Quest Diagnostics Pays $85 Million For Labtech

Quest Diagnostics Pays $85 Million For Labtech

Quest Diagnostics Pays $85 Million For Labtech

The latest 10K annual report from Quest Diagnostics revealed that the company paid $85 million for its acquisition of Labtech Diagnostics (Anderson, SC). The deal, which closed on December 13, 2021, included cash consideration of $80 million and contingent consideration of $5 million dependent upon certain test volume goals. Labtech is an independent clinical lab specializing in allergy testing that serves physicians and patients primarily in South Carolina, North Carolina, Georgia and Florida. Labtech, which has 200 employees, was founded by its CEO/Owner Joseph Labash in 2011.

Labcorp Completes Acquisition of PGDx

Labcorp Completes Acquisition of PGDx

Labcorp Completes Acquisition of PGDx

Labcorp completed its previously announced (see LE, January 2022) acquisition of Personal Genome Diagnostics Inc. (PGDx-Baltimore, MD) on February 18. PGDx markets an FDA-cleared comprehensive tumor profiling test, PGDx ELIO tissue complete, that is covered by Medicare under the PLA code 0250U at a rate of $2,950. Labcorp paid $450 million in cash at closing
and will pay up to an additional $125 million based on PGDx achieving future performance milestones. The $575 million purchase price, including contingent performance payments, is equal to 14.4 times PGDx’s expected revenue of $40 million in 2022.

PathGroup Acquires Pathology Consultants in South Carolina

PathGroup Acquires Pathology Consultants in South Carolina

PathGroup Acquires Pathology Consultants in South Carolina

 PathGroup (Brentwood, TN) acquired Pathology Consultants Inc. (PCI-Greenville, SC) for an undisclosed sum in January. PCI operates a CAP-accredited pathology lab in Greenville, South Carolina. It has approximately 100 employees, including 31 pathologists.

PCI’s biggest client is Prisma Health System of South Carolina (Greenville, SC). Prisma Health is the largest health system in South Carolina, formed by the merger of Palmetto Health and the Greenville Health System in November 2017. Prisma Health includes 18 hospitals and 270 physician practices. Its largest hospitals are Greenville Memorial Hospital (746 beds) and Richland Hospital (641 beds).

Pathology Consultants was founded by Arthur Dreskin, MD, and Don Kilgore, MD, in 1959. The group is currently led by David Schammel, MD, President and Medical Director, and Jesse Stafford, MD, who is Chief Clinical Officer for Laboratory Services at Prisma Health.

Ben Davis, MD, Chief Executive at PathGroup, says the PCI lab in Greenville will remain fully operational and that Drs. Schammel and Stafford will continue in their respective leadership roles at PCI.

The acquisition of PCI represents PathGroup’s sixth deal since Pritzker Private Capital (Chicago,IL) took a majority stake in the company in the summer of 2016.

PathGroup now has more than 2,600 employees, including more than 225 pathologists, serving 100+ hospital contracts and thousands of physician clients. Annual revenue is now estimated to be more than $500 million.

BioReference Labs Goes Live With Digital Pathology Plus AI

BioReference Labs Goes Live With Digital Pathology Plus AI

BioReference Labs Goes Live With Digital Pathology Plus AI

OPKO’s BioReference Labs (Elmwood Park, NJ) went live in December with new whole-slide imaging scanners from Leica Biosciences (Buffalo Grove, IL). The scanners have been integrated with a digital pathology solution, PathFlow, made by Gestalt Diagnostics (Spokane, WA). PathFlow is a cloud-based software system that has helped integrate BioReference’s LIS, workflow and scanned slide images with artificial intelligence algorithms developed by MindPeak (Hamburg, Germany). BioReference is also using PathFlow for slide image management and archival storage.

BioReference is using MindPeak’s AI tool (named BreastIHC) to detect and quantify breast cancer cells from digitized slide images with immunohistochemistry at its main laboratory in northern New Jersey. Pathologists can access their case and slide images securely on their computer monitors and use their mouse to outline regions of interest (ROI). All cells within this outlined ROI are instantly classified into positively stained tumor and unstained tumor cells. The panel of algorithms include five key tumor markers (ER, PR, Ki-67, HER2, and P53) which can be counted and scored.

Eventually, Dan Roark, Chief Executive Officer, Gestalt Diagnostics, expects the AI algorithms to both automatically identify the regions of interest in addition to performing IHC marker positivity scoring.

Digital Pathology & AI Market Growth
Separately, Roark says that after more than 10 years of limited adoption, digital pathology is finally starting to take off in the clinical market in the United States. Whole slide scanners have gotten quicker and less expensive. For example, it used to take 8-10 minutes to scan a slide but now takes as little as 30 seconds. But the biggest driver is the pathologist efficiency gains obtained when AI is applied to digitized slides. “The number of RFP requests we receive is exploding,” says Roark.

Worldwide Opportunities for U.S.-Based Pathologists
The U.S. has more working pathologists per capita than most other countries. For example, there are approximately 20,000 actively practicing pathologists in the United States, according to the American Medical Association. This works out to a ratio of one pathologist for every 17,000 people.

CDx Diagnostics Leads In Digital Pathology

CDx Diagnostics Leads In Digital Pathology

CDx Diagnostics Leads In Digital Pathology

CDx Diagnostics (Suffern, NY), which specializes in oral, esophageal, and laryngeal cancer testing, is by far the biggest digital pathology lab as measured by volume of Part B claims for CPT 88361. CDx was paid for 55,082 Part B tests for CPT 88361 (including combined global, TC-only and PC-only claims) in 2019, according to provider utilization and payment data from CMS.

CPT 88361 is used to bill Medicare for digital quantification of HER2, estrogen receptor (ER), progesterone receptor (PR) and Ki-67 for breast cancer. This code can also be used for digital analysis of other cancers, including oral and esophageal cancers.

NeoGenomics has four labs (California, Florida, Michigan and Texas) in the top 25 with a combined total volume of 19,950 Part B allowed tests for CPT 88361 in 2019.

Sonic Healthcare USA has two lab locations (New York and Texas) that performed CPT 88361 with a combined volume of 6,760 allowed Part B tests for CPT 88361.

Overall, Medicare Part B allowed volume for CPT 88361 totaled 191,205 tests in 2019, down 10% from 212,003 tests in 2018.

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