Quest Diagnostics ($DGX) acquired Solstas Lab Partners Group from private equity partner Welsh, Carson, Anderson and Stowe for approximately $570 million, according to a company statement Wednesday.
Solstas--a Greensboro, NC-based commercial laboratory company--operates in 9 states throughout the Southeastern U.S., including the Carolinas, Virginia, Tennessee, Georgia and Alabama. Quest hopes to expand its presence in the region through the transaction.
"Solstas has excellent client relationships and local presence in the Southeast, and we expect to build on the value of these assets with our broad and innovative test menu, scientific expertise and health IT solutions," President and CEO of Quest Diagnostics Steve Rusckowski said in a statement. "This combination will translate into better healthcare for the region because it will improve access to innovative, cost-effective diagnostic information services for patients, physicians and hospitals."
The deal also represents Quest's effort to bounce back after a disappointing 2013: Although the company modestly increased its earnings-per-share guidance in December, revenue for the full year was 3.5% lower than in 2012. In an attempt to revamp, Quest sealed three diagnostic development deals earlier this month and restructured its managerial and business units. The company also rolled out a new BRCA-related cancer predictive test, despite a pending lawsuit from competitor Myriad Genetics ($MYGN). Its acquisition of Solstas is a bright point in an otherwise ominous reimbursement environment.
"Strategic partnerships between innovative laboratory providers is of critical importance during these changing times and most often result in superior, value-based solutions for customers," said Solstas Lab Partners CEO David C. Weavil. "Quest has established itself as a trusted provider of innovation and quality solutions. We believe it is the right organization to help Solstas enhance and extend its services for physician practices, hospital systems and, most importantly, their patients."
Quest said the acquisition will increase its annual revenues by approximately 5%--including 1% from professional lab services--and will be modestly accretive to adjusted earnings per share in 2014. The company expects to finalize the deal during the first half of 2014.
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