LabCorp, still riding the COVID-19 testing wave, exceeds its own expectations with $4.2B Q1 revenue

The “new normal” of 2021 represents a delicate balance, where businesses are resuming operations amid rising vaccination rates, while the COVID-19 pandemic remains very much in play. In this strange limbo, LabCorp, for one, is thriving.

The lab testing giant reported first-quarter earnings that so surpassed its own estimates—and those of external analysts—that it bumped up its predictions for the rest of the year.

The higher-than-expected results were driven not only by LabCorp’s molecular and antibody tests for COVID-19, but also by steady increases in biopharmaceutical companies’ drug development efforts and the returning demand for its non-COVID diagnostics, Chairman and CEO Adam Schechter said in a statement.

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In total, LabCorp saw its revenues jump to $4.16 billion for the first three months of the year, a nearly 50% increase compared to 2020's initial quarter. The company’s net earnings, meanwhile, registered a billion-dollar annual increase that brought it firmly out of the red, from last year’s $317 million loss to approximately $770 million in earnings.

As a result, LabCorp upped its outlook for the remainder of 2021. The company is now expecting total annual revenues to increase by 2% to 6.5%, compared to its previous predictions that revenues would fall somewhere between a 1% loss and a 4.5% increase.

The vast majority of the quarter’s revenues were driven by organic growth, one-third of which came from COVID testing alone. Within just the company’s diagnostics segment, COVID testing made up more than half of the gains, which contributed to an increase of 62%.

That growth reflects LabCorp’s efforts throughout the quarter to expand the availability and scope of its coronavirus offerings. Earlier this year, LabCorp added DiaSorin’s high-sensitivity antigen test to its diagnostic menu and was tapped by the Centers for Disease Control and Prevention to launch a large genomic study to track new mutations of the coronavirus as they spread to the U.S.

And in February, the company partnered with Walgreens to begin offering its Pixel at-home PCR test over the counter at up to 6,000 the chain’s locations around the U.S.

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But LabCorp hasn’t put all its eggs in the COVID-19 basket. Even as Schechter noted in a conference call with investors that “our fight against this virus is not over,” he added that LabCorp’s COVID testing volume has declined, in line with a national trend linked to increased vaccinations.

Indeed, while LabCorp improved its annual outlook across the entire business, its expectations for the COVID testing business remained stagnant, with an expected revenue loss of 35% to 50% across 2021.

To maintain the upward trajectory of the first-quarter results—and meet its own newly updated financial goals—LabCorp will therefore double down on its work outside of the realm of COVID to develop new testing solutions and assist biopharmaceutical partners in bringing new drugs to clinical trials, Schechter said.

That work has already begun: In the first quarter of the year, LabCorp forged partnerships with several insurance providers and the Department of Defense to make lab testing more available to patients and expanded its existing collaboration with PathAI to use AI algorithms to accelerate LabCorp-managed clinical trials.