BURLINGTON – Life science giant LabCorp’s business is soaring, so much so that the Burlington-based company has decided to return $76 million it received in federal relief funds as part of COVID-19 relief assistance.
Among the early leaders in development and delivery of pandemic-related tests and other products, LabCorp reported a one-third increase in revenues for the third quarter to $3.9 billion. That’s up from $2.9 billion in the same quarter of 2019. Analysts had expected $3.72 billion, according to financial information site Zacks.
And the company acknowledged COVID-related business as the primary reason: “The 31.5% increase in organic revenue includes the 32.6% contribution from COVID-19 Testing, partially offset by the (1.1%) reduction in the Company’s organic Base Business due to the pandemic.”
Revenues and resulting earnings both topped Wall Street expectations, triggering an upward move in LabCorp (NYSE: LH) stock shortly after the earnings announcement early Tuesday.
Net income was $703.4 million.
On a per-share basis, LabCorp reported a profit of $7.17. Earnings, adjusted for one-time gains and costs, were $8.41 per share.
The results surpassed Wall Street expectations. The average estimate of eight analysts surveyed by Zacks Investment Research was for earnings of $5.29 per share.
Because of the strong quarter and continuing demand as the pandemic drags on, LabCorp noted: “Due to improved current and expected future performance, LabCorp will return all money received from the CARES Act Provider Relief Funds.”
The third quarter CARES funding totalled more than $76 million.
LabCorp also pointed out it is returning other CARES funding in the second quarter.
“LabCorp received $56 million in CARES Act Relief Funds in Q2, and $76 million in Q3. We have not yet returned any of those funds, but we have decided to return all $132 million and will do that in the fourth quarter of 2020,” a company spokesperson said.
So far this year, LabCorp shares have risen 19% since the beginning of the year, while the Standard & Poor’s 500 index has risen slightly more than 5%. The stock has risen 23% in the last 12 months.
“LabCorp remains committed to fighting the pandemic through innovations in testing and clinical trials aimed at discovering treatments and vaccines. This combined with the dedication from our employees, advances our goal of improving health and improving lives,” said LabCorp CEO and chair Adam Schechter in a statement.
“We delivered strong results in the quarter, with growth across both our Diagnostics and Drug Development businesses. Our base business continued to improve as people returned to routine medical care and treatments, and clinical trial studies resumed. I want to thank our more than 70,000 employees around the world for all of their hard work and dedication.”
So far in 2020, LabCorp has reported a 10% jump in revenue over the same period of 2019 to some $9.49 billion.
Of the revenue growth, LabCorp attributes more than 16% to COVID-related business which has more than offset an 8% reduction in other business.
(The Associated Press contributed to this story.)