Quarterly earnings results are a good time to check in on a company’s progress, especially compared to its peers in the same sector. Today we are looking at Quest (NYSE:DGX) and the best and worst performers in the testing & diagnostics services industry.
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 12.8% since the latest earnings results.
Quest (NYSE:DGX)
Founded in 1967 as MetPath, Quest Diagnostics (NYSE:DGX) is a provider of diagnostic testing services, offering a broad range of tests for medical conditions such as diabetes, heart disease, and infections, as well as genetic testing and drug monitoring services.
Quest reported revenues of $2.62 billion, up 14.6% year on year. This print exceeded analysts’ expectations by 1.8%. Overall, it was a strong quarter for the company with a narrow beat of analysts’ sales volume estimates and a decent beat of analysts’ EPS estimates.
"In the fourth quarter, we delivered impressive revenue growth of nearly 15%, including approximately 5% organic growth, while also improving our profitability," said Jim Davis, Chairman, CEO, and President.
The stock is up 9.4% since reporting and currently trades at $169.90.
Founded in 1981, RadNet (NASDAQ: RDNT) provides outpatient diagnostic imaging services and advanced AI solutions to enhance radiology practices.
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 a solid 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 20% since reporting. It currently trades at $46.07.
Founded in 2012, Guardant Health (NASDAQ:GH) is a precision diagnostics company that develops blood tests for detecting cancer and assessing treatment responses.
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 14.2% since the results and currently trades at $40.71.
Founded in 1978, Labcorp Holdings (NYSE:LH) is a life sciences and diagnostics company that provides clinical testing, drug development, and medical testing solutions.
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 logged 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 5.4% since reporting and currently trades at $236.31.
Founded in 2001, NeoGenomics (NASDAQ:NEO) provides genetic and molecular testing services to support cancer diagnosis and treatment decisions, specializing in clinical testing, molecular oncology, and pharmacogenomics (impact of genes on drugs and vice versa).
NeoGenomics reported revenues of $172 million, up 10.6% year on year. This number came in 1% below analysts' expectations. More broadly, it was actually a satisfactory quarter as it put up a solid beat of analysts’ EPS estimates.
NeoGenomics had the weakest performance against analyst estimates among its peers. The stock is down 33.7% since reporting and currently trades at $9.57.
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