In the first significant clinical laboratory acquisition of 2012, Quest Diagnostics Incorporated (NYSE: DGX) acquired S.E.D. Medical Laboratories of Albuquerque, New Mexico, from Lovelace Health System. The transaction was announced on January 3, 2012, and the sale was completed just days later, on January 7.
Along with acquiring a 50,000 square foot lab facility in Albuquerque, Quest Diagnostics picks up nine patient service centers (PSCs) in Albuquerque and Rio Rancho, plus six additional PSCs throughout the state. S.E.D. Medical Labs employees 450 people and performs about 7.5 million tests per year.
Quest Diagnostics Will Manage Four Inpatient Clinical Laboratories
One interesting aspect to the sale is the fact that Quest Diagnostics will manage the inpatient laboratories at four hospitals owned by Lovelace Health System. It will also provide medical laboratory testing services to members of the Lovelace Health Plan.
Founded in 1972 by three pathologists named Savino, Engberg, and Dain, S.E.D. Medical Laboratories’ 40-year run as a private venture ended on January 7, 2012, when Quest Diagnostics Incorporated acquired the clinical laboratory organization.
Specific terms of the sale were not announced. Sources who were familiar with the S.E.D. sales book that was shown to prospective buyers told Dark Daily’s sister intelligence service, The Dark Report, that the purchase price was probably less than one time annual revenue. If true, this would be a relatively low price, compared with what buyers have paid for similar clinical laboratory testing businesses in recent years.
S.E.D. is another example of consolidation in the clinical laboratory sector. It was founded in 1972. It took its name from the initials of the three founding pathologists, Doctors Savino, Engberg, and Dain. In April 1987, S.E.D. formed a joint venture with the St. Joseph Healthcare System in Albuquerque. All of the lab staff and equipment from the two partners were assimilated into one organization.
Medical Laboratories of S.E.D. and Lovelace Sandia Health Merged in 2003
The next change at S.E.D. Medical Laboratories came in 2002 and early 2003. That is when, in separate purchases, Ardent Health Services acquired St. Joseph Healthcare System and Lovelace Health System. Ardent merged the two health systems into a new entity known as Lovelace Sandia Health System. This new entity had five hospitals, 460 providers, and a health plan. It was in July 2003, when the Lovelace Sandia Health System merged its laboratories with S.E.D. Medical Laboratories.
The acquisition of S.E.D. Medical Laboratories by Quest Diagnostics represents a major change in Albuquerque’s lab testing marketplace. The two primary clinical laboratories providing services to office-based physicians in the Albuquerque metro area have been S.E.D. and its cross-town competitor, TriCore Laboratories. Now that S.E.D. is owned and operated by Quest Diagnostics, it is expected that competition will intensify for the lab testing referrals of office-based physicians in this metro area.
—Joseph Burns
Related Information:
S.E.D. Labs to be acquired by Quest Diagnostics
Quest acquires S.E.D. Medical Laboratories
Quest Diagnostics Completes Acquisition of S.E.D. Medical Laboratories
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