LabCorp, already a giant in diagnostics and laboratory testing, is building its capabilities in prenatal testing with an agreement to acquire Sequenom in a $371 million deal.
Under the tender offer, Burlington, NC-based LabCorp (NYSE: LH) will acquire all of the outstanding shares of Sequenom for $2.40 per share, for a total equity value of $302 million. LabCorp will also assume net debt of San Diego-based Sequenom (NASDAQ: SQNM), bringing the value of the cash deal to approximately $371 million.
LabCorp reported $8.5 billion in revenue in 2015, most of which came from testing done at physician’s offices and other healthcare facilities. Sequenom focuses on molecular diagnostics and genetic analysis. The company’s 2015 revenue was $128.2 million.
Sequenom is no stranger to North Carolina, where it had a presence until earlier this year. In 2011, state incentives lured the company to Research Triangle Park, where it built a $19 million lab to bolster its molecular diagnostics business. The company said the North Carolina site would expand its reach in genetic testing. The lab processed the company’s prenatal tests and reproductive health tests, including a Down syndrome diagnostic that tests fetal DNA circulating in the mother’s bloodstream. Sequenom touted its Down syndrome test, called MaterniT21, as less invasive and more accurate compared to other Down syndrome testing methods.
Despite the fanfare of Sequenom’s MaterniT21, the company has had financial struggles and its earnings reports show a history of losses. In 2013, when Sequenom reported a $107.4 million net loss, the company laid off 13 percent of its workforce as part of a series of cost-cutting measures. In 2014, Sequenom sold a genetic analysis tool and a bioscience facility to San Diego-based Agena Bioscience for $31.8 million. Earlier this year, Sequenom announced plans to sell its RTP site, and bring some employees back to San Diego. The company said at the time that the move was part of a strategy to focus its efforts on tests in women’s health.
LabCorp has its own non-invasive prenatal testing for genetic abnormalities, including a test for Down syndrome. In a prepared statement, LabCorp CEO David King said that Sequenom’s technology complements LabCorp’s capabilities in women’s health, and expands the company’s geographic reach—particularly in Europe and Asia.
The board of directors of Sequenom has approved the acquisition, but the deal still needs approval of Sequenom shareholders. It is expected to close by the end of the year.
Photo courtesy of Flickr user Danny Cain under a Creative Commons license.