IN ONE SENSE, WE CAN SAY THAT THE DECADE OF 2001 THROUGH 2010 was bookended by two one-half billion dollar anatomic pathology acquisitions. Each transaction was a powerful signal to Wall Street investors. Unfortunately, most pathologists are not tuned into that signal and so continue to miss the message.
It was back in 2002 when Laboratory Corporation of America stepped up and purchased Dianon Systems, Inc., for the sum of $578 million. At that time, Dianon had annual revenue of around $190 million. LabCorp thus paid a bit more than three times annual revenue to acquire Dianon.
The willingness of Labcorp to spend almost two-thirds of a billion dollars to buy an anatomic pathology company that tested biopsies referred by office-based physicians became a milestone event for the pathology profession. It captured the attention of Wall Street investors and caused lots of investment dollars to flow into the anatomic pathology marketplace throughout the past decade.
Now, in 2010, we have the other bookend. General Electric (GE) has agreed to pay $587 million to purchase Clarient, Inc., a company which just barely produced $100 million in revenue for 2009 and posted a $10 million loss that same year. Already, investors are asking, “what does GE know about anatomic pathology, molecular diagnostics, and genetic testing that we don’t?”
This old curmudgeon has lived through any number of bull and bear stock markets. So take that into consideration when I say that GE’s acquisition of Clarient is likely to be an even more optimistic portent about the rosy future of anatomic pathology than was LabCorp’s purchase of Dianon Systems back in 2002. It will pay every pathologist to understand which propietary strategies GE intends to pursue—and how the Clarient acquisi- tion enables those strategies.
It is not often that the world’s major healthcare corporations make billion-dollar bets on the wrong thing. Labcorp’s bet on Dianon in 2002 turned out well for it. Now GE has placed its own bet on Clarient. Thus, independent pathology group practices should stay alert to these unfolding events and use them to craft effective clinical and business strategies. With the rapid advances in molecular diagnostics and genetic testing, anatomic pathology is likely to become the new gold mine in medicine. Pathologists should be first to tap that gold mine for clinical and financial success.