SECAUCUS, N.J. and TORONTO, Aug. 26,
2024 /PRNewswire/ -- Quest Diagnostics (NYSE:
DGX), a leading provider of diagnostic information services, today
announced the completion of its acquisition of LifeLabs from
OMERS. The transaction, valued at approximately CAN $1.35 billion (approximately USD $1 billion), including net debt, has received all
necessary approvals and is now closed.
"This acquisition brings together two industry leaders committed
to enhancing access to diagnostic innovation for patients in
North America," said Jim Davis, Chairman, CEO, and President of Quest
Diagnostics. "The combination of LifeLabs' strong business and deep
community presence with Quest's specialized lab services and
expertise creates a powerful opportunity to generate growth while
improving care and outcomes for Canada's expanding and aging population."
Quest provides a comprehensive offering of tests requiring
specialized skills, science, and technology in clinical areas such
as cardiometabolic health, infectious diseases, Alzheimer's
disease, oncology and genomics.
"Joining forces with Quest Diagnostics marks a pivotal moment
for LifeLabs. Quest's extensive diagnostic capabilities and
forward-thinking strategy will help the LifeLabs team enhance
access to services and ultimately improve healthcare for
Canadians," said Charles Brown,
President and CEO of LifeLabs.
LifeLabs and its more than 6,500 employees will continue to
operate under the LifeLabs brand and with the same management team
and headquarters. Quest will provide LifeLabs with new expertise,
innovations and resources to strengthen the services provided by
LifeLabs. In addition to fostering greater access to specialized
tests, the two companies will work together to improve online
appointment scheduling and speed patient service centre processing.
Quest will also support LifeLabs' data security enhancements while
ensuring Canadian patients' health data remains in Canada.
"OMERS is proud to have supported and fostered LifeLabs' growth
into the prominent Canadian healthcare institution it is today,"
said Michael Hill, Executive Vice
President and Global Head of OMERS Infrastructure. "This
transaction represents a significant achievement for OMERS and its
members. We extend our best wishes to Quest and LifeLabs as they
embark on their shared journey towards future success and
innovation supporting patient care."
Transaction Details
Quest has acquired 100% of the equity of LifeLabs. The transaction
meets all of Quest's criteria on growth, profitability and returns.
Quest expects the transaction to generate approximately CAN
$970 million (approximately USD
$710 million) in annual revenues. The
company expects the transaction to be slightly dilutive to GAAP
earnings per share (EPS), due primarily to amortization of
intangibles and other items, but $0.10-$0.15
accretive to adjusted EPS, in the first 12 months after closing.
The company will provide updated financial guidance for the full
year 2024 on its third quarter 2024 earnings call in October
2024. 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 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.
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SOURCE Quest Diagnostics