Labcorp Expands Oncology Diagnostics Portfolio with $225M Acquisition of BioReference Health Assets

Labcorp, a leading global life sciences company, has announced a significant expansion of its oncology diagnostics capabilities through the acquisition of key assets from BioReference Health, a subsidiary of Opko Health. The deal, valued at up to $225 million, underscores Labcorp's strategic focus on high-growth testing areas and further solidifies its position in the cancer diagnostics market.

Acquisition Details and Financial Impact

Labcorp will pay an initial $192.5 million at closing, with an additional performance-based payment of up to $32.5 million. The acquired assets, which include specific customer accounts, are expected to generate annual revenue between $85 million and $100 million. Labcorp anticipates that the acquisition will positively impact earnings within the first year after closing.

The transaction, announced on Tuesday, is subject to state regulatory approvals and is expected to be finalized in the second half of 2023. This move aligns with Labcorp's broader acquisition strategy, which saw the company invest approximately $839 million in various purchases throughout the previous year.

Strategic Expansion in High-Growth Testing Areas

Labcorp has identified oncology as one of its key focus areas for growth, alongside women's health, neurology, and autoimmune disease. This acquisition builds upon the company's recent expansion efforts, which included the $240.8 million purchase of medical genetics company Invitae and a $237.6 million deal for BioReference Health's clinical diagnostics and reproductive health businesses.

CEO Adam Schechter emphasized the company's ongoing pursuit of acquisition opportunities, particularly in specialty testing areas. He noted that Labcorp sees a strong pipeline of potential deals on the horizon, indicating that this latest acquisition may be part of a larger growth strategy.

Impact on Opko Health and BioReference Health

For Opko Health, the parent company of BioReference Health, this transaction represents a strategic move to streamline operations and improve profitability. Opko CEO Phillip Frost stated that the deal would help further refine BioReference Health's focus.

Following the acquisition, BioReference Health will maintain its core clinical testing services in the New York and New Jersey region. The company will also retain the ability to expand its urology franchise, which includes the 4Kscore blood test for prostate cancer screening.

This latest development in the pharmaceutical and diagnostics industry highlights the ongoing trend of consolidation and specialization, as companies seek to optimize their portfolios and focus on high-growth areas. As the deal progresses towards closure, industry observers will be keen to see how this acquisition enhances Labcorp's oncology diagnostics offerings and impacts the competitive landscape in the cancer testing market.