3D Buys Medical Modeling - Analyst Blog

3D Systems Corp. DDD acquired a leading provider of personalized surgical treatments and patient-specific medical devices, Medical Modeling, for an undisclosed amount. The company expects the acquisition to be accretive to its earnings. However, it failed to impress investors as the stock fell 2.97% during intra-day trading on Thursday, following the news.

The combination of 3D Systems and Medical Modeling is believed to create the largest 3D printing personalized surgery and medical device service and product capability. Post acquisition, 3D Systems intends to deliver the only integrated 3D modeling-to-printing capability available in direct metals and biocompatible plastics, that is approved by the FDA.

The acquisition is a strategic move by 3D Systems, as the Medical Modeling buy signifies the greater adoption of 3D technology not only in the field of industrial manufacturing but also in the MedTech industry. Most importantly, this Colorado-based company was the first to launch 3D printing-centric personalized surgery and patient-specific medical device solutions and its manufacturing processes are approved by FDA.

Moreover, Medical Modeling also brings on board Virtual Surgical Planning (VSP), which is a service-based approach to personalized surgery that combines expertise in medical imaging, surgical simulation and additive manufacturing.

This solution provides surgeons the access to a state-of-the-art toolbox for the most challenging head and neck surgical procedures. Further, VSP also provides with a comprehensive virtual surgical plan with custom-engineered instrumentation to guarantee surgical success. VSP is a patented and tested technology and is available to assit in surgeries ranging from trauma reconstruction of the facial skeleton to guidance of fibula-free grafts to more routine orthognathic surgeries.

Prior to this in Feb 2014, 3D printing solutions provider had printed a hybrid Exoskeleton robotic suit by partnering Ekso Bionics, a robotic exoskeleton company. The 3D printed Ekso-Suit — the first of its kind — was made for Amanda Boxtel, who was paralyzed from waist down after a skiing accident in 1992 in Aspen.

The greater adoption of 3D printing technology is also being supported by IDC's growth estimates for the worldwide 3D printer market. The research firm expects 3D printing revenues and units to grow at a CAGR of 29% and 59%, respectively, for the 2012–2017 period. Moreover, according to Taiwan Industrial Economics and Knowledge Research Center (IEK), the global 3D printer market will reach 100K units in 2014, and increase to approximately 6 million units by 2018.

These estimates are incrementally positive for 3D Systems as it is a leading provider of 3D printing design-to-manufacturing solutions including 3D printers, print materials and cloud-sourced, on-demand custom parts for professionals and consumers. The company's solutions currently work on materials like plastics, metals, ceramics and edibles. The company expects that its portfolio of new and innovative products will lead to more than 30% organic growth in the next couple of years, thereby enhancing its margins and earnings.

3D Systems currently hold a Zacks Rank #4 (Sell). Investors interested in the computer peripheral equipment can consider companies such as Alps Electric Co. Ltd. (APELY), Hewlett Packard HPQ and Accenture plc ACN, all three carry a Zacks Rank #2 (Buy).