Quest Diagnostics Inc.
) has signed a definitive agreement to acquire Solstas Lab
Partners Group and its subsidiaries. Quest Diagnostics will pay
approximately $570 million to Welsh, Carson, Anderson and Stowe,
a private equity firm which owns Solstas. The acquisition is
expected to be completed by the first half of 2014.
Greensboro, N.C.-based Solstas operates in nine Southeastern
states in the U.S. and is a full-service commercial laboratory
company. The integration of Quest Diagnostics advanced diagnostic
services with the wide client network of Solstas in Southeast
U.S. should boost healthcare solutions in the aforesaid
The transaction will benefit Quest Diagnostics by adding
nearly 5% to annualized revenues, about 1% of which would be from
professional lab services. The deal is also expected to be
slightly accretive to adjusted earnings per share in 2014.
This deal is in line with Quest Diagnostics' robust and
consistent inorganic growth strategy. In a bid to enhance its
diagnostics services, the company acquired ConVerge Diagnostic
Services and the lab-related operations of Dignity Health and
UMass Memorial Medical Center in 2013. It also formed a strategic
) in the same year to focus on women's health.
We are optimistic about Quest Diagnostics' active involvement
in fighting odds like low healthcare demand and adverse
healthcare reforms. As mentioned in the company's annual report,
management is focusing strongly on a five-point strategy, which
includes restoring growth and driving disciplined capital
deployment through strategically aligned, accretive acquisitions.
Such efforts are likely to garner increased market share for the
company and subsequently help it to emerge as a leading provider
of diagnostic testing information services.
Currently, Quest Diagnostics has a Zacks Rank #4 (Sell). Some
better-ranked in the broader healthcare industry are
Almost Family Inc.
). Both these stocks sport a Zacks Rank #1 (Strong Buy).
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