LabCorp continues on its recent buying spree, having just purchased PAML which was a regional, Spokane based non-profit reference lab (see: LabCorp buying Spokane-based PAML). Below is an excerpt from the recent article about the purchase:
LabCorp is buying the 60-year-old medical-testing laboratory [PAML] from Providence Health & Services and Catholic Health Initiatives, two of the nation’s largest health care systems. Pathology Associates Medical Laboratories employs over 1,600 people, tests samples collected in eight states and generates about $300 million a year in revenue....LabCorp also is buying PAML’s interest in PACLAB Network Laboratories in Western Washington and Tri-Cities Laboratory, as well as three other joint ventures: Colorado Laboratory Services, Kentucky Laboratory Services and MountainStar Clinical Laboratories....PAML and its joint ventures provide laboratory services in Washington, Idaho, Montana, Oregon, Utah, California, Colorado and Kentucky. The sale expands LabCorp’s geographic scope in the Pacific Northwest, Midwest and South....Based in Burlington, North Carolina, Laboratory Corp. of America Holdings (LabCorp) has been on a buying spree. The company paid $371 million for genetic testing lab Sequenom last fall, and in January it reached a deal to buy several clinical laboratories from Mount Sinai (see: LabCorp to Acquire Assets of Mount Sinai Health System Clinical Outreach Laboratories), a major health system in New York City. In 2015, LabCorp acquired New Jersey-based drug development firm Covance (see: LabCorp to Acquire Covance for $6.1B) for about $5.7 billion. Earlier this month Reuters reported that LabCorp is in talks to acquire contract researcher Pharmaceutical Product Development LLC for more than $8 billion. That would be LabCorp’s largest acquisition ever.....Considered one of the top reference laboratories in the country, PAML has been an industry leader in joint venture partnerships with community-based hospitals. It also provides blood and diagnostic tests for clinics and employers across the West.
Along with ARUP and Mayo Medical Labs, PAML has been on my radar screen for decades as a high quality, non-profit reference lab. As noted above, LabCorp, with a market cap of $14.7B, has been expanding into genomic testing and contract research support. I indicated in a previous note posted about a year ago that LabCorp was "investing heavily in clinical trials, drug development, and speciality lab businesses (see: Quest and LabCorp Pursue Divergent Strategies; Which Will Succeed More?)." I found another recent reference to the diverging strategies of LabCorp and Quest (see: Quest, LabCorp forge divergent paths through M&A). Below is an excerpt from it:
And in recent years, both....[Quest and LabCorp] have made significant strides in expanding their businesses by partnering with hospitals. But Quest has concentrated on acquiring health systems' labs, while LabCorp has focused on acquisitions that shore up its technology and the sophistication of its diagnostic services....Quest's strategy will grow its core business of diagnostic services, while LabCorp's efforts are steering the company toward a future beyond clinical labs.....Quest has focused on acquiring health systems' laboratory outreach businesses, which are labs that perform services for customers outside of the health system, often for patients seeking a lab order from a personal physician or a provider at a different health system.
I am personally distressed to see PAML absorbed into LabCorp and become corporatized. However, I can also understand the desire of the PAML owners, Providence Health & Services and Catholic Health Initiatives, two of the nation’s largest health care systems, to perhaps focus on what they may perceive as their core businesses. However, PAML, as a unique entity will be sorely missed.