Labcorp shares tumble as third-quarter revenue hit by drop in COVID testing; cuts FY22 outlook

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Labcorp (New York stock market :HL) shares are trading lower ahead of market Thursday after the third quarter revenue came in below estimates and the company cut its outlook for FY22.

The fit company based in Burlington, North Carolina PES fell around 31.4% year on year to $4.68, and aligned with analysts’ expectations.

Total revenue fell -11.2% year on year to $3.61 billion, estimates missing. The company said the decline was due to organic revenue of (-10.7%) and foreign currency translation of (-1.3%), partially offset by acquisitions of +0.8%. The decline (-10.7%) in organic revenue was due to a decline (-11.8%) in COVID-19 testing, partially offset by a 1.1% increase in the organic core business of business (which includes Labcorp operations except for COVID-19 testing).

“Our core diagnostics business has performed well and the fundamentals of our core drug development business 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 President. and CEO Adam Schechter.

Diagnostics revenue decreased -15.7% year on year to $2.21 billion. The decrease was due to a decline in organic revenue of (-16.4%), which was caused by a decline (-18.4%) in COVID-19 testing, partially offset by an increase of 1. 9% of core business. Total base activity increased by +3.7% year-on-year.

Drug development segment revenue fell -3.7% year-on-year to $1.41 billion.

Group operating cash flow for the third quarter decreased to $373.8 million from $767.3 million in the third quarter of 2021. The decline was due to lower cash income partially offset by a favorable working capital, according to the company.

At the end of the third quarter, Labcorp’s cash balance and total debt were $0.4 billion and $5.3 billion, respectively.

Outlook:

Labcorp lowered its FY22 revenue outlook and now expects a decline of between -7.5% and -6.0% (previous outlook of -6% to -2%) for revenue of business of $16.1 billion in 2021. Consensus The revenue estimate for 2022 is 15.19 billion (-5.76% year-on-year).

The company also cut its Adjusted EPS outlook to between $19.25 and $20.25 (previous range of $19 to $21.25). The consensus EPS estimate for 2022 is $20.19.

HL -4.76% at $219 pre-market on October 27

Sallie R. Loera