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Laboratory Corp. of America Holdings bid $239 million cash to win a Bankruptcy Court auction Wednesday for Invitae Corp., a San Francisco company that hoped to open a new world of genetic testing.
Instead, the potential sale opens the door for North Carolina-based Labcorp (NYSE: LH) to pursue a franchise beyond blood testing — the dominant part of its $12 billion-a-year business — into the promising but underdelivering area of genetic testing.
A hearing to approve the sale to Labcorp Genetics Inc., including most of Invitae's assets as a going concern, is scheduled for May 6 in U.S. Bankruptcy Court in New Jersey. If approved, the sale process could be completed in the third quarter, Invitae said.
Backed by SoftBank, BlackRock Inc., Deerfield Partners LP and others, Invitae had spent hundreds of millions of dollars over the past few years on more than a dozen acquisitions in an attempt to roll them into a company offering broad insights into possible genetic causes of patients' conditions and related services.
Invitae also has partnered with some drugmakers, especially rare-disease drug developers, to offer no-cost testing that helped move patients onto those drugs more quickly.
The promise of Invitae, started by biotech entrepreneur Randy Scott in 2010, drove the company's valuation to $7 billion. Its tests can interpret almost 2 million disease-associated genes and have been used by more than 4.4 million people, also allowing their results to be shared through digital health and clinical data services to help with research into genetic diseases.
But Invitae filed in February for Chapter 11 bankruptcy protection, listing $1.6 billion in debts against $535 million in assets. The company's acquisitions were not only funded by debt but increased operating expenses and significantly accelerated its cash burn, company officials told the court.
Many of the acquisitions were precommercial and unprofitable.
Under CEO Ken Knight, who took the company's top job in July 2022, the company cut some 1,200 jobs, divested its women's health and Ciitizen patient network business units ad opted for other cost-cutting moves.
"This agreement with Labcorp marks a significant step in our financial restructuring and supports our efforts to continue to deliver innovative and industry-leading products and services for health care," Knight said in a statement Wednesday.
