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Could Even More M&A Be on the Way for Hologic?

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Waltham, MA-based Hologic has acquired Diagenode for $159 million. This marks Hologic’s third deal this year. The company is in a prime position for M&A because of strong COVID-19 earnings.

Hologic is acquiring molecular diagnostic assay developer Diagenode for $159 million, and more M&A could be around the corner.

Belgium-based Diagenode provides more than 30 real-time polymerase chain reaction tests that are CE-marked for the detection of bacteria, parasites, and viruses involved in sexually transmitted infections, respiratory diseases, meningitis, and gastroenteritis.

Mike Matson, an analyst with Needham & Company, said the deal could help boost Hologic’s Panther Fusion systems.  

In a research note Matson said, “we believe the Diagenode acquisition capitalizes on the large (~2,400 systems globally) and growing (500 systems placed in FY20, 150 placed in 1Q21) installed-base of Panther Fusion systems while further solidifying European operations and expanding Hologic’s test menu to drive post-COVID-19 growth.”

Diagenode has generated more than $30 million of revenue in the last 12 months and since 2016 has helped develop PCR-based assays for Hologic’s Panther Fusion. Diagenode is playing a leading role in epigenetics with a robust portfolio of devices, kits, reagents, antibodies, and services to aid in the analysis of DNA and RNA.

“We are excited to put our strong cash flow to work to acquire Diagenode and further strengthen our diagnostics business, which has had tremendous momentum in the United States and internationally,” said Steve MacMillan, Hologic’s chairman, president and CEO. “The acquisition is consistent with our tuck-in M&A strategy, leverages our automation capabilities, and provides attractive growth potential.”

Hologic opened the year up with M&A. The company said it was acquiring Somatex Medical Technologies for $64 million and a few short days later it announced Biotheranostics for $230 million. The deals would expand Hologic’s testing offerings in breast and metastatic cancers.

Matson said the firm’s strong earnings from COVID-19 offerings have helped open the door for more M&A opportunities.

“Given the financial windfall that has resulted from Hologic’s COVID-19 test sales, we expect Hologic to remain active with M&A,” Matson wrote in a research note. “We believe that Hologic’s shares are fairly valued considering its post-COVID-19 earnings power and we maintain our hold rating.”

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