Maryland Medical, MetPath to merge

May 05, 1994|By Patricia Meisol | Patricia Meisol,Sun Staff Writer Bloomberg Business News contributed to this article.

Corning Inc. said yesterday that it will acquire Maryland Medical Laboratories Inc., the leading clinical testing laboratory in the region, and merge it with its own lab, MetPath, the biggest in the country.

The New York-based consumer products company said it would exchange 4.5 million shares of its stock for the privately owned Baltimore company and its subsidiaries. The deal would be valued at $148.5 million based on yesterday's closing share price of $33, up 75 cents.

Maryland Medical, started by a handful of doctors in the late 1960s, had revenues of $100 million in 1993. It grew into one of the 10 largest privately held clinical laboratories in the country as new tests for diseases such as AIDS were invented.

Selvin Passen, medical director and one of the founding physicians, said yesterday that he and other company owners were searching for a "premier partner" when they began talks with Corning about a year ago.

MetPath Inc. has 20 clinical laboratories and serves every state except California.

Its acquisition of one of Maryland's largest health care businesses comes amid a frenzy of consolidation in every segment of the health care industry. In another major deal yesterday, National Health Laboratories Inc. of La Jolla, Calif., said it will buy Allied Clinical Laboratories Inc. of Nashville, Tenn., in a cash deal worth more than $193 million.

"Everybody has a for-sale sign out," said Alex Henderson, analyst with Prudential Securities in New York. The Corning-Maryland deal is "good for both sides," he said.

Maryland Medical conducts testing and other clinical services for doctors, hospitals, clinics and other medical groups.

It is "one of the most technically advanced and scientifically skilled labs in the country," said Randy H. Thurman, president of Corning Lab Services. He said the acquisition would help MetPath better meet demands from managed care companies for lower-cost quality services.

Maryland Medical's owners and managers will remain in charge of the operations here, which could be called MML-MetPath or something similar. Maryland Medical "gets bigger and better as result of the merger," Dr. Passen said. The firm's Sulphur Spring Road laboratory in Arbutus will become MetPath's central base, he said, and MetPath's Rockville lab will be downsized.

In the past year Maryland Medical has expanded, doubling its space and outlining plans to hire hundreds more people.

The two firms were competitors in Maryland, and some customers welcomed the merger.

"Now we have the best of both worlds," said Darlene Burton, director of sales and marketing for the Chesapeake Health Plan, a Baltimore managed care company. "We use MetPath -- we used to use Maryland Medical. But MetPath had more drawing stations in rural areas," she said.

In 1993, Corning's combined laboratory services revenue from MetPath and another unit, Corning Pharmaceutical Services Inc., was $1.3 billion. The revenue accounted for almost one-third of Corning's total revenue of $4 billion last year.

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