What happened
Shares of Invitae (NVTA 16.13%) fell as much as 22% today after tumbling by double digits yesterday. The genetic testing company announced three acquisitions yesterday that will be funded with a combination of cash and stock, but the combined transactions total $195 million. By contrast, Invitae has lost roughly $500 million in market valuation in the last two days.
Given the relatively small amount of dilution for the $1.3 billion company, it's clear that much of the stock's decline has much more to do with the broader market downturn. Nearly every stock is in negative territory as investors brace for the economic impact of the coronavirus pandemic.
As of 3:08 p.m. EDT, the growth stock had settled to a 21.1% loss.
Image source: Getty Images.
So what
Invitae announced three acquisitions this week. The first was of Diploid, a company developing an artificial intelligence platform that might allow clinicians to make diagnoses from whole genome sequencing data in "minutes", according to the press release. The total transaction cost was $95 million, including $32 million in cash and $63 million in Invitae stock.
The second and third acquisitions were of YouScript and Genelex, respectively. Both will allow Invitae to integrate pharmacogenetic information into its genetic testing platform. Such data combines an individual's genetic information with known reactions to drugs, which could potentially lead to improved dosing recommendations and fewer side effects for patients.
Now what
It takes months of work behind the scenes to complete an acquisition. Invitae just so happened to wrap up discussions and publicly disclose them during one of the worst trading days in recent memory. But the acquisitions serve as a reminder that the business is focused on the long term. Individual investors looking for the best outcomes for their portfolio would be well served to do the same.
