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Quest Diagnostics' (DGX) New Deal Aids Diagnostic Access in Ohio
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Quest Diagnostics (DGX - Free Report) recently entered into a definitive agreement to acquire one of the leading nonprofit health systems and academic medical centers in the United States. The company will purchase select assets of University Hospitals' (“UH”) outreach laboratory services business, expanding access to innovative, quality diagnostic information services to drive affordable healthcare in Ohio.
The latest transaction is expected to be completed in the fourth quarter of 2024, subject to the customary regulatory reviews. Financial terms were, however, not disclosed.
More on the News
Established in 1866, UH serves as a major health system in Northern Ohio, with an integrated network of more than 20 hospitals (including five joint ventures), 50 plus health centers and outpatient facilities and more than 200 physician offices in 16 counties. It boasts 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, the system’s flagship quaternary care, academic medical center, consistently features among the top performers in national rankings, such as the U.S. News & World Report’s "America's Best Hospitals."
Image Source: Zacks Investment Research
Jim Davis, chairman, CEO and president of Quest Diagnostics, notes that top health systems like UH are transitioning its laboratory services to their company to improve operating efficiency and ensure continued access to affordable care. With its specialization and scale, DGX can optimize lab services for quality, innovation and affordability, allowing health systems to redirect more resources to clinical patient care. The company is aiming to broaden its presence in the additional communities in Ohio that could benefit from its expertise.
Industry Prospects
Per a Grand View Research report, the global clinical laboratory services market was valued at $233.2 billion in 2023 and is expected to witness a CAGR of 3.5% by 2030.
The market growth is spurred by the increasing burden of chronic diseases and the growing demand for early diagnostic tests. Moreover, rapid advancements in data management and sample preparation due to growing volumes of testing samples are also expected to accelerate growth during the forecast period.
Acquisition Strategy Enhances Growth Potential
Acquisitions play a vital role for Quest Diagnostics to ensure growth, particularly by targeting hospital outreach purchases and smaller, independent labs that are immediately accretive. The company has engaged in a string of deals lately that meet its criteria for growth, profitability and returns, and also enables DGX to expand into strategic growth areas. Last month, Quest Diagnostics announced a definitive agreement with OMERS to acquire LifeLabs, its reference testing business partner, which provides community laboratory tests for millions of Canadians. The transaction is expected to generate approximately C$970 million (around $710 million) in annual revenues, supporting the company’s expansion in Canada, which has quicker population growth and faster-aging trends than the United States.
In June 2024, Quest Diagnostics announced that it would purchase select lab assets of Allina Health, a leading non-profit health system, to extend the company’s reach in Minneapolis and throughout Minnesota and Wisconsin. Besides, it will also acquire the outreach lab assets of OhioHealth, a nationally recognized charitable health system in Ohio. These key transactions aim to broaden the company’s geographic presence in the United States, addressing areas where access had been limited due to the predominance of health systems.
Meanwhile, Quest Diagnostics successfully acquired PathAI Diagnostics, which provides it with a readymade platform on which to scale digital pathology and AI to help health systems and other providers improve quality, speed and efficiency in cancer diagnosis. The company will also license PathAI's AISight digital pathology image management system to support its pathology laboratories and customer sites in the United States.
Price Performance
In the past year, shares of DGX have gained 15.9% compared with the industry’s growth of 22.4%.
Zacks Rank and Other Key Picks
Quest Diagnostics currently carries a Zacks Rank #2 (Buy).
Masimo’s shares have gained 7.3% in the past year. Estimates for the company’s earnings have increased from $3.63 to $3.83 in 2024 and from $3.97 to $4.20 in 2025 in the past 30 days. MASI’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 14.6%. In the last reported quarter, it posted an earnings surprise of 11.7%.
Estimates for Boston Scientific’s 2024 earnings per share have moved to $2.40 from $2.36 in the past 30 days. Shares of the company have gained 47.1% in the past year compared with the industry’s growth of 13.8%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%. In the last reported quarter, it delivered an earnings surprise of 6.9%.
Estimates for HealthEquity’s fiscal 2025 earnings have remained constant at $1.12 in the past 30 days. Shares of the company have gained 12.8% in the past year compared with the industry’s 10% growth. HQY’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 17.2%. In the last reported quarter, it delivered an earnings surprise of 21.2%.
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Quest Diagnostics' (DGX) New Deal Aids Diagnostic Access in Ohio
Quest Diagnostics (DGX - Free Report) recently entered into a definitive agreement to acquire one of the leading nonprofit health systems and academic medical centers in the United States. The company will purchase select assets of University Hospitals' (“UH”) outreach laboratory services business, expanding access to innovative, quality diagnostic information services to drive affordable healthcare in Ohio.
The latest transaction is expected to be completed in the fourth quarter of 2024, subject to the customary regulatory reviews. Financial terms were, however, not disclosed.
More on the News
Established in 1866, UH serves as a major health system in Northern Ohio, with an integrated network of more than 20 hospitals (including five joint ventures), 50 plus health centers and outpatient facilities and more than 200 physician offices in 16 counties. It boasts 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, the system’s flagship quaternary care, academic medical center, consistently features among the top performers in national rankings, such as the U.S. News & World Report’s "America's Best Hospitals."
Image Source: Zacks Investment Research
Jim Davis, chairman, CEO and president of Quest Diagnostics, notes that top health systems like UH are transitioning its laboratory services to their company to improve operating efficiency and ensure continued access to affordable care. With its specialization and scale, DGX can optimize lab services for quality, innovation and affordability, allowing health systems to redirect more resources to clinical patient care. The company is aiming to broaden its presence in the additional communities in Ohio that could benefit from its expertise.
Industry Prospects
Per a Grand View Research report, the global clinical laboratory services market was valued at $233.2 billion in 2023 and is expected to witness a CAGR of 3.5% by 2030.
The market growth is spurred by the increasing burden of chronic diseases and the growing demand for early diagnostic tests. Moreover, rapid advancements in data management and sample preparation due to growing volumes of testing samples are also expected to accelerate growth during the forecast period.
Acquisition Strategy Enhances Growth Potential
Acquisitions play a vital role for Quest Diagnostics to ensure growth, particularly by targeting hospital outreach purchases and smaller, independent labs that are immediately accretive. The company has engaged in a string of deals lately that meet its criteria for growth, profitability and returns, and also enables DGX to expand into strategic growth areas. Last month, Quest Diagnostics announced a definitive agreement with OMERS to acquire LifeLabs, its reference testing business partner, which provides community laboratory tests for millions of Canadians. The transaction is expected to generate approximately C$970 million (around $710 million) in annual revenues, supporting the company’s expansion in Canada, which has quicker population growth and faster-aging trends than the United States.
In June 2024, Quest Diagnostics announced that it would purchase select lab assets of Allina Health, a leading non-profit health system, to extend the company’s reach in Minneapolis and throughout Minnesota and Wisconsin. Besides, it will also acquire the outreach lab assets of OhioHealth, a nationally recognized charitable health system in Ohio. These key transactions aim to broaden the company’s geographic presence in the United States, addressing areas where access had been limited due to the predominance of health systems.
Meanwhile, Quest Diagnostics successfully acquired PathAI Diagnostics, which provides it with a readymade platform on which to scale digital pathology and AI to help health systems and other providers improve quality, speed and efficiency in cancer diagnosis. The company will also license PathAI's AISight digital pathology image management system to support its pathology laboratories and customer sites in the United States.
Price Performance
In the past year, shares of DGX have gained 15.9% compared with the industry’s growth of 22.4%.
Zacks Rank and Other Key Picks
Quest Diagnostics currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space are Masimo (MASI - Free Report) , Boston Scientific (BSX - Free Report) and HealthEquity (HQY - Free Report) . Each of these carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Masimo’s shares have gained 7.3% in the past year. Estimates for the company’s earnings have increased from $3.63 to $3.83 in 2024 and from $3.97 to $4.20 in 2025 in the past 30 days. MASI’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 14.6%. In the last reported quarter, it posted an earnings surprise of 11.7%.
Estimates for Boston Scientific’s 2024 earnings per share have moved to $2.40 from $2.36 in the past 30 days. Shares of the company have gained 47.1% in the past year compared with the industry’s growth of 13.8%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 7.2%. In the last reported quarter, it delivered an earnings surprise of 6.9%.
Estimates for HealthEquity’s fiscal 2025 earnings have remained constant at $1.12 in the past 30 days. Shares of the company have gained 12.8% in the past year compared with the industry’s 10% growth. HQY’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 17.2%. In the last reported quarter, it delivered an earnings surprise of 21.2%.