Labcorp acquires Myriad prenatal testing unit for $210M

On Tuesday, Labcorp revealed plans to purchase Myriad Genetics’ prenatal testing division for $210 million. The transaction encompasses diagnostic tools designed to evaluate fetal risks and support various prenatal services. According to projections, these tests are anticipated to contribute roughly $160 million in annual revenue following the acquisition.

The acquired business operates through four distinct tests. FirstGene and Prequel serve as prenatal screening options, with the former assessing risks for general conditions and the latter focusing on chromosomal abnormalities—both available beginning at eight weeks of pregnancy. Foresight examines potential parents’ likelihood of transmitting severe hereditary disorders, while SneakPeek determines fetal sex as early as six weeks into gestation.

Revenue from Myriad’s prenatal tests declined by 16% year-over-year during the first half of 2024, totaling $81.7 million. Both unit sales and per-test earnings dropped in the second quarter. During a July earnings call, Myriad leadership attributed these declines to “raised payer friction,” delays in expanding its sales team, and intensified market competition.

Evercore ISI analysts suggest Labcorp could enhance the financial performance of the newly acquired tests by utilizing its existing infrastructure and expanding access through established provider networks. The tests will integrate into Labcorp’s women’s health testing lineup, a key focus area for the company. Analysts emphasized whether Labcorp can effectively capitalize on its operational strengths to improve sales momentum.

Competition in women’s health testing has intensified, with firms like BillionToOne and Natera capturing market share, according to Evercore. The analysts noted that Labcorp’s success hinges on deploying its extensive sales network to counteract these trends. They forecast that adjusted operating margins for these tests could nearly double, rising from 9% in fiscal 2027 to 14% in fiscal 2028, with potential growth to 17.5% once fully integrated.

Labcorp’s purchase price equates to roughly 1.3 times the projected first-year revenue before inventory adjustments, a more favorable multiple than the 2.9 times paid for its recent BioReference Health acquisition, per Evercore data. Despite this, TD Cowen analysts described the $210 million deal as exceeding Myriad shareholders’ expectations.

This acquisition marks the latest in Labcorp’s strategic expansion through mergers and acquisitions, broadening its geographic presence and deepening its specialty testing capabilities. The company’s diagnostic president previously highlighted that specialty testing segments are expanding at three times the industry average, now representing a $2 billion business segment.