HBI Deals+Insights / White Paper

Synlab to IPO in Frankfurt

Europe’s largest lab group Synlab will list on the Frankfurt Stock Exchange in Q2 after releasing an intention to float document on Wednesday morning. The group says revenue will grow 17% this year to €3bn+ revenue and that COVID-19 revenue will only continue to grow.

The listing comes on the back of a bonanza year for the lab groups, driven by pandemic-related testing. Nearly a third of its 2020 revenues came from COVID-19 testing at €800m with a net impact of +€620m due to a drop in revenues elsewhere of €175m-€185m.

2020 saw revenue grow 38% to €2.6bn and EBITDA 71% to €679m. Adjusted operating profit grew 99% to €504m. The group is not providing guidance on COVID-19 revenue in 2021 but says it expects it to grow. 


Synlab says it intends to list in the second quarter, subject to market conditions. It could reach a valuation of €6bn, with rival Cerba being valued at €4.5bn last week when private equity EQT bought out Partners’ Group. Synlab’s 2020 EBITDA of €679m was 1.7x greater than Cerba’s. The move comes following months of speculation around Cinven’s exit.

The ITF document details a plan to raise €400m from new shares to pay down debt, with a net debt/EBITDA ratio of 3.0x in the mid-term. The offering will have a secondary component but Synlab would not comment on the expected volume. 

It has already halved its leverage ratio to 3.3x through the sale of its non-diagnostics business A&S earlier in the year. The public offering will be available to individual and institutional investors in Germany and private placements in certain other jurisdictions. It’s targeting a dividend of 20-30% of the previous year’s net profit, starting in 2022.

“We’ve had very strong feedback from investors so far,” said Synlab CEO Mathieu Floreani. 

Capital markets have, however, been shaken by recent IPO mishaps. Renal care provider Diaverum pulled its Stockholm listing late last year following disagreements on pricing and more recently takeout delivery company Deliveroo has been branded ‘London’s worst ever IPO’ with volumes around a third of what advisers expected. 

The DAX index of the top 30 companies is trading at a near all-time high of around €15,200. The much-touted €6bn valuation would leave it just shy of a place on the list. 

Growth and market size

Synlab expects 17% revenue growth in 2021 to more than €3bn with organic growth (excluding COVID testing) at 10%. The start of a new 15-year pathology contract in southeast London, which HBI understands to be worth £2bn, is expected to “significantly enhance” organic growth going forward.

In the coming years, it expects 10% annual growth, of which 3% is organic, and an EBITDA margin of 23%.

Debate continues over how much growth the lab groups can continue to sustain high levels of growth as the pandemic slows down. Many in the industry expect COVID-19 to become part of a standard panel of testing much like superbug MRSA and for the lab groups to be testing travelers and event-goers for some time. 

“We don’t provide exact guidance for 2021 but we expect to have an increase in COVID-19 testing volumes, with a drop in prices and less impact on confinement and lockdown,” said CFO Sami Badarani. “We expect an increase in our COVID-19 contribution.” 

Synlab estimates its addressable market at €32bn in 2019: with about half from the core EU markets of Germany, France, Italy and Switzerland, plus €13bn from ‘select other markets’ and €4bn from B2C testing. It expects this to grow at a CAGR of 4% excluding COVID testing and 6% including until 2025. 

Future strategy

Synlab is a top-three player in about half of its markets and a key strategy going forward will be to take market share from local competitors. The group sees potential in precision medicine, B2C testing, and its digital/AI service. “We are the biggest in-vitro diagnostics provider of data in healthcare,” Floreani claims.

This is partly through brand presence but also in shifting the approach to selling. “We realised a few years ago that we are a retailer,” said Floreani. “We started hiring retail specialists and changing the way that the patient interacts with us before coming to our blood collection points and after, digitally.” 

This initiative in Spain has already accelerated out-of-pocket payments by 27%. The group says that every time it exposes itself to more genetics, by adding more genetic counselors for example, it sees double-digit growth. A pilot in the Nordics last year also saw it increase online sales by 30%. 

Competitors like Unilabs are also working on more personalised products, including better B2C revenue streams. Finnish prevention testing start-up Nightingale Health went public on March 19th, raising €110m in the process. Its shares are down 9.5% since the listing. 

The group also said it would continue its M&A strategy, saying that it had made an average of 20 acquisitions annually since 2017 spending €200m each year between 2016-2019. It would not be drawn on the size of any acquisition targets but said that there would be temporary flexibility in the targeted 3.0x leverage ratio to “pursue value-accretive M&A”. 

Floreani said strict criteria for M&A targets means any acquired party must give access to new platforms, technology or regions. “We want to develop balanced regional presence and sustain our resilience… synergies are achieved primarily within two years for example through procurement. We’re able to improve the margins of our acquired companies by three to five points on average.” 

It pointed to LATAM, Asia and Africa as markets with high growth potential. 

Synlab is also intending to become carbon neutral by 2025 as part of a new focus on environmental, social and governance goals (ESG). 

We would welcome your thoughts on this story. Email your views to Rachel Lewis or call 0207 183 3779.