Executive Summary

Solid Q3 with revenue of $3.56B (+8.6% YoY) and adjusted EPS of $4.18 (+19% YoY); modest beats vs SPGI consensus on both revenue and EPS. Diagnostics led margin expansion; BLS benefited from strong Central Labs while Early Development lagged . Revenue est: $3.560B* vs actual $3.563B; EPS est: $4.14* vs actual $4.18.
2025 guidance: Enterprise revenue growth range trimmed to 7.4–8.0% (midpoint -40 bps on FX and acquisition timing) but adjusted EPS midpoint raised to $16.33 (from ~$16.28) and FCF midpoint raised by $25M, reflecting operational strength and cash generation .
Strategic execution: continued hospital/regional lab deals (Empire City, Laboratory Alliance/Crouse Health, CHS outreach), specialty test expansion (oncology, neurology), and AI-enabled operations (Test Finder with AWS; digital pathology/cytology/microbiology) underpin mix tailwinds and efficiency .
Watch items: early development softness prompting ~$50M revenue divestitures/site consolidation; 2026 PAMA risk expected to be ~$100M headwind to both revenue and EBIT with ~$25M offset initiatives underway (AI/Launchpad efficiencies) .

What Went Well and What Went Wrong

What Went Well
- Diagnostics momentum: revenue +8.5% YoY to $2.77B; AOI margin +110 bps to 16.3% on organic demand and Invitae performance; organic volume +3.5% and price/mix +2.8% . “Adjusted operating income and margin increased primarily driven by organic demand, including the strong performance of Invitae” .
- Central Labs strength: BLS revenue +8.3% (constant-currency +5.3%), with Central Labs +10.3%; trailing-12-month book-to-bill 1.09 and backlog $8.58B (+5.4% YoY), supporting forward visibility .
- Cash generation and capital allocation: FCF $280.5M (vs $161.5M LY); $598M cash, $5.58B debt; invested $268.4M in acquisitions/partnerships, paid $59.9M in dividends, repurchased $25M of stock in Q3 .
What Went Wrong
- Early Development softness: lower-than-anticipated study starts prompted plan to divest or consolidate sites affecting ~$50M annual revenue; actions expected to slightly improve operating income profile .
- FX/acquisition timing trimmed full-year revenue midpoint by ~40 bps, though EPS/FCF midpoints rose, highlighting mixed headline optics despite better profitability .
- Ongoing regulatory uncertainty: management planning for a $100M PAMA headwind to both revenue and profit in 2026; mitigation of ~$25M underway but residual risk remains .

Financial Results

Metric	Q3 2024	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Billions)	$3.282	$3.345	$3.527	$3.563
GAAP Diluted EPS ($)	$2.00	$2.52	$2.84	$3.12
Adjusted EPS ($)	$3.50	$3.84	$4.35	$4.18
Operating Income ($USD Millions)	$254.1	$326.0	$394.5	$396.6
Operating Margin (%)	7.7%	9.7%	11.2%	11.1%
Adjusted Operating Income ($USD Millions)	$441.1	$469.0	$531.6	$513.3
Adjusted Operating Margin (%)	13.4%	14.0%	15.1%	14.4%
Free Cash Flow ($USD Millions)	$161.5	-$107.5	$542.7	$280.5

Actual vs SPGI Consensus (Q3 2025):

Revenue: $3.563B actual vs $3.560B estimate → Beat by ~$3M*
Adjusted EPS: $4.18 actual vs $4.14 estimate → Beat by ~$0.04*

Segment Performance

Segment	Q3 2024	Q2 2025	Q3 2025
Diagnostics Revenue ($B)	$2.554	$2.749	$2.770
Diagnostics AOI ($M)	$387.4	$482.8	$450.4
Diagnostics AOI Margin (%)	15.2%	17.6%	16.3%
BLS Revenue ($M)	$737.7	$784.8	$799.1
BLS AOI ($M)	$120.9	$123.3	$132.2
BLS AOI Margin (%)	16.4%	15.7%	16.5%

KPIs

KPI	Q1 2025	Q2 2025	Q3 2025
Diagnostics Volume Delta (YoY)	+3.0%	+4.9%	+4.7%
Diagnostics Price/Mix (YoY)	+3.0%	+4.0%	+3.7%
BLS TTM Net Orders ($B)	$3.15	$3.34	$3.34
BLS TTM Book-to-Bill	1.07	1.11	1.09
BLS Backlog ($B)	$8.18	$8.71	$8.58
BLS NTM Backlog Conversion ($B)	$2.56	$2.71	$2.66

Guidance Changes

Metric	Period	Previous Guidance (Q2 update)	Current Guidance (Q3 update)	Change
Enterprise Revenue Growth	FY 2025	7.5% – 8.6%	7.4% – 8.0%	Lowered midpoint (FX, acquisition timing)
Diagnostics Revenue Growth	FY 2025	7.0% – 8.0%	7.2% – 7.8%	Maintained midpoint; narrowed
BLS Revenue Growth	FY 2025	6.1% – 7.5%	5.7% – 7.1%	Lowered midpoint (FX)
Adjusted EPS	FY 2025	$16.05 – $16.50	$16.15 – $16.50	Raised midpoint (+$0.05)
Free Cash Flow ($B)	FY 2025	$1.13 – $1.28	$1.17 – $1.29	Raised midpoint (+$0.025)

Management also expects full-year enterprise margins to increase, with both segments up vs 2024 .

Earnings Call Themes & Trends

Topic	Q1 2025 (Q-2)	Q2 2025 (Q-1)	Q3 2025 (Current)	Trend
AI/Tech initiatives	Launched eClaim Assist; consumer menu expansion	Digital pathology and AI solutions added in Central Labs	Test Finder (AWS genAI) and AI in pathology/cytology/microbiology	Accelerating deployment
Hospital/Health System partnerships	Inspira lab mgmt; outreach assets (NMHS)	CHS outreach announced; partnerships broadened	Empire City, Laboratory Alliance/Crouse lab mgmt; progressing CHS	Expanding pipeline
Specialty/Esoteric testing	Oncology, Alzheimer’s, consumer tests	Expanded oncology (liquid biopsy), neurology plans	Oncology/women’s/neurology; Alzheimer’s blood tests; OnDemand adds	Mix tailwind building
Invitae integration	Margin drag cited	Constrained adj. margin	Accretive in Q3; price/mix tailwind	Improving accretion
Central Labs vs Early Dev	Early Dev +4.4%, Central Labs +0.3% YoY	Early Dev +20.4%, Central Labs +7.5%	Central Labs +10.3%, Early Dev +3.3% with $50M divest/cons.	Central Labs strong; Early Dev streamlined
Regulatory/PAMA	—	—	Plan for $100M 2026 headwind; ~$25M offsets in-flight	Rising 2026 risk

Management Commentary

“Labcorp’s third-quarter performance reflects continued momentum in our Diagnostics and Central Laboratory businesses, resulting in strong revenue growth and margin improvement” – Adam Schechter, CEO .
“Adjusted EPS was $4.18 in the quarter, up 19%… Free cash flow… $281 million… At quarter end, we had $598 million in cash, while total debt was $5.6 billion… leverage… 2.4x gross debt to trailing 12-month adjusted EBITDA” – Julia Wang, CFO .
“We are beginning to divest or restructure through site consolidation, approximately $50 million of annual revenue [in Early Development]… resulting in a more streamlined business and slight improvement to operating income” .
“Labcorp TestFinder, a generative AI tool developed with Amazon Web Services… allows clinicians to easily search for lab tests using plain language” .

Q&A Highlights

Guidance mechanics: Revenue midpoint reduction split ~$13M FX and remainder acquisition timing; utilization strength driven by demographics/share gains; organic volume +3.5% .
Price/mix: Unit price flat; mix/Invitae and tests per session drove +2.8% organic price/mix; Invitae tailwind moderates sequentially in Q4 .
Early Development actions: ~$50M of low-margin/non-core revenue to be divested/streamlined due to delayed study starts; expected slight OI improvement .
PAMA 2026: Planning for ~$100M top- and bottom-line impact; ~$25M offset targeted via AI/efficiency beyond Launchpad; legislative timing uncertain .
Segment margins: Diagnostics +110 bps YoY from organic demand/Invitae; BLS +20 bps; Q4 seasonality to moderate diagnostics margins QoQ; FY margins up for both segments .

Estimates Context

Q3 2025 results vs SPGI consensus: Revenue $3,563.5M vs $3,560.3M estimate (beat by ~$3.2M); Adjusted EPS $4.18 vs $4.14 estimate (beat by ~$0.04). Continued mix strength and Invitae accretion drove the EPS outperformance while FX/acquisition timing limited revenue optics .
Implications: EPS and FCF midpoint raises likely drive modest upward revisions to FY EPS/FCF; 2025 revenue midpoint trimmed on FX/acquisition timing suggests limited top-line estimate changes. 2026 estimate risk from PAMA may pressure medium-term models unless offsets materialize .
Values retrieved from S&P Global.*

Key Takeaways for Investors

Diagnostics growth and mix remain durable, with Invitae now accretive and specialty testing momentum underpinning price/mix; expect continued tailwind into Q4 albeit moderated sequentially .
BLS outlook is bifurcated: Central Labs strength supports backlog conversion (TTM B2B 1.09), while Early Development is being actively streamlined to improve profitability .
2025 quality of earnings improved (EPS/FCF midpoint raised) despite FX/acquisition timing trimming revenue midpoint; management also expects full-year margin expansion across segments .
Capital deployment remains active (M&A, dividends, buybacks) with leverage ~2.4x, providing flexibility to pursue hospital/regional lab pipelines .
2026 PAMA is the principal medium-term risk (~$100M headwind) with ~$25M offsets underway; additional AI/Launchpad efficiencies are key to neutralizing impact .
Near-term trading setup: small beat/raise on EPS/FCF and visible diagnostics mix tailwinds vs overhangs from FX, Early Dev timing, and PAMA headline risk; watch Q4 margins and BLS bookings trajectory .

Additional relevant press releases during/around Q3:

Digital pathology partnership with Roche (Sept 30) .
BioReference oncology/clinical testing assets acquisition completed (Sept 15) .
Test Finder launch and OnDemand expansions (July 30) .
Dividend announced Oct 8 ($0.72/share) .
First FDA-cleared Alzheimer’s blood test nationwide (Aug 18) .

Note: All non-GAAP measures per company definitions; reconciliations provided in the press release and 8-K exhibits .

SPGI Estimates footnote: Values retrieved from S&P Global.*

LABCORP HOLDINGS INC. (LH)·Q3 2025 Earnings Summary