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| Quest Diagnostics CEO Stephen Rusckowski |
Quest Diagnostics ($DGX) is charging full speed ahead with its previously announced joint venture with global CRO Quintiles ($Q), launching the companies' new business, dubbed Q2 Solutions, to provide lab services for clinical trials and to expand its diagnostics footprint.
Quest and Quintiles revealed the deal in March, saying they would team up to give biopharma customers the "depth of capabilities and end-to-end clinical trial laboratory services" needed to take their research to the next level. But the companies are not stopping there. Now that the deal is closed, Quest and Quintiles will also kick off an "exclusive collaboration" to see how their combined data sets could improve clinical trials in areas such as patient recruitment and retention, trial design and companion diagnostic development, the companies said in a statement.
Both companies are keeping quiet on financial details, but Quintiles will own 60% Q2 Solutions and Quest will hold onto the remainder, creating the world's second-largest provider of central laboratory services. The venture would have brought in $575 million in revenues in 2014.
"Clinical laboratory services are central to advances in genomics, precision medicine and drug development. Q2 Solutions is well positioned to generate significant advances in these areas to benefit biopharmaceutical customers and patients," Quest CEO Steve Rusckowski said in a statement.
The deal also bolsters Quest's 5-point strategy, Rusckowski added, as the company looks to increase its presence in clinical trials and refocus on its diagnostics business. Last year, the Madison, NJ-based company decided to do some housecleaning, implementing a series of job cuts, managerial changes and reorganization to revive its lagging fortunes. Quest also started scouting around for deals, scooping up Solstas Lab Partners for $570 million to expand its footprint in the southeastern U.S.
The company's hard work is not going unnoticed. In May, Quest's shares hit a record after takeover speculation surfaced on Twitter and elsewhere, with stock climbing as much as 20.5% before briefly halting on the New York Stock Exchange. The diagnostics giant declined to address a potential sale, saying it would not discuss the stock price move because the company does not comment on rumors or speculation, a spokeswoman told Reuters at the time.
Still, with a new JV and positive numbers under its belt, Quest could be poised to generate more waves in the months ahead. The company reported Q1 revenues of $1.8 billion and is forecasting 2% to 3% growth in 2015. "We're pleased with the continued progress we're making against our 5-point strategy," Rusckowski said earlier this year.
- read the statement