Whether you're looking for parasites, signs of drug abuse, or a diagnosis of congestive heart failure, Biosite (NASDAQ:BSTE) has got a test for you to take.

The diagnostics business was good to Biosite in the first quarter as revenue grew 25% over last year and about 9% from the fourth quarter. Sales were led again by the company's Triage BNP test platform (a test for congestive heart failure), as revenue grew 27% compared with last year's quarter and made up nearly 70% of the company's total.

While it was not nearly as significant as a percentage of total revenue, Biosite once again experienced growth in its Triage Drugs of Abuse and TOX Drug screen products, as revenue from these products climbed about 10% over the year-ago quarter.

Better growth also translated into better profitability for Biosite. Good control in selling, general, and administrative expenses and a big improvement in gross margin led to the operating margin improving from 25% to 31% in the first quarter, leading the company to a 54% increase in net income. Higher dilution partially offset this, though, as EPS growth clocked in at 38%.

While there was a small decline in end-user pricing for the BNP test, end-user demand for the tests increased at a rate faster than management had expected. What's more, management also saw fewer losses to competition than previously estimated. Remember, while Biosite was the first to market with a BNP test, the company has to contend with competitors like Bayer (NYSE:BAY), Abbott Labs (NYSE:ABT), and Roche -- all of which are considerably larger than it is.

The news wasn't all good for Biosite, though. The company announced that it had received word from the Food and Drug Administration that the premarket approval application for the Triage Stroke Panel was on hold pending the resolution of certain issues. Although the company didn't go into specifics, it did advise that the FDA considered the application, in its current form, to be unapprovable.

Without knowing the specifics, it's hard to judge just how serious this matter is. That said, Biosite has been through this process many times before (including actually receiving negative FDA panel votes), and I believe the odds favor an eventual favorable resolution. So although the product will no doubt be delayed, I doubt these FDA issues will constitute "deal breakers" that will kill the application altogether.

In addition to this stroke diagnostic test, the company is working on a variety of new diagnostic tests. Clinical trials should begin this quarter for a new panel that tests for acute coronary syndromes and heart attack risks, and a sepsis test should enter trials later in the year. Biosite is also proceeding with new tests for abdominal pain and diagnosing incidences of shortness of breath.

A good quarter and a 50% increase in the stock over the past year not withstanding, diagnostics is often a tricky space for investors to find profits. The business is intensely competitive, and one company's novel test is often duplicated by the competition in a relatively short period of time.

Nevertheless, Biosite has emerged as a survivor and a potent competitor to the much larger companies that generally dominate the diagnostics industry. While present valuation isn't enough to get me really excited about owning the stock, the shares don't trade too much above the company's stated long-term growth goal of 20%, and margins and returns on assets and equity are both quite solid.

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