A Tale of Two Clinical Diagnostic Companies by Ken_Powell
Quest Diagnostics and LabCorp are the two largest commercial reference labs (CRLs) in the US. CRLs are an essential component in healthcare delivery, providing vital routine and esoteric clinical diagnostic test results to physicians, hospitals and numerous alternate site market segments. Since over 70% of all clinical decisions are made on the basis of a diagnostic test result, the value of clinical diagnostic testing in the healthcare continuum speaks for itself.
Last week LabCorp reported 3 percent revenue growth for Q3. Q3 revenues were $1.46 billion versus $1.42 billion in 2012. Contrast this against an almost 2% revenue drop at Quest, with the top line falling from $1.82 billion in Q3 2012 to $1.79 billion for the same period this year. What’s going on with two virtually identical but very different CRLs? Both CEOs cite reimbursement challenges, particularly in the molecular diagnostics business, government payment reductions and test utilization as growth restrictors.
What’s in the future for the two largest CRLs in the world and are there other companies in the mix? LabCorp appears to be well positioned for delivering on expectations of 3% annual growth, while Quest guided 2013 revenue performance to 3.5% below 2012. Clearly these are two functionally different companies competing against each other in a highly competitive business, but there are other players such as Bio-Reference Labs, Inc. that present attractive opportunities for investors.
For more information on the companies mentioned above, the commercial reference lab market and the $52 billion dollar global clinical diagnostic industry, please contact through Zintro and schedule an individual consult today.