Insurance reimbursement challenges continued to dog diagnostics giant LabCorp ($LH) as it closed out 2013. But the Burlington, NC, company booked some growth in net sales and income, a small dose of positive news after months with hundreds of jobs slashed, a restructuring, new product launches and an acquisition.
LabCorp said it pulled in nearly $1.44 billion in net sales for its 2014 fourth quarter, up 2.3% from $1.41 billion in the 2012 fourth quarter. Net earnings hit $126.7 million--$1.43 per diluted share--versus $120.6 million during the same period in the previous year.
Those gains came from a number of areas. Restructuring charges were drastically lower during Q4 than in previous months. Job and cost cutting led to lower administrative spending, and LabCorp's toxicology business continued to grow. While test volume measured by requisitions grew 5%, revenue per requisition dipped 2.6% year over year.
The company could have done better, it said, save for Medicare reimbursement reductions and problems regarding molecular pathology "payment issues."
"We are pleased with our 2013 performance, especially given the significant payment reductions and the unexpected reimbursement issues related to new molecular pathology codes," LabCorp Chairman and CEO David King said in a statement.
Some things that have helped: LabCorp's $241 million acquisition of Medtox (announced in 2012) boosted its toxicity-testing arm, which is growing. In 2013, LabCorp also launched a series of predictive cancer diagnostic tests focused on BRCA mutations, which has become a hot space in the wake of a U.S. Supreme Court decision over the summer that invalidated some patents held by market leader Myriad Genetics ($MYGN). Myriad is suing LabCorp and other rivals for alleged patent infringement.
For the year, LabCorp booked $5.81 billion in net sales, versus $5.67 billion in 2012. Net earnings for 2013 reached $575.4 million, down from $584.8 million, reflecting the company's challenges with reimbursement, lower demand and restructuring costs. Earnings per diluted share came in at $6.25 for the year.
King noted that LabCorp will continue to follow its "5-pillar strategy," a revamp plan that includes share buybacks, new diagnostic tests, improved IT capabilities, greater efficiency, shrewder investment in R&D and new models for alternative delivery.
Along those lines, LabCorp said it bought back $251.6 million in stock during Q4, and as of Dec. 31, had about $1 billion more remaining in a buyback program announced last February. LabCorp predicts 2% revenue growth in 2014, and adjusted earnings per share between $6.35 and $6.65, excluding the impact of any 2014 share buybacks.
LabCorp's stock priced at $88 in premarket trading on Friday, down more than 2.5%.
- read the earnings release