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📌 Main takeaway:
Key takeaways
- Abbott Laboratories has agreed to acquire Exact Sciences Corp. In a $21 billion deal, it pays shareholders $105 per share.
- Exact Sciences makes a variety of cancer screening tests, including Cologuard, and expects to generate revenue of about $3 billion this year.
- Many pharmaceutical companies spend billions to develop tests and treatments for a variety of cancers, with millions of people diagnosed with cancer each year.
Shares of Exact Sciences Corp. rose. (EXAS), which makes cancer screening tests, on Thursday after Abbott Laboratories (ABT) announced a deal to acquire the company for about $21 billion.
Abbott said Thursday it will pay $105 per share to Exact Sciences shareholders and expects to close the deal in the second quarter of next year.
Exact Sciences manufactures a range of cancer screening products, including Cologuard and other tests. Abbott said in its press release that the “precision cancer screening and diagnostics” market in the United States has a total value of about $60 billion.
In its latest quarterly report earlier this month, Exact Sciences said it had revenue of $851 million in the third quarter and raised its full-year revenue forecast to a range of $3.22 billion to $3.235 billion.
Why is this important to investors?
Some of the world’s largest pharmaceutical companies have spent billions expanding their own efforts or licensing and acquiring other companies developing treatments, vaccines and screenings for various types of cancer. Target companies with innovative and promising products can command high prices, which pays off handsomely for shareholders.
Before the announcement, Oppenheimer analysts wrote that the reported potential deal made sense for Abbott at a fundamental level, but said how the deal was financed would likely matter more to Abbott in the long term, as paying a high valuation could make the deal less attractive to investors.
Globally, studies have estimated that the cancer screening market was worth more than $100 billion last year, and is expected to grow 6% to 8% annually over the next several years as the population continues to expand, and the number of people diagnosed with cancer increases as well. In the press release, Abbott said about 2 million people in the United States and 20 million people globally are diagnosed with cancer each year.
Shares of Exact Sciences rose 17% to just under $101, closing at a four-year high. The stock is up nearly 80% since the start of 2025.
Abbott shares ended the day down about 2%. The stock is up 10% this year, underperforming the S&P 500.
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