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Introduction & Market Context
Labcorp Holdings Inc (NYSE:LH) released its first quarter 2025 financial results on April 29, showing continued growth across its business segments. The healthcare diagnostics and biopharma services provider reported a 5.3% year-over-year revenue increase to $3.35 billion, with adjusted earnings per share rising to $3.84, up 4.3% from $3.68 in the same period last year.
The company’s performance comes as Labcorp shares traded at $229.60 at the previous day’s close, sitting well above its 52-week low of $191.97 but below its high of $258.59. The premarket trading on April 29 showed a slight decline of 0.44% to $228.60.
Quarterly Performance Highlights
Labcorp’s enterprise revenue reached $3.35 billion in Q1 2025, representing a 5.3% increase compared to the same period in 2024. This growth was slightly tempered by foreign exchange headwinds, which had a negative 0.5% impact on revenues.
As shown in the following breakdown of foreign exchange impact on revenues:
The company’s business segments showed varying performance, with Diagnostics Laboratories growing at 6.0% to reach $2.63 billion, while Biopharma Laboratory Services increased by 1.5% to $721 million. When adjusted for foreign exchange impacts, the Biopharma segment’s growth rate was 2.6%.
Labcorp’s revenue distribution demonstrates the company’s continued reliance on its core diagnostics business, which accounts for more than three-quarters of total revenue, while the U.S. market remains the dominant geographic source of revenue:
The Diagnostics Laboratories segment showed balanced growth, with volume increasing by 3.0% and price/mix also contributing 3.0% to the overall 6.0% revenue growth. This represents a moderation from the 6.8% volume growth seen in Q4 2024, but maintains the positive trajectory from recent quarters.
Detailed Financial Analysis
Labcorp reported adjusted operating income of $469.0 million for Q1 2025, up from $452.8 million in Q1 2024. However, the adjusted operating margin decreased slightly to 14.0% from 14.3% in the prior year period.
The company’s adjusted EBITDA reached $560.6 million in Q1 2025, showing improvement from $547.2 million in Q1 2024. The following chart illustrates key financial metrics over the past five quarters:
Debt metrics remained stable, with the total debt to last twelve months adjusted EBITDA ratio at 2.5x, unchanged from Q1 2024 but improved from 2.9x in Q4 2024. The net debt to adjusted EBITDA ratio was 2.4x, slightly below the 2.5x level from the same period last year.
The Biopharma Laboratory Services segment showed encouraging signs for future revenue with strong backlog metrics. The trailing twelve-month net orders increased to $3.15 billion, with a book-to-bill ratio of 1.07x, indicating more new business coming in than being recognized as revenue:
Strategic Outlook
Labcorp maintained a positive outlook for 2025, projecting full-year revenue growth of 6.7% to 8.0% compared to 2024. The company expects its Diagnostics Laboratories segment to grow between 6.5% and 7.7%, while Biopharma Laboratory Services is projected to increase by 3.0% to 5.0%.
The following table details Labcorp’s updated guidance for 2025:
Adjusted earnings per share are expected to reach between $15.70 and $16.40, representing growth of 7.7% to 12.5% compared to 2024. Free cash flow is projected to be between $1.10 billion and $1.25 billion, potentially increasing by up to 14.1% from the previous year.
Financial Reconciliation
Labcorp’s adjusted financial results exclude various items that impact comparability. For Q1 2025, these adjustments included $69.6 million in amortization of intangibles, $6.4 million in restructuring charges, and various other special charges.
The detailed reconciliation of operating income to adjusted operating income shows the specific items excluded:
These adjustments resulted in adjusted net income of $324.0 million for Q1 2025, compared to $312.2 million in Q1 2024, representing a 3.8% increase year-over-year.
Conclusion
Labcorp’s Q1 2025 results demonstrate continued growth momentum, albeit at a slightly slower pace than seen in previous quarters. The company’s diagnostics segment remains the primary growth driver, while its biopharma services maintain a strong backlog that should support future revenue.
The slight compression in adjusted operating margin warrants monitoring, but the company’s overall financial position appears solid with stable debt metrics and improved EBITDA. Labcorp’s positive outlook for 2025, with projected revenue growth of up to 8.0% and adjusted EPS growth of up to 12.5%, suggests management confidence in the company’s strategic direction and market position.
As Labcorp continues to navigate the evolving healthcare landscape, investors will likely focus on the company’s ability to maintain growth momentum while managing margins and capitalizing on its strong biopharma services backlog.
Full presentation:
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