$2.8 billion deal will bring together cancer screening and other diagnostic tests.
The companies that make the Cologuard at-home fecal DNA test for colorectal cancer (Exact Sciences) and Oncotype DX assays for breast and prostate cancer (Genomic Health) will be combining forces in the near future. Exact Sciences has agreed to pay $2.8 billion in total ($1.1 billion in cash and $1.7 billion in stock) for Genomic Health.
The deal has been approved by the boards of both companies and is expected to close by the end of 2019. When combined, the new entity will have approximately 1,000 employees working to support existing and developmental cancer screening and other diagnostic test products. Company execs predict that these assets will generate annual revenues of at least $1.6 billion by the end of 2020 and a gross profit of $1.2 billion by next year.
The company has penetrated less than 10% of the market for the screening of solid tumors, which it estimates presents a market opportunity of approximately $20 billion. The joining of the two businesses is also expected to provide synergies worth approximately $25 million within three years.