Chicago-headquartered Hill-Rom (HRC) is a multinational medical technologies company. It supplies products such as smart beds, operating room equipment, patient assessment technologies, and caregiver collaboration tools.
Hill-Rom recently agreed to be acquired by global medical products company Baxter International (BAX) in a deal valuing it at $12.4 billion. The transaction is expected to close in early 2022.
With this in mind, we used TipRanks to take a look at the newly added risk factors for Hill-Rom. (See Top Smart Score Stocks on TipRanks)
Q4 Financial Results
Hill-Rom reported revenue of $798 million for its Fiscal 2021 fourth quarter ended September 30, representing an increase of 13% year-over-year and exceeding the consensus estimate of $753 million. It posted adjusted EPS of $1.67, beating the consensus estimate of $1.47 and topping $1.17 in the same quarter last year.
During Fiscal 2021, Hill-Rom returned $202 million to shareholders through dividends and share repurchases. It finished the fiscal year with $271.8 million in cash.
Risk Factors
Hill-Rom carries 29 risk factors, according to the new TipRanks Risk Factors tool. It recently updated its risk profile with four new risk factors mostly related to its pending takeover by Baxter.
The company has cautioned investors that there is no guarantee that the proposed merger with Baxter will close. It has mentioned that the deal requires shareholder and regulatory approvals before it can be completed. Therefore, failure to obtain the approvals could cause the deal to collapse. Further, the company has told investors that it may be required to pay $367 million in termination fees to Baxter if the deal falls through.
Hill-Rom has warned that failure to complete the proposed merger with Baxter could adversely affect its business, financial condition, and stock price. For example, it has mentioned that it will incur certain expenses related to the merger even if the transaction does not close. Additionally, the merger agreement contains certain restrictions that may force Hill-Rom to forgo certain business opportunities that it would otherwise pursue absent the agreement.
The company has told investors that climate change and measures to counter it could have unfavorable effects on its business and financial condition. It has mentioned that extreme weather conditions may disrupt its supply chain and adversely affect its ability to obtain the materials it requires for its operations.
It goes on to say that climate change concerns could cause customers to prioritize the purchase of products that are made in sustainable ways. Furthermore, the company has cautioned that regulatory actions aimed at tackling climate change could increase its costs.
Most of Hill-Rom’s risk factors come under the Finance and Corporate category, with 28% of the total risks. That just about matches the sector average.
Wall Street’s Take
Following Hill-Rom’s Q4 earnings report, Stifel Nicolaus analyst Rick Wise downgraded Hill-Rom stock rating to a Hold from a Buy but raised the price target to $156 from $155. Wise’s new price target aligns with the price at which Baxter agreed to acquire Hill-Rom and almost matches the stock’s current price. Consensus among analysts is a Hold based on five Holds.
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