Diagnostic & IVD Risk Assessment
Diligence across IVD 510(k), De Novo and PMA pathways, LDT and CLIA status: clinical validity and utility, reimbursement coding and lab workflow. An automated Quick Screen within 24 hours; full reports in 48, reviewed by a physician and a biomedical engineer.
The Problem
FDA authorization is only half the path. CPT and PLA codes, LCD coverage and lab workflow fit drive revenue, and AI-enabled tests add validation questions of their own.
A federal court vacated FDA's 2024 LDT rule in March 2025, and FDA rescinded it in September 2025. LDTs remain under CLIA, so diligence checks whether a test's claims, marketing and distribution fit that status.
Tests can clear FDA without a PLA or CPT code, or sit in Category III for years. Without a payable code, a revenue model built on list price needs a second look.
FDA's review centers on analytical and clinical validity. Payers, MolDx in particular, also ask for clinical utility: does the result change management? Sensitivity and specificity alone don't answer that.
Palmetto MolDx, Novitas, and other MACs have divergent LCDs. A test "covered by Medicare" may not be covered in the geographies your target actually sells.
A test that wins a KOL's lab won't scale to a hospital automated chemistry line. Throughput, interfaces, sample type, and middleware connectivity gate real adoption.
Locked vs adaptive algorithms, validation cohort representativeness, postmarket performance monitoring. FDA's December 2024 final guidance on predetermined change control plans sets out what a planned-update pathway needs.
Regulatory Pathways We Cover
IVDs, LDTs and CLIA-only workflows carry different evidence bars. A full report reads each against its own.
Substantial equivalence for IVDs. Analytical validity, clinical validity, predicate integrity, and risk-based controls matter most.
Companion diagnostics, some tumor markers, novel indications. Clinical study design, PMA panel risk and payer alignment shape the read.
Regulated under CLIA. FDA's 2024 rule to phase LDTs into device oversight was vacated in March 2025. Risk sits in validation documentation and in whether claims or distribution move a test outside LDT status.
CLIA complexity categorization, proficiency testing, inspection readiness, personnel qualification. Required regardless of FDA pathway.
What a Diagnostic Report Examines
Full reports read the same 20-category framework on every company and summarize it in a composite Vantage Index. For a diagnostic, these are the areas that get the closest read. Some inputs, like financials, come from the company or the buyer.
| Domain | What we're looking at |
|---|---|
| Reimbursement & Coding | PLA/CPT code status, MolDx LCD coverage, MAC variance, payer policy, gap-fill vs crosswalk, prior-auth burden |
| Clinical Validity & Utility | Analytical validity (precision, accuracy, LoD), clinical validity (sensitivity/specificity), clinical utility (management impact, health-econ evidence) |
| Regulatory Pathway Integrity | Predicate choice, LDT status and claims, CDx companion strategy, pre-submission correspondence, labeling alignment with intended use |
| Lab Operations & Workflow | Throughput, automation fit, LIS/middleware integration, sample type and stability, CLIA complexity, interpretation time |
| AI/ML Validation & Monitoring | Training/validation cohort representativeness, locked vs adaptive, performance monitoring plan, drift detection, subgroup performance, predetermined change control |
| IP & Freedom-to-Operate | Assay-method patents, algorithm protection, FTO on gene sequences (post-Myriad), trade secrets for reagent formulation |
| Commercial & Market Access | Physician ordering patterns, hospital-reference-lab send-out decisions, direct-contract sales model, payer contracting strategy |
| Financial & Operational | COGS, reimbursement-per-test, denial rate, days-sales-outstanding, capacity utilization — provided by the company or buyer |
Pricing Ladder
Start with an automated Quick Screen, delivered within 24 hours of a complete intake. Move to a full report when the deal moves: 48-hour turnaround, reviewed by Arvind Ravinutala, MD, and Aswini Ravinutala, BME.
Running diligence across a fund or portfolio? See Vantage Licenses →
Want continuous monitoring post-close? Surveillance from $1,500/mo →
Diagnostic Intelligence Library
Articles on diagnostic-specific risks in diligence. Written by Arvind and Aswini.
Existing-code claims, Category III reliance, hospital economics, coverage policies and health economics, and what to check for each.
Read → AI/ML IVDMulti-site performance, training-data bias, change control plans and reimbursement: how to read an AI diagnostic's validation record.
Read → Clinical UtilityWhy the evidence that clears a test is not always the evidence that gets it covered, and what to look for in an evidence package.
Read → LDT RuleWhat the 2024 rule would have required, what the March 2025 court decision and FDA's rescission changed, and how to read a lab-developed-test portfolio now.
Read → Case StudyMedicare's 2026 switch to paying most skin substitutes as supplies, the coverage policies that were withdrawn, and what diligence can check.
Read → CDxLabeling coupling, single-test dependence, laboratory-developed tests and test coverage. Why a drug that depends on a test carries two sets of risk.
Read →Buy a Quick Screen and give us the target and a data-room link (or just the intended-use statement) on the intake form. The Quick Screen arrives within 24 hours of a complete intake. Prefer to talk first? Book a free 20-minute call.