Quest allies with Hologic in women's health Dx deal

Quest Diagnostics ($DGX) and Hologic ($HOLX) inked a 5-year strategic deal calling for the companies to jointly develop and promote new women's health diagnostic products.

Their agreement, announced June 6, expands on an existing relationship between the two companies. Quest already sells Hologic's APTIMA HPV mRNA-based assay across the country to test for cervical cancer risks. That arrangement will continue, but Quest will boost its APTIMA-related product offerings as part of the expanded arrangement, and will add Hologic APTIMA tests for HPV, chlamydia and gonorrhea, among other infections.

Neither side is disclosing financial terms of their deal. But it is a non-exclusive arrangement set to last 5 years with the option to renew. And their focus on developing new women's health diagnostic products will itself involve satellite partnerships with medical associations and patient advocacy groups.

Quest gains a lot here, with a big boost in its women's health offerings, and the expanded focus could help its bottom line. The company is in an ongoing reorganization and has pursued growth through strategic acquisitions. But Quest's 2013 first quarter saw a drop in net income due to factors ranging from Medicare and private payer reimbursement declines to overall market conditions and restructuring costs (including 600 job cuts so far this year).

Hologic, on the other hand, gains a partner that can help it reach a broader audience as it struggles with a number of factors. A $51.1 million net loss damped the company's 2013 second quarter, due to higher selling costs and a profound jump in R&D spending, and as the company sorts out operations in the wake of its $3.8 billion Gen-Probe buy. Hologic has targeted diagnostics as a growth area, and Quest can help it grow one crucial part of that.

- read the release
- here's MHT/BBJ's take

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