Labcorp (LH) to Report Q4 Earnings: What's in the Cards?
Laboratory Corporation of America Holdings LH, or Labcorp, is slated to report fourth-quarter 2023 results on Feb 15 before market open.
In the last reported quarter, the company’s adjusted earnings of $3.38 topped the Zacks Consensus Estimate by 0.30%. Labcorp surpassed estimates in two of the trailing four quarters and missed in the other two, the average negative surprise being 0.86%.
Factors at Play
Throughout 2023, Labcorp’s COVID-19 testing revenues continued to nosedive significantly, affecting the top-line growth and other key metrics. We assume this trend to have persisted in the fourth quarter as well.
However, Labcorp is expected to have witnessed robust growth across the diagnostic laboratories and biopharma laboratory service businesses. The company may have leveraged deep science, innovation and technology to deliver superior solutions to its customers. In the fourth quarter of 2023, LH is likely to have expanded its base business, finalizing and integrating its hospital and health system and local and regional laboratory transactions.
Labcorp Price and EPS Surprise
Labcorp price-eps-surprise | Labcorp Quote
Through its strategic relationship with Jefferson Health, one of the largest and most prominent health systems serving the greater Philadelphia area and southern New Jersey, Labcorp may have focused more on research and innovations to improve health outcomes. Another one is with Tufts Medicine, through which the company is likely to have expanded its diagnostic testing and laboratory services in eastern Massachusetts to increase access, affordability and standardized testing.
In October, Labcorp announced plans to acquire Baystate Health's outreach laboratory business and select operating assets. The partnership will improve access and enhance affordable, high-quality healthcare services for underserved communities across Massachusetts. In addition, LH now manages Portland-based Legacy Health's inpatient hospital laboratories through a long-term agreement to provide staffing, leadership, scientific knowledge, analytics, supply-chain services and laboratory support. The progress in these partnerships is likely to have favorably benefited Labcorp’s results of operations in the fourth quarter of 2023.
We also assume the company has further invested in innovation and technology that supports diagnostic and drug development testing across disease areas, including cancer, Alzheimer’s and others. Labcorp is the first to make a fully blood-based ATN Profile commercially available, giving physicians a simple, objective test for Alzheimer's disease pathology that can help shorten the time to diagnosis.
Across women’s health, the company is likely to have benefited from its new consumer offering for menopause on the Labcorp OnDemand digital health platform. In the third quarter of 2023, Labcorp’s Biopharma Laboratory services team opened two new international facilities in China, a new kit production facility, and an immunology and immunotoxicology laboratory. These developments are likely to have strongly boosted LH’s top line in the fourth quarter.
In Diagnostic Laboratories, the company is expected to have advanced in high-growth strategic areas such as specialty testing, including companion diagnostics. Developing these tests is likely to have made the company an attractive partner to health systems and biopharma as they continue to develop more therapies and the highest specialty areas.
In the to-be-reported quarter, growth in key areas such as oncology, women’s health, autoimmune disease and neurology is likely to have outpaced the growth of other therapeutic areas. Further, LH is expected to have capitalized on its scale and geographic presence to drive near-term growth and differentiation. We expect all these trends to have a positive effect on the company’s top-line performance in the fourth quarter of 2023.
For the fourth quarter of 2023, the Zacks Consensus Estimate for the company’s Diagnostics Laboratories business revenues indicates a 0.4% improvement. However, the Zacks Consensus Estimate for Biopharma Laboratory Services’ revenues indicates a year-over-year decrease of 48.7%.
Q4 Estimates
The Zacks Consensus Estimate for LH’s fourth-quarter 2023 revenues is pegged at $3.01 billion. This suggests an 18.2% fall from the year-ago reported figure.
The Zacks Consensus Estimate for its fourth-quarter 2023 EPS of $3.29 indicates a year-over-year decrease of 20.5%
What Our Model Suggests
Per our proven model, stocks with a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold), along with a positive Earnings ESP, have a higher chance of beating estimates. However, that is not the case here, as you can see below:
Earnings ESP: Labcorp has an Earnings ESP of -0.43%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank:The company currently carries a Zacks Rank #3.
Stocks Worth a Look
Here are some medical stocks worth considering as these have the right combination of elements to post an earnings beat this quarter:
GoodRx GDRX has an Earnings ESP of +15.91% and a Zacks Rank #2. The company is expected to release its fourth-quarter 2023 results on Feb 29. You can see the complete list of today’s Zacks #1 Rank stocks here.
GDRX has an expected earnings growth rate of 14.3% compared to the S&P 500’s 4.9%. GDRX surpassed earnings in three of the trailing four quarters and broke even in one, the average being 18.3%.
Merit Medical Systems MMSI has an Earnings ESP of +1.44% and a Zacks Rank #2. The company is expected to release fourth-quarter 2023 results on Feb 28.
MMSI has an expected earnings growth rate of 10.4% compared to the S&P 500’s 4.9%. The company surpassed earnings in each of the trailing four quarters, the average being 14.41%.
Sarepta Therapeutics SRPT currently has an Earnings ESP of +52.45% and a Zacks Rank #2. The company is expected to release its fourth-quarter 2023 results on Feb 27.
SRPT has an expected earnings growth rate of 132.6% compared to the industry’s 11.1%. In the last reported quarter, the company delivered an earnings surprise of 72.3%.
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Labcorp (LH) : Free Stock Analysis Report
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