Want a new job? There's a good chance you'll be drug-tested. A little worried about that mole on your calf? Get it removed and it will be sent to a lab for further analysis. Want a life insurance policy? Prepare to visit your friendly neighborhood phlebotomist and give up some blood.

That's the business of Laboratory Corp (NYSE:LH) -- handling thousands of tests ranging from the cheap and simple to the expensive and esoteric.

Business continues to move along at a positive, albeit not rapid, pace. Revenue rose more than 7% in the quarter, with volume growth of about 1%. Although Lab Corp wasn't really able to achieve much in the way of operating leverage (operating income excluding restructuring charges was up less than 5%), a better tax rate and lower shares outstanding boosted the per-share earnings by about 10%.

As a large national player second in size only to Quest Diagnostics (NYSE:DGX), it's fair to wonder just how much growth Lab Corp can really hope to achieve. Sure, there's an opportunity to build the esoteric business and that will boost margins (these are more expensive and profitable tests), but the very nature of "esoteric" does suggest something of a limit in terms of sheer volume.

Likewise in dealing with managed care companies. Lab Corp certainly has room to boost the percentage of business that it gets from companies like UnitedHealth (NYSE:UNH) and Aetna (NYSE:AET), and WellPoint (NYSE:WLP) is already a significant client, but dealing with these companies is a mixed blessing. Sure, they'll provide volume, but their profitability is in part tied to controlling costs -- costs like the amount of money they're willing to pay to companies like Lab Corp for tests.

While there are definite cost advantages from the sheer size of the company and there will likely continue to be new tests and procedures (like the ThinPrep from Cytyc (NASDAQ:CYTC)) that make incremental contributions, I still see this as a mature market with plenty of competition. Since Lab Corp will be hard-pressed to sustainably grow free cash flow beyond 10% a year, I just don't see much of a bargain in these shares.

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Laboratory Corp and UnitedHealth are Motley Fool Stock Advisor picks.

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