Slimming down for the new year

Quest Diagnostics CEO Steve Rusckowski

While some companies are focused on megamergers and bolt-ons, others are looking to ship out their underperforming or extraneous segments and buckle down on core business, especially in the diagnostics world.

Quest Diagnostics ($DGX), the biggest provider of lab tests, sees a wave of Medicare austerity on the horizon and has wasted no time paring down its operations to stay in the black. Along with up to 600 job cuts, Quest is divesting from much of its diagnostic products business, selling OralDNA to Access Genetics at the start of the year for an undisclosed sum, contributing to an $89.5 million charge. Then, in February, Quest shipped its HemoCue unit to Danaher for $300 million.

Hologic CEO Rob Cascella

In the same vein, Hologic ($HOLX) sold its Lifecodes business to Immucor for $85 million, exiting one of the units it acquired in its $3.8 billion acquisition of Gen-Probe last year in an effort to pay down debt and focus on women's health diagnostics. Invacare ($IVC) had a similar thought with its $150.8 million sale of its medical supplies business to AssuraMed, as the wheelchair manufacturer is still gradually working through an FDA consent decree, cutting at least 140 jobs and streamlining its operations.

For Wright Medical ($WMGI), after spending years getting out from under federal antikickback penalties, the company sees a brighter future as a smaller operation, in June selling its hip and knee implants business to MicroPoint Medical for $290 million. The deal leaves Wright with its growing foot-and-ankle unit and an expanded share of the biologics implant market, thanks to a March acquisition of BioMimetic Therapeutics ($BMTI) for $190 million.

On the other hand, the spike in companies looking to shuffle their priorities and pare down creates opportunities for those with cash on hand, much like Argon Medical Devices, which snatched up Angiotech Pharmaceuticals' successful interventional devices business for $362.5 million in March. Through the deal, Argon gets a fleet of biopsy devices and drainage catheters that posted $101.6 million in sales last year.

Same goes for AngioDynamics ($ANGO), which paid $15 million for Microsulis Medical's soft-tissue-treating microwave ablation technology, and GE Healthcare ($GE), which bought nisyn Medical's ultrasound repair segment on undisclosed terms.

Slimming down for the new year