Guardant Health Decides Against Buying NeoGenomics

(Bloomberg) -- Guardant Health Inc. has decided not to pursue a potential acquisition of rival medical testing company NeoGenomics, according to people familiar with the matter.

Guardant had hoped to use a tie up with NeoGenomics as a way to boost its reach into community cancer facilities, typically smaller, local clinics where most cancer patients are treated, the people added, asking not to be identified because the matter is private.

But the Redwood City-California based company decided against the deal over the weekend, the people said.

Specifics about the decision to abandon talks with Fort Myers, Florida-based NeoGenomics couldn’t immediately be learned. 

However, Guardant’s shares fell nearly 20% Friday after Bloomberg News reported on the discussions. Guardant ended trading Friday with a market value of about $10.8 billion while NeoGenomics was worth about $6 billion.  

Representatives for Guardant and NeoGenomics couldn’t immediately be reached for comment. 

Before the talks fell apart, SVB Leerink’s Puneet Souda noted that a combination would be positive for Guardant and strengthen its business in pathology but that it would also dilute the company’s growth and margins.

While it is possible talks could restart, the need for Guardant to use significant amounts of its own stock to fund such a deal -- and the unusually negative reaction to the prospect -- could prove too great a deterrent.

Guardant will instead focus on its efforts on delivering early cancer screening tools, a highly lucrative market in which the company already has ongoing trials. 

Guardant was bullish about the trial of its colorectal cancer screening product during an August earnings call and outlined ambitions to become a leader in the more than $50 billion early screening market. 

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