BURLINGTON – Labcorp on Thursday reported first-quarter earnings of $491.6 million, and its top exec says he is pleased.
“Labcorp continues to advance our strategy through science, innovation and technology,” said Adam Schechter, chairman and CEO of Labcorp. “We delivered a solid first quarter despite the impact of Omicron. We remain focused on growth opportunities while continuing to take actions to mitigate inflation. Our base business performance coming out of the quarter positions us well for continued success throughout the year.”
The Burlington-based company said it had net income of $5.23 per share. Earnings, adjusted for non-recurring costs, were $6.11 per share.
The results topped Wall Street expectations. The average estimate of seven analysts surveyed by Zacks Investment Research was for earnings of $5.88 per share. (Read the full earnings report online.)
The medical laboratory operator posted revenue of $3.9 billion in the period, which missed Street forecasts. Six analysts surveyed by Zacks expected $4.04 billion.
LabCorp expects full-year earnings in the range of $18.25 to $21 per share.
Highlights as reported by Labcorp:
Revenue: Q1 of $3.9 billion versus $4.2 billion last year
• Diluted EPS: Q1 of $5.23 versus $7.82 last year
• Adjusted EPS: Q1 of $6.11 versus $8.79 last year
• Free Cash Flow: Q1 of $239 million versus $1.1 billion last year
• Announced initiation of quarterly dividend, with $0.72 per share for the second quarter
• Entered into several new strategic health system collaborations
• Full-Year 2022 Guidance: Adjusted EPS improved to $18.25 to $21.00 and Free Cash Flow unchanged at $1.7 billion to $1.9 billion
Results by segments
Labcorp broke down its unit performances as well:
- Diagnostics
Revenue for the quarter was $2.45 billion, a decrease of (11.0%) from $2.76 billion in the first quarter of 2021. The decrease was due to organic revenue of (11.5%), partially offset by acquisitions of 0.5%. The (11.5%) decrease in organic revenue was due to a (14.7%) reduction from COVID-19 Testing, partially offset by a 3.2% increase in the Base Business. Total Base Business growth compared to the Base Business in the prior year was 5.6%.
Total volume (measured by requisitions) decreased by (5.0%) as organic volume decreased by (5.3%) and acquisition volume contributed 0.3%. Organic volume was impacted by a (8.5%) decrease in COVID-19 Testing, partially offset by a 3.1% increase in Base Business. Price/mix decreased by (6.0%) due to a decrease in COVID-19 Testing of (6.3%), partially offset by acquisitions of 0.2% and organic Base Business growth of 0.1%. Base Business volume was up 4.4% compared to the Base Business last year, while price/mix was up 1.2%.
Adjusted operating income for the quarter was $683.1 million, or 27.8% of revenue, compared to $991.6 million, or 36.0%, in the first quarter of 2021. The decrease in adjusted operating income and adjusted operating margin was primarily due to a reduction in COVID-19 Testing, higher personnel expense, and other inflationary costs, partially offset by organic Base Business growth and LaunchPad savings.
- Drug Development
Revenue for the quarter was $1.46 billion, an increase of 1.5% from $1.44 billion in the first quarter of 2021. The increase was due to organic Base Business growth of 4.3% and acquisitions net of divestitures of 0.1%, partially offset by lower COVID-19 Testing of (1.7%) and foreign currency translation of (1.2%).
Adjusted operating income for the quarter was $168.6 million, or 11.6% of revenue, compared to $234.1 million, or 16.3%, in the first quarter of 2021. Adjusted operating income and margin declined primarily due to COVID-19 Testing, a reduction in COVID-19 vaccine and therapeutic work, the interruption of some clinical trial activity due to the conflict in Ukraine, higher personnel expense, and other inflationary costs. These impacts were partially offset by organic Base Business growth and LaunchPad savings.
