Avalon GloboCare Corp. (AVCO) shares were up 18.25% to $0.67 at the time of the most recent check as the business signed a binding agreement.
Which contract has AVCO signed?
Today, Avalon (AVCO) said that it has entered into a legally binding acquisition agreement (the “Acquisition Agreement”) to buy a 60% stake in renowned reference laboratory Laboratory Services MSO, LLC. Avalon will change its ticker symbol from “AVCO” to “ALBT” in conjunction with the deal and to reflect the increased emphasis on lab tests and services. On Thursday, November 10, 2022, shares of AVCO common stock will start trading on the Nasdaq Capital Market under the new ticker symbol “ALBT.”
Laboratory Services, with its main office in Costa Mesa, California, offers a wide range of diagnostic tests, including toxicology, drug testing, and general bloodwork, as well as anatomic pathology and urine toxicology. A few examples of specific capabilities are STAT blood testing, qualitative drug screening, genetic testing, urine testing, and testing for sexually transmitted diseases. The industry’s top reputation for customer service and quick response times belongs to Laboratory Services. Since its founding, Laboratory Services has performed over 450,000 tests, has two sites in California, and is expected to generate unaudited annual revenue of over $25 million in 2021.
Financial information on the contract
A total of $31 million will be paid for the transaction, which will be made up of $1 million due on the first anniversary of the closing date, $15 million in cash, and $15 million in shares of the company’s Series B preferred stock. The conversion of the preferred shares will be prohibited for a period of 12 months, after which only 10% of the total ownership may be converted due to leak-out provisions.
Avalon made a $5 million refundable cash advance payment in conjunction with the formal contract’s signing. Additionally, the seller will be entitled to an earnout of up to $10 million, payable in cash and shares of the common stock of AVCO, based on 2022 and 2023 positive cash flow projections. Sarah Cox, the co-founder, and CEO of Laboratory Services will join the company’s board of directors when the deal closes and take on the role of chief operating officer.
What does this purchase signify for AVCO?
The transaction represents a game-changing purchase for Avalon (AVCO), adding significant revenue and positive cash flow while also bringing notable clinical synergies to the company’s current portfolio. The market for lab testing and services is quite fragmented, yet Laboratory Services has a remarkable track record of success and is an established industry leader. The diagnostic business of Laboratory Services is particularly complementary to the current precision companion diagnostic and cellular technology platforms of AVCO.