Is the Proposed Acquisition Best for Genomic Health (GHDX) and Its Shareholders?
Robbins LLP’s investigation focuses on whether the board of directors at Genomic Health is undertaking a fair process to obtain maximum value and adequately compensate its shareholders.
As an initial matter, the $72.00 merger consideration represents a one-day premium of only 4.86% based on Genomic Health’s closing price on July 26, 2019. This premium is significantly below the average one-day premium of approximately 40% for comparable transactions within the past five years. Further, the $72.00 merger consideration is significantly below the target price of $77 set by an analyst at Canaccord Genuity on June 26, 2019, and reiterated as recently as July 24, 2019. In the last three years, Genomic Health traded as high as $92.18 on November 7, 2018, and most recently closed above the merger consideration – at $74.63 – on March 21, 2019.
On July 29, 2019, Genomic Health reported strong earnings results for its second quarter 2019. Total revenue for the second quarter of 2019 was $114.1 million compared with $95.6 million for the second quarter of 2018, an increase of 19.4%. Additionally, in each of its last four fiscal quarters Genomic Health has beat analyst estimates for revenue, adjusted net income, and adjusted earnings per share. In commenting on these results Kimberly Popovits, Genomic Health’s Chairman of the Board, President, and Chief Executive Officer, remarked “In the second quarter of 2019 we delivered 19% topline revenue growth and twice the profit compared to last year… we are raising both our full-year 2019 revenue and net income guidance.”
In light of these facts, Robbins LLP is examining Genomic Health’s board of directors’ decision to sell the company now rather than allow shareholders to continue to participate in the company’s continued success and future growth prospects.