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LH Stock Down Despite Q2 Earnings and Revenue Beat, Margins Rise
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Key Takeaways
Labcorp beat Q2 earnings and revenue estimates, while shares fell nearly 6% in pre-market trading.
LH expanded gross and adjusted operating margins on organic growth and operating efficiencies.
Labcorp raised 2026 revenue and adjusted earnings guidance while maintaining free cash flow outlook.
Labcorp Holdings Inc. (LH - Free Report) reported second-quarter 2026 adjusted earnings of $4.99 per share, up 14.9% year over year. The metric beat the Zacks Consensus Estimate by 4.18%.
On a GAAP basis, earnings per share (EPS) came in at $3.64, up 28.5% from the prior-year quarter. Net earnings attributable to Labcorp rose to $298.7 million from $237.9 million.
Revenues rose 5.8% to $3.73 billion and surpassed the Zacks Consensus Estimate by 0.36%. Enterprise revenues increased on 4.2% organic growth, a 1.2% contribution from acquisitions net of divestitures and a 0.4% foreign currency benefit. The mix indicates that underlying business activity accounted for most of the top-line expansion.
Following the announcement, Labcorp shares dipped 5.6% in the pre-market session today.
LH Reports Broad-Based Revenue Growth
Diagnostics Laboratories (Dx) revenues rose 5.5% to $2.90 billion. Organic growth was 3.6%, while acquisitions net of divestitures added 1.9%. Total requisition volume increased 3%, including 1.8% organic growth and a 1.3% acquisition contribution. Price and mix improved 2.5%, with organic price and mix up 1.8%.
Biopharma Laboratory Services (BLS) revenues advanced 6.5% to $836.2 million. Organic growth was 6.2%, and foreign exchange added 1.8%, partly offset by a 1.4% reduction from acquisitions net of divestitures. Central Labs revenues climbed 9.8%, while Early Development revenues declined 1.4%.
Labcorp’s Margins Expand
Gross profit increased to $1.11 billion from $1.05 billion a year earlier. Gross margin was 29.8%, up roughly 10 basis points (bps) from the prior-year quarter, as revenue growth outpaced the increase in the cost of revenues.
Labcorp Holdings Inc. Price, Consensus and EPS Surprise
Adjusted operating income increased to $588.7 million from $531.6 million. The adjusted operating margin widened 70 bps to 15.8%, reflecting organic growth and operating efficiencies.
Reported operating income was $451.6 million compared with $394.5 million. The reported operating margin improved 90 bps to 12.1%, while selling, general and administrative expenses declined to $577.2 million from $579.3 million.
Labcorp’s Cash Position
Labcorp exited the second quarter of 2026 with cash and cash equivalents of $141.8 million compared with $981.1 million at the end of the first quarter. Debt totaled $5.86 billion at quarter-end.
Cumulative net cash provided by operating activities at the end of the second quarter was $637 million compared with $639.1 million a year ago.
LH Deploys Capital Across Priorities
Labcorp invested $225.7 million in acquisitions, repurchased $353.8 million of stock and paid $58.7 million in dividends during the quarter. It also retired $500 million of senior notes. The board increased the share repurchase authorization by $1 billion, bringing the remaining authorization to $1.4 billion.
Labcorp Updates 2026 Outlook
Management raised full-year enterprise revenue growth guidance to 5.4-6.3% from 5-6.1%. The updated range implies revenues of $14.71-$14.83 billion. Dx growth is now projected at 5.3-6%, while BLS growth is expected at 5.5-6.5%. The Zacks Consensus Estimate for full-year revenues is pegged at $14.71 billion, implying growth of 5.4%.
Adjusted earnings guidance increased to $18.10-$18.55 per share, from the earlier $17.70-$18.35 range. The Zacks Consensus Estimate for the metric is pegged at $18.00.
Free cash flow guidance remained $1.24-$1.36 billion.
Our Take
Labcorp exited the second quarter of 2026 with both earnings and revenues beating estimates. Both segments contributed to the quarter's performance. The company expanded its capabilities in oncology and other high-growth specialty areas, strengthened its position as the partner of choice for health systems, biopharmaceutical companies and regional and local laboratories and advanced the use of technology to improve the experience for consumers and providers. Both gross and operating margins expanded during the quarter, which is highly encouraging.
LH’s Zacks Rank and Other Key Picks
Labcorp currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Quest Diagnostics (DGX - Free Report) and Medpace (MEDP - Free Report) .
Intuitive Surgical, carrying a Zacks Rank #2, reported second-quarter 2026 adjusted EPS of $2.80, which surpassed the Zacks Consensus Estimate by 12.9%. Revenues of $2.89 billion beat the Zacks Consensus Estimate by 3.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ISRG has an earnings yield of 3.1% compared to the industry’s negative 3% yield. The company beat earnings estimates in each of the trailing four quarters, the average surprise being 16.53%.
Quest Diagnostics, carrying a Zacks Rank #2 at present, posted second-quarter 2026 adjusted EPS of $3.12, exceeding the Zacks Consensus Estimate by 11%. Revenues of $3.04 billion topped the Zacks Consensus Estimate by 2.1%.
DGX has an earnings yield of 4.7%, almost in line with the industry’s yield. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 5.77%.
Medpace, carrying a Zacks Rank #2 at present, posted second-quarter 2026 adjusted EPS of $4.25, exceeding the Zacks Consensus Estimate by 4.17%. Revenues of $707.3 million outperformed the consensus mark by 1.12%.
MEDP has an historical five-year earnings growth rate of 30.5% compared with the industry’s 5.6% growth. In the trailing four quarters, the company delivered an average earnings beat of 10.16%.
View the Zacks #1 Rank List
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LH Stock Down Despite Q2 Earnings and Revenue Beat, Margins Rise
Key Takeaways
Labcorp Holdings Inc. (LH - Free Report) reported second-quarter 2026 adjusted earnings of $4.99 per share, up 14.9% year over year. The metric beat the Zacks Consensus Estimate by 4.18%.
On a GAAP basis, earnings per share (EPS) came in at $3.64, up 28.5% from the prior-year quarter. Net earnings attributable to Labcorp rose to $298.7 million from $237.9 million.
Revenues rose 5.8% to $3.73 billion and surpassed the Zacks Consensus Estimate by 0.36%. Enterprise revenues increased on 4.2% organic growth, a 1.2% contribution from acquisitions net of divestitures and a 0.4% foreign currency benefit. The mix indicates that underlying business activity accounted for most of the top-line expansion.
Following the announcement, Labcorp shares dipped 5.6% in the pre-market session today.
LH Reports Broad-Based Revenue Growth
Diagnostics Laboratories (Dx) revenues rose 5.5% to $2.90 billion. Organic growth was 3.6%, while acquisitions net of divestitures added 1.9%. Total requisition volume increased 3%, including 1.8% organic growth and a 1.3% acquisition contribution. Price and mix improved 2.5%, with organic price and mix up 1.8%.
Biopharma Laboratory Services (BLS) revenues advanced 6.5% to $836.2 million. Organic growth was 6.2%, and foreign exchange added 1.8%, partly offset by a 1.4% reduction from acquisitions net of divestitures. Central Labs revenues climbed 9.8%, while Early Development revenues declined 1.4%.
Labcorp’s Margins Expand
Gross profit increased to $1.11 billion from $1.05 billion a year earlier. Gross margin was 29.8%, up roughly 10 basis points (bps) from the prior-year quarter, as revenue growth outpaced the increase in the cost of revenues.
Labcorp Holdings Inc. Price, Consensus and EPS Surprise
Labcorp Holdings Inc. price-consensus-eps-surprise-chart | Labcorp Holdings Inc. Quote
Adjusted operating income increased to $588.7 million from $531.6 million. The adjusted operating margin widened 70 bps to 15.8%, reflecting organic growth and operating efficiencies.
Reported operating income was $451.6 million compared with $394.5 million. The reported operating margin improved 90 bps to 12.1%, while selling, general and administrative expenses declined to $577.2 million from $579.3 million.
Labcorp’s Cash Position
Labcorp exited the second quarter of 2026 with cash and cash equivalents of $141.8 million compared with $981.1 million at the end of the first quarter. Debt totaled $5.86 billion at quarter-end.
Cumulative net cash provided by operating activities at the end of the second quarter was $637 million compared with $639.1 million a year ago.
LH Deploys Capital Across Priorities
Labcorp invested $225.7 million in acquisitions, repurchased $353.8 million of stock and paid $58.7 million in dividends during the quarter. It also retired $500 million of senior notes. The board increased the share repurchase authorization by $1 billion, bringing the remaining authorization to $1.4 billion.
Labcorp Updates 2026 Outlook
Management raised full-year enterprise revenue growth guidance to 5.4-6.3% from 5-6.1%. The updated range implies revenues of $14.71-$14.83 billion. Dx growth is now projected at 5.3-6%, while BLS growth is expected at 5.5-6.5%. The Zacks Consensus Estimate for full-year revenues is pegged at $14.71 billion, implying growth of 5.4%.
Adjusted earnings guidance increased to $18.10-$18.55 per share, from the earlier $17.70-$18.35 range. The Zacks Consensus Estimate for the metric is pegged at $18.00.
Free cash flow guidance remained $1.24-$1.36 billion.
Our Take
Labcorp exited the second quarter of 2026 with both earnings and revenues beating estimates. Both segments contributed to the quarter's performance. The company expanded its capabilities in oncology and other high-growth specialty areas, strengthened its position as the partner of choice for health systems, biopharmaceutical companies and regional and local laboratories and advanced the use of technology to improve the experience for consumers and providers. Both gross and operating margins expanded during the quarter, which is highly encouraging.
LH’s Zacks Rank and Other Key Picks
Labcorp currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the broader medical space are Intuitive Surgical (ISRG - Free Report) , Quest Diagnostics (DGX - Free Report) and Medpace (MEDP - Free Report) .
Intuitive Surgical, carrying a Zacks Rank #2, reported second-quarter 2026 adjusted EPS of $2.80, which surpassed the Zacks Consensus Estimate by 12.9%. Revenues of $2.89 billion beat the Zacks Consensus Estimate by 3.1%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ISRG has an earnings yield of 3.1% compared to the industry’s negative 3% yield. The company beat earnings estimates in each of the trailing four quarters, the average surprise being 16.53%.
Quest Diagnostics, carrying a Zacks Rank #2 at present, posted second-quarter 2026 adjusted EPS of $3.12, exceeding the Zacks Consensus Estimate by 11%. Revenues of $3.04 billion topped the Zacks Consensus Estimate by 2.1%.
DGX has an earnings yield of 4.7%, almost in line with the industry’s yield. The company’s earnings outpaced estimates in each of the trailing four quarters, the average surprise being 5.77%.
Medpace, carrying a Zacks Rank #2 at present, posted second-quarter 2026 adjusted EPS of $4.25, exceeding the Zacks Consensus Estimate by 4.17%. Revenues of $707.3 million outperformed the consensus mark by 1.12%.
MEDP has an historical five-year earnings growth rate of 30.5% compared with the industry’s 5.6% growth. In the trailing four quarters, the company delivered an average earnings beat of 10.16%.