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Quest Diagnostics Buys PhenoPath, Grows in Anatomic Pathology

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Quest Diagnostics Incorporated (DGX - Free Report) has purchased PhenoPath, a national provider of specialized anatomic pathology (AP) and related services. The acquisition is expected to accelerate the company’s growth strategy for advanced diagnostics. However, financial terms of the deal have been kept under wraps.

Quest Diagnostics expects this deal to be strategic as several capabilities of PhenoPath will complement and extend the acquirer’s portfolio, particularly in pathology and molecular oncology space. The transaction is also expected to deepen Quest Diagnostics’ presence in Pacific Northwest.

Notably, the PhenoPath business will operate as part of Quest Diagnostics’ wholly owned business, AmeriPath, a leading provider of AP services. It offers many ambulatory health and surgery centers, imaging centers, clinics and physician offices a suite of high-end pathology services. It also has on-site community pathologists in more than 170 hospitals across the United States.

With growing demand for AP and molecular oncology services in healthcare, we believe that this acquisition will be strategically fit and well-timed. Per American Cancer Society data, in 2018 alone, there will be an estimate of 1,735,350 new cancer cases diagnosed in the United States.

Strategies to Drive Growth

Significantly, Quest Diagnostics has been focusing on areas with high potential such as gene-based esoteric testing for cancer, cardiovascular disease, infectious disease, neurological disorders as well as women’s health.

Gene-based esoteric testing revenues consistently grow at a rapid rate with a substantial rise observed in infectious disease testing, prescription drug monitoring and wellness business. Besides this, 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 great success with its new Texas-based center of excellence in precision medicine oncology. This apart, with the acquisition of Med Fusion, the company has seen revved up growth in tumor panels.

Recent Developments by Quest Diagnostics

Quest Diagnostics has been hitting headlines on a slew of strategic developments. In September, the company acquired ReproSource, a provider of specialty fertility diagnostic services. Moreover, last week, the company formed an alliance with Regional Medical Center Health System (RMC), a regional health care provider catering to a five-county service area in northeast Alabama. RMC currently has 323 inpatient beds at RMC Anniston and 125 acute care beds at Stringfellow Memorial Hospital. Recently, the company has come up with its plan to acquire the U.S. laboratory services business of Oxford Immunotec Global PLC (OXFD) in order to widen its tuberculosis testing suite.

Per Quest Diagnostics, these advancements are aligned with the company’s accelerated growth strategy, particularly in advanced diagnostics. These deals also suits the company’s objective to deliver the broadest access to diagnostic innovation.

However, the presence of a large number of players has made this diagnostic testing laboratory industry intensely competitive. In general, Quest Diagnostics competes with players like Laboratory Corporation of America Holding (LH - Free Report) , OPKO Health (OPK - Free Report) and Genomic Health, Inc. (GHDX - Free Report) among others.

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