Oct 28, 2020 - Health

Coronavirus testing is a windfall

Data: Yahoo Finance; Chart: Axios Visuals
Data: Yahoo Finance; Chart: Axios Visuals

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.

Go deeper