Public Laboratory Companies Eye More Lab Outreach Acquisitions

Companies want to get back to base business as COVID-19 test volumes fall, according to earnings reports

PUBLICLY-TRADED CLINICAL LABORATORY COMPANIES released second quarter 2022 financial reports that confirmed a softening demand for COVID-19 tests, even as their base business revenues grew compared to last year. 

While continuing to address ongoing needs for SARS-CoV-2 testing, company leaders said during earnings calls that they are prioritizing the following business areas: 

  • Acquiring hospital laboratories. 
  • Growing relationships with retail sites. 
  • Stepping up at-home test offerings to consumers. 
  • Expanding oncology testing and companion diagnostics. 

Here is an overview of results and priorities shared by leading publicly-traded laboratory companies. 



At Labcorp in Burlington, N.C., Q2 revenue was down amid a decrease in COVID- 19 testing, but base business revenue went up. Moving forward, the company said it is prioritizing its base business, including the acquisition of hospital laboratories. 

Labcorp announced: 

  • Q2 revenue was $3.7 billion, down from $3.8 billion in Q2 2021. 
  • Revenue for the first six months of 2022 was $7.6 billion, down 5.1% from $8 billion in the first six months of 2021. 
  • Diagnostics revenue in Q2 earned $2.26 billion, down 4.7% from $2.37 billion Q2 2021. 
  • Q2 COVID-19 testing revenue went down 42% compared to Q2 2021, with requisition volume down 2.7% 
  • Diagnostics base business revenue grew 3.9% compared to Q2 2021. 

During the Labcorp earnings call, an analyst asked about balancing more testing from retail pharmacies. Chairman and CEO Adam Schechter noted challenges in retail settings and reaffirmed Labcorp’s priorities for growth. 

“We’ve seen more of our business move to the retail sector, where it challenges our margins a bit. Margin right now for PCR testing is about 60%. And we see the retail sector as an opportunity,” he commented. “But frankly, we are focused on our base business. We’re really focused on the hospital and local laboratory acquisitions that are before us.” 

Labcorp has a “strong pipeline of health system and regional acquisition possibilities,” Schechter said. “We acquired select outreach business assets and agreed to provide ongoing technical support to Prisma Health’s [South Carolina] hospital laboratories. We completed our acquisition of select clinical outreach business assets from AtlantiCare in New Jersey. We reached an agreement to acquire the clinical outreach business and related assets of RWJBarnabas Health, also in New Jersey.” 

The RWJBarnabas deal, announced on Aug. 23, involved New Jersey’s largest academic health system. The agreement, the cost of which was not disclosed, affects all lab outreach services in the system. RWJBarnabas does not list lab test statistics in its financial documents, but the system runs 15 hospitals and sees two million outpatients per year. 

Labcorp’s other priorities include expanding home testing offerings and oncology diagnostics. 



Quest Diagnostics in Secaucus, N.J., increased base business revenue, even as COVID-19 test earnings decreased. 

“We believe demand for COVID- 19 molecular testing will continue into 2023,” Steve Rusckowski, Chairman, and outgoing CEO, told investors during an earnings call. 

“We also continued to ramp our investments to accelerate growth in the base business, particularly in the areas of advanced diagnostics and direct-to-consumer testing,” said Jim Davis, CEO-elect, in a news release. 

Quest shared the following results: 

  • Q2 revenue was $2.4 billion, down 3.8% from Q1 2021. 
  • Q2 base revenue brought in $2.1 billion, up 2.9% from Q1 2021. 
  • COVID-19 testing revenue was $355 million in Q2, down 31% from Q2 2021 and 41% compared to Q1 2022. 
  • Revenue-per-test-requisition declined 2.6% year over year, and requisition volume dropped 1.4%. 

Half of Quest’s COVID-19 test revenue in Q2 came from retail channels. Quest operates about 6,000 COVID-19 patient access sites, which include its retail relationships with CVS, Rite Aid, and Walmart, and patient service centers. 

In response to an analyst’s inquiry about spending, Davis explained that the company’s priorities for 2023 included investments in advanced diagnostics and direct-to-consumer testing. 

“We continue to see growth in direct-to-consumer testing,” he added. “We saw strong growth from testosterone, comprehensive metabolic panels, and Lyme disease [tests].” 

The company’s merger and acquisition opportunities remain appealing, according to Davis. “We are in late-stage discussions with several hospital health systems on the purchase of their laboratory outreach businesses,” Davis noted. 



BioReference Laboratories (part of OPKO Health) in Elmwood Park, N.J., announced its Q2 revenue was down significantly year over year as it also shared a plan to improve growth. 

Data shared in an earnings call included: 

  • Q2 revenue was $186.8 million, down from $397.2 million in Q2 2021 due to decreased COVID-19 testing volumes. 
  • The company performed one million COVID-19 tests in Q2, down from 2.1 million in Q1 2022 and three million in Q2 2021. 

Jon Cohen, Director, and Executive Chairman at BioReference, said in an earnings call that the company is carrying out a three-pronged strategy to improve margins: cutting costs; pursuing investments in oncology, women’s health, and urology; and creating a more efficient organizational structure. 

The cost cutting included a massive staff reduction. “At the peak of COVID, we had nearly 8,000 employees at BioReference, and by the end of July [2022], our employee count has been reduced to 3,600 employees, including reductions of approximately 700 associates in June and July,” Cohen said.



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