Labcorp(US:LH) ZACKSยท2024-08-01 14:50Core Viewpoint - Laboratory Corporation of America Holdings (Labcorp) reported strong second-quarter results for 2024, with adjusted earnings per share (EPS) of $3.94, reflecting a 15.2% year-over-year increase, and surpassing the Zacks Consensus Estimate by 4.2% [1] Revenue Performance - Revenues for the quarter increased by 6.2% year-over-year to $3.22 billion, exceeding the Zacks Consensus Estimate by 0.8% [2] - The revenue growth was attributed to organic revenue growth of 3.8% and acquisitions contributing 2.5%, partially offset by a foreign currency translation loss of 0.1% [2] - Organic revenue growth was driven by a 4.5% increase in the Base Business, while PCR testing (COVID-19 Testing) saw a decline of 0.7% [2] Segment Analysis - Diagnostics Laboratories segment reported revenues of $2.34 billion, a 7.9% increase year-over-year [3] - On an organic basis, revenues in this segment rose by 4.7%, supported by a 5.6% increase in the Base Business, despite a 0.9% decline in COVID-19 testing [4] - Biopharma Laboratory Services revenues increased by 1.1% to $707 million, primarily due to organic growth of 1.2% [5] Margin and Profitability - Gross margin expanded by 101 basis points to 28.8%, despite a 4.7% rise in the cost of revenues [6] - Adjusted operating income improved by 9.6% year-over-year to $368.6 million, with an adjusted operating margin of 11.4%, up 36 basis points from the previous year [6] Cash Position - At the end of the second quarter, Labcorp had cash and cash equivalents of $265.1 million, down from $536.8 million at the end of the first quarter [7] - Long-term debt remained stable at $3.05 billion, and cumulative cash inflow from operating activities was $531.3 million, compared to $472.6 million in the prior year [7] 2024 Guidance - Labcorp updated its 2024 revenue guidance, expecting total revenues to grow between 6.4% and 7.5%, up from the previous estimate of 4.8% to 6.4% [8] - Diagnostics Laboratories revenues are projected to increase between 6.9% and 7.9%, while Biopharma Laboratory Services revenues are expected to rise between 3.7% and 5% [8] Earnings Outlook - The Zacks Consensus Estimate for full-year revenues is $12.85 billion, with Labcorp projecting adjusted EPS in the range of $14.30 to $15.90 [9] - The company anticipates free cash flow from continued operations to be between $0.85 billion and $1.00 billion [9] Strategic Developments - Labcorp expanded its leadership in key therapeutic areas and bolstered its position through acquisitions and innovative solutions [10] - The company received approval for the acquisition of select assets from Invitae, aiming to utilize genetic insights for new treatments in oncology and rare diseases [11] - Labcorp launched new strategic service offerings, including a first-trimester preeclampsia screening test and Labcorp Global Trial Connect [11]