Abbott made one of the biggest deals in recent medtech history last week when it announced its plan to acquire Exact Sciences — maker of colon cancer screening test Cologuard — for $23 billion.
Experts view the deal as a bold, long-term play that expands Abbott’s portfolio in the high-growth area of diagnostics, as well as complements its existing commercial and regulatory strengths.
Abbott’s acquisition of Exact marks the largest medtech deal since March 2023, when Pfizer bought cancer-focused biotech company Seagen for $43 billion. The deal also comes on the heels of another major medtech transaction last month, when Hologic agreed to be taken private by Blackstone and TPG in a $18.3 billion deal.
The transaction is expected to close in the second quarter of next year. Industry observers definitely see potential in the acquisition, but whether Abbott can successfully integrate Exact and capture the expected upside has yet to be seen.
Why did Abbott choose to buy Exact?
Madison, Wisconsin-based Exact generated $2.76 billion in revenue last year, and it is expected to rake in more than $3 billion this year.
Cologuard, its flagship product, is a noninvasive at-home test that screens for colorectal cancer by detecting abnormal DNA and blood in stool. Since it hit the market in 2014, Cologuard has been used for more than 16 million completed screenings.
Cologuard is Exact’s only FDA-approved diagnostic, but the company has several others in its pipeline — including Oncotype DX, a genomic test that helps inform personalized cancer treatment decisions, Oncodetect, a minimal residual disease test that monitors cancer recurrence after treatment, Cancerguard, a liquid biopsy to detect multiple cancer types from a blood sample, and Riskguard, a genetic test that assesses hereditary cancer risk.
Abbott, which is based in the Chicago area, is eager to dive deeper into cancer diagnostics through Exact’s pipeline of pioneering tests, CEO Robert Ford said during an investor call the company held last Thursday. He said he views this move as a natural extension of Abbott’s mission to improve health outcomes and expand access to novel medtech tools.
“The technologies developed by Exact Sciences help answer the three most critical questions in cancer diagnostics: Do I have cancer? What is the best treatment for my cancer? And is my cancer in remission? Exact Sciences has built an exceptional portfolio of products and capabilities that provide answers to these fundamental questions,” Ford said during the call.
With the addition of Exact’s product portfolio, Abbott expects to double the market size for its diagnostics unit — from approximately $60 billion to more than $120 billion, he stated.
He also noted that Abbott expects the deal to deliver a return on invested capital in the high single digits within six years. Ford said this return will come mostly from growing Exact’s revenue, rather than by cutting costs or slashing programs.
He highlighted international expansion as a key focus for Abbott. Exact’s current business is overwhelmingly U.S.-based, and he said Abbott sees a major growth opportunity in bringing Exact’s cancer diagnostics to developed and emerging markets around the world.
“We’re making a pretty significant move here that is more long-term in terms of how we see medical need and clinical need across the global healthcare markets,” Ford remarked.
He added that Abbott’s vision is “really to build the premier cancer diagnostic company in the world.”
What will Abbott gain?
One analyst — Pankit Bhalodia, partner at consultancy West Monroe — thinks the deal makes sense for Abbott and is a smart move.
The acquisition not only expands Abbott into cancer diagnostics, which is a space it previously lacked — but Exact’s business model also offers Abbott higher margins than its traditional instrument-and-assay model, he explained.
Exact owns and operates the labs where its tests are processed, so it collects reimbursement directly from insurers and patients for each test. By contrast, Abbott’s usual model sells instruments and consumable assays to hospitals, which then handle reimbursement, meaning Abbott only captures a portion of the revenue.
“The margin expansion is pretty good here, along with the portfolio diversification that [Abbott] is getting from the acquisition,” Bhalodia stated.
He added Abbott’s existing network of clinical buyers will complement Exact’s more direct-to-consumer approach rather than conflict with it.
By combining Exact’s patient-focused model with Abbott’s established relationships with healthcare providers, the company can accelerate adoption of both existing and pipeline tests, he said, pointing out that some of Exact’s products in the pipeline depend on physicians to order and guide them.
Overall, he views the deal as an offensive acquisition aimed at securing future growth. He noted that it positions Abbott to compete directly with diagnostics companies, leveraging its commercial scale and sales networks, as well as its deep regulatory experience.
There are some questions around Cologuard’s long-term growth, though, another analyst highlighted.
Marie Thibault, managing director and BTIG, stated in her research note that blood-based testing is on the rise, with Cologuard now competing with the likes of Guardant Health and Freenome — so there are uncertainties around whether Cologuard can maintain its growth momentum as these new tests gain adoption.
Abbott said it views these tests as expanding the total market rather than cannibalizing Cologuard.
How does this deal fit into the larger medtech M&A story?
Diagnostics have been a major focus within medtech deals over the past five years. John Heinbigner, a partner at EY, said he expects M&A activity to continue in this high-growth segment, along with others like cardiology and robotics.
He pointed out that while large strategic buyers have more appetite than they did a year ago, they still remain selective.
Larger medtech players are looking to buy companies that offer clinical differentiation in growing markets, have scalable technology, and are well-positioned to deliver better outcomes at a lower cost, Heinbigner remarked.
“That said, caution persists around integration complexity and regulatory scrutiny, so the bias remains toward high-conviction, synergistic deals,” he stated.
To succeed when integration is more complex than ever, acquirers need digital fluency, Heinbigner argued.
To him, this means integrating software, data platforms and cybersecurity tools into traditional device operations, as well as shifting engagement models as care models become more patient-focused.
“Regulatory agility is critical, especially for AI-enabled solutions, and cultural alignment matters as companies bridge startup innovation with large-scale operating models. Tech-enabled and consumer-facing assets amplify these challenges — demanding new talent, operating models and governance frameworks,” he explained.
Ultimately, Abbott’s acquisition of Exact underscores how diagnostics has become a central focus in the medtech M&A landscape. It’s a gutsy deal, and only time will tell whether it can deliver on Abbott’s ambitious growth expectations and cement the company as a leader in cancer diagnostics.
Photo: Sundry Photography, Getty Images