Wrapping up Q4 earnings, we look at the numbers and key takeaways for the testing & diagnostics services stocks, including NeoGenomics (NASDAQ:NEO) and its peers.
The testing and diagnostics services industry plays a crucial role in disease detection, monitoring, and prevention, serving hospitals, clinics, and individual consumers. This sector benefits from stable demand, driven by an aging population, increased prevalence of chronic diseases, and growing awareness of preventive healthcare. Recurring revenue streams come from routine screenings, lab tests, and diagnostic imaging, with reimbursement from Medicare, Medicaid, private insurance, and out-of-pocket payments. However, the industry faces challenges such as pricing pressures, regulatory compliance, and the need for continuous investment in new testing technologies. Looking ahead, industry tailwinds include the expansion of personalized medicine, increased adoption of at-home and rapid diagnostic tests, and advancements in AI-driven diagnostics that enhance accuracy and efficiency. However, headwinds such as reimbursement uncertainties, competition from decentralized testing solutions, and regulatory scrutiny over test validity and cost-effectiveness may impact profitability. Adapting to evolving healthcare models and integrating automation will be key for sustaining growth and maintaining operational efficiency.
The 5 testing & diagnostics services stocks we track reported a satisfactory Q4. As a group, revenues beat analysts’ consensus estimates by 2.1%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 12.5% since the latest earnings results.
NeoGenomics (NASDAQ:NEO)
Operating a network of CAP-accredited and CLIA-certified laboratories across the United States and United Kingdom, NeoGenomics (NASDAQ:NEO) provides specialized cancer diagnostic testing services, including genetic analysis, molecular testing, and pathology consultation for oncologists and healthcare providers.
NeoGenomics reported revenues of $172 million, up 10.6% year on year. This print fell short of analysts’ expectations by 1%, but it was still a satisfactory quarter for the company with a solid beat of analysts’ EPS estimates.
“Our business continued to perform well throughout 2024 and we have now achieved nine consecutive quarters of double digit revenue growth and improved adjusted EBITDA over 1,000% for the year,” said Chris Smith, Chief Executive Officer of NeoGenomics.
NeoGenomics delivered the weakest performance against analyst estimates of the whole group. The stock is down 36.6% since reporting and currently trades at $9.16.
With over 350 imaging facilities across seven states and a growing artificial intelligence division, RadNet (NASDAQ:RDNT) operates a network of outpatient diagnostic imaging centers across the United States, offering services like MRI, CT scans, PET scans, mammography, and X-rays.
RadNet reported revenues of $477.1 million, up 13.5% year on year, outperforming analysts’ expectations by 4.2%. The business had a strong quarter with an impressive beat of analysts’ same-store sales and EPS estimates.
Although it had a fine quarter compared to its peers, the market seems unhappy with the results as the stock is down 14.1% since reporting. It currently trades at $49.49.
Pioneering the field of "liquid biopsy" with technology that can identify cancer-specific genetic mutations from a simple blood draw, Guardant Health (NASDAQ:GH) develops blood tests that detect and monitor cancer by analyzing tumor DNA in the bloodstream, helping doctors make treatment decisions without invasive biopsies.
Guardant Health reported revenues of $201.8 million, up 30.2% year on year, exceeding analysts’ expectations by 4.8%. Still, it was a mixed quarter as it posted a significant miss of analysts’ EPS estimates.
As expected, the stock is down 11.7% since the results and currently trades at $41.91.
With over 600 million tests performed annually and involvement in 90% of FDA-approved drugs in 2023, Labcorp (NYSE:LH) provides laboratory testing services and drug development solutions to doctors, hospitals, pharmaceutical companies, and patients worldwide.
Labcorp reported revenues of $3.33 billion, up 9.8% year on year. This print beat analysts’ expectations by 0.6%. Taking a step back, it was a satisfactory quarter as it also recorded full-year revenue guidance slightly topping analysts’ expectations.
Labcorp delivered the highest full-year guidance raise but had the slowest revenue growth among its peers. The stock is down 6.4% since reporting and currently trades at $233.77.
Processing approximately one-third of the adult U.S. population's lab tests annually, Quest Diagnostics (NYSE:DGX) provides laboratory testing and diagnostic information services to patients, physicians, hospitals, and other healthcare providers across the United States.
Quest reported revenues of $2.62 billion, up 14.6% year on year. This result surpassed analysts’ expectations by 1.8%. It was a strong quarter as it also recorded a narrow beat of analysts’ sales volume estimates and a decent beat of analysts’ EPS estimates.
The stock is up 6.2% since reporting and currently trades at $164.96.
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