NEW YORK – Laboratory Corporation of America on Tuesday reported 33 percent year-over-year revenue growth for the third quarter.
Total revenues for the three months ended Sept. 30 were $3.90 billion, up from $2.93 billion in the third quarter of 2019, and above the consensus Wall Street estimate of $3.63 billion.
Growth was driven by a recovery in baseline testing along with continued demand for SARS-CoV-2 testing. Organic revenues grew 32 percent with acquisitions contributing 1 percent and favorable foreign currency translation contributing less than 1 percent.
In diagnostics, revenues were up 54 percent to $2.70 billion compared to $1.76 billion in Q3 2019. Organic growth was 52 percent, with SARS-CoV-2 testing contributing to a 54 percent increase that was partially offset by a 2 percent decline in the company's base testing business, which included a negative impact from the Protecting Access to Medicare Act (PAMA) of 1 percent, the Burlington, North Carolina-based firm said.
Total requisition volume grew 22 percent, while organic volume grew by 20 percent with SARS-CoV-2 testing contributing a 29 percent increase in volume that was countered by a 9 percent decline in base testing volumes due to the coronavirus pandemic.
The company's Covance unit saw revenues grow by about 6 percent year over year to $1.24 billion from $1.18 billion, with organic growth of 4 percent.
On a conference call following release of the results, LabCorp President and CEO Adam Schechter noted that base test volumes continued to recover as people resumed routine preventive care and moved ahead with elective surgeries and other procedures they had postponed during the pandemic.
He added that the company saw improvements in its clinical trial business, as well, both for COVID-19-related and non-COVID-19 trials.
LabCorp also continued to see high SARS-CoV-2 test volumes. Schechter said the company is currently able to perform more than 210,000 molecular SARS-CoV-2 tests and more than 300,000 antibody tests per day and that it was continuing to increase this capacity. He said the company continued to buy additional machines for running molecular tests, noting that this was the "biggest rate-limiting step." During October, LabCorp has averaged 120,000 SARS-CoV-2 molecular tests per day with an average turnaround time of one day, he said.
Schechter noted that the company also launched a combined SARS-CoV-2/influenza/RSV test during the quarter and that it has filed for a US Food and Drug Administration Emergency Use Authorization for home collection version of the test. LabCorp also received during the quarter EUAs for a pooled SARS-CoV-2 testing method and a heat-based RNA extraction technology.
Schechter said that due to improvements in the company's business it was returning $132.1 million in federal funds received through the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
During Q3 2020, net earnings attributable to LabCorp were $703.4 million, or $7.17 per share, compared to $220.7 million, or $2.25 per share, in the same quarter last year. Adjusted EPS for the quarter was $8.41 and beat the analysts' average estimate of $5.25.
The company's SG&A costs were $419.5 million, up 4 percent compared to $401.5 million in the same quarter last year.
LabCorp declined to provide a full-year 2020 guidance, citing the continued unpredictability of the COVID-19 pandemic.
The company ended the quarter with $667.2 million in cash and cash equivalents.
In Tuesday afternoon trading on the New York Stock Exchange, LabCorp shares were up 2 percent to $206.86.