Laboratory Corporation of America Holdings or LabCorp ( LH Quick Quote LH - Free Report) recently completed the acquisition of select operating assets and intellectual property (IP) from Myriad Genetics' ( MYGN Quick Quote MYGN - Free Report) autoimmune business unit, including the Vectra rheumatoid arthritis (RA) assay. Initiated in May 2021, this acquisition strengthens LabCorp’s global position in RA testing and treatment.
The financial terms of the deal, however, were kept under wraps.
A Few Words on RA and Vectra
Rheumatoid arthritis is an autoimmune disorder and one of the most common forms of arthritis that causes painful inflammation and tissue damage in the knees, wrists, and other joints.
Vectra is a non-invasive, blood-based test capable of analyzing 12 biomarkers to measure RA activity. It combines those measures to generate a score that identifies the severity of RA inflammation and the effectiveness of the current treatment. It can also predict potential, future joint damage. This test has enabled the 5,000 practicing rheumatologists in the United States to better manage RA symptoms by providing targeted treatment and correcting ongoing treatments.
Strategic Significance of the Acquisition
The U.S. Centers for Disease Control and Prevention currently estimates that by 2040, roughly 26% of the country’s adult population will be living with doctor-diagnosed arthritis such as RA. This huge market opportunity of RA testing has enabled LabCorp to focus on this space.
According to LabCorp, Vectra and the related IP and other assets complement its prior business activity. The company noted that the integration of the Vectra testing capabilities into its legacy products offers tremendous potential. This will expand the test’s availability. Further, it will make Labcorp a single-source diagnostics solution for RA providers.
LabCorp’s Targeted Development in High-Growth Area
In its efforts to identify and expand in high-growth opportunity areas, LabCorp has acquired select operating assets and IP from Myriad. Additionally, the company agreed to acquire the outreach laboratory business of Minnesota-based North Memorial Health and will provide management services to its inpatient lab.
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In another high-growth area of oncology testing, in the second quarter of 2021, LabCorp launched several oncology tests, including OmniSeq INSIGHT, a pan-cancer tissue-based sequencing test for patients with advanced solid tumor cancers. It has also launched a companion diagnostic test to identify patients with non-small cell lung cancer who are eligible for a new treatment option developed by Amgen.
This apart, the company is currently exercising options to acquire the remaining stake in OmniSeq, LabCorp’s long-time oncology partner and a pioneer in solid tumor profiling.
In women’s health, another focus area, LabCorp acquired Ovia Health in August, a digital health platform to seek information and support with family planning, pregnancy, and parenting. The transaction extends Labcorp’s position as a go-to source for women’s health insights. It helps the company to advance in personalized care in this space and also enables better communication between health care providers and their patients.
Share Price Performance
The stock has outperformed its
industry over the past year. It has rallied 60% compared with the industry’s 32.7% growth. Zacks Rank and Key Picks
Currently, LabCorp carries a Zacks Rank #3 (Hold).
A few better-ranked stocks from the broader medical space are
Envista Holdings Corporation ( NVST Quick Quote NVST - Free Report) , and Henry Schein, Inc. ( HSIC Quick Quote HSIC - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of Zacks #1 Rank (Strong Buy) stocks here.
Envista Holdings has an estimated long-term earnings growth rate of 27%.
Henry Schein has a projected long-term earnings growth rate of 14%.