EKF Diagnostics Holdings plc (AIM: EKF), the AIM-listed point-of-care business, announces that it has agreed to acquire, pursuant to the terms of a securities purchase agreement dated 27 September 2021 (“SPA”), the entire issued capital of Advanced Diagnostic Laboratory LLC (“ADL Health”), a Texas based PCR-focused testing laboratory certified under the Clinical Laboratory Improvement Amendments (“CLIA”) for high complexity testing, for an initial consideration payment of $10 million payable in shares on completion, with further performance-based consideration payable over the following three years as detailed below (the “Acquisition”).
ADL Health’s CLIA-certified laboratory covers the fields of clinical, forensic and microbiological tests. The business has ISO 15189 Medical Laboratory accreditation giving it recognition in 44 countries and reflecting ADL Health’s commitment to high standards. Using its expertise in Polymerase Chain Reaction (PCR) testing, ADL Health also provides COVID testing needs for dozens of Fortune 500 companies and government agencies. In addition, ADL Health is expanding its range of testing capabilities across a broader suite of healthcare applications. Under EKF’s ownership, further investment is anticipated to support the deployment of additional equipment and personnel in order to service customer demand.
ADL Health was founded in May 2020 by a management team with over 60 years’ experience in the diagnostics field. Unaudited management accounts for the six months to 30 June 2021 showed revenue of $6.3 million and earnings before interest, taxes, depreciation and amortisation (“EBITDA”) of $2.6 million. ADL Health has grown significantly since inception and the management teams of EKF and ADL Health consider that the business has continuing, strong growth prospects as part of the enlarged EKF Group. While the growth of ADL Health has been accelerated by revenue from COVID testing, its wider testing offer, including current and planned capabilities, is considered by the EKF Board to provide an attractive platform to both complement and broaden the Group’s existing diagnostics capabilities.
The ADL Health business is cash generative and the Acquisition is expected to be immediately earnings enhancing. The initial share-based consideration is subject to a two-year lock-up, with earnout payments subject to lock-up and orderly market arrangements, as described below.
Mike Salter, President of EKF Diagnostics' Americas and Chief Executive Officer Designate of EKF, commented: “We are delighted to have agreed terms for the acquisition of ADL Health and believe this represents a highly attractive and earnings accretive transaction. Strategically this is an excellent move for us as it positions EKF as a leading provider of diagnostic products and services, including a testing offering that our industry partners have been looking for us to provide.
“The ability to offer testing for a wide range of diseases, combined with our existing point-of-care device, reagent, sample collection, kitting and manufacturing services, positions us as a single provider able to encompass all products and services from ‘sample-to-result’.
“It is also reassuring to EKF’s shareholders that the vendors of ADL Health have been willing to accept all of the up-front consideration in shares, with further paper available as part of the earnout structure. This reflects their confidence in our shared vision for the future of the enlarged business and EKF’s recently revised strategy for accelerated growth.”
Stanley Crawford III, COO and Founder of Advanced Diagnostic Laboratory added: “We are excited to become a member of the EKF Diagnostics family. The combination of a premier CLIA lab with a powerhouse such as EKF not only creates a whole new capability for the Group but also provides the combined Group compelling opportunities to drive growth by meeting more of our clients’ needs.”
EKF Diagnostics Holdings plc
Christopher Mills, Non-Executive Chairman
Julian Baines, CEO
Richard Evans, FD and COO
Tel: 00 44 29 2071 0570
N+1 Singer (Nomad & Broker)
Aubrey Powell / George Tzimas (Corporate Finance)
Tom Salvesen (Corporate Broking)
|Tel: 020 7496 3000
Walbrook PR Limited
|Tel: 020 7933 8780 or [email protected]
Mob: 07980 541 893 / 07584 391 303