Quest grabs Bay State lab testing services outfit with eye on New England growth
Quest Diagnostics ($DGX) is boosting its presence in the lucrative New England market with the acquisition of a regional laboratory testing services company in Massachusetts--its fourth deal in the space so far this year and its second in the Bay State.
New Jersey-based Quest isn't telling how much it paid for ConVerge Diagnostic Services, a Peabody, MA-based operation that had been owned by the investor Water Street Healthcare Partners. Quest gains plenty, however, including ConVerge's Peabody laboratory, plus patient service centers in Massachusetts, New Hampshire and Connecticut. ConVerge is now a wholly-owned Quest subsidiary and joins the company's national laboratory network. Eventually, Converge will be blended into the state-of-the-art laboratory facility Quest is building in Marlborough, MA.
ConVerge is a full-service laboratory focused on providing New England-based patients, physicians and hospitals with full-service clinical, cytology and anatomic pathology testing services, Quest noted.
Quest said the acquisition dovetails with similar deals the company has made in 2013, Earlier this year, Quest snatched up UMass Memorial Medical Center's clinical and anatomic pathology outreach laboratory business, Dignity Health's lab-related clinical outreach operations in California and Nevada, and Humana/Concentra's toxicology and clinical laboratory business.
Quest CEO Steve Rusckowski said the deal delivers on the company's ongoing "five-point strategy," which includes, in part, plans to grow as much as 2% a year through strategic acquisitions. Those deals fold into a larger reorganization plan Quest announced last year. Known as "Invigorate," the strategy involves up to 600 job cuts, a reorganization of business units and managerial changes to address sluggish revenue and save $500 million in 2013.
To accomplish this, Quest has also sold off businesses and investments. Recently, the company unloaded its Enterix colorectal cancer screening test business, selling it to Australia's Clinical Genomics for an undisclosed sum. Quest also sold off its HemoCue diagnostics business to Danaher ($DHR) for $300 million, and its share of Johnson & Johnson's ($JNJ) cancer drug ibrutinib to Royalty Pharma for $485 million. That money, in turn, has been channeled, in part, into a $1.3 billion share repurchase program.
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