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Laboratory Corporation of America Holdings (LH - Free Report) , or Labcorp, reported adjusted earnings per share (EPS) of $3.94 in the second quarter of 2024, up 15.2% from the year-ago quarter’s figure.
The adjusted figure excludes the impact of certain amortization expenses and restructuring charges, among others. The bottom line also beat the Zacks Consensus Estimate by 4.2%.
On a GAAP basis, EPS in the second quarter was $2.43, up 14.6% from last year’s comparable period.
Revenues
Revenues in the quarter under review rose 6.2% year over year to $3.22 billion. The metric surpassed the Zacks Consensus Estimate by 0.8%.
The increase was due to organic revenues of 3.8% and acquisitions, net of divestitures, of 2.5%, partially offset by a foreign currency translation loss of 0.1%. The 3.8% increase in organic revenues was driven by a 4.5% rise in the company's organic Base Business, partially offset by a 0.7% decline in PCR testing (COVID-19 Testing).
Segments in Detail
The company currently operates under two segments — Diagnostics Laboratories and Biopharma Laboratory Services (comprised of its Central Laboratories and Early Development Research Laboratories).
For the second quarter, Diagnostics Laboratories reported revenues of $2.34 billion, reflecting a 7.9% rise year over year.
On an organic basis, revenues were up 4.7%, driven by a 5.6% increase in the Base Business, partially offset by a 0.9% decline in COVID-19 testing. The company’s total volumes (measured by requisitions) increased by 5.7%, as acquisition volumes contributed 2.8%, and organic volumes rose 2.9%.
Biopharma Laboratory Services revenues rose 1.1% to $707 million in the second quarter. The year-over-year increase was primarily driven by organic growth of 1.2%, partially offset by a foreign currency translation loss of 0.1%.
Margins
The gross margin expanded 101 basis points (bps) to 28.8% in the second quarter despite a 4.7% rise in the cost of revenues.
The adjusted operating income improved 9.6% year over year to $368.6 million. The adjusted operating margin expanded 36 bps from the year-ago quarter’s levels to 11.4%.
Cash Position
Labcorp exited the second quarter of 2024 with cash and cash equivalents of $265.1 million compared with $536.8 million at the end of the first quarter. Long-term debt (excluding the current portion) was $3.05 billion, almost similar to the first quarter-end figure.
Cumulative cash inflow from operating activities at the end of the second quarter was $531.3 million compared with $472.6 million in the year-ago period.
2024 View
The company provided updated 2024 guidance.
Total Labcorp Enterprise revenues for 2024 are expected to grow in the range of 6.4%-7.5% (earlier 4.8%-6.4%). Diagnostics Laboratories revenues are expected to increase in the range of 6.9%-7.9% (previously 4.8%-6%). Total Biopharma Laboratory Services revenues are expected to rise in the range of 3.7%-5% (from the earlier 3.7%-5.7%) in 2024.
The Zacks Consensus Estimate for full-year revenues is pegged at $12.85 billion.
LH expects full-year adjusted EPS in the band of $14.30-$14.90 (previously $14.45-$15.35). The Zacks Consensus Estimate for the metric is pegged at $14.84.
The company projects 2024 free cash flow from continued operation in the range of $0.85-$1.00 billion (earlier $1.00 billion-$1.15 billion).
Our Take
Labcorp topped earnings and revenue estimates in the second quarter of 2024. The company expanded its leadership in key therapeutic areas, including oncology, women's health and neurology, and also bolstered its position with customers through acquisitions and innovative digital and data solutions. The expansion of both margins in the quarter is highly encouraging.
Furthermore, LH received approval for the acquisition of select assets from Invitae, through which it will utilize genetic insights to develop new treatments and deliver personalized care in oncology and select rare diseases. The company continued to make strides in science, technology and innovation, including the launch of the first-trimester preeclampsia screening test, new strategic service offerings within its precision oncology portfolio and the introduction of Labcorp Global Trial Connect. All these bode well for the stock.
Meanwhile, Labcorp cut down its adjusted EPS outlook for the full year to reflect the dilution impact of the Invitae acquisition.
Zacks Rank and Key Picks
Labcorp currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Abbott Laboratories, Inc. (ABT - Free Report) and Quest Diagnostics (DGX - Free Report) .
Intuitive Surgical reported a third-quarter 2024 adjusted EPS of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical has an estimated long-term earnings growth rate of 16.1% in 2024 compared with the industry’s 14.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 8.97%.
Abbott, carrying a Zacks Rank #2 (Buy), reported third-quarter 2024 earnings of $1.14, which surpassed the Zacks Consensus Estimate by 3.6%. Revenues of $10.38 billion topped the Zacks Consensus Estimate by 0.3%.
ABT has an estimated earnings growth rate of 10.1% for 2025 compared with the S&P 500’s 9.3%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 2.34%.
Quest Diagnostics, carrying a Zacks Rank #2, reported a third-quarter adjusted EPS of $2.35, which surpassed the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion exceeded the Zacks Consensus Estimate by 0.5%.
DGX’s historical five-year earnings growth rate of 7.4% compared favorably with the industry’s 4.2%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 3.31%.
(NOTE: We are reissuing this article to correct an inaccuracy. The original version, pulbished earlier today, August 1st, 2024, shall no longer be relied upon.)
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Labcorp (LH) Q2 Earnings Surpass Estimates (revised)
Laboratory Corporation of America Holdings (LH - Free Report) , or Labcorp, reported adjusted earnings per share (EPS) of $3.94 in the second quarter of 2024, up 15.2% from the year-ago quarter’s figure.
The adjusted figure excludes the impact of certain amortization expenses and restructuring charges, among others. The bottom line also beat the Zacks Consensus Estimate by 4.2%.
On a GAAP basis, EPS in the second quarter was $2.43, up 14.6% from last year’s comparable period.
Revenues
Revenues in the quarter under review rose 6.2% year over year to $3.22 billion. The metric surpassed the Zacks Consensus Estimate by 0.8%.
The increase was due to organic revenues of 3.8% and acquisitions, net of divestitures, of 2.5%, partially offset by a foreign currency translation loss of 0.1%. The 3.8% increase in organic revenues was driven by a 4.5% rise in the company's organic Base Business, partially offset by a 0.7% decline in PCR testing (COVID-19 Testing).
Segments in Detail
The company currently operates under two segments — Diagnostics Laboratories and Biopharma Laboratory Services (comprised of its Central Laboratories and Early Development Research Laboratories).
For the second quarter, Diagnostics Laboratories reported revenues of $2.34 billion, reflecting a 7.9% rise year over year.
On an organic basis, revenues were up 4.7%, driven by a 5.6% increase in the Base Business, partially offset by a 0.9% decline in COVID-19 testing. The company’s total volumes (measured by requisitions) increased by 5.7%, as acquisition volumes contributed 2.8%, and organic volumes rose 2.9%.
Labcorp Price, Consensus and EPS Surprise
Labcorp price-consensus-eps-surprise-chart | Labcorp Quote
Biopharma Laboratory Services revenues rose 1.1% to $707 million in the second quarter. The year-over-year increase was primarily driven by organic growth of 1.2%, partially offset by a foreign currency translation loss of 0.1%.
Margins
The gross margin expanded 101 basis points (bps) to 28.8% in the second quarter despite a 4.7% rise in the cost of revenues.
The adjusted operating income improved 9.6% year over year to $368.6 million. The adjusted operating margin expanded 36 bps from the year-ago quarter’s levels to 11.4%.
Cash Position
Labcorp exited the second quarter of 2024 with cash and cash equivalents of $265.1 million compared with $536.8 million at the end of the first quarter. Long-term debt (excluding the current portion) was $3.05 billion, almost similar to the first quarter-end figure.
Cumulative cash inflow from operating activities at the end of the second quarter was $531.3 million compared with $472.6 million in the year-ago period.
2024 View
The company provided updated 2024 guidance.
Total Labcorp Enterprise revenues for 2024 are expected to grow in the range of 6.4%-7.5% (earlier 4.8%-6.4%). Diagnostics Laboratories revenues are expected to increase in the range of 6.9%-7.9% (previously 4.8%-6%). Total Biopharma Laboratory Services revenues are expected to rise in the range of 3.7%-5% (from the earlier 3.7%-5.7%) in 2024.
The Zacks Consensus Estimate for full-year revenues is pegged at $12.85 billion.
LH expects full-year adjusted EPS in the band of $14.30-$14.90 (previously $14.45-$15.35). The Zacks Consensus Estimate for the metric is pegged at $14.84.
The company projects 2024 free cash flow from continued operation in the range of $0.85-$1.00 billion (earlier $1.00 billion-$1.15 billion).
Our Take
Labcorp topped earnings and revenue estimates in the second quarter of 2024. The company expanded its leadership in key therapeutic areas, including oncology, women's health and neurology, and also bolstered its position with customers through acquisitions and innovative digital and data solutions. The expansion of both margins in the quarter is highly encouraging.
Furthermore, LH received approval for the acquisition of select assets from Invitae, through which it will utilize genetic insights to develop new treatments and deliver personalized care in oncology and select rare diseases. The company continued to make strides in science, technology and innovation, including the launch of the first-trimester preeclampsia screening test, new strategic service offerings within its precision oncology portfolio and the introduction of Labcorp Global Trial Connect. All these bode well for the stock.
Meanwhile, Labcorp cut down its adjusted EPS outlook for the full year to reflect the dilution impact of the Invitae acquisition.
Zacks Rank and Key Picks
Labcorp currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Abbott Laboratories, Inc. (ABT - Free Report) and Quest Diagnostics (DGX - Free Report) .
Intuitive Surgical reported a third-quarter 2024 adjusted EPS of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Intuitive Surgical has an estimated long-term earnings growth rate of 16.1% in 2024 compared with the industry’s 14.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 8.97%.
Abbott, carrying a Zacks Rank #2 (Buy), reported third-quarter 2024 earnings of $1.14, which surpassed the Zacks Consensus Estimate by 3.6%. Revenues of $10.38 billion topped the Zacks Consensus Estimate by 0.3%.
ABT has an estimated earnings growth rate of 10.1% for 2025 compared with the S&P 500’s 9.3%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 2.34%.
Quest Diagnostics, carrying a Zacks Rank #2, reported a third-quarter adjusted EPS of $2.35, which surpassed the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion exceeded the Zacks Consensus Estimate by 0.5%.
DGX’s historical five-year earnings growth rate of 7.4% compared favorably with the industry’s 4.2%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 3.31%.
(NOTE: We are reissuing this article to correct an inaccuracy. The original version, pulbished earlier today, August 1st, 2024, shall no longer be relied upon.)