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Introduction & Market Context
Labcorp Holdings Inc (NYSE:LH) released its third quarter 2025 financial results on October 28, showing solid growth across all business segments despite broader market volatility. The diagnostic testing and drug development services provider reported an 8.6% year-over-year revenue increase to $3.56 billion, slightly exceeding analyst expectations.
Despite the strong performance, Labcorp’s stock declined 4.73% in regular trading, following a 2% drop in pre-market activity, suggesting investors may have been looking for even stronger results or were concerned about broader economic headwinds affecting the healthcare sector.
Quarterly Performance Highlights
Labcorp’s third quarter showed robust performance across key metrics. The company reported adjusted earnings per share of $4.18, representing a 19% increase year-over-year and slightly above the forecasted $4.13.
As shown in the following revenue breakdown by segment:
The Enterprise segment achieved revenues of $3.56 billion, representing 8.6% growth compared to the same period last year. This growth was primarily driven by the Diagnostics Laboratories segment, which posted an 8.5% revenue increase to $2.77 billion. The Biopharma Laboratory Services segment also performed well, with revenues up 8.3% to $799 million.
Foreign exchange movements had a positive impact on overall results, contributing 0.7 percentage points to Enterprise revenue growth and 3.0 percentage points to Biopharma Laboratory Services growth, while having a neutral effect on Diagnostics Laboratories.
Segment Analysis
Labcorp’s revenue continues to be dominated by its Diagnostics Laboratories segment, which accounted for 77.6% of total revenue in Q3 2025, while Biopharma Laboratory Services contributed the remaining 22.4%. Geographically, the United States remains Labcorp’s primary market, generating 83.3% of revenue, with international operations accounting for 16.7%.
The following chart illustrates this revenue distribution:
The Diagnostics Laboratories segment showed strong organic growth, with volume increasing by 4.7% and price/mix improving by 3.7% year-over-year. This balanced growth demonstrates both increased testing demand and Labcorp’s ability to optimize its test mix toward higher-value diagnostics.
In the Biopharma Laboratory Services segment, Labcorp maintained a healthy book-to-bill ratio of 1.09x for the trailing twelve months ending September 30, 2025, indicating continued strong demand for its services. The segment’s backlog reached $8.58 billion, with $2.66 billion expected to convert to revenue within the next twelve months.
The following metrics highlight the strength of Labcorp’s Biopharma Services business:
Forward-Looking Statements & Guidance
Based on strong year-to-date performance, Labcorp has updated its full-year 2025 guidance. The company now expects Enterprise revenue to reach between $13.97 billion and $14.05 billion, representing growth of 7.4% to 8.0% compared to 2024.
The detailed outlook across segments is presented below:
Notably, Labcorp raised its adjusted EPS guidance to $16.15-$16.50, representing a 10.8% to 13.2% increase from 2024. This projection exceeds previous analyst consensus estimates and reflects management’s confidence in continued operational efficiency and growth across both business segments.
Free cash flow is expected to reach $1.17 billion to $1.29 billion for the full year, a significant improvement from $1.10 billion in 2024, providing Labcorp with additional resources for strategic investments, debt reduction, and potential share repurchases.
Market Reaction & Analyst Perspectives
Despite the strong quarterly results and improved guidance, Labcorp’s stock declined 4.73% on the day of the announcement. This reaction appears disconnected from the company’s operational performance and may reflect broader market concerns about healthcare spending or potential regulatory changes.
During the earnings call, CEO Adam Schechter highlighted the company’s achievements, stating, "We delivered strong revenue growth and margin improvement, leading to double-digit EPS growth." He emphasized the role of technology and AI in driving operational efficiency, adding, "We are using technology, robotics, and AI to accelerate growth and improve operational efficiency."
Analysts raised questions about Labcorp’s strategy for consumer testing growth and margin expansion. The company detailed its plans for leveraging AI and digital tools to enhance efficiency. Additionally, the potential $100 million impact of PAMA (Protecting Access to Medicare Act) reimbursement changes was discussed, highlighting a key regulatory challenge the company is monitoring.
The company’s fundamentals remain strong, with consistent revenue growth, expanding margins, and a solid backlog indicating future growth potential. However, investors should monitor potential regulatory changes, particularly PAMA reimbursement adjustments, which could impact future revenue streams in the Diagnostics segment.
With Labcorp trading at approximately $262.61 (as of market close on October 28, 2025), well below its 52-week high of $293.72, the current price weakness may present an opportunity for investors who believe in the company’s long-term growth strategy and healthcare market positioning.
Full presentation:
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