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LabCorp Grows Sequencing Portfolio

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Laboratory Corporation of America Holdings (LH - Free Report) , a leading player in the U.S. diagnostic market, recently introduced GeneSeq, the company’s next generation sequencing assay for genetic causes of familial cardiac disease.

According to the company, GeneSeq Cardio will help recognize patients with pathogenic mutations in genes, who need regular cardiac screening, lifestyle changes or clinical intervention to prevent the progress of cardiac disease and secondary complications. Identification of these individuals may help prevent myocardial infarction, stroke, and sudden cardiac death. Given that familial cardiac diseases are associated with 80% of sudden cardiac death cases in young patients, LabCorp remains hopeful about the prospect of this next generation test.

Despite the near-term challenges from reimbursement issues, LabCorp is working on portfolio expansion to drive top line. The company is focusing more on the high-margin esoteric testing business. The company recorded approximately 40% of total revenues during the last reported quarter from the genomic, esoteric and anatomic pathology categories, which is expected to go up to 45% over the next 3−5 years. The esoteric volume during the fourth quarter increased 3.5% on the back of decent growth in specialized endocrinology and coagulation businesses, and cardiovascular and chronic kidney disease programs.

In an attempt to diversify its portfolio in this line, earlier in 2012, LabCorp tied up with Ariosa Diagnostics to offer the latter’s Harmony prenatal test, a non-invasive test for detection of common fetal trisomies, utilizing cell-free DNA (cfDNA) in maternal blood. The company is also working to expand its portfolio of molecular diagnostics testing. Moreover, the company introduced several new tests and collaborated with major companies and academic institutions to develop advanced tests.

Further, the company is excelling in the field of chromosomal microarray analysis. In addition to its pediatric, prenatal and conception test offerings, the company is also working with oncology applications.Given the continuous focus on portfolio expansion, we are confident about LabCorp garnering higher revenues from specialized testing, going forward. The stock carries a Zacks Rank #3 (Hold).

However, other stocks in the medical device sector, carrying a Zacks Rank #1(Strong Buy), like Medical Action Industries Inc. , Given Imaging Ltd. and Cyberonics Inc. appear impressive.

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