This story has been updated with comments from Labcorp's Q2 earnings call.
NEW YORK – Laboratory Corporation of America reported on Thursday that its second quarter revenues grew 6 percent year over year.
For the three months ended June 30, Burlington, North Carolina-based Labcorp reported $3.22 billion in revenues, compared to $3.03 billion in the year-ago period and above the consensus Wall Street estimate of $3.19 billion. Organic revenue made up 4 percent of that growth, while acquisitions (net of divestitures) contributed 3 percent to revenue growth and foreign currency effects decreased revenues by a fraction of a percent.
Labcorp said that organic revenue growth was driven by a 5 percent year-over-year increase in the company's base business, partially offset by a 1 percent decrease in COVID-19 PCR and antibody testing.
By business segment, Labcorp's Diagnostics Laboratories Q2 revenue grew 8 percent to $2.52 billion from $2.34 billion a year ago, driven by 5 percent organic growth and 3 percent acquisitions-related growth, partially offset by foreign currency effects, which drove revenues down a fraction of a percent. The 5 percent rise in organic revenue was due to a 6 percent increase in the base business partially offset by a 1 percent decrease in COVID-19 testing, the company said. Total year-over-year base business growth for the company's diagnostics segment was 9 percent.
Total volume as measured by test requisitions increased by 6 percent with organic volume growth contributing 3 percent and acquisitions contributing 3 percent. Organic volume was up due to a 3 percent increase in Labcorp's base testing business, which was partially offset by a decline in COVID-19 testing of less than 1 percent.
Revenues for Labcorp's Biopharma Services segment were $707.0 million, up 1 percent from $699.0 million in Q2 2023. The increase was primarily due to organic growth of 1 percent with foreign currency translation decreasing revenues by a fraction of a percent.
Labcorp "has significant momentum as we enter the second half of the year," Adam Schechter, the company's chairman and CEO, said in a statement. "We expanded our leadership in key therapeutic areas, including oncology, women's health and neurology, and strengthened our position with customers through acquisitions and innovative digital and data solutions."
During a conference call following the release of the company's Q2 results, Schechter discussed Labcorp's recent acquisition of genetic testing firm Invitae, noting that the company expects the acquired assets to generate between $275 million and $300 million in revenue in the first 12 months after the deal closes, including $120 million in 2024.
He noted that Labcorp believes the genetic testing market will grow "significantly faster than other markets we compete in" and projected an annual growth rate of more than 10 percent.
Schechter also highlighted Labcorp's recent agreement with Florida's Naples Comprehensive Healthcare (NCH) to manage operations of the system's inpatient laboratory and provide testing for its physician network.
Additionally, he said the company expects to close its previously announced acquisition of assets of BioReference Laboratories by the end of Q3.
Schechter also touched on the US Food and Drug Administration's final rule on laboratory-developed tests, noting that while the company continues to oppose the rule it is preparing to meet the requirements of the rule. He said the rule will not "have a significant impact to our revenue or expenses," echoing comments made last month by Quest Diagnostics.
Net earnings attributable to Labcorp for the quarter were $205.3 million, or $2.43 per share, compared to $188.9 million, or $2.12 per share, a year ago. Adjusted EPS was $3.94, coming in above analysts' average expectation of $3.78.
The company's Q2 SG&A expenses were $557.8 million, up 10 percent from $505.8 million in the same quarter last year.
Labcorp revised its full-year 2024 guidance, projecting revenue growth of between 6.4 percent and 7.5 percent compared to a previous range of 4.8 percent to 6.4 percent. Full-year revenue growth for its diagnostics business is expected to be between 6.9 percent and 7.9 percent, up from 4.8 percent to 6.0 percent. The company said it now expects full-year adjusted EPS of $14.30 to $14.90 down from its prior guidance of $14.45 to $15.35.
The company ended the quarter with cash and cash equivalents of $265.1 million.
In Thursday morning trading on the New York Stock Exchange, shares of Labcorp were up 7 percent at $229.93.