LabCorp Extends UnitedHealthcare Pact, Lifts Diagnostics Arm

Over the last few months, Laboratory Corporation of Americas Holdings (NYSE:LH) (popularly known as LabCorp) has been dominating headlines on several developments including strategic partnerships and divestments. Following the company’s laboratory collaboration with Appalachian Regional Healthcare and Mount Sinai, it has formed one more joint venture, this time with UnitedHealthcare, a business of UnitedHealth Group (NYSE:UNH) .

In fact, this is the renewal of both entities’ long-term strategic partnership to create more simplified and personalized care recommendations for 48 million people enrolled in UnitedHealthcare plans. Per UnitedHealth, LabCorp will continue to serve as UnitedHealthcare’s exclusive national laboratory provider until Jan 1, 2019. However, financial terms of the deal have been kept under wraps.

Notably, as part of the expanding relationship, both companies are going to join forces on a variety of value-based programs. This alliance will help bringing advanced lab services in accountable care arrangements between UnitedHealthcare and more than 1,100 hospitals plus 110,000 physicians.

Progress on Strategic Collaborations

Significantly, LabCorp has fortified its footprint in the diagnostics space through both organic and inorganic means plus plans to coordinate with leading companies and academic institutions to build a wider portfolio of tests.

The company continues to increase its scale and competencies in clinical laboratory medicine via acquisitions ranging from routine capabilities to highly esoteric testing. Among its recent associations, LabCorp has formed one multi-year, comprehensive laboratory teamwork with Appalachian Regional Healthcare. Also, under the new agreement with Interpace Diagnostics, Dianon Pathology, a member of the LabCorp Specialty Testing Group, the company will perform the thyroid biopsy analysis.

Additionally, worth mentioning are the company’s two major health systems partnerships, Mount Sinai Health System and PAML, respectively. PAML is a Pacific Northwest-based market-leading reference and outreach laboratory. Per LabCorp, these anchor health systems will gradually emerge as research hubs, improving access to trials as well as Covance's site activation and investigator besides patient recruitment capabilities.

Other recent coalitions include a strategic partnership with Thermo Fisher (NYSE:TMO) , which enabled the launch of Thermo Fisher Oncomine Dx target panel for non-small cell lung cancer patients. Also, Labcorp works on developing and operating patient service centers within select Walgreens stores, courtesy of its drug retailer Walgreens (NASDAQ:WBA) . This apart, the company has an important tie-up with Japan-based Sysmex Corporation, a foremost clinical laboratory services provider and Roche, the world's reputed biotech company.

Share Price Performance

Over the past three months, shares of LabCorp have outperformed its industry. The stock has gained 0.4% against the industry’s 3.7% decline.

LabCorp carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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