Sonic Healthcare to acquire Dr Risch laboratory group for CHF117 million

SYDNEY, AUSTRALIA: Sonic Healthcare Limited (ASX: SHL)has signed binding agreements to acquire the Dr Risch laboratory group.

Dr Risch is a full-service medical laboratory group in Switzerland. Dr Risch employs around 650 staff in thirteen clinical laboratories across Switzerland and a laboratory in Vaduz, Liechtenstein.

In CY 2023 the Swiss laboratories generated revenue of ~ CHF 94 million, with a further ~ CHF 8 million of revenue generated by the laboratory in Liechtenstein.

The integration of Dr Risch with Sonic’s existing Swiss operations, including the recently acquired Synlab Suisse (now called MediSyn) laboratories, will be led by Sonic’s existing Swiss leadership team together with Dr Risch’s management team, which will continue with Sonic into the future.

The purchase price of CHF117 million will include the issue to the sellers of Sonic Healthcare ordinary shares1 with a value equivalent to CHF 30 million, with the balance to be funded in Swiss francs from Sonic’s existing cash and debt facilities.

The transaction is expected to be earnings per share (EPS) accretive from CY 2025 and the return on invested capital (ROIC) will significantly exceed Sonic’s cost of capital once synergies are achieved.

Significant synergies are expected in multiple areas of infrastructure and operations (including procurement).

The transaction is expected to close by 31 March 2024.

Sonic’s CEO, Dr Colin Goldschmidt said: “The partnership with Dr Risch is an exciting development for Sonic Healthcare and further strengthens our existing position in the Swiss market.

I take this opportunity to warmly welcome the pathologists and staff of Dr Risch into our Swiss and worldwide Sonic Healthcare team. We look forward to working with this highly experienced and respected group to enhance and strengthen our service offering to clinicians and their patients across Switzerland.”

Whilst an important strategic step for Sonic Healthcare in Switzerland, the transaction is not considered to be material for Sonic Healthcare Limited.