Invitae’s business operations are heading to a new home. Under a bankruptcy auction, Labcorp was selected as the winning bidder for the firm’s genetic testing services, digital health solutions, and health data services.
Invitae described the bid as covering “substantially all” of its assets, adding that the transaction will ensure continuity for the company’s customers and partners. Labcorp characterized the purchase as “selected assets of Invitae.” Because the bid came as part of Invitae’s bankruptcy process, the purchase still needs court approval. A hearing is scheduled for May 7.
The tests of San Francisco-based Invitae are used in clinical areas that include oncology, women’s health, and rare disease. In 2022, Invitae announced a corporate realignment to streamline its operations and its product portfolio. The restructuring cut more than 1,000 employees. The cost-saving measures were not enough. In February, Invitae filed for chapter 11 bankruptcy protection. The bankruptcy filing lists $535.1 million in assets and more than $1.6 billion in total debt.
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Labcorp’s winning bid for the Invitae assets comes nearly a month after the Burlington, North Carolina-based laboratory testing giant agreed to pay $237 million to acquire the clinical diagnostics and reproductive women’s health business of BioReference Health. Those assets generate about $100 million in annual revenue, Labcorp said. This transaction is expected to close in the second half of this year.
The Labcorp portfolio already covers oncology and genetic testing as well as some rare diseases. The company calculates that the Invitae assets will generate between $275 million and $300 million in annual revenue. But one concern might be Invitae’s high rate of business spending. In a research note sent to investors, William Blair analyst Andrew Brackmann said that if Labcorp can stem this high cash burn, the incoming assets could become compelling additions to its portfolio, leveraging the lab testing company’s existing infrastructure to expand in oncology and rare diseases.
“What is notable, in our view, is that Labcorp is being aggressive in its M&A strategy, announcing the deployment of over $475 million on acquisitions over the last few months,” Brackmann said. “And while we do not see these as accelerating top-line segment growth by more than one percentage point over the coming years—hence the questions on profitability—adding scale and solutions for the long term is critical in this evolving landscape, and these acquisitions could certainly open new customer doors for the company.”
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