NEW YORK – Laboratory Corporation of America on Thursday reported a 47 percent year-over-year rise in Q1 revenues.
Labcorp's revenues for the quarter ended March 31 were $4.16 billion, up from $2.82 billion in the same quarter last year and above the consensus Wall Street estimate of $3.91 billion.
Organic revenues were up 45 percent due to both COVID-19 testing volumes, which provided a 33 percent contribution, and the company's base business, which was up 12 percent year over year. Acquisitions contributed just under 1 percent and a favorable currency translation contributed just over 1 percent, the Burlington, North Carolina-based firm said.
In the company's diagnostics division, revenue for the quarter was $2.76 billion, up 62 percent from $1.70 billion in the same quarter last year. Organic revenues were up 61 percent with COVID-19 contributing 55 percent of that rise and the base testing business up 6 percent compared to Q1 2020.
Total volume, as measured by test requisitions, was up 27 percent, with organic volume also up 27 percent. COVID-19 testing boosted test volumes by 28 percent, while base testing volume fell by just over 1 percent.
Revenues for the company's Covance unit, which focuses on drug development, were $1.44 billion for the quarter, up 26 percent from $1.14 billion in Q1 2020.
On a conference call following the release of the Q1 results, Adam Schechter, Labcorp's president and CEO, said that the revenue growth was driven by a continued return of customers to pre-pandemic healthcare routines and the company's biopharma clients resuming their research and development work.
While COVID-19 testing remained a major source of revenue during the quarter, Schechter noted that Labcorp had seen COVID-19 test volumes decline. The company averaged 112,000 molecular COVID-19 tests per day throughout Q1 2021 but ended the quarter averaging around 80,000 tests per day.
Glenn Eisenberg, Labcorp executive VP and CFO, said that the company's base testing business was recovering more quickly than expected, noting that while base requisition volumes were down during the quarter, the number of individual tests performed was up.
"Maybe fewer visits to the physicians but they are doing more tests for each of those visits," he said.
Schechter said the company hypothesized that this trend might not be maintainable as it could be due to people who have been out of contact with the healthcare system due to the pandemic undergoing a higher number of tests than is typical upon returning to the doctor.
"We're going to have to watch that closely in terms of how many tests per accession we see over time," he said.
Schechter said regarding COVID-19 testing that Labcorp anticipated a continued decline in volume over the course of the year but noted that the extent of the decline would depend on a variety of factors including how much schools and workplaces adopted molecular-based screening.
Net earnings attributable to Labcorp for the quarter were $769.6 million, or $7.82 per share, compared to a net loss of $317.2 million, or $3.27 per share, for Q1 last year. The company's adjusted EPS was $8.79, beating analysts' average estimate of $7.43.
The company's SG&A expenses were $429.8 million, up 9 percent from $395.5 million in the same quarter last year.
Labcorp reported $1.89 billion in cash and cash equivalents as of the end of the quarter.
The company revised its full year 2021 guidance to reflect the recovery of its businesses, projecting revenue growth of between 2 percent and 6.5 percent and adjusted EPS of between $20.00 and $24.00 along with growth in its base testing business of between 13.5 percent and 16 percent and a decline in its COVID-19 testing business of between 35 percent and 50 percent.
Previously, it projected revenue ranging from a loss of 1 percent to growth of 4.5 percent and adjusted EPS of between $19.00 and $23.00 along with growth in its base testing business of between 11 percent and 13.5 percent and a decline in its COVID-19 testing business of between 35 percent and 50 percent.
In Thursday morning trading on the New York Stock Exchange, Labcorp stock was up 1 percent to $264.14.