WASHINGTON (Reuters) - Quest Diagnostics Inc <DGX.N>, the largest U.S. medical testing company, posted a 32 percent increase in quarterly profit on Monday on a boost in revenue from an acquisition, sending shares higher by about 6 percent.

First-quarter net income rose to $139.6 million, or 71 cents per share, from $105.9 million, or 54 cents per share, a year earlier.

Excluding discontinued operations, earnings were 2 cents ahead of the average Wall Street forecast, according to Reuters Estimates.

"Overall it lacked any bad surprises seen in previous quarters," said Alex Morozov, an analyst at Morningstar.

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In the fourth quarter, Quest reported a net loss after setting aside reserves to fund a settlement with the government over a probe of a manufacturing unit closed in 2006.

It is also still dealing with loss of a big contract with UnitedHealth Group <UNH.N> to archrival Laboratory Corp of America <LH.N>.

Revenue increased 17 percent to $1.78 billion. The acquisition of Ameripath, which Quest bought in May 2007, lifted revenue by 13 percent.

Quest's clinical testing volume rose 5.6 percent.

The New Jersey-based company said it continues to expect 2008 earnings from continuing operations of between $3 and $3.20 per share on revenue growth of about 9 percent.

Quest shares rose $2.85 to $48.47, while Laboratory Corp of America also rose, about 2 percent to $76.43, on the NYSE.

(Reporting by Lewis Krauskopf and Kim Dixon; Editing by John Wallace and Steve Orlofsky)