Labcorp lifts annual profit forecast on strong diagnostic test demand

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(Reuters) -Labcorp on Tuesday raised its annual profit forecast and beat estimates in the third quarter as the laboratory operator benefited from strong demand for its diagnostic tests.

Steady demand for non-urgent surgeries, especially among older Americans, is helping boost earnings of diagnostic-test providers such as Labcorp and Quest Diagnostics.

Over the past year, the two companies have also tapped agreements to manage hospital laboratories as they seek to expand market share.

Labcorp trimmed its full-year revenue forecast, however, and now expects growth of 7.4% to 8%, down from its prior estimate of 7.5% to 8.6%, due to a stronger dollar and the timing of certain acquisitions.

Around 13% of its revenue came from outside the United States last year.

Revenue from its diagnostics laboratories climbed 8.5% to $2.77 billion, while its contract research business for drug development grew 8.3% to $799.1 million.

Labcorp also said it is taking action to address weaker demand in early-stage drug development by divesting or restructuring about $50 million in annual revenue through site consolidation, as biotechs face a prolonged funding crunch.

“We advanced our strategy by forming new partnerships with health systems and regional laboratories” and introduced new specialty tests for diseases including cancer and Alzheimer’s, said CEO Adam Schechter.

The company now expects 2025 adjusted profit of $16.15 to $16.50 per share, up from its previous range of $16.05 to $16.50 per share.

For the third quarter ended September 30, Labcorp reported adjusted earnings of $4.18 per share, beating analysts’ consensus estimate of $4.13, according to data compiled by LSEG.

(Reporting by Sahil Pandey and Puyaan Singh in Bengaluru)