Quest Diagnostics joined the earnings party by recording better than expected revenues and earnings for the June 2014 quarter. Some of the highlights of the conference call follow:
- Reimbursement trends and outlook is improved. Several examples referenced including Tricare announcing restoration of payment for 40 molecular codes previously denied.
- ACA enrollment ramped up late in Q1 resulting in a modest shift in uninsured patient volumes in Q2.
- Improvement in organic volume and price trends seen.
- Partnership established with Sloan-Kettering for molecular NextGen sequencing of solid tumor cancer patients.
- Partnership with Sequenom for national access to MaterniT21 PLUS NIPT.
- Cost savings should exceed long term goal of $1 billion.
Laboratory Corp of America also beat on both top and bottom line for June 2014 though year over year comps remain soft. Highlights from conference call:
- Cost savings through streamlined operations and consolidation is progressing.
- Robust growth seen in companion diagnostic assays to guide targeted drug therapy. Example provided was HCV GenoSure.
- Problems getting paid for tests continues to hurt bottom line.
- Tricare three-year program to pay for some molecular testing that had stopped in 2013 should help, including extended coverage for prenatal and preconception, cystic fibrosis and carrier screening.
- Recovered some money that went unpaid last year and are getting paid by some payers that were not paying last year. However, not seeing material overall improvement yet.
- Run rate of uncollected MoPath payments from last year of $52 million has not materially improved.
- Tricare is a material portion this $52 million and the single largest test was cystic fibrosis. Tricare has stated they will go back to January 2013, but company is still waiting to see impact of this decision.
- ACA is providing a volume benefit. Seeing a very rapid growth in the Medicaid population which is shift to mix. Medicaid is very restrictive for molecular and high value testing which is putting pressure on price.