LabCorp Cuts 2018 Outlook

(RTTNews) - LabCorp (LH) cut its full-year 2018 guidance, citing lower-than-expected volume growth in LabCorp Diagnostics, which the company believes will continue for the remainder of the year.

"We are disappointed with this shortfall in Diagnostics but continue to be confident in our outlook in Covance Drug Development. Looking to next year, we continue to expect modest EPS growth over our updated 2018 earnings," said David P. King, chairman and chief executive officer.

The company noted that the revised outlook was primarily driven by lower-than-expected volume growth in LabCorp Diagnostics, which the Company believes will continue for the remainder of the year. The softness in demand is primarily due to slower growth in referred direct-to-consumer genetic testing, lower referral volume from hospitals and health systems, volume declines from certain managed care plans that will no longer be exclusive to LabCorp in 2019, and adverse weather.

As stated on the third quarter earnings call, the Company has implemented cost reduction initiatives, but these initiatives will be insufficient to maintain the Company's prior outlook in light of the unanticipated volume shortfall.

The company lowered its annual adjusted earnings per share outlook to a range of $10.95 - $11.05 from the prior outlook of $11.25 - $11.45. Analysts polled by Thomson Reuters expect the company to report earnings of $11.35 per share for 2018. Analysts' estimates typically exclude special items.

The company also now projects full-year revenue growth of 9.9 percent to 10.3 percent, compared to the prior guidance of 10.5 percent and 11.0 percent growth.

The company anticipates annual LabCorp Diagnostics revenue growth of 2.1 percent to 2.5 percent, compared to the previous outlook 3.0 percent to 3.5 percent growth.

LabCorp still expects Covance Drug Development revenue growth of 24.0 percent to 26.0 percent in 2018.

The company expects to report its financial results for 2018 and provide guidance for 2019 on its fourth-quarter earnings call, scheduled for February 7, 2019.