Coronavirus testing is a windfall
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The sustained coronavirus pandemic is leading to especially large windfalls for labs and companies that make the materials used for testing.
The big picture: Detecting widespread infection and helping set up clinical trials isn't free, and the botched federal response will keep demand for these supplies high for a long time.
By the numbers: Investors in companies directly involved with coronavirus testing are starting to reap their largest rewards six months into the pandemic.
- Thermo Fisher, which makes test kits, reagents and materials used in vaccine and coronavirus drug trials, said third-quarter profit more than doubled compared to last year, reaching $1.9 billion. Revenue soared 36% to $8.5 billion. More than 20% of its revenue was tied to COVID-19 tests, equipment and services.
- LabCorp said its third-quarter earnings more than tripled as COVID-19 test demand continued to surge and other routine lab tests started to come back.
- Quest Diagnostics also said its profit doubled.
What they're saying: "We're on track to achieve a truly spectacular year," Thermo Fisher CEO Marc Casper told Wall Street this week after the company raised its full-year revenue and profit projections by 14% and 35%, respectively. "It's exciting to be able to set a new bar on performance, right?"
Between the lines: Enhanced federal payments for COVID-19 tests, as well as a one-year reprieve from Medicare cuts, will buoy labs.
- Medicare has guaranteed $100 payments for COVID-19 tests if labs can turn around test results within two days, but Medicare will still pay $75 if that timeline isn't met — higher than the $51 Medicare was initially paying.
