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Labcorp (LH) to Boost Clinical Diagnostics With New Deal
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Laboratory Corporation of America Holdings, Inc. or Labcorp (LH - Free Report) inked a deal to acquire clinical diagnostics, reproductive and women's health testing assets from Bioreference Health — a wholly owned subsidiary of OPKO Health (OPK - Free Report) . The deal is anticipated to close in the second half of 2024.
The latest move will augment Labcorp's laboratory services network and expand access to the company's high-quality clinical laboratory services.
Financial Details
The assets that Labcorp will acquire are expected to generate around $100 million in yearly revenues. The purchasing price is $237.5 million. The proposed acquisition fulfills LH’s strategic and financial objectives.
The deal is subject to customary closing conditions and necessary regulatory approvals, including those under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
More on the News
Through this deal, Labcorp will purchase the laboratory testing operations of BioReference Health, which are concentrated on clinical diagnostics and women's and reproductive health outside of New York and New Jersey throughout the United States. PSCs, as well as a few client contracts and operational assets, are all included in this transaction.
Along with carrying on with its full operations in New York and New Jersey, BioReference Health will continue to provide oncology and urology testing services nationwide.
Image Source: Zacks Investment Research
The buyout deal will enable OPKO Health to significantly streamline its laboratory services business while retaining its core operations, positioning BioReference Health for sustained growth and profitability. The company also stated that this transaction is part of its previously-announced effort to re-establish profitability in the clinical laboratory business while at the same time better positioning OPKO as an innovative biopharmaceutical company.
Strategic Implications
While increasing accessibility and convenience for patients across the nation, Labcorp is dedicated to upholding the excellent customer service that medical professionals and health systems expect from BioReference Health. Following the close of the transaction, the company looks forward to working with the BioReference Health team to ensure a smooth transition.
When completed, the deal is intended to give patients, clinicians, and consumers better access to Labcorp's comprehensive, high-quality laboratory services, scientific expertise and enhanced testing capabilities in important regions across the country.
Industry Prospects
Per Grand View Research, the global clinical laboratory services market size was estimated at $233.24 billion in 2023 and is projected to witness a CAGR of 3.5% from 2024 to 2030. The market growth is due to factors such as the increasing burden of chronic diseases and the growing demand for early diagnostic tests. Moreover, rapid advancements in data management and sample preparation due to growing volumes of testing samples are anticipated to boost market growth.
Other Highlights Within Clinical Laboratory Business
In January 2023, Labcorp entered into a strategic collaboration with Hawthorne Effect to accelerate decentralized clinical trial capabilities for pharma, biotech and medical device sponsors. Through this collaboration, sponsors seek to increase patient diversity and inclusion, reduce site burden and accelerate enrollment and clinical study timelines.
In November 2023, LabCorp completed a comprehensive laboratory relationship with Legacy Health. Under the terms of the agreement, LabCorp will acquire the select assets of its outreach laboratory business in the Northwest United States, including laboratory facilities and equipment. The collaboration allows LabCorp to bring its leading diagnostics capabilities to patients across Legacy's service area.
Price Performance
In the past year, LH’s shares have gained 11.7% compared with the industry’s rise of 15.1%.
Zacks Rank and Key Picks
Labcorp currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Stryker Corporation (SYK - Free Report) and Cencora, Inc. (COR - Free Report) .
Stryker, carrying a Zacks Rank #2, reported a fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker has an estimated earnings growth rate of 11.5% for 2025 compared with the S&P 500’s 9.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.
Cencora, carrying a Zacks Rank #2, reported a first-quarter fiscal 2024 adjusted EPS of $3.28, which beat the Zacks Consensus Estimate by 14.7%. Revenues of $72.3 billion outpaced the Zacks Consensus Estimate by 5.1%.
COR has an earnings yield of 5.75% compared with the industry’s 1.85%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 6.7%.
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Labcorp (LH) to Boost Clinical Diagnostics With New Deal
Laboratory Corporation of America Holdings, Inc. or Labcorp (LH - Free Report) inked a deal to acquire clinical diagnostics, reproductive and women's health testing assets from Bioreference Health — a wholly owned subsidiary of OPKO Health (OPK - Free Report) . The deal is anticipated to close in the second half of 2024.
The latest move will augment Labcorp's laboratory services network and expand access to the company's high-quality clinical laboratory services.
Financial Details
The assets that Labcorp will acquire are expected to generate around $100 million in yearly revenues. The purchasing price is $237.5 million. The proposed acquisition fulfills LH’s strategic and financial objectives.
The deal is subject to customary closing conditions and necessary regulatory approvals, including those under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
More on the News
Through this deal, Labcorp will purchase the laboratory testing operations of BioReference Health, which are concentrated on clinical diagnostics and women's and reproductive health outside of New York and New Jersey throughout the United States. PSCs, as well as a few client contracts and operational assets, are all included in this transaction.
Along with carrying on with its full operations in New York and New Jersey, BioReference Health will continue to provide oncology and urology testing services nationwide.
The buyout deal will enable OPKO Health to significantly streamline its laboratory services business while retaining its core operations, positioning BioReference Health for sustained growth and profitability. The company also stated that this transaction is part of its previously-announced effort to re-establish profitability in the clinical laboratory business while at the same time better positioning OPKO as an innovative biopharmaceutical company.
Strategic Implications
While increasing accessibility and convenience for patients across the nation, Labcorp is dedicated to upholding the excellent customer service that medical professionals and health systems expect from BioReference Health. Following the close of the transaction, the company looks forward to working with the BioReference Health team to ensure a smooth transition.
When completed, the deal is intended to give patients, clinicians, and consumers better access to Labcorp's comprehensive, high-quality laboratory services, scientific expertise and enhanced testing capabilities in important regions across the country.
Industry Prospects
Per Grand View Research, the global clinical laboratory services market size was estimated at $233.24 billion in 2023 and is projected to witness a CAGR of 3.5% from 2024 to 2030. The market growth is due to factors such as the increasing burden of chronic diseases and the growing demand for early diagnostic tests. Moreover, rapid advancements in data management and sample preparation due to growing volumes of testing samples are anticipated to boost market growth.
Other Highlights Within Clinical Laboratory Business
In January 2023, Labcorp entered into a strategic collaboration with Hawthorne Effect to accelerate decentralized clinical trial capabilities for pharma, biotech and medical device sponsors. Through this collaboration, sponsors seek to increase patient diversity and inclusion, reduce site burden and accelerate enrollment and clinical study timelines.
In November 2023, LabCorp completed a comprehensive laboratory relationship with Legacy Health. Under the terms of the agreement, LabCorp will acquire the select assets of its outreach laboratory business in the Northwest United States, including laboratory facilities and equipment. The collaboration allows LabCorp to bring its leading diagnostics capabilities to patients across Legacy's service area.
Price Performance
In the past year, LH’s shares have gained 11.7% compared with the industry’s rise of 15.1%.
Zacks Rank and Key Picks
Labcorp currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the broader medical space are Stryker Corporation (SYK - Free Report) and Cencora, Inc. (COR - Free Report) .
Stryker, carrying a Zacks Rank #2, reported a fourth-quarter 2023 adjusted EPS of $3.46, beating the Zacks Consensus Estimate by 5.8%. Revenues of $5.8 billion outpaced the consensus estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stryker has an estimated earnings growth rate of 11.5% for 2025 compared with the S&P 500’s 9.9%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 5.1%.
Cencora, carrying a Zacks Rank #2, reported a first-quarter fiscal 2024 adjusted EPS of $3.28, which beat the Zacks Consensus Estimate by 14.7%. Revenues of $72.3 billion outpaced the Zacks Consensus Estimate by 5.1%.
COR has an earnings yield of 5.75% compared with the industry’s 1.85%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 6.7%.