Telix Pharmaceuticals Ltd (ASX: TLX) shares are falling on Monday morning.
At the time of writing, the ASX 200 healthcare stock is down 3.5% to $19.57
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Why is this ASX 200 healthcare stock falling?
Investors have been selling the company's shares this morning after broad market weakness offset the announcement of a major acquisition.
According to the release, Telix has signed an agreement to acquire RLS from its parent company, RLS Group, for US$230 million in cash. There is also a deferred cash consideration of up to a maximum of US$20 million, which is contingent on the achievement of certain milestones during the four quarters following closing.
RLS is America's only Joint Commission-accredited radiopharmacy network, with 31 radiopharmacies covering more than 85% of the population. Its revenue for the 12 months ended 31 December 2023 was US$158 million.
Management notes that every RLS radiopharmacy houses cutting-edge clean rooms and is fully equipped and aligned to compliance standards. They are each led by experienced nuclear pharmacists to ensure every product the company offers is meticulously prepared, dispensed, and distributed to more than 1,500 customers without fail.
Telix believes the acquisition will significantly expand its North American manufacturing footprint and establishes the basis of a next generation radiometal production network to benefit the company and select strategic commercial partners.
Management advised that the transaction is expected to be cost-neutral to Telix from an operating cash flow perspective. Furthermore, RLS is currently a distributor of Illuccix. As a result, the acquisition is expected to be accretive to Telix following completion.
Management commentary
Telix's managing director and CEO, Dr Christian Behrenbruch, highlights that the deal is part of plans to invest in vertical integration and build integrated supply chains. He said:
Our vision is to build a radiometal production and distribution network fit for the future. By combining the ARTMS platform and the RLS network, we can scale up the production of key isotopes and build a stable and consistent supply of PET and SPECT diagnostic tracers, along with therapeutic radiopharmaceuticals across the U.S. for the benefit of Telix, our partners and the patients we serve.
Telix is a trusted brand, recognised for our technical expertise, product quality, scheduling flexibility and delivery reliability. As we grow and commercialise new products, this investment ensures we can continue to deliver to this standard, alongside our key trusted distribution partners.
RLS CEO, Stephen Belcher, adds:
We look forward to becoming part of the Telix Group ecosystem. The RLS management team has emphasised quality, reliability and flexibility, and by leveraging Telix's support, we will be able to expand our capabilities further and, together, build the radiopharmaceutical company of the future. We see this as a very positive step for the company, our people and our customer base.
