While many in health care lament cutbacks in government reimbursements, one Fort Myers laboratory says the cuts provide opportunities for acquisitions.
Cancer-testing firm NeoGenomics says it is scouting to buy rival labs that have been hit hard by the reimbursement cuts. For example, the government's Medicare program for older people slashed one popular cancer test by 45% in 2014 and 20% this year, and commercial insurers promptly followed suit.
“NeoGenomics has been able to weather the storm by getting much more efficient, but we know that smaller labs and hospital systems are increasingly considering closing some lab operations,” says Douglas VanOort, chairman and CEO of NeoGenomics, in a transcript of a call with investors on SeekingAlpha.com. “While this has been painful for the industry on a longer term basis, we believe there will be opportunities for efficient high-quality providers like NeoGenomics to gain market share.”
VanOort counseled patience, saying the company is mindful of what it might pay. “You may be getting tired of hearing this, but we really have been active in pursuing a number of initiatives and opportunities here,” VanOort says in the transcript. “We just have not found an acquisition yet that we believe would deliver enough benefit to our company and its shareholders.”
NeoGenomics recently reported second quarter revenues of $24.3 million, up 18% over the same quarter one year ago. In addition to its headquarters in Fort Myers, the company has labs in Tampa, Nashville, Fresno and West Sacramento, Calif.