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LabCorp Q1 Revenues Fall 2 Percent

NEW YORK (360Dx) – Laboratory Corporation of America today reported a 2 percent year-over-year drop in Q1 revenues.

LabCorp revenues for the quarter ended March 31 were $2.79 billion, down from $2.85 billion in the same quarter last year, and below the consensus Wall Street estimate of $2.83 billion.

The company saw a negative impact of almost 2 percent from the disposition of businesses and a negative impact of almost 1 percent from currency translation, which was balanced against a .5 percent positive impact from acquisitions, it said.

In the company's diagnostics division, revenue for the quarter was $1.72 billion, a decrease of 3 percent from revenue of $1.77 billion in the same quarter last year. According to LabCorp, the Protecting Access to Medicare Act of 2014  (PAMA) cut diagnostics revenues by nearly 2 percent during the quarter. Organic revenues were up less than 1 percent.

Revenues for the company's Covance unit were $1.07 billion for the quarter, down less than 1 percent from $1.08 billion in Q1 2018.

Net earnings attributable to LabCorp for the quarter were $185.6 million, or $1.86 per share, up from $173.2 million, or $1.67 per share, for Q1 last year. The company's adjusted EPS were $2.62, beating analysts' average estimate of $2.53.

The company's SG&A expenses were $393.8 million, down less than 1 percent from $397.0 million in the same quarter last year.

On an earnings call following release of the results, David King, LabCorp's chairman and CEO, said that the company's diagnostic business grew organically both in terms of revenue and volume despite PAMA-driven price reductions and the loss of exclusivity in its contracts with UnitedHealthcare and Horizon. He noted that the company benefited from expanded access to Aetna customers upon becoming a preferred national laboratory for Aetna's network at the beginning of the year.

Revenue from all aspects of the company's companion diagnostics business grew 30 percent during the quarter, King said.

He also updated the company's partnership with Walgreens, noting that it expects to be in 125 Walgreens locations by the end of the year, including in several new states and metropolitan areas. The company is on track to be in at least 600 Walgreens locations by 2022, he added.

On whether PAMA was continuing to drive consolidation within the industry, King said that LabCorp had "a very robust pipeline of potential acquisitions that we continue to look at."

The company maintained its revenue guidance of .5 percent to 2.5 percent growth in 2019 but raised its adjusted EPS guidance to $11.05 to $11.45 per share from a previous guidance of  $11.00 to $11.40.

LabCorp reported $348.8 million in cash and cash equivalents at of the end of the quarter.

In morning trading on the New York Stock Exchange, LabCorp's shares were up 4 percent at $159.61.