Quest Sells Much of Focus Affiliate to Italian Laboratory

Quest Diagnostics has engaged in a rare shedding of assets, selling a portion of its California-based Focus Diagnostics affiliate to an Italian laboratory. DiaSorin S.p.A. will pay $300 million in cash for Focus’ immunodiagnostics and molecular diagnostics business, further globalizing the U.S. laboratory sector. DiaSorin will operate Focus through a new U.S. subsidiary. The deal is expected to close in the second quarter of this year. Excluded from the deal are Focus’ diagnostic information service laboratory, which primarily serves the biopharmaceutical sector.

Focus had total revenue of about $80 million in 2015, up a double-digit percentage from 2014, according to Quest. Revenue for the portions being sold to DiaSorin were not broken out. Focus is known primarily for its Simplexa molecular tests, serology, IFA and ELISA assays.

“The combination of DiaSorin and Focus products will create a unique portfolio of specialty products, especially in the clinical area of infectious disease, which will continue to strengthen the leadership of DiaSorin in this segment that today already represents over half of DiaSorin revenues,” said company Chief Executive Officer Carlo Rosa.

DiaSorin has its own line of molecular products it markets under the brand name Liaison. However, Focus has about 200 hospital clients in the U.S., a business base coveted by DiaSorin, which is trying to make inroads into the American market. It has a goal of locating half of its test volume in the U.S. in the coming years, the company said.

“As a leader in diagnostic products, DiaSorin is well positioned to build on the Focus platform of innovation to deliver continuing value to Focus’ employees, customers and patients,” said Quest Chief Executive Officer Steve Rusckowski. “This transaction reflects our ongoing commitment to refocusing on Quest’s core diagnostic information services business. We remain committed to delivering disciplined capital deployment, the fifth element of our five-point strategy. We return the majority of our free cash flow to investors in the form of dividends and share repurchases, and also have been investing in the business through strategically aligned acquisitions.”

Takeaway: As Quest makes a rare move to sell off one of its assets, it contributes to the ongoing globalization of the U.S. laboratory sector.