Just a month ago, we reported on molecular-diagnostics firm Invitae (NYSE: NVTA), and its interest in the eHealth sector, following the acquisition of two digital health companies. In July, the company set its sights on other laboratory companies and announced two more acquisitions.
Invitae also separately announced that it will sell $73.5 million of its stock through a private placement to be led by existing investors with “significant” participation from multiple new investors, all unnamed.
Invitae is one of the fastest growing genetic information companies in the United States, whose longer-term strategy is to aggregate most of the world’s genetic tests into a single service with higher quality, faster turnaround time, and lower price than many single-gene and panel tests today.
On July 31, 2017, Invitae acquired Good Start Genetics, a molecular diagnostics company that provides carrier screening and preimplantation embryo testing. The seller, Safeguard Scientifics (NYSE: SFE), is a private equity and venture capital firm. Good Start was the first to bring next-generation sequencing to reproductive health and, with its three primary product lines, has processed 1.7 million tests since its commercial launch in 2012.
Invitae will issue up to 1.65 million shares of its common stock, and approximately $18.3 million in cash consideration to eliminate Good Start’s outstanding secured debt, and the assumption of approximately $6.0 million in Good Start liabilities, for a total consideration of $29.4 million.
Safeguard deemed its Good Start investment a “significant shortfall,” based on return expectations. But, considering the anticipated time and cost required to introduce additional technologies and tests into adjacent markets and to further develop Good Start, a larger, more financially capable enterprise focused on genetic testing was crucial to move forward.
That same day, Invitae acquired CombiMatrix Corporation, which provides miscarriage analysis testing and DNA-based testing for the detection of genetic abnormalities beyond what can be identified through traditional methodologies for use in preimplantation genetic diagnostics, carrier screening, prenatal diagnosis, miscarriage analysis and the diagnosis of pediatric developmental disorders.
Invitae paid approximately $33 million of combined consideration, based on a fixed price per share of Invitae’s common stock of $9.49 and subject to certain adjustments. Based on CombiMatrix’s annualized 2017 revenue, the revenue multiple works out to 2.17x.
The acquisition of CombiMatrix was announced concurrently with Invitae’s acquisition of Good Start, and will complement Invitae and Good Start’s genetic information services to establish a category-leading menu with the breadth and depth needed to provide comprehensive support for women, their partners and clinicians to use genetic information when considering their reproductive health options.
