BURLINGTON – A ransomware attack in July and Hurricane Florence combined for a double whammy on global life science giant LabCorp’s profits. And its stock is taking a hit as a result.
In its quarterly earnings announcement before the markets opened Wednesday, LabCorp (NYSE: LH) said the previously disclosed attack combined with fallout from the hurricane cut earnings by “approximately” 10 cents a share to $2.74.
LabCorp also adjusted downward its guidance on earnings for the year by 10 cents a share.
The news sent LabCorp shares down more than 4 percent, or $7.50 a share, to $161.10 from Tuesday’s closing price of $168.60.
In late morning trading, shares were still down 4.4 percent at $161.30.
The company did report an 8 percent rise in revenue year-over-year.
Both earnings and revenue missed Wall Street expectations, according to The Associated Press.
The average estimate of 10 analysts surveyed by Zacks Investment Research was for earnings of $2.87 per share.
The medical laboratory operator posted revenue of $2.83 billion in the period, which also missed Street forecasts. Eight analysts surveyed by Zacks expected $2.84 billion.
“We are pleased with our performance in the quarter, highlighted by excellent results in our Covance Drug Development business and solid results in LabCorp Diagnostics,” said David King, chairman and chief executive officer of LabCorp, in a statement.
“Covance delivered growth in net orders, a strong book to bill and significant margin expansion, while Diagnostics continued its consistent organic revenue and volume growth. In addition, we made progress on our three strategic objectives, and initiated LaunchPad Phase II in Diagnostics to continue streamlining the business and reducing the fixed cost base.
“Despite the dynamically changing market, we have two strong businesses, outstanding cash flow and a strong balance sheet, positioning us well to deliver growth for the balance of this year and in the years ahead.”
In July, LabCorp reported a possible breach of its network and notified “relevant authorities.”
The company acknowledged “the activity was subsequently determined to be a new variant of ransomware. LabCorp promptly took certain systems offline as part of its comprehensive response to contain and remove the ransomware from its system.”
In a securities filing, the Burlington-based company said “suspicious activity” was detected.
As a result of shutting down “certain systems,” LabCorp said some patient test results and customer access was affected. LabCorp is used by healthcare providers for tests for millions of patients across North Carolina and the United States.
Its’ Covance Drug Development group apparently was not affected.
