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LabCorp (LH) to Report Q4 Earnings: What's in the Cards?
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Laboratory Corporation of America Holdings (LH - Free Report) , also known as LabCorp, is slated to report fourth-quarter 2022 results on Feb 16, before market open.
In the last reported quarter, the company’s adjusted earnings of $4.68 missed the Zacks Consensus Estimate by 0.6%. The company beat estimates in three of the trailing four quarters and missed in one, the average surprise being 6.06%.
Factors at Play
LabCorp has been registering an ongoing sales rebound in the base business for both Diagnostics and Drug Development segments. However, as the severity of the pandemic has declined, we expect the demand for COVID-19 testing services and vaccines to have been lower than the year-ago period’s levels, impacting the fourth-quarter sales performance. Also, the ongoing Ukraine-Russia crisis, a strengthening U.S. dollar and supply chain issues are expected to have adversely impacted LabCorp’s fourth-quarter performance.
Covance Drug Development is likely to have benefited in Q3 from continued growth in the organic base business and a strong backlog of $15.2 billion at the end of the third quarter. The company expects approximately $4.7 billion of this backlog to convert into revenues over the next 12 months.
Similar to the last reported quarter, growth in early development and clinical development is expected to have been offset by central labs on account of a significant slowdown in COVID-related work and the Russia-Ukraine crisis. On a positive note, LabCorp completed a comprehensive laboratory relationship with Ascension in the third quarter to manage Ascension’s hospital-based laboratories in 10 states and purchase select assets of the health system’s outreach laboratory business. The company also completed its acquisition of the outreach lab business and related assets of New Jersey-based RWJBarnabas Health during the third quarter. We believe these developments to have contributed to LabCorp’s Q4 revenues.
Laboratory Corporation of America Holdings Price and EPS Surprise
Turning to oncology. the company continues to deepen its leadership position by expanding its cancer-related diagnostic screening and testing portfolio and by partnering with its pharmaceutical clients. During the third quarter, the company formed a strategic partnership with MD Anderson Cancer Center Foundation in Spain to increase access to early-phase oncology clinical trials. The company also entered into a collaboration with Becton, Dickinson and Company to help match patients with critical and potentially life-changing treatments for cancer and other diseases. These developments are likely to have made significant contributions to the company’s fourth-quarter performance.
The Zacks Consensus Estimate for the Covance Drug Development segment’s fourth-quarter revenues is pegged at $1.41 billion, indicating a decline of 2.4% from the prior-year quarter’s figure. Our model projects Q4 drug development revenues to be $1.42 billion, a 2.2% decline year over year.
Within LabCorp Diagnostics, base business organic volume is anticipated to have continued its rally, led by consistent growth in esoteric and routine procedures. However, a slowdown in COVID-19 testing is likely to have hampered sales performance within the segment. In this regard, in the third quarter, COVID-19 testing rates dropped and LabCorp expected the decline to continue further. This is expected to get reflected in the company’s Q4 earnings release.
However, in terms of base business, during the third quarter, the company witnessed growing demand for its at-home testing and collection options through Labcorp OnDemand. The company also noted that its FDA authorization, combination COVID, flu and RSV at-home collection test continues to register strong demand with the rise of respiratory virus cases expected this fall and through the winter. We believe this trend to have continued through the fourth quarter, thus adding to the top line.
The Zacks Consensus Estimate for LabCorp Diagnostics’ fourth-quarter revenues is pegged at $2.34 billion, implying a 10.9% decline from the year-ago quarter’s reported figure. Our model projects Q4 LabCorp Diagnostics’ revenues to be $2.32 billion, suggesting an 11.5% decline year over year.
Key Q4 Estimates
The Zacks Consensus Estimate for fourth-quarter earnings of $4.06 per share implies a 40% plunge from the year-ago reported figure. The consensus estimate for revenues is pegged at $3.75 billion, suggesting a 7.5% fall from the prior-year reported number.
What Our Model Suggests
Our proven model predicts an earnings beat for LabCorp this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: The company has an Earnings ESP of +2.67%. 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 #2.
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.
Cardinal Health has a long-term expected earnings growth rate of 11.7%. Cardinal Health’s earnings yield of 6.87% compares favorably with the industry’s 4.34%.
McKesson Corporation (MCK - Free Report) has an Earnings ESP of +0.21% and a Zacks Rank of #2. McKesson is scheduled to release third-quarter fiscal 2023 results on Feb 1.
MCK’s long-term historical earnings growth rate is estimated at 10.1%. MCK’s earnings yield of 6.49% compares favorably with the industry’s 4.34%.
Hologic (HOLX - Free Report) has an Earnings ESP of +5.05% and a Zacks Rank of #2. Hologic is scheduled to release first-quarter fiscal 2023 results on Feb 1.
Hologic’s long-term historical earnings growth rate is estimated to be 23.4%. Hologic’s earnings yield of 4.35% compares favorably with the industry’s -6.74%.
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LabCorp (LH) to Report Q4 Earnings: What's in the Cards?
Laboratory Corporation of America Holdings (LH - Free Report) , also known as LabCorp, is slated to report fourth-quarter 2022 results on Feb 16, before market open.
In the last reported quarter, the company’s adjusted earnings of $4.68 missed the Zacks Consensus Estimate by 0.6%. The company beat estimates in three of the trailing four quarters and missed in one, the average surprise being 6.06%.
Factors at Play
LabCorp has been registering an ongoing sales rebound in the base business for both Diagnostics and Drug Development segments. However, as the severity of the pandemic has declined, we expect the demand for COVID-19 testing services and vaccines to have been lower than the year-ago period’s levels, impacting the fourth-quarter sales performance. Also, the ongoing Ukraine-Russia crisis, a strengthening U.S. dollar and supply chain issues are expected to have adversely impacted LabCorp’s fourth-quarter performance.
Covance Drug Development is likely to have benefited in Q3 from continued growth in the organic base business and a strong backlog of $15.2 billion at the end of the third quarter. The company expects approximately $4.7 billion of this backlog to convert into revenues over the next 12 months.
Similar to the last reported quarter, growth in early development and clinical development is expected to have been offset by central labs on account of a significant slowdown in COVID-related work and the Russia-Ukraine crisis. On a positive note, LabCorp completed a comprehensive laboratory relationship with Ascension in the third quarter to manage Ascension’s hospital-based laboratories in 10 states and purchase select assets of the health system’s outreach laboratory business. The company also completed its acquisition of the outreach lab business and related assets of New Jersey-based RWJBarnabas Health during the third quarter. We believe these developments to have contributed to LabCorp’s Q4 revenues.
Laboratory Corporation of America Holdings Price and EPS Surprise
Laboratory Corporation of America Holdings price-eps-surprise | Laboratory Corporation of America Holdings Quote
Turning to oncology. the company continues to deepen its leadership position by expanding its cancer-related diagnostic screening and testing portfolio and by partnering with its pharmaceutical clients. During the third quarter, the company formed a strategic partnership with MD Anderson Cancer Center Foundation in Spain to increase access to early-phase oncology clinical trials. The company also entered into a collaboration with Becton, Dickinson and Company to help match patients with critical and potentially life-changing treatments for cancer and other diseases. These developments are likely to have made significant contributions to the company’s fourth-quarter performance.
The Zacks Consensus Estimate for the Covance Drug Development segment’s fourth-quarter revenues is pegged at $1.41 billion, indicating a decline of 2.4% from the prior-year quarter’s figure. Our model projects Q4 drug development revenues to be $1.42 billion, a 2.2% decline year over year.
Within LabCorp Diagnostics, base business organic volume is anticipated to have continued its rally, led by consistent growth in esoteric and routine procedures. However, a slowdown in COVID-19 testing is likely to have hampered sales performance within the segment. In this regard, in the third quarter, COVID-19 testing rates dropped and LabCorp expected the decline to continue further. This is expected to get reflected in the company’s Q4 earnings release.
However, in terms of base business, during the third quarter, the company witnessed growing demand for its at-home testing and collection options through Labcorp OnDemand. The company also noted that its FDA authorization, combination COVID, flu and RSV at-home collection test continues to register strong demand with the rise of respiratory virus cases expected this fall and through the winter. We believe this trend to have continued through the fourth quarter, thus adding to the top line.
The Zacks Consensus Estimate for LabCorp Diagnostics’ fourth-quarter revenues is pegged at $2.34 billion, implying a 10.9% decline from the year-ago quarter’s reported figure. Our model projects Q4 LabCorp Diagnostics’ revenues to be $2.32 billion, suggesting an 11.5% decline year over year.
Key Q4 Estimates
The Zacks Consensus Estimate for fourth-quarter earnings of $4.06 per share implies a 40% plunge from the year-ago reported figure. The consensus estimate for revenues is pegged at $3.75 billion, suggesting a 7.5% fall from the prior-year reported number.
What Our Model Suggests
Our proven model predicts an earnings beat for LabCorp this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat.
Earnings ESP: The company has an Earnings ESP of +2.67%. 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 #2.
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.
Cardinal Health (CAH - Free Report) has an Earnings ESP of +5.75% and a Zacks Rank of #2. The company will release fourth-quarter 2022 results on Feb 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Cardinal Health has a long-term expected earnings growth rate of 11.7%. Cardinal Health’s earnings yield of 6.87% compares favorably with the industry’s 4.34%.
McKesson Corporation (MCK - Free Report) has an Earnings ESP of +0.21% and a Zacks Rank of #2. McKesson is scheduled to release third-quarter fiscal 2023 results on Feb 1.
MCK’s long-term historical earnings growth rate is estimated at 10.1%. MCK’s earnings yield of 6.49% compares favorably with the industry’s 4.34%.
Hologic (HOLX - Free Report) has an Earnings ESP of +5.05% and a Zacks Rank of #2. Hologic is scheduled to release first-quarter fiscal 2023 results on Feb 1.
Hologic’s long-term historical earnings growth rate is estimated to be 23.4%. Hologic’s earnings yield of 4.35% compares favorably with the industry’s -6.74%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.