Corewell Health, Quest Diagnostics form lab services joint venture

SOUTHFIELD, Mich. - Corewell Health and Quest Diagnostics (NYSE:DGX), a prominent player in the Healthcare Providers & Services industry with a market capitalization of nearly $20 billion and annual revenue exceeding $10.5 billion, have signed a definitive agreement to form a joint venture aimed at expanding laboratory services across Michigan, according to a press release issued Tuesday.

The new entity, Diagnostic Lab of Michigan, LLC, will operate from a planned 100,000-square-foot facility at the Corewell Health Southfield Center. The laboratory will feature advanced technologies including automated microbiology and high-throughput molecular testing. According to InvestingPro data, Quest Diagnostics has demonstrated strong financial stability with a 22-year track record of consistent dividend payments and 14 consecutive years of dividend increases.

Under the agreement, Quest will also manage Corewell Health’s 21 hospital laboratories throughout Michigan while providing reference laboratory testing, professional management services, workforce and supply chain management, and analytics.

The joint venture will be 51% owned by Quest and 49% by Corewell Health. The parties expect to complete the transaction in the first quarter of 2026, with the new laboratory facility projected to become operational in the first quarter of 2027.

"This joint venture combines Corewell Health’s first-rate academic expertise and deep ties to Michigan with Quest’s leadership in scaling diagnostic innovation," said Jim Davis, Chairman, CEO and President of Quest Diagnostics. The company’s stock is currently trading near its 52-week high, reflecting investor confidence in its strategic initiatives. For deeper insights into Quest Diagnostics’ financial health and growth prospects, investors can access comprehensive analysis through InvestingPro’s detailed research reports, which cover over 1,400 US stocks.

Both organizations will continue serving providers and patients from their existing patient service centers and laboratories until the new joint venture laboratory opens. These service centers will eventually be operated by the joint venture.

Corewell Health, a not-for-profit health system, employs approximately 65,000 people including more than 12,000 physicians and advanced practice providers across 21 hospitals and 300+ outpatient locations in Michigan.

In other recent news, Quest Diagnostics reported strong financial results for the second quarter of 2025, surpassing analyst expectations. The company achieved an adjusted earnings per share of $2.62, exceeding the projected $2.57, and reported revenue of $2.76 billion, above the anticipated $2.73 billion. Additionally, the U.S. Food and Drug Administration granted Breakthrough Device Designation to Quest Diagnostics’ Haystack MRD test for detecting minimal residual disease in stage II colorectal cancer patients. This designation is aimed at identifying MRD-positive patients who might benefit from additional therapy following surgery.

In a related development, Quest Diagnostics’ subsidiary, Haystack Oncology, has entered a research collaboration with Mass General Brigham. The partnership will focus on studying liquid biopsy technology to aid post-surgical treatment decisions for certain types of cancer, including cutaneous squamous cell carcinoma and HPV-independent head and neck squamous cell carcinoma. Meanwhile, Baird has downgraded Quest Diagnostics from Outperform to Neutral, citing a balanced risk/reward profile as the reason for the change. The firm maintained a price target of $194.00, indicating that they see limited upside potential in the current market conditions. These developments highlight a period of significant activity for Quest Diagnostics.

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