Quest Diagnostics to Acquire University Hospitals' Outreach Laboratory Services Business

Rhea-AI Summary

Quest Diagnostics (NYSE: DGX) has announced a definitive agreement to acquire select assets of University Hospitals' outreach laboratory services business in Ohio. This strategic move aims to broaden access to Quest's innovative diagnostic services and extensive test menu across the state. The acquisition is expected to enhance operating efficiency and ensure continued access to affordable care.

Key points of the transaction include:

• Streamlined operations and quality maintenance
• Expanded patient access to Quest's convenient testing sites
• Broader health plan coverage
• Expected completion in Q4 2024, subject to regulatory approval

Financial terms were not disclosed, but the deal aligns with Quest's strategy to optimize laboratory services for quality, innovation, and affordability.

Positive

• Acquisition expands Quest's market presence in Ohio
• Potential for increased revenue through broader patient access
• Opportunity to leverage Quest's scale for improved operating efficiency
• Enhanced service offerings through Quest's innovative test menu

Negative

• Undisclosed financial terms may impact investor assessment
• Regulatory approval process could delay completion
• Potential integration challenges with University Hospitals' existing systems

Insights

Financial Analyst

This acquisition by Quest Diagnostics is a strategic move to expand its market presence in Ohio. The deal, while not disclosing financial terms, is likely to be accretive to Quest's earnings in the medium term. It aligns with the industry trend of consolidation in the diagnostic services sector, driven by the need for scale and efficiency.

The transaction could potentially increase Quest's revenue and market share in Ohio, leveraging University Hospitals' existing customer base. However, investors should watch for integration costs and any potential regulatory hurdles. The expected completion in Q4 2024 suggests a long-term growth strategy rather than immediate financial impact.

Overall, this move strengthens Quest's competitive position and could lead to improved operational efficiencies, potentially boosting profitability in the long run.

Healthcare Industry Consultant

This acquisition reflects the ongoing trend of health systems divesting non-core assets to focus on patient care. For University Hospitals, this move allows them to streamline operations and potentially reduce costs associated with running an outreach lab business.

For Quest, this deal expands their footprint in a key market and aligns with their strategy of partnering with health systems. The acquisition could lead to increased test volumes and economies of scale, potentially improving Quest's profit margins.

Investors should note that this trend of lab service outsourcing by health systems is likely to continue, presenting further growth opportunities for major players like Quest. However, the success of this deal will depend on smooth integration and maintaining service quality to retain existing customers.

Transaction to broaden access to innovative, quality diagnostic information services powering affordable care in Ohio

SECAUCUS, N.J., and CLEVELAND, Aug. 21, 2024 /PRNewswire/ -- Quest Diagnostics (NYSE: DGX), a leading provider of diagnostic information services, and University Hospitals, one of the nation's leading nonprofit health systems and academic medical centers, today announced a definitive agreement for Quest to acquire select assets of University Hospitals' outreach laboratory services business.

The transaction will broaden access in Ohio to Quest's industry-leading and innovative test menu, network of convenient patient access sites and broad health plan coverage.

"Laboratory testing is a critical and increasingly complex area of healthcare and Quest is a trusted name in laboratory services known for high quality and innovation," said Cliff A. Megerian, MD, FACS, Chief Executive Officer, University Hospitals; Jane and Henry Meyer Chief Executive Officer Distinguished Chair. "We look forward to a collaboration with Quest that will maintain streamlined and efficient operations, quality and breadth of menu while enhancing access for our patients."  

"Top health systems like University Hospitals are transitioning their laboratory services to Quest in order to improve operating efficiency and ensure continued access to affordable care," said Jim Davis, Chairman, CEO and President, Quest Diagnostics. "Our specialization and scale empower us to optimize lab services for quality, innovation and affordability, enabling health systems to dedicate more resources to clinical patient care. We look forward to extending our presence in the many communities in Ohio that can benefit from our expertise."

The parties expect to complete the transaction in the fourth quarter of 2024, assuming customary regulatory reviews. Financial terms were not disclosed.

About Quest Diagnostics
Quest Diagnostics works across the healthcare ecosystem to create a healthier world, one life at a time. We provide diagnostic insights from the results of our laboratory testing to empower people, physicians and organizations to take action to improve health outcomes. Derived from one of the world's largest databases of de-identifiable clinical lab results, Quest's diagnostic insights reveal new avenues to identify and treat disease, inspire healthy behaviors and improve healthcare management. Quest Diagnostics annually serves one in three adult Americans and half the physicians and hospitals in the United States, and our nearly 50,000 employees understand that, in the right hands and with the right context, our diagnostic insights can inspire actions that transform lives and create a healthier world. www.QuestDiagnostics.com.

About University Hospitals / Cleveland, Ohio
Founded in 1866, University Hospitals serves the needs of patients through an integrated network of more than 20 hospitals (including five joint ventures), more than 50 health centers and outpatient facilities, and over 200 physician offices in 16 counties throughout northern Ohio. The system's flagship quaternary care, academic medical center, University Hospitals Cleveland Medical Center, is affiliated with Case Western Reserve University School of Medicine, Northeast Ohio Medical University, Oxford University, Taiwain University and the Technion Israel Institute of Technology. The main campus also includes the UH Rainbow Babies & Children's Hospital, ranked among the top children's hospitals in the nation; UH MacDonald Women's Hospital, Ohio's only hospital for women; and UH Seidman Cancer Center, part of the NCI-designated Case Comprehensive Cancer Center. UH is home to some of the most prestigious clinical and research programs in the nation, with more than 3,000 active clinical trials and research studies underway. UH Cleveland Medical Center is perennially among the highest performers in national ranking surveys, including "America's Best Hospitals" from U.S. News & World Report. UH is also home to 19 Clinical Care Delivery and Research Institutes. UH is one of the largest employers in Northeast Ohio with more than 30,000 employees. Follow UH on LinkedIn, Facebook and Twitter. For more information, visit UHhospitals.org.

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SOURCE Quest Diagnostics

FAQ

What assets is Quest Diagnostics (DGX) acquiring from University Hospitals?

Quest Diagnostics is acquiring select assets of University Hospitals' outreach laboratory services business in Ohio.

When is the Quest Diagnostics (DGX) acquisition of University Hospitals' lab services expected to close?

The transaction is expected to be completed in the fourth quarter of 2024, subject to customary regulatory reviews.

How will the acquisition affect Quest Diagnostics' (DGX) presence in Ohio?

The acquisition will broaden Quest's presence in Ohio, expanding access to its diagnostic services, test menu, and patient access sites across the state.

What are the expected benefits of Quest Diagnostics' (DGX) acquisition for patients in Ohio?

Patients in Ohio are expected to benefit from broader access to Quest's innovative test menu, convenient patient access sites, and expanded health plan coverage.