The brand that was once touted as one of Richmond’s greatest startup success stories is set to be eliminated.
The Texas-based lab company that’s on the verge of purchasing Health Diagnostic Laboratory said Monday it will do away with the HDL name, in addition to not offering employment to some HDL workers.
True Health Diagnostics, a year-old lab company headquartered near Dallas, is preparing to close on its bankruptcy court-approved acquisition of the bulk of HDL’s assets for $37.1 million. The deal is expected to close Wednesday, according to a company representative.
The company is taking over parts of HDL’s 280,000-square-foot downtown headquarters and will use only the True Health brand going forward, True Health CEO Chris Grottenthaler said in a prepared statement. True Health’s banner will eventually be hoisted in place of the current HDL signage, the company said.
Grottenthaler also said in the statement that offers were made to “several hundred” current HDL employees Monday and Tuesday, but he did not share a specific headcount. HDL had about 570 employees leading up to the sale.
Since last summer, HDL has had several rounds of layoffs, cutting at least 255 jobs since August of 2014.
The sale of HDL ends a seven-year run for the once fast-growing blood testing company. It rose quickly after its founding in 2008 with notable growth that was stymied in the last two years by a national scandal involving a federal investigation over alleged kickbacks paid to doctors to use its tests. That resulted in a $47 million settlement with the Department of Justice and subsequent Chapter 11 bankruptcy filing.
“Aspects of HDL’s business practices were certainly the subject of considerable scrutiny and controversy, but there has never been any question that its diagnostic tests and laboratory facilities are world class,” Grottenthaler said in the statement.
True Health and HDL offer similar services, providing healthcare practitioners with tests designed to help detect cardiovascular diseases, genetic disorders, diabetes and other conditions.
Grottenthaler said True Health, which already has about 100 employees, plans to retain HDL’s current departments, “including integrating the current HDL sales force into True Health’s existing sale group.”
HDL broke ties with its third-party sales contractor, BlueWave Healthcare Consultants, earlier this year, after which it started hiring its own sales force throughout the country.
BlueWave was included in the federal investigation, and the DOJ has filed a new suit against the company, its founders Robert Bradford Johnson and Floyd Calhoun Dent, along with HDL’s founder and former CEO Tonya Mallory. Mallory resigned shortly after the federal investigation became public. True Health has had ties to HDL, BlueWave and Johnson, bankruptcy documents claim.
In his statement, Grottenthaler said True Health will adopt the so-called corporate integrity agreement that HDL signed with the DOJ, which “will ensure that True Health will meet or exceed all regulatory requirements.”
True Health did not say how much space it will retain in HDL’s downtown complex, which was constructed in 2014 to the tune of $100 million. VCU is expected to lease at least 53,000 square feet in the building by November. True Health will also continue to operate out of its Texas office.
Biotech 8 LLC owns the HDL property at 737 N. Fifth St. An affiliate of HDL owns 58.9 percent of Biotech 8. True Health’s deal to purchase HDL will not include its ownership stake of Biotech 8.
Remnants remain elsewhere around town of the HDL name and its once impressive philanthropy, particularly from the fruits of its $4 million pledge to VCU Athletics, the largest donation the department ever received. HDL backed out of that deal during its bankruptcy process, but the university has yet to remove “HDL Athletic Village” signs on some of its sports facilities. The school has said it will eventually take the signs down.