Why did Labcorp report a fourth-quarter loss despite higher revenue?

The operating loss of ($122.8) million was driven by impairment charges, amortization, restructuring charges and special items totaling $517.6 million in the quarter. Goodwill and other asset impairment charges of $333.8 million were primarily related to the Early Development business.

What drove the decline in adjusted operating margin?

The company attributed the decline in adjusted operating income to a reduction in COVID-19 Testing. Adjusted operating margin was 13.0% in the fourth quarter compared with 14.1% a year earlier, and 14.1% for the full year compared with 18.3% in 2022.

What is the outlook for 2024?

Full-year 2024 guidance calls for adjusted EPS of $14.30 to $15.40 and free cash flow from continuing operations of $1.00 billion to $1.15 billion. Enterprise revenue is expected to grow 4.7% to 6.5%, with Diagnostics Laboratories at 3.2% to 4.8% and Biopharma Laboratory Services at 5.5% to 7.5%.

How did the company return capital to shareholders?

During 2023 the company repurchased $1.00 billion of stock, representing approximately 4.8 million shares, and paid dividends of $254.0 million for the year. On January 12, 2024, it announced a quarterly cash dividend of $0.72 per share, payable March 13, 2024.

What was the Fortrea spin-off and how does it affect results?

The filing references the spin-off of Fortrea Holdings Inc., formerly the Clinical Development and Commercialization Services business, which was distributed to shareholders as a tax-free spin on June 30, 2023. Results from continuing operations exclude the discontinued business, and the company recorded spin-off transaction costs of $94.1 million for the full year.

LH 8-K: Earnings & Results

01—Abstract

Summary

Summary of the 8-K filed February 15, 2024. Cited figures are marked; the original filing is the authoritative source.

Laboratory Corporation of America Holdings reported fourth-quarter and full-year 2023 results on February 15, 2024, along with full-year 2024 guidance.

Fourth-quarter revenue was $3.03 billion^a, up from $2.93 billion, but the company posted an operating loss of ($122.8) million and a diluted loss per share from continuing operations of $(1.95), driven largely by $333.8 million in goodwill and other asset impairment charges, primarily related to the Early Development business. Adjusted EPS rose to $3.30 from $3.05, as the adjusted operating margin declined to 13.0% from 14.1% due to lower COVID-19 Testing revenue. For the full year, revenue was $12.16 billion, up from $11.86 billion, while diluted EPS from continuing operations fell to $4.33 from $10.94 and adjusted EPS fell to $13.56 from $16.66.

Free cash flow from continuing operations was $748.7 million^b, compared with $1,335.5 million in 2022. The company repurchased $1.00 billion of stock during the year and invested $0.67 billion in acquisitions, and it closed its transaction to acquire select assets of Legacy Health's outreach laboratory business.

For 2024, the company guided to adjusted EPS of $14.30 to $15.40^c and free cash flow of $1.00 billion to $1.15 billion, with enterprise revenue growth of 4.7% to 6.5%. The filing also notes the spin-off of Fortrea Holdings Inc., the company's former Clinical Development and Commercialization Services business, completed in 2023, and a quarterly dividend of $0.72 per share.

02—Key points

Key Highlights

Q4 2023 revenue of $3.03 billion, up from $2.93 billion, with organic revenue growth of 1.5%
Q4 2023 operating loss of ($122.8) million, including $333.8 million in goodwill and other asset impairment charges
Q4 2023 adjusted EPS of $3.30 versus $3.05 a year earlier; diluted EPS from continuing operations was $(1.95)
Full-year 2023 revenue of $12.16 billion; adjusted EPS of $13.56 versus $16.66 in 2022
Full-year 2023 free cash flow from continuing operations of $748.7 million, compared with $1,335.5 million in 2022
2024 guidance: adjusted EPS of $14.30 to $15.40 and free cash flow of $1.00 billion to $1.15 billion
Year-end cash of $0.54 billion and total debt of $5.05 billion; $530.4 million of share repurchase authorization remaining

03—Questions

Frequently Asked Questions

Why did Labcorp report a fourth-quarter loss despite higher revenue?
The operating loss of ($122.8) million was driven by impairment charges, amortization, restructuring charges and special items totaling $517.6 million in the quarter. Goodwill and other asset impairment charges of $333.8 million were primarily related to the Early Development business.
What drove the decline in adjusted operating margin?
The company attributed the decline in adjusted operating income to a reduction in COVID-19 Testing. Adjusted operating margin was 13.0% in the fourth quarter compared with 14.1% a year earlier, and 14.1% for the full year compared with 18.3% in 2022.
What is the outlook for 2024?
Full-year 2024 guidance calls for adjusted EPS of $14.30 to $15.40 and free cash flow from continuing operations of $1.00 billion to $1.15 billion. Enterprise revenue is expected to grow 4.7% to 6.5%, with Diagnostics Laboratories at 3.2% to 4.8% and Biopharma Laboratory Services at 5.5% to 7.5%.
How did the company return capital to shareholders?
During 2023 the company repurchased $1.00 billion of stock, representing approximately 4.8 million shares, and paid dividends of $254.0 million for the year. On January 12, 2024, it announced a quarterly cash dividend of $0.72 per share, payable March 13, 2024.
What was the Fortrea spin-off and how does it affect results?
The filing references the spin-off of Fortrea Holdings Inc., formerly the Clinical Development and Commercialization Services business, which was distributed to shareholders as a tax-free spin on June 30, 2023. Results from continuing operations exclude the discontinued business, and the company recorded spin-off transaction costs of $94.1 million for the full year.

04—Continue

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