The long awaited CEO succession process has finally come to an end for Quest Diagnostics (DGX). Recently, this diagnostic tool major announced the appointment of Stephen H. Rusckowski as the Chief Operating Officer (CEO), effective May 1, 2012. Stephen H. Rusckowski has earlier served as the CEO of Philips Healthcare since 2006 and will succeed Surya N. Mohapatra, Quest Diagnostics’ present President and CEO.
Mr. Rusckowski is also set to join Quest Diagnostics’ board of directors. Additionally, Quest Diagnostics’ present Lead Independent Director Daniel C. Stanzione, will take the position of Non-Executive Chairman of the Board on May 1, 2012.
During Mr. Rusckowski's six-year work span as the CEO of Philips Healthcare, a prime division of Royal Philips Electronics (PHG), revenues of the company reached the €9 billion mark in fiscal 2011 (up from €6 billion in 2005), accounting for 39% of Philips’ total revenue.
Quest Diagnostics, which was ranked among the 2011 Fortune 500 list, has been facing several headwinds in recent times. Soft industry trends on the back of a decline in physician office visits remain a persistent matter of concern. Also, the lower recovery in healthcare utilization has affected the company’s growth.
Additionally, several acquisitions in the recent past have reduced the financial flexibility of the company. Moreover, the competitive landscape is tough with the presence of Laboratory Corporation of America Holdings (LH).
Amid such difficulties, the board started seeking some effective strategic shift, which motivated Quest Diagnostics to search for a new CEO outside the company. We expect the market to react positively to the successful completion of the transition process that started in October last year. Mr. Rusckowski in this regard is expected to come up with several new ideas to enhance the company’s position to counter the prevailing market threats.
Quest Diagnostics currently retains a short-term Zacks #4 Rank (Sell).We have a Neutral recommendation on Quest and Lab Corp over the long term.
QUEST DIAGNOSTC (DGX): Free Stock Analysis Report
LABORATORY CP (LH): Free Stock Analysis Report
KONINKLIJKE PHL (PHG): Free Stock Analysis Report
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