BURLINGTON, N.C. - Labcorp (NYSE: LH), a global provider of laboratory services, has received approval from the United States Bankruptcy Court to acquire select assets of Invitae (OTC:NVTAQ), a medical genetics company, as part of Invitae's Chapter 11 bankruptcy process. The transaction, valued at $239 million in cash plus additional non-cash considerations, is expected to close in the third quarter of 2024, pending customary closing conditions and regulatory approvals.
The acquisition is set to expand Labcorp's capabilities in specialty testing, particularly in areas such as oncology and rare diseases, enhancing patient care through improved access to genetic information. This move aligns with Labcorp's strategy to advance its leadership in genetic screening and diagnostics.
Mark Schroeder, Labcorp's Executive Vice President and President of Diagnostics Laboratories, emphasized the compatibility of Invitae's genomics-based testing solutions with Labcorp's business goals. Ken Knight, President and CEO of Invitae, expressed confidence that the transaction would ensure the continued availability of their genetics platform for those who can benefit from it.
Labcorp, known for its diagnostics and drug development services, supports clinical trials and treatment regimens with genetic data utilization, a capability expected to be strengthened by the acquisition. The company's extensive global reach includes support for a significant portion of FDA-approved drugs and therapeutic products in 2023 and the performance of over 600 million tests for patients worldwide.
The transaction is a key milestone for Invitae, which has been advised by Kirkland & Ellis LLP, Moelis (NYSE:MC) & Company LLC, and FTI Consulting (NYSE:FCN), Inc. in the Chapter 11 case. Labcorp's financial advisor for the deal is Citi, with Hogan Lovells and Kilpatrick Townsend providing legal counsel.
InvestingPro Insights
As Labcorp (NYSE: LH) positions itself to enhance its specialty testing capabilities with the acquisition of Invitae's assets, the financial health and market performance of the company provide a backdrop to this strategic move. Labcorp's management has demonstrated confidence in the company's future through aggressive share buybacks, a move that often signals a belief in undervalued stock or a commitment to increasing shareholder value. This aligns with the company's high shareholder yield, an InvestingPro Tip that indicates a strong return to investors through dividends and buybacks.
Looking at the real-time data from InvestingPro, Labcorp's market capitalization stands at $16.99 billion, reflecting its significant presence in the healthcare industry. The company trades at a high earnings multiple with a P/E ratio of 39.93, though adjusted figures for the last twelve months as of Q1 2024 show a more moderate ratio of 23.71. This suggests that while the stock may be pricier relative to earnings, the adjusted figures indicate a potentially more favorable valuation. Revenue growth has been steady, with a 4.62% increase in the last twelve months as of Q1 2024, indicating a consistent expansion in Labcorp's business operations.
Investors looking to further understand Labcorp's position in the market can find additional insights with InvestingPro, which lists a total of 11 InvestingPro Tips for the company. These tips provide a deeper dive into the company's financial health, industry standing, and future outlook. For those interested in accessing these valuable insights, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
With analysts predicting profitability for the company this year, and a prominent role in the Healthcare Providers & Services industry, Labcorp's strategic acquisition of Invitae's assets may well be a calculated step to solidify its market position and enhance its service offerings in genetic diagnostics.
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