPro analysis indicates positive momentum in the company's financial health, with expectations of profitability this year. Discover more insights and 7 additional ProTips about Bioventus with an InvestingPro subscription, including access to comprehensive Pro Research Reports covering 1,400+ US stocks.
Canaccord Genuity's endorsement of the transaction emphasizes the potential benefits for Bioventus. The firm has not yet adjusted its financial model or estimates to reflect the completion of this divestiture but remains optimistic about the company's future prospects in light of this recent development.
In other recent news, Bioventus, an orthobiologic solutions leader, has reported substantial Q3 growth and raised its full-year guidance. The company achieved a 15% year-over-year increase in revenue, reaching $139 million in Q3, marking its fourth consecutive quarter of double-digit organic revenue growth.
Bioventus also raised its full-year revenue guidance to between $562 million and $567 million, indicating nearly 13% expected growth. It's worth noting that the company's adjusted EBITDA increased by 9% to $24 million, with an anticipated annual margin improvement of 100 basis points.
Further, Bioventus is selling its advanced rehabilitation business for $25 million, with potential earn-outs of up to $20 million. The company aims to reduce net leverage to below three times by the end of 2025 and has increased its cash position to $43 million. Adjusted earnings per share guidance for the full year has been increased to $0.40 to $0.42.
These are recent developments that highlight the company's strong performance and strategic initiatives aimed at driving growth and profitability. Despite anticipating a lower growth rate in Q4 due to challenging year-over-year comparisons and a temporary slowdown in onboarding new distributor agents, Bioventus remains optimistic about its future growth, driven by a strong position in the HA market and a disciplined resource allocation strategy.
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