Quest Diagnostics to acquire LifeLabs for $985m in strategic expansion into Canada
Quest Diagnostics (NYSE: DGX), a prominent provider of diagnostic information services, has announced a definitive agreement to acquire LifeLabs, a leading Canadian community laboratory service provider, for approximately CAN $1.35 billion (about USD $985 million), including net debt. This acquisition marks a significant expansion of Quest’s operations into Canada, leveraging over two decades of experience in supporting Canadian laboratories, hospitals, and academic centers.
“Quest has supported laboratories, hospitals, and academic centers in Canada with specialized testing services for over two decades, including during the COVID-19 pandemic,” said Jim Davis, Chairman, CEO, and President of 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 maintain its brand, Canadian headquarters, and management structure post-acquisition. Quest aims to provide LifeLabs with new expertise, innovations, and resources to enhance services provided by LifeLabs’ over 6,500 employees, such as improved online appointment scheduling and faster patient service center processing. Additionally, Quest plans to support LifeLabs in accelerating data security enhancements while ensuring Canadian patients’ health data remains within the country.
Michael Hill, Executive Vice President and Global Head of Infrastructure at OMERS, commented on the transition, stating, “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. Quest is uniquely equipped to expand the service offering at LifeLabs, bringing new innovations to this market while extending access for patients in Canada.”
Charles Brown, President and CEO of LifeLabs, also noted the strategic fit of the acquisition: “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. 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.”
Quest will acquire 100% of the equity of LifeLabs and expects to fund the acquisition through cash on hand and debt. The transaction is anticipated to generate approximately CAN $970 million (approximately USD $710 million) in annual revenues and to be slightly dilutive to GAAP earnings per share (EPS) initially, due primarily to amortization of intangibles and other items, but accretive to adjusted EPS in the first 12 months post-closing.
The acquisition is subject to customary closing conditions and approvals, including Canadian regulatory approvals, with completion expected by the end of the year.