SECAUCUS, N.J.
and TORONTO, July 3, 2024
/CNW/ -- Quest Diagnostics (NYSE: DGX), a leading provider of
diagnostic information services, today announced a definitive
agreement with OMERS to acquire LifeLabs, a trusted provider of
community laboratory tests for millions of Canadians, for a value
of approximately CAN $1.35 billion
(approximately USD $985 million),
including net debt.
"Quest has supported laboratories, hospitals and
academic centres in Canada with
specialized testing services for over two decades, including during
the COVID-19 pandemic," said Jim
Davis, Chairman, CEO and President, Quest Diagnostics. "This
transaction is predicated on our strong belief that we can help
LifeLabs accelerate growth and improve healthcare. We are committed
to working with the LifeLabs team to ensure service continuity and
enhance access and innovation to meet the needs of Canada's growing and aging
population."
LifeLabs will retain its brand, Canadian
headquarters, and management after the acquisition is closed. Quest
will provide LifeLabs with new expertise, innovations and resources
to strengthen the services provided by LifeLabs' more than 6,500
employees. This will include improved online appointment scheduling
and faster patient service centre processing. Quest also expects to
help accelerate LifeLabs' data security enhancements while ensuring
Canadian patients' health data remains in Canada.
"OMERS is proud to have supported LifeLabs'
growth over the last 17 years. Our purchase in 2007 and subsequent
investments have helped LifeLabs grow into a great Canadian success
story," said Michael Hill, Executive
Vice President and Global Head of Infrastructure of OMERS. "Quest
is uniquely equipped to expand the service offering at LifeLabs,
bringing new innovations to this market while extending access for
patients in Canada."
Quest has recently introduced several new tests
requiring specialized skills, science, and technology, including in
Alzheimer's disease, women's health (particularly prenatal and
hereditary genetics), oncology and advanced cardiometabolic
health.
"Quest is the right partner to build on the
strengths of LifeLabs and align with our strategic path, which
focuses on enhancing the accessibility and quality of services that
we provide to millions of Canadians," said Charles Brown, President and CEO, LifeLabs. "We
know and respect Quest, as we share similar cultures and values and
a productive test-reference relationship. Together, we'll grow
LifeLabs and provide more Canadians with access to the advanced
diagnostics they rely on, closer to home. We sincerely thank OMERS
for its investment, leadership, and valued collaboration over 17
years."
The two companies already have an established
relationship. Over the past five years, LifeLabs has participated
in the Quest-led Global Diagnostic Network, which connects 12 of
the leading diagnostic testing labs globally to broaden testing
access and share expertise. LifeLabs and Quest also have a
reference relationship through which Quest provides access to
select advanced diagnostic tests.
Transaction Details
Quest will acquire 100% of the equity of LifeLabs
and expects to fund the acquisition through cash on hand and debt.
The company expects the transaction to generate approximately CAN
$970 million (approximately USD
$710 million) in annual revenues and
to be slightly dilutive to GAAP earnings per share (EPS), due
primarily to amortization of intangibles and other items, but
accretive to adjusted EPS in the first 12 months after closing. The
transaction meets all of Quest's criteria on growth, profitability
and returns. The parties expect to complete the transaction by the
end of the year, subject to certain customary closing conditions
and approvals, including Canadian regulatory approvals. Additional
terms were not disclosed.
Advisors
McCarthy Tétrault LLP served as legal advisor to Quest Diagnostics.
Blake, Cassels & Graydon LLP served as legal advisor to OMERS.
Evercore and CIBC Capital Markets served as financial advisors to
OMERS.
About LifeLabs
LifeLabs is Canada's leading provider of laboratory
diagnostic information and digital health connectivity systems,
enabling patients and healthcare practitioners to diagnose, treat,
monitor and prevent disease. We are a committed innovator in
supporting Canadians to live healthier lives, operating
Canada's first commercial genetics
lab, and the country's largest online patient portal, with more
than 8 million Canadians receiving their results online. LifeLabs
has been named one of Canada's
Best Employers (2021, 2022 and 2023) and Best Employers for
Diversity (2022 and 2023) by Forbes and recognized for having an
award-winning Mental Health Program from Benefits Canada. Learn
more at lifelabs.com.
About OMERS
OMERS is a jointly sponsored, defined benefit
pension plan, with 1,000 participating employers ranging from large
cities to local agencies, and over 600,000 active, deferred and
retired members. Our members include union and non-union employees
of municipalities, school boards, local boards, transit systems,
electrical utilities, emergency services and children's aid
societies across Ontario. OMERS
teams work in Toronto,
London, New York, Amsterdam, Luxembourg, Singapore, Sydney and other major cities across
North America and Europe – serving members and employers, and
originating and managing a diversified portfolio of high-quality
investments in bonds, public and private credit, public and private
equities, infrastructure and real estate.
About Quest Diagnostics
Quest Diagnostics works across the healthcare
ecosystem to create a healthier world, one life at a time. We
provide diagnostic insights from the results of our laboratory
testing to empower people, physicians and organizations to take
action to improve health outcomes. Our nearly 50,000 employees
understand that, in the right hands and with the right context, our
diagnostic insights can inspire actions that transform lives and
create a healthier world. www.QuestDiagnostics.com.
Note on Non-GAAP Financial Measures
In this press release, we (Quest Diagnostics or
the Company) present financial information with respect to our
projected adjusted EPS following the expected acquisition of
LifeLabs. Projected adjusted EPS is a non-GAAP financial measure,
with projected diluted EPS as its most comparable GAAP financial
measure. In calculating projected adjusted EPS we exclude special
items such as restructuring and integration charges, amortization
expense, excess tax benefits ("ETB") associated with stock-based
compensation, gains and losses associated with changes in the
carrying value of our strategic investments, and other items from
projected diluted EPS. Projected adjusted EPS should not be
considered as an alternative to projected diluted EPS. Management
is presenting projected adjusted EPS because it believes it is
useful to investors and analysts to evaluate the impact of the
expected acquisition of LifeLabs. The Company believes that a
quantitative reconciliation of projected adjusted EPS to projected
diluted EPS cannot be presented at this time without unreasonable
efforts due to the unpredictability and uncertainty of the amounts
and timing of events affecting the items we exclude from projected
diluted EPS, including acquisition-related transaction and
integration costs, the purchase price allocation which is performed
based on facts and circumstances as of the acquisition closing
date, and the accounting treatment and valuation of intangible
assets that are expected to be acquired. Material changes to any
one of the items could result in a significant adjustment from
projected diluted EPS.
Forward Looking Statements
The statements in this press release which are
not historical facts may be forward-looking statements. Readers are
cautioned not to place undue reliance on forward-looking
statements, which speak only as of the date that they are made and
which reflect management's current projections, expectations or
beliefs and which involve risks and uncertainties that could cause
actual results and outcomes to be materially different. Risks and
uncertainties that may affect the future results of the company
include, but are not limited to, risks and uncertainties related to
Quest's proposed acquisition of LifeLabs, including
satisfaction of the regulatory and other closing conditions,
adverse results from pending or future government investigations,
lawsuits or private actions, the competitive environment, the
complexity of billing, reimbursement and revenue recognition for
clinical laboratory testing, changes in government regulations,
changing relationships with customers, payers, suppliers or
strategic partners and other factors discussed in Quest's most
recent filings with the Securities and Exchange Commission,
including its Annual Report on Form 10-K and in any of its
subsequently filed Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K, including those discussed in the "Business,"
"Risk Factors," "Cautionary Factors that May Affect Future Results"
and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" sections of those reports.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/quest-diagnostics-to-acquire-lifelabs-from-omers-enhancing-diagnostic-services-for-canadians-302188624.html
SOURCE Quest Diagnostics