Labcorp lifts profit margins as biopharma demand climbs
The diagnostics company raised its full-year adjusted earnings guidance to as much as $18.35 a share.
The clinical-laboratory operator Labcorp Holdings (LH) posted first-quarter earnings that accelerated on widening margins and stronger demand from drug developers. Revenue rose 5.8% to $3.54 billion.
The results marked a turn from uneven growth in prior quarters, driven by a rebound in biopharma services and disciplined cost control. Operating income margin expanded 100 basis points to 10.8%, while adjusted operating margin improved 30 basis points to 14.4%.
Earnings per share climbed 32.8% to $3.35, and adjusted EPS rose 10.6% to $4.25. The company said price and mix contributed 2.5 percentage points of the revenue gain, while volume added 2.6 points despite adverse weather that trimmed organic growth.
Diagnostics Laboratories revenue grew 5.0% to $2.76 billion, with acquisitions accounting for 2.0 points of the increase. Adjusted operating margin in the segment widened 30 basis points to 16.6%. Biopharma Laboratory Services revenue jumped 8.2% to $780.6 million, led by 11.3% growth in Central Labs. Margins in the unit expanded 60 basis points to 15.5%.
Backlog in biopharma services rose 5.6% to $8.64 billion, and the book-to-bill ratio reached 1.04. Free cash flow swung to a positive $70.5 million from a year-earlier outflow of $107.5 million.
Labcorp raised its full-year guidance. Revenue growth is now expected between 5.0% and 6.1%, up 20 basis points at the midpoint, while adjusted EPS is projected at $17.70 to $18.35, a 13-cent increase.
The company spent $202.2 million on acquisitions in the quarter, up from $53.5 million a year earlier, and repurchased $98.0 million of shares. Dividends remained steady at $61.2 million.