As per its plan to sell the HemoCue diagnostics products
), recently completed the divesture of the same. The company
announced that Radiometer Medical ApS purchased this business for
$300 million plus customary adjustments for cash balances. Last
December, Quest Diagnostics came up with the plan to sell its
HemoCue diagnostic products business in order to align its assets
in the core diagnostics information service business.
HemoCue develops point-of-care testing systems like hemoglobin
tests, glucose test and others worldwide. The company believes
that, in addition to its earlier divestment of OralDNA Labs
salivary-diagnostics business to Access Genetics, the latest
divesture of HemoCue will allow it to refocus its resources
toward core diagnostic information services, drive operational
excellence and restore growth.
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. The company has experienced increasing demand for
gene-based and esoteric tests compared to routine tests on the
back of increased esoteric mix contributed by Athena and
Earlier in Dec 2012, as a part of this strategy, the company
shredded off its OralDNA Labs salivary-diagnostics business in
order to refocus its resources to core diagnostic information
services. In the recent past, Quest developed a number of
gene-based and esoteric tests, made strategic acquisitions and
entered into partnerships to further strengthen its foothold in
Although we remain concerned with Quest Diagnostics' overall
sales disruption in the recent past, we are optimistic regarding
the company's strategy to refocus on Diagnostic Information
Services along with the organizational structure developed by the
company's new CEO, Steve Rusckowski. We also expect this to run
successfully adding synergies to its ongoing $500 million
restructuring initiative, associated with its Invigorate
We remain concerned about Quest Diagnostics as it is
continuously witnessing challenges in testing volume. Concerns
also remain about a conservative 2013 revenue outlook, indicating
that the industry trend will not improve in the near future.
Moreover, reimbursement pressure from government and other payers
continue. Concerns linger regarding the reimbursement cut, in
effect from Jan 1, 2013. The competitive landscape is also
tough with the presence of
Laboratory Corporation of America Holdings
). The stock retains a Zacks Rank #3 (Strong Sell).
Other Stocks to Consider
Other medical device stocks worth a look are
Medical Action Industries Inc.
). Both these stocks carry a Zacks Rank #1 (Strong Buy).
CYBERONICS INC (CYBX): Free Stock Analysis
QUEST DIAGNOSTC (DGX): Free Stock Analysis
LABORATORY CP (LH): Free Stock Analysis
MEDICAL ACTION (MDCI): Free Stock Analysis
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