This story has been updated to reflect NeoGenomics' estimate on the valuation of the common stock portion of the deal and include debt the firm has taken on to finance it.
NEW YORK (GenomeWeb) – NeoGenomics today announced it has signed a definitive agreement to acquire cancer molecular diagnostics firm Clarient in a cash and stock deal worth approximately $275 million.
NeoGenomics will offer $80 million in cash, $110 million in preferred stock, and issue 15 million shares of its common stock. Shares of Ft. Myers, Florida-based NeoGenomics closed at $5.68 on the Nasdaq, valuing the common stock portion of the deal at approximately $85 million. As part of the acquisition, NeoGenomics will also purchase Clarient's wholly owned subsidiary Clarient Diagnostic Services.
NeoGenomics officials said on a conference call that the firm has taken out a $55 million term loan financed by AB Private Credit Investors and will draw $10 million from a $25 million revolving credit facility from Wells Fargo Capital Finance. The remaining $15 million in cash will come from the firm's balance sheet.
Clarient is a unit of GE Healthcare's Life Sciences business and has 415 employees between its locations in Houston and Aliso Viejo, California.
GE Healthcare had acquired Clarient in December 2010 for $580 million. At the time it said that its diagnostic imaging combined with Clarient's technologies was expected to accelerate development of integrated tools for cancer diagnosis and characterization.
NeoGenomics said in a statement that the acquisition will allow it to "broaden its offering of innovative cancer diagnostics tests" and help it address a growing market for comprehensive cancer testing services for pharmaceutical clinical trials and research.
The purchase must still be approved by NeoGenomics' shareholders and regulatory bodies, but the firm said it anticipates closing the deal in the fourth quarter of 2015.
The preferred stock will be issued at $7.50 per share along with accrued dividends and is redeemable at NeoGenomics' option during a 10-year period. After three years, GE Healthcare can convert the preferred stock and any accrued dividends to NeoGenomics' common stock.
The deal would give GE Healthcare up to a 32 percent stake in NeoGenomics on a fully diluted basis, assuming full conversion of the preferred stock.
As part of the transaction, NeoGenomics will expand its board of directors and add a new director position from GE Healthcare.
NeoGenomics said that it and GE Healthcare will also collaborate on a personalized oncology bioinformatics initiative to explore new products combining genomic and clinical imaging data.
NeoGenomics Chairman and CEO Douglas VanOort said that the deal is anticipated to double his firm's revenues to between approximately $240 million and $250 million. He added that he expects realized synergies of between $4 million and $6 million in 2016. By the end of the third year following the acquisition, synergies are anticipated to increase to between $20 million and $30 million each year.
Shares of NeoGenomics were up 23 percent to $6.99 in morning trading on the Nasdaq.
Last month, NeoGenomics signed a purchasing deal making the firm a preferred in-network laboratory for healthcare provider Premier.