Labcorp and OPKO Health have partnered up for an agreement that sees Labcorp acquire select assets of BioReference Health, a subsidiary of OPKO.
Under the terms of the deal, the medtech and testing giant gets its hands on BioReference Health's laboratory testing businesses focused on clinical and women's health testing services, urology, corrections and certain operational assets, including over 80 additional patient service centers.
Labcorp will also acquire BioReference Health's proprietary 4Kscore Test, an FDA-approved blood test that helps predict the likelihood of finding aggressive prostate cancer before a biopsy decision.
The company will pay $722 million in cash at closing, subject to an upward or downward adjustment (if any) based on closing business revenues, and up to an additional $150 million in an earnout based on revenue from the 4Kscore Test.
Labcorp expects the business revenue to be around $250 million in the first year after close. Until the deal closes, there will be no changes to operations or services, and both companies will continue to operate independently.
The purchase will strengthen Labcorp’s ability to deliver affordable, high-quality, specialized diagnostic services to more patients and providers around the country, said Bryan Vaughn, EVP and President of Diagnostics at Labcorp, in a statement.
“By expanding our clinical, women's health, urology and corrections testing capabilities and broadening access to innovative diagnostics such as the FDA-approved 4Kscore Test, we can help providers make more informed decisions, improve patient care and increase access to the comprehensive laboratory services people need to live healthier lives,” he said.
Analysts at Evercore ISI said in a note to clients that the deal fits Labcorp’s strategy of expanding into higher-growth specialty testing, adding women’s health and urology capabilities alongside an established clinical testing business and more than 80 patient service centers.
“We see two complementary opportunities: leveraging LH’s [Labcorp Holdings] infrastructure to improve the economics of BioReference’s regional business, while using its national commercial reach to broaden adoption of the proprietary, FDA-approved 4Kscore prostate cancer test,” the analysts wrote.
“In our view, women’s health strengthens the specialty offering, while 4Kscore adds a differentiated asset with an opportunity for broader distribution rather than simply more routine testing volume.”