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OPKO Health, Inc. (OPK)
NasdaqGS - NasdaqGS Real Time Price. Currency in USD
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Sema4 agrees to acquire OPKO Health's GeneDx in ~$623M deal
Sema4 will make an upfront cash payment of $150M plus 80M in Sema4 shares. The deal also includes additional $150M revenue-based milestone payments over the next two years, payable in cash or Sema4 shares.
The total aggregate consideration, including potential milestones, is ~$623M.
In connection with the deal, Sema4 has entered into definitive agreements for a $200M private placement of its Class A shares from a syndicate of institutional investors, including Pfizer. The acquisition and the private placement are expected to close in Q222.
The acquisition will expand Sema4's portfolio of health intelligence and genomic screening offerings. GeneDx's expertise in rare disease diagnostic and exome sequencing services brings over 300,000 clinical exomes and over 2.1M expertly annotated phenotypes to strengthen Sema4's 12M de-identified clinical records for its Centrellis health intelligence platform and its Traversa genomic analysis platform for optimizing health screenings.
Together, Sema4 and GeneDx will become one of the largest and most advanced providers of genomic clinical testing in the U.S., with a projected $350M in pro forma 2022 revenue.
As part of the deal, GeneDx CEO Katherine Stueland will join Sema4 as Co-CEO, alongside Eric Schadt, and become a member of Sema4's Board of Directors. Additionally, Jason Ryan, a member of Sema4’s Board of Directors, will assume the role of Executive Chair of Sema4’s Board of Directors.
In other news, Sema4 has issued its FY22 outlook, expecting total revenue of $215M - $225M (23%-29% growth excluding revenue associated with COVID-19).
Phillip Frost, M.D., Chairman and CEO of OPKO, added: “We believe the sale of GeneDx to Sema4 will unlock untapped value and maximize the value of GeneDx for the benefit of OPKO shareholders. In addition to bolstering our cash position, we will have a significant equity stake in Sema4 at closing, ensuring OPKO and our shareholders continue to participate in the rapidly growing genomics market through a continued investment in GeneDx, which we believe is well positioned to deliver long-term success.”
Sure looks like OPKO is cleaning up BRL for a sale. A testing company or other acquirer is looking for a simple, cash cow, they can optimize and milk. GeneDx is way to flashy to be valued properly by such a company. Imagine what OPKO could do with the $3B they'd get from selling BRL.
They could buy back shares.
They could buy VBIV or COCP
They could sell the pharma business.
All of these options would unlock existing value.
$OPK This is a great deal and not only gives us an up front $150 million in cash but future royalties and a large equity stake in a growing business.
LONG & STRONG
***Frost wants $20+***
Frost in bed with PFE. Both agreed to boost OPK value to get top dollar for Opko. It's pennies for PFE and makes Frost happy.
Selling GenDx lowers expenses and raises earnings. Retiring bonds eliminates dilution and interest expense, and raises earnings.
Then Soma $$$, testing and earnings. All these extra $$$ = buyback announcement. Price heads towards the teens.
PFE buys SMFR within a few months at about $10. Opko shares continue to rise. Then PFE buys OPK at $20+.
This deal certainly puts the balance sheet on a very sound footing and they are very likely not done. There are
so many opportunities in small cap biotech, which has gotten pummeled, that they might be looking to get a deal done. The PFE angle is interesting but with this GeneX deal, they wouldn't want Bio Reference, which then begs the question, is Bio Reference next in the house cleaning?
Remember how the Boo Birds complained about OPKO's debt? OPKO IS NET DEBT FREE.
$150M from Sema4 plue $148M is cash and equivalents at the end of the THIRD quarter 2021 plus whatever positive cash they have from the FOURTH quarter 2021 adds up to MUCH MORE than the $244M reported debt at the end of the third quarter of 2021.
This deal provides several hundred millions of dollars of cash to the balance sheet which ensures continued operations without having to dilute the sharebase. We also know that Dr. Frost is in communication with larger companies who might be interested in buying out OPKO one day. What we know now is the balance sheet is flush with cash, no one needs to worry about OPKO going out of business and the cash received will be used not only to pay down debt but to grow the business. This is easily a 6-7 dollar stock.
this deal makes PERFECT sense for both companies having OPK owning this would of needed more capital to expand it to its full potential whereas Sema4 holds more pieces of the puzzle so to speak and by having this important piece is HUGE for them to obtain
It is so rare to see a company up over 5% with the overall market in the red. According to FINVIZ 80% of the market is in the red. No one is surprised however now that the company has several hundred million in cash from this recent deal. There is no doubt in my mind there will be more deals in the future and its possible the entire company could be sold to Pfizer or some other big pharma. Its to note that Pfizer would have to spend a lot more money to get to the same level as Opkos research so why not just buy out the whole thing?
Tuesday, January 18th was an exciting day for OPKO closing up $0.19 (4.2%) to $4.72 on a day when teh sale/merger of GeneDx with Sema4 was announced. OPKO to receive $150M, ~20% share of the merged company, as well as royalty payments.
I would never short OPK for a few reasons: heavy insider ownership,too low priced with real sales, over 1 B, has book value compared to a lot of promising but no financial power, cushioned by the more stable lab testing business. Ask myself: how many testing co besides LAPCORP and QUEST. To long shareholders ignored with the help of insiders to help mm to cap the price down.
10K for Sema4 merger with geneDx has been filed by OPKO:
"At Closing, Sema4 will pay to the Company aggregate consideration of $150.0 million in cash, together with 80.0 million shares (the “Closing Shares”) of Sema4’s Class A common stock, par value $0.0001 per share (“Sema4 Common Stock”), subject to a customary purchase price adjustment mechanism providing for a normalized level of working capital and that GeneDx be free of debt at Closing. Additionally, Sema4 has agreed to pay the Company up to an additional $150.0 million, which may be paid in Sema4 Common Stock, cash or a combination thereof in Sema4’s discretion, subject to GeneDx achieving certain revenue targets for the fiscal years ending December 31, 2022 and 2023 (the “Milestone Consideration”). If the Milestone Consideration in respect of the year ending December 31, 2022 becomes payable in full, then the Milestone Consideration conditionally payable in respect of the year ending December 31, 2023 is subject to acceleration in the event of a change in control of Sema4."
Frost's plan has aways been to sell the company. He just sold GeneDx. He will sell BRLI to Quest or Lab Corp. He will sell Rayaldee to Vivor. He will sell HGH to Pfiser. Maybe keep the rest and develop it or sell it off to Pfiser or do other partnerships. Either way he will cash out his shares for a high price. That is a given. The time has come folks.
The GeneDx transaction highlights several important facts: (1) PFE has confidence in OPKO, at least as far as it's subsidiary GeneDx and the HGH compound - impressive, (2) OPKO successfully sold a small part of the company for 1/5 of OPKO's total market cap -- impressive, (3) OPKO isn't afraid to buy or sell if they think they have a good deal -- which could mean the company is grooming for a sale of more units or the rest.
Good luck, longs.
I might add to my last post. Take a look at the stock market. Its down big. The Nasdaq is down over 2% as I write this. However, OPKO is managing to add 5% to its price despite a really bad stock market day. Everything I see is in the red except for OPKO. Eventually the stock market will pivot and when it does OPK will go even higher. IMHO, it would be up 10-20% today if it were not for the greater market being down.
OPK selling GeneDx to Sema4
Keep in mind:
Dow 30 35,368.47 -543.34(-1.51%)
Nasdaq 14,506.90 -386.86(-2.60%)
OPK was 1 of only a couple of stocks in the GREEN Today !
Back in 2017 Frost said they would consider selling BioRef once they turned the company around and made if profitable. The GeneDx deal proves they are in sell mode and ready to unlock the value they have created. Look for a deal to come to furition to sell BioRef to Lab Corp and Quest. This one is a no brainer.
This shows that frost is ready to make deals. Clearly OPK is being primed for sale via various deals. Bio ref could be sold to quest or labcorp. Leaving hgh to Pfizer. Sum of the parts should in theory make up the $18 sell price Frost eluded to years back.
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