Chembio Diagnostics, Hauppauge maker of disease tests, to be bought by French firm for $17M
A financially strapped Hauppauge-based manufacturer of diagnostic tests is being purchased by a French test maker for $17.2 million in cash, officials said.
Chembio Diagnostics Inc. has signed a “definitive acquisition agreement” with Biosynex SA in Strasbourg. Each company has just over 300 employees and specializes in rapid point-of-care tests.
Executives said the sale to Biosynex will help Chembio turn a profit after years of losses and a high-profile stumble with a COVID-19 antibody test that the U.S. Food and Drug Administration found to have produced inaccurate results in some instances in 2020.
“The backing of Biosynex will enable Chembio to secure its financial needs and the synergies expected from this combination are aiming at returning the business to profitability,” Chembio CEO Richard L. Eberly said in announcing the sale on Tuesday.
The public company reported a loss of $22.4 million for the nine months ended Sept. 30 on revenue of $39 million, according to its most recent earnings report in November. At that time, executives repeated their earlier warning of “substantial doubt about the company’s ability to continue as a going concern” for the next year due to debt obligations compared with revenue forecasts.
Tuesday’s sale announcement came after the stock-market close. On Wednesday, Chembio shares closed up 8 cents, or 24%, to 44 cents.
Biosynex has agreed to pay 45 cents for each Chembio share.
In a message to employees on Tuesday, Eberly said the sale to Biosynex will close by March 31.
In an accompanying FAQ, executives responded to a question about the potential for layoffs by stating that the two companies “are complementary in a number of ways, including commercial and manufacturing geographies. Our talented and experienced team was one of the main reasons Biosynex was interested in acquiring Chembio and our team members will play a critical role in the combined company’s success.”
Most of Chembio’s 337 employees work at its headquarters, laboratory and warehouse in Hauppauge and at a factory in Medford. It also has operations in Germany, Brazil and Malaysia. To reduce expenses, the company has deployed robots on its production lines, according to securities filings.
Besides COVID tests, Chembio has developed and sells rapid tests for HIV, syphilis, Ebola, malaria, dengue fever and other tropical diseases. The tests have been certified by the FDA, World Health Organization and regulators in Europe and Brazil, the filings state.
Biosynex CEO Larry Abensur said on Tuesday that the addition of Chembio’s portfolio of tests will “provide transformative commercial opportunities that can represent meaningful growth drivers over the near and long-term.”
Biosynex specializes in point-of-care tests for infectious diseases and women’s health as well as laboratory instruments. Its customers include health care facilities, labs and pharmacies. The public company has 329 employees and was founded in 2005, according to securities filings in Europe.
Biosynex has acquired five companies since 2016, the filings show.