LH - Labcorp stock dips as Q3 revenue hit by lower COVID testing; cuts FY22 outlook

Labcorp ( NYSE: LH ) stock is trading lower after Q3 revenue came below estimates and the company cut its FY22 outlook.

The Burlington, N.C.-based company's Adjusted EPS fell ~31.4% Y/Y to $4.68, and came in line with analysts' expectations.

Total revenues fell -11.2% Y/Y to $3.61B, missing estimates. The company said the decrease was due to organic revenue of (-10.7%) and foreign currency translation of (-1.3%), partially offset by acquisitions +0.8%. The (-10.7%) decrease in organic revenue was driven by a (-11.8%) decrease in COVID-19 testing, partially offset by a 1.1% increase in the company's organic Base Business (which  includes Labcorp's operations except for COVID-19 testing).

"Our Diagnostics Base Business performed well, and our Drug Development Base Business fundamentals remain strong, despite challenging year-over-year comparisons due to COVID-19. We continue to manage inflationary headwinds and labor constraints through our LaunchPad initiatives," said Labcorp Chairman and CEO Adam Schechter.

Revenue from Diagnostics declined -15.7%Y/Y to $2.21B. The decline was due to decrease in organic revenue of (-16.4%), which was caused by a (-18.4%) decline in COVID-19 testing, partially offset by a 1.9% increase in the Base Business.  Total Base Business grew +3.7% Y/Y.

Revenue from Drug Development segment fell -3.7% Y/Y to $1.41B.

The group's operating cash flow for Q3 declined to $373.8M, compared to $767.3M in Q3 2021. The decrease was due to lower cash earnings partially offset by favorable working capital, according to the company.

At the end of Q3, Labcorp's cash balance and total debt were $0.4B and $5.3B, respectively.

Outlook :

Labcorp lowered its FY22 revenue outlook and now expects a decline between -7.5% and -6.0% (prior outlook of -6% to -2%) to 2021 revenue of $16.1B. Consensus Revenue Estimate for 2022 is 15.19B (-5.76% Y/Y).

The company also narrowed its adjusted EPS outlook to be between $19.25 and $20.25 (prior range of $19 to $21.25). Consensus EPS Estimate for 2022 is $20.19.

LH -4.76% to $219 premarket Oct. 27

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