Publicly-Traded Esoteric Labs Are Off to Good Start in 2016

As personalized medicine continues to gain traction in the United States, the publicly-traded esoteric laboratories continue to chug along, posting strong growth numbers, even as some have yet to operate in the black. Whereas volume growth of 1 to 2 percent a year among the large national labs has become normalized as a result of a shift of many patients to higher-deductible plans, “esoteric testing remains a source of strength across the lab space,” William Blair & Co. analyst Amanda Murphy observed in a recent report. Florida-based NeoGenomics was among the leaders of the pack in terms of growth, driven in part by its acquisition of cancer testing laboratory Clarient in late 2015. The deal helped drive test volume up 158 percent in the quarter compared to the second quarter of 2015. The company reported consolidated revenue of $63.1 million, up 159 percent from the $24.4 million reported for the second quarter of 2015. OPKO Health, another Florida-based laboratory, has also made progress assimilating its own acquisition—of BioReference Labs, announced last year. The company reported net income of $15 million on revenue of $357.1 million for the quarter ending June 30.

Although Massachusetts-based Foundation Medicine has yet to report a profit, it also reported a solid quarter of growth. Although it reported a loss of $29 million for the quarter, revenue reached $28.2 million, up 26 percent. The loss also narrowed from the $33.1 million reported for the second quarter of 2015. California-based Veracyte reported a second quarter increase in revenue of 23 percent, to $14.7 million, compared to $11.9 million for the second quarter of 2015. However, the company reported a widening loss of $11.2 million, up from $9.1 million from the year-ago quarter. For the first half of 2016, Veracyte lost $21.3 million on revenue of $28.2 million, compared to a loss of $16.7 million on revenue of $23.1 million for the first half of 2015. Another California-based laboratory, Genomic Health, reported a healthy growth in revenues and narrowed its losses. For the second quarter, it reported a loss of $6.1 million on revenue of $82 million. For the second quarter of 2015, it lost $10.8 million on revenue of $70.6 million.

For more in-depth analysis of these earnings reports and the services and acquisitions driving the growth, see “Inside the Lab Industry” in the Sept. 22, 2016 issue of Laboratory Industry Report.