Israeli Biopharma Firm Opko Sells Assets for Up to $872 Million
Translated & summarized from Bizportal by baba
Israeli biopharma company Opko Health announced a major deal to sell assets of its subsidiary BioReference Health to Labcorp for up to $872 million. The sale, which includes significant laboratory testing operations and the 4Kscore prostate cancer test, caused Opko's stock to surge 25%. The acquired business is projected to generate $250 million in annual revenue, with Labcorp aiming to expand the reach of the 4Kscore test.
The story in 5 lines · by baba
- Opko Health will sell BioReference Health assets to Labcorp for up to $872 million.
- The deal includes laboratory testing operations and the 4Kscore prostate cancer test.
- Opko's stock surged 25% on Wall Street following the announcement.
- The acquired business is expected to generate $250 million in annual revenue.
- Labcorp plans to expand access to the 4Kscore test.
Opko Health, a biopharmaceutical and diagnostics company traded on both the Tel Aviv and Nasdaq stock exchanges, saw its stock surge approximately 25% in pre-market trading on Wall Street. This jump follows the announcement of a major deal to sell assets of its subsidiary, BioReference Health, to the American laboratory giant Labcorp.
Under the terms of the agreement, Opko will receive $722 million in cash upon completion, with the potential for an additional $150 million based on the performance of certain divested operations. This transaction is substantial relative to Opko's size; before the announcement, the company's market capitalization on Nasdaq was around $1.02 billion. The base payment alone represents about 70% of its market value prior to the stock increase. If the full contingent payment is realized, the total proceeds would reach $872 million, approaching 85% of the company's pre-announcement market value.
However, it is important to note that Opko is selling revenue-generating operations, which will impact its future turnover. The deal involves Labcorp acquiring BioReference's laboratory testing operations across clinical medicine, women's health, urology, and correctional facility testing, along with over 80 patient service centers.
A significant component of the sale is the 4Kscore blood test, used to assess the risk of aggressive prostate cancer and aid in biopsy decisions. This FDA-approved test is intended to be made more accessible by Labcorp through its national laboratory network. Labcorp projects that the acquired business will generate approximately $250 million in revenue in its first year post-acquisition, suggesting a base revenue multiple of about 2.9, potentially rising to 3.5 if the full contingent amount is paid. The profitability of the divested operations was not disclosed, making it difficult to determine the operating profit multiple Labcorp is paying.
