Hospitals seeking to outsource their outreach lab operations create acquisition opportunities for large companies that have the scale to streamline testing services and reduce costs. Few companies have been more aggressive in cashing in on these opportunities than Labcorp. Over the years, the diagnostics giant has spent over $3.5 billion to acquire dozens of labs in multiple sectors and across multiple markets. While the overall merger and acquisition (M&A) market has been slow in 2022, Labcorp has been on a bit of an acquisitions binge.

The RWJBarnabas Acquisition

On Aug. 23, Labcorp announced the closing of its latest strategic buy, the acquisition of the hospital outreach lab business of New Jersey’s largest academic health system, RWJBarnabas Health (RWJBH), for an undisclosed price. The purchase covers all 12 of RWJBH’s acute care hospitals across eight New Jersey counties.

It’s a perfect fit. Labcorp has been providing lab services to RWJBH hospitals for years. The expanded relationship with RWJBH will build on the collaboration and provide patients “enhanced access to high-quality laboratory services, seamless data integration and connectivity and exceptional value to help improve patient care and outcomes,” according to the company’s Northeast Division senior vice president Bill Haas, noting that RWJBH physicians and patients will now have access to an expanded test menu and the company’s patient service center networks, including Labcorp at Walgreens.

The RWJBH acquisition comes on the heels of the North Carolina company’s purchase (also at an undisclosed price) of strategic outreach lab assets from another NJ health system client, AtlantiCare, which closed on May 9.

Both acquisitions follow the same basic partnership model that Labcorp has used to acquire other outreach labs outside of the Garden State. The company has forged similar strategic relationships with health systems across the country, including two new partnerships that closed this year:

• On March 10, Labcorp entered a partnership to acquire the outreach lab operations of South Carolina system Prisma Health; and
• On Feb. 14, Labcorp partnered with Ascension to provide lab management services to, and purchase certain assets associated with, the St. Louis-based Catholic non-profit health system’s outreach lab business in 10 different states, a deal expected to generate between $500 million and $600 million in combined revenues during the first year.

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Here’s a summary of the other key M&A diagnostic deals that were signed or closed in August 2022:

Mergers, Acquisitions, & Asset Sales