Labcorp To Buy PGDx For $575 Million

by Jondavid Klipp | Jan 15, 2022 | Lab Acquisition, Labcorp, Personal Genome Diagnostics, PGDx

Labcorp To Buy PGDx For $575 Million

Labcorp (Burlington, NC) has agreed to acquire Personal Genome Diagnostics Inc. (PGDx-Baltimore, MD) for $450 million in cash at closing plus up to an additional $125 million based on future performance milestones. The transaction is expected to close in the first half of 2022.

PGDx was founded in 2010 by two cancer scientists, Luis Diaz, MD, and Victor Velculescu, MD, PhD, from Johns Hopkins University. The company received FDA clearance to market its comprehensive tumor profiling test kit, PGDx ELIO tissue complete, in May 2020. The test analyzes 505 genes
from FFPE tissue samples from advanced cancer patients to inform treatment decisions for 35 solid tumor types. PGDx ELIO is covered by Medicare under the PLA code 0250U at a rate of $2,920.

PGDx, which has 114 employees, recorded revenue of approximately $22 million in 2021. Revenue is expected to grow nearly 82% to $40 million in 2022. Labcorp expects the acquisition of PGDx to negatively impact its earnings slightly over the next couple of years, but provide returns in excess of the cost of capital by year five.

PGDx had raised more than $200 million from outside investors, including New Enterprise Associates, Bristol-Myers Squibb and Cowen Healthcare Investments.

Progenity Sells Lab Business To Northwest Pathology

by Jondavid Klipp | Jan 15, 2022 | Lab Acquisition, Northwest Pathology, Progenity

Progenity Sells Lab Business To Northwest Pathology

Progenity Inc. (San Diego, CA) has sold its lab business, Avero Diagnostics (Irving, TX), to Northwest Pathology (Bellingham, WA) for $10.9 million in cash. The sale of Avero Diagnostics is expected to reduce Progenity’s annual operating expenses by approximately $28 million. Progenity now expects to focus on its research and development efforts for new drugs and diagnostic tests.

Avero Diagnostics (aka Mattison Pathology, LLP) performs anatomic, genetic and Covid tests at CLIA-certified labs in Lubbock and Irving, Texas. Annual revenue is approximately $40 million. Avero was originally founded by Tom Mattison, MD, and Trae Mattison, MD, in 2004, and then sold to Progenity in 2015.

Northwest Pathology, which employs 10 pathologists, operates a full-service lab and provides pathology services to 13 hospitals and more than 100 outpatient clinics in Washington and Alaska.

Sonic Buys ProPath

by Jondavid Klipp | Jan 15, 2022 | Lab Acquisition, ProPath, Sonic Healthcare

Sonic Buys ProPath

Sonic Healthcare (Sonic) acquired 100% of ProPath Services (Dallas, TX) for an undisclosed price on December 17, 2021. ProPath had been one of the largest pathologist-owned anatomic pathology labs in the nation. ProPath’s annual revenue is approximately $110 million. Its 500+ employees, including ~50 pathologists, serve roughly 1,000 physicians and 26 hospital clients across 45 states.

ProPath was established as an anatomic pathology practice in 1966. Growth has been almost entirely organic, including the expansion into clinical laboratory services in 2017. In early 2020 ProPath acquired New England Tissue Issue, an AP company located in Massachusetts.

ProPath’s pathologists will join as colleagues with Sonic’s existing group of 330 pathologists in the US. ProPath’s leadership team, including Chairman and CEO Cory Roberts, MD, are expected to hold senior roles at Sonic Healthcare USA.

The acquisition of ProPath follows Sonic’s purchase of Aurora Diagnostics for $540 million in January 2019.

Coker Capital (Charlotte, NC) served as a financial advisor to ProPath, while Haynes and Boone LLP (Dallas, TX) provided legal services.

Toxicology Labs Average $475 Per Medicare Patient

by Jondavid Klipp | Nov 15, 2021 | Aegis Sciences Corp., Toxicology, Vitas Laboratory

Toxicology Labs Average $475 Per Medicare Patient

.The top 25 independent toxicology lab companies received an average of $475 of revenue per Medicare patient they served in 2019, according to data analyzed by Laboratory Economics from the Medicare Part B program.

The biggest toxicology lab in the country is Aegis Sciences Corp. (Nashville, TN), which received $47.8 million of Medicare payments for 387,812 tests provided to 117,943 patients in 2019 for an average of $405 per patient. Aegis billed an average of 3.3 CPT codes per Medicare beneficiary it served. Its three highest volume codes in 2019 were G0482 (drug test, definitive; 15-21 classes), CPT 80307 (testing for presence of drug) and G0481 (drug test, definitive; 8-14 classes).

Vitas Laboratory (Barling, AR) collected the highest average Medicare payment per beneficiary at $4,459. The company billed an average of 28 CPT codes per Medicare beneficiary it served. Its three highest volume codes in 2019 were G0483 (drug test, definitive; 22+ classes), CPT 80307
and CPT 80053 (comprehensive metabolic panel). The owner of Vitas Laboratory, Billy Joe Taylor, was recently indicted for allegedly defrauding Medicare.

Arkansas Lab Owner Indicted in $100 Million Billing Fraud

by Jondavid Klipp | Nov 15, 2021 | Fraud, Medicare, Toxicology

Arkansas Lab Owner Indicted in $100 Million Billing Fraud

A federal grand jury in the Western District of Arkansas has indicted Billy Joe Taylor, age 42, for an alleged scheme that billed Medicare for over $100 million dollars in fraudulent lab test claims between February 2017 and May 2021.

Taylor is the owner of several lab companies, including Vitas Laboratories (Barling, AR), Beach Tox (Torrance, CA), Nations Laboratory Services (Tecumseh, OK), Corrlabs (Southern Pines, NC) and Imaginus Diagnostic Laboratory (Spiro, OK).

Taylor allegedly used access to beneficiary and medical provider information from prior lab orders to submit fraudulent claims for urine drug tests, Covid-19 tests and respiratory pathogen panels, that were not actually ordered or performed. The complaint also alleges that hundreds of claims were submitted for beneficiaries after they had died or otherwise ceased providing samples.

Taylor used the proceeds of the fraud to live a lavish lifestyle, including purchasing numerous luxury cars, real estate, jewelry and guitars, according to the indictment.

Taylor is charged with 16 counts of health care fraud, and one count of engaging in a monetary transaction in criminally-derived property. Each of the counts is punishable by a maximum penalty of 10 years in prison. He is scheduled for his arraignment on November 23 before the U.S. District Court for the Western District of Arkansas.