By Kirell Lakhman

Is LabCorp looking to make another buy?

Seven weeks after it closed its $107 million acquisition of Monogram Biosciences, CEO David King said the clinical lab market “is still highly fragmented” and suggested that “consolidation opportunities are still very much available to us.”

King made the comments yesterday during his presentation at the annual UBS life-sciences conference in New York, so one can make the argument that their bullish nature was meant to invigorate his investor base.

But perspective from two unrelated statements attaches deeper meaning to the remarks.

The first occurred in July during LabCorp’s second-quarter earnings release. In the firm’s earnings statement, King said LabCorp “will continue to focus on our priorities of gaining new customers.”

Innocuous enough. But the remark took on greater urgency during the UBS presentation yesterday after King sketched out what could be LabCorp’s potential acquisition menu: Quest and LabCorp, the No. 1 and No. 2 reference labs in the US, together share around 23 percent of the clinical lab market while hospitals own between 50 and 55 percent. The balance, around 20-25 percent, is split between 1,500 and 2,000 small, independent labs, he said.

The fastest and, in many cases, most cost-effective way of “gaining new customers” — especially with today’s life-science M&A environment, and particularly among smaller deals — is simply to buy them.

The second statement came from an investment bank analyst one week before King spoke at UBS. Ralph Giacobe at Credit Suisse said the national health-care reform currently being induced on Capitol Hill could force LabCorp and Quest to cut prices as early as next year.

Giacobe, who released his assessment after downgrading both labs’ stock, added that the resulting slow-down in profit would embolden the labs to make a “large international acquisition in the next year or 18 months.”

No Matter What

Also at UBS yesterday, King sought to reassure investors that clinical labs will remain vital regardless of how the ongoing health-care reform debate unfolds, or the kind of payor changes emerge from it.

(He declined to delve into details, but dutifully singled out the $750 million clinical lab tax floated earlier this month by Senate Finance Committee Chairman Max Baucus — he called it “draconian” and “confiscatory.” About an hour after he spoke the committee wisely nixed the plan.)

“Clinical laboratories in general are at a critical position in the health-care delivery system. We are the gatekeeper; we are the front line,” King said. “I’m not aware of any country anywhere in the world that has a health-care system that is not lab-focused, lab-centric, and in which clinical labs do not play a critically important role.”

He added that clinical labs represent the “lowest-cost component” of the health-care system in the US.”