(Reuters) – Labcorp beat Wall Street expectations for second-quarter profit and revenue on Thursday on strong demand for its diagnostic tests, and raised its sales growth forecast for the year.
The lab operator now sees annual sales growth between 6.4% and 7.5%, up from its previous range of 4.8% to 6.4%, boosted by demand for diagnostic health tests in the United States that has grown in recent quarters due to a post-pandemic recovery.
The increased demand for medical care has benefited U.S. lab testing companies, including rival Quest Diagnostics, which raised its 2024 profit and revenue forecasts betting on strong demand for diagnostic kits.
Labcorp, however, lowered its annual adjusted profit forecast to $14.30 to $14.90 per share, from $14.45 to $15.35 per share previously, due to charges related to its $239 million acquisition of bankrupt genetic test maker Invitae.
Analysts’ on average expect profit for the period to be $14.82 per share, according to LSEG data.
Labcorp also lowered the upper-end of the sales growth forecast for its biopharma laboratory services segment, which helps biotechs conduct pre-clinical and clinical drug development, to 5% from 5.7% keeping the lower end at 3.7%.
Drug development tool makers have seen sluggish demand as rising borrowing costs have crippled several early-stage biotech firms
Its diagnostics unit – the biggest unit by revenue – generated sales of $2.52 billion in the quarter ended June 30, up 7.9% from a year ago.
Sales from Labcorp’s biopharma laboratory services segment, rose 1.1% to $707 million during the reported quarter.
Burlington, North Carolina-based Labcorp’s total sales came in at $3.22 billion, topping estimates of $3.19 billion.
On an adjusted basis, Labcorp reported a second-quarter profit of $3.94 per share, beating estimates of $3.78 per share.
(Reporting by Puyaan Singh in Bengaluru; Editing by Shailesh Kuber)
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