If earnings and revenue guidance were the equivalent of topography maps, LabCorp and Quest Diagnostics would be stuck somewhere in the middle of the Great Plains. The nation’s two largest labs issued final earnings guidance for 2013 late last month, and LabCorp also offered a glimpse into 2014. The views from the corporate offices of both diagnostics giants remain mostly flat—with the end of the horizon yet to be sighted. LabCorp’s earnings guidance for 2013 was between $6.90 and $7.05 per share—a final number will be issued when its fourth-quarter and year-end numbers are issued on Feb. 7. It also said that revenue for the year would grow about 3.5 percent. That’s essentially unchanged from the forecast it issued with third-quarter earnings last October. However, the Burlington, N.C.-based company also issued its preliminary guidance for 2014. Revenue growth for the year is pegged at 2 percent. Earnings are predicted to be in the $6.50 per share range, suggesting its bottom line could shrink nearly 8 percent if its final 2013 earnings come in on the high side. More formal guidance will be issued in February, according to the company. “We continue to operate in a very difficult environment,” said LabCorp […]
If earnings and revenue guidance were the equivalent of topography maps, LabCorp and Quest Diagnostics would be stuck somewhere in the middle of the Great Plains.
The nation’s two largest labs issued final earnings guidance for 2013 late last month, and LabCorp also offered a glimpse into 2014. The views from the corporate offices of both diagnostics giants remain mostly flat—with the end of the horizon yet to be sighted.
LabCorp’s earnings guidance for 2013 was between $6.90 and $7.05 per share—a final number will be issued when its fourth-quarter and year-end numbers are issued on Feb. 7. It also said that revenue for the year would grow about 3.5 percent. That’s essentially unchanged from the forecast it issued with third-quarter earnings last October.
However, the Burlington, N.C.-based company also issued its preliminary guidance for 2014. Revenue growth for the year is pegged at 2 percent. Earnings are predicted to be in the $6.50 per share range, suggesting its bottom line could shrink nearly 8 percent if its final 2013 earnings come in on the high side. More formal guidance will be issued in February, according to the company.
“We continue to operate in a very difficult environment,” said LabCorp Chief Executive Officer Dave King. He added that LabCorp would continue to focus on cost cutting, improvement of its information technology initiatives, and strategic acquisitions.
Kevin Ellich and Bradley D. Maiers of Piper Jaffray called LabCorp’s earnings guidance “disappointing” and said the lab industry “will continue to be pressured by weak organic volumes and reimbursement headwinds” this year.
The New Jersey-based Quest Diagnostics has yet to issue any guidance for 2014. But it finalized guidance for 2013, saying revenue would be 3.5 percent below its 2012 numbers, which was unchanged from prior guidance. Net income is expected to come in between $3.90 and $3.95 per share, which is on the higher end of previous guidance of $3.85 and $3.95 per share. However, the company will not issue 2014 guidance until it releases year-end 2013 earnings on Jan. 30, a week before LabCorp.
That Quest is hedging on issuing guidance raised some concern with some analysts.
“We are a little surprised that the company narrowed its FY13 EPS guidance with only a few weeks remaining in the year without providing FY14 guidance, which is the main point of contention with most investors,” Ellich and Maiers observed. They maintained a neutral rating on Quest’s stock, and lowered its 2014 revenue estimates to $7.12 billion from $7.16 billion, and dropped earnings estimates to $4.07 per share from $4.15 per share.
Takeaway: LabCorp and Quest Diagnostics continue to navigate a landscape of flat numbers for the foreseeable future.
