NeoGenomics has moved to acquire clinical oncology laboratory Genoptix for $125 million in cash plus 1 million shares of stock currently worth over $14 million.
The two companies billed the deal as complementary, marrying NeoGenomics’ genetic testing services for hospitals and pathologists with Genoptix’s relationships with community-based oncologists.
“The acquisition of Genoptix enhances NeoGenomics’ leadership in the oncology test market, significantly expanding our coverage of oncology practices, increasing our customer reach and leaving us better positioned for growth,” NeoGenomics Chairman and CEO Douglas VanOort said in a statement.
“With what we believe to be the most comprehensive oncology test menu in the country and reach across all distribution channels, the combined company will be uniquely positioned in the oncology test market,” VanOort added.
Formerly part of Novartis, Genoptix’s sales force and pathologists have experience developing customized reports for community oncologist practices, which NeoGenomics sees as an “underpenetrated” channel for its more comprehensive liquid biopsy and next-generation sequencing offerings, the companies said.
The acquisition is projected to add $85 million of revenue and potentially break even after the first year, alongside opportunities to reduce combined operating expenses by $25 million over three years—for example, with NeoGenomics operating a lab in Aliso Viejo, California, about 40 miles from Genoptix’s headquarters in Carlsbad, VanOort said on a conference call with investors.
Earlier this year, NeoGenomics and Pharmaceutical Product Development announced they would integrate their pathology and molecular testing offerings, with NeoGenomics providing lab services for PPD’s contract research in cancer. The two companies also hope to provide a companion diagnostic development service, from biomarker discovery through regulatory approval and commercialization.
In 2015, NeoGenomics bought GE Healthcare’s cancer diagnostics unit Clarient for about $300 million. In addition, GE gained roughly one-third of ownership in NeoGenomics, plus a board seat in the deal. Since then, the Fort Myers, Florida-based NeoGenomics has added about $1 billion to its market cap, currently standing at around $1.36 billion.