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Quest Diagnostics Grows in Fertility Services With New Buyout

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In a bid to expand in the field of fertility diagnostics, Quest Diagnostics (DGX - Free Report) recently acquired ReproSource, a provider of specialty fertility diagnostic services. However, financial terms of the deal have been kept under wraps.

Per Quest Diagnostics, this acquisition is aligned with the company’s accelerated growth strategy, particularly in advanced diagnostics. This deal also suits the company’s objective to deliver the broadest access to diagnostic innovation.

Strategic Fit?

Centers for Disease Control and Prevention data states that nearly 10% of women at child-bearing age in the United States finds it difficult to either conceive or remain pregnant. With fertility related issues growing at an alarming rate, we are optimistic about the expanding opportunities seen in the fertility services market.

Going by an Allied Market Research report published in CISION, the global fertility services market was valued at $16,761 million in 2016 and is projected to reach $30,964 million by 2023 witnessing a CAGR of 9.3%. Accordingly, we believe that the inclusion of ReproSource in Quest Diagnostics’ business portfolio to be perfectly strategic.

Post the above-mentioned integration, ReproSource is going to provide an array of advanced diagnostic services including genetics-based ovarian health and recurrent pregnancy loss assessments. These will help patients identify and overcome fertility and pregnancy related issues.

Quest Diagnostics plans to offer ReproSource's services across the United States as part of its comprehensive women's health and reproductive offerings for obstetricians, gynaecologists, fertility specialists and other physicians.

Strategies to Drive Growth

Notably, Quest Diagnostics has been focusing on areas with high potential such as gene-based esoteric testing for cancer, cardiovascular disease, infectious disease and neurological disorders plus women’s health. It is encouraging to note that Quest Diagnostics has efficiently rebounded from a shrinking business that caused an organic revenue decline of more than 4% in 2014.

Gene-based esoteric testing revenues continue to grow at a rapid rate with significant rise observed in infectious disease testing, prescription drug monitoring as well as wellness business. Besides, strong growth has been experienced in the company’s infectious disease testing and prescription drug monitoring.

Of late, major new developments included the company’s progress in prescription drug monitoring, QuantiFERON and non-invasive prenatal screening. In advanced diagnostics, Quest Diagnostics achieved a great success with its new center of excellence in precision medicine oncology in Texas. This apart, with the acquisition of Med Fusion, the company has seen revved up growth in tumor panels.

Share Price Performance

Shares of Quest Diagnostics have underperformed its industry over the past three months. The stock has lost 4% versus the industry's 4.3% rise.

Zacks Rank and Key Picks

Quest Diagnostics currently carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the broader medical space are athenahealth (ATHN - Free Report) , Masimo Corporation (MASI - Free Report) and Veeva Systems (VEEV - Free Report) .

athenahealth has an expected long-term earnings growth rate of 17.6%. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Masimo’s long-term earnings growth rate is projected at 14.8%. The stock carries a Zacks Rank #2 (Buy).

Veeva Systems’ long-term earnings growth rate is estimated at 19.3%. The stock has a Zacks Rank of 1.

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