|LabCorp CEO David King|
Diagnostics giant LabCorp ($LH) posted another quarterly slip up, as declining reimbursements and bad weather dragged down its long-running turnaround effort.
The Burlington, NC, company cleared $1.4 billion on the quarter, a decrease of about 1% from the same period last year that LabCorp blames in part on inclement weather. But the company's biggest challenge is far more permanent: Thanks to Medicare payment reductions, revenue per requisition fell 3.3% on the quarter, dragging down net gains despite a 2.6% increase in test volume.
Net earnings fell about 23% to $113.5 million due to a 52% leap in cost of sales, and LabCorp took a $7.6 million restructuring charge on the quarter.
Meanwhile, the company is working through what CEO David King said would be a "difficult" year, sticking to its 5-pillar strategy of spending money on share buybacks and new tests, boosting IT capabilities, improving efficiency, being wise with R&D investments and implementing alternative delivery models.
LabCorp is expecting annual revenue growth of 2%, good for about $5.9 million, and King said the Q1's $1.4 billion is an encouraging first step.
"We delivered a quarter with solid volume growth and strong earnings despite the greatest weather impact in our company's history," King said in a statement. "Our performance demonstrates the soundness of our 5-pillar strategy, which we continue to execute across our business."
- read the results