Labcorp’s second quarter was marked by broad-based revenue growth and improved profitability, prompting a strong positive market reaction. Management attributed this momentum to robust organic growth in its Diagnostics Laboratory segment, supported by recent acquisitions and expanding partnerships with hospitals and regional labs. CEO Adam Schechter noted that specialty testing areas—such as oncology, women’s health, and neurology—continue to outpace the broader market, helping drive both volume and an improved mix of higher-value tests. The company also highlighted its progress integrating Invitae and the benefits of new hospital laboratory agreements, which have contributed to increased market share and operational leverage.
Is now the time to buy LH? Find out in our full research report (it’s free).
Labcorp (LH) Q2 CY2025 Highlights:
- Revenue: $3.53 billion vs analyst estimates of $3.49 billion (9.5% year-on-year growth, 1% beat)
- Adjusted EPS: $4.35 vs analyst estimates of $4.16 (4.5% beat)
- Adjusted EBITDA: $630 million vs analyst estimates of $611 million (17.9% margin, 3.1% beat)
- Management raised its full-year Adjusted EPS guidance to $16.28 at the midpoint, a 1.4% increase
- Operating Margin: 11.2%, up from 9.2% in the same quarter last year
- Organic Revenue rose 5.4% year on year (3.8% in the same quarter last year)
- Market Capitalization: $21.88 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Labcorp’s Q2 Earnings Call
- Michael Cherny (Leerink Partners) asked about drivers of broad-based volume growth and the offensive strategies behind customer and payer mix. CEO Adam Schechter detailed contributions from hospital partnerships and specialty testing, emphasizing expanding geographic access and increased share in high-severity patient groups.
- Ann Hynes (Mizuho) questioned Labcorp’s preparedness for legislative changes, particularly PAMA-related reimbursement cuts and Medicaid impacts. Schechter outlined ongoing lobbying efforts and contingency planning, estimating a $100 million potential impact but stressing mitigation via cost-saving initiatives.
- Kevin Caliendo (UBS) sought clarity on the Community Health Systems acquisition’s margin and accretion profile. Schechter confirmed the deal is structured to be accretive in its first year and should support higher-margin outreach business, with integration plans already underway.
- Patrick Donnelly (Citi) inquired about renewed momentum in Biopharma Laboratory Services, especially early development. Schechter attributed growth to favorable comparisons and a strong book-to-bill ratio, highlighting increased study starts and a healthy RFP pipeline.
- Jack Meehan (Nephron Research) asked for an update on the Invitae integration and revenue trajectory. Schechter expressed confidence in achieving 10% annual growth and slight profitability from Invitae, noting improved customer experience and enthusiasm among sales teams.
Catalysts in Upcoming Quarters
Looking forward, our team will be monitoring (1) the pace of integration and early performance of recent hospital and outreach lab acquisitions, (2) trends in specialty test volume and average revenue per accession, and (3) Labcorp’s ability to offset regulatory headwinds—particularly any developments related to PAMA reimbursement changes. Continued progress on operational cost initiatives and the rollout of new specialty diagnostics will also be important signposts.
Labcorp currently trades at $263.91, up from $250.67 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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