For decades, medical testing has been the domain of central laboratories, with results arriving hours or days after a patient leaves the clinic. But healthcare is shifting. The pandemic normalised rapid, point-of-care tests for conditions like COVID-19, and now investors and health systems alike are eyeing a new wave of diagnostics that can be run in doctors’ offices, urgent care clinics — and even retail pharmacies.
The implications are significant. By delivering results in minutes rather than days, decentralised diagnostics can lower costs, reduce pressure on hospitals, and support faster treatment decisions. For patients, it means fewer return visits and a more direct link between diagnosis and care.
CLIA waivers: A regulatory gateway
In the expansive US healthcare market, a key driver of this shift is the Clinical Laboratory Improvement Amendments (CLIA) waiver system. Tests that achieve CLIA-waived status can be used outside certified laboratories, including in primary care and pharmacy settings.
For diagnostic developers, CLIA status can substantially broaden a product’s reach. A waiver reclassifies a test as low-complexity, making it available in more than 270,000 non-lab sites nationwide. That expansion not only increases access but also changes the commercial prospects for a test that can be scaled at the point of care.
FebriDx at the frontline
This is the pathway Lumos Diagnostics Holdings Ltd (ASX:LDX, OTC:LDXHF) is pursuing with its flagship FebriDx® test. Already cleared by the US Food and Drug Administration for moderate- and high-complexity labs, FebriDx is designed to help clinicians distinguish between bacterial and viral respiratory infections in about 10 minutes.
Lumos recently completed its pivotal CLIA waiver study — supported by the US Biomedical Advanced Research and Development Authority (BARDA) — and has now submitted the application to the FDA. If successful, FebriDx could move from a laboratory-based product to one accessible across thousands of additional clinical sites.
Read more: MST Access lifts Lumos Diagnostics valuation as CLIA waiver bid boosts FebriDx opportunity
From labs to pharmacies
CLIA status would extend beyond GP surgeries and urgent care centres, opening the door to use in retail pharmacy settings. US pharmacy giants such as CVS and Walgreens have expanded in-store health services, responding to demand for convenient and lower-cost care.
Respiratory infections account for tens of millions of consultations in the US each year. A simple point-of-care test available in pharmacies and walk-in clinics could help guide treatment more efficiently and reduce unnecessary antibiotic prescriptions, a key factor in antimicrobial resistance.
Read more: Inside Biotech: The frontline fight against respiratory infections
Why it matters for investors
For investors, a biotech company’s prospects for US reimbursement often matter as much as regulatory approval. FebriDx was added to the US Medicare Clinical Laboratory Fee Schedule at US$41.38 per test in January 2025, with six of seven Medicare contractors now covering it. CLIA waiver status would allow that reimbursement pathway to apply across a much wider range of care settings.
The combination of payor coverage and easier access could support larger test volumes over time, though the exact pace will depend on FDA timelines and uptake in the US health system. Lumos has also built a network of distribution partners, including PHASE Scientific and Henry Schein, to prepare for that expansion.
Read more: Lumos Diagnostics secures US$317 million US distribution milestone for FebriDx®
Decentralisation as a wider trend
The Lumos story reflects a broader trend: diagnostics are steadily moving closer to the patient. Genetic screening, infectious disease tests and women’s health diagnostics are all seeing a push toward decentralisation, with faster results and lower infrastructure needs.
As this shift continues, CLIA waivers in the US — and Medicare Benefits Schedule listings in Australia — will be central to determining which tests achieve broad adoption.
For Lumos, the outcome of its CLIA waiver application will be pivotal. More broadly, for investors across the biotech sector, it highlights that the value of diagnostics is increasingly tied not only to clinical performance but also to how, where and by whom the test can be used.