Skip to main content
Premium Trial:

Request an Annual Quote

Diagnostics Lifts LabCorp Q4 Revenues 6 Percent

NEW YORK (GenomeWeb) – Laboratory Corporation of America on Thursday reported a 6 percent growth year over year in fourth quarter revenues, thanks largely to an 8 percent increase in revenues from its diagnostics business.

For the three months ended Dec. 31, 2016, LabCorp posted $2.43 billion in revenues, up from $2.30 billion in Q4 2015 and surpassing the analysts' average estimate of $2.35 billion.

Net revenue in the quarter came in at $2.39 billion, a 6 percent increase from $2.24 billion in Q4 2015, on acquisitions and organic growth.

In the diagnostics segment, the company recorded $1.67 billion in net revenues, up about 8 percent year over year from $1.55 billion. Total volume, as measured by requisitions, in the segment was up by 3 percent, with acquisitions increasing volume by more than 2 percent and organic volume up a fraction of 1 percent.

Revenue per requisition was up 5 percent, helped by LabCorp's acquisition of Sequenom, the company said.

Net earnings attributable to LabCorp during the quarter rose to $184.4 million, or $1.75 per share, from a profit of $110.0 million, or $1.07 per share, a year ago. Adjusted EPS was $2.15, beating the consensus analyst average of $2.13.

The company's Q4 SG&A costs fell slightly to $406.0 million from $406.2 million a year ago. Restructuring and other special charges were reduced to $9.8 million from $54.0 million in Q4 2015.

Last month, LabCorp inked a deal to acquire the assets of Mount Sinai's Clinical Outreach Laboratories to provide laboratory services to physicians and patients that use Mount Sinai's outreach laboratory. On a call following the release of its financial results on Thursday, LabCorp Chairman and CEO David King said that the pipeline for similar deals is "stronger than ever and we expect to continue to add health system partnerships this year and years ahead."  

For full-year 2016, LabCorp's total revenues rose 11 percent to $9.64 billion from $8.68 billion in 2015, beating the consensus Wall Street estimate of $9.40 billion.

Net revenues increased 11 percent to $9.44 billion from $8.51 billion in 2015 due to organic growth, acquisitions, and the inclusion of Covance's financial results for the entire year.  

The company's profits for the year grew to $732.1 million, or $7.02 per share, from $437.6 million, or $4.35 per share, in 2015. Adjusted EPS was $8.83, surpassing the consensus Wall Street estimate of $8.80.

"We had a strong finish to a record year," LabCorp Chairman and CEO David King said in a statement. "On the strategic front, we continue to establish ourselves as a global life sciences company, deeply integrated in guiding patient care."

SG&A costs for the year were essentially flat at $1.63 billion. Restructuring and other special charges was almost halved to $58.4 million from $113.9 million in 2015.

LabCorp said that at the start of the fourth quarter, it began reporting net orders and backlogs based on fully executed contracted orders, compared to the industry standard of recognizing orders and backlog including non-contracted written awards. Backlog at the end of 2016 was $4.9 billion, $2.0 billion of which is expected to be converted into revenue during the next 12 months, the company added.

At the end of the year, LabCorp had $433.6 million in cash and cash equivalents.

For 2017, LabCorp said it anticipates net revenue growth of 4.5 percent to 6.5 percent. Net revenue growth in the diagnostics segment is expected to grow at the same rate. The company also expects adjusted EPS for 2017 of $9.35 to $9.75. Analysts are expecting earnings of $9.63 per share for 2017.

The firm's 2017 outlook "anticipates continued strong revenue and EPS growth that will drive substantial free cash flow, which we will deploy toward return of capital to shareholders, strategic acquisitions, and debt reduction," King said.

LabCorp's shares were up 2 percent to $139.01 in morning trading on the New York Stock Exchange.