Laboratory Corporation of America Holdings (Labcorp), known as LH, is scheduled to report its third-quarter 2023 results on October 26 before the opening of the market. As investors eagerly await the release, let’s take a closer look at what factors could shape Labcorp’s performance this quarter and what the market expects.
Factors at Play
Similar to previous quarters, Labcorp is expected to experience a significant decline in COVID-19 PCR and antibody testing, which might impact its overall sales performance for the quarter. The company forecasts a decline of 85%-89% in testing revenues compared to the same period in 2022.
However, Labcorp’s legacy Diagnostics Laboratories business is anticipated to show improved performance driven by strong base business volumes. Additionally, the company’s lab management agreement with Ascension is likely to contribute to the organic growth of the business.
Labcorp has recently completed the spinoff of its CDCS business, which has brought the growth opportunities of its laboratory businesses into focus. The Biopharma Laboratory Services segment is expected to benefit from Labcorp’s continued leadership in the central lab business.
The company has also expanded its presence in Japan and China, enhancing its central laboratory capabilities and drug development offerings, which could positively impact its operations in the third quarter of 2023.
Labcorp has established strategic collaborations with local and regional health systems to enhance its laboratory services. These partnerships, such as the one with Jefferson Health, are expected to contribute to Labcorp’s revenues this quarter.
Furthermore, Labcorp is capitalizing on innovation and technology to support diagnostic and drug development testing across various disease areas. The company’s suite of precision oncology tests and its acquisition of Personal Genome Diagnostics (PGDx) are likely to gain momentum in the third quarter.
Labcorp also offers its innovative tests online through its digital health platform, Labcorp OnDemand. The company’s advanced e-commerce platform aims to improve consumer engagement and support business growth.
Q3 Estimates
According to the Zacks Consensus Estimate, Labcorp’s third-quarter 2023 revenues are projected to be $2.99 billion, indicating a 17% decline from the year-ago figure. The estimated earnings per share (EPS) for the quarter is $3.50, reflecting a year-over-year decrease of 25.2%.
What Our Model Suggests
Labcorp currently holds a Zacks Rank #3. While stocks with a Zacks Rank #1, 2, or 3 and a positive Earnings ESP have a higher chance of beating estimates, Labcorp’s Earnings ESP is 0.00%. Therefore, it does not meet the criteria for a potential earnings beat.
Stocks Worth Considering
When it comes to medical stocks with the potential to post an earnings beat this quarter, Insulet (PODD), Acadia Pharmaceuticals (ACAD), and Dentsply Sirona (XRAY) are worth considering. Insulet has an Earnings ESP of +6.61% and a Zacks Rank #2, while Acadia Pharmaceuticals has an Earnings ESP of +6.76% and Dentsply Sirona has an Earnings ESP of +1.85%, both with a Zacks Rank #2.
These stocks have the right combination of elements to potentially deliver positive earnings surprises when they report their respective quarterly results.
As Labcorp prepares to announce its Q3 earnings, investors will be closely watching how the company performed amid the ongoing challenges and opportunities in the healthcare industry. Stay tuned for the latest updates on Labcorp’s financials.
