Laboratory Corporation of America announced a $371 million acquisition on Wednesday while reporting rising second-quarter profits.
The Burlington, N.C.-based diagnostic and drug development company—a clinical lab provider—has acquired Sequenom, a San Diego-based lab offering non-invasive prenatal testing. LabCorp will acquire all of the outstanding shares of the publicly traded company for $2.40 per share.
LabCorp announced the formation of an acquisition subsidiary, Savoy Acquisition Corp., which will acquire Sequenom and then is expected to merge with LabCorp. The company has shown a business interest in women's health, having previously acquired Torrance, Calif.-based Pathology, a full-service lab known for women's health services, in December.
LabCorp concurrently reported second quarter profits of $198.2 million in the three months ended June 30, up 17% from the same time last year. Revenue was $2.4 billion, up 7% from the same time last year, thanks to organic growth in both its diagnostic and drug development segments, along with growth from small acquisitions.
Strong profits in the diagnostics segment are in part thanks to the company's LaunchPad cost-cutting initiative, which is expected to save LabCorp $150 million through a three-year period that ends in 2017.
So far this year, LabCorp has reported $358.4 million in profit, up significantly from $172.9 billion last year because the results now include complete financial results of the company's Covance Drug Development arm, the acquisition of which was completed last February. Six-month revenue was $4.7 billion, up 17% from $4 billion during the same period the year before.
LabCorp slightly raised its expectations for net revenue growth, projecting a 9.5% to 10.5% increase over the $8.5 billion in revenue reported last year. Its projection for adjusted earnings per share was also raised, now at $8.60 to $8.95.