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Labcorp Q2 Revenues Up 39 Percent, Beat Analysts' Estimate

NEW YORK – Laboratory Corporation of America said on Thursday that its second quarter revenues were up 39 percent year over year.

For the three months ended June 30, the Burlington, North Carolina-based firm reported $3.84 billion in revenues, up from $2.77 billion in Q2 2020 and above analysts' average estimate of $3.61 billion.

Acquisitions added 1 percent to growth while foreign currency translation boosted revenues by 2 percent. Organic base business revenues were up 36 percent.

Labcorp Diagnostics' revenues rose 40 percent to $2.37 billion from $1.69 billion a year ago. Acquisitions added around 1 percent to revenues, while currency translation also added 1 percent. Organic base business revenues were up 38 percent. COVID-19 molecular and serology testing revenues were flat at $440.0 million.

Test volumes were up 40 percent, with acquisitions contributing around 1 percent. Base testing volumes were up 39 percent, while COVID-19 testing volumes were down a fraction of 1 percent.

Labcorp Drug Development, formerly called Covance, saw revenues rise 37 percent to $1.50 billion from $1.09 billion in Q2 2020.

On a conference call following the release of the earnings results, Adam Schechter, Labcorp's chairman and CEO, said that much of the growth was driven by "continued strength" in the company's base business, which he noted had recovered as patients returned to more routine healthcare patterns and pharma firms resumed research activities.

During the call, CFO Glenn Eisenberg provided a snapshot of the company's growth versus pre-pandemic levels, noting that compared to pre-pandemic levels, specifically Q2 2019, the compound annual growth rate for Labcorp's base business revenue was roughly 5 percent, mainly due to organic growth.

Schecter said Labcorp averaged 54,000 COVID-19 molecular tests per day during the quarter, with the June numbers coming in below the overall Q2 average. He added that test volumes had ticked up in recent weeks, presumably in response to rising infections driven by the delta variant. He said that given the uncertainty regarding future COVID-19 testing demand, Labcorp planned to "maintain our ability to scale testing capacity quickly."

Labcorp notched several acquisitions during the quarter, including the purchase of the remaining stake in cancer genomic and immune profiling firm OmniSeq, which the company announced Thursday. It also announced during the quarter the acquisition of Myriad Genetics' autoimmune business, including the Vectra test, which Schecter said would strengthen the company's position in rheumatoid arthritis.

Labcorp also agreed this week to acquire the outreach business of Minnesota-based healthcare system North Memorial Health and will provide management services to its in-patient lab, Schecter said.

Net earnings attributable to the company for Q2 2021 were $467.4 million, or $4.76 per share, compared to $231.6 million, or $2.37 per share, a year ago. Adjusted EPS of $6.13 beat the consensus Wall Street estimate of $5.57.

Labcorp's SG&A expenses rose 16 percent year-over-year to $458.7 million from $396.3 million.

The firm ended the quarter with $1.96 billion in cash and cash equivalents.

Labcorp updated its full year 2021 guidance and said revenues are expected to increase between 6.5 percent and 9 percent year over year compared to a previous range of 2 percent to 6.5 percent. Guidance for its adjusted EPS was revised to a new range of $21.50 to $25.00 from a previous range of $20.00 to $24.00.

In Thursday morning trading on the New York Stock Exchange, Labcorp shares were up 1 percent to $286.29.