Core Insights - Labcorp has expanded its precision oncology portfolio with new test offerings for solid tumors and hematologic malignancies, along with enhanced biopharma solutions to accelerate clinical trials and companion diagnostic development [1][2] Diagnostics: New Solutions for Solid Tumor and Hematologic Malignancies - The company aims to improve patient access to testing and identify eligibility for targeted therapies through new diagnostic solutions [2] - New NGS panels for myeloid, lymphoid, and pan-heme indications provide broader genomic coverage and actionable insights for hematologic malignancies [4] - The launch of a Rapid AML Panel enhances testing for acute myeloid leukemia, enabling timely treatment decisions [4] - Expansion of OmniSeq® INSIGHT includes homologous recombination deficiency (HRD) testing to identify ovarian cancer patients likely to benefit from targeted therapies [4] - New FDA-approved companion diagnostics include HER2 categorization for breast cancer and the VENTANA® MET (SP44) RxDx Assay for non-squamous non-small cell lung cancer [4] Biopharma Laboratory Services: Accelerating Clinical Trials and Companion Diagnostic Development - Labcorp is enhancing global trial consistency and collaboration with biopharma customers [3] - The global expansion of Labcorp® Plasma Focus, a solid tumor liquid biopsy test, is now available in Geneva and Shanghai, complementing Labcorp Tissue® Complete for pan-solid tumors [4] - An enhanced digital pathology platform has been launched across global central labs, utilizing advanced scanning and image management systems for improved diagnostic insights [4] Company Overview - Labcorp is a global leader in laboratory services, supporting over 75% of new drugs approved by the FDA in 2024 and performing over 700 million tests annually [5]

Core Viewpoint - Labcorp's shares have increased by approximately 2.5% since the last earnings report, which is underperforming compared to the S&P 500 [1] Group 1: Earnings and Estimates - Recent estimates for Labcorp have trended downward over the past month [2] - The magnitude of estimate revisions for Labcorp has been net zero, indicating stability in expectations [4] Group 2: VGM Scores and Rankings - Labcorp has a subpar Growth Score of D and a similar score for momentum, but a B grade for value, placing it in the top 40% for this investment strategy [3] - The overall VGM Score for Labcorp is C, which is relevant for investors not focused on a single strategy [3] - Labcorp holds a Zacks Rank of 3 (Hold), suggesting an expectation of an in-line return in the coming months [4] Group 3: Industry Performance - Labcorp is part of the Zacks Medical - Dental Supplies industry, where West Pharmaceutical Services has seen a slight gain of 0.1% over the past month [5] - West Pharmaceutical reported revenues of $698 million for the last quarter, reflecting a year-over-year increase of 0.4% [5] - The expected earnings for West Pharmaceutical for the current quarter is $1.51 per share, indicating a year-over-year decline of 0.7% [6]

Company Overview - Labcorp Holdings, Inc. is a leading healthcare diagnostics company providing comprehensive clinical laboratory services and end-to-end drug development support [12] - The company acquired Covance in 2015, enhancing its capabilities in drug development services for the pharmaceutical and biotechnology industries [12] Investment Analysis - Labcorp has a Zacks Rank of 3 (Hold) and a VGM Score of B, indicating a moderate investment potential [13] - The Momentum Style Score for Labcorp is B, with shares increasing by 9.9% over the past four weeks [13] - For fiscal 2025, eight analysts have revised their earnings estimates upwards in the last 60 days, with the Zacks Consensus Estimate increasing by $0.04 to $16.05 per share [13] - Labcorp has an average earnings surprise of 2.3%, suggesting a positive trend in earnings performance [13] Investment Recommendation - With a solid Zacks Rank and top-tier Momentum and VGM Style Scores, Labcorp is recommended for investors' consideration [14]

Financial Data and Key Metrics Changes - LabCorp reported exceptional results in 2024, with strong momentum heading into 2025, indicating a positive outlook for financial performance [4] - At least 91% of shares voted in favor of the nonbinding advisory approval of the company's compensation for named executive officers, reflecting shareholder confidence [30] - The approval rate for the company's 2025 omnibus incentive plan was at least 94%, and for the employee stock purchase plan, it was at least 99% [30] Business Line Data and Key Metrics Changes - The diagnostics and biopharma laboratory services businesses made meaningful advances through organic growth and transformative acquisitions, contributing to the overall success of LabCorp [4] Market Data and Key Metrics Changes - No specific market data or key metrics changes were provided in the meeting [0] Company Strategy and Development Direction - LabCorp is focused on improving health and lives while generating attractive returns for shareholders, positioning itself well for future growth [4] - The company emphasizes ethical and regulatory responsibilities in its biopharma laboratory services, particularly regarding animal welfare and research integrity [35] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in LabCorp's positioning for continued success in 2025, highlighting the importance of their strategic initiatives [4] - The company is committed to high standards of animal care and welfare, which is fundamental to sound scientific research [35] Other Important Information - The meeting included the election of directors, approval of executive compensation, and ratification of the independent registered public accounting firm for 2025, all of which passed with significant support from shareholders [30] Q&A Session Summary Question: What specific measures is LabCorp taking to mitigate biosafety and public health risks associated with research animals? - LabCorp takes its ethical and regulatory responsibilities seriously, ensuring the health and wellness of research animals, which is fundamental to scientific research [35] - The company has a dedicated global team to establish high standards of animal care and welfare, proactively identifying and mitigating risks [36]

Group 1 - Labcorp will host its Annual Meeting of Shareholders on May 15 at 9:00 a.m. ET, which will be available for live streaming on its Investor Relations website [1] - An archived replay of the webcast will be accessible for one year following the event [1] Group 2 - Labcorp is a global leader in laboratory services, providing innovative and comprehensive solutions to healthcare professionals and researchers [2] - The company employs nearly 70,000 individuals and operates in approximately 100 countries [2] - Labcorp supports over 75% of new drugs and therapeutic products approved by the FDA in 2024 and conducts more than 700 million tests annually [2]

Financial Data and Key Metrics Changes - Revenue for Q1 2025 was $3.3 billion, an increase of 5.3% year-over-year, driven by organic growth of 2.1% and net acquisitions of 3.7%, partially offset by foreign currency translation of 0.5% [17] - Adjusted earnings per share (EPS) was $3.84, up 4% year-over-year [19] - Operating income for the quarter was $326 million, or 9.7% of revenue, with adjusted operating income at $469 million, or 14% of revenue [17][18] Business Line Data and Key Metrics Changes - Diagnostics Laboratories revenue was $2.6 billion, a 6% increase year-over-year, with organic growth of 1.6% and net acquisitions contributing 4.7% [21] - Biopharma Laboratory Services (BLS) revenue was $721 million, a 1.5% increase year-over-year, with organic revenue growth of 2.6% [23] - Diagnostics adjusted operating income was $428 million, or 16.3% of revenue, compared to $418 million, or 16.9% of revenue last year [22] Market Data and Key Metrics Changes - The book-to-bill ratio for BLS was strong at 1.13 for the quarter, with a trailing twelve-month ratio of 1.07 [24] - Total volume in Diagnostics increased by 3% year-over-year, with organic volume contributing 0.9% [21] Company Strategy and Development Direction - The company aims to be a partner of choice for health systems and regional laboratories, focusing on launching new tests in high-growth therapeutic areas [10] - Strategic collaborations and acquisitions, such as with Inspira Health and BioReference Health, are expected to enhance growth and expand market presence [10][11] - The company is focused on four strategic areas: oncology, women's health, autoimmune disease, and neurology, which are projected to grow faster than other therapeutic areas [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the dynamic macroeconomic and regulatory landscape, reaffirming revenue and free cash flow guidance while increasing the midpoint of EPS guidance by $0.05 per share [9][26] - The company anticipates continued margin expansion across all segments for the full year [28] - Management is closely monitoring regulatory developments and tariff impacts, with contingency plans in place [8][40] Other Important Information - The company reported a free cash flow use of $108 million for the quarter, with expectations of $1.1 billion to $1.25 billion for the full year [20] - The company has a strong business development pipeline and is committed to operational efficiencies through technology [15][11] Q&A Session Summary Question: Variability in BLS segment guidance - Management indicated that the BLS business had about 3% growth overall, with continued strength in the book-to-bill ratio, allowing for flexibility in guidance [34][35] Question: Tariffs impact on guidance - Management confirmed that tariffs are embedded in guidance, with a focus on maintaining operational resilience through flexible supply chains [40][43] Question: Expectations on organic growth in Diagnostics - Management expects about half of the growth to come from organic sources, with adjustments for weather and revenue days indicating a stronger underlying trend [48][50] Question: Impact of regulatory changes on animal testing - Management noted that animal testing currently represents 10-15% of BLS revenue, with no significant impact expected this year from potential regulatory changes [71][72] Question: Invitae's performance and integration - Management expressed confidence in Invitae's integration, expecting it to be slightly accretive for the full year, with revenue growth projected over 10% [80][81] Question: Lab M&A environment - Management reported a strong pipeline for acquisitions, with increased outreach from potential partners due to macroeconomic pressures [86][87]

Each of the forward-looking statements is subject to change based on various important factors, many of which are beyond the company's control, including without limitation: (i) the effect of the holding company reorganization on the company's business generally; (ii) the failure to receive tax-free treatment with respect to the spin-off of the company's Clinical Development and Commercialization Services business, now Fortrea Holdings Inc. for U.S. federal income purposes; (iii) the impact of spin-off rela ...

Revenue Performance - For the three months ended March 31, 2025, the Company's revenues were $3,345.1 million, an increase of 5.3% from $3,176.6 million for the corresponding period in 2024[114]. - Diagnostic (Dx) revenues for the same period were $2,629.6 million, reflecting a 6.0% increase over $2,479.7 million in Q1 2024, driven by acquisitions (4.7%) and organic revenue growth (1.6%) despite a 0.3% unfavorable foreign currency translation[117]. - BLS revenues for Q1 2025 were $721.3 million, a 1.5% increase from $710.9 million in Q1 2024, primarily due to organic growth of 2.6%[119]. - The Company experienced organic revenue growth of 2.1% for the three months ended March 31, 2025, despite a 0.5% negative impact from foreign currency translation[114]. - The Company anticipates continued growth driven by strategic acquisitions and organic expansion in the upcoming quarters[114]. Cost and Expenses - Cost of revenues increased by 5.2% to $2,397.1 million, while the cost of revenues as a percentage of revenues decreased to 71.7% from 71.8% in the prior year[120]. - Selling, general, and administrative expenses rose by 7.4% to $546.0 million, with expenses as a percentage of revenues increasing to 16.3% from 16.0%[121]. - The increase in selling, general, and administrative expenses was attributed to higher personnel costs and the impact from Invitae, partially offset by LaunchPad savings[121]. Operating Income and Cash Flow - Total operating income increased by 1.5% to $326.0 million for the three months ended March 31, 2025, from $321.3 million in the same period of 2024[131]. - Net cash provided by operating activities was $18.5 million for the three months ended March 31, 2025, compared to a cash usage of $29.8 million in the same period of 2024, marking a $48.3 million improvement[137]. - Net cash used for investing activities decreased to $336.0 million for the three months ended March 31, 2025, from $393.1 million in the same period of 2024[138]. - Net cash used for financing activities surged to $839.7 million for the three months ended March 31, 2025, compared to $11.7 million in the same period of 2024, primarily due to a $1,000.0 million payment of senior notes[141]. - Cash and cash equivalents increased to $369.4 million at March 31, 2025, from $99.3 million at the same date in 2024[136]. Capital Expenditures and Debt - Capital expenditures were $126.0 million for the three months ended March 31, 2025, representing 3.8% of revenues, with expectations to maintain this level for the remainder of 2025[140]. - The company had $1,000.0 million available under its revolving credit facility as of March 31, 2025, with compliance to all covenants related to its debt obligations[142]. - Some of the Company's debt is subject to variable interest rates, affecting financial results due to interest rate fluctuations[156]. - The Company entered into fixed-to-variable interest rate swap agreements for $500.0 million of senior notes due 2031, with variable rates based on the three-month Secured Overnight Financing Rate plus 1.0706%[158]. Foreign Currency Exposure - Approximately 13.0% of the Company's revenues for Q1 2025 were denominated in currencies other than the U.S. dollar, compared to 13.8% in Q1 2024[153]. - A hypothetical 10% change in average exchange rates would have impacted income before income taxes for Q1 2025 by approximately $6.3 million[153]. - The Company had 14 open foreign exchange forward contracts with a total notional value of approximately $496.4 million as of March 31, 2025[154]. - The Company is party to cross-currency swap agreements with an aggregate notional amount of $1,200.0 million, maturing between 2029 and 2034[155]. Amortization and Impairments - Amortization of intangibles and other assets increased by 15.8% to $69.6 million for the three months ended March 31, 2025, compared to $60.1 million in the same period of 2024[122]. - Goodwill and other asset impairments were eliminated, showing a 100% decrease from $2.5 million in the three months ended March 31, 2024[124]. Interest Expense - Interest expense rose by 19.4% to $56.0 million for the three months ended March 31, 2025, compared to $46.9 million in the same period of 2024[127].

Core Insights - Labcorp reported revenue of $3.35 billion for the quarter ended March 2025, reflecting a year-over-year increase of 5.3% [1] - The company's EPS was $3.84, up from $3.68 in the same quarter last year, exceeding the consensus estimate of $3.73 by 2.95% [1] - The revenue fell short of the Zacks Consensus Estimate of $3.41 billion, resulting in a surprise of -2.04% [1] Financial Performance Metrics - The net book-to-bill ratio was reported at 1.1%, surpassing the estimated 1% by analysts [4] - Revenue from Biopharma Laboratory Services was $721.30 million, below the average estimate of $742.69 million, but showing a year-over-year increase of 1.5% [4] - Revenue from Diagnostics Laboratories was $2.63 billion, compared to the average estimate of $2.69 billion, with a year-over-year increase of 6.1% [4] - Adjusted Operating Income for Biopharma Laboratory Services was $106.90 million, slightly below the estimated $108.86 million [4] - Adjusted Operating Income for Diagnostics Laboratories was $427.50 million, compared to the average estimate of $435.69 million [4] Stock Performance - Labcorp's shares have returned -1.4% over the past month, while the Zacks S&P 500 composite has changed by -0.8% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Core Viewpoint - Labcorp Holdings (LH) reported a mixed performance in Q1 2025, with adjusted EPS beating estimates but revenues missing expectations, indicating a year-over-year growth trend despite challenges [1][2][9]. Financial Performance - Adjusted EPS for Q1 2025 was $3.84, a 4.3% increase from the previous year, surpassing the Zacks Consensus Estimate by 2.9% [1] - GAAP EPS was $2.52, down from $2.69 in the same period last year [1] - Revenues rose 5.3% year-over-year to $3.35 billion but fell short of the Zacks Consensus Estimate by 2% [2] - Organic revenue growth contributed 2.1%, while acquisitions added 3.7%, offset by a 0.5% loss from foreign currency translation [2] Segment Performance - Diagnostics Laboratories generated $2.63 billion in revenues, reflecting a 6% year-over-year improvement [3] - Biopharma Laboratory Services revenues increased by 1.5% to $721.3 million, driven by organic growth of 2.6% but impacted by a 1.1% foreign currency translation loss [4] Margin Analysis - Gross margin expanded by 9 basis points to 28.3%, despite a 5.2% rise in the cost of revenues [5] - Adjusted operating income improved by 3.4% year-over-year to $402 million, but the adjusted operating margin contracted by 23 basis points to 12% due to a 7.4% increase in SG&A expenses [5] Cash Position - Cash and cash equivalents at the end of Q1 were $369.4 million, down from $1.52 billion at the end of Q4 2024 [6] - Long-term debt increased to $5.57 billion from $5.33 billion at the end of Q4 2024 [6] - Cumulative cash inflow from operating activities was $18.5 million, a recovery from a cash outflow of $29.8 million at the end of 2024 [6] 2025 Guidance - Labcorp expects total revenues for 2025 to grow between 6.7% and 8%, with Diagnostics Laboratories revenues projected to increase by 6.5% to 7.7% and Biopharma Laboratory Services revenues forecasted between 3% and 5% [7] - The Zacks Consensus Estimate for full-year revenues is $13.93 billion, with adjusted EPS expected to be in the range of $15.70 to $16.40 [8] Strategic Developments - The company is advancing its pipeline of acquisitions and partnerships, expanding its test menu in oncology, women's health, autoimmune disease, and neurology [9] - Labcorp launched its liquid biopsy test, Labcorp Plasma Complete, indicating a focus on innovative developments [9]