Opko Health said today it will acquire Bio-Reference Laboratories for $1.47 billion, in an all-stock deal that brings the nation’s third-largest full-service clinical lab under the umbrella of the drug and diagnostics developer.
In a statement, Opko said it will use Bio-Reference’s national marketing, sales, and distribution resources to enhance sales of its diagnostic tests—including 4Kscore test, a $395 blood test designed to measure a man’s risk of having aggressive prostate cancer.
Opko said it will merge its current diagnostic services with Bio-Reference Laboratories operations nationwide, adding: “Opko intends to allow laboratory operations to continue seamlessly but with enhancement from Opko’s pipeline of diagnostic products.”
Additionally, Opko said it will make available to industry and academic scientists genetic and genomics data accumulated by Bio-Reference through two of its operations—its oncology and women’s health business units, combined under GenPath Diagnostics, and its genetic sequencing laboratory GeneDx.
GeneDx was the first commercial laboratory to offer next-generation sequencing for rare disorders. Nearly a quarter of a million patients have benefited from these services including almost 20,000 patients who have undergone exome analysis, according to the companies.
“Bio-Reference Laboratories is a true success story that has culminated in cutting-edge diagnostic solutions accompanied by a worldwide franchise in the diagnosis of rare diseases,” Opko chairman and CEO Phillip Frost, M.D., said in a statement.
The Bio-Reference data will be invaluable to drug discovery programs of Opko and any partners, since it is diagnostic, or disease-related, added Marc Grodman, M.D., Bio-Reference’s chairman, CEO and president.
“In addition to identifying a synergistic partner for the value we have built over the past three decades, we are pleased that our shareholders will be rewarded by being able to share in the upside of the combined company,” Dr. Grodman stated.
Headquartered in Elmwood Park, NJ, with a presence in more than 50 countries, Bio-Reference provides clinical testing services to physician offices, clinics, hospitals, long term care facilities, and employers. The company’s testing capabilities and expertise spans molecular diagnostics, anatomical pathology, women's health, oncology, and rare disease genetics. Bio-Reference also carries out drug discovery and development efforts with disease foundations, academic, and pharmaceutical partners.
Bio-Reference finished its most recent fiscal year, which ended October 31, 2014, with $832.3 million in revenue, up 16% from a year earlier, and net income of $46.8 million, up 64% year-over-year. Opko last year reported a net loss of $171.7 million on revenue of $91.1 million, down from $96.5 million in 2013, which saw a net loss of 4114.8 million. The company blamed the widening loss and revenue declne on higher R&D expenses and costs associated with 4Kscore and other diagnostics.
Under the terms of a definitive merger agreement approved by the boards of both companies, holders of Bio-Reference’s common stock will receive 2.75 shares of Opko common stock for each share of Bio-Reference common stock. Opko will shell out $52.58 per share of BRLI common stock, a 60% premium to the company’s Wednesday closing price of $32.96 per share. The deal is valued at $1.47 billion based on a closing price of $19.12 per share of Opko common stock on Wednesday.
The deal is expected to be completed during the second half of this year, subject to approval of Bio-Reference Laboratories’ shareholders and other customary conditions.