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Laboratory Corp of America Holdings LH

Morningstar Rating
$216.91 +2.82 (1.32%)
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Company Report

LabCorp Earnings: Solid Underlying Nonpandemic Test Demand Offsets Declines in COVID Tests

LabCorp delivered third-quarter results that closely track with our full-year topline expectations. Gross margin year-to-date has run slightly behind our projections, but that was partially offset by operational costs, which have run lower than we'd expected. These slight adjustments to our model weren't enough to materially move our $233 fair value estimate. Narrow-moat LabCorp continues to put the COVID-19 disruption in the rearview mirror, and the quarterly decline in pandemic test revenue was comparable to that seen at rival Quest. Perhaps more importantly, LabCorp's non-COVID quarterly test volume and price/mix were up 7% and 9%, respectively, year over year. While some of this strength relied on the new Ascension lab management deal, base business on these measures remained decent on an organic basis. We think this growth suggests solid underlying dynamics for reference labs heading into 2024.

Price vs Fair Value

LH is trading at a 7% discount.
Price
$216.90
Fair Value
$238.00
Uncertainty
Medium
1-Star Price
$518.43
5-Star Price
$719.30
Economic Moat
Xbmcln
Capital Allocation
Dnprmnyz

Bulls Say, Bears Say

Bulls

Now that commercial payers are moving away from exclusive contracts with the large independent labs, we think the prospect of cutthroat pricing competition has eased.

Bears

If significant numbers of hospital-based labs are ill-equipped to comply with Medicare's payment reporting requirements, then reimbursement pressure could increase even more in 2024-26.

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News

Trading Information

Previous Close Price
$214.09
Day Range
$212.47216.98
52-Week Range
$195.01258.90
Bid/Ask
$195.84 / $218.97
Market Cap
$18.42 Bil
Volume/Avg
1.4 Mil / 821,146

Key Statistics

Price/Earnings (Normalized)
14.68
Price/Sales
1.50
Dividend Yield
1.33%
Dividend Yield (Forward)
1.33%
Total Yield
8.14%

Company Profile

Laboratory Corp. of America is one of the nation's two largest independent clinical laboratories, with roughly 20% of the independent lab market. The company operates approximately 2,000 patient-service centers, offering a broad range of 5,000 clinical lab tests, ranging from routine blood and urine screens to complex oncology and genomic testing.
Sector
Healthcare
Industry
Diagnostics & Research
Stock Style Box
Mid Value
Total Number of Employees
80,000

Competitors

Valuation

Metric
LH
MYGN
DGX
Price/Earnings (Normalized)
14.6816.07
Price/Book Value
2.342.292.39
Price/Sales
1.502.121.69
Price/Cash Flow
10.2012.01
Price/Earnings
LH
MYGN
DGX

Financial Strength

Metric
LH
MYGN
DGX
Quick Ratio
0.960.960.88
Current Ratio
1.361.271.12
Interest Coverage
6.35−97.217.49
Quick Ratio
LH
MYGN
DGX

Profitability

Metric
LH
MYGN
DGX
Return on Assets (Normalized)
6.72%−3.03%7.44%
Return on Equity (Normalized)
13.51%−4.41%15.85%
Return on Invested Capital (Normalized)
9.13%−3.64%9.88%
Return on Assets
LH
MYGN
DGX

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