If it’s true that 70% or more of medical decisions are made based on diagnostic testing results, then one can assume that the Laboratory, MRI & Dialysis sector is at the crossroads where fee-for-service and value-based reimbursements meet. Although this sector isn’t the largest in transaction volume and dollars spent relative to other markets, mergers and acquisition activity has picked up in 2016, as these lines of business adjust to changes in technology.
Since 2014, there have been 104 acquisitions, and $21.8 billion (of disclosed prices) spent in the Laboratory, MRI & Dialysis sector (33 in 2014; 52 in 2015; and 19 as of June 30, 2016). The largest players buying up laboratory firms are other laboratory companies, which accounted for 67 of the 104 acquisitions. Some of the most prolific acquirers are Aurora Diagnostics, Eurofins Scientific SA (Paris: ERF), and Schryver Medical LLC, formerly Schryver Medical Sales and Marketing, LLC.
Schryver Medical LLC, a portfolio company of Revelstoke Capital Partners since July 2014, has continued its buy-and-build approach on its way to becoming a national provider of diagnostic services to the post-acute care market. Based in Denver, Colorado, Schryver’s services include imaging, ultrasound, laboratory medical waste, and respiratory and oxygen services.
Schryver’s buying spree began in January 2015 with its purchase of Quality Mobile X-Ray Services, a private, Tennessee-based provider of mobile X-ray, ultrasound and other diagnostic services. In July 2015, Schryver announced the acquisition of two more companies; Main Street Clinical Laboratory and On-Site Imaging Solutions. Main Street was a privately held, Mississippi-based CLIA certified laboratory. On-Site was a privately held, Arkansas-based mobile imaging center that provides services to nursing homes, hospice centers, correctional facilities and home health patients.
Schryver expanded its presence to the West Coast in August 2015 with its acquisition of BON Clinical Laboratories, a Nevada-based company with labs in Nevada and California. In December 2015, the company announced its acquisition of two more mobile imaging services, both based in Texas: MetroStat Clinical Laboratory and MetroStat Diagnostic Services (collectively MetroStat) and Community Portable X-Ray. These transactions, announced concurrently, marked Schryver’s entrance into the Texas market.
Integrating those acquisitions took some time, as Schryver didn’t announce another deal until the end of June 2016. Professional Clinical Laboratories, Inc. became its seventh acquisition since Revelstoke’s majority stake investment. The target is another privately held, Texas-based company which provides real-time laboratory services and results to skilled nursing facilities in Alabama, Mississippi, Oklahoma and Texas. Given its track record, we expect at least one more acquisition by December.