While the larger national labs have been grappling with stagnant revenue and earnings, swiftly growing regional player Bio-Reference Laboratories continues to demonstrate vibrant growth.
For the fiscal third quarter, ending July 31, Bio-Reference reported net income of $14.7 million on revenues of $185.4 million. That compares to year-ago net income of $12.6 million on revenues of $172.3 million, increases of 17 percent and 16 percent, respectively.
For the first nine months of fiscal 2013, net income was $34.7 million on revenues of $523.1 million, compared to net income of $29.3 million on revenues of $450.8 million for the year before, up 19 percent and 16 percent, respectively.
Revenue per patient increased 7 percent, while patient count was up 8 percent. The latter number was slightly below analyst projections of 9 percent.
“The operations and financial results of the company met or exceeded our expectations for the quarter while our industry and health care in general were in a state of flux. Despite these extrinsic pressures, we were able to sustain our growth,” said Marc D. Grodman, M.D., Bio-Reference’s chief executive officer.
According to Grodman, growth has been coming through its GeneDX genetics testing division, as well as recent acquisitions. That includes Hunter Laboratories in Northern California and EdgeBio, a Maryland-based laboratory that will be folded into its GeneDx operations.
Bio-Reference also announced it would begin performing BRCA1 and BRCA2 testing, a diagnostic realm that was opened up by a recent U.S. Supreme Court decision that unaltered genes could not be patented. Grodman also announced Bio-Reference has been investing heavily in tumor sequencing and a new initiative that focuses on inherited cancers.
Altogether, esoteric testing comprised about 64 percent of the company’s volume, up from 61 percent a year ago.
“The company has clearly established a leadership position in genetic testing, with about 65 sales reps dedicated to genetics [and half of these dedicated to inherited cancers], 50 [medical doctor or doctorate-level] geneticists, and 50 genetic counselors,” wrote William Blair analysts Amanda Murphy and J.P. McKim in a report released just after Bio-Reference announced its earnings.
Bio-Reference did note a six-day increase in outstanding sales, which Grodman attributed to a billing dispute with Blue Cross Blue Shield of New Jersey. However, he also said that Bio-Reference has contracts with the nation’s five largest commercial insurers and a growing number of Blues plans.
“We believe that the total number of lives that we cover rivals any laboratory in the country,” Grodman said during a conference call with analysts.
Murphy and McKim kept William Blair’s market perform rating of Bio-Reference in place, noting that it expects the company to continue to feel the same reimbursement pressures as other laboratories.
Startups Struggling
Two laboratories that are still in startup mode also recently announced earnings.Seattle-based Atossa Genetics, which focuses on testing for precancerous cells in the breast, reported a net loss for the second quarter, ending June 30, of $2.6 million on revenue of $326,078. That compares to a net loss of $1.2 million on revenues of $223,097 for the second quarter of 2012. Waltham, Mass.-based Interleukin Genetics reported a net loss of $1.8 million on revenues of $852,158 for the second quarter, ending June 30. That compares to a net loss of $1.2 million on revenue of $777,549 for the second quarter of 2012.
Takeaway: Genetic testing appears to be the future for Bio-Reference Laboratories, while startup firms are still struggling to find traction in that arena.
