Genoptix Inc., a cancer testing company, put itself up for sale, said two people with knowledge of the process. The shares gained 17 percent.
Genoptix hired Barclays Plc to run an auction, said the people, who declined to be identified because the matter is private. Genoptix, based in Carlsbad, California, had a market value of about $369 million at the close of trading today.
Genoptix provides laboratory tests and services to doctors for diagnosing cancer. Sales have been hurt by unemployment in the U.S, which has reduced the number of patients seeking care from blood specialists and cancer doctors who use the tests, said Amanda Murphy, an analyst at William Blair & Co. in Chicago.
“Given the recent difficulties the company has faced from a competitive standpoint and the recent increase in M&A transactions in the lab space, I am not surprised Genoptix would be seeking alternative options,” Murphy said in an e-mail.
Genoptix increased $3 to $20.98 at 4 p.m. New York time in Nasdaq Stock Market composite trading, for the biggest single-day gain since Nov. 7, 2008. The stock fell 49 percent this year before today.
Genoptix is currently trading at 7.8 times earnings before interest, tax, depreciation and amortization, higher than the median premium of 6.1 times ebitda paid for publicly traded U.S. diagnostics companies acquired over the past five years.
Quest Diagnostics Inc., based in Madison, New Jersey, and Sydney-based Sonic Healthcare Ltd. are among companies that may be interested in acquiring Genoptix, Murphy said.
“As a policy, we do not comment on rumors or speculation about M&A activity,” Wendy Bost, a Quest Diagnostics spokeswoman, said in an e-mail. Colin Goldschmidt, Sonic Healthcare’s chief executive, didn’t respond to an e-mail seeking comment.
Marcy Graham, executive director of investor relations for Genoptix, declined to comment in a telephone interview.
The market for specialized medical tests is about $1.5 billion, Murphy said. Genoptix reported net income of $30.6 million on revenue of $184 million last year. “Complicating any sale is the dramatic company growth deceleration and long-term questions on pricing stability,” Stephen Shankman, an analyst at UBS Investment Research in New York, wrote in a note to investors yesterday.
Genoptix’s sales may grow only 5.5 percent, to $194.5 million in 2010 after jumping nearly 59 percent in 2009, Shankman said in his note.
There have been 185 acquisitions in the U.S. medical lab and test services business in the past five years, with an average disclosed price of $66.5 million, according to data compiled by Bloomberg. Sonic was the industry’s busiest purchaser, announcing seven U.S. acquisitions during that time.