Quest Diagnostics (DGX) - Get Report , a $12.8 billion diagnostic-laboratory-services provider, is the latest company to suffer a hacker onslaught.

The data breach of Quest Diagnostics isn't huge by comparison with Yahoo!, of course, but hackers nevertheless obtained protected health information on nearly 34,000 people, including names, telephone numbers, birth dates and lab results.

Quest Diagnostics said that this "unauthorized third-party intrusion" occurred last month on the MyQuest byCare360 application. 

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The company, which has employed a cybersecurity company to help it assess its information technology systems, must attempt to prevent a Yahoo!-like situation. Health care data are personal and sensitive, and hackers can command high prices for this type of information.

Yet, shares of Quest Diagnostics have soared this year, up nearly 30%, outperforming peers such as Laboratory Corp. of America, which has risen about 3%.

Quest Diagnostics brought in steady capital inflows, with cash provided by operations estimated at $1 billion, and it could easily invest in IT security to thwart future attacks.

To conform with legal conditions, health care organizations more often than not save medical information for several years. The probability that a breach will occur and the severity of the consequences rises with every layer of stored data.

If the company is able to protect itself effectively, the hacking incident will become an isolated instance.

And given the importance of lab results, diagnostic services are a stable business. 

Quest Diagnostics is projected to deliver higher earnings growth over the next five years of more than 8% annually on average, higher than the 2.98% average annual growth rate over the past half decade.

However, Quest Diagnostics has been trying to improve revenue growth, setting a goal of an annual increase between 3% and 5% between 2017 and 2020. The company's recent dividend increase to nearly 2% indicates optimism on the part of management.

By making strategic acquisitions such as MyPRS from Signal Genetics, and implementing key initiatives, including joining hands with hospital systems, the company could build its market base.

This savvy company looks likely to put the data breach behind it and maintain its momentum


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The author is an independent contributor who at the time of publication owned none of the stocks mentioned.