Bio-Reference reported its second-quarter results earlier today, and management held nothing back in proclaiming it the "best ever quarter in corporate history." The company has good reason to brag. The bottom-line results beat myopic analyst expectations for the quarter. Total revenue rose 29%, and earnings per share jumped 15%.
During the earnings conference call, management cited "changes imposed by certain insurance companies," likely a reference to managed-care giant UnitedHealth Group's
Bio-Reference is obviously happy to benefit from the events, but management also realizes that it needs to turn the potentially fleeting developments into long-term growth opportunities. It believes it can do so by offering differentiated services, such as diagnosing rare genetic diseases, performing other "esoteric" testing that capitalizes on the move to personalized health care, and investigating individual genetic profiles, cells, and immunology. Esoteric testing carries higher margins, and it's giving Bio-Reference a good boost -- it grew to 44% of total revenue for the quarter.
Bio-Reference is growing fast and has improved sales and earnings by more than 20% annually over the past three years, although cash flow trends have been more murky and have been falling slightly. However, the company is continuing to see a near-term boost to results from turmoil in its core New York metropolitan region.
With a market capitalization that represents only a small percentage of those of its larger, national rivals, Bio-Reference is surprisingly small compared with LabCorp and Quest. MEDTOX
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