Industry Buzz: Quest Puts HemoCue Up for Sale

In its continuing march toward a streamlined business model, Quest Diagnostics has put its HemoCue division on the sales block. HemoCue, with operations based in Cypress, Calif., develops and manufactures handheld devices for determining hemoglobin, glucose, and white blood cell counts. Quest bought the firm for $420 million, although some analysts say the final purchase price was closer to $440 million. Quest has not disclosed any potential suitors for the company. When Quest originally announced the acquisition exactly six years ago, HemoCue was intended to play an integral part of its Care360 electronic portal for physicians. “Technology is enabling diagnostic testing to move closer to the patient, and the acquisition of HemoCue and its exciting product pipeline gives us a strong presence in this emerging market,” said former Quest Chief Executive Officer Surya N. Mohapatra, at the time the deal was announced. “This will help doctors improve the way they diagnose, monitor, and treat disease.” Mohapatra left Quest last year. His successor, Steve Rusckowski, has made it clear the company required a major operational shakeup after a couple of years of flat revenue growth. Last fall, Quest announced a streamlining of layers of management, with a refocus on traditional diagnostics and diagnostic information services. Quest’s announcement it would shed HemoCue came just a couple of weeks after its New Year’s Eve announcement it had sold its OralDNA division to Access Genetics for an undisclosed sum. “The company’s plan to sell HemoCue comes as no surprise, given Quest’s indication that it was reviewing strategic options for HemoCue and Celera in an effort to refocus the business on traditional lab services,” said a recent report by Amanda Murphy and Sylvia Chao of investment banking firm William Blair & Co. in Chicago. They added that HemoCue’s sales—which were less than $100 million a year when Quest acquired it—had likely not ramped up as projected. “We expect more divestitures of nonstrategic product assets, although management has said it intends to keep Focus Diagnostics’ infectious disease testing [and point-of-care products] business,” Murphy and Chao said.