What the Cord Blood Registry Buyout Really Adds to AMAG

Health and Healthcare

Published: August 17, 2015 4:31 pm

AMAG Pharmaceuticals, Inc. (NASDAQ: AMAG) had already seen shares rise handily prior to the summer selloff. While this deal is a known event, it looks as though AMAG may have just scored after it completed the planned acquisition of the Cord Blood Registry. This was a $700 million acquisition, if certain adjustments are made, versus a $2.2 billion market cap for AMAG.

If you are not familiar with outfits like the Cord Blood Registry, this is one of the businesses tied to umbilical cord blood stem cell collection and storage after a baby is born. It has become big business, and it comes with future revenues that can be counted upon for years.

Cord Blood Registry was shown to be the world’s largest company targeting this stem cell collection. The goal is to be able to help your children down the road have access to their own stem cells to fight diseases in the future. The acquisition will allow AMAG to expand its growing maternal health business in what was said to be a deal which would be a seamless integration that is immediately accretive to AMAG’s adjusted EBITDA and earnings upon the closing.

What AMAG gets here in this storage facility is over 600,000 preserved umbilical cord blood and tissue stem cell units. The company said that it believes this number to be more than half of all privately stored cord units in the United States.

In 2014, CBR generated non-GAAP revenue of $126 million and adjusted EBITDA of $45 million. AMAG generated $124.4 million in revenues in 2015, up from $81 million in 2013 and $85 million in 2012. The company sees roughly $15 million in annual expense synergies (cost savings) associated with the transaction.

Analysts expect AMAG revenues to jump to $468 million in 2015, and then to rise to $670 million in 2016. Sales in the first two quarters of 2015 were already $123.8 million in June and $89.5 million in March.

AMAG shares rose 2.6% to $64.62 on Monday, with a 52-week range of $19.98 to $77.73 and a consensus analyst target of $79.40.

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