Testing & Diagnostics Services Stocks Q3 Recap: Benchmarking NeoGenomics (NASDAQ:NEO)

The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how NeoGenomics and the rest of the testing & diagnostics services stocks fared in Q3.

The testing and diagnostics services industry plays a crucial role in disease detection, monitoring, and prevention, serving hospitals, clinics, and individual consumers. This sector benefits from stable demand, driven by an aging population, increased prevalence of chronic diseases, and growing awareness of preventive healthcare. Recurring revenue streams come from routine screenings, lab tests, and diagnostic imaging, with reimbursement from Medicare, Medicaid, private insurance, and out-of-pocket payments. However, the industry faces challenges such as pricing pressures, regulatory compliance, and the need for continuous investment in new testing technologies.Looking ahead, industry tailwinds include the expansion of personalized medicine, increased adoption of at-home and rapid diagnostic tests, and advancements in AI-driven diagnostics that enhance accuracy and efficiency. However, headwinds such as reimbursement uncertainties, competition from decentralized testing solutions, and regulatory scrutiny over test validity and cost-effectiveness may impact profitability. Adapting to evolving healthcare models and integrating automation will be key for sustaining growth and maintaining operational efficiency.

The 5 testing & diagnostics services stocks we track reported a very strong Q3. As a group, revenues beat analysts’ consensus estimates by 4.9%.

Thankfully, share prices of the companies have been resilient as they are up 9.5% on average since the latest earnings results.

NeoGenomics

Operating a network of CAP-accredited and CLIA-certified laboratories across the United States and United Kingdom, NeoGenomics provides specialized cancer diagnostic testing services, including genetic analysis, molecular testing, and pathology consultation for oncologists and healthcare providers.

NeoGenomics reported revenues of $187.8 million, up 11.9% year on year. This print exceeded analysts’ expectations by 2.1%. Overall, it was a strong quarter for the company with EPS in line with analysts’ estimates and a solid beat of analysts’ revenue estimates.

“During the third quarter, we again delivered strong clinical test volumes and revenue while advancing our long-term growth initiatives in therapy selection and MRD – two of the largest and fastest growing areas of cancer testing with significant unmet needs,” stated Tony Zook, CEO of NeoGenomics.

NeoGenomics delivered the weakest full-year guidance update of the whole group. Interestingly, the stock is up 13.7% since reporting and currently trades at $11.94.

Is now the time to buy NeoGenomics? Access our full analysis of the earnings results here, it’s free for active Edge members.

Best Q3: Guardant Health

Pioneering the field of "liquid biopsy" with technology that can identify cancer-specific genetic mutations from a simple blood draw, Guardant Health develops blood tests that detect and monitor cancer by analyzing tumor DNA in the bloodstream, helping doctors make treatment decisions without invasive biopsies.

Guardant Health reported revenues of $265.2 million, up 38.5% year on year, outperforming analysts’ expectations by 12.6%. The business had an incredible quarter with an impressive beat of analysts’ revenue estimates and full-year revenue guidance exceeding analysts’ expectations.

Guardant Health pulled off the biggest analyst estimates beat and fastest revenue growth among its peers. The market seems happy with the results as the stock is up 42.4% since reporting. It currently trades at $102.89.

Is now the time to buy Guardant Health? Access our full analysis of the earnings results here, it’s free for active Edge members.

Weakest Q3: Labcorp

With over 600 million tests performed annually and involvement in 90% of FDA-approved drugs in 2023, Labcorp provides laboratory testing services and drug development solutions to doctors, hospitals, pharmaceutical companies, and patients worldwide.

Labcorp reported revenues of $3.56 billion, up 8.6% year on year, in line with analysts’ expectations. It was a mixed quarter as it posted a narrow beat of analysts’ organic revenue estimates.

Labcorp delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 6% since the results and currently trades at $259.25.

Read our full analysis of Labcorp’s results here.

RadNet

With over 350 imaging facilities across seven states and a growing artificial intelligence division, RadNet operates a network of outpatient diagnostic imaging centers across the United States, offering services like MRI, CT scans, PET scans, mammography, and X-rays.

RadNet reported revenues of $522.9 million, up 13.4% year on year. This result surpassed analysts’ expectations by 6.3%. Overall, it was a strong quarter as it also logged a solid beat of analysts’ same-store sales estimates and an impressive beat of analysts’ revenue estimates.

The stock is up 1.3% since reporting and currently trades at $79.34.

Read our full, actionable report on RadNet here, it’s free for active Edge members.

Quest

Processing approximately one-third of the adult U.S. population's lab tests annually, Quest Diagnostics provides laboratory testing and diagnostic information services to patients, physicians, hospitals, and other healthcare providers across the United States.

Quest reported revenues of $2.82 billion, up 13.2% year on year. This print topped analysts’ expectations by 3.3%. It was a strong quarter as it also put up a solid beat of analysts’ revenue estimates and full-year revenue guidance slightly topping analysts’ expectations.

Quest delivered the highest full-year guidance raise among its peers. The stock is down 3.5% since reporting and currently trades at $183.71.

Read our full, actionable report on Quest here, it’s free for active Edge members.