Labcorp (LH) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue rose 7.4% year-over-year to $3.28 billion, driven by strong Diagnostics and Biopharma growth, organic expansion, and acquisitions including Invitae and BioReference assets.

• Adjusted EPS for Q3 2024 was $3.50, up 4% year-over-year, while reported diluted EPS declined to $2.00 from $2.11.

• Diagnostics Laboratories contributed about 78% and Biopharma Laboratory Services 22% of Q3 revenue.

• Strategic acquisitions and lab management agreements expanded capabilities and geographic reach.

• LaunchPad cost-saving initiatives are on track, targeting $100–$125 million in annual savings for 2024.

Financial highlights

• Adjusted operating income for Q3 2024 was $441 million (13.4% margin), up from $424 million last year; operating income was $254.1 million (7.7% margin).

• Free cash flow for Q3 was $161.5 million; year-to-date free cash flow from continuing operations was $430.8 million, up 28.1% year-over-year.

• Cash and cash equivalents at quarter end were $1.52 billion; total debt was $6.8 billion, with leverage at 2.4x net debt to trailing twelve months adjusted EBITDA.

• Capital expenditures for the first nine months of 2024 totaled $377.8 million, up 31.9% year-over-year.

• Net earnings from continuing operations were $170 million, or $2.00 per diluted share.

Outlook and guidance

• 2024 revenue expected to grow 6.6%-7.3% year-over-year, with Diagnostics up 7.2%-7.8% and Biopharma up 4.7%-5.6%.

• Adjusted EPS guidance for 2024 is $14.30–$14.70, midpoint down $0.10 due to weather.

• Free cash flow guidance for 2024 is $850 million–$980 million.

• Early Development expected to return to year-over-year growth in Q4.

• Long-term organic revenue growth guidance: Diagnostics 2.5%-4.5%, Biopharma 3.5%-5.5%, with inorganic growth raised to 1.5%-2.5%.