Yahoo Finance Laboratory Corp of America Holdings (LH) Q1 Earnings: Surpasses Revenue Forecasts and Updates ...
Revenue: Reported at $3.18 billion for Q1 2024, up 4.6% year-over-year, slightly surpassing the estimate of $3.116 billion.
Net Income: Reached $228 million in Q1 2024, up from $208 million in Q1 2023, exceeding the estimated $298.9 million.
Earnings Per Share (EPS): Diluted EPS was $2.69, below the estimate of $3.48; Adjusted EPS was $3.68, surpassing the estimate of $3.46.
Adjusted Operating Income: Totaled $452.8 million, or 14.3% of revenue, slightly up from $447.8 million or 14.7% of revenue in Q1 2023.
Free Cash Flow: Reported a negative $163.6 million compared to a positive $107.5 million in Q1 2023, due to lower cash earnings and changes in working capital requirements.
Full-Year Guidance: Adjusted EPS guidance for 2024 has been updated to a range of $14.45 to $15.35, reflecting a raised midpoint from the previous guidance.
Acquisitions and Expansions: Announced/completed five acquisitions and significantly expanded test menu, enhancing capabilities in key therapeutic areas.
Laboratory Corp of America Holdings (NYSE:LH) released its 8-K filing on April 25, 2024, revealing a promising start to the year with first-quarter results that exceeded revenue expectations and demonstrated strategic growth through acquisitions. The company, a leading provider in the medical diagnostics and research industry, operates about 2,000 patient-service centers and offers a wide array of clinical lab tests.
Financial Highlights and Analyst Expectations
For the first quarter of 2024, Laboratory Corp reported revenue of $3.18 billion, a 4.6% increase from $3.04 billion in the same period last year, surpassing the analyst's estimate of $3.116 billion. The growth was primarily driven by a 6.7% increase in its base business. However, diluted earnings per share (EPS) for the quarter stood at $2.69, below the estimated $3.48, while adjusted EPS was $3.68, aligning closely with expectations.
Operational and Strategic Developments
Adam Schechter, chairman and CEO of Labcorp, highlighted the company's strategic initiatives, including several key acquisitions that enhance its diagnostic and testing capabilities. These moves are expected to bolster its specialty testing in areas such as oncology and rare diseases. The company also launched innovative tests for Alzheimer's and other neurodegenerative diseases, reinforcing its commitment to expanding its test menu to meet evolving patient needs.
Furthermore, Labcorp announced a restructuring to form a new holding company, Labcorp Holdings Inc., effective May 17, 2024. This change aims to better reflect the company's operations and align more closely with its brand identity.
Financial Performance Analysis
The company's operating income was $321.3 million, or 10.1% of revenue, a slight decrease from 10.9% in the prior year, mainly due to increased personnel costs and reduced COVID-19 testing. Despite these challenges, the company managed to improve its base business operations significantly. Net earnings from continuing operations saw an increase, reaching $228.3 million compared to $208.4 million in the first quarter of 2023.
However, operating cash flow presented a challenge, turning to a use of $29.8 million from a generation of $185.7 million in the previous year, primarily due to lower cash earnings and changes in working capital requirements. Capital expenditures rose to $133.8 million, up from $78.2 million, reflecting ongoing investments in business growth.
Updated Guidance and Future Outlook
Based on its first-quarter performance, Labcorp has updated its full-year 2024 guidance, raising the midpoint and narrowing the range of its adjusted EPS forecast to $14.45 to $15.35. The company maintains its free cash flow projection at $1.00 billion to $1.15 billion, indicating confidence in its operational efficiency and cash generation capabilities going forward.
In conclusion, Laboratory Corp of America Holdings (NYSE:LH) has set a solid foundation for 2024 with strategic expansions and a robust financial performance in the first quarter. As the company continues to innovate and expand its service offerings, it remains a significant player in the medical diagnostics and research industry, poised for continued growth and operational success.
Explore the complete 8-K earnings release (here) from Laboratory Corp of America Holdings for further details.
This article first appeared on GuruFocus.
