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LabCorp to Expand Hematology Suite With Sysmex America Deal

Zacks Equity Research

Laboratory Corporation of America Holdings LH or LabCorp recently extended its existing hematology automation pactwith medical diagnostic instrument manufacturer and information systems developer Sysmex America. With this development, LabCorp Diagnostics' primary reference laboratories will get Sysmex America's latest, enhanced XN-Series technology.

Financial terms of the deal have been kept under wraps.

SysmexDeal at a Glance

Back in 2006, LabCorp initiated its partnership with Sysmex by signing a five-year agreement under which the latter provided its fully automated hematology systems for the  primary testing laboratories of the former.

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Per the terms of the agreement, LabCorp will get to use Sysmex’ advanced XN-9100 system, a scalable, modular automation system that incorporates sample sorting robotics from Yaskawa Motoman, the provider of automation solutions for labor-intensive, high throughput areas of the clinical diagnostic lab.

Going by the press release, the XN-9100 system reduces the turnaround time and optimizes labor utilization while maintaining high-quality patient results. This frees up laboratory space to be used for other operational needs.

Is the Latest Deal Strategic Fit?

The initial deal with Sysmex is claimed to have aided LabCorp to improve its test volumes by approximately 50% while using less laboratory space. LabCorp expects to see a similar improvement with the latest Sysmex deal. According to LabCorp, the update on XN-9100 will help put its 10-year planned growth on track.

The company also believed that this collaboration with Sysmex America and Yaskawa Motoman has helped upgrade the design of compact and efficient hematology work cells that are integral to the XN-9100 system.

Strategic Alliances Add Stimulus to LabCorp

LabCorp has strengthened its foothold in the diagnostics space through both organic and inorganic means and plans to coordinate with leading companies and academic institutions to provide a wider portfolio of tests. Among the company’s recent alliances, worth mentioning are collaborations with UnitedHealthcare and CVS Health’s CVS Aetna, which enabled LabCorp to emerge as a contracted laboratory provider for all major national plans. Jul 1, 2019 onward, all LabCorp brands are included in UnitedHealthcare's preferred lab network.

The company is optimistic about the opportunity to expand volume with UnitedHealthcare through the Preferred Lab Network in 2020 and beyond. Further, in the last reported quarter, LabCorp announced the Mount Sinai digital pathology and artificial intelligence collaboration as well as finalized several other new relationships. The company is also progressing well under its broad tie-up with Walgreens WBA on patient engagement, health and wellness offerings plus the creation of a next-generation contract research organization (CRO).

Meanwhile, we make a note that LabCorp’s direct peer Quest Diagnostics DGX has also struck a partnership deal last month with hc1, a major bioinformatics player in the field of precision testing. Under this alliance, both unveiled a service called Quest Lab Stewardship powered by hc1 to help optimize laboratory test utilization.

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Quest Diagnostics Incorporated (DGX) : Free Stock Analysis Report
 
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