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