In its effort to expand in women’s health testing business, leading medical laboratory tests and services provider Laboratory Corp. of America Holdings LH recently agreed to purchase all the operating assets of full-service independent women's health laboratory Pathology, Inc. Financial terms of the deal have been kept under wraps. The transaction is expected to close in the first quarter of 2016, subject to certain customary conditions.
Pathology, Inc.’s forte is in reproductive FDA donor testing and anatomic, molecular and digital pathology services. The impending acquisition includes Pathology, Inc.’s patient service centers, which are used to conduct its medical testing and services business.
According to LabCorp, the company’s decision to add Pathology, Inc. to its portfolio is a strategic fit as the latter perfectly complements LabCorp’s existing women’s health service offerings and supports its mission to provide world class diagnostic solutions. Impressively, the transaction meets LabCorp’s financial criteria of being accretive to earnings in the first year and to earn cost of capital by the third year.
Of late, LabCorp has strengthened its foothold in the diagnostics space through both organic and inorganic means. Strategic acquisitions and collaborations with leading companies and academic institutions should help the company provide a wider portfolio of tests. The company continues to increase its scale and competencies in clinical laboratory medicine through acquisitions ranging from routine capabilities to highly esoteric testing.
Apart from its mega $6.1 billion acquisition of Covance, completed in Feb 2015; in recent times, LabCorp has acquired LipoScience – a premier esoteric laboratory focused on personalized diagnostics for cardiovascular and metabolic disorders and Bode Technology Group, Inc. – a provider of specialized forensic DNA analysis, proprietary DNA collection products, and relationship testing. Both the acquisitions are consistent with the company’s efforts to strengthen its foothold in the personalized diagnostics testing market for cardiovascular and metabolic disorders as well in the forensics and DNA identification testing market.
With awareness on the rise globally, women’s health testing is currently emerging as a rapidly evolving area of medicine. We believe, meaningful acquisitions like that of Pathology, Inc., will allow LabCorp’s customers advanced access to high-quality testing, going ahead.
Currently, LabCorp has a Zacks Rank #3 (Hold). Some of the better-ranked med/dental-supply stocks are Align Technology Inc. ALGN, AmerisourceBergen Corporation ABC and DENTSPLY International Inc. XRAY. All the three stocks carry a Zacks Rank #2 (Buy).
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