SYDNEY, AUSTRALIA: Australian Clinical Labs (ACL) today entered into a binding agreement to purchase Medlab Pathology, a leading Australian privately-owned independent pathology provider, based in NSW and QLD.
The acquisition is subject to regulatory approval and completion of customary conditions precedent.
The acquisition an will be funded by an upfront payment of $60m plus a deferred consideration of $5m on completion of CY22 and a further $5m subject to the achievement of non-COVID revenue retention hurdles.
The transaction will be funded by cash and existing debt facilities and no new capital will be required to fund the transaction.
Since ACL was founded in 2015, the Company has demonstrated a proven track record in expansion via acquisitions and successful integration of those businesses to create shareholder value via a unified national pathology platform which creates material operating leverage of the combined business.
As well as adding scale, the acquisition of the Medlab business represents a complementary geographic footprint providing a significant expansion in the largest pathology market in Australia (New South Wales) and the third largest (Queensland).
The acquisition will enhance ACL’s market positions in NSW and QLD, relative to its more established positions in Victoria, Western Australia, South Australia, ACT and Northern Territory.
In NSW Medlab operates a laboratory in Auburn, Sydney and 205 collection centres. On completion of the acquisition, ACL’s share of collection centres will nearly double in NSW with the number of collection centres increasing from 222 to 427.
As important as the incremental scale, there is limited geographic collection centreoverlap in Sydney and the acquisition gives ACL a more comprehensive coverage of the whole Sydney market including growth corridors in western and south western Sydney.
In Queensland, Medlab operates a laboratory in Wilston, Brisbane and 83 Collection Centres and will provide ACL an entry into the Queensland Medicare Community funded market which complements ACL’s existing Queensland strategy which includes the recent acquisition of the SunDoctors skin cancer clinics and a purpose built clinical and Commercial (Clinical Trials) testing laboratory.
Post the Medlab acquisition, ACL will have specialist histology laboratories in each State in which it operates and four across NSW and QLD.
The Medlab acquisition will also strategically assist ACL in targeting the emerging private COVID-19 traveller market.
Chief Executive Officer, Melinda McGrath, said: “The Medlab acquisition aligns to our well-defined strategy to grow our position in the New South Wales and Queensland markets, and will deliver both significant growth opportunities and shareholder value.
“The significant prior investment we have made in the national unified pathology system and single laboratory information system will ensure the Medlab integration is efficient and delivers material synergies, with the additional volume expected to underpin further operating leverage for ACL.”