Getting testy is still a good thing if you're Laboratory Corporation (NYSE:LH). Headquartered just down the road from yours truly, it remains one of the leading providers of testing services both simple and complex. But the question lingers: Is there money to be made in this stock?

Results for this quarter point toward both some of the opportunities and challenges here. Sales grew just under 10%, with a near 50/50 split between volume and pricing. Margins, though, were a little more mixed. Gross margin was basically flat, and even if you add back the impact of stock compensation expense, there wasn't a great deal of juice in the operating margin, either. That said, free cash flow did improve nicely from last year's quarter.

The trick here, in my view, continues to be the balancing act between payers who want to pay less for tests and the innovation/obsolescence question. For example, large managed-care companies like WellPoint (NYSE:WLP) and UnitedHealth (UNH) both do testing business with Lab Corp, but that could be something of a mixed blessing. Both choose Lab Corp because it could lower their costs, but what happens in the future if they decide to cut the amount they're willing to pay Lab Corp? It's the old dilemma of dancing with the gorilla -- you stop when the gorilla wants to stop.

And likewise on the pace of new and newly obsolete testing. HPV testing seems to be growing well now, but what happens when Merck (NYSE:MRK) and GlaxoSmithKline Kline (NYSE:GSK) get their cervical cancer vaccines approved? Will women be less likely to go for regular pap screenings when the vaccine becomes available, and will that hurt business with Lab Corp and Cytyc (NASDAQ:CYTC)?

There will always be necessary tests, and Lab Corp has a good and durable franchise, but I'm not sure how much further it can push its margins. Likewise, I'm uncertain about long-term revenue growth prospects. I'd certainly be very willing to revisit this stock if it were trading at a discount, but that's not the case today.

For more Foolishness that passes the test:

UnitedHealth is a Motley Fool Stock Advisor recommendation, whileMerck and GlaxoSmithKline are Motley Fool Income Investor recommendations. Take the newsletter that best fits your investing style for a 30-day free spin.

Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).