Reuters – May 31, 2016 7:00 AM — By Lewis Krauskopf
NEW YORK, May 31 (Reuters) – Shares of Quest Diagnostics and Laboratory Corporation of America Holdings have been on a roll as analysts point to improving business trends for the U.S. clinical-lab testing industry stalwarts.
Their share gains have also come as a competitive threat from Theranos, an upstart rival in the sector, appears to have diminished. Next, the shares face a test of their own: an impending Medicare reimbursement decision.
This year, Quest shares have climbed 8.5 percent and LabCorp has risen 3.5 percent, against a 1.4 percent drop for the S&P 500 healthcare sector.
Both established companies have been buoyed by a broad resurgence in medical testing volume – now running up almost 2 percent annually after several flat years, according to William Blair analyst Amanda Murphy.
The industry has had a broad pick-up in volume as a result of more people seeking health care, said Morningstar analyst Debbie Wang.
“We are just seeing a trend that seems to have legs,” Wang said.
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