- Exact Sciences and Genomic Health where the two companies will be combined for $72 per share in a $2.8 billion deal
Exact Sciences and Genomic Health have announced a definitive agreement under which Exact Sciences will combine with Genomic Health for $72 per share in a cash and stock transaction valued at $2.8 billion. The transaction — which has been unanimously approved by the boards of directors of both companies — is expecting the deal to be completed by the end of 2019.
As a combined company, Exact Sciences and Genomic Health will create a leading global cancer diagnostics company. And the combined company will offer two of the strongest and fastest-growing brands in cancer diagnostics, Cologuard, and Oncotype DX thus providing a robust platform for continued growth.
With the enhanced platform — including a commercial presence in more than 90 countries — the combined company is expecting to continue to increase adoption of current tests and to bring new innovative cancer diagnostics to patients throughout the world.
The combined company expects to generate revenue of approximately $1.6 billion and a gross profit of approximately $1.2 billion in 2020 on a pro forma basis. And additionally, the combination is expected to generate annualized cost synergies of approximately $25 million within the third full year following close primarily through reducing public company costs and purchasing optimization.
“Uniting the best minds and molecular diagnostics capabilities will advance the fight against cancer. Combining industry pioneers Exact Sciences and Genomic Health is a pivotal step toward building the leading cancer diagnostics company in the world,” said Kevin Conroy — the chairman and CEO of Exact Sciences. “Exact Sciences is continuing to grow sales and expand adoption of Cologuard at a rapid pace, and Genomic Health’s Oncotype DX is the global standard of care to inform treatment decisions for women with breast cancer. Together, with our collective resources and broader platform, we will be able to provide our existing tests to more people, while also accelerating the development and launch of future cancer diagnostic tests. We are excited to join together two teams who are united in their dedication to making a positive impact on patients’ lives.”
“We are very pleased to join forces with Exact Sciences, a company and team with which we have a shared vision to revolutionize the way cancer is diagnosed and treated,” added Kim Popovits — the chairman of the board, CEO, and president of Genomic Health. “Genomic Health has achieved incredible success over nearly two decades in pioneering cancer diagnostics, and the recent landmark TAILORx trial results set a new standard of care for the use of the Oncotype DX test for women with early-stage invasive breast cancer. This transaction provides immediate value to Genomic Health stockholders through an upfront cash payment, as well as ownership in a combined company with enhanced financial strength and the commercial and R&D capabilities to continue to drive significant growth into the future.”
Exact Sciences’ Cologuard has a total available U.S. screening market of $15 billion with an additional potential $3 billion opportunity among people ages 45-91. And to date, Cologuard has captured less than 6% of the large addressable market of people over 50 years old and is rapidly building on its 174,000 health care provider customer base with a goal of reaching 40% share of the market over the long-time. In the second quarter of 2019, Cologuard revenue grew 94% year-over-year.
Genomic Health’s Oncotype IQ portfolio is known for guiding personalized treatment decisions for more than one million cancer patients worldwide and it delivered more than 19% year-over-year overall revenue growth in the second quarter of 2019. And Genomic Health estimates that its Oncotype DX suite of products in oncology and urology have a total available market of $2 billion.
The combined commercial organization will have over 1,000 team members inclusive of sales, marketing and reimbursement teams. And the combined company will have the resources to support a high level of investment in R&D — which will support the development of innovative products across the diagnostic paradigm, including the ongoing work to identify proprietary biomarkers across the world’s 15 deadliest cancers while continuing to advance the adoption of current products. Plus the combined company will have a commercial presence in more than 90 countries and expanded reach across primary care, oncology, OB/GYN, gastroenterology, and urology to support the growth of existing and future cancer tests.
As part of the deal, for each share of Genomic Health common stock they own, Genomic Health stockholders will receive $27.50 in cash and $44.50 in shares of Exact Sciences stock subject to a 10% collar centered on Exact Sciences’ volume-weighted average price for the 45 trading days ended July 26, 2019. This deal represents a premium of approximately 19% to Genomic Health’s volume-weighted average price (“VWAP”) for the last 30 trading days. Upon the closing of the deal, Exact Sciences shareholders are expected to own approximately 91% of the combined company and Genomic Health stockholders are expected to own approximately 9%.
