The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how testing & diagnostics services stocks fared in Q4, starting with Guardant Health (NASDAQ:GH).
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 satisfactory Q4. As a group, revenues beat analysts’ consensus estimates by 2.1%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 15.4% since the latest earnings results.
Weakest Q4: Guardant Health (NASDAQ:GH)
Pioneering the field of "liquid biopsy" with technology that can identify cancer-specific genetic mutations from a simple blood draw, Guardant Health (NASDAQ:GH) 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 $201.8 million, up 30.2% year on year. This print exceeded analysts’ expectations by 4.8%. Despite the top-line beat, it was still a mixed quarter for the company with full-year revenue guidance slightly topping analysts’ expectations but a significant miss of analysts’ EPS estimates.
Guardant Health Total Revenue
Guardant Health achieved the biggest analyst estimates beat and fastest revenue growth of the whole group. Still, the market seems discontent with the results. The stock is down 13.6% since reporting and currently trades at $36.30.
With over 350 imaging facilities across seven states and a growing artificial intelligence division, RadNet (NASDAQ:RDNT) 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 $477.1 million, up 13.5% year on year, outperforming analysts’ expectations by 4.2%. The business had a strong quarter with a solid beat of analysts’ same-store sales and EPS estimates.
RadNet Total Revenue
The stock is down 13.6% since reporting. It currently trades at $49.75.
With over 600 million tests performed annually and involvement in 90% of FDA-approved drugs in 2023, Labcorp (NYSE:LH) provides laboratory testing services and drug development solutions to doctors, hospitals, pharmaceutical companies, and patients worldwide.
Labcorp reported revenues of $3.33 billion, up 9.8% year on year, exceeding analysts’ expectations by 0.6%. It was a satisfactory quarter as it also posted full-year revenue guidance slightly topping analysts’ expectations but full-year EPS guidance in line with analysts’ estimates.
Labcorp delivered the highest full-year guidance raise but had the slowest revenue growth in the group. The stock is down 9.9% since the results and currently trades at $225.11.
Processing approximately one-third of the adult U.S. population's lab tests annually, Quest Diagnostics (NYSE:DGX) provides laboratory testing and diagnostic information services to patients, physicians, hospitals, and other healthcare providers across the United States.
Quest reported revenues of $2.62 billion, up 14.6% year on year. This number beat analysts’ expectations by 1.8%. Overall, it was a strong quarter as it also produced a narrow beat of analysts’ sales volume estimates and a decent beat of analysts’ EPS estimates.
The stock is up 8.1% since reporting and currently trades at $167.87.
Operating a network of CAP-accredited and CLIA-certified laboratories across the United States and United Kingdom, NeoGenomics (NASDAQ:NEO) provides specialized cancer diagnostic testing services, including genetic analysis, molecular testing, and pathology consultation for oncologists and healthcare providers.
NeoGenomics reported revenues of $172 million, up 10.6% year on year. This result came in 1% below analysts' expectations. Taking a step back, it was still a satisfactory quarter as it logged a solid beat of analysts’ EPS estimates.
NeoGenomics had the weakest performance against analyst estimates among its peers. The stock is down 38.2% since reporting and currently trades at $8.93.
In response to the Fed’s rate hikes in 2022 and 2023, inflation has been gradually trending down from its post-pandemic peak, trending closer to the Fed’s 2% target. Despite higher borrowing costs, the economy has avoided flashing recessionary signals. This is the much-desired soft landing that many investors hoped for. The recent rate cuts (0.5% in September and 0.25% in November 2024) have bolstered the stock market, making 2024 a strong year for equities. Donald Trump’s presidential win in November sparked additional market gains, sending indices to record highs in the days following his victory. However, debates continue over possible tariffs and corporate tax adjustments, raising questions about economic stability in 2025.
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