Quest Diagnostics Set to Acquire OhioHealth's Lab Services

Quest Diagnostics DGX recently announced a definitive agreement to purchase the select assets of OhioHealth's outreach laboratory services business. The transaction will expand access to the company's cost-effective and advanced laboratory services in Ohio.

The transaction is likely to be completed in the third quarter of 2024, subject to customary regulatory reviews. However, the financial details of the deal were kept under wraps.

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Quest Diagnostics' diagnostic insights are derived from one of the world's largest databases of de-identifiable clinical lab results, offering new ways to identify and treat disease, inspire healthy behaviors and enhance healthcare. The latest agreement supports the strategy of growing through accretive outreach lab acquisitions and also broadening its presence across Ohio.

Colombia, OH-based OhioHealth is a nationally recognized, not-for-profit, charitable healthcare outreach of the United Methodist Church. Apart from a robust team, it has a network of 15 hospitals, three joint-venture hospitals, one managed-affiliate hospital, more than 200 ambulatory sites and other health services spanning a 50-county area. With this partnership, Quest Diagnostics showcases its ability to attract and collaborate with leading health systems that are seeking to optimize their lab services.

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Following the close of the acquisition, providers and patients will gain access to Quest Diagnostics' industry-leading test menu, a network of patient service sites throughout the state, extensive health plan coverage and lower out-of-pocket costs for many services. The majority of the outreach testing performed by OhioHealth will transition to Quest Diagnostics' full-service laboratory in Pittsburgh, PA.

At the same time, OhioHealth will continue to maintain full ownership and operation of its hospital labs, providing high-quality laboratory services for inpatient and hospital-based outpatient care, as well as anatomic pathology and oncology.

Industry Prospects

Per a report by Precedence Research, the global clinical laboratory services market was valued at $210 billion in 2022 and is expected to witness a CAGR of 3.7% by 2032.

The market growth is fueled by the growing number of clinical trials and R&D activities in the healthcare sector. Also, the rising prevalence of targeted disorders globally remains a key factor driving this increase.

Notable Developments

Earlier this month, the company entered a definitive agreement with OMERS to acquire LifeLabs — the Canadian provider of community laboratory tests. The company will offer new expertise, innovations and resources to bolster the services provided by LifeLabs' more than 6,500 employees, including improved online appointment scheduling and faster patient service center processing. DGX also aims to help accelerate LifeLabs' data security enhancements while ensuring Canadian patients' health data remains in Canada.

In late June 2024, Quest Diagnostics announced that it would buy select laboratory assets from Allina Health to improve access and the affordability of innovative laboratory services across Minnesota and western Wisconsin. The transaction stems from a shared commitment to helping a range of communities benefit from the quality and cutting-edge laboratory services that people can afford.

Price Performance

In the past year, shares of DGX have risen by 3% compared with the industry's growth of 11.5%.

Zacks Rank and Key Picks

Quest Diagnostics currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader medical space are Hims & Hers Health HIMS, DaVita DVA and Haemonetics HAE. While Hims & Hers Health sports a Zacks Rank #1 (Strong Buy), DaVita and Haemonetics each carry a Zacks Rank #2 (Buy) at present.

Hims & Hers Heath shares have surged 138.2% in the past year. Estimates for the company's earnings have increased from 18 cents to 20 cents in 2024 and from 33 cents to 38 cents in 2025 in the past 30 days.

HIMS' earnings beat estimates in three of the trailing four quarters and missed in one, delivering an average surprise of 79.2%. In the last reported quarter, it posted an earnings surprise of a staggering 150%.

Estimates for DaVita's 2024 earnings per share have remained constant at $9.62 in the past 30 days. Shares of the company have surged 35.4% in the past year compared with the industry's 11.5% growth.

DVA's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 29.4%. In the last reported quarter, it delivered an earnings surprise of 21.4%.

Estimates for Haemonetics' fiscal 2025earnings per share have moved north 0.4% to $4.57 in the past 30 days. Shares of the company have increased 2.5% in the past year against the 0.8% decline in the industry.

HAE's earnings surpassed estimates in each of the trailing four quarters, the average surprise being 13.2%. In the last reported quarter, it delivered an earnings surprise of 2.3%.

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