Labcorp on Tuesday reported first-quarter revenues of $3.78 billion, down 3% from $3.9 billion in Q1 2022.
For the three months ended March 31, the firm posted Diagnostics revenues of $2.38 billion, down 3% from $2.45 billion in the prior-year quarter. Within Diagnostics, a 4.7% decrease in organic revenue was due to an 18.4% decrease in COVID-19 testing, partially offset by a 13.7% increase in the Base Business, Labcorp said.
Growth in the total Base Business, which excluded COVID-19 testing but included revenues from a lab management agreement with Ascension health system, was 19.8% compared to the Base Business in the prior year.
In the first quarter, Labcorp continued with its integration of laboratories previously owned by Ascension, a Catholic nonprofit health system. The firm announced the deal in February 2022, saying it would manage Ascension's hospital-based laboratories in 10 states and purchase select assets of the health system's outreach laboratory business. Labcorp said that its employees are now managing laboratories in nearly 100 Ascension hospitals.
In Q1, total test volume, measured by requisitions, decreased by 3.3% as organic volume decreased by 5.6% and acquisition volume contributed 2.3%. Organic volume was impacted by a 12.7% decrease in COVID-19 testing, partially offset by a 7.1% increase in the Base Business.
Meanwhile, Q1 revenues in Labcorp’s other business, Drug Development, were $1.40 billion, a decline of 4% from $1.46 billion in Q1 2022. The decrease was primarily due to an organic decline of 2.4%, foreign currency translation of 1.5%, and a drop related to acquisitions net of divestitures of 0.1%.
"Labcorp's first-quarter results set the foundation for a strong 2023, led by … strength in our Diagnostics and Central Laboratories, and strong fundamentals in our Early Development Research Laboratories," Adam Schechter, chairman and CEO of Labcorp, said in a statement.
The firm said that its planned spin-off of its Clinical Development business remains on schedule for mid-2023. In early January 2023, it appointed Tom Pike to lead the Clinical Development business, which is now called Fortrea. Pike was previously CEO and a board member of Quintiles, a fully integrated biopharmaceutical services company offering clinical, commercial, and consulting solutions worldwide.
Q1 net income was $212.9 million, or $2.39 per share, compared to $491.6 million, or $5.23 per share, in the prior-year quarter. Q1 adjusted earnings per share (EPS) was $3.82.
Labcorp updated its guidance for full-year 2023, saying it now expects revenue growth of 1% to 4% on $14.9 billion booked for 2022. Its previous estimate was for 1.5% to 4% revenue growth.
COVID-19 testing revenue is expected to decline by 75% to 90% from $1.1 billion booked in 2022. Labcorp previously expected an 80% to 90% decline in year-over-year COVID-19 testing revenue.
The firm now expects 2023 adjusted EPS of $16.00 to $18.00 compared to its previous guidance of $16.25 to $17.75.
Labcorp had cash and cash equivalents of $393.9 million at the end of Q1. Additionally, on April 6, it announced a quarterly cash dividend of $0.72 per share, payable on June 8 to stockholders of record at the close of business on May 18.