Labcorp(US:LH)2024-08-01 11:04markdown [Highlights and Executive Summary](index=1&type=section&id=Highlights%20and%20Executive%20Summary) Labcorp reported strong Q2 2024 results, updated full-year guidance for Invitae acquisition, and increased share repurchase authorization Q2 2024 Financial Highlights (vs. Q2 2023) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | Revenue | $3.22 billion | $3.03 billion | | Diluted EPS | $2.43 | $1.74 | | Adjusted EPS | $3.94 | $3.42 | | Free Cash Flow | $432.9 million | $58.2 million | Updated Full-Year 2024 Guidance | Metric | Updated 2024 Range | Invitae Impact | | :--- | :--- | :--- | | Revenue Growth | 6.4% to 7.5% | ~1.0% | | Adjusted EPS | $14.30 to $14.90 | ~$0.40 dilution | | Free Cash Flow | $0.85B to $1.00B | ~$150M cash usage | - The Board of Directors increased the company's share repurchase authorization by **$1.0 billion**, bringing the total authorization to **$1.4 billion**[1](index=1&type=chunk)[5](index=5&type=chunk) - The company launched Labcorp Global Trial Connect, a new suite of central laboratory solutions designed to accelerate clinical trials[1](index=1&type=chunk)[4](index=4&type=chunk) [Business and Strategic Developments](index=2&type=section&id=Business%20and%20Strategic%20Developments) Labcorp advanced growth through acquisitions, collaborations, and new test launches, enhancing genetics and clinical trial capabilities - Received approval for the acquisition of select assets from medical genetics company Invitae, expected to close in early August. This aims to enhance capabilities in oncology and rare diseases[3](index=3&type=chunk) - Entered a strategic collaboration with Naples Comprehensive Healthcare (NCH) to manage its inpatient lab operations and serve as the primary lab for its physician network[3](index=3&type=chunk) - Received FDA approval for a companion diagnostic (CDx) for Pfizer's hemophilia B gene therapy, BEQVEZ™[3](index=3&type=chunk) - Introduced the first U.S. test for first-trimester preeclampsia screening and expanded its precision oncology portfolio with Labcorp® Tissue Complete and OmniSeq INSIGHT[4](index=4&type=chunk) - Announced a quarterly cash dividend of **$0.72 per share**[5](index=5&type=chunk) [Consolidated Financial Results](index=3&type=section&id=Consolidated%20Financial%20Results) Consolidated financial results show solid year-over-year growth in revenue, operating income, and cash flow, driven by organic performance and acquisitions [Second Quarter 2024 Results](index=3&type=section&id=Second%20Quarter%202024%20Results) Q2 2024 revenue increased **6.2%** to **$3.22 billion**, driven by organic growth and acquisitions, with improved profitability and cash flow Q2 2024 Consolidated Financial Summary | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $3.22B | $3.03B | +6.2% | | Operating Income | $294.8M | $266.3M | +10.7% | | Adjusted Operating Income | $479.9M | $448.3M | +7.1% | | Net Earnings (Cont. Ops) | $205.6M | $155.2M | +32.5% | | Adjusted EPS | $3.94 | $3.42 | +15.2% | | Free Cash Flow (Cont. Ops) | $432.9M | $58.2M | +643.8% | - Revenue growth of **6.2%** was attributed to a **3.8%** increase in organic revenue and a **2.5%** net contribution from acquisitions[6](index=6&type=chunk) - At quarter-end, the company held a cash balance of **$265.1 million** and total debt of **$5.07 billion**. During the quarter, **$100.0 million** was used for share repurchases[9](index=9&type=chunk) [Year-To-Date 2024 Results](index=4&type=section&id=Year-To-Date%202024%20Results) YTD 2024 revenue grew **5.4%** to **$6.40 billion**, driven by organic growth and acquisitions, with improved operating income and free cash flow YTD 2024 Consolidated Financial Summary | Metric | YTD 2024 | YTD 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $6.40B | $6.07B | +5.4% | | Operating Income | $616.1M | $596.1M | +3.4% | | Adjusted Operating Income | $932.7M | $896.1M | +4.1% | | Net Earnings (Cont. Ops) | $433.9M | $363.6M | +19.3% | | Adjusted EPS | $7.62 | $6.88 | +10.8% | | Free Cash Flow (Cont. Ops) | $269.3M | $165.7M | +62.5% | - The **5.4%** year-to-date revenue increase was driven by **3.0%** organic growth, **2.1%** from acquisitions (net), and **0.2%** from foreign currency translation[10](index=10&type=chunk) [Segment Performance](index=5&type=section&id=Segment%20Performance) Diagnostics Laboratories showed strong **7.9%** revenue growth, while Biopharma Laboratory Services grew **1.1%** with stable backlog [Diagnostics Laboratories](index=5&type=section&id=Diagnostics%20Laboratories) Diagnostics Laboratories reported Q2 revenue of **$2.52 billion**, up **7.9%**, driven by organic growth and acquisitions, with stable operating margin Q2 2024 Diagnostics Laboratories Performance | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $2.52B | $2.34B | +7.9% | | Adjusted Operating Income | $441.5M | $409.7M | +7.8% | | Adjusted Operating Margin | 17.5% | 17.5% | 0 bps | - Total volume, measured by requisitions, increased by **5.7%**, driven by a **2.9%** rise in organic volume and **2.8%** from acquisitions[16](index=16&type=chunk) - Price/mix increased by **2.1%**, primarily due to a **2.2%** improvement in the organic Base Business[16](index=16&type=chunk) [Biopharma Laboratory Services](index=6&type=section&id=Biopharma%20Laboratory%20Services) Biopharma Laboratory Services posted Q2 revenue of **$707.0 million**, up **1.1%**, with improved operating margin and a **$7.92 billion** backlog Q2 2024 Biopharma Laboratory Services Performance | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Revenue | $707.0M | $699.0M | +1.1% | | Adjusted Operating Income | $107.4M | $104.6M | +2.7% | | Adjusted Operating Margin | 15.2% | 15.0% | +20 bps | - Backlog at the end of the quarter was **$7.92 billion**, with approximately **$2.50 billion** expected to convert to revenue in the next twelve months[18](index=18&type=chunk) - Net orders for the trailing twelve months were **$2.82 billion**, resulting in a net book-to-bill ratio of **1.00**. The company expects orders, book-to-bill, and backlog to increase in the second half of the year[18](index=18&type=chunk) [Full-Year 2024 Outlook](index=7&type=section&id=Full-Year%202024%20Outlook) Labcorp updated its full-year 2024 guidance, reflecting Q2 performance and Invitae acquisition impact on revenue, adjusted EPS, and free cash flow Updated 2024 Full-Year Guidance vs. Previous | Metric | Previous Guidance (Low-High) | Updated Guidance (Low-High) | Midpoint Change | | :--- | :--- | :--- | :--- | | **Enterprise Revenue Growth** | 4.8% - 6.4% | 6.4% - 7.5% | +1.35% | | **Diagnostics Revenue Growth** | 4.8% - 6.0% | 6.9% - 7.9% | +2.0% | | **Biopharma Revenue Growth** | 3.7% - 5.7% | 3.7% - 5.0% | -0.35% | | **Adjusted EPS** | $14.45 - $15.35 | $14.30 - $14.90 | -$0.30 | | **Free Cash Flow (Cont. Ops)** | $1.00B - $1.15B | $0.85B - $1.00B | -$0.15B | - The updated guidance incorporates the impact of the Invitae acquisition, which is expected to contribute **~1.0%** to revenue, be dilutive to Adjusted EPS by **~$0.40**, and use **~$150 million** in cash[1](index=1&type=chunk)[20](index=20&type=chunk)[21](index=21&type=chunk) [Financial Statements and Reconciliations](index=10&type=section&id=Financial%20Statements%20and%20Reconciliations) This section provides detailed unaudited consolidated financial statements and reconciliations of non-GAAP measures to GAAP counterparts [Consolidated Statements of Earnings](index=10&type=section&id=Consolidated%20Statements%20of%20Earnings) [Consolidated Balance Sheets](index=11&type=section&id=Consolidated%20Balance%20Sheets) [Consolidated Statements of Cash Flows](index=12&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) [Non-GAAP Segment Information](index=13&type=section&id=Non-GAAP%20Segment%20Information) [Reconciliation of Non-GAAP Measures](index=14&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures) [Supplementary Information](index=8&type=section&id=Supplementary%20Information) This section provides rationale for non-GAAP measures and a cautionary statement regarding forward-looking statements and associated risks - The company uses non-GAAP adjusted measures (e.g., adjusted EPS, free cash flow) as a supplement to GAAP measures to provide an additional tool for investors to evaluate operating results, trends, and growth[23](index=23&type=chunk) - The press release contains forward-looking statements regarding 2024 guidance, impacts of acquisitions, and future growth, which are subject to various important factors and risks[27](index=27&type=chunk) - Key risks include changes in government regulations, customer purchasing decisions, competition, inflation, and failure in information technology or data security[28](index=28&type=chunk)