Quest’s Latest Acquisition Expected to Help Boost Bottom Line
Quest Diagnostics has continued on its acquisition spree, buying the toxicology laboratory business of Humana subsidiary Concentra. The deal is the third major transaction by Quest since the fall and the second in as many months. It acquired the outreach business of the University of Massachusetts Memorial Medical Center in October and the outreach of […]
Quest Diagnostics has continued on its acquisition spree, buying the toxicology laboratory business of Humana subsidiary Concentra. The deal is the third major transaction by Quest since the fall and the second in as many months. It acquired the outreach business of the University of Massachusetts Memorial Medical Center in October and the outreach of hospital operator Dignity Health in California. Concentra’s Advanced Toxicology Network includes a laboratory in Memphis, Tenn., and serves clients nationally. Quest spokesperson Wendy Bost said that the national business is what made it interested in the acquisition. “With this transaction, Concentra’s patients, physicians and employer clients will gain access to Quest’s industry-leading menu of innovative workplace drug and clinical lab diagnostic information services,” Quest Chief Executive Officer Steve Rusckowski said in a statement. “The transaction is also consistent with Quest’s disciplined capital deployment strategy, which includes generating one to two percent in growth per year through strategically aligned fold-in acquisitions.” Terms of the deal were not disclosed, and Bost would not provide any specifics about lab volumes. She said that it is likely some Concentra employees at its Memphis lab would be laid off by the end of the year but could not provide any numbers. Concentra focuses on services such as occupational medicine, urgent care, and employee wellness programs. Its laboratory business was mostly a peripheral concern and was likely pulling focus from Concentra’s other product lines, according to Michael Snyder, a principal with Clinical Lab Business Solutions in Cherry Hill, N.J. “They don’t want to be in the lab business,” Snyder said. He added that the toxicology testing business has gotten extremely competitive and volumes have risen so quickly that it is creating a backlash among payers. As part of the transaction, Quest will provide toxicology testing services primarily to Concentra and its employer groups and clinical testing to its urgent and primary care facilities. “Quest will be exclusive provider of these services except in situations where Concentra has other contractual obligations,” Bost said. Quest’s toxicology business is substantial enough that it provides annual reports on drug testing trends. Quest said in its statement that it expects the transaction to add positively to its bottom line by 2014.