Quest Diagnostics (DGX) To Launch Coronavirus Test Service

Quest Diagnostics (NYSE:DGX) announced plans to launch a coronavirus (COVID-19) test service once it is prepared to receive specimens for testing from Mar 9, 2020. Through the latest service, the company will cater to the testing requirements of patients in the United States by providing access to the test.

Notably, the test facilitates the presumptive detection of nucleic acid in respiratory samples of patients who meet the clinical criteria of the Centers for Disease Control and Prevention (“CDC”) for COVID-19 testing.

With the latest test service launch, Quest Diagnostics aims to strengthen its position in the global Diagnostic Information Services segment.

Regulatory Status of the Test

Quest Diagnostics will provide the service as a laboratory-developed test. However, the FDA’s review under emergency use authorization (“EUA”) is still pending. The company will submit the same for the FDA’s review within 15 days of clinical testing, as mandated by the guidance.

Significance of the Test Service

Per Quest Diagnostics, the test service is expected to employ respiratory specimens collected in suitable health care settings, such as hospitals and physician offices.

However, the company has notified that it is not collecting any sample at its patient service centers and phlebotomy sites. Patients, who are suspected as well as confirmed to have COVID-19, should consult a physician for advices about the process to provide specimens for testing by the company.

Notably, the company’s direct peer LabCorp (NYSE:LH) also announced the availability of LabCorp 2019 Novel Coronavirus (COVID-19), NAA test, which detects the presence of the underlying virus causing the COVID-19. The test will be used for patients that meet the current evaluation guidance of infection with the same. Currently, LabCorp is pursuing an EUA for the NAA test.

Industry Prospects

Per a report by Grand View Research, the global clinical laboratory tests market was valued at $176.7 billion in 2019 and is expected to register a CAGR of 7.1% between 2020 and 2027. Factors like rising prevalence of chronic diseases and growing awareness among the health-conscious population are expected to drive the market.

Considering the rising impact of COVID-19, Quest Diagnostics seems to be well positioned in the niche market.

Recent Partnerships & Acquisitions

Quest Diagnostics entered into a multi-pronged long-term collaboration with Memorial Hermann Health System (a key not-for-profit health system that includes 17 hospitals and more than 300 care delivery sites in the Greater Houston) in January, 2020. The collaboration was aimed for gaining more access to innovative and high-value laboratory services for providers as well as patients in Greater Houston.

In the same month, the company acquired Blueprint Genetics — a key specialty genetic testing firm with experience in gene variant interpretation based on next generation sequencing and bioinformatics. Through the buyout, Quest Diagnostics will gain access to actionable insights in genetic and rare diseases. This will enable the company to improve patient care as well as pharmaceutical drug research and development.

In December 2019, Quest Diagnostics acquired certain assets of the clinical laboratory services business of Boston Clinical Laboratories (“BCL”), which is a Waltham-based regional provider of laboratory services. After the buyout, BCL’s patients and providers will have access to Quest Diagnostics’ broader range of diagnostic services, a larger network of patient service centers, and access to tools such as the company’s Quanum suite of healthcare information technologies as well as data analytics.

Also, the company signed a professional laboratory services agreement with an eight-hospital health system in Tennessee.

Price Performance

Shares of Quest Diagnostics have rallied 31.3% in the past year compared with the industry’s 2.9% growth.

Zacks Rank & Key Picks

Currently, the company carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are ResMed Inc. (NYSE:RMD) and Medtronic plc (NYSE:MDT) .

ResMed has a projected long-term earnings growth rate of 14.5%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Medtronic’s long-term earnings growth rate is estimated at 7.4%. The company presently carries a Zacks Rank #2.

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