Original from: Financial Times
A diagnostics company behind one of the best-known rapid Covid-19 tests has put its point-of-care testing unit up for sale, aiming at a valuation of $1.5bn, as private equity buyers eye opportunities in the healthcare and life sciences sectors.
QuidelOrtho, a San Diego-based diagnostics group with a $940mn market capitalisation, is weighing bids from private equity groups including Advent International for its point-of-care testing division behind rapid antigen tests for Covid and flu, according to people familiar with the matter.
Smaller private equity buyers including SK Capital Partners and Archimed have also expressed interest in the unit, which makes rapid tests for a range of respiratory viruses as well as certain cardiac problems, the people added.
The sale process is aimed at helping QuidelOrtho to grapple with its $2.6bn net debt pile left over from Quidel’s 2021 acquisition of Ortho Clinical Diagnostics, a former Johnson & Johnson diagnostics unit, from Carlyle, in a deal which valued the target company at $8bn including $2bn of debt.
QuidelOrtho’s enterprise value including debt stood at about $3.5bn at Friday’s close. Its debt load totalled 4.2 times earnings.
Shares in QuidelOrtho are down nearly 90 per cent over the past five years. The group flourished during the Covid pandemic, in which its rapid antigen tests were the first of their kind to be approved by the US Food and Drug Administration and became a key part of the public health response, pushing its market capitalisation to all-time highs of close to $20bn.
QuidelOrtho was hoping its point-of-care testing unit could fetch as much as $1.5bn, the people said. The unit generated some $150mn in earnings before interest, taxes, depreciation and amortisation last year. While the sale process is at an advanced stage, there are no guarantees that QuidelOrtho will decide to offload the unit.
The sale process comes as private equity buyers hunt for opportunities across the healthcare and life sciences sector, despite a slower pace of sponsor-backed deals because of stubbornly high interest rates.
Last year, TPG and Blackstone struck an $18.3bn deal to take medical technology group Hologic private. Earlier this month, Thoreau, an investment vehicle founded by former New Mountain Capital president Matt Holt, struck a deal to buy a 51 per cent controlling stake in Ensemble Health Partners, valuing the healthcare software group at $11.75bn, according to separate people familiar with the matter.
QuidelOrtho and Advent declined to comment. SK Capital and Archimed did not respond to multiple requests for comment.
Source: QuidelOrtho looks to sell testing unit as PE circles healthcare companies
