The companies announced an exclusive distribution deal for GE Healthcare (a division of big papa GE) to distribute Cardiac Science's Powerheart external defibrillators to U.S. and Canadian hospitals. GE will market the company's current AED (automated external defibrillator) products and a new "crash cart" currently awaiting FDA approval. At press time, the news had spiked Cardiac Science shares up more than 40%, while Quinton Cardiology shares jumped 14%.
This isn't so much a new agreement as a continuation of the two companies' relationship. GE already sells Cardiac Science-manufactured AEDs in Europe under the GE Responder brand.
Since Cardiac Science is currently merging with Quinton, this is good news for both companies. Prior to this agreement, neither company was expected to post revenue growth much above the high single-digit levels. Once the GE deal is up and running, it should help boost Cardiac Science's sales numbers.
That said, this is not a slam dunk for the merged company's success. Distribution agreements between huge companies and little companies don't often end up working quite as well as the little company originally hoped. I imagine this is, in part, the result of the fact that the agreement almost never matters quite as much to the larger partner as it does to the smaller one.
What's more, there's plenty of competition in this space. Philips Medical, part of PhilipsElectronics
In any case, I don't want to rain on Cardiac Science and Quinton's parade today. Both companies trade at low valuations relative to small-cap med-tech standards; investors who believe that this GE agreement could be a real catalyst might want to investigate further.
We've charged up more Fool Takes on med-tech:
- Medical Action Bags a Good Quarter
- A Second Opinion on Medtronic
- Integra LifeSciences Strikes a Nerve
- Success Is Intuitive
Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (which means he's neither long nor short the shares).
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