SYDNEY, AUSTRALIA: Sonic Healthcare (ASX: SHL) has acquired 100% of ProPath, a Texas based anatomical pathology (AP) company.
ProPath’s annual revenue is ~US$110 million, and with its ~50 pathologists, serves over 1,000 physicians and more than 20 hospital groups across 45 States.
ProPath was established as an AP practice in 1966. Growth has largely been organic, including the addition of clinical laboratory services from 2017.
In early 2020 ProPath acquired New England Tissue Issue, an AP company located in Massachusetts.
The acquisition of ProPath is a very significant additional step in the ongoing development of Sonic’s AP and clinical laboratory operations in the US, and is part of Sonic’s long-term strategy of integrating the disciplines of anatomical pathology and clinical laboratory testing together as a seamless service in the USA, with consequent revenue and cost synergies and service enhancement for referrers and patients.
The US anatomical pathology market is estimated to be in excess of US$10 billion per annum (in addition to the >US$70 billion clinical laboratory market) and Sonic is already one of the largest participants following previous acquisitions, including the Aurora Diagnostics transaction in 2019.
Sonic Healthcare’s CEO, Dr Colin Goldschmidt said: “Together with Dr Jerry Hussong, CEO of Sonic Healthcare USA, I am delighted to warmly welcome the entire ProPath team to Sonic Healthcare.
ProPath has an outstanding reputation as a top-quality pathology company, with outstanding pathologists, managers and staff who have driven strong organic growth over decades based on clinical expertise and focus on physician and patient satisfaction.”
The acquisition was funded from cash and available debt lines and will be immediately earnings per share accretive.
The return on capital invested is expected to exceed Sonic’s cost of capital in the first year, and is enhanced as the vast majority of the purchase price will be deductible for US income tax over a 15-year amortisation period.
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