Acquisition is a deal between two private equity firms

Spectrum Laboratory Network of Greensboro, North Carolina, will be acquired by Welsh, Carson, Anderson, & Stowe. Investment funds managed by Apax Partners are the sellers and the purchase price is $230 million. It is the highest dollar value acquisition of a clinical laboratory during 2009.

The acquisition agreement was announced at the end of last week. It brings Welsh, Carson back into the laboratory testing industry for the first time since 2007. During this decade, Welsh, Carson held an equity ownership in LabOne, Inc., which was based in Kansas City, Missouri and was building a fast-growing business in medical laboratory testing.

Spectrum Laboratory Network Sells to Welsh Carson
Welsh Carson also had 100% ownership of AmeriPath, Inc., an anatomic pathology laboratory company. Quest Diagnostics Incorporated (NYSE: DGX ) purchased both laboratory companies. It acquired LabOne, in November 2005 for approximately $934 million. It acquired AmeriPath in May 2007 for almost $2 billion, including the assumption of $770 million of AmeriPath’s debt.

It’s been slightly less than 48 months since Apax Partners acquired its stake in Spectrum Laboratory Network. Apax completed that purchase in January 2006. At the time, The Dark Report estimated that Spectrum had annual revenue of approximately $125 million. Moses Cone Health System —one of the three original health systems which founded Spectrum Laboratory Network in 1997—retained about an 80% equity interest. The other two original founders of Spectrum were High Point Regional Health System and Novant Health System. (See The Dark Report, November 14, 2005, “Spectrum Lab Network Is Sold to Equity Investor.” )

With two more weeks left in 2009, there is still time for additional clinical laboratory acquisitions to be announced as buyers and sellers try to finalize transactions before the year end. As of today, the $230 million sales price that Welsh Carson will pay for Spectrum Laboratory Network makes this the largest clinical laboratory acquisition of the year.

Related Information:

WCAS Buying Spectrum Holding from Apax for $230 Million

The Dark Report, November 14, 2005, Spectrum Lab Network Is Sold to Equity Investor