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Sonic Healthcare (ASX:SHL) share price struggles despite US acquisition

Sonic is making an acquisition
The post Sonic Healthcare (ASX:SHL) share price struggles despite US acquisition appeared first on The Motley Fool Australia. –

It isn’t just Healius Ltd (ASX: HLS) announcing an acquisition today, rival Sonic Healthcare Limited (ASX: SHL) has also announced one this morning.

And just like the Healius share price, this hasn’t stopped the Sonic share price from dropping into the red.

Sonic’s shares are down almost 1% to $43.87 at the time of writing.

Sonic share price lower despite US acquisition

This morning Sonic announced the acquisition of US-based medically led anatomical pathology company, ProPath for an undisclosed fee. The deal will be funded from cash and available debt lines and be immediately earnings per share accretive.

According to the release, ProPath was established in 1966 and currently generates annual revenue of US$110 million. It has a team of ~50 pathologists and serves over 1,000 physicians and more than 20 hospital groups across 45 States.

Management believes the acquisition of ProPath is a very significant additional step in the ongoing development of Sonic’s anatomical pathology and clinical laboratory operations in the US. It also expects it to support the company’s long-term strategy of integrating the disciplines of anatomical pathology and clinical laboratory testing together as a seamless service in the USA.

This certainly is a worthy market to target. The release notes that the US anatomical pathology market is estimated to be in excess of US$10 billion per annum. This is in addition to the >US$70 billion clinical laboratory market. Positively, Sonic is already one of the largest participants following previous acquisitions, including the Aurora Diagnostics transaction in 2019.

Sonic Healthcare’s CEO, Dr Colin Goldschmidt said: “Together with Dr Jerry Hussong, CEO of Sonic Healthcare USA, I am delighted to warmly welcome the entire ProPath team to Sonic Healthcare. ProPath has an outstanding reputation as a top-quality pathology company, with outstanding pathologists, managers and staff who have driven strong organic growth over decades based on clinical expertise and focus on physician and patient satisfaction. The cultural alignment between ProPath and Sonic, centred on Medical Leadership, will ensure the success of the integration and promote positive outcomes for the whole of Sonic Healthcare USA.”

The post Sonic Healthcare (ASX:SHL) share price struggles despite US acquisition appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Sonic Healthcare Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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