Quest Diagnostics Inc.
), a leading provider of diagnostic information services,
announced its takeover of ConVerge Diagnostic Services, LLC from
Water Street Healthcare Partners, one of the prime investors in
the health care industry. However, the financial terms of the
acquisition are yet to be disclosed.
The acquisition is part of the five-point strategy announced by
the company in 2012. The strategies intend to strengthen DGX's
foothold in the core diagnostic information services business,
drive operational excellence, restore growth, simplify the
organizational structure and deliver disciplined capital
deployment. The company expects to grow 1%-2% through its
strategically aligned acquisitions.
ConVerge Diagnostic is a regional leader in women's health with
good repute for customer service, medical expertise and
innovation. It provides clinical, cytology and anatomic pathology
testing services to patients, physicians and hospitals in New
The addition of ConVerge Diagnostic is expected to synergize
perfectly with the Quest Diagnostic's business portfolio. The
acquisition will extend the range of diagnostic information
services for DGX, facilitating greater accessibility of patients
in the region and enhancing better patient outcomes in the long
run. The transaction paves the way for both the companies to
discover new medical innovations that can spur better patient
ConVerge Diagnostic is the fourth laboratory acquisition of
Quest Diagnostics in 2013 and the second in Massachussets, after
the Jan 2013 acquisition of UMass Memorial Medical Center's
clinical and anatomic pathology outreach laboratory businesses in
Following the acquisition, ConVerge Diagnostic will become a
wholly-owned subsidiary of Quest Diagnostics. Its laboratory in
Peabody, MA, and its patient service centers currently
functioning in Massachusetts, New Hampshire and Connecticut will
operate as part of Quest Diagnostic's national laboratory
network. Eventually the ConVerge laboratory will be integrated
into the one-of-a kind laboratory facility being built by Quest
Diagnostics in Marlborough, Mass.
Following the announcement of the five-point strategy, Quest
Diagnostics has been rigorously trying to pursue it for robust
organizational excellence. As a part of its plan to remain
focused on the core diagnostic information services business, DGX
has already divested its non-core assets, selling its OralDNA
dental diagnostics, HemoCue diagnostic products, Ibrutinib
royalty rights and Enterix colorectal-cancer product businesses.
The divestments have generated gross proceeds of $800 million,
which in turn, has propelled enhanced shareholder value.
On the hand, the strategy of delivering an effective capital
deployment is being affected through cautious acquisitions made
by Quest Diagnostics in 2013 including the Tennessee-based
toxicology and clinical laboratory business of Concentra, a
Humana business, and lab-related clinical outreach operations of
Dignity Health in California and Nevada.
Quest expects the ConVerge acquisition to be neutral to adjusted
earnings per share in 2013. It, however, expects the transaction
to be modestly accretive to adjusted earnings in 2014.
DGX currently carries a Zacks Rank #3 (Hold). Other stocks that
are worth a look include
LHC Group, Inc.
), each of them carries a Zacks Rank #1 (Strong Buy), and
), carrying a Zacks Rank #2 (Buy).
AMSURG CORP (AMSG): Free Stock Analysis
QUEST DIAGNOSTC (DGX): Free Stock Analysis
LCA-VISION INC (LCAV): Free Stock Analysis
LHC GROUP LLC (LHCG): Free Stock Analysis
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