Quest Diagnostics said today it will acquire Solstas Lab Partners Group and its subsidiaries from private-equity firm Welsh, Carson, Anderson and Stowe for a total $570 million, in a deal that boosts the buyer’s presence with patients and healthcare providers in the southeastern United States.
Headquartered in Greensboro, NC, Solstas is a full-service commercial laboratory company that operates in nine states including Alabama, Georgia, North Carolina, South Carolina, Tennessee, and Virginia.
Steve Rusckowski, Quest Diagnostics’ president and CEO, said in a statement that the deal fit into the company’s “five-point strategy” launched more than a year ago, which includes restoring growth—in part by extending into adjacent markets—and focusing capital spending on strategically aligned, accretive acquisitions.
Quest Diagnostics said it expects the transaction to add approximately 5% in annual revenues—about 1% of which will be from professional lab services—and add to its adjusted earnings per share this year. The company expects to complete the acquisition in the first half of 2014, subject to customary closing conditions.
“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,” Rusckowski said. “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 Solstas deal continues a series of strategic acquisitions for Quest Diagnostics. Addressing the JP Morgan 32nd Annual Healthcare Conference last week, Rusckowski said four deals last year will contribute 1–2% to revenue growth this year.
During 2013, Quest Diagnostics acquired ConVerge Diagnostic Services, a full-service lab providing clinical, cytology, and anatomic pathology testing services in New England; the lab-related clinical outreach service operations of Dignity Health, a hospital system based in California; the toxicology and clinical laboratory business or Advanced Toxicology Network (ATN) of medical center operator Concentra; and the clinical and anatomic-pathology outreach laboratory businesses of UMass Memorial Medical Center.
Quest Diagnostics provides diagnostic information and testing services for patients and doctors. The company also offers professional laboratory services designed to help hospitals and health systems manage their laboratories to improve both quality and cost efficiencies.