Bio-Reference Labs (NASDAQ:BRLI) has put together a string of impressive sales and earnings gains in recent years, capturing an increasing share of the $40 billion clinical laboratory testing market. Bio-Reference is dwarfed by a couple of other national rivals, but has held its own in its home Northeast region. Tomorrow's second-quarter earnings report will shed more light on recent trends in the marketplace.

What analysts say:

  • Buy, sell or waffle? Two analysts follow Bio-Reference: one is bullish and the other is on the fence with a hold rating.
  • Revenues. Analysts are projecting second-quarter sales of $56 million, for 18.7% growth over last year's quarter.
  • Earnings. Analysts project second-quarter earnings are $0.22 per share, or 10% above last year's $0.20.

What management says:
At a recent health-care investment conference, Bio-Reference highlighted that it is much smaller than LabCorp (NYSE:LH) and Quest Diagnostics (NYSE:DGX), the two leading lab testing firms. However, it qualifies as an appealing growth company with more than a 20% improvement in annual sales and earnings over the past three years, and is a formidable competitor in the greater New York metropolitan region.

What management does:
In addition to double-digit growth, Bio-Reference is becoming more profitable, thanks to a higher mix of esoteric and genomic testing, as opposed to more routine tests such as blood screening and pap smears, or even the employee drug testing that MEDTOX (NASDAQ:MTOX) performs. Esoteric testing enters the realm of personalized medicine by looking into a patient's unique genetic profile, individual cells, and immune systems.

Margins

10/05

01/06

04/06

07/06

10/06

01/07

Gross

50.9%

50.9%

51.2%

51.2%

52%

52.2%

Operating

7.7%

7.6%

8.4%

8.5%

9.3%

9.6%

Net*

4.6%

4.6%

5.2%

5.6%

5.8%

5.9%
All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
LabCorp and Quest Diagnostics are more profitable than Bio-Reference, but Bio has been growing faster and recently boasted that most expansion has been through organic, or internal, means. Bio-Reference's move to higher-margin esoteric is also a welcome sign and can further boost the bottom line.

Examine more related Foolishness:

LabCorp is a Stock Advisor and Quest Diagnostics is an Inside Value recommendation.

Fool contributor Ryan Fuhrmann is long shares of Quest Diagnostics but has no financial interest in any other company mentioned. The Fool has an ironclad disclosure policy. Feel free to email him with feedback or to discuss any companies mentioned.