ARTICLE SUMMARY:
Industry experts on a recent Arizona State University online seminar highlighted the success of rising young and increasingly profitable tech-enabled diagnostics companies, labeling them the “Terrific 10,” a moniker that references the tech industry’s “Magnificent 7.” Excerpted from our recent feature article.
For most of the past 30 years, diagnostics has been the stepchild of the life sciences industry, in terms of investment, reimbursement, and valuation both in clinical care and on Wall Street. In 2021, during the height of COVID-19, capital suddenly flowed into the sector in record amounts, however, and broad public recognition of its importance surged.
But that was a moment. Then came the withdrawal. The years 2022 through 2024 were, to put it mildly, dark.
What a difference a year makes. At least that was the sentiment from a February 7 “Year in Review” online seminar summarizing the industry as of year-end 2025 and presented by the Biomedical Diagnostics Design program of Arizona State University (ASU). Three speakers from Illumina Ventures and the consulting firm Health Advances (HA) backed their enthusiasm for the future by pointing to leading companies’ increasing financial health and interest in building new kinds of business models based on emerging technologies and data.
Technological advances, reimbursement, and regulatory wins, notably loosening regulations for laboratory-developed tests (LDTs) and the growing embrace of companion diagnostics (CDx) by the pharmaceutical industry, paved the path for the diagnostics industry’s “landmark year” in 2025, according to 
the panelists. They called out “The Terrific 10,” a group of companies that they define as a new generation of industry leaders (see Figure 1). These “sequencing-forward” companies are adopters of next-generation sequencing (NGS) and advanced multiomic and computational platforms that offer improved performance of existing tests and provide clinicians with previously unavailable information that has the potential to open entirely new doors in medicine.
“2025 was tremendously exciting for the diagnostics industry,” said Mara Aspinall, founder of ASU’s diagnostics program, the only one of its kind in the US, and a partner at Illumina Ventures. Aspinall, who has long experience as a leading executive in the diagnostics industry, and who has been a vocal champion for the sector for decades, started off the program stating, “I’ve been in this industry a long time, and I’ve never seen a situation like this, with so many people” on Wall Street enthusiastic about its upside potential.”
Mergers and acquisition deal values set a record in 2025, with mega-deals of greater than $1 billion totaling $60.2 billion, almost as large as the value of the combined last decade of deals, according to the year-end review, which used data compiled by TD Cowen. These deals included the acquisition of Hologic by Blackstone and TPG, Waters by BD, and Exact Sciences by Abbott, as well as Nova Biomedical by Advanced Instruments. In comparison, 2021, the year with the second-highest deal value, saw the acquisition of four companies totaling $17 billion. In 2023 and 2024, zero mega-deals took place in the industry.
2025 also saw strong, albeit not record-setting, demand for smaller deals valued at less than $1 billion, with 23 deals averaging $192 million in value. (These figures exclude deals where financial terms were not disclosed.)
While acquirers last year were well-established, mature diagnostics companies and a private equity firm, notably, the rising powerhouses comprising the Terrific 10 also have “firepower,” that is, sustained and sufficient resources to pursue their own significant deals, which is essential for industry stability and growth, Aspinall said. (TD Cowen defines firepower as the sum of current cash balance, 20% of current market cap, and incremental debt capacity, assuming a 4 times maximum net debt/EBITDA leverage ratio.)
These companies reflect five key characteristics, according to Aspinall: their product portfolios consist primarily of LDTs targeted at high-value opportunities and large indications; their tests aim to have significant clinical impact that changes treatment processes; they do not rely on traditional laboratory technologies for revenues, but instead offer proprietary, innovative platforms based on NGS and multiomics; they focus on market access very early in test development; and they are incorporating artificial intelligence (AI) deeply into their strategy, for example, creating their own foundation models. “These companies are changing the definition of diagnostics,” she continued.
The general diagnostics stock index was up 8% in 2025 from 2024, with large cap companies (market caps >$1 billion) up an average of 6.6&, while the index subset representing small public companies (market caps <$1 billion), battered particularly hard in recent years, rose 13%.
IPO activity, an indicator of future liquidity options for early-stage investors, also improved in 2024 and 2025, from the dismal performances of the past five years, which saw either zero activity or debuts that subsequently floundered in the aftermarkets. There were zero IPOs in 2022 and 2023. The four companies that went public in 2024 and 2025, in contrast, are doing “very, very well,” Aspinall pointed out. The poorest performer, Caris, is up 30% over its IPO price, and Grail’s was up as high as 300%. “The opening of the IPO window is critical going forward,” she added.
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