Cepheid to acquire LABSCO's customer relationships for $21M

Cepheid (NASDAQ: CPHD) today announced that, effective today, it has entered into a purchase agreement to acquire the customer relationships from its former distribution partner, the Laboratory Supply Company (LABSCO). LABSCO has partnered with Cepheid since early 2012 to drive adoption of the GeneXpert® System in US hospitals with fewer than 150 beds, which increased Cepheid's installed base in the segment by approximately 200 customers.

"While LABSCO has been a valued partner for the last three years, the current scale of our commercial operations and our strategic focus on customers of all sizes has led us to conclude that now is the right time to step up our commitment to the smaller hospital market," said John Bishop, Cepheid's Chairman and Chief Executive Officer. "With 14 different tests readily available for the platform today, and additional tests expected in the near-term, the GeneXpert System is more relevant and accessible to customers of all sizes than ever before. Further, the unique scalability of the GeneXpert System makes it an excellent choice for smaller hospitals operating on a stand-alone basis or as part of a consolidated group. We look forward to the opportunity to support, first-hand, these hospitals' commitments to ever higher standards of patient care and efficiency."

The purchase price is $21 million for the acquisition of the customer relationships established by LABSCO, subject to certain upward and downward purchase price adjustments. As part of the purchase agreement, Cepheid terminated its prior distribution agreement with LABSCO, which was otherwise scheduled to end on December 31, 2014. The prior agreement also contained obligations regarding future sales to existing customers which have also been terminated as part of this transaction.