Leading diagnostic testing information service provider Quest Diagnostics Inc. DGX is witnessing solid progress with respect to its mergers and acquisitions (M&A) strategy. In keeping with this strategy, recently the company formed an alliance with Hartford HealthCare (HHC) and acquired the outreach laboratory service business of Clinical Laboratory Partners (CLP) – a wholly-owned subsidiary of HHC.
Notably, HHC is an integrated health care system with five hospitals in Connecticut. CLP, as the outreach laboratory services provider for HHC, provides clinical lab testing to physicians in Connecticut.
With his acquisition CLP will transition laboratory testing to Quest Diagnostics’ rapid-response clinical laboratories and full-service, state-of-the-art clinical laboratory. The acquisition includes several CLP patient service centers and other select assets but excludes HHC's hospital-based laboratories and the inpatient and outpatient services. Further, professional consultative pathology services performed by Hartford Pathology Associates are also not part of the acquisition.
According to Quest Diagnostics, the inclusion of CLP is expected to enhance its capacity to provide quality, affordable and convenient laboratory services in Connecticut. With a partnership that dates back to 1988, Quest Diagnostics expects this latest association to further strengthen the delivery of multiple benefits to patients and physicians in Connecticut.
Benefits include greater patient access and convenience through a combined patient service center network in Connecticut and numerous test services that include highly advanced and novel genetic sequencing tests for cancer, neurological disorders and other diseases.
Quest Diagnostics and CLP are also aiming to explore opportunities to collaborate in population health and data analytics, in other areas, based on the former’s laboratory data. Quest Diagnostics is currently upbeat about the acquisition, which is expected to leverage the company’s efficiency to produce more cost-effective testing, with affordable pricing for patients as well as government and commercial health plans. The company encouragingly notes that, according to third-party research, Quest Diagnostics’ lab services cost significantly less than those provided by hospital-based labs.
Quest Diagnostics’ merger and acquisition activity, believed to be a key driver of growth, is in full swing. In fact, CLP is the company’s fifth acquisition of a laboratory outreach service business from a hospital system since 2012, when the company had introduced its five-point strategy that calls for strategically-aligned, accretive acquisitions.
Currently, Quest Diagnostics carries a Zacks Rank #3 (Hold). Some better-ranked medical stocks are Hill-Rom Holdings, Inc. HRC, OraSure Technologies, Inc. OSUR and Vascular Solutions Inc. VASC. All the three stocks sport a Zacks Rank #1 (Strong Buy).
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