Much like its rival Quest Diagnostics, national player LabCorp has gotten its mojo back. After a couple of years of tepid to flat growth, the North Carolina-based LabCorp reported strong growth in the fourth quarter ending Dec. 31. LabCorp reported net income for the quarter of $120 million on revenue of $1.5 billion. Although its profit was down slightly from the $126.7 million it reported for the fourth quarter of 2013, revenue was up 5.3 percent from $1.4 billion. The company had taken $13 million in special charges during the quarter, much of that related to its recent acquisition of drug testing firm Covance for $5.7 billion. That deal closed last month. LabCorp’s earnings per share came in at $1.65, a couple of pennies above the consensus of analysts. “We are pleased with our fourth quarter operating performance, highlighted by solid organic growth and adjusted operating margin improvement,” said LabCorp Chief Executive Officer Dave King in a press release. “We are excited about the opportunity in 2015.” For calendar 2014, LabCorp reported net income of $512.6 million on revenue of $6.01 billion. That compares to 2013 net income of $575.4 million on revenue of $5.8 billion. Cash on hand ballooned […]
Much like its rival Quest Diagnostics, national player LabCorp has gotten its mojo back. After a couple of years of tepid to flat growth, the North Carolina-based LabCorp reported strong growth in the fourth quarter ending Dec. 31.
LabCorp reported net income for the quarter of $120 million on revenue of $1.5 billion. Although its profit was down slightly from the $126.7 million it reported for the fourth quarter of 2013, revenue was up 5.3 percent from $1.4 billion. The company had taken $13 million in special charges during the quarter, much of that related to its recent acquisition of drug testing firm Covance for $5.7 billion. That deal closed last month.
LabCorp’s earnings per share came in at $1.65, a couple of pennies above the consensus of analysts.
“We are pleased with our fourth quarter operating performance, highlighted by solid organic growth and adjusted operating margin improvement,” said LabCorp Chief Executive Officer Dave King in a press release. “We are excited about the opportunity in 2015.”
For calendar 2014, LabCorp reported net income of $512.6 million on revenue of $6.01 billion. That compares to 2013 net income of $575.4 million on revenue of $5.8 billion. Cash on hand ballooned from $404 million at the end of 2013 to$580 million at the end of last year.
Test volume was up 6.4 percent during the quarter, of which 5.3 percent was organic and not tied to acquisitions of other laboratories.
Yet despite LabCorp’s strong numbers, the sector remains under financial pressure, as indicated by the company reporting a 1.1 percent drop in revenue per test requisition.
Company officials said they expect annual revenue to grow 40 to 44 percent during calendar 2015, including business from Covance, and will gain about $100 million in efficiencies after the company is fully integrated. That would put Lab- Corp on track to report 2015 revenue of about $8.5 billion. Earnings per share are projected to grow 8 percent to 13 percent.
Of particular note was the introduction of an efficiency initiative known as “Project Launchpad.” It is projected to save $150 million over the next three years.
“Project LaunchPad savings will favorably impact both gross profit and SG&A through improved customer to cash processes, bad debt reduction, outsourcing, procurement savings, and labor efficiency,” Chief Financial Officer Glenn A. Eisenberg said during a call with analysts to discuss earnings. Few other details on the initiative were available. King noted on the same call that “LaunchPad is not a short-term cost-cutting measure. It is a long-term structural change in how we deliver our services.”
Aside from the announcement of the initiative, LabCorp also disclosed the inevitable post-Covance restructuring changes. The company will operate in two divisions, LabCorp Diagnostics and Covance Drug Development. LabCorp’s former chief operating officer, Jay Boyle, has been appointed as CEO of the LabCorp Diagnostics division. Former Covance CEO Joe Herring has been named as CEO of the Covance Drug Development division.
Both will report to King.
Stock analyst firm Zacks is fairly bullish on LabCorp moving forward, citing its strong quarterly numbers. “We are also optimistic about the solid revenue and earnings outlook for 2015, which indicate improving industry trends as along with expected positive synergy from the Covance integration,” the company said in a recent report.
LabCorp’s stock rose nearly 4 percent on Feb. 20, the day it announced its earn- ings. The company’s shares are up more than 20 percent since last October.
Takeaway: LabCorp is moving swiftly toward becoming the largest national laboratory in the U.S.
