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Labcorp Holdings (LH)
NYSE:LH
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Labcorp Holdings
(NYSE:LH)73Outperform
Positive Factors
Financial Performance
Labcorp Holdings posted solid fourth-quarter results, surpassing expectations with sales of $3.33 billion and adjusted EPS of $3.45.
Growth Projections
The company initiated a full-year 2025 sales guide at the midpoint ahead of expectations, indicating strong future growth.
Negative Factors
Backlog and Foreign Exchange
Backlog decreased ~3.2% due to foreign exchange.
Labcorp Holdings (LH) vs. S&P 500 (SPY)
Market Cap
$21.01B
Dividend Yield1.15%
Average Volume (3M)585.79K
Price to Earnings (P/E)28.4
Beta (1Y)0.50
Revenue Growth0.83%
EPS Growth89.55%
CountryUS
Employees67,000
SectorHealthcare
Sector Strength74
IndustryMedical Diagnostics & Screening
Share Statistics
EPS (TTM)8.84
Shares Outstanding83,700,000
10 Day Avg. Volume509,941
30 Day Avg. Volume585,787
Financial Highlights & Ratios
PEG Ratio0.32
Price to Book (P/B)N/A
Price to Sales (P/S)1.62
Price to Cash Flow (P/CF)6.80
P/FCF Ratio7.40
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
$278.85Price Target Upside8.58% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering14
Labcorp Holdings Business Overview & Revenue Model
Company DescriptionLabcorp Holdings (LH) is a leading global life sciences company that provides comprehensive clinical laboratory and end-to-end drug development services. Operating in the healthcare sector, Labcorp offers a wide range of diagnostic solutions, including routine blood tests, genomic testing, and specialty testing services. The company serves healthcare providers, pharmaceutical companies, and other entities, contributing to medical research and clinical trial development.
How the Company Makes MoneyLabcorp makes money through its two main business segments: Labcorp Diagnostics and Labcorp Drug Development. Labcorp Diagnostics generates revenue by offering a variety of clinical laboratory testing services, including routine testing, specialty testing, and genetic testing, to healthcare providers, patients, and managed care organizations. This segment is supported by a robust network of laboratories and patient service centers. Labcorp Drug Development, formerly known as Covance, provides contract research services to pharmaceutical and biotechnology companies. It supports drug development from early-stage research to clinical trials and regulatory approval, generating revenue through service contracts and partnerships with pharmaceutical firms. Additionally, Labcorp collaborates with hospitals, health systems, and large healthcare organizations, leveraging its extensive infrastructure and expertise to drive growth in both its diagnostic and drug development services.
Labcorp Holdings Financial Statement Overview
Summary
Laboratory Holdings demonstrates moderate financial health with stable profitability and cash flow generation. While the company shows resilience in revenue and cash flow, improvements in profitability margins and return on equity are necessary. Managing leverage remains crucial for maintaining financial stability in the medical diagnostics industry.Income Statement
The TTM revenue of $12.71 billion shows a moderate growth of 4.5% compared to the previous year, and the gross profit margin is consistent at 26.5%. The net profit margin stands at 3.4% for the TTM, which is slightly below industry expectations. EBIT and EBITDA margins are 8.8% and 11.1% respectively, indicating stable but modest profitability. The decline in revenue compared to 2021 and 2020 suggests some market challenges.70
Positive
Balance Sheet
The debt-to-equity ratio is 0.94, reflecting a balanced leverage position. The return on equity is low at 5.3%, indicating limited returns on shareholder investments. However, the equity ratio of 43.9% suggests a solid capital structure with adequate shareholder equity relative to total assets. Continued leverage management is necessary to mitigate risks associated with debt.65
Positive
Cash Flow
The operating cash flow to net income ratio is strong, indicating good cash generation relative to earnings. Despite a slight decrease in free cash flow, the company maintains a stable financial position with a free cash flow to net income ratio of 1.94. Efficient cash management and operational efficiency are evident, although capital expenditure may require careful monitoring.75
Positive
| Breakdown | |||||
| TTM | Dec 2023 | Dec 2022 | Dec 2021 | Dec 2020 | Dec 2019 |
|---|---|---|---|---|---|
| Income Statement | Total Revenue | ||||
| 12.71B | 12.16B | 14.88B | 16.12B | 13.98B | 11.55B | Gross Profit |
| 3.37B | 3.36B | 4.39B | 5.62B | 4.95B | 3.25B | EBIT |
| 1.12B | 725.60M | 1.77B | 3.26B | 2.45B | 1.33B | EBITDA |
| 1.41B | 1.35B | 1.95B | 4.28B | 3.25B | 2.12B | Net Income Common Stockholders |
| 435.50M | 418.00M | 1.28B | 2.38B | 1.56B | 823.80M |
| Balance Sheet | Cash, Cash Equivalents and Short-Term Investments | ||||
| 536.80M | 536.80M | 430.00M | 1.47B | 1.32B | 337.50M | Total Assets |
| 16.73B | 16.73B | 20.16B | 20.39B | 20.07B | 18.02B | Total Debt |
| 5.95B | 5.95B | 6.29B | 6.34B | 6.76B | 7.08B | Net Debt |
| 5.42B | 5.42B | 5.86B | 4.87B | 5.44B | 6.75B | Total Liabilities |
| 8.83B | 8.83B | 10.06B | 10.11B | 10.71B | 10.45B | Stockholders Equity |
| 7.88B | 7.88B | 10.10B | 10.27B | 9.36B | 7.57B |
| Cash Flow | Free Cash Flow | ||||
| 843.20M | 874.10M | 1.47B | 2.65B | 1.75B | 1.04B | Operating Cash Flow |
| 1.39B | 1.33B | 1.96B | 3.11B | 2.14B | 1.44B | Investing Cash Flow |
| -1.49B | -1.17B | -1.65B | -884.60M | -643.20M | -1.28B | Financing Cash Flow |
| 880.10M | -59.30M | -1.32B | -2.07B | -517.40M | -252.70M |
Labcorp Holdings Technical Analysis
Positive
256.81
Price Trends
240.84
Positive
235.27
Positive
223.70
Positive
Market Momentum
3.21
Negative
67.76
Neutral
83.41
Negative
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For LH, the sentiment is Positive. The current price of 256.81 is above the 20-day moving average (MA) of 248.06, above the 50-day MA of 240.84, and above the 200-day MA of 223.70, indicating a bullish trend. The MACD of 3.21 indicates Negative momentum. The RSI at 67.76 is Neutral, neither overbought nor oversold. The STOCH value of 83.41 is Negative, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for LH.
Labcorp Holdings Risk Analysis
Labcorp Holdings disclosed 45 risk factors in its most recent earnings report. Labcorp Holdings reported the most risks in the “Legal & Regulatory” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Labcorp Holdings Peers Comparison
Overall Rating
UnderperformOutperform
Sector (49)
Financial Indicators
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
81 Outperform | $19.19B | 22.56 | 12.85% | 1.70% | 6.70% | 2.56% | |
73 Outperform | $21.01B | 28.40 | 9.26% | 1.15% | 0.83% | 89.55% | |
70 Outperform | $194.88B | 31.23 | 12.78% | 0.30% | 0.05% | 6.87% | |
68 Neutral | $35.08B | 28.28 | 20.89% | 0.76% | -3.00% | 3.67% | |
58 Neutral | $7.04B | 61.36 | 6.35% | 0.43% | 13.56% | -73.92% | |
49 Neutral | $7.05B | 0.34 | -55.09% | 2.46% | 25.27% | -3.43% | |
48 Neutral | $7.11B | ― | -28.07% | ― | -3.92% | -202.80% |
* Healthcare Sector Average
Performance Comparison
LH
Labcorp Holdings
256.81
43.37
20.32%
A
Agilent
123.06
-20.30
-14.16%
BIO
Bio-Rad Laboratories
250.50
-80.44
-24.31%
BRKR
Bruker
46.42
-43.54
-48.40%
DGX
Quest Diagnostics
175.01
53.07
43.52%
TMO
Thermo Fisher
516.57
-66.45
-11.40%
Labcorp Holdings Earnings Call Summary
Earnings Call Date: Feb 6, 2025 | % Change Since: 3.02% | Next Earnings Date: Apr 24, 2025
Earnings Call Sentiment Positive
The earnings call reflects a positive sentiment with strong revenue growth across diagnostics and biopharma segments, successful acquisitions, and promising guidance for 2025. However, there are concerns about margin decline due to acquisitions and higher personnel costs.Highlights
Revenue Growth
Revenue for the quarter was $3.3 billion, an increase of 10% compared to the fourth quarter of 2023. Diagnostics and biopharma revenue each grew by approximately 10% in the quarter.
Acquisitions and Strategic Collaborations
Completed acquisitions of select assets and molecular testing locations of Lab Works and select outreach laboratory services for Ballad Health. Announced a strategic collaboration with Inspira Health.
Adjusted EPS Increase
Adjusted EPS of $3.45 was up 5% year-over-year.
Strong Free Cash Flow
Free cash flow from continuing operations was $665 million for the quarter.
Launch of New Diagnostic Tests
Introduced new diagnostics, including a multiple sclerosis monitoring profile and the first companion diagnostic assay to identify gastric cancer patients eligible for targeted treatment.
Expansion in Genetic Testing
Expanded leadership in genetic testing solutions through the acquisition of select assets of Invitae.
Promising 2025 Guidance
Expecting enterprise revenue growth of 6.7% to 8% and improving margins across both diagnostics and biopharma. Anticipated adjusted EPS range of $15.60 to $16.40, representing a midpoint growth rate of 10%.
Lowlights
Margin Decline
Enterprise margins were down 40 basis points due to the expected impact of the Invitae acquisition.
Higher Personnel Costs
Increase in adjusted operating income was partially offset by higher personnel costs.
Impact of Weather and Days
Diagnostics margins were negatively affected by weather and days, along with the impact of the Invitae acquisition.
Currency Headwinds
Biopharma revenue guidance includes a headwind from foreign currency translation of 140 basis points.
Company Guidance
During Labcorp's fourth quarter 2024 conference call, the company provided guidance for 2025, projecting enterprise revenue growth between 6.7% and 8%, with improving margins across both diagnostics and biopharma segments. The adjusted EPS is expected to range from $15.60 to $16.40, representing an implied midpoint growth rate of 10%. Labcorp anticipates free cash flow growth in line with earnings, estimating a range of $1.1 billion to $1.25 billion. The company also outlined expectations for diagnostics revenue to grow by 6.5% to 7.7% and biopharma revenue by 3% to 5%, despite a 140-basis-point headwind from foreign currency translation in the biopharma sector. The guidance assumes a continued focus on acquisitions, share repurchases, and dividends, with anticipated capital allocation adjustments throughout the year.Labcorp Holdings Corporate Events
Business Operations and Strategy
Labcorp to Participate in J.P. Morgan Healthcare Conference
Neutral
Jan 10, 2025
Labcorp announced that its executive management team will participate in a fireside chat at the 43rd Annual J.P. Morgan Healthcare Conference on January 14, 2025. This participation highlights Labcorp’s ongoing engagement with key industry events, signaling its commitment to maintaining a strong presence in the healthcare sector and providing insights into its strategic direction for stakeholders.
Dividends
Labcorp Declares Quarterly Cash Dividend for 2025
Positive
Jan 10, 2025
Labcorp Holdings Inc. announced that its Board of Directors has declared a quarterly cash dividend of $0.72 per share of common stock, payable on March 12, 2025, to stockholders of record as of February 27, 2025. This decision reflects the company’s strong financial standing and commitment to delivering value to its shareholders while maintaining its position as a leader in the laboratory services industry.
Financial Disclosures
Labcorp to Announce Q4 2024 Financial Results
Neutral
Jan 8, 2025
Labcorp Holdings Inc. announced that it will release its financial results for the fourth quarter of 2024 on February 6, 2025, before the market opens. The company will host a conference call and webcast to discuss these results, providing stakeholders with insights into its financial performance and strategic positioning.
Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.