Lantheus stock rocketed to a record high Wednesday after a Medicare proposal suggested hiking the reimbursement rate for diagnostic radiopharmaceutical North Billerica, Mass.-basedLantheus Holdings(LNTH) makes diagnostics and drugs using radiopharmaceutical technology.

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Oftentimes, the Centers for Medicare and Medicaid Services packages the cost for a diagnostic in this space with the drug. But that doesn't always adequately account for the cost of certain specialized tests, CMS said in its proposal. The agency proposes paying separately the cost of any diagnostic radiopharmaceutical that costs more than $630 a day.

"This update should address challenges for patients in assessing these prescribed nuclear medicine tests with higher-cost radiopharmaceuticals," the agency said.

In morning trades ontoday's stock market, Lantheus stock soared 30.8% to 101.65. Shares hit a new intraday record high at 101.96, topping their previous high at 100.85, achieved in May 2023.

Lantheus Stock: A Growing Diagnostics Business

The news could push more hospitals to use Lantheus' Pylarify, Leerink Partners analyst Roanna Ruiz said in a report. Pylarify is a diagnostic imaging agent for prostate cancer. The final rule is expected in early November.

Investors likely didn't expect the proposal, Ruiz said. Importantly, Pylarify is likely to meet the daily $630 threshold for separate reimbursement.

"The proposed rule suggests that CMS should support separate favorable reimbursement of specialized diagnostic radiopharmaceuticals such as Pylarify beyond its transitional pass-through expiry at year-end 2024," she said.

Ruiz kept her outperform rating on Lantheus stock.

Last year, Lantheus' precision diagnostics business brought in $390 million in sales, growing more than 9% and narrowly surpassing expectations for $386.4 million. This year, analysts polled by FactSet expect $415 million from that division.

Lantheus' radiopharmaceutical oncology segment is bigger, though. The Street forecasts $1.07 billion from that division in 2024.

Lantheus stock has trended higher this year, rising more than 25% as of Tuesday's close.