Meridian Bioscience, Inc. (NASDAQ: VIVO), a provider of
diagnostic testing solutions and life science raw materials, today
announced it has entered into a definitive agreement to acquire the
business of GenePOC Inc., a Quebec City, Quebec, Canada based
provider of molecular diagnostic instruments and assays. Founded in
2007, GenePOC has approximately 100 employees and generated total
revenues of less than $1 million in calendar 2018. Meridian has
agreed to make a cash payment at closing of the transaction of $50
million with future payments totaling up to an additional $70
million contingent upon the successful achievement of certain
technical development milestones and sales thresholds.
Strategic Fit and
Rationale
With the acquisition, Meridian will be getting GenePOC’s
state-of-the art revogeneTM molecular diagnostics platform, which
offers sample to result testing for single tests, as well as
flexible multiplexing capability. The Company believes revogeneTM
is a perfect fit with Meridian’s stated strategy to provide
gastrointestinal disease and core respiratory illness diagnostics
solutions for the diverse needs of complex medical health systems.
revogeneTM is an FDA-cleared platform that currently has three
FDA-cleared assays, including C. difficile, Group A Strep, and
Group B Strep. Those three assays comprise a vast majority of
Meridian’s current total molecular diagnostics sales, thus enabling
it to immediately offer this new platform and technology to
existing customers seeking better workflow and less hands-on time
than Meridian’s current AlethiaTM molecular platform can provide.
Over time, through its multiplexing capability, revogeneTM is
expected to allow Meridian to also offer its customers smart panel
solutions currently in development and planning.
Jack Kenny, Chief Executive Officer, commented, “We are very
excited to be adding the GenePOC technology and team to Meridian.
GenePOC provides an exciting new state-of-the-art molecular
diagnostics platform to our Diagnostics portfolio. This is a
critical element of our strategy to re-position our Diagnostics
business for sustainable long-term growth. GenePOC’s revogeneTM
platform is an excellent fit for our customers and strategy to
offer gastrointestinal-focused and other targeted diagnostic
solutions to meet the diverse needs of today’s more complex health
care system. We welcome the GenePOC team to the Meridian family and
look forward to leveraging Meridian’s strong and established
commercial infrastructure to offer revogeneTM and its menu of
assays to our current and new customers.”
Summary Transaction Terms and
Impact
The cash-free/debt-free purchase price has a maximum potential
value of $120 million, with $50 million to be paid at closing
(subject to a holdback and working capital adjustment), subsequent
payments of up to $20 million in Meridian’s fiscal 2021 based on
the achievement of certain technical development milestones, and a
final payment of up to $50 million in fiscal 2023 based on both the
sales performance of certain molecular assays and their achievement
of minimum profit margin thresholds.
Excluding amortization expense, the Company expects the
transaction to add approximately $4 - $5 million in operating
expenses in fiscal 2019 and $9 - $10 million in fiscal 2020, both
net of planned cost synergies. R&D Teams in both Quebec City
and Cincinnati will continue and ramp up work to develop new assays
for revogeneTM and meaningfully expand the menu of product
offerings. As a result, the Company expects R&D expense in the
Diagnostics business to increase to the mid-teens as a percent of
sales. The Company expects the transaction to provide a net
positive contribution to run rate molecular sales and Company
EBITDA starting in fiscal 2021.
The transaction is subject to certain closing conditions of a
transaction of this nature. PNC Bank has committed financing and
will lead with Fifth Third Bank a transaction for a new $125
million revolving line of credit to finance the acquisition and
re-finance Meridian’s current outstanding debt. The acquisition
will also be financed with cash. The Company expects the
transaction to close no later than early fourth quarter of fiscal
2019.
Conference Call
Meridian is holding a conference call at 10:00 a.m. Eastern Time
today to review the transaction and answer questions, as well as
report its fiscal second quarter results. To participate in the
live call by telephone from the U.S., dial (866) 443-5802, or from
outside the U.S., dial (513) 360-6924, and enter the audience pass
code 3893028. A replay will be available for 14 days beginning at
1:00 p.m. Eastern Time on April 30, 2019 by dialing (855) 859-2056
or (404) 537-3406 and entering pass code 3893028.
Cautionary Statement Regarding Forward-Looking
Statements
Certain statements in this communication regarding the proposed
acquisition of the business of GenePOC by Meridian, including any
statements regarding the synergies, benefits and opportunities of
the transaction, future opportunities for the combined company and
products, future financial performance and any other statements
regarding Meridian's future expectations, beliefs, plans,
objectives, financial conditions, assumptions or future events or
performance that are not historical facts are "forward-looking"
statements made within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended. The words "anticipate," "believe,"
"ensure," "expect," "if," "intend," "estimate," "probable,"
"project," "forecasts," "predict," "outlook," "aim," "will,"
"could," "should," "would," "potential," "may," "might,"
"anticipate," "likely," "plan," "positioned," "strategy," and
similar expressions, and the negative thereof, are intended to
identify forward-looking statements.
All forward-looking information is subject to numerous risks and
uncertainties, many of which are beyond the control of Meridian,
that could cause actual results to differ materially from the
results expressed or implied by the statements. These risks and
uncertainties include, but are not limited to: the diversion of
management time on transaction-related issues; ability to
successfully integrate the businesses; risk that the transaction
and its announcement could have an adverse effect on the parties’
ability to retain customers and retain and hire key personnel; the
risk that any potential synergies from the transaction may not be
fully realized or may take longer to realize than expected; and
risks inherent in funding, developing and obtaining regulatory
approvals of new, commercially-viable and competitive products. In
addition, forward-looking statements may also be adversely affected
by general market factors, competitive product development, product
availability, federal and state regulations and legislation, the
regulatory process for new products and indications, manufacturing
issues that may arise, patent positions and litigation, among other
factors. The forward-looking statements contained in this
communication may become outdated over time. Meridian does not
assume any responsibility for updating any forward-looking
statements. Additional information concerning these and other
factors can be found in Meridian's filings with the SEC and
available through the SEC's Electronic Data Gathering and Analysis
Retrieval system at www.sec.gov, including Meridian's most recent
Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and
Current Reports on Form 8-K. The foregoing list of important
factors is not exclusive. Meridian assumes no obligation to update
or revise any forward-looking statements as a result of new
information, future events or otherwise, except as may be required
by law. Readers are cautioned not to place undue reliance on these
forward-looking statements that speak only as of the date
hereof.
About Meridian Bioscience, Inc.
Meridian is a fully integrated life science company that
develops, manufactures, markets and distributes a broad range of
innovative diagnostic products. We are dedicated to developing and
delivering better solutions that give answers with speed, accuracy
and simplicity that are redefining the possibilities of life from
discovery to diagnosis. Through discovery and development, we
provide critical life science raw materials used in immunological
and molecular tests for human, animal, plant, and environmental
applications. Through diagnosis, we provide diagnostic solutions in
areas including gastrointestinal and upper respiratory infections
and blood lead level testing. We build relationships and provide
solutions to hospitals, reference laboratories, research centers,
veterinary testing centers, physician offices, diagnostics
manufacturers, and biotech companies in more than 70 countries
around the world.
Meridian’s shares are traded on the NASDAQ Global Select Market,
symbol VIVO. Meridian’s website address is
www.meridianbioscience.com.
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Jack KennyChief Executive OfficerMeridian Bioscience, Inc.Phone:
513.271.3700Email: mbi@meridianbioscience.com
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