Sonic Healthcare Acquires Labs in USA and Switzerland

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.

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