Laboratory Corp Q3 Earnings Beat Street View, Investors Overlook Hurricane Helene Impact

Thursday, Laboratory Corp LH reported third-quarter 2024 adjusted earnings per share of $3.50, up from $3.38 a year ago, beating the consensus of $3.49.

Sales increased 7.4% year-over-year to $3.28 billion, almost in line with the consensus of $3.26 billion.

The increase was due to organic revenue of 4.2%, acquisitions, net of divestitures of 3.1%, and foreign currency translation of 0.1%.

The 4.2% increase in organic revenue was driven by a 4.8% increase in the company's organic Base Business, partially offset by a (0.6%) decrease in COVID-19 testing. 

Also Read: Diagnostic Giants Labcorp, Roche To Ramp Up Testing Capacity Amid Global Concerns Over New Mpox Strain

Adjusted operating income for the quarter was $441.1 million, or 13.4% of revenue, compared to $423.9 million, or 13.9%, in the third quarter of 2023.

William Blair reported that the operating margin came in about 30 basis points below expectations, primarily due to a lower margin in the diagnostics segment, which stood at 15.2%. This decline was influenced by fewer operational days caused by adverse weather and dilution from Invitae.

Diagnostics Laboratories revenue for the quarter was $2.55 billion, an increase of 8.9%.

Biopharma Laboratory Services revenue increased 2.6% to $737.7 million.

Guidance: LabCorp expects 2024 adjusted EPS of $14.30-$14.70, compared to prior guidance of $14.30-$14.90 and the consensus of $14.56.

The analyst notes that adjusted EPS guidance was lowered due to a $0.15 headwind from adverse weather impacts and offset by slightly better underlying trends.

The weather impact was slightly greater than expected, but William Blair believes investors will likely overlook this factor, as they did with Quest Diagnostics DGX earlier in the week.

The analyst noted that LabCorp could experience a more significant effect from the weather this quarter, given its higher exposure to North Carolina, which was impacted by Hurricane Helene, compared to Quest.

The company expects 2024 revenue growth of 6.6%-7.3%, compared to the prior guidance range of 6.4%-7.5% and the consensus of 12.96 billion.

The guidance includes 2024 Diagnostics Laboratories sales growth of 7.2%-7.8% and Biopharma Laboratory Services sales growth of 4.7%-5.6% versus prior guidance of 6.9%-7.9% and 3.7%-5.0%, respectively.

Price Action: Laboratory stock is up 6.37% at $233.91 at last check Thursday.

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