Labcorp (LH) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue increased 6.2% year-over-year to $3.22 billion, driven by organic growth and acquisitions, with adjusted EPS of $3.94 and free cash flow from continuing operations of $432.9 million.

• Diagnostics Laboratories accounted for 78% of Q2 revenue, with Biopharma Laboratory Services contributing 22%.

• Strategic acquisitions, including Invitae and BioReference Health assets, are expected to drive future growth, with Invitae anticipated to add $120 million in 2024 revenue.

• LaunchPad cost savings, new test launches in oncology and women's health, and digital solutions contributed to performance.

• Completed holding company reorganization in May 2024 and Fortrea spin-off in June 2023.

Financial highlights

• Adjusted operating income was $480 million (14.9% margin), up from $448 million last year; Q2 net earnings from continuing operations were $205.3 million ($2.43 per diluted share).

• Year-to-date revenue grew 5.4% to $6.40 billion; adjusted EPS for the first half was $7.62.

• Operating cash flow for the first half reached $531.3 million, up 53% year-over-year.

• Capital expenditures were $128 million (4% of revenue); $34 million invested in acquisitions, $60 million in dividends, and $100 million in share repurchases.

• Board increased share repurchase authorization by $1 billion to $1.4 billion.

Outlook and guidance

• 2024 revenue guidance raised to $12.94–$13.07 billion, representing 6.4%-7.5% growth, with Invitae contributing about 1%.

• Diagnostics revenue guidance raised to 6.9%-7.9% growth; Biopharma revenue to grow 3.7%-5%.

• Adjusted EPS guidance is $14.30-$14.90, with midpoint lowered by $0.30-$0.40 due to Invitae dilution.

• Free cash flow guidance is $850 million-$1 billion, including $150 million cash use from Invitae.

• Invitae expected to be dilutive in 2024 but accretive in 2025, with >10% annual top-line growth.