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Laboratory Corporation of America Holdings (LH - Analyst Report) has launched Roma (Risk of Ovarian Malignancy Algorithm) risk assessment tool to evaluate whether an ovarian mass is at high or low likelihood of being malignant.

Earlier, in September 2011, Fujirebio Diagnostics received 510(k) clearance from the US Food and Drug Administration (“FDA”) to market its HE4 test in Roma algorithm. Roma is a qualitative serum test that combines the results of HE4 EIA, Architect CA 125 II and menopausal status into a numerical score.

Ovarian cancer is often difficult to diagnose because its symptoms are easily confused with other non-cancerous conditions. Three fourths of ovarian cancer cases are diagnosed at an advanced stage, when it is more difficult to treat. Although more than 90% of the patients diagnosed early generally live for more than five years, it is only a quarter of the patients who are diagnosed in the initial stages of the disease.

Given the continuous focus on portfolio expansion, LabCorp during the most recent quarter expanded its companion diagnostic portfolio for Roche’s (RHHBY - Analyst Report) Zelboraf and Pfizer’s (PFE - Analyst Report) Xalkori. Over the past few years, LabCorp has been working to increase its revenues from esoteric testing. The company currently derives approximately 40% of revenues from genomic, esoteric and anatomic pathology categories, which can climb to 45% in the next 3-5 years. This specialized niche is now a much sought after avenue for top-line growth and its arch rival Quest Diagnostics (DGX - Analyst Report) is also engaged in strategic acquisitions to bolster its esoteric testing portfolio.

LabCorp has strengthened its foothold in the diagnostics space through both organic and inorganic means and plans to collaborate with leading companies and academic institutions to provide a wider portfolio of tests. Some of the significant acquisitions include Orchid Cellmark, DCL in Indiana, and Westcliff Medical Laboratories in California where LabCorp has a limited presence.

However, economic uncertainty is affecting LabCorp’s volume, which is reflected in the continuous decline in organic growth over the past few quarters (3% in first, 2% in second and 1.2% in the third quarter of fiscal 2011). With no significant job growth in the economy or an increase in commercially insured covered lives, the company’s overall volume growth will continue to languish until the economy rebounds.

LabCorp currently retains a Zacks #3 Rank (short-term Hold rating). We also maintain our long-term Neutral recommendation on the stock.

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