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LH

LABCORP HOLDINGS INC. (LH)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue grew 5.3% year over year to $3.35B; adjusted EPS was $3.84 (up ~4% YoY). Enterprise adjusted operating margin was 14.0% and GAAP operating margin 9.7% .
  • Versus consensus, adjusted EPS beat by ~$0.10, while revenue was modestly below; EBITDA was below Street due to Invitae and weather impacts. Management raised the midpoint of FY25 adjusted EPS guidance by $0.05 and reaffirmed revenue and free cash flow ranges . Estimates are noted with an asterisk; Values retrieved from S&P Global*.
  • Segment performance: Diagnostics grew 6% with volume +3% and price/mix +3%; BLS revenue rose 1.5% with margins +80 bps and trailing 12-month book-to-bill of 1.07 and backlog at $8.18B .
  • Potential stock reaction catalysts: the EPS beat and guidance midpoint raise, strong BLS backlog and book-to-bill, and expanding specialty testing launches (Plasma Complete MRD, pTau-217/Beta Amyloid 42 ratio). Headwinds: weather and one fewer revenue day, personnel cost inflation, and Invitae’s near-term margin dilution .

What Went Well and What Went Wrong

What Went Well

  • Diagnostics volume rebounded in March after weather impacts; organic growth would have been ~3.5% excluding weather/day effects. “We saw a strong rebound in volume in March… [and] if you just adjusted for weather and the revenue day, [organic] would have been 3.5%” .
  • BLS momentum: quarterly book-to-bill 1.13; TTM book-to-bill 1.07; margin +80 bps on organic demand and LaunchPad savings. “Margin for BLS was strong, improving 80 basis points and the quarter book-to-bill was 1.13 with a trailing 12-month of 1.07” .
  • Technology and AI initiatives: Diagnostic Assistant recognized as a 2025 Innovators Award; launch of eClaim Assist to improve billing efficiency .
  • New specialty tests: Labcorp Plasma Complete liquid biopsy for oncology and pTau-217/Beta Amyloid 42 Ratio blood test aiding Alzheimer’s diagnosis broadened specialty menu .

What Went Wrong

  • Enterprise adjusted operating margin declined 20 bps YoY (14.0% vs 14.3%) due to Invitae and weather; Diagnostics AOI margin down 60 bps on same factors .
  • Free cash flow usage in Q1 (-$107.5M) and modest operating cash flow ($18.5M) reflect typical seasonality and working capital timing .
  • Personnel costs (inflation 3–3.5%) pressured margins; management highlighted higher personnel costs as a headwind despite LaunchPad offsets .
  • Revenue modestly trailed consensus and EBITDA missed, reflecting mix and integration effects; CFO commentary suggests Invitae and weather were principal drags . Estimates are noted with an asterisk; Values retrieved from S&P Global*.

Financial Results

Consolidated performance vs prior periods

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$3.282 $3.329 $3.345
Diluted EPS ($)$2.00 $1.70 $2.52
Adjusted EPS ($)$3.50 $3.45 $3.84
Operating Income ($USD Millions)$254.1 $216.5 $326.0
Operating Margin (%)7.7% 6.5% 9.7%
Adjusted Operating Income ($USD Millions)$441.1 $423.2 $469.0
Adjusted Operating Margin (%)13.4% 12.7% 14.0%

Results vs Wall Street consensus (Q1 2025)

MetricConsensus*Actual
Revenue ($USD Billions)$3.399*$3.345
Adjusted EPS ($)$3.735*$3.84
EBITDA ($USD Millions)$577.1*$499.2*

Values with an asterisk are retrieved from S&P Global*.

Segment breakdown

MetricQ3 2024Q4 2024Q1 2025
Diagnostics Revenue ($USD Billions)$2.554 $2.586 $2.630
Diagnostics Adjusted Operating Income ($USD Millions)$387.4 $359.5 $427.5
Diagnostics Adjusted Operating Margin (%)15.2% 13.9% 16.3%
BLS Revenue ($USD Millions)$737.7 $767.0 $721.3
BLS Adjusted Operating Income ($USD Millions)$120.9 $130.8 $106.9
BLS Adjusted Operating Margin (%)16.4% 17.0% 14.8%

KPIs

Diagnostics volume and price/mix (Q1 2025)

KPIQ1 2025
Requisition Volume Delta (YoY)3.0%
Organic Volume Delta0.9% (includes negative impact from weather and one fewer revenue day)
Price/Mix Delta (YoY)3.0%
Organic Price/Mix Delta0.7%
Acquisitions – Volume/Price Mix Contribution+2.1% / +2.6%
FX impact (Price/Mix)-0.3%

BLS backlog, conversion and book-to-bill

KPIQ3 2024Q4 2024Q1 2025
Backlog ($USD Billions)$8.14 $7.99 $8.18
Next 12 Months Backlog Conversion ($USD Billions)$2.59 $2.53 $2.56
TTM Book-to-Bill1.02 1.00 1.07

Guidance Changes

MetricPeriodPrevious Guidance (Q4 2024)Current Guidance (Q1 2025)Change
Labcorp Enterprise Revenue Growth (%)FY 20256.7%–8.0% 6.7%–8.0% Maintained
Diagnostics Revenue Growth (%)FY 20256.5%–7.7% 6.5%–7.7% Maintained
BLS Revenue Growth (%)FY 20253.0%–5.0% (FX impact -1.4%) 3.0%–5.0% (FX impact -0.3%) Maintained; FX headwind reduced
Adjusted EPS ($)FY 2025$15.60–$16.40 $15.70–$16.40 Midpoint raised by $0.05
Free Cash Flow ($USD Billions)FY 2025$1.10–$1.25 $1.10–$1.25 Maintained
Enterprise FX Impact (%)FY 2025(0.5%) (0.2%) Headwind reduced

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024 and Q4 2024)Current Period (Q1 2025)Trend
AI/Technology initiativesEmphasis on LaunchPad savings; adoption of Diagnostic Assistant; Global Trial Connect enhancements Diagnostic Assistant received Innovators Award; launched eClaim Assist to improve billing efficiency Strengthening; execution visible
Tariffs/Supply chainPlanning for scenarios; wage inflation offset by LaunchPad; debt prefunding Built duplicative, flexible supply chains; tariffs embedded in guidance; majority spend with secured pricing; U.S. vendors Prepared; manageable headwinds
Regulatory (LDT/PAMA)PAMA delay; base case impact in 2026 included in LRP Favorable court decision on LDT rule; base case assumes PAMA from Jan 2026 (~$100M impact) LDT risk abated; PAMA still assumed
Product performance (Invitae)Invitae integration on track; dilutive near term; accretive in 2025; ~10% revenue growth Still on track; accretive in 2H25; Q1 dilution + weather reduced margins Improving cadence through 2025
BLS demand/book-to-billTTM BTB ~1.00–1.02; early development softness in 2024 but improving Quarterly BTB 1.13; TTM 1.07; backlog $8.18B; monitoring trial timing vs regulatory feedback Improving; cautious on timing
Managed care & pricingNeutral to slightly positive payer dynamics; nonexclusive preference Pricing largely flat; focus on volume; strong access and constructive payer dialogues Stable/constructive

Management Commentary

  • “Labcorp delivered solid performance in the first quarter of 2025… we continue to progress our pipeline of attractive acquisitions and partnerships and further expand our test menu in four strategic areas, including oncology, women’s health, autoimmune disease and neurology” — Adam Schechter .
  • “We have developed duplicative, flexible supply chains… there will be some impact from the tariffs, but our guidance range includes what we think are the most likely scenarios” — Adam Schechter .
  • “Adjusted operating income… primarily due to organic demand and LaunchPad savings, partially offset by higher personnel costs. The 20 basis point decline in adjusted operating margin included headwinds from Invitae and the weather; excluding which enterprise margins would have been up 60 basis points” — Julia Wang .
  • “Our quarterly book-to-bill was strong at 1.13, bringing the trailing 12-month book-to-bill to 1.07… we ended the quarter with a backlog of $8.2 billion” — Julia Wang .

Non-GAAP adjustments included amortization, restructuring, acquisition/disposition-related costs, LaunchPad costs, TSA reimbursements, and venture fund losses; reconciliations provided in the press release and 8-K .

Q&A Highlights

  • Tariffs embedded in guidance; impact manageable due to secured pricing (80% of spend), U.S. vendors, pass-throughs in kits/logistics; flexible supply chains in place .
  • Regulatory: favorable LDT court ruling; PAMA base case assumed January 2026 with ~$100M full-year impact, plans built to succeed despite this .
  • Invitae: expected to be accretive in 2H25; near-term margin headwind shifting to tailwind as integration and cost actions progress .
  • BLS pipeline: quarterly book-to-bill 1.13; monitoring potential timing delays from regulatory feedback; one large COVID trial cancellation offset by overall bookings strength .
  • Pricing/managed care: pricing relatively flat in Diagnostics; constructive payer dialogues; focus on volume growth and specialty/esoteric mix .

Note: CFO once referenced diluted EPS of $2.62; the press release reports $2.52 diluted EPS — we anchor to press release and 8-K as authoritative .

Estimates Context

  • Q1 2025: Adjusted EPS beat (Actual $3.84 vs $3.735*); revenue slight miss (Actual $3.345B vs $3.399B*); EBITDA under consensus (Actual $499.2M* vs $577.1M*) — driven by Invitae and weather headwinds even as LaunchPad savings and price/mix supported margins .
  • Estimate dispersion: EPS 15 estimates; revenue 13 estimates* — modest breadth [GetEstimates].
  • Outlook: Midpoint EPS raised by $0.05 (to $16.05 equivalent midpoint), FX headwinds reduced vs prior guide, suggesting upward bias to EPS models even if revenue ranges maintained .

Values with an asterisk are retrieved from S&P Global*.

Key Takeaways for Investors

  • Quality of beat: EPS outperformance amid slight revenue softness reflects execution on price/mix, LaunchPad savings, and Diagnostics resilience; near-term EBITDA underperformance ties to integration/weather — watch for margin cadence improvement in Q2–Q4 as Invitae turns accretive .
  • Guidance credibility: Midpoint EPS raise, FX headwind reduction, and reaffirmed revenue/FCF suggest confidence; both segments expected to expand margins in FY25 .
  • BLS momentum: Book-to-bill >1 and rising backlog underpin mid-single-digit constant currency growth; monitor regulatory timing risks for trial starts (potentially influences intra-year phasing rather than demand) .
  • Diagnostics drivers: Volume growth, specialty/esoteric mix (oncology, women’s health, neurology, autoimmune), and payer access are tailwinds; pricing flat with constructive payer dynamics .
  • Tariffs/regulatory: Embedded tariff scenarios and favorable LDT ruling reduce risk; PAMA remains a 2026 planning headwind — keep an eye on legislative progress and potential delays .
  • Cash flow seasonality: Q1 is the trough for FCF; expect H2 weighting toward FCF realization; capital allocation continues across acquisitions, dividends ($0.72 declared), and buybacks .
  • Trading implications: Near-term positive bias from EPS beat and guidance midpoint raise; medium-term thesis supported by margin expansion trajectory, specialty test launches, and BLS backlog conversion, tempered by integration execution and macro/regulatory timing watchpoints .

Appendix: Additional Relevant Press Releases (Q1 2025)

  • Quarterly dividend of $0.72 per share (payable June 11, 2025; record May 29, 2025) .
  • Launches in oncology (Labcorp Plasma Detect MRD and PGDx elio plasma focus Dx) .
  • pTau-217/Beta Amyloid 42 Ratio blood test for Alzheimer’s diagnosis .
  • Nationwide HPV and STI self-collection options .

Sources

  • Q1 2025 press release and financial tables .
  • Q1 2025 8-K (Item 2.02) and exhibits .
  • Q1 2025 earnings call transcript .
  • Prior quarter press releases (Q4 2024 and Q3 2024) and transcripts .
  • Product/dividend press releases .
  • Consensus estimates (S&P Global)* for Q1 2025 and forward quarters [GetEstimates].