Diagnostics giant LabCorp ($LH) is betting sluggish demand and uncertain reimbursement will step all over its 2014 revenue, an announcement that sent the company's shares down nearly 10% in premarket trading.
LabCorp is predicting annual revenue growth of just 2% in 2014 and profit per share around $6.50, numbers well below analyst expectations. The company blames the same headwinds that have dogged it all year: low demand for tests, trouble with reimbursement and a murky idea of how the Affordable Care Act will affect its business.
"We continue to operate in a very difficult environment," CEO David King said in a statement. But the company sees a way forward through its "5-pillar strategy," King said, which entails spending money on share buybacks and new tests, boosting IT capabilities, improving efficiency, being wise with R&D investments and implementing alternative delivery models.
And LabCorp has already made some headway this year, shedding hundreds of jobs and racking up sizable restructuring charges in an effort to slim down and better focus its efforts.
At the same time, the company has been working to diversify its revenue streams, bolstering its clinical trials business and spending $241 million on Medtox to stoke its growing toxicity testing segment.
In 2012, LabCorp pulled in about $5.7 billion in revenue, good for 2.3% growth over 2011. The company is expecting about $5.8 billion for this year, a 3% jump.
- read the statement