Labcorp Q1 Earnings Surpass Estimates, Revenues Miss, Stock Gains

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]