Portfolio Managers:Portfolio Managers:

Qi HeNan LiangSu ChenPresented April 4, 2012

Bio-Reference Laboratories, Inc. provides clinical laboratory

testing services for the detection, diagnosis, evaluation,

monitoring, and treatment of diseases primarily in the greater

New York metropolitan area. 

GICS Map: 35102015 – Health Care Services

Current Price $23.90 Implied one-year growth rate 34.60%P/E(ttm) 18.82 5-7 yrs growth rate 5.20%Forward P/E 13.98 EBIT/Tangible Assets 37.50%EPS 1.27 EBIT/EV 10%

Source: finance. yahoo.com

PEG Ratio 0.95

Source: IBIS – 62151 Diagnostic & Medical Laboratories in the US Industry Report, Feb 2012 by Sophia Snyder

Source: IBIS – 62151 Diagnostic & Medical Laboratories in the US Industry Report, Feb 2012 by Sophia Snyder

The industry revenue growth is projected to be around 2.7% due to the economy’s slow recovery.

Source: IBIS – 62151 Diagnostic & Medical Laboratories in the US Industry Report, Feb 2012 by Sophia Snyder

Key External Drivers for this industry:

•Federal funding for Medicare and Medicaid•Number of people with private health insurance•Total health expenditure•Number of adults aged 50 and older•Technological changes

Source: IBIS – 62151 Diagnostic & Medical Laboratories in the US Industry Report, Feb 2012 by Sophia Snyder

Medicare Medicaid Heavily regulated industry

Federal and state laws applicable to billing and claims payment; Federal and state laboratory anti- mark- up laws; Federal and state anti- kickback laws; Federal and state false claims laws; Federal and state self- referral and financial inducement laws, including the

federal physician anti- self- referral law, or the Stark Law; Coverage and reimbursement levels by Medicare and other governmental payors

and private insurers; Federal and state laws governing laboratory licensing and testing, including

CLIA; Federal and state laws governing the development, use and distribution of

diagnostic medical tests known as laboratory developed tests or "LDTs"; HIPAA, along with the revisions to HIPPA as a result of the HITECH Act, and

analogous state laws; Federal, state and foreign regulation of privacy, security, electronic transactions

and identity theft; Federal, state and local laws governing the handling, transportation and disposal

of medical and hazardous waste; Occupational Safety and Health Administration rules and regulations;Source: BRLI 2011 10-K

Source: BRLI 2011 10-K

Source: IBIS – 62151 Diagnostic & Medical Laboratories in the US Industry Report, Feb 2012 by Sophia Snyder

Source: BRLI 2011 10-K

Source: Capital IQ

CompanyName

TotalRevenue EBITDA EPS P/B P/E

DGX 7510.5 1588.9 2.93 NM 20.87

LH 5542.3 1258.6 5.11 NM 17.91

BRLI 586.9 79.7 1.27 3.98 18.51

BIOC 68 9.2 0.17 7.18 32.65

NGNM 43.5 1.7 -0.028 12.44 NM

PMD 24.1 6.2 0.67 4.66 14.66

Source: BRLI 2011 10-K

Source: finance. yahoo.com

BRLI is a clinical testing laboratory offering testing, information and related services to physician offices, clinics, hospitals, employers and governmental units.

Fourth largest full-service laboratory in the United States and the largest independent regional laboratory in the Northeastern market.

Source: BRLI 2011 10-K

Source: BRLI 2011 10-K

Source: BRLI 2011 Conference Call

In 2006, BRLI acquired GeneDx, a diagnostic genetic testing laboratory providing services to national and international customers. In 2008, BRLI were the first commercial laboratory in the world to offer NextGen (high speed computerized sequencing) to analyze multi- gene conditions. These innovations have significantly grown GeneDx's business.

On March 2, 2010, BRLI completed the acquisition of Lenetix Medical Screening Laboratory, Inc., a clinical testing laboratory located in Mineola, New York. The laboratory performs both clinical laboratory diagnostic testing and genetic testing.

On August 5, 2011, BRLI acquired The Genetics Center, Inc., a New York corporation engaged in the clinical laboratory business with its principal place of business in Smithtown, New York

Source: BRLI 2011 10-K

Source: BRLI 2011 10-K

Source: BRLI 2011 Conference Call

Source: BRLI 2011 Conference Call

BRLI: Esoteric Testing has Fueled Growth

Source: BRLI 2011 Conference Call

Source: BRLI 2011 10-K

Healthcare Reform Law:Healthcare Reform Law:

Including programs to extend medical benefits to millions of individuals who currently lack insurance coverage, coupled with measures to cut Medicare spending for most healthcare services, including clinical laboratories.

Source: BRLI 2011 10-K

Congress has periodically considered imposing a 20 percent coinsurance on laboratory services.

Under the Medicare framework, the national limitation amount for clinical laboratory services had been reduced in a number of instances over the past several years to a present level equal to 74% of the national median of laboratory charges

Source: BRLI 2011 10-K

Source: BRLI 2011 10-K

Source: BRLI 2011 10-K

Source: BRLI 2011 10-K

BRLI has demonstrated 20% CAGR over the past seventeen years with an actual increase of 26% for FY10 over FY09.

Source: BRLI 2011 Conference Call

Source: BRLI 2011 10-K

Source: BRLI 2011 10-K

Company Name TEV/EBITDA

BIOC 8.33x

LH 8.66x

NGNM 48.78xPMD 7.44xDGX 8.41x

Mean 16.324xMedian 8.41x

BRLI 8.34xSource: Capital IQ

Target price: $ 19.80

Current Stock Price $23.97DCF $23.87Multiple $19.80

Recommendation: Watch list