“April 21, 1997 Intelligence:  Late Breaking Lab News”

Quest Diagnostics Incorporated reported quarterly earnings last week. It is the first look at the financial performance of the newly-independent spin off from Corning Incorporated. The company reported net income of $4.0 million on revenues of $388.1 million. Revenues declined 3.3% from same quarter last year. This indicates that revenue erosion still continues.

MORE ON: Quest Diagnostics Incorporated…
Although revenues declined from the same quarter last year, Quest indicates that pricing improved 1.6% above last year. Quest attributes this to improved pricing discipline (long lacking among the national laboratories) and contract renegotiations.

ADD TO: Pricing Discipline…
Laboratory Corporation of America reported that pricing was stable for fourth quarter 1996, the second consecutive quarter this occurred. Combined with Quest’s experience, it could be an early sign that major laboratories are finally learning how to avoid “loss leader” pricing.

Is Neuromedical Systems, Inc., maker of the PapNet® System, being picked on or simply getting their just desserts? On March 31, NeoPath Inc., maker of the AutoPap® System, sued Neuromedical on claims of patent infringement. Neuromedical was then hit with another lawsuit on April 15. Cytyc Corporation, maker of the ThinPrep® System, sued Neuromedical and PIE Mutual Insurance Company. Cytyc alleges, among other things, deceptive trade practices, unfair competition and defamation.

ADD TO: Neuromedical …
DARK REPORT readers know that Neuromedical started this feud back on July 15, 1996. At that time Neuromedical sued NeoPath on the grounds of patent infringement, false advertising, and unfair competition. Maybe it is time for all the companies in the automated cytology market to compete in the marketplace, not in the courts. In the long term , the marketplace is always an efficient judge of product quality and a company’s integrity.

Both Laboratory Corporation of America and SmithKline Beecham Clinical Laboratories announced the signing of national contracts with United Healthcare. Both laboratories are now preferred providers for laboratory services. United Healthcare is the largest public managed care company. It has 5.12 million members in its HMO plans.

Impath Inc. attracted favorable attention on Wall Street. Last week Prudential Securities launched coverage of the disease management company. Analyst Ken Bohringer rated Impath a “buy.” Impath is one of an emerging group of boutique companies combining laboratory and pathology testing with disease management services for clinicians.

MYSTERY BUYER

Look for a big announcement about the sale of a respected independent laboratory. Laboratory industry observers will be surprised at who the buyers are, as well as the source of the acquisition funds.

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