Laboratory Corporation of America Holdings (LabCorp), a leading provider of diagnostic and healthcare services, delivered a strong performance in the third quarter of 2024, exceeding analyst expectations. The company reported adjusted earnings per share of $3.50, a significant increase from $3.38 a year earlier and surpassing the consensus estimate of $3.49. Sales also climbed 7.4% year-over-year, reaching $3.28 billion, slightly exceeding the anticipated $3.26 billion. This growth was fueled by a combination of factors: 4.2% organic revenue growth, 3.1% contribution from acquisitions, and 0.1% from foreign currency translation.
The 4.2% increase in organic revenue was primarily driven by a robust 4.8% growth in the company’s core Base Business. This positive trend was partially offset by a 0.6% decline in COVID-19 testing, reflecting the continued normalization of testing demand as the pandemic’s impact subsides.
While LabCorp’s financial performance was impressive, the company did lower its guidance for 2024, citing the adverse impact of recent weather events, particularly Hurricane Helene, which significantly affected North Carolina. This weather impact led to a reduction in adjusted EPS guidance to $14.30-$14.70 from the previous range of $14.30-$14.90. The consensus estimate for 2024 adjusted EPS remains at $14.56.
LabCorp’s revenue growth guidance for 2024 was also adjusted downward to 6.6%-7.3%, compared to the prior range of 6.4%-7.5%. Despite the revised guidance, analysts believe that the weather impact will likely be overlooked by investors, similar to the situation with Quest Diagnostics earlier in the week. The analyst noted that LabCorp could experience a more significant effect from the weather this quarter due to its higher exposure to North Carolina, the state hardest hit by Hurricane Helene.
Despite the weather-related headwinds, LabCorp’s core business remains strong, evidenced by the impressive organic revenue growth in the third quarter. The company’s focus on its Diagnostics Laboratories segment, which saw an 8.9% increase in revenue to $2.55 billion, and its Biopharma Laboratory Services segment, which grew 2.6% to $737.7 million, reinforces its commitment to driving long-term growth across its key business areas.
Overall, LabCorp’s Q3 earnings report paints a picture of a company navigating through a period of transition. While the impact of weather events has created some uncertainty, the company’s strong organic revenue growth and continued focus on its core businesses suggest a resilient and optimistic outlook for the future.