Quest Diagnostics carves out PathAI's digital pathology lab, plots AI ramp-up

Quest Diagnostics is building out its artificial intelligence-powered cancer pathology offerings through a multilayered deal with PathAI—acquiring some assets and licensing out others.

The testing giant will be buying out PathAI’s Memphis, Tennessee-based diagnostics laboratory, with plans to turn it into its own AI and digital R&D solutions center to help support its current AmeriPath and Dermpath Diagnostics pathology businesses.

PathAI, meanwhile, will continue its solo work with drugmakers and biopharma clients by providing clinical trial services.

“This transaction will enable Quest to dramatically ramp our capabilities in AI and digital pathology, building on our leadership in oncology and subspecialized pathology services,” Quest’s senior oncology VP, Kristie Dolan, said in a statement. “AI and digital technologies have tremendous potential to improve cancer care, and Quest has the know-how to scale and deliver innovations that are high quality, efficient and broadly accessible.”

Under a separate agreement, Quest will purchase access to the former Fierce Medtech Fierce 15 winner’s AISight digital pathology image management system and algorithm portfolio—while leaving the door open for future collaborations on AI development. At the same time, Quest will serve as the preferred provider for PathAI's biopharma clinical trial lab services.

The financial details of the deals, set to close by the end of June, were not disclosed.

“This strategic relationship represents a significant milestone for the anatomic pathology industry and marks a major turning point for digital pathology adoption in the U.S.,” said PathAI co-founder and CEO Andy Beck.

The two companies cite statistics from the American Cancer Society, which predicts that 2024 will be the first year the U.S. records more than 2 million new cases of cancer. By digitizing slides of tissue biopsy samples and automating some facets of their analysis, Quest and PathAI aim to help pathologists share findings for second opinions and better tackle an ever-increasing workload.

“Digital pathology will strengthen our ability to offer flexible solutions that fulfill the needs of today's hospital laboratories. For instance, many hospital labs are facing a shortage of histotechs. With digital pathology, these labs can refer slide preparation to us while continuing to perform professional interpretation in-house,” said Dolan. “Digital pathology will also allow us to extend the interpretative expertise of our roughly 400 pathologists to hospitals and other labs who lack these skilled professionals on-staff, regardless of location.”

In time, Quest said it also hopes its tie-up with PathAI will serve as the foundation for offering digital consultation services overseas, as well as outside of cancer and further into dermatological, gastrointestinal and urological diseases.