M&A Watch: 8 Medical Consumables Companies That Look Like Buyout Targets

The recent pick-up in mergers and acquisitions has spilled over into MedTech companies too, with Covidien (COV) announcing the purchase of Aspect Medical (ASPM) in late September and Kimberly-Clark (KMB) announcing the purchase of I-Flow Corp (IFLO) last week. I didn't even know that KMB had a Healthcare division (6% of sales in 2008)!

While I am somewhat disappointed that my keen interest in the space hasn't yet yielded me any buyouts of companies I have purchased or recommended, I do believe that the buyouts signal that some big companies are on the prowl in the sector. Covidien, the former Tyco Healthcare, also bought Vnus Medical earlier this year as well as some private companies. One thing that I have noticed about the acquisitions has been that the targets have had very high gross margins and strong balance sheets. Further, the companies have had high recurring revenue due to the sale of consumables rather than capital equipment. With that in mind, I screened my 70-stock universe of medical consumables companies for the following: