Dive Brief:
- Labcorp has agreed to acquire certain ambulatory outreach laboratory assets from Community Health Systems, furthering an expansion push that has seen the testing services provider forge deals with a growing list of local and national health systems.
- The $195 million cash agreement with Community Health includes patient service centers and in-office phlebotomy locations in 13 states, where Labcorp will assume some facility leases.
- Evercore ISI analyst Elizabeth Anderson, in a note to clients Tuesday, called the deal “very much in-line with [Labcorp’s] long-stated hospital management and outreach strategy where it continues to build a strong track record.”
Dive Insight:
Like its chief rival Quest Diagnostics, Labcorp has stepped up collaborations with health systems looking to outsource lab services to offset financial pressures and staffing shortages. The COVID-19 pandemic accelerated the trend.
Outreach lab services include testing for doctors’ offices and other locations outside of the hospital.
In the arrangement with Labcorp, Community Health patients and providers at the outreach sites will gain access to Labcorp’s testing and laboratory services. Community Health, one of the nation’s largest health systems, will continue to operate its inpatient and emergency department labs and provide lab services for imaging, preadmission testing and other hospital-based services.
Labcorp paid about $839 million in 2024 to acquire the clinical and outreach businesses of Baystate Medical Center, Providence Medical Foundation, Westpac Labs, Invitae, BioReference Health and other businesses. In 2023, Labcorp spent about $671.5 million on acquisitions.
In one of its larger deals, Labcorp acquired certain assets of hospital chain Ascension’s outreach laboratory business for about $400 million in 2022.
The Community Health transaction is expected to close in the fourth quarter.
