FACT BRIEF

Are COVID-19 tests producing substantial profits for the US health care industry?

Friday, December 24, 2021

By Lisa Freedland

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YES

Private U.S. providers of COVID-19 diagnostic tests and testing services have continued to make significant profits in 2021.

Abbott, one of the best-known manufacturers of the tests, reported global COVID-19 testing-related sales of $1.9 billion in the third quarter of 2021, as the surge of Delta-variant infections boosted demand for its tests. It reported profits 50% above forecasts and said it expected 40% growth in profits for the full year.

Companies, clinics and hospitals administering the tests also “have been booking record profits,” Kaiser Health News reported in May. U.S. regulations don’t limit fees charged to insurers or the public. In 2020, Quest Diagnostics made $42 in revenue per procedure, which on average cost $29 to administer—margins one-third higher than the company generates from its regular activities, according to Reuters. Quest in October raised its 2021 earnings outlook based on “higher than anticipated" COVID-19 testing volumes.

This Brief has been updated to include third-quarter financial figures.

This fact brief is responsive to conversations such as this one.

Sources

BioWorld Abbott soundly beats earnings estimates with delta boost

Abbott Abbott Reports Third-Quarter 2021 Results; Achieves Strong Double-Digit Earnings Growth and Raises Guidance

Kaiser Health News Covid Testing Has Turned Into a Financial Windfall for Hospitals and Other Providers

Reuters Breakingviews - How U.S. made Covid-19 tests a profitable disaster

The Motley Fool Transcript of Quest Diagnostics third quarter 2021 earnings call

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