Sonic Healthcare has made its first two U.S.-based acquisitions for 2009—Tampa, Fla.-based Axiom Laboratories and Piedmont Laboratories, which is based in Winchester, Va. The combined purchase price for both labs is an up-front cash payment of $20 million, in addition to a performance-based earn-out of up to $2.5 million payable over two years. The location of these labs ties in well with Sonic’s other small acquisitions in Orlando, Fla., and the Washington, D.C., metro area, and cost synergies are expected to be significant.

With a combined annual revenue of $16 million—Piedmont with $11 million and Axiom with $5 million—the revenue multiple is 1.4x. This revenue multiple is a large discount compared to the price paid for large esoteric labs, which have attracted prices of greater than 2.5x, noted John Hester, an analyst with LINWAR Securities in Sydney. "Sonic’s strategy of multiple small acquisitions is akin to growth by stealth," he explained. "We estimate they have completed at least eight acquisitions of pathology laboratories in the United States, each with revenues of less than $30 million in the last three years. The combined revenues of these businesses are approximately $88 million. We estimate Sonic’s revenue base in the United States for fiscal year 2010 [current fiscal year] will be $616 million."