Benzinga | Aug 16, 2021 08:01AM EDT

Genetic Technologies Shares Spike After Co. Announced Completion Of EasyDNA Acquisition

Genetic Technologies Limited ((ASX: GTG, NASDAQ:GENE, "Company", "GENE")), a global leader in Genomics based tests in health, wellness and serious disease, is pleased to announce the completion of its acquisition of EasyDNA ('the acquisition') for US$4 million in cash and stock on August 13, 2021.

Overview

* BelHealth becomes a shareholder of Genetic Technologies with 2.3% holding following completion of EasyDNA acquisition

* Provides for global expansion into genomics based "Health and Wellness" in 40 countries and a significant platform for the sale and expansion of existing and future products

* EasyDNA currently sells paternity, oncology and health & wellness genomics-based laboratory tests through agreements with 12 laboratories in North America, AsiaPac and Europe

* Acquisition to have immediate positive impact on Genetic Technologies' revenues and bottom line

* Fully funded via cash payment of US$2.5 million and US$1.5 million of shares issued at $4.29 per ADR with a 24-month cash reserve post completion

* Share based payment escrowed for six months demonstrating alignedinterests

Simon Morriss, Chief Executive Officer of GENE, said, "Having completed the acquisition of EasyDNA we are now focused on integrating the team and embedding the product and platform into our existing structure. The strong alignment of this brand and platform with GENE's planned expansion into "health and wellness" testing was critical to our decision to acquire the business of EasyDNA and will deliver solid revenue growth and expansion in the future."

"This acquisition gives GENE the platform to immediately access the consumer genomics market in 40 countries with an estimated value of USD$2.4billion," added Morriss. "This market is forecast to continue on a trajectory of 19.4% CAGR, reaching USD$8.1billion by 2028. This market covers Ancestry, Genetic Relatedness, Diagnostics Lifestyle, Reproductive Health, Personalized Medicine & Pharmacogenetic testing and more, in regions including North American, Europe, and Asia Pacific where EasyDNA has presence."

Commenting on the completion of the acquisition and becoming a shareholder in Genetic Technologies, Inder Tallur, Managing Partner, BelHealth Investment Partners, said, "Genetic Technologies' products were a natural fit for EasyDNA's platform and product portfolio. The acquisition provides a significant opportunity to further scale the EasyDNA platform in combination with Genetic Technologies existing and future products, and we look forward to being part of this next stage of growth. We look forward to working with the team as we complete the integration process and see a very bright future within the genomics space."

Genetic Technologies' acquisition of EasyDNA provides an established revenue stream with US$4.63 million in unaudited revenue for CY20. EasyDNA, which has delivered revenue growth of 11% over the last two years, has a stable outlook for future growth and the ability to leverage existing direct-to-consumer marketing avenues for future product sales. The acquisition includes all brands, websites and reseller agreements associated with EasyDNA. This includes over 70 websites in 40 countries and six brand identities. Acquisition revenue contributions are strongly weighted to five countries: Australia, UK, France, Canada and the USA, where it received 68% of its CY20 revenue, with the UK as the largest market contributing 20% of total revenue. EasyDNA has current agreements with 12 NATA and associated international certified laboratories.

EasyDNA generates revenue from the sale of test kits to customers via its network of websites. Tests are typically performed via an oral swab sent directly to the customer from external laboratory partners. The laboratory processes the tests and transmits the results to EasyDNA, with test results communicated to customers by email.

GENE acquired 100% of EasyDNA's brands and assets for a purchase price comprising upfront consideration of US$2 million plus US$1.5 million in GENE ADRs equating to 348,939 ADRs at a 30-Day Volume Weighted Average Price on the NASDAQ of $4.29 ('Consideration ADRs') as at July 16, 2021. The issue of new ordinary shares underlying the Consideration ADRs represented 2.3% of GENE's issued share capital and was issued under GENE's Listing Rule 7.1 capacity. An additional US$500k cash consideration is held in escrow for up to 12 months and payable subject to the completion of conditions precedent1. The total cash consideration of US$2.5 million was funded from GENE's existing cash reserves. The Consideration ADRs are subject to a lock-up agreement whereby BelHealth will not be able to trade in GENE securities for six months after completion.