- Varian Medical Systems is acquiring Cancer Treatment Services International (CTSI) for $283 million, the Palo Alto, California-based radiation oncology systems maker announced Monday.
- Founded by a team of University of Pittsburgh Medical Center (UPMC) doctors and business partners in 2006, CTSI operates cancer care brand American Oncology Institute in sites across South Asia, with a flagship hospital in Hyderabad, India. CTSI's Oncology Solutions division is a Pennsylvania-based centralized management hub for the company's cancer centers.
- Separately, CTSI houses a reference laboratory brand that provides UPMC-guided pathology services in India.
The takeover comes as Varian emphasizes international expansion, largely in Asian markets. Orders for Varian's oncology systems were up 35% in the Asia-Pacific region in the most recent quarter, with accelerating growth in China, the company reported.
The CTSI acquisition positions Varian to expand from a radiation therapy technology supplier to an integrated cancer services provider in emerging markets.
"This transaction will increase Varian's expertise in cancer center operations, allowing for new partnerships globally to deliver world-class, value-based care in developed and emerging markets," the press release said. "In addition, the transaction expands the scope and geographic reach of CTSI's technology-enabled clinical solutions."
In addition to American Oncology Institute, CTSI operates a reference laboratory and pathology provider called AmPath, guided by UPMC's pathology department. AmPath touts itself as India's only reference lab "featuring a comprehensive clinical collaboration with an American hospital."
Varian said CTSI had revenues of $43.5 million last year, compared to Varian's $779 million in revenues in its most recent quarter.
Varian lowered annual earnings per share guidance on news of the acquisition to $4.55 to $4.70. The company expects the CTSI acquisition to become accretive in fiscal year 2021. Varian's full year revenue guidance remains in the $3.09 billion to $3.18 billion range, which would represent 6% to 9% year-over-year growth.
The CTSI-driven expansion into India builds on a recent Varian partnership with philanthropic organization Tata Trusts. The India-based organization selected Varian as the preferred supplier in a three-year framework agreement signed in March. It aims to install radiation therapy treatment systems across India. The agreement includes creation of new cancer centers in addition to installation of radiotherapy equipment in existing centers.