Dive Brief:
- Labcorp will pay up to $225 million to acquire the oncology diagnostics businesses of BioReference Health, a subsidiary of Opko Health, to expand its portfolio of tests used in cancer care.
- The deal, announced Tuesday, includes $192.5 million to be paid at closing and a payment of up to $32.5 million based on performance.
- The assets, including certain customer accounts, generate about $85 million to $100 million in annual revenue, according to the announcement. Labcorp expects the acquisition to be accretive to earnings in the first year after closing.
Dive Insight:
Labcorp has identified oncology as one of the high-growth testing areas where it wants to increase its laboratory service offerings. The others are women's health, neurology and autoimmune disease.
The company spent about $839 million last year on acquisitions to further its expansion goals, including the $240.8 million purchase of medical genetics company Invitae and a $237.6 million deal for BioReference Health’s businesses focused on clinical diagnostics and reproductive and women’s health.
Labcorp also snapped up the clinical and outreach businesses of Baystate Medical Center, Providence Medical Foundation and Westpac Labs.
The deals capitalize on the trend of health systems selling lab assets to concentrate on their core clinical care services.
CEO Adam Schechter told analysts last month that Labcorp continues to look for acquisition opportunities, including in specialty testing areas, and sees a strong pipeline of potential deals ahead.
Opko CEO Phillip Frost said the transaction will further streamline its BioReference Health operations to achieve profitability.
BioReference Health will maintain its core clinical testing services in the New York and New Jersey region. It will also have the ability to expand its urology franchise, which includes the 4Kscore blood test for prostate cancer screening, Frost said in a statement.
The deal, which is subject to state regulatory approvals, is expected to close in the second half of this year.
