Labcorp beats Q3 earnings estimates, raises full-year EPS outlook

BURLINGTON, N.C. - Labcorp (NYSE:LH) reported third-quarter adjusted earnings that exceeded analyst expectations while maintaining its revenue guidance, as the diagnostic testing giant continues to benefit from strong organic demand and strategic acquisitions.

The company’s shares edged down 0.24% in pre-market trading following the announcement.

The company posted adjusted earnings per share of $4.18 for the third quarter, surpassing the analyst consensus of $4.13. Revenue reached $3.56 billion, in line with analyst expectations and representing an 8.6% increase compared to $3.28 billion in the same period last year.

"Labcorp’s third-quarter performance reflects continued momentum in our Diagnostics and Central Laboratory businesses, resulting in strong revenue growth and margin improvement," said Adam Schechter, Chairman and CEO of Labcorp. "Our performance led to double-digit adjusted EPS growth and strong cash flow in the quarter."

The company’s Diagnostics Laboratories segment, which accounts for the majority of revenue, grew 8.5% to $2.77 billion, while its Biopharma Laboratory Services segment increased 8.3% to $799.1 million. Adjusted operating margin improved to 14.4% from 13.4% in the prior-year period.

Labcorp raised the midpoint of its full-year adjusted EPS guidance by $0.05 to a range of $16.15 to $16.50, compared to the analyst consensus of $16.30. The company slightly lowered its revenue growth forecast to 7.4%-8.0% from the previous 7.5%-8.6%, citing currency impacts and acquisition timing.

During the quarter, Labcorp continued its acquisition strategy, signing agreements to acquire select assets from Empire City Laboratories in the New York Tri-State area and Laboratory Alliance of Central New York. The company also completed the acquisition of oncology and clinical testing assets from BioReference Health.

Free cash flow for the quarter increased to $280.5 million from $161.5 million in the year-ago period, primarily driven by higher cash earnings. The company invested $268.4 million in acquisitions and partnerships during the quarter while returning $84.9 million to shareholders through dividends and share repurchases.

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