Portland, Ore.-based Legacy Health has inked a tentative deal to sell its lab operations to Labcorp in a restructuring move that aims to improve its financial health.
Labcorp said it will acquire "select assets" of Legacy's laboratory business, including facilities and equipment, and will also manage the system's inpatient hospital labs through a long-term agreement to provide staffing, leadership, supply chain services and other support.
The deal is not expected to result in any layoffs, but about 700 Legacy employees will join Labcorp, according to The Oregonian. Terms of the deal, which is subject to regulatory approvals, were not disclosed.
The six-hospital system ended 2022 with a $114.8 million operating loss. It is now losing $10 million a month, according to the report, and has had to dip into its cash reserves — a key reason for the Labcorp deal.
"This is Legacy's financial crisis," Kecia Kelly, chief nursing officer and senior vice president, told The Oregonian.
In April, Moody's Investor Service revised the Legacy's outlook to negative from stable as it expects the system to continue to seek waivers or amendments to some of its debt obligations.
Philadelphia-based Jefferson Health also recently signed an agreement to offload lab assets to Labcorp, which sees hospital lab acquisitions as key opportunity for growth.