Labcorp Enters into Agreement with OPKO Health to Acquire Select Assets of BioReference Health
The agreement includes up to an additional $150 million earnout tied to 4Kscore Test revenue.
Sentiment and the balance of points
Rhea-AI Sentiment reads the wording of the document, how positive or negative its language is on a 1 to 5 scale. The balance of points shown with the takes weighs what the document actually discloses, so the two can disagree, for example when a trial that missed its main goal is described in upbeat language.
Rhea-AI Summary
Labcorp (LH) agreed with OPKO Health to acquire select BioReference Health assets for $722 million in cash at closing. The purchase covers clinical and women's health testing, urology, corrections and certain operational assets, including over 80 additional patient service centers. It also includes the FDA-approved 4Kscore Test, a blood test that helps predict the likelihood of finding aggressive prostate cancer before a biopsy decision.
The closing price is subject to an upward or downward adjustment based on closing business revenues, with up to an additional $150 million payable based on 4Kscore Test revenue. Labcorp expects approximately $250 million in business revenue in the first year after closing. Regulatory approvals remain required. Until closing, operations and services will remain unchanged, and both companies will operate independently.
How this balance works
Rhea-AI gives every point it takes from this document a weight. Minor counts 1, Moderate 3 and Major 9, so one Major point outweighs several Minor ones. The bar adds up the weights on each side, and when neither side holds more than 65% of the total the balance reads Mixed.
It reads the document as published, with the same rules for every company, and it does not look at what the market expected or at how the stock traded, so a point can be objectively good on a day the stock falls.
Rhea-AI Sentiment measures something else, the tone of the wording.
Hollow bars mark forward-looking points. How the balance works
Positive
- Moderate point. Forward-looking: it has not happened yet and may not happen.Acquisition agreement would add BioReference's clinical, women's health, urology and corrections testing businesses to Labcorp.
- Minor point. Forward-looking: it has not happened yet and may not happen.Approximately $250 million in business revenue expected by Labcorp in the first year after closing.
- Minor pointFDA-approved 4Kscore Test is included in the assets Labcorp agreed to acquire.
Negative
- Moderate point. Forward-looking: it has not happened yet and may not happen.$722 million cash payment at closing is subject to upward or downward adjustment based on closing business revenues. 2.8% of market cap
- Minor point. Forward-looking: it has not happened yet and may not happen.Up to an additional $150 million earnout is payable based on 4Kscore Test revenue.
- Minor pointRegulatory approvals remain required before the transaction can close.
Details
Market Reaction – OPK
On Oct 15, the day this news came out, the latest delayed price for OPK is 30.65% above the previous close. Argus tracked a peak move of +29.9% during the session. Our momentum scanner has recorded 53 alerts for this stock so far that day. The latest delayed price is $1.79. Relative volume is exceptionally heavy at 12952.6x the average.
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Key Figures
- Cash purchase price
- $722 million
- Payable at closing, subject to adjustment based on closing business revenues
- Maximum 4Kscore earnout
- Up to $150 million
- Additional consideration based on 4Kscore Test revenue
- First-year business revenue
- Approximately $250 million
- Labcorp's current post-closing forecast for the first year after close
- Additional patient service centers
- Over 80
- Included among the operational assets to be acquired
Previous Acquisition Reports
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Labcorp completed its purchase of oncology and clinical testing assets; BioReference retained 4Kscore.
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Labcorp agreed to buy oncology assets for up to $225 million; BioReference retained 4Kscore.
24h Move is the share-price change in the day after each event; other market factors may also have contributed.
Key Terms
earnout financial
AI-generated analysis. How Rhea-AI works. Not financial advice.
Acquisition will expand access to clinical laboratory services, including a broad specialty testing menu for patients and providers nationwide
Through this transaction, Labcorp will acquire 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. As part of the agreement, 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, making this important test more broadly available to patients across the country.
When complete, the transaction is expected to provide patients, physicians and customers with greater access to Labcorp's comprehensive, high-quality laboratory services, including a broad specialty testing menu, convenient patient service center network and robust data analytics and digital tools.
"This acquisition strengthens our ability to deliver affordable, high-quality, specialized diagnostic services to more patients and providers around the country," said Bryan Vaughn, Executive Vice President and President of Diagnostics at Labcorp. "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."
"This transaction will allow OPKO to streamline operations and focus our resources on our biopharmaceutical business," said Phillip Frost, M.D., Chairman and Chief Executive Officer of OPKO. "Labcorp's national scale and capabilities will broaden patient and provider access to BioReference's 4Kscore Test to many more patients across the country. We believe this transaction is an important catalyst to further unlock additional value for our shareholders."
The purchase price for the transaction is
This transaction is subject to regulatory approvals and customary closing conditions. Until the transaction closes, there will be no changes to operations or services, and both companies will continue to operate independently.
Lazard is serving as Labcorp's financial advisor, Hogan Lovells Cadwalader US LLP is serving as lead transaction counsel and Parker Poe is serving as real estate counsel.
Piper Sandler & Co. is serving as OPKO's exclusive financial advisor, and Greenberg Traurig P.A. is serving as legal counsel.
About Labcorp
Labcorp (NYSE: LH) is a global leader of innovative and comprehensive laboratory services that helps doctors, hospitals, pharmaceutical companies, researchers and patients make clear and confident decisions. We provide insights and advance science to improve health and improve lives through our unparalleled diagnostics and drug development laboratory capabilities. The company's nearly 71,000 employees serve clients in approximately 100 countries, provided support for more than
About OPKO
OPKO Health, Inc. (Nasdaq: OPK) is a multinational biopharmaceutical and diagnostics company that seeks to establish industry-leading positions in large, rapidly growing markets by leveraging its discovery, development, and commercialization expertise and novel and proprietary technologies. For more information, visit www.opko.com.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements, including, but not limited to, statements with respect to (a) the anticipated impact of the transaction including expanding access to comprehensive, high-quality laboratory services, (b) increased access to testing services and expanded testing capabilities including with respect to the 4Kscore Test, (c) anticipated timing to closing, final purchase price, post-closing revenue, and earnout for the 4Kscore Test, (d) other anticipated potential benefits of the acquisition to Labcorp and OPKO Health, and (e) required regulatory approvals and customary closing conditions.
Each of the forward-looking statements is subject to change based on various important factors, many of which are beyond the control of Labcorp or OPKO Health. These factors, in some cases, have affected and in the future (together with other factors) could affect the ability of Labcorp or OKPO Health to implement its respective business strategy, and actual results could differ materially from those suggested by these forward-looking statements. As a result, readers are cautioned not to place undue reliance on any of the forward-looking statements.
Neither Labcorp nor OPKO Health has any obligation to provide any updates to these forward-looking statements even if its expectations change. All forward-looking statements are expressly qualified in their entirety by this cautionary statement. Further information on potential factors, risks and uncertainties that could affect operating and financial results is included in each of Labcorp's and OPKO Health's most recent Annual Report on Form 10-K and subsequent Forms 10-Q, including in each case under the headings RISK FACTORS and MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS, and in each of Labcorp's and OPKO Health's other filings with the SEC.
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SOURCE Labcorp Holdings Inc
FAQ
AI-generated questions and answers. How Rhea-AI works. Not financial advice.
How much will Labcorp pay for the BioReference Health assets?
Labcorp will pay $722 million in cash at closing, subject to an upward or downward adjustment based on closing business revenues. The agreement also includes up to an additional $150 million earnout based on revenue from the 4Kscore Test.
How much revenue does Labcorp expect from the BioReference acquisition?
Labcorp expects the acquired business to generate approximately $250 million in revenue in the first year after closing, based on its current post-closing forecasts.
Why is OPKO selling the BioReference Health assets to Labcorp?
OPKO said the transaction would allow it to streamline operations and focus resources on its biopharmaceutical business.