We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will LabCorp's (LH) Food Solution Divestment Upset Sales?
Read MoreHide Full Article
On Sep 25, we issued an updated research report on LabCorp (LH - Free Report) . The stock carries a Zacks Rank #4 (Sell).
In the past three months, shares of LabCorp have underperformed its industry. The stock has lost 7.5% against the industry’s 4.4% increase. The company’s narrowed 2018 guidance has also been discouraging. Per the company, the latest expectations include the previously-announced divestiture of the Food Solutions business. The current economic uncertainty resulting in a challenging reimbursement scenario for testing labs as well as utilization weaknesses loom large on LabCorp.
This Burlington, NC-based healthcare diagnostics company, providing comprehensive clinical laboratory services and an end-to-end drug development support, has been grappling with multiple issues of late. Economic uncertainties including a challenging volume environment for testing laboratories and softness in utilization pose as headwinds for LabCorp.
Changes in governmental regulations left a significant impact on LabCorp’s operations. Particularly, in the past couple of years, the company faced several reimbursement woes hurting its revenues. The company is concerned about the CMS' (Centers for Medicare & Medicaid Services) latest Medicare reimbursement reduction following the implementation of Protecting Access to Medicare Act (PAMA). Notably, first-quarter 2018 opened operating under the clinical IP schedule.
The above development has come as a huge blow to the testing laboratories. Per LabCorp’s earlier statement, the new PAMA rates published by CMS do not reflect the intent of Congress when it directed CMS to enforce market-based Medicare rates for lab testing. We are quite apprehensive about this entire scenario. With latest clinical lab fee schedule getting implemented without any amendment in favor of the testing laboratories, the continuation of LaunchPad, the projected growth at Covance, the benefits from Chiltern, PAML and Mount Sinai acquisitions plus the Covance LaunchPad process will all be offset by PAMA reductions.
On a positive note, LabCorp's Diagnostics business remains strong on the back of improving price, mix, acquisition and a favorable foreign exchange.
Under Covance Drug Development business, LabCorp gears up to expand the company’s range of diagnostic offerings and create a new industry leader in both laboratory testing and CRO spaces, which will act as a foremost provider of medical testing besides operating as a premier full-service drug development organization.
At the end of the second quarter, the company stays on track to deliver cost synergies worth $30 million from the integration of Chiltern within three years of its acquisition.
This apart, the company’s latest investment in building a central delivery center in Bangalore, India, has been considered an important milestone toward extending its global service delivery model. In addition, the company has progressed with the Covance LaunchPad initiative in the same period.
Key Picks
Some better-ranked stocks in the broader medical space are Intuitive Surgical (ISRG - Free Report) , Amedisys, Inc. (AMED - Free Report) and Masimo Corporation (MASI - Free Report) .
Intuitive Surgical’s expected long-term earnings growth rate is 14.7%. The stock currently carries a Zacks Rank #2 (Buy).
Masimo’s expected long-term earnings growth rate is 14.8%. The stock has a Zacks Rank of 2 at present.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
Image: Bigstock
Will LabCorp's (LH) Food Solution Divestment Upset Sales?
On Sep 25, we issued an updated research report on LabCorp (LH - Free Report) . The stock carries a Zacks Rank #4 (Sell).
In the past three months, shares of LabCorp have underperformed its industry. The stock has lost 7.5% against the industry’s 4.4% increase. The company’s narrowed 2018 guidance has also been discouraging. Per the company, the latest expectations include the previously-announced divestiture of the Food Solutions business. The current economic uncertainty resulting in a challenging reimbursement scenario for testing labs as well as utilization weaknesses loom large on LabCorp.
This Burlington, NC-based healthcare diagnostics company, providing comprehensive clinical laboratory services and an end-to-end drug development support, has been grappling with multiple issues of late. Economic uncertainties including a challenging volume environment for testing laboratories and softness in utilization pose as headwinds for LabCorp.
Laboratory Corporation of America Holdings Price
Laboratory Corporation of America Holdings Price | Laboratory Corporation of America Holdings Quote
Changes in governmental regulations left a significant impact on LabCorp’s operations. Particularly, in the past couple of years, the company faced several reimbursement woes hurting its revenues. The company is concerned about the CMS' (Centers for Medicare & Medicaid Services) latest Medicare reimbursement reduction following the implementation of Protecting Access to Medicare Act (PAMA). Notably, first-quarter 2018 opened operating under the clinical IP schedule.
The above development has come as a huge blow to the testing laboratories. Per LabCorp’s earlier statement, the new PAMA rates published by CMS do not reflect the intent of Congress when it directed CMS to enforce market-based Medicare rates for lab testing. We are quite apprehensive about this entire scenario. With latest clinical lab fee schedule getting implemented without any amendment in favor of the testing laboratories, the continuation of LaunchPad, the projected growth at Covance, the benefits from Chiltern, PAML and Mount Sinai acquisitions plus the Covance LaunchPad process will all be offset by PAMA reductions.
On a positive note, LabCorp's Diagnostics business remains strong on the back of improving price, mix, acquisition and a favorable foreign exchange.
Under Covance Drug Development business, LabCorp gears up to expand the company’s range of diagnostic offerings and create a new industry leader in both laboratory testing and CRO spaces, which will act as a foremost provider of medical testing besides operating as a premier full-service drug development organization.
At the end of the second quarter, the company stays on track to deliver cost synergies worth $30 million from the integration of Chiltern within three years of its acquisition.
This apart, the company’s latest investment in building a central delivery center in Bangalore, India, has been considered an important milestone toward extending its global service delivery model. In addition, the company has progressed with the Covance LaunchPad initiative in the same period.
Key Picks
Some better-ranked stocks in the broader medical space are Intuitive Surgical (ISRG - Free Report) , Amedisys, Inc. (AMED - Free Report) and Masimo Corporation (MASI - Free Report) .
Intuitive Surgical’s expected long-term earnings growth rate is 14.7%. The stock currently carries a Zacks Rank #2 (Buy).
Amedisys’ expected long-term growth rate is 19.4%. The stock sports a Zacks Rank #1 (Strong Buy) at the moment. You can see the complete list of today’s Zacks #1 Rank stocks here.
Masimo’s expected long-term earnings growth rate is 14.8%. The stock has a Zacks Rank of 2 at present.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>