The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how testing & diagnostics services stocks fared in Q2, starting with NeoGenomics (NASDAQ: NEO).

The testing and diagnostics services industry plays a crucial role in disease detection, monitoring, and prevention, serving hospitals, clinics, and individual consumers. This sector benefits from stable demand, driven by an aging population, increased prevalence of chronic diseases, and growing awareness of preventive healthcare. Recurring revenue streams come from routine screenings, lab tests, and diagnostic imaging, with reimbursement from Medicare, Medicaid, private insurance, and out-of-pocket payments. However, the industry faces challenges such as pricing pressures, regulatory compliance, and the need for continuous investment in new testing technologies. Looking ahead, industry tailwinds include the expansion of personalized medicine, increased adoption of at-home and rapid diagnostic tests, and advancements in AI-driven diagnostics that enhance accuracy and efficiency. However, headwinds such as reimbursement uncertainties, competition from decentralized testing solutions, and regulatory scrutiny over test validity and cost-effectiveness may impact profitability. Adapting to evolving healthcare models and integrating automation will be key for sustaining growth and maintaining operational efficiency.

The 5 testing & diagnostics services stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 2.6%.

Luckily, testing & diagnostics services stocks have performed well with share prices up 14.8% on average since the latest earnings results.

Weakest Q2: NeoGenomics (NASDAQ: NEO)

Operating a network of CAP-accredited and CLIA-certified laboratories across the United States and United Kingdom, NeoGenomics (NASDAQ: NEO) provides specialized cancer diagnostic testing services, including genetic analysis, molecular testing, and pathology consultation for oncologists and healthcare providers.

NeoGenomics reported revenues of $181.3 million, up 10.2% year on year. This print fell short of analysts’ expectations by 0.9%. Overall, it was a softer quarter for the company with a significant miss of analysts’ full-year EPS guidance estimates.

“In the second quarter clinical revenue increased by 16% driven by sequential improvement in AUP, a record quarter for volumes, and NGS growth of 23%,” said Tony Zook, CEO of NeoGenomics.

NeoGenomics delivered the weakest performance against analyst estimates and weakest full-year guidance update of the whole group. Unsurprisingly, the stock is down 5% since reporting and currently trades at $6.15.

Read our full report on NeoGenomics here, it’s free.

Best Q2: Guardant Health (NASDAQ: GH)

Pioneering the field of "liquid biopsy" with technology that can identify cancer-specific genetic mutations from a simple blood draw, Guardant Health (NASDAQ: GH) develops blood tests that detect and monitor cancer by analyzing tumor DNA in the bloodstream, helping doctors make treatment decisions without invasive biopsies.

Guardant Health reported revenues of $232.1 million, up 30.9% year on year, outperforming analysts’ expectations by 10%. The business had an exceptional quarter with full-year revenue guidance exceeding analysts’ expectations and a beat of analysts’ EPS estimates.

Guardant Health pulled off the biggest analyst estimates beat, fastest revenue growth, and highest full-year guidance raise among its peers. The market seems happy with the results as the stock is up 29.3% since reporting. It currently trades at $58.50.

Is now the time to buy Guardant Health? Access our full analysis of the earnings results here, it’s free.

Labcorp (NYSE: LH)

With over 600 million tests performed annually and involvement in 90% of FDA-approved drugs in 2023, Labcorp (NYSE: LH) provides laboratory testing services and drug development solutions to doctors, hospitals, pharmaceutical companies, and patients worldwide.

Labcorp reported revenues of $3.53 billion, up 9.5% year on year, exceeding analysts’ expectations by 1%. It was a satisfactory quarter as it also posted a narrow beat of analysts’ full-year EPS guidance estimates but a slight miss of analysts’ organic revenue estimates.

Interestingly, the stock is up 11.5% since the results and currently trades at $279.42.

Read our full analysis of Labcorp’s results here.

RadNet (NASDAQ: RDNT)

With over 350 imaging facilities across seven states and a growing artificial intelligence division, RadNet (NASDAQ: RDNT) operates a network of outpatient diagnostic imaging centers across the United States, offering services like MRI, CT scans, PET scans, mammography, and X-rays.

RadNet reported revenues of $498.2 million, up 8.4% year on year. This number topped analysts’ expectations by 1.6%. It was an exceptional quarter as it also logged a beat of analysts’ EPS estimates and an impressive beat of analysts’ same-store sales estimates.

RadNet had the slowest revenue growth among its peers. The stock is up 27.6% since reporting and currently trades at $68.06.

Read our full, actionable report on RadNet here, it’s free.

Quest (NYSE: DGX)

Processing approximately one-third of the adult U.S. population's lab tests annually, Quest Diagnostics (NYSE: DGX) provides laboratory testing and diagnostic information services to patients, physicians, hospitals, and other healthcare providers across the United States.

Quest reported revenues of $2.76 billion, up 15.2% year on year. This print beat analysts’ expectations by 1.4%. Overall, it was a strong quarter as it also put up a solid beat of analysts’ sales volume estimates and full-year revenue guidance slightly topping analysts’ expectations.

The stock is up 10.7% since reporting and currently trades at $184.40.

Read our full, actionable report on Quest here, it’s free.

Market Update

The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.

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