Exact Sciences (Madison, WI) paid $190 million, including 50% in Exact common stock and 50% in cash, for PreventionGenetics (Marshfield, WI) in early January. PreventionGenetics operates a CLIA-certified lab that performs proprietary next-gen sequencing tests, including PGnome Health Screen (list price $2,290) and PGxome Prenatal (list price $2,860).
Labcorp (Burlington, NC) has agreed to acquire Personal Genome Diagnostics Inc. (PGDx-Baltimore, MD) for $450 million in cash at closing plus up to an additional $125 million based on future performance milestones. The transaction is expected to close in the first half of 2022.
PGDx was founded in 2010 by two cancer scientists, Luis Diaz, MD, and Victor Velculescu, MD, PhD, from Johns Hopkins University. The company received FDA clearance to market its comprehensive tumor profiling test kit, PGDx ELIO tissue complete, in May 2020. The test analyzes 505 genes
from FFPE tissue samples from advanced cancer patients to inform treatment decisions for 35 solid tumor types. PGDx ELIO is covered by Medicare under the PLA code 0250U at a rate of $2,920.
PGDx, which has 114 employees, recorded revenue of approximately $22 million in 2021. Revenue is expected to grow nearly 82% to $40 million in 2022. Labcorp expects the acquisition of PGDx to negatively impact its earnings slightly over the next couple of years, but provide returns in excess of the cost of capital by year five.
PGDx had raised more than $200 million from outside investors, including New Enterprise Associates, Bristol-Myers Squibb and Cowen Healthcare Investments.
Progenity Inc. (San Diego, CA) has sold its lab business, Avero Diagnostics (Irving, TX), to Northwest Pathology (Bellingham, WA) for $10.9 million in cash. The sale of Avero Diagnostics is expected to reduce Progenity’s annual operating expenses by approximately $28 million. Progenity now expects to focus on its research and development efforts for new drugs and diagnostic tests.
Avero Diagnostics (aka Mattison Pathology, LLP) performs anatomic, genetic and Covid tests at CLIA-certified labs in Lubbock and Irving, Texas. Annual revenue is approximately $40 million. Avero was originally founded by Tom Mattison, MD, and Trae Mattison, MD, in 2004, and then sold to Progenity in 2015.
Northwest Pathology, which employs 10 pathologists, operates a full-service lab and provides pathology services to 13 hospitals and more than 100 outpatient clinics in Washington and Alaska.
Sonic Healthcare (Sonic) acquired 100% of ProPath Services (Dallas, TX) for an undisclosed price on December 17, 2021. ProPath had been one of the largest pathologist-owned anatomic pathology labs in the nation. ProPath’s annual revenue is approximately $110 million. Its 500+ employees, including ~50 pathologists, serve roughly 1,000 physicians and 26 hospital clients across 45 states.
ProPath was established as an anatomic pathology practice in 1966. Growth has been almost entirely organic, including the expansion into clinical laboratory services in 2017. In early 2020 ProPath acquired New England Tissue Issue, an AP company located in Massachusetts.
ProPath’s pathologists will join as colleagues with Sonic’s existing group of 330 pathologists in the US. ProPath’s leadership team, including Chairman and CEO Cory Roberts, MD, are expected to hold senior roles at Sonic Healthcare USA.
The acquisition of ProPath follows Sonic’s purchase of Aurora Diagnostics for $540 million in January 2019.
Coker Capital (Charlotte, NC) served as a financial advisor to ProPath, while Haynes and Boone LLP (Dallas, TX) provided legal services.
Apollo Medical Holdings (ApolloMed-Alhambra, CA) has agreed to purchase a majority stake in Sun Clinical Laboratories (Sun Labs-El Monte, CA) for $4 million in cash. The deal is expected to close within three months.
Sun Labs is a small independent routine clinical lab with 19 patient service centers located across the San Gabriel Valley in southern California. Sun Labs was founded by its CEO Francis Sun in 1980.
ApolloMed is a publicly-traded company that manages 14 independent physician associations (IPAs) with 7,000 contracted physicians located primarily in California. Apollo’s IPAs have capitated contracts with insurers (Aetna, Anthem, Cigna, Humana, UnitedHealthcare, etc.) covering a total of 1.13 million members. ApolloMed, which is expanding into New York and Florida, anticipates growing to a total of 10,000 contracted physicians, two million covered lives, and $700 million of revenue by the end of this year.
Apollo had already been using Sun Labs for testing services. “As ApolloMed expands its geographic footprint, we see Sun Labs as a core partner in this expansion, growing the business and bringing high-quality lab services to more patients across the nation,” according to Kenneth Sim, MD,
Chairman and Co-Chief Executive of ApolloMed.
Quest Diagnostics has completed its previously announced acquisition of the clinical lab outreach business of Mercy (St. Louis, MO) in an all-cash asset transaction (see LE, March 2021). The purchase price has not yet been disclosed. Cain Brothers served as Mercy’s transaction advisor.
Under the deal, Mercy’s clinical lab outreach tests will transition to Quest’s full-service laboratory in Lenexa, Kansas. Mercy’s clinical lab outreach business currently operates from 29 hospital laboratories and two independent clinical laboratories serving providers and patients in Arkansas, Kansas, Missouri and Oklahoma.
Mercy will continue to wholly own and operate its hospital laboratories for tests connected to inpatient and hospital-based outpatient services.