In a recent development, Labcorp, a leading laboratory testing entity, has been chosen as the winning bidder for Invitae’s assets through a bankruptcy auction. Invitae, a firm specializing in genetic testing services, digital health solutions, and health data services, is set to provide Labcorp with assets covering “substantially all” of Invitae’s operations. The deal aims to maintain continuity for Invitae’s customers and partners. Labcorp’s bid acquisition is currently pending court approval with a scheduled hearing on May 7. Read more here.
San Francisco-based Invitae, whose tests are employed across clinical fields such as oncology, women’s health, and rare diseases, initiated a corporate realignment in 2022 to streamline operations and the product portfolio. Despite the downsizing of over 1,000 employees in a bid to cut costs, Invitae sought chapter 11 bankruptcy protection in February after declaring $535.1 million in assets against a debt exceeding $1.6 billion. Learn more about the realignment here. View the bankruptcy filing here.
This acquisition follows Labcorp’s recent $237 million purchase of the clinical diagnostics and women’s health business of BioReference Health, a move expected to generate $100 million in annual revenue. Based in Burlington, North Carolina, Labcorp’s portfolio already includes oncology and genetic testing, along with some rare diseases. The company anticipates that Invitae assets could potentially bring an annual revenue of $275-300 million. The BioReference Health agreement details can be found here.
One critical concern related to the Invitae acquisition is Invitae’s excessively high business spending, as pointed out by William Blair analyst Andrew Brackmann. If Labcorp succeeds in curbing this high cash burn rate, Invitae assets could become solid additions to its portfolio, utilizing Labcorp’s existing infrastructure to further diversify its presence in oncology and rare diseases.
M&A strategies have been aggressively utilized by Labcorp, as demonstrated by it announcing over $475 million in acquisitions in just a few months. Despite the limited projected growth not exceeding one percentage point over the coming years, Brackmann feels that these acquisitions are pivotal for long-term scaling and problem-solving in an evolving landscape and could indeed facilitate Labcorp’s entry into new customer bases.
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