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Fitch Ratings said Friday it is lowering its outlook on Quest Diagnostics Inc., citing the medical lab operator's upcoming purchase of a diagnostics business and other spending.

The firm now has a negative outlook on Quest's credit, meaning a downgrade of its rating is more likely than an upgrade. Previously Fitch had a stable rating on Quest. It has an investment-grade rating of rating of 'BBB+' on the Madison, N.J., company's credit. That rating is three notches above junk status.

On Thursday, Quest agreed to buy Thermo Fisher Scientific Inc.'s Athena Diagnostics unit for $740 million. Last month Quest said it would pay $835 million to buy back all the stock held by its largest shareholder. SB Holdings Capital currently owns 15.4 million shares of Quest. Fitch also said Quest may have to pay $240 million as part of a legal settlement with the California Department of Health Services.

The ratings apply to $2.99 billion in outstanding debt. Fitch said Quest will likely try to pay down its debt over the next 12 to 18 months, and by the end of 2012, it may reduce its leverage to the higher end of the company's normal levels.

Shares of Quest rose 29 cents to $56.67 on Friday. The stock fell 6 cents to $56.61 in aftermarket trading.

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