CBOE Trader's  Instablog

CBOE Trader
Send Message
  • Obamacare To Boost Spending On Medical Tests 2 comments
    Aug 26, 2013 1:06 PM | about stocks: ARYC, DGX

    In June last year, the U.S. Supreme Court upheld President Obama's controversial Affordable Care Act ('ACA). The ACA is expected to result in a major overhaul of the healthcare sector. Ultimately, the healthcare sector, along with patients, will benefit immensely from ACA or Obamacare, as it is known. In the near future though, the legislation is likely to boost spending on medical tests.

    Spending on medical testing to rise

    In an article in Forbes magazine earlier this month, Gene Marcial noted that starting January 1, 2014, all preventative test costs won't be applied to a patient's deductible insurance bill. Currently, the costs for these tests are borne by individuals or corporation until the deductible limit is reached, according to Marcial. However, the new legislation, which goes into effect next year, means that Medicare and private insurance carriers will pay 100% of the costs of these tests.

    Marcial notes that the immediate impact of this development will be a spike in demand for medical tests since individuals and corporations won't be paying anything for these.

    This means that medical testing companies are definitely going to benefit from Obamacare in the near future.

    How to benefit from this trend?

    Of course going long on medical testing companies is an excellent idea, given the expected rise in demand for medical tests in the near future.

    One company investors can focus on is Quest Diagnostics Inc. (NYSE:DGX). Based in Madison, New Jersey, Quest Diagnostics provides diagnostic testing, information and services. The company offers patients and physicians the access to diagnostic testing services through its nationwide network of laboratories and company-owned patient service centers.

    Recently, DGX announced that its Board of Directors increased its share repurchase authorization by $1 billion. That is an encouraging sign for investors. For a growth company, DGX is currently attractively valued, trading at a P/E ratio of 17.70.

    However, if you are looking for a bargain in the field then Sunnyvale, California-based Arrayit Corp. (OTCPK:ARYC) looks a good option. The company saw a strong first half of 2013, with revenue rising 19% on a year-over-year basis.

    With a robust pipeline of preventive tests, ARYC is currently well-positioned to capitalize on an expected rise in spending on medical tests. The company's pipeline of preventive tests include the OvaDx® ovarian cancer test and the PDx™ Parkinson's Disease test.

    The company has leveraged its proprietary life sciences platform to develop OvaDx, which is the first definitive diagnostic screening test for early stage detection of ovarian cancer.

    I would certainly keep an eye on ARYC, given the company's product pipeline.

    Disclosure: I am long OTCPK:ARYC.

    Stocks: ARYC, DGX
Back To CBOE Trader's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (2)
Track new comments
  • Delfin
    , contributor
    Comments (25) | Send Message
    This bodes well for ARYC if they can get the above mentioned OvaDx® ovarian cancer test and the PDx™ Parkinson's Disease test approved by the FDA. Any idea what the time line is for these tests to be approved by the FDA? What stage are these tests at right now?
    26 Aug 2013, 06:05 PM Reply Like
  • filoblack
    , contributor
    Comments (23) | Send Message
    Long ARYC.
    27 Aug 2013, 01:50 AM Reply Like
Full index of posts »
Latest Followers


  • ACTC
    Apr 20, 2013
  • PRXI
    Jan 14, 2013
More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.