The quarterly earnings of two midsize labs demonstrate the current up-and-down nature of the business. While Elmwood, N.J.-based Bio-Reference Laboratories reported dramatic growth for its fourth fiscal quarter, ending Oct. 31, its earnings dropped. New York-based Enzo Biochem Inc. reported a dip in revenue and a continuing loss. Bio-Reference, which provides clinical laboratory services in the Greater New York area, reported net income of $11.1 million on revenue of $192.2 million. That compares to third-quarter 2012 net income of $12.9 million on adjusted revenue of $163.5 million, a decrease of 14 percent and an increase of 18 percent, respectively. Bio-Reference Chief Executive Officer Marc D. Grodman, M.D., attributed the dip in net income to continued reimbursement pressures from commercial payers; revenue from that segment dipped 4 percent compared to the fiscal fourth quarter of 2012. “Over the past year . . . we identified a significant reduction in reimbursement, particularly from commercial payers,” he said. Grodman added that the company was working on reducing costs but also noted that revenue from molecular and esoteric testing would drive future growth. The company reiterated its guidance that net income, revenues, and patient volumes would all grow 10 percent apiece during fiscal 2014. […]
The quarterly earnings of two midsize labs demonstrate the current up-and-down nature of the business.
While Elmwood, N.J.-based Bio-Reference Laboratories reported dramatic growth for its fourth fiscal quarter, ending Oct. 31, its earnings dropped. New York-based Enzo Biochem Inc. reported a dip in revenue and a continuing loss.
Bio-Reference, which provides clinical laboratory services in the Greater New York area, reported net income of $11.1 million on revenue of $192.2 million. That compares to third-quarter 2012 net income of $12.9 million on adjusted revenue of $163.5 million, a decrease of 14 percent and an increase of 18 percent, respectively.
Bio-Reference Chief Executive Officer Marc D. Grodman, M.D., attributed the dip in net income to continued reimbursement pressures from commercial payers; revenue from that segment dipped 4 percent compared to the fiscal fourth quarter of 2012.
“Over the past year . . . we identified a significant reduction in reimbursement, particularly from commercial payers,” he said. Grodman added that the company was working on reducing costs but also noted that revenue from molecular and esoteric testing would drive future growth. The company reiterated its guidance that net income, revenues, and patient volumes would all grow 10 percent apiece during fiscal 2014.
For all of fiscal 2013, Bio-Reference reported net income of $45.8 million on revenue of $715.4 million. That compares to net income of $42.2 million on revenue of $614.3 million for fiscal 2012. Revenue was adjusted downward to $661.7 million due to recent changes made by the Financial Accounting Standards Board regarding the reporting of insurance claims revenue by health care entities.
Amanda Murphy, an analyst with William Blair & Co., believes that esoteric testing will comprise 67 percent of Bio-Reference’s revenue by the fourth quarter of 2014. She maintained her market perform rating for the company.
Enzo Struggling
Meanwhile, numbers reported by Enzo Biochem for its first fiscal 2014 quarter are struggling to maintain the status quo.
The company reported a loss of $2.8 million on revenue of $24.1 million. That’s improved from the $3.7 million net loss reported during the year-ago quarter, but revenue for that period was $25.6 million, meaning a 6 percent year-over-year drop. Revenue from each of its three business segments—clinical laboratory services, product sales, and royalty and license fee income—were down.
Company officials indicated that its operations are also being squeezed by reduced payments from insurers.
“We are faced with a new economic environment regarding health care. More people are being brought in under the health care umbrella, which will create greater demand. And at the same time, there is an intensive and relentless drive to reduce costs, which is reflected in lower reimbursement rates,” said Barry W. Weiner, Enzo Biochem’s chief financial officer, during a recent call to discuss earnings.
Weiner added that the company has cut expenses and improved collections with the intent of improving its bottom line in the coming quarters.
A recent report by Standard & Poor’s on Enzo Biochem gave the company’s stock a grade of C. However, its stock is up by about 7.5 percent over the past year, suggesting that investors currently have a positive outlook for the company.
Takeaway: Whether growing or struggling to grow, laboratories are being hit hard by reductions in reimbursements from payers.
