Sonic Healthcare buys Swiss lab group Dr Risch in $202m deal
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The news: Global pathology provider Sonic Healthcare has acquired the Dr Risch laboratory group, a full-service medical laboratory group based in Switzerland, for 117 million Swiss francs ($202 million).
The numbers: Dr Risch employs around 650 staff in 14 laboratories across Switzerland and Liechtenstein. In the 2023 calendar year, the Swiss laboratories generated revenue of 94 million Swiss francs, with a further 8 million Swiss francs of revenue generated by the laboratory in Liechtenstein.
The purchase price includes the issue of shares to Sonic with a value equivalent to 30 million Swiss francs, with the balance to be funded from Sonic's existing cash and debt facilities.
In February, Sonic reported a sharp half-year profit drop of nearly 50%, as earnings were hit by a "dramatic reduction" in Covid-related revenue.
The context: Sydney-based Sonic said the integration of Dr Risch with Sonic's existing Swiss operations — which include the recently acquired Synlab Suisse (now MediSyn) laboratories — will be led by its existing Swiss leadership team together with Dr Risch's management team.
The transaction, which is due to close by 31 March 2024, is expected to be earnings per share accretive from the 2025 calendar year. Sonic noted the return on invested capital will "significantly exceed" Sonic's cost of capital once synergies are achieved.
Sonic said that whilst "an important strategic step" for the company in Switzerland, the transaction is not considered to be material for the ASX-listed group.
The source: ASX announcement
