Dive Brief:

• PerkinElmer has struck a deal to buy Immunodiagnostic Systems Holdings (IDS) for $155 million to grow its diagnostics business, continuing the company's 2021 spending spree.

• IDS is built on a random access chemiluminescence platform that it applies to endocrinology, autoimmunity and infectious diseases. PerkinElmer is already active in some of those areas but said the "respective product lines are to a large extent complementary." 

• The acquired assets will slot into the same Euroimmun portfolio as the tuberculosis product PerkinElmer picked up in its takeover of Oxford Immunotec earlier this year.

Dive Insight:

Like other companies exposed to COVID-19 testing, PerkinElmer has generated cash at a record rate in the pandemic. Net operating cash flow grew 146% last year over 2019. In the first quarter of 2021, PerkinElmer's cash flow exceeded the amount it generated in all of 2019, or in any of the other few years leading up to the pandemic.

PerkinElmer is using the money to buy assets. The company began the year by agreeing to pay $591 million for Oxford Immunotec for the chance to challenge Qiagen for the tuberculosis market. Last week, PerkinElmer agreed to pay $260 million to buy Nexcelom Bioscience for its cell counting tech.

On Monday, PerkinElmer disclosed another triple-digit deal, this time for IDS, to gain control of a fully automated immunodiagnostics platform and an associated menu of tests. The flurry of M&A activity means PerkinElmer has struck more deals, at a higher aggregate value, in the first six months of 2021 than in the years since it bought Euroimmun for $1.3 billion in 2017.

PerkinElmer has executed the series of transactions despite its management's belief that the market is hot and companies with a COVID-19 tailwind are demanding a premium. Talking on a conference call with investors earlier this month, PerkinElmer CEO Prahlad Singh said the company has tried to find value by staying out of auctions and doing deals that are "more strategic and more partnerships resulting in acquisitions."

Shares in IDS traded in London for below their pre-pandemic value for most of the past year. As such, while PerkinElmer's offer is higher than IDS' share price at any time since 2014, it has avoided paying a significant COVID-19-related premium for the assets.

PerkinElmer still faces the challenge of integrating IDS at the same time as its other acquisitions, and amid ongoing disruptions to travel and in-person interactions that could affect its exchanges with the U.K.-based business and its 300 employees. However, PerkinElmer has tried to lay the groundwork for a smooth integration of IDS and other acquired companies.  

"We have established what we are calling the 'integration transformation office' and put a very good function in place that has allowed for seamless integration of the acquisitions that we have brought in, and we hope to bring in in the rest of the year. So, I think you will continue to see us be active in the M&A space," Singh said during a May 4 earnings call.