Patterson Companies (PDCO) to Buy Holt Dental Supply - Analyst Blog

Distributor of dental, veterinary and rehabilitation supplies, Patterson Companies, Inc. (PDCO), recently announced an agreement to acquire Holt Dental Supply, Inc.

Holt Dental Supply is a regional dental supply company serving dental practices in Wisconsin, Illinois, Minnesota, Missouri, Michigan and Indiana. The acquisition is expected to expand Patterson Dental's local reach while also enhancing its Midwest domination.

Post-acquisition, the employees of Holt Dental will be integrated into Patterson Dental. The president of Hold Dental, Paul Holt, will go on to become a district manager.

Notably, acquisitions contributed 3.6% to the recently concluded quarter's sales growth.

Apart from acquisitions, Patterson Companies is also active on the partnership front.  In the recent past, Patterson Dental has entered into a strategic partnership with QSIDental, the dental division of healthcare information systems provider, Quality Systems Inc. (QSII). Through this partnership, Quality Systems intends to leverage Patterson Dental's special market division sales force to set up a new line of business with its dental group practice customers.  

While Patterson Companies is making significant progress in its Dental division, it also continues to focus on its Veterinary division. A few months back, the company had entered into a strategic partnership with Abaxis, Inc. (ABAX) – a medical products company that manufactures point-of-care blood instrumentation and consumables to the medical, research and veterinary markets.

Per the agreement, Patterson Companies will gain access to and sell the full line of Abaxis' veterinary diagnostic products, to advance its goal of providing quality veterinary care.

The Holt Dental acquisition, along with the strategic partnerships, will help Patterson Companies to better its top-line growth, going forward. Notably, Patterson Companies reported a better-than-expected second quarter of fiscal 2015, whereby both sales and earnings managed to beat the respective Zacks Consensus Estimate.

Patterson Dental's sales (55% of total sales) increased 7.5% at constant currency to $601.7 million. We believe the acquisition of Holt Dental is well aligned to enhance the prospects of Patterson Dental in the coming quarters.

Moreover, the acquisition of Holt Dental, coupled with the recent partnerships, will help Patterson Companies to fight off stiff competition from the likes of DENTSPLY International Inc. (XRAY), Henry Schein, Inc. and MWI Veterinary Supply, Inc.

Currently, Patterson Companies carries a Zacks Rank #2 (Buy).