For Quest, the move allows it to gain a stronger foothold in the health and wellness market, which received a boost under the Patient Protection and Affordable Care Act by creating incentives for employers to invest in such programs. As of this year, companies can reward employees who participate in such programs and improve their health with lower insurance premiums.
The diagnostic services company already has its own health and wellness business, Blueprint for Wellness, which provides health assessments to individuals and employers, based on clinical laboratory testing results.
While the deal should be a positive expansion for Quest, there are broader questions about the underlying growth potential and reimbursement environment for the market, Michael Cherny, managing director and analyst at ISI Group, wrote in a research note.
The company, like many of its hospital clients, is facing pressure on its revenue from declining utilization and reimbursement.
Earlier this year, Quest said it would acquire Solstas Lab Partners, a Greensboro, N.C., commercial laboratory business, from its private equity owners in a $570 million deal.
Follow Beth Kutscher on Twitter: @MHbkutscher