BioReference, Foundation Medicine Report Strong Sales Growth

BioReference Laboratory and Foundation Medicine, a larger and mid-level player in the laboratory sector, both reported strong growth for their respective fiscal and year-end quarters, but the latter continues to report steep losses. The New Jersey-based BioReference reported a 15 percent rise in revenue for its fiscal first quarter ending Jan. 31, reaching $209 million. That compares with $181.3 million for the first quarter of fiscal 2014. Net income more than doubled, to $6.6 million from $3 million, although the company noted that severe weather conditions during the winter of 2014 shaved more than 30 percent off its net earnings in the year-ago quarter and should be taken into account. Nevertheless, BioReference missed the earnings predictions of analysts. Their consensus was that the company would report revenue of $216.3 million. However, the company reported other strong fundamentals. Revenue per patient rose 8 percent during the quarter, to more than $88, as the company’s pricey esoteric assays provided 70 percent of revenue, up from 66 percent a year ago. According to William Blair & Co., that represents a 22 percent growth in esoteric testing over the past year. “This is the first quarter in several years where we believe that one can make valid year over year quarterly comparison given the reset attributable to both the reimbursement changes we have seen as an industry as well as our investment in our own infrastructure, both of which occurred in 2013,” said Marc Grodman, M.D., BioReference’s chief executive officer, in a press release. The latter is a reference to a more than 50 percent reduction in payments for the technical component of CPT code 88305, a move by the Centers for Medicare & Medicaid Services that had a profound impact on the finances of pathology practices throughout the U.S. BioReference appears to have gotten over that hump, as Grodman reiterated 2015 guidance of 10 percent growth in revenue and 20 percent growth in earnings during a recent call with analysts. William Blair reported that sales are expected to reach $945 million during fiscal 2015, and top the $1 billion mark next year. Meanwhile, the Massachusetts-based Foundation Medicine reported revenue of $18.7 million for the fourth quarter ending Dec. 31, up 93 percent from the $9.7 million reported for the fourth quarter of 2013. For the entire year, revenue reached $61.1 million, more than doubling the $29 million reported in 2013. Company officials said test volumes increased 93 percent in the fourth quarter and 167 percent for calendar 2014. The company focuses on esoteric tests, primarily for cancer companion diagnostics. Revenue averaged about $3,600 per test in the fourth quarter, according to Jason Ryan, Foundation’s senior vice president of finance. “Commercial execution and growth rates were strong across both our clinical and pharma customers in the fourth quarter, highlighting the broad adoption of our comprehensive genomic profiling approach,” said Foundation Medicine Chief Executive Officer Michael Pellini, M.D., in a press release. “We’re also pleased with the achievement of many strategic and operational milestones that culminated in the announcement of a broad collaboration agreement with Roche, which we expect will strengthen all aspects of our business.” Foundation and Roche entered into a strategic research and commercialization collaboration last January that included the drug giant making a $250 million investment in Foundation. However, Foundation has continued to operate deep in the red. It reported a loss of $13.3 million in the fourth quarter of 2014, up from $13 million a year ago. For calendar 2014, it reported a loss of $52.2 million, up from $42.9 million in 2013. The company’s 2015 revenue guidance is in the range of $105 million to $115 million, of which $10 to $12 million will be derived from the Roche relationship. Takeaway: Aggressive growth is continuing at some of the other major laboratories in the U.S.