Abbott Laboratories recently announced a monumental $21 billion acquisition deal with cancer test maker Exact Sciences. This strategic move is aimed at strengthening Abbott’s diagnostic division, which has faced a decline in revenue due to reduced demand for Covid-19 tests in recent years.
During the peak of the Covid-19 pandemic, Abbott Laboratories emerged as a key player in the global fight against the virus by supplying Covid tests and testing kits. However, as government funding for Covid testing dwindled and insurance coverage decreased with the decrease in Covid cases, Abbott’s diagnostic sales took a hit. In the third quarter of this year, Abbott’s total diagnostic sales were reported at only $2.2 billion, a significant drop from the $8 billion generated from Covid test sales alone in 2022.
The impact of the Trump administration’s decision to dismantle the US Agency for International Development (USAID) also contributed to Abbott’s diagnostic sales decline. This move resulted in the cancellation of contracts with pharmaceutical and diagnostic companies like Abbott, which had been instrumental in saving lives around the world through their tests and drugs.
Analysts at TD Cowen highlighted the challenges faced by Abbott’s diagnostic division, citing Covid test roll-offs, USAID defunding, and pressures from China’s Value-Based Purchasing (VBP) policies as factors affecting organic growth. The acquisition of Exact Sciences is seen as a strategic solution to address this growth deficit.
Exact Sciences is projected to generate over $3 billion in revenue this year, with a high teens organic sales growth rate. Once the acquisition is finalized, Exact Sciences will operate as a subsidiary of Abbott, boosting Abbott’s total diagnostics sales to over $12 billion annually.
In acquiring Exact Sciences, Abbott aims to revolutionize cancer care by enhancing early detection, optimizing treatment, and monitoring to improve the lives of millions. Exact Sciences’ product portfolio includes innovative cancer screening and diagnostic products like Cologuard and Oncotype DX tests, as well as cutting-edge liquid biopsy tests for multi-cancer early detection and molecular residual disease testing.
Abbott’s chairman and CEO, Robert B. Ford, expressed excitement about the partnership, emphasizing Exact Sciences’ strengths in the cancer diagnostics space and their alignment with Abbott’s mission to address global health challenges. The terms of the deal involve Exact Sciences shareholders receiving $105 per common share, totaling an equity value of $21 billion, with the transaction expected to close in the second quarter of 2026.
Kevin Conroy, chairman and CEO of Exact Sciences, expressed optimism about the collaboration with Abbott, highlighting the potential to reach more patients, advance early detection, and make a significant impact in the fight against cancer. Conroy will continue to serve as an advisor to Abbott post-acquisition, as both companies work towards eradicating cancer and expanding access to life-saving tests worldwide.
