Healthy Prognosis for Diagnostic and Imaging Companies

Investors in diagnostics and imaging companies are watching the values of their stakes rise following strong IPOs.

Diagnostics and imaging—the very mention of these two fields once made venture capitalists shudder. Historically, neither offered an opportunity to generate true "venture style" returns. With business models that were deemed undefined or capital costs that were too onerous, the pair largely were orphaned by life sciences venture investors who preferred investing in companies that sought to cure maladies, not merely identify them.

That clearly is changing. Public investors, casting their votes through their participation in recent life sciences IPO, are recognizing the most important change—these companies are making money. The rise of...

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