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Varian Medical to acquire private cancer treatment provider for $283M


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Varian Medical to acquire private cancer treatment provider for $283M

Varian Medical Systems Inc. struck a definitive deal to acquire privately held Cancer Treatment Services International for $283 million.

Pittsburgh, Pa.-based Cancer Treatment Services is a provider of university-level, comprehensive treatment for cancer patients. The transaction is expected to be completed in about two weeks.

The seller is TPG Growth, which first invested in Cancer Treatment Services in 2016. TPG Growth is the middle market and growth equity platform of alternative asset manager TPG Capital Management LP.

Palo Alto, Calif.-based Varian will finance the acquisition through borrowings under its credit facility and cash on hand.

Cancer Treatment Services operates the American Oncology Institute in Hyderabad in India's Telangana state and 10 multidisciplinary cancer centers, including radiation, medical and surgical oncology, across the Indian subcontinent. The company also owns a U.S.-based Oncology Solutions division that provides cancer care services to healthcare providers globally.

This acquisition will help Varian expand the development and implementation of new solutions for cancer care and support the company's growth trajectory for its oncology systems business.

Varian expects the transaction to have a 6-cents-per-share dilutive impact on its GAAP earnings a 3-cent impact on its non-GAAP EPS for the remainder of the fiscal year 2019. The acquisition is anticipated to be accretive to Varian's EPS during the fiscal year 2021 on a non-GAAP basis and fiscal year 2022 on a GAAP basis.

The company adjusted its guidance for fiscal 2019 to reflect the impact of the proposed acquisition and recently announced incremental tariffs.

Varian's non-GAAP EPS is now expected to be between $4.55 and $4.70, down from $4.60 to $4.75 expected previously, while cash flows from operations are expected to be between $440 million and $490 million compared to the previous forecast of $460 million to $510 million.