Summary: Quest Diagnostics has completed its acquisition of LifeLabs from OMERS for approximately CAN $1.35 billion, bringing together two leading diagnostic service providers in North America.

Takeaways:

  1. The acquisition enhances Quest Diagnostics’ presence in Canada, combining its specialized lab services with LifeLabs’ strong community presence.
  2. LifeLabs will continue operating under its brand with the same management, gaining access to Quest’s expertise and innovations.
  3. The transaction is expected to be accretive to adjusted earnings per share within the first 12 months post-closing.

Quest Diagnostics, a leading provider of diagnostic information services, today announced the completion of its acquisition of LifeLabs from OMERS. The transaction, valued at approximately CAN $1.35 billion (approximately USD $1 billion), including net debt, has received all necessary approvals and is now closed.

“This acquisition brings together two industry leaders committed to enhancing access to diagnostic innovation for patients in North America,” says Jim Davis, chairman, CEO, and president of Quest Diagnostics. “The combination of LifeLabs’ strong business and deep community presence with Quest’s specialized lab services and expertise creates a powerful opportunity to generate growth while improving care and outcomes for Canada’sexpanding and aging population.”

Quest Diagnostics Provides Comprehensive Offerings

Quest provides a comprehensive offering of tests requiring specialized skills, science, and technology in clinical areas such as cardiometabolic health, infectious diseases, Alzheimer’s disease, oncology and genomics.

“Joining forces with Quest Diagnostics marks a pivotal moment for LifeLabs. Quest’s extensive diagnostic capabilities and forward-thinking strategy will help the LifeLabs team enhance access to services and ultimately improve healthcare for Canadians,” says Charles Brown, president and CEO of LifeLabs. 

Business as Usual

LifeLabs and its more than 6,500 employees will continue to operate under the LifeLabs brand and with the same management team and headquarters. Quest will provide LifeLabs with new expertise, innovations and resources to strengthen the services provided by LifeLabs. In addition to fostering greater access to specialized tests, the two companies will work together to improve online appointment scheduling and speed patient service centre processing. Quest will also support LifeLabs’ data security enhancements while ensuring Canadian patients’ health data remains in Canada.

“OMERS is proud to have supported and fostered LifeLabs’ growth into the prominent Canadian healthcare institution it is today,” says Michael Hill, executive vice president and global head of OMERS Infrastructure. “This transaction represents a significant achievement for OMERS and its members. We extend our best wishes to Quest and LifeLabs as they embark on their shared journey towards future success and innovation supporting patient care.”

Transaction Details

Quest has acquired 100% of the equity of LifeLabs. The transaction meets all of Quest’s criteria on growth, profitability and returns. Quest expects the transaction to generate approximately CAN $970 million (approximately USD $710 million) in annual revenues. The company expects the transaction to be slightly dilutive to GAAP earnings per share (EPS), due primarily to amortization of intangibles and other items, but $0.10-$0.15 accretive to adjusted EPS, in the first 12 months after closing. The company will provide updated financial guidance for the full year 2024 on its third quarter 2024 earnings call in October 2024. Additional terms were not disclosed.