Quest Diagnostics to Acquire PathAI Diagnostics

PathAI Diagnostics' digitized laboratory in Memphis, Tennessee will become Quest's AI and digital R&D and solutions center.

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iStock/Parradee Kietsirikul

Quest Diagnostics announced a multi-faceted collaboration designed to accelerate the adoption of digital and AI pathology innovations to improve quality, speed and efficiency in diagnosing cancer and other diseases.

Under the terms of a definitive agreement, Quest will acquire select assets of PathAI Diagnostics, the business of PathAI that provides anatomic and digital pathology laboratory services. At closing, PathAI Diagnostics' digitized laboratory in Memphis, Tennessee will become Quest's AI and digital R&D and solutions center, supporting Quest's specialty pathology businesses, AmeriPath and Dermpath Diagnostics. PathAI will continue to support its biopharmaceutical clients with end-to-end clinical trial services capabilities at its biopharma lab, which is separate and distinct from the diagnostic laboratory business. The transaction is expected to be completed in the second quarter of 2024.

Under separate agreements, Quest will license PathAI's AISight digital pathology image management system to support its pathology laboratories and customer sites in the United States. The two entities may also pursue opportunities for Quest to aid PathAI's algorithm product development, drawing on Quest's deep pathology leadership. In addition, Quest will be a preferred provider for PathAI's biopharmaceutical clinical laboratory services.    

Digital pathology enables the creation of digital images of glass slides that can be securely shared electronically with other pathologists to view, reducing transportation needs and speeding testing and results reporting. It also has the advantage of extending access to expert consults to geographic areas where pathologists are in short supply, such as in parts of rural America and internationally. It may also help alleviate workforce pressures due to a shortage of pathologists and histotechnologists, the skilled laboratory professionals who prepare tissue slides.

AI builds upon digital pathology by identifying patterns in a digitized image that suggest cancer or other diseases, helping a pathologist concentrate on areas of concern for potentially more accurate diagnosis.

Quest has a long history of strategic AI and automation deployment. The company has implemented AI, digital and automation technologies across several laboratory and business functions, from microbiology and cytogenetics to specimen processing and customer service, improving quality, efficiency and customer and employee experiences.

The transaction also builds on Quest's deep expertise and scale in cancer, with approximately 400 pathologists serving top health systems in the U.S. In recent years, Quest has piloted digital and AI pathology oncology solutions at Quest and AmeriPath sites in Clifton, NJ, Tampa and Denver.

Over time, Quest expects the transaction with PathAI will enable it to deploy flexible digital slide preparation and diagnostic and second opinion consultation services to health systems and other providers, both in the United States and, through its Global Diagnostic Network, overseas. The acquisition will also extend Quest's anatomic pathology services into comparatively more profitable areas, including dermatopathology as well as gastrointestinal and urological diseases. Provider customers of PathAI Diagnostics will benefit from access to Quest's industry-leading clinical test menu, broad health plan relationships and approximately 2,000 patient service centers in the U.S.

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