Laboratory News

Sonic Healthcare Expands Further with Lab Acquisition in Germany

Laboratory medicine's first true global laboratory company expanded again. Earlier this month, Sonic Healthcare, Ltd.  of Sydney, Australia, announced the acquisition of Labor 28 , an independent laboratory company based in Berlin, Germany.

What is noteworthy about this acquisition is that Sonic is building its market presence in the Berlin metropolitan market. Sonic's two existing laboratory divisions in Germany-Bioscientia Healthcare  and the Schottdorf Group  -have significant business activities in and around Berlin. That gives Sonic the opportunity to integrate Labor 28's courier routes and other infrastructure with Sonic's existing resources in the Berlin metropolitan region.

Labor 28 is a modest-sized laboratory operation. It employs 200 people and Sonic disclosed a prospective EBITDA (earnings before interest, taxes, depreciation, and amortization) for Labor 28 of approximately $12.3 million (€8.0 million), including synergies, for 2009. At a 15% EBIDTA margin, that would indicate annual revenues in the range of $82 million (€53.4 million). Sonic stated it was paying a multiple of 8.8 times EBITDA for Labor 28.

Germany is undergoing a consolidation of independent laboratory companies similar to that experienced in Canada and the United States during the 1990s. The German health system faces increased utilization and rising costs. There is reimbursement pressure on providers, including clinical laboratories. That creates an opportunity for commercial laboratory companies to make economies of scale work to their advantage. Further laboratory consolidation is likely to occur in Germany.

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Sonic Healthcare buys Berlin's biggest laboratory group 

Sonic Healthcare to Acquire the Labor 28 Group in Berlin, Germany