Agreement to acquire East Side Clinical Laboratory is a reminder that Sonic remains an active buyer of clinical laboratories
It’s another clinical lab acquisition and a new regional market for Sonic Healthcare Limited (ASX:SHL). Yesterday the Australian-based lab company established a beachhead in New England when it acquired East Side Clinical Laboratory, based in Providence, Rhode Island.
East Side is the third laboratory acquisition that Sonic Healthcare made during 2009. Sonic officials indicate that they remain interested in doing other laboratory acquisitions.
East Side’s consistent growth and dominant position caught Sonic’s attention. East Side is currently the top provider of clinical laboratory services in the state of Rhode Island. Its current annual revenues exceed $30 million.
This acquisition follows Sonic’s earlier acquisitions of Axiom Labs (Tampa, Florida) and Piedmont Medical Labs (Winchester, Virginia) in June and August of 2009, respectively. East Side will be integrated into Sonic Healthcare USA’s existing Northeast Division. The acquisition affirms Sonic’s growth plans for its laboratory testing business in the United States.
Over the last four years, Sonic has acquired 13 labs in the United States for an estimated total investment of US$1 billion. According to Sonic CEO Colin Goldschmidt, M.D., Sonic still has a “war chest” of nearly US$700 million dollars for further acquisitions in this country.
“Following a pause in acquisition activity during the height of the global financial crisis, we are in a strong position to pursue growth via synergetic acquisitions, particularly in the United States and Europe,” Goldschmidt stated. “It is certainly our impression that asset values have come off the highs seen prior to the onset of the credit crisis.”
Sonic did not release financial details about the East Side acquisition. However, financial analysts in Australia speculated that an expected sales price would be around $45 million. This implies a price that equates to about 1.5 times East Side’s current revenue. These numbers are in line with the $22.5 million Sonic Healthcare paid for both PML and Axiom, which equaled 1.4 times the combined revenue of the two acquired laboratories.