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Quest and Hologic Extend Ties

Zacks Equity Research

Leading player in the women’s health market Hologic Inc. (HOLX) recently inked a non-exclusive agreement with Quest Diagnostics (DGX). As per the agreement, Quest Diagnostics will conduct extensive testing on Hologic’s APTIMA line of products to address vital unmet needs in the women’s health market. Further, the companies will conjointly develop and promote advanced diagnostic solutions to improve women’s health.

The agreement has an initial term of five years. This new partnership extends the lasting association between the companies. As per the agreement, Quest Diagnostics will continue to apply its expansive services on Hologic’s market leading ThinPrep portfolio.

The alliance with Hologic will support Quest Diagnostics’ focus to provide innovative testing solutions and other diagnostic information services specially designed to improve women’s health. The strategic alliance is likely to eliminate challenges faced by obstetricians as well as gynecologists for treating women.

As per management at Quest Diagnostics, the alliance with Hologic is a landmark in women’s health diagnostics. The unparalleled diagnostic information services as well as laboratory and interpretive consulting provided by Quest along with Hologic’s innovative portfolio should serve the current market needs in the area of women health, especially cancer detection.

Notably, Quest Diagnostics continues to focus on high potential areas such as core diagnostic information services. On the other hand, the agreement reflects Hologic’s effort to promote its APTIMA franchise (under Diagnostics business) that was included in the company’s portfolio subsequent to the acquisition of Gen-Probe.

Hologic’s Diagnostic business presently accounts for almost 49% of total revenue. Its APTIMA STD line still accounts for a lion’s share of clinical Diagnostics revenue. We are impressed by the progress of this franchise that will likely help maintain the growth momentum.

Both Hologic and Quest Diagnostics carry a Zacks Rank #3 (Hold). While we remain on the sidelines for these stocks, other medical stocks such as Natus Medical Inc. (BABY) and Cyberonics Inc. (CYBX) are worth considering. These stocks hold a Zacks Rank #1 (Strong Buy).

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