Lab Companies See Massive Layoffs and Restructuring

by Glenn S. Demby | Jan 31, 2023 | Essential, Industry Buzz-lir, Laboratory Industry Report

Economic volatility and uncertainty is also making a significant impact on merger and acquisition activity in the diagnostics space.

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Having ridden the COVID-19 testing wave as far as it will take them, laboratory diagnostic companies are now settling in to manage bearish conditions. Restructuring has become the order of the day for many of these firms. While most apparent in the latest round of layoffs, economic volatility and uncertainty is also making a significant impact on merger and acquisition (M&A) activity.

Lab Company Layoffs

In an almost perverse irony, the industry is being buffeted by a combination of staffing shortages and widespread layoffs. There aren’t enough nurses and skilled lab technicians, but there are too many of just about every other kind of position. No fewer than six key lab companies announced significant staff cuts in January:

Cue Health: After seeing revenues decline by 69 percent in 2022 Q3, Cue Health cut its workforce by roughly 26 percent (388 employees) as part of a new cost reduction plan. Times have been tough for the COVID-19 testing lab that went public via a $200 million initial public offering (IPO) in September 2021. The new round of layoffs, which officially take effect in March, comes after the firm cut 170 jobs in June. They also carry a hefty price tag, with Cue estimating that it will incur an aggregate restructuring charge of up to $8 million for the termination payments it will have to make.¹

Biocept: The day after Cue filed its SEC Form 8-K disclosing the cost reduction plan, Biocept announced its own restructuring process, including a 35 percent staff cut. The liquid biopsy firm did make one hiring, though, bringing in EF Hutton to help it “preserve [its] remaining resources to extend [its] cash runway.” Potential options include acquisition, merger, reverse merger, asset sales, licensing, and/or other strategic transactions, the company added.²

Verily Life Sciences: Alphabet subsidiary Verily Life Sciences kicked off the next round of layoffs on Jan. 11. As first reported by The Wall Street Journal, the life sciences company broke the news of its reorganization in an email to employees, more than 200 (15 percent of the company’s work force) of whom will be getting pink slips. “We will advance fewer initiatives with greater resources,” noted the email from new CEO Stephen Gillett. “In doing so, Verily will move from multiple lines of business to one centralized product organization with increasingly connected healthcare solutions.” Among the casualties are the Verily Value Suite clinical and financial insights platform and an early heart failure patient monitoring products program.³

Personalis: On Jan. 16, Personalis filed its SEC Form 8-K disclosing plans to lay off approximately 30 percent of its workforce. The move will cost about $3 million in severance benefits and employee benefits but is expected to save the cancer genomics company $17 million in operating costs for the remainder of 2023.⁴ Earlier this month, Personalis es timated that its 2022 revenues will come in at $65 million, $2 million above its previous guidance.⁵

PAVmed Inc.: The bloodletting continued on Jan. 18 when PAVmed and its subsidiaries, Lucid Diagnostics and Veris Health, announced the layoff of 20 percent of their employees.⁶ The commercial-stage cancer prevention and diagnostics company is struggling to stay afloat. In Q3, Lucid reported revenues of only $76,000, as compared to $200,000 in Q3 2021 and well short of its Wall Street estimate of $420,000.⁷ By slashing its workforce, the company is hoping to reduce its quarterly cash bleed by 25 percent.

Immunovia: The layoffs and restructuring bug also bit foreign diagnostics firms, with Swedish firm Immunovia announcing the layoff of R&D employees in the home country so that it could focus on US operations, particularly the commercialization of its new new IMMRay PanCan-d blood-based pancreatic cancer test. “Immunovia is in the early stages of commercial execution, and the scope of the in-house R&D and operations needs have changed,” noted the firm in the statement announcing the recent moves.⁸

M&A Activity

Continuing recent patterns, January was also a slow month for M&A deals both in transaction volume and value. Many of the deals that did come off were designed to advance strategic reorganization and refocusing efforts. The most active player was Inscripta, which acquired synthetic biology firms Infinome Biosciences and Sestina Bio in separate deals, suggesting a pivot away from genome editing instrumentation and toward biomanufacturing.⁹ The transactions came a month after the startup closed its San Diego, California, and Boulder, Colorado, facilities and laid off 43 employees. Other key restructuring M&A deals during the period:

HealthTrackRx sold off its toxicology lab business to Aegis Sciences as it transitions to a focus on “infectious disease testing and combating antimicrobial resistance”¹⁰ and
Matrix Medical Network sold its Matrix Clinical Laboratory service line to Karrington Clinical Laboratory to focus on in-home health care.¹¹

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Here’s a summary of the key M&A diagnostic deals that were signed or closed in January 2023:

MERGERS, ACQUISITIONS, & ASSET SALES

Acquiring Company	Target(s)	Deal Summary
Thermo Fisher Scientific	The Binding Site Group	• Price: £2.3 billion ($2.80 billion) cash • Closed • Acquisition of UK-based specialty diagnostics company with more than 1,200 worldwide employees, which provides specialty assays and instruments for blood cancers and immune system disorders
Qiagen	Verogen	• Price: $150 million • Status: Closed • Qiagen acquires forensic science next-generation sequencing firm whose products help solve crimes and missing persons cases • Acquisition gives Qiagen exclusive distribution rights to forensic version of Verogen’s Illumina MiSeq FGx sequencer
Inscripta	Infinome Biosciences	• Price: Undisclosed • Status: Closed • Acquisition of developer of GenoScaler platform for rapidly engineering microbial strains • Acquisition of synthetic bio firm suggests Inscripta has shifted focus to biomanufacturing and away from genome editing instrumentation
Inscripta	Sestina Bio	• Price: Undisclosed • Status: Closed • Acquisition of developer of novel approach for building and identifying strains that can withstand scale-up to levels needed for commercial biomanufacturing • As with the Infinome acquisition above, the acquisition of its second synthetic bio firm in a month suggests Inscripta has shifted focus to biomanufacturing and away from genome editing instrumentation
Calibre Scientific	Glass Chemicals	• Price: Undisclosed • Status: Closed • Calibre expands presence in Spain by acquiring Spanish distributor of scientific consumables, equipment, and services for diagnostics, life sciences, and industrial sectors
Aegis Sciences	HealthTrackRx Toxicology	• Price: Undisclosed • Status: Closed • Acquisition of Texas clinical toxicology business line enables Aegis to expand its clinical toxicology testing capacity
Agilent Technologies	Avida Biomed	• Price: Undisclosed • Status: Closed • Acquisition of firm that develops targeted methylation sequencing panels for cancer diagnosis, including tools for simultaneous genomic and DNA methylation profiling from a single sample, complements Agilent’s SureSelect target enrichment portfolio while furthering its strategy to expand into high-growth clinical research and diagnostics markets
Summa Equity	Pierian + Seven Bridges + UgenTec	• Price: Undisclosed • Status: Closed • Three firms merged to form new precision medicine company called Velsera dedicated to enable “democratization” of omics data across clinical and research applications via integration of a rich software platform, deep domain expertise, and knowledge of multiomics
Moderna	OriCiro Genomics	• Price: $85 million • Status: Definitive agreement to acquire with no closing date announced • Acquisition of Tokyo-based synthetic biology firm that provides cell-free synthesis and amplification of plasmid DNA boosts Moderna’s messenger RNA (mRNA) manufacturing capacities
Karrington Clinical Laboratory	Matrix Clinical Laboratory	• Price: Undisclosed • Status: Closed • Sale of lab services line advances Matrix’s strategy to refocus on in-home health and care assessments
ProPhase Labs	Stella Diagnostics	• Price: $4.5 million, including $3.5 million cash and $1 million in ProPhase common stock, plus another $2 million of ProPhase common stock upon achievement of a revenue-based commercial milestone within 5 years after closing, plus 5 percent royalty on the adjusted gross margin from commercialization of the intellectual property • Status: Closed • ProPhase acquires exclusive rights to Stella Diagnostics’ BE-Smart Esophageal Pre-Cancer screening test and related intellectual property assets
Bruker	Biognosys	• Price: Undisclosed • Status: Closed • Acquisition of majority stake in Swiss proteomics firm enables Bruker to combine its 4D proteomics timsTOF technology with Biognosys' portfolio of mass spectrometry-based proteomics services, software, and kits • Biognosys to use Bruker funds to open an advanced proteomics contract research lab in Massachusetts offering proteomics biomarker and drug discovery and development services
Heska	MBio Diagnostics (doing business as LightDeck Diagnostics)	• Price: $38.7 million • Status: Closed • Acquisition of Colorado-based developer of planar waveguide fluorescence immunoassay diagnostic tests used at point of care

Lab Companies See Massive Layoffs and Restructuring

Lab Company Layoffs

M&A Activity

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