Labcorp Q4 Earnings & Revenues Beat, Margins Down, Stock Tumbles

Core Viewpoint - Labcorp Holdings reported better-than-expected earnings and revenues for the fourth quarter of 2024, showcasing strong organic and inorganic growth, although margins contracted [11][12]. Financial Performance - Adjusted EPS for Q4 2024 was $3.45, a 4.5% increase year-over-year, beating the Zacks Consensus Estimate by 1.5% [1][2]. - GAAP EPS for Q4 was $1.70, compared to a loss of $1.95 in the same period last year [2]. - Total revenues for Q4 rose 9.8% year-over-year to $3.33 billion, surpassing the Zacks Consensus Estimate by 0.6% [3][4]. - For the full year, adjusted EPS was $14.57, up 7.4% from the previous year, and also exceeded the Zacks Consensus Estimate by 0.4% [2][4]. Revenue Breakdown - Diagnostics Laboratories segment reported revenues of $2.59 billion, reflecting a 10.2% year-over-year improvement [5]. - Biopharma Laboratory Services revenues increased by 10.4% to $767 million, driven by organic growth of 8.9% [6]. - Organic revenues for the quarter were up 5.4%, with a 6.2% rise in the Base Business, partially offset by a 0.8% decline in COVID-19 testing [3][6]. Margin Analysis - Gross margin contracted by 16 basis points to 26.9% due to a 9.1% rise in the cost of revenues [7]. - Adjusted operating income improved by 4.4% year-over-year to $301.1 million, but the adjusted operating margin contracted by 47 basis points to 9% [7]. Cash Position - Labcorp ended Q4 with cash and cash equivalents of $1.52 billion, significantly up from $536.8 million at the end of 2023 [8]. - Long-term debt totaled $5.33 billion, a 31.5% increase from the previous quarter [8]. - Cumulative cash inflow from operating activities was $1.59 billion, compared to $1.20 billion at the end of 2023 [8]. Future Guidance - Total revenues for 2025 are expected to grow between 6.7% and 8%, with Diagnostics Laboratories revenues projected to increase by 6.5% to 7.7% [9]. - Full-year adjusted EPS for 2025 is expected to be in the range of $14.57 to $15.60, with the Zacks Consensus Estimate at $15.97 [9]. Strategic Developments - Labcorp is enhancing its Global Trial Connect to speed up clinical trials and expanding its Labcorp OnDemand test menu [11][12]. - The company introduced a companion diagnostic assay for gastric cancer patients, marking a significant advancement in targeted treatment [12].