Labcorp (LH) investor relations material

Third-quarter performance and central lab

• Revenue grew 7%, adjusted EPS increased 14.5%, and margin expanded 60 bps; guidance midpoints rose by $65M for revenue and $0.18 for adjusted EPS.

• Central lab revenue grew 11.3% organically at constant currency in Q3, primarily on underlying demand; some customer study starts were pulled forward.

• Central lab grew ~8% organically at constant currency through Q3 YTD; FY2026 outlook was raised to high-single-digit organic constant-currency revenue growth.

• Book-to-bill was 1.13 for Q3 and 1.10 on a trailing-12-month basis; central lab bookings remained strong and ED bookings improved.

• Management cited strong growth, margin expansion, raised guidance and momentum as support for confidence in the growth outlook heading into 2027.

Diagnostics and specialty testing

• Q3 Diagnostics organic revenue grew 4.4%, including 3.1% volume and 1.3% price mix; organic volume growth was ~2% for the first three quarters.

• Esoteric tests rose from 38% of Diagnostics revenue in Q1 2024 to ~42% in Q2 2026; tests per accession have increased slightly but consistently each quarter since the post-COVID rebound.

• Specialty testing sales were ~$2B; 2022–2025 CAGR ranged from 10% in women’s health to 15% in oncology and autoimmune, and 25% in neurology, with core growth strong excluding acquisitions.

• FY2026 Diagnostics revenue growth outlook was 5.9% at the midpoint; organic growth is expected to lead, with volume slightly ahead of price mix.

• For 2027–2029, organic revenue growth outlook is 3.5%–5.5% total and 2.5%–4.5% in Diagnostics; inorganic contribution is expected at 1.5%–2.5%.

PAMA and operating outlook

• If the current preliminary PAMA design takes effect in 2027, the estimated impact is ~$125M in revenue and AOI before mitigation, tied to traditional Medicare and Medicaid; this is slightly less than 1% of enterprise revenue.

• Most commercial contracts are decoupled from the CMS fee schedule; some third-party contracts could have manageable knock-on effects.

• Annual LaunchPad savings target rises from $100M–$125M to $125M–$150M starting in 2027, with AI, robotics and other technology improvements as key levers.

• Margin expansion outlook remains 75–150 bps by end-2029; PAMA in its current design would make 2027 margin growth more challenging, with multiple levers available to manage the impact.

• RESULTS Act was described as the preferred long-term industry solution; CBO scoring was pending, while efforts to pursue legislative reform would continue if PAMA proceeds.