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LabCorp Q2 Revenues Grow Slightly, Miss Analysts Estimate

NEW YORK – Laboratory Corporation of America today said that its second quarter revenues grew a fraction of 1 percent year over year but missed the consensus Wall Street estimate.

For the three months ended June 30, the Burlington, North Carolina-based firm reported $2.88 billion in revenues, up from $2.86 billion in Q2 2018. The analysts' average estimate was $2.89 billion.

Acquisitions added 1.4 percent to growth while organic growth was 1.7 percent. The Protecting Access to Medicare Act, which reduced reimbursements for many routine tests, had a negative impact of .9 percent, and the disposition of businesses negatively impacted growth by 1.9 percent, while foreign currency translation posed a headwind of .7 percent, LabCorp said.

LabCorp Diagnostics' revenues declined 2.8 percent to $1.76 billion from $1.81 billion a year ago. The disposition of businesses negatively impacted results by 2.8 percent, while currency translation had a headwind of.2 percent. Organic revenues shrank by .3 percent, while acquisitions added .4 percent to growth, LabCorp said. PAMA had negative effect of 1.5 percent.

The Covance Drug Development business, meanwhile, grew its revenues 8 percent to $1.13 billion from $1.05 billion.

On a conference call to discuss the Q2 2019 results, LabCorp Chairman and CEO David King said that the revenue growth "significantly understates the strength of our operational performance."

During the quarter, the firm saw strength in non-consumer genetics testing, as well as noninvasive prenatal testing, and testing for allergies, oncology, women's health, and drug monitoring, he said.

"Broadly, the esoteric testing base performed very well and that benefitted us in terms of our mix," King said, adding that companion diagnostic test-related revenues were up almost 30 percent year over year in Q2 2019.

He also said that LabCorp is on track to have at least 125 service centers in Walgreens by the end of 2019 as part of its partnership with that retail pharmacy. By 2022, LabCorp believes it will have at least 600 such service centers. 

For the quarter LabCorp's SG&A expenses rose 5 percent year over year to $415.3 million from $395.2 million.

Net earnings attributable to the company was $190.4 million, or $1.93 per share, compared to $233.8 million, or $2.27 per share, a year ago.  Adjusted EPS of $2.93 barely beat the consensus Wall Street estimate of $2.92.

LabCorp ended the quarter with $265.4 million in cash and cash equivalent.

For full-year 2019, the company anticipates revenues growth of 1 percent to 2 percent. Adjusted EPS is expected to be between $11.10 and $11.40.

In April LabCorp had guided to revenue growth of between .5 percent and 2.5 percent. Adjusted EPS was expected to be between $11.05 and $11.45.

Full-year 2019 LabCorp Diagnostics' revenues  are anticipated to decline 2 percent to 3 percent year over year, it said, while Covance Drug Development revenues are anticipated to rise 5.5 percent to 8.5 percent.