People shopping for health insurance through the new online exchanges aren’t the only ones frustrated with the fruits of the Affordable Care Act. Count diagnostics company LipoScience (NASDAQ:LPDX) among them.
In the third quarter, physicians ordered 509,000 units of LipoScience’s NMR LipoProfile test – a 3.8 percent increase compared to the same period last year. But third quarter revenue was just $12.7 million, a 6.1 percent year over year decrease. In the last year the average selling price of the test assessing cardiovascular disease risk has dropped by $2.32 to $24.05, a change that interim CEO Bob Greczyn attributes to pricing pressures from the Affordable Care Act.
Payers are now far now more conscious of what they are paying for and the price of these tests, Greczyn said. In many cases, payers are declining to reimburse for tests done in a out-of-network labs.
But LipoScience has upped its game in the effort to win over insurance companies. Greczyn said that some of the medical policies for insurers lump the NMR LipoProfile test as a “novel biomarker.” The company has embarked on a new messaging campaign, supported by the company’s clinical data, that explains what the test is and how it works.
“We are not a novel biomarker,” Greczyn said on a conference call Tuesday to discuss third quarter financial results. “What we are is a better and more accurate measure of a well established marker, that being LDL cholesterol.”
NMR stands for nuclear magnetic resonance. The LipoScience test is based on NMR research developed at and licensed from N.C. State University that uses the technology to measure the density of lipoproteins in a blood sample. LipoScience’s clinical data shows that its tests offer a better gauge of cardiovascular disease compared to the current standard of cholesterol tests.
LipoScience, which went public earlier this year, has had a tough time winning market traction for the NMR LipoProfile test. But the company points to a recent deal in California as a sign of the improving marketing strategy.
Scripps Health, an integrated health system based in San Diego that treats 500,000 patients annually, recently signed on to use LipoScience’s NMR LipoProfile test at its hospitals. The health system will also use LipoScience’s Vantera, the device used to analyze the tests. Health care providers that do not have the Vantera must send the tests to LipoScience for analysis. Chief Operating Officer Tim Fisher said that LipoScience understands laboratory partners in California better and is using the same approach in other states – understanding the needs of potential partners before entering a new market. LipoScience has 66 total sales representatives in the field. Fisher said he does not expect that total to change for the remainder of the year.
Greczyn said LipoScience is interested in working with large laboratory companies that do business nationally, such as Burlington-based LabCorp (NYSE:LH). But he added that LipoScience might need to get broader insurance coverage for the test before these companies will look at it.
In light of the revenue declines, LipoScience is narrowing its 2013 revenue guidance to $52-$53 million, compared to the earlier $52-$54 million range. LipoScience’s board of directors is scheduled to meet with management in coming days to review the company’s operations. Greczyn said that directors and executives are “leaving no stone unturned” to get LipoScience on track for growth. The company plans to issue 2014 financial guidance on Dec. 3.
For now, the losses continue. LipoScience reported a third quarter net loss of $4.6 million. In the third quarter of 2012, LipoScience lost $500,000. As of Sept. 30, the company had $51.6 million in cash and cash equivalents.
