Exact Sciences to buy firm for $2.8B
Exact Sciences, the Madison company that has seen rapid growth with its non-invasive molecular test for colon cancer, will buy Genomic Health, a company with tests for breast and prostate cancer, in a cash-and-stock transaction valued at $2.8 billion.
The two companies announced the agreement Monday. They expect to complete the transaction by the end of this year.
The combined companies would have revenue of $1.6 billion and a presence in 90 countries.
“Combining industry pioneers Exact Sciences and Genomic Health is a pivotal step toward building the leading cancer diagnostics company in the world,” Kevin Conroy, chairman and CEO of Exact Sciences, said in a statement. “Exact Sciences is continuing to grow sales and expand adoption of Cologuard at a rapid pace, and Genomic Health's Oncotype DX is the global standard of care to inform treatment decisions for women with breast cancer.”
Genomic Health, based in Redwood City, California, has developed genomic tests that have been used to guide treatment decisions for over 1 million cancer patients worldwide.
The company, founded in 2000, employs more than 880 people. It reported net income of $25.7 million on revenue of $394.1 million in 2018, up from a net loss of $3.9 million on revenue of $340.7 million in 2017.
Genomic Health stockholders will receive $72 a share — $27.50 in cash and $44.50 in Exact Sciences stock, subject to a 10% collar tied to Exact Sciences average stock price for the 45 days before July 26.
The purchase price represents a 19% premium based on Genomic Health's stock price over the past 30 days, the companies said.
Exact Sciences stockholders will own 91% and Genomic Health stockholders will own 9% of the combined company once the transaction is completed.
Exact Sciences, based in Madison, has developed a non-invasive test that analyzes stool samples for blood cells and DNA associated with colon cancer and precancerous growths.
Cologuard, which was approved by the Food and Drug Administration in 2014, is included in the recommended screening methods for colorectal cancer of the U.S. Preventive Services Task Force and in the American Cancer Society's colorectal cancer screening guidelines.
The company said that 2.6 million people have been screened and 12,000 early-stage cancers have been detected using the company's Cologuard test.
Exact Sciences stock — which closed at $5.36 a share on May 19, 2016 — traded around $107 a share, down about 8%, Monday morning.
The company, which has $1.2 billion in cash, reported a net loss of $175.1 million, or $1.43 a share, last year but has been spending to support its growth.