Vantari Genetics Chief Executive Nick Arroyo said there are only two ways to grow the private company, organically through internal growth or through mergers and acquisitions. He’s opted for the latter, buying Southwestern Medical Laboratory in Tustin last month and now merging with Universal Diagnostic Lab in Van Nuys.
“You see, today it is hard for independently owned laboratories,” said Arroyo, citing lowered reimbursement for clinical lab tests and competition from large players, such as Quest Diagnostics Inc. (NYSE: DGX) in Secaucus, N.J., and Burlington, N.C.-based Laboratory Corp. of America Holdings (NYSE: LH), commonly known as LabCorp. The two have market caps of $13.6 billion and $16.8 billion. Vantari, based in Irvine, took in about $50 million last year, according to Arroyo.
“The consolidation will make us the largest independently owned laboratory in Southern California. Right now we are focused on growing [our markets in] OC, Riverside, L.A. and Ventura this year, and will then build out the business to covering California.”
Full-Service
Vantari is a Clinical Laboratory Improvement Amendments-certified laboratory offering clinical diagnostics, genetic testing and contract research services. Its offerings run the gamut from routine blood and urine tests to next-generation sequencing for missing chromosomes and for inherited conditions that can increase a patient’s risk for cancer and other diseases.
Its recent add-ons aren’t genetic testing providers, but basic lab-work servicers. Why?
“You don’t start with the esoteric tests, you start with the basic stuff before you get to the complex genetic stuff,” Arroyo said. He indicated that the company now has the ability to offer a broad spectrum of tests at reasonable rates.
Southwestern Medical Laboratory provides clinical chemistry and routine bloodwork services. With the purchase, Vantari will own a dozen blood-draw locations in Orange County and add $1.7 million a year in revenue.
Vantari occupies 50,000 square feet at its headquarters, where it employs 88 people.
Women’s Health
Vantari offers a wide range of tests, including women’s health, gastrointestinal, respiratory health, toxicology, cancer, carrier and cystic fibrosis. It intends to focus on the first, adding to that capability via the merger with Universal Diagnostic, which focuses on women and men’s health testing. Its offerings include reproductive donor testing.
“Most women will stay with their OB-GYN for a lifetime,” Arroyo said, pointing out that the market opportunity to provide testing services for women starts with a basic pap smear and extends to genetic testing for family planning.
Vantari isn’t alone in its ambition to expand women’s health services. In 2014, Fort Myers, Fla.-based cancer-focused genetic testing service provider NeoGenomics Inc. (Nasdaq: NEO) bought Path Labs LLC, known as Path Logic. Path Logic’s specialties are renal pathology, dermatopathology, women’s health, and gastrointestinal and genitourinary pathology. LabCorp bought San Diego-based Sequenom Inc. in 2016 to build its capabilities in prenatal testing.
Arroyo said Vantari now has 220 employees. He said the company’s in the process of integration and will expand its management team. He said he’ll continue leading as chief executive and that he doesn’t anticipate layoffs.
Arroyo said the company plans to build on existing contracts with some of the largest health insurance companies in the country.
“We want to let healthcare plan managers know we have the scale to be competitive. Vantari is hiring more scientists.”
