Quest Diagnostics Inc. has agreed to acquire Solstas Lab Partners Group from its private equity owner for $570 million, a purchase that enables the Madison-based commercial laboratory to expand its presence in the Southeast.
Greensboro, N.C.-based Solstas operates in nine states spanning Virginia to Alabama. Quest CEO Steve Rusckowski said Solstas has excellent relationships in that region, enabling Quest to provide lab services to additional hospital clients.
Rusckowski said Quest's array of tests, scientific expertise and health information technology makes this acquisition a good fit.
"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," Rusckowski said in a statement.
Rusckowski said the purchase builds on Quest's strategy of targeted acquisitions to boost revenue and profit. The company expects the deal to add about 5 percent to its annual revenue, about 1 percent of which will come from professional lab services, and modestly improve Quest's 2014 earnings per share.
Like others in the industry, Quest is under pressure to increase revenue in a tight economic environment where governments and insurance companies are reducing reimbursements and consumers are choosier about using health services.
The acquisition is expected to be complete in the first half of 2014.
Solstas is owned by Welsh, Carson, Anderson, and Stowe, a private equity firm specializing in health care business. Solstas and its subsidiaries serve states includingVirginia, Tennessee, Georgia, Alabama and the Carolinas.
Shares of Quest rose 12 cents to $54.65 in morning trading on the New York Stock Exchange.
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