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LabCorp Inks Lab, Digital Pathology Deals With Baptist Health, Definiens

NEW YORK (360Dx) – Laboratory Corporation of America today announced two deals, one to expand an existing laboratory collaboration, the other to integrate digital pathology into precision medicine.

LabCorp has entered into a multiyear lab collaboration with Kentucky-based Baptist Health to provide technical services and enhanced data analytics to the healthcare system's eight hospital based labs.

Separately, LabCorp's Covance business will collaborate with artificial intelligence-based image analysis company Definiens to incorporate digital pathology into clinical-trial and tissue-based testing solutions.

The new agreement with Baptist expands an existing relationship between the two partners. LabCorp has provided reference lab services for Baptist Health for more than five years.

Under the deal, Baptist Health will work closely with LabCorp to establish a core lab at Baptist Health Louisville. The core lab is being created to support hospital labs and streamline system-wide lab testing processes. Baptist Heath will retain ownership of the labs at all of its eight hospitals as well as the core lab.

Additional enhanced information technology and data analytics that LabCorp will provide to Baptist Health's hospital labs will be geared toward improving the delivery of patient care. Terms of the deal were not disclosed.

LabCorp Diagnostics CEO Gary Huff said the new expanded relationship would help Baptist Health standardize its lab operations.

"Introducing fully standardized laboratory diagnostics for patients and physicians will help Baptist Health fulfill its mission to improve the health and promote the well-being of the communities that it serves," Huff said. "LabCorp Diagnostics' industry-leading solutions, including our logistics and operating expertise, meet the needs of health systems and their patients across the entire spectrum of care."

Ross Muken, an analyst at investment bank Evercore ISI, said that the new relationship is a sign that deals for the largest lab companies are picking up "post-PAMA clarity," referring to the Protecting Access to Medicare Act, which introduced new lower Medicare prices for lab tests. Muken noted that Quest Diagnostics recently announced deals to acquire the US lab business of Oxford Immunotec as well as fertility diagnostics services form ReproSource.

"The recent flurry of announcements shows that momentum appears to be building up again, further confirming our thesis," Muken said.

In September, a US District Court judge dismissed a lawsuit filed by the American Clinical Laboratory Association over the implementation of PAMA pricing, which the lab industry has long argued was flawed.

At the time Muken predicted an uptick in M&A activity as a result of the court decision.
Meanwhile, Covance's agreement with Munich-based Definiens is expected to lead to faster and more rigorous biomarker validation and companion diagnostic co-development, the companies said. Definiens uses machine learning and deep learning to profile tumor microenvironments, creating unique patient phenotypic profiles.

The deal, whose terms were not disclosed, will focus initially on immunohistochemistry and in situ hybridization applications for early-stage clinical programs. The approach, the companies said, would accelerate a therapy to pivotal clinical trial scale studies, and the collaboration's first application is anticipated to be in oncology, especially immune-oncology.

"This collaboration unites Definiens' ground-breaking technology and innovation with Covance's extensive experience in biomarker identification and companion diagnostics development," John Ratliff, CEO of Covance, said in a statement. "Together, we can accelerate the pace of drug development, delivering the transformative potential of oncology therapies - and immuno-oncology in particular - to patients around the globe faster and more efficiently than ever before."