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Marty Chilberg
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Marty Chilberg is a seasoned financial professional with over 30 years of executive leadership, board, consulting and advisory experience.  He began his career as a certified public accountant (CPA). He moved to Silicon Valley in 1981 to begin his career in the software industry, working for... More
  • Clinical Labs Recap Q2-2014: Slowly Improving Climate 1 comment
    Jul 25, 2014 11:16 AM | about stocks: DGX, LH

    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.
    Stocks: DGX, LH
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  • Marty Chilberg
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    Author’s reply » Note: PKI is scheduled to release earnings on 7/31. Will add them to this blog at that time.
    25 Jul 2014, 11:26 AM Reply Like
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