Corewell Health and Quest Diagnostics to Enter into Joint Venture Providing Enhanced Laboratory Services in Michigan

Rhea-AI Summary

Quest Diagnostics (NYSE:DGX) and Corewell Health have announced a strategic joint venture to form Diagnostic Lab of Michigan, LLC. The partnership includes building a 100,000-square-foot state-of-the-art laboratory in Southfield, Michigan, featuring advanced technologies for automated microbiology and high-throughput molecular testing.

Under the agreement, Quest will hold 51% ownership while Corewell Health will retain 49%. Quest will manage Corewell Health's 21 hospital laboratories across Michigan through its Collaborative Lab Solutions program. The joint venture transaction is expected to complete in Q1 2026, with the new laboratory becoming operational in Q1 2027.

Positive

• Strategic expansion of Quest's presence in Michigan through 51% ownership in joint venture
• Management control of 21 hospital laboratories, expanding Quest's service network
• Access to state-of-the-art 100,000-square-foot facility with advanced testing capabilities
• Joint venture meets Quest's criteria for growth, profitability and returns

Negative

• Significant capital investment required for new laboratory facility
• Extended timeline until full operational status (Q1 2027)
• Complex integration process involving 21 hospital laboratories

Insights

Healthcare Business Analyst

Quest's Michigan JV with Corewell Health expands its market presence and adds recurring revenue through lab management services.

Quest Diagnostics has secured a strategic 51%-owned joint venture with Michigan's Corewell Health, positioning the company for significant regional growth. The deal has multiple revenue streams: ownership in a new state-of-the-art 100,000-square-foot laboratory facility in Southfield and management contracts for 21 hospital labs across Michigan.

This agreement follows Quest's established playbook of partnering with major health systems, providing both immediate lab management revenue and long-term strategic positioning. The Collaborative Lab Solutions (Co-Lab) services Quest will provide include reference testing, professional management, workforce solutions, supply chain management, and analytics – representing a comprehensive service offering that typically generates reliable recurring revenue.

The transaction timeline shows thoughtful implementation: JV completion in Q1 2026, phased supply chain integration starting late 2025, and the new laboratory operational by Q1 2027. Quest's majority ownership (51%) ensures control while maintaining Corewell Health's significant stake (49%), aligning incentives for both partners.

For Quest, this agreement advances its strategic goals of expanding in growth areas through health system collaborations. The company explicitly stated the JV meets all its criteria for growth, profitability and returns, suggesting it passes internal financial hurdles. While specific financial terms weren't disclosed, the comprehensive nature of the agreement (management services + new facility construction) indicates a material business opportunity that strengthens Quest's competitive position in Michigan's diagnostic testing market.

Parties to build state-of-the-art laboratory in Southfield to serve physicians and patients across the state

Quest will also manage Corewell Health's 21 hospital labs

SOUTHFIELD, Mich. and GRAND RAPIDS, Mich. and SECAUCUS, N.J., Aug. 26, 2025 /PRNewswire/ -- Corewell Health and Quest Diagnostics (NYSE: DGX), a leading provider of diagnostic information services, have signed a definitive agreement to enter into a joint venture to expand access to innovative, quality and affordable laboratory services in Michigan.

The joint venture, Diagnostic Lab of Michigan, LLC, will be based at a state-of-the-art laboratory facility at the Corewell Health Southfield Center in Southfield, Michigan. The future 100,000-square-foot facility will feature advanced technologies, such as automated microbiology and high-throughput molecular testing.

In addition, Quest will provide the full complement of its Collaborative Lab Solutions (Co-Lab), including reference laboratory testing, professional laboratory management services, laboratory workforce and supply chain management, and analytics, for all of Corewell Health's 21 inpatient and outpatient hospital labs. These hospitals labs are located across the state and will remain open after the new lab is constructed.

"We are thrilled to collaborate with Quest Diagnostics, a leader in diagnostic lab services," Corewell Health Chief Operating Officer Chad Tuttle said. "Quest has a proven track record of delivering innovative and high-quality diagnostic services that put patients first. This new joint venture will support our ongoing efforts to make health care more affordable and accessible."

"This joint venture combines Corewell Health's first-rate academic expertise and deep ties to Michigan with Quest's leadership in scaling diagnostic innovation to improve access, affordability and patient care," said Jim Davis, Chairman, CEO and President, Quest Diagnostics. "It also advances Quest's strategy to expand in growth areas through collaborations with top health systems, building on our many successful laboratory joint ventures in other parts of the U.S." 

Equity ownership of the joint venture will be shared 51% by Quest and 49% by Corewell Health. The JV transaction meets all of Quest's criteria for growth, profitability and returns. Additional terms were not disclosed.

The parties expect to complete the joint venture transaction in the first quarter of 2026. The parties intend to begin phases of the supply chain and reference agreements in late 2025, although most aspects of the laboratory services agreement, including laboratory management, will begin in 2026. Quest and Corewell Health expect to continue to serve providers and patients in Michigan from their existing patient service centers, which will be run by the joint venture, as well as from their existing laboratories, until the joint venture laboratory opens. The parties expect the new laboratory to be operational in the first quarter of 2027. 

About Corewell Health™
People are at the heart of everything we do, and the inspiration for our legacy of outstanding outcomes, innovation, strong community partnerships, philanthropy and transparency. Corewell Health is a not-for-profit health system that provides health care and coverage with an exceptional team of 65,000+ dedicated people—including more than 12,000 physicians and advanced practice providers and more than 15,500 nurses providing care and services in 21 hospitals, 300+ outpatient locations and several post-acute facilities—and Priority Health, a provider-sponsored health plan serving more than 1.3 million members. Through experience and collaboration, we are reimagining a better, more equitable model of health and wellness. For more information, visit corewellhealth.org. 

About Quest Diagnostics
Quest Diagnostics works across the healthcare ecosystem to create a healthier world, one life at a time. We provide diagnostic insights from the results of our laboratory testing to empower people, physicians and organizations to take action to improve health outcomes. Derived from one of the world's largest databases of de-identifiable clinical lab results, Quest's diagnostic insights reveal new avenues to identify and treat disease, inspire healthy behaviors and improve healthcare management. Quest Diagnostics annually serves one in three adult Americans and half the physicians and hospitals in the United States, and our more than 55,000 employees understand that, in the right hands and with the right context, our diagnostic insights can inspire actions that transform lives and create a healthier world. www.QuestDiagnostics.com.

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SOURCE Quest Diagnostics

FAQ

What is the ownership structure of Quest Diagnostics' joint venture with Corewell Health?

Quest Diagnostics will own 51% of the joint venture, while Corewell Health will own 49% of Diagnostic Lab of Michigan, LLC.

When will Quest Diagnostics' new Michigan laboratory facility become operational?

The new 100,000-square-foot laboratory facility in Southfield, Michigan is expected to become operational in the first quarter of 2027.

How many hospital laboratories will Quest Diagnostics manage under this agreement?

Quest will manage 21 inpatient and outpatient hospital laboratories across Michigan through its Collaborative Lab Solutions program.

What is the timeline for Quest Diagnostics' joint venture completion with Corewell Health?

The joint venture transaction is expected to complete in the first quarter of 2026, with initial phases of supply chain and reference agreements beginning in late 2025.

What services will Quest Diagnostics provide in the new Michigan laboratory?

The facility will offer advanced technologies including automated microbiology, high-throughput molecular testing, and comprehensive laboratory management services through Quest's Collaborative Lab Solutions program.