01—Abstract
Summary
Summary of the 10-Q filed August 2, 2024. Cited figures are marked; the original filing is the authoritative source.
Labcorp Holdings Inc. (LH) reported its second-quarter 2024 Form 10-Q, filed as the company's first quarterly report after its May 17, 2024 holding company reorganization in which Labcorp Holdings Inc. became successor issuer to Laboratory Corporation of America Holdings (LCAH).
Revenues for the three months ended June 30, 2024 were $3,220.9 milliona, up 6.2% from $3,033.7 million, with organic revenue growth of 3.8% and acquisitions, net of divestitures, contributing 2.5%. Net earnings attributable to Labcorp Holdings Inc. were $205.3 million, or $2.43 per diluted share, compared with $188.9 million in the prior-year quarter, which included discontinued operations from Fortrea. For the six months, revenues were $6,397.5 million, up 5.4%, and diluted EPS from continuing operations was $5.13 versus $4.08.
Operating income for the quarter rose to $294.8 millionb from $266.3 million, while the Dx segment operating margin held at 17.5% and BLS segment operating margin improved to 15.2% from 15.0%. Cash and cash equivalents fell to $265.1 million at June 30, 2024, and short-term borrowings and the current portion of long-term debt rose to $2,019.5 million, largely due to $1,000.0 million of 3.60% senior notes due 2025 now classified as current. Management said it anticipates refinancing the $2,000.0 million of debt coming due within the next 12 months.
The company repurchased 0.5 million shares for $100.0 millionc during the six months, and on July 24, 2024 its board authorized a new $1,000.0 million repurchase plan, bringing total authorization to $1,430.4 million. Pending acquisitions include selected assets of BioReference Health for $237.5 million and Invitae assets for $239.0 million, both expected to close in the third quarter of 2024 or on August 5, 2024. The filing also discloses ongoing litigation, including the Ravgen patent case in which damages were awarded, and new FDA rules on laboratory-developed tests that the company says present increased enforcement risk.
02—Key points
Key Highlights
- Revenues for the quarter were $3,220.9 million, up 6.2% year over year, with organic revenue growth of 3.8%.
- Diluted EPS was $2.43 for the quarter, compared with $2.12 in the prior-year quarter, which included discontinued operations.
- Operating income increased to $294.8 million from $266.3 million, and Dx segment operating income rose to $441.5 million.
- Cash and cash equivalents declined to $265.1 million, while short-term debt rose to $2,019.5 million, including $1,000.0 million of 3.60% senior notes due 2025.
- Net cash provided by operating activities from continuing operations was $531.3 million for the six months, versus $347.2 million a year earlier.
- The board authorized a new $1,000.0 million share repurchase plan on July 24, 2024, for an aggregate authorization of $1,430.4 million.
- Pending acquisitions of BioReference Health assets ($237.5 million) and Invitae assets ($239.0 million) are expected to close in the third quarter of 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2024, Labcorp Holdings kept $0.06.
- Revenue$3.22B100.0%
- Cost of revenue−$2.29B71.2%
- Gross profit$926.4M28.8%
- Operating costs−$631.6M19.6%
- Operating income$294.8M9.2%
- Interest, other & tax−$89.5M2.8%
- Net income$205.3M6.4%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2024filed August 2, 2024Financial Statements
Q2 FY2024 against Q2 FY2023
| Line item | Q2 FY2024Q2 FY2023 | Change |
|---|---|---|
| Revenue | $3.22B$3.03B | +6.2% |
| Cost of Revenue | $2.29B$2.19B | +4.7% |
| Gross Profit | $926.40M$842.20M | +10.0% |
| SG&A Expenses | $557.80M$505.80M | +10.3% |
| Operating Income | $294.80M$266.30M | +10.7% |
| Interest Expense | $47.60M$49.80M | −4.4% |
| Net Income | $205.30M$188.90M | +8.7% |
| EPS (Basic) | $2.44$2.13 | +14.6% |
| EPS (Diluted) | $2.43$2.12 | +14.6% |
| Shares Outstanding (Basic) | 84.10M88.70M | −5.2% |
| Shares Outstanding (Diluted) | 84.30M89.00M | −5.3% |
05—Questions
Frequently Asked Questions
Why did the company change its public parent entity in 2024?
On May 17, 2024, the company completed a holding company reorganization in which Labcorp Holdings Inc. became the successor issuer to Laboratory Corporation of America Holdings (LCAH). The new holding company has no independent assets or operations and its sole ownership interest is in LCAH.
How did the spin-off of Fortrea affect prior-year results?
Fortrea Holdings Inc., formerly the CDCS business, was separated on June 30, 2023 and its historical results are presented as discontinued operations. Earnings from discontinued operations were $33.9 million for the second quarter of 2023, so reported net earnings in that period were $189.1 million, compared with $205.6 million in 2024.
How is the company handling its upcoming debt maturities?
The company had $2,019.5 million of short-term borrowings and current portion of long-term debt at June 30, 2024, and stated it anticipates refinancing the $2,000.0 million of debt coming due during the next 12 months. It also reported $980.0 million of available borrowings under its revolving credit facility, which expires in 2026.
What is the outlook for the FDA's regulation of laboratory-developed tests?
On April 29, 2024, the FDA released a final rule clarifying its authority to regulate laboratory-developed tests as medical devices, phasing out its enforcement discretion over a four-year period. The rule becomes effective May 6, 2025 absent a successful legal challenge, and the company says the rule presents an increased risk of FDA enforcement actions, though the ultimate impact remains difficult to predict.
06—Continue