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Quest Diagnostics (DGX) Acquires Northern Light Laboratory

Quest Diagnostics, Inc. DGX announced the closure of its previously announced acquisition of select assets of Northern Light Laboratory --  a large integrated healthcare system in Maine. Financial details of the deal were kept under wraps.

In December 2022, Quest Diagnostics entered into a strategic laboratory collaboration to acquire Northern Light Health's outreach laboratory business.

The latest development is likely to broaden Quest Diagostics' laboratory services offering.

More on the News

Quest Diagnostics offers a complete portfolio of services to authorize health systems and hospitals to enhance the quality, innovation and insights of their diagnostic laboratory services, elevate patient experience and lower costs for more accessible — and affordable — care.

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Quest Diagnostics now offers professional laboratory management services for nine of Northern Light Health's hospital laboratories and its cancer center laboratory at Northern Light Cancer Care in Brewer, Maine.

Strategic Implications

Through the acquisition, physicians and patients throughout Maine will likely benefit from access to Quest Diagnostics’ highly-advanced test menu, a network of patient access sites throughout the state, broad health plan coverage and lower out-of-pocket costs for various services.

Quest Diagnostics' laboratory in Marlborough, MA, will offer the majority of advanced and routine clinical testing services for physicians and patients previously served by Northern Light Laboratory.

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Per the December update, diagnostic testing is a highly specialized and rapidly evolving area of medicine. The acquisition enables Northern Light Health to position itself to deliver the highest level of diagnostic innovation, service and affordability while energizing its core focus on patient care.

Industry Prospects

Per a report by Grand View Research, the global clinical laboratory service market size was $201.94 billion in 2021 and is expected to register a CAGR of 3.7% by 2030.  The increasing burden of chronic diseases and the growing demand for early diagnostic tests are fueling the market.

Recent Developments

In February 2023, Quest Diagnostics entered into a strategic agreement with NewYork-Presbyterian to extend access to quality, advanced laboratory services for the providers and patients. The agreement targets to serve NewYork-Presbyterian's providers and patients in the greater New York region and beyond.

In November 2022, Quest Diagnostics acquired select assets of LabCare Plus — the outreach laboratory services business of Summa Health — a large integrated health system. With the buyout, the company expands access to diagnostic advancement and insights, empowering better health for more communities in Northeastern Ohio.

Share Price

In the past year, Quest Diagnostics has outperformed its industry. The stock has lost 7.6% compared to the 23.8% decline of the industry.

Zacks Rank and Key Picks

Quest Diagnostics currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the overall healthcare sector include Haemonetics Corporation HAE, TerrAscend Corp. TRSSF and UnitedHealth Group UNH. Haemonetics and TerrAscend both sport a Zacks Rank #1 (Strong Buy), while United Health carries a Zack Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Haemonetics’ stock has risen 42.1% in the past year. Earnings Estimates for Haemonetics have increased from $2.87 per share to $2.91 for 2023 and from $3.02 per share to $3.28 for 2024 in the past 30 days.

HAE’s earnings beat estimates in all the last four quarters, delivering an average surprise of 10.98%. In the last reported quarter, it reported an earnings surprise of 7.59%.

Estimates for TerrAscend in 2023 have remained constant at a loss of 10 cents per share in the past 30 days. Shares of TerrAscend have declined 70.6% in the past year.

TerrAscend’s earnings beat estimates in one of the last three quarters and missed the mark in the other two, the average negative surprise being 136.11%. In the last reported quarter, TRSSF delivered an earnings surprise of 216.67%.

The bottom line of UnitedHealth Group outpaced estimates in all the last four quarters, the average surprise being 4.4%. The Zacks Consensus Estimate for UNH’s 2023 earnings suggests an improvement of 12.3%, while the same for revenues indicates growth of 10.7% from the corresponding year-ago reported figures.

The consensus mark for UNH’s 2023 earnings has moved 0.2% north in the past 60 days.

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