This is APP’s third acquisition of an anatomic pathology laboratory since 2008
Earlier today, it was announced that American Pathology Partners had acquired the anatomic pathology laboratory assets of Palm Beach Pathology, the private pathology practice located in West Palm Beach, Florida. No purchase price was disclosed.
Consistent with its business model, American Pathology Partners (APP) purchased the pathology laboratory owned and operated by Palm Beach Pathology, along with its staff and associated assets, such as courier cars and sales representatives. The six partner pathologists of Palm Beach Pathology continue to own 100% of their professional corporation.
Two Other Anatomic Pathology Laboratory Acquisitions
It has been almost two full years since APP last acquired an anatomic pathology laboratory. It was in March 2009 when APP purchased the anatomic pathology laboratory of Eastern Carolina Pathology, based in Wilson, North Carolina. The four pathologists retained full ownership of their professional corporation.
That acquisition came just four months after APP’s first purchase. It was December 2008 when APP bought the anatomic pathology laboratory of UniPath, LLC, based in Denver, Colorado. At the time of the acquisition, this group of 25 pathologists had a 40,000 square foot independent central lab in Denver and on-site laboratories in 11 hospitals in Colorado.
American Pathology Partners says its business model distinguishes it from other companies actively looking to acquire pathology group practices. In each of its three acquisitions, APP buys the histology laboratory and basic service infrastructure of the pathology group, even as the selling pathologists retain full ownership of their professional corporation. APP then contracts with the selling pathologists to provide professional services.
In this manner, American Pathology Partners provides the technical services and bills for the technical component (TC) of the case. The pathologists diagnose and sign out the case. They bill for the professional component (PC) of the case.
Pathology Group Acquisition Activity to Pick Up in 2011
Today’s announcement that American Pathology Partners had completed an acquisition of the histology laboratory and associated staff and assets from Palm Beach Pathology is the latest in a string of pathology acquisitions that have closed in recent months. The largest deal was GE Healthcare’s purchase of Clarient, Inc. (NASDAQ:CLRT), for $587 million last October.
Aurora Diagnostics, Inc. of Florida has also been active. It completed two purchases of pathology groups in December. One was Austin Pathology Associates, a group of about 17 pathologists in Austin, Texas. Aurora said it paid $29.9 million in cash consideration and issued notes with a maximum payout of $14.9 million.
Aurora Diagnostics’ other pathology group acquisition in December was of Western Pathology Consultants, Ltd. (WPC), of Reno, Nevada. There are seven pathologists at WPC. In this deal, Aurora paid the pathologist-owners a cash consideration of $7 million and issued notes with a maximum payout of $4 million.
Considering the pace of acquisition activity over the past 90 days involving pathology laboratories and anatomic pathology group practices, it may turn out that 2011 will be a busy years for pathology mergers and acquisitions. One reason for this is that pathologists of the baby boomer generation are now reaching retirement age. That creates the need for pathology groups to find the capital needed to cash out retiring partners.
At the upcoming Executive War College in New Orleans on May 3-4, 2011, there will be a full day session on Laboratory and Pathology Mergers and Acquisitions. A number of buyers and sellers of anatomic pathology group practices will discuss their views about recent acquisitions, along with insights about valuations, prices paid in recent sales, and how pathologists can best position their private group practice to make it attractive to strong buyers.