BURLINGTON, N.C. – Labcorp (NYSE: LH) and OPKO Health, Inc. (: OPK) announced an agreement for Labcorp to purchase select assets of OPKO’s subsidiary, BioReference Health, excluding operations in New York and New Jersey. The acquisition, valued at $237.5 million, involves BioReference Health’s clinical diagnostics and reproductive and women’s health services across the United States.
The transaction, which is expected to close in the second half of 2024, is subject to customary closing conditions, including regulatory approvals under the Hart-Scott-Rodino Antitrust Improvements Act. The acquired assets currently generate approximately $100 million in annual revenue.
Labcorp’s Executive Vice President Mark Schroeder expressed the company’s commitment to enhancing customer service and expanding patient access to its laboratory services. “We look forward to working with the BioReference Health team to ensure a smooth transition,” Schroeder said.
Phillip Frost, M.D., Chairman and CEO of OPKO, views the sale as a strategic move to streamline laboratory services and focus on core operations, positioning BioReference Health for sustained growth and profitability.
Labcorp, a global provider of laboratory services, assists in health decision-making and supports new drug approvals. The company performed over 600 million tests worldwide in 2023. BioReference Health, headquartered in New Jersey, operates 10 laboratory facilities and processes more than 12 million tests annually.
Financial advisory services for the deal are provided by Lazard (NYSE:) for Labcorp and Piper Sandler & Co. for OPKO, with legal counsel from Hogan Lovells, Kilpatrick Townsend, Parker Poe, and Greenberg Traurig.
This transaction is based on a press release statement.
InvestingPro Insights
As Labcorp (NYSE: LH) advances its strategic acquisition of BioReference Health’s clinical diagnostics and reproductive health services, its financial metrics and management activities paint a picture of a company in a robust position. With a market capitalization of $17.96 billion, Labcorp’s presence in the healthcare industry is notable. The company’s commitment to shareholder value is evident from aggressive share buybacks, a move that often signals management’s confidence in the company’s future prospects. Moreover, Labcorp’s shareholder yield is considered high, which could be attractive to investors seeking returns through both dividends and share price appreciation.
While the P/E ratio stands at 44.93, reflecting a premium valuation, the adjusted P/E ratio for the last twelve months as of Q4 2023 is more moderate at 26.92. This suggests that investors may be considering the company’s future earnings potential rather than just its past performance. Additionally, Labcorp’s revenue growth remains steady, with a 2.51% increase over the last twelve months as of Q4 2023, indicating a consistent expansion of its business operations.
InvestingPro Tips reveal that analysts have mixed expectations for Labcorp, with some revising their earnings downwards for the upcoming period, yet others predict the company will be profitable this year and expect net income growth. For investors seeking further insights, there are additional InvestingPro Tips available that could provide a deeper understanding of Labcorp’s financial health and market position. To explore these insights, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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