Abaxis, VCA Antech Ink Twin Deal - Analyst Blog

Abaxis, Inc. ABAX and VCA Antech Inc. WOOF jointly announced the signing of two long-term agreements. The first is a long-term product supply deal for VCA's Animal Hospitals, while the second is a co-marketing agreement with VCA's Antech Diagnostic reference laboratories.

Following the news, Abaxis' share price increased 7.3% to close at $44.56 yesterday.

CA-based Abaxis manufactures and distributes portable blood analysis systems for use in both human and veterinary patient care globally. VCA, also based in California, is a leading animal healthcare provider in the U.S. and Canada.

Per the long-term product supply contract, VCA will buy VetScan VS2 chemistry analyzers and diagnostic reagent discs from Abaxis. These products will find place in most of VCA's more than 600 animal hospitals located across North America.

With reference to the co-marketing agreement, Abaxis and VCA have entered into a non-exclusive relationship to cash upon new growth opportunities within the animal healthcare industry. Representatives from both the companies will work together to provide complete state-of-the-art diagnostic solutions. Such solutions combining Antech Diagnostic laboratory services with Abaxis' VetScan VS2 chemistry analyzers should help improve veterinary practices throughout North America.

The co-marketing agreement between the two companies has opened up new avenues for in-house testing and reference laboratory services, which can now be effectively utilized by any type of veterinary practice, be it single doctor, multi-doctor or specialty practice.

Management at Abaxis is quite upbeat about this deal. It views VCA's established presence in the veterinary hospital industry as a bright prospect for its cutting-edge diagnostic technology, and expects to enhance the latter's capacity to offer patient care in a more time and cost-effective manner.

With Abaxis and VCA now working together, the two companies are positioned to generate incremental new business and expand market share in their respective markets. The partnership will in turn, provide a comprehensive suite of diagnostic solutions to the veterinary community.

Both Abaxis and VCA currently retain a Zacks Rank #3 (Hold). Some better-ranked stocks worth considering in the medical products industry include Cardica Inc. CRDC and ICU Medical, Inc. ICUI. Both the stocks carry a Zacks Rank #2 (Buy).