News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups
Hosted by Robert Michel

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Clinical Laboratories and Pathology Groups
Hosted by Robert Michel
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Sonic Healthcare Acquires Labs in USA and Switzerland

Jun 4, 2007 | Laboratory News, Laboratory Sales and Marketing

Sonic Healthcare was busy in the month of May. Last Thursday, on May 31, it announced the acquisition of a laboratory company in Zurich, Switzerland. Earlier, on May 1, it acquired Mullins Laboratory of Augusta, Georgia. Sonic Healthcare has also won a hospital laboratory contract in the United Kingdom.

Sonic Healthcare will pay US $80 million to purchase Medica Medizinische Laboratorien. Medica has annual revenues of approximately US $44.9 million. It is one of the larger laboratory companies in Switzerland. Sonic intends to keep the existing management team in place, under the leadership of Medica’s current CEO, Dr. Franz Käppeli.

With little fanfare and even less publicity, Sonic Healthcare, Ltd. acquired Mullins Laboratory. Sonic Healthcare did not issue a press release to announce the acquisition. Mullins Laboratory is a private independent laboratory company that was founded in 1954. In recent years, it has been operated by Stephen C. Mullins, M.D., whose father founded the lab company. Mullins is a pathologist boarded in clinical and anatomic pathology, as well as dermatopathology.

With five pathologists and annual revenues estimated in the $17 million range, Mullins Laboratory serves office-based physicians in Augusta, Georgia and nearby communities. With a population of 195,000, Augusta, is Georgia’s second largest city and is located about 150 miles east of Atlanta. Augusta is a self-contained market for laboratory services and Sonic Healthcare’s business strategy is to maintain the acquired laboratory’s name, local identity, and existing staff. The nearest laboratory division owned and operated by Sonic Healthcare is located in Orlando, Florida, about 400 miles south of Augusta. It is Cognescenti Health Institute and was acquired by Sonic Healthcare last fall.

Earlier this year, in the United Kingdom, Sonic Healthcare won a management contract to provide pathology services to the Ealing Hospital NHS Trust and Ealing Primary Care Trust in north London. Sonic will manage the hospital laboratory and provide laboratory testing services to the primary care clinics affiliated with the trust. The contract is for five years and is like a similar agreement recently signed by Quest Diagnostics Incorporated with West Middlesex University Hospital and the Hounslow Primary Care Trust in north London. The management contract commences in the summer of 2007 and has a five-year term.

Since acquiring Clinical Pathology Laboratories (CPL) in Austin, Texas, in 2005, Sonic Healthcare has been steadily expanding its operations in the United States. Last year it acquired Cognescenti Health Institute in Orlando, Florida, and American Esoteric Laboratories, based in Nashville, Tennessee. Lab directors and pathologists should expect to hear about more laboratory acquisitions by Sonic Healthcare. The company is in active negotiations with a number of independent lab companies.

Related articles:

Sonic Healthcare acquires Medica group

Sonic Healthcare Acquires The Medica Laboratory Group in Switzerland

Sonic Healthcare Expands with Acquisition of American Esoteric Laboratories

Dec 18, 2006 | Laboratory News, Laboratory Pathology

Few people were prepared for Friday’s announcement that Sonic Healthcare, Limited of Sidney Australia will acquire American Esoteric Laboratories, Inc. (AEL) of Nashville, Tennessee.

However, Sonic’s purchase of AEL provides several useful insights about the competitive laboratory marketplace and will be the lead story in The Dark Report which is at the printer today. Sonic will pay approximately $180 million cash to acquire American Esoteric Laboratories.  Subject to regulatory approvals, seller and buyer are working to close the deal in early January.

More details about this acquisition are in our full intelligence briefing in The Dark Report. For owners of independent laboratories, there is good news. Sonic is paying a fairly strong multiple of EBITDA (earnings before interest, taxes, depreciation, and amortization). On one hand, this shows the demand for good laboratory business, since there were other buyers who looked at purchasing American Esoteric Laboratories and Sonics offer would reflect that demand. On the other hand, it shows that Sonic Healthcare is willing to pay a strong price for laboratory business operations it considers a solid platform for ongoing growth.

When completed, this acquisition will mean that Sonic Healthcare’s business divisions in the United States are providing laboratory testing services to clients in 14 states. Since it first entered the U.S. lab testing market with its acquisition of Clinical Pathology Laboratories (CPL) in late 2005, Sonic Healthcare has taken careful steps to expand its presence in regional markets throughout the United States. By acquiring AEL, Sonic gains a significant presence in Memphis, Tennessee, through AEL’s Memphis Pathology Laboratories (MPL).

Finally, The Dark Report knows that Sonic Healthcare is having discussions with other independent laboratory companies. Our prediction is that Sonic Healthcare will acquire several significant laboratory operations during 2007. For reasons explained in detail in our Dark Report intelligence briefing, some laboratory owners consider Sonic Healthcare to be a more attractive acquirer than the two blood brothers. Thus, it is likely that Sonic�s next few laboratory acquisitions will involve a least one of the nation’s most prominent, independent regional laboratory companies.

Should you have comments or insights on this acquisition, please contact Robert at rmichel@darkdaily.com.

PS: Cognescenti Health Institute, a division of Sonic Healthcare, disclosed that Philip Chen, M.D., Ph.D., founder of Cognescenti and Vice President and Chief Medical Informatics Officer for Clinical Pathology Laboratories. Inc., on the Board of Directors for the Central Florida Regional Health Information Organization Details of this strategic informatics initiative are in the December 18, 2006 issue of The Dark Report.

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