NEW YORK (GenomeWeb) – Laboratory Corporation of America today reported that second quarter revenues rose 7 percent from Q2 2015, driven primarily by organic revenue growth of 6 percent.
For the quarter ended June 30, the firm reported total revenues of $2.43 billion up from $2.27 billion year over year, and beating the average Wall Street analysts’ estimate of $2.33 billion.
LabCorp also announced today that it has agreed to acquire all outstanding shares of Sequenom, a provider of non-invasive prenatal testing (NIPT) for reproductive health, for $2.40 per share in cash. This represents an equity value of $302 million and a total enterprise value of approximately $371 million including net indebtedness.
“We continue to expand our test menu, innovate in science, and complement our internal efforts through strategic acquisitions,” LabCorp Chairman and CEO David King said in a conference call with analysts following the release of the earnings results.
The acquisition expands LabCorp’s geographic reach both domestically and internationally, with an emphasis on expansion in the European Union and the Asia Pacific region, he noted.
“Our companion diagnostics franchise continues to lead the industry as evidenced by an important new test launched during the quarter,” King said. “We’re the only national laboratory to introduce a... mutation test for non small cell lung cancer patients, the first blood-based liquid biopsy test cleared by FDA for clinical use. We also extended our leadership in oncology with the commercial launch of complementary diagnostic tests for bladder cancer.”
Revenues from LabCorp's diagnostics business in the second quarter were $1.66 billion, a 5 percent increase from $1.58 billion in Q2 2015. The Covance drug development segment brought in $722.4 million in revenues, a 12 percent increase from $643.7 million in the year-ago period.
The company reported Q2 net income of $198.2 million, or $1.91 per share, compared to $169.8 million, or $1.66 per share, in Q2 2015. On an adjusted basis, Q2 EPS was $2.31, beating analysts' consensus estimate of $2.30.
The firm's SG&A costs rose 4 percent to $408.0 million from $390.5 million a year ago. The company also reported $45.3 million in charges for amortization of intangibles and other assets and $6.6 million in restructuring and other charges.
LabCorp finished the quarter with $639.6 million in cash and cash equivalents.
The company also updated its 2016 guidance and is now projecting net revenue growth of 9.5 percent to 10.5 percent over 2015’s net revenues of $8.51 billion. Previously, the firm had said it was expecting revenue growth between 8.5 percent and 10.5 percent.
The total revenue growth guidance includes an expectation for 4.5 percent to 5.5 percent revenue growth over 2015 pro forma revenues of $6.21 billion in the diagnostics business; and an expectation for revenue growth in the Covance Drug Development business of 7 percent to 9 percent over the prior-year pro forma revenue of $2.63 billion.
The firm also said it expects FY2016 adjusted EPS of $8.60 to $8.95, versus prior guidance of $8.55 to $8.95. Analysts have estimated 2016 EPS of $8.79.
In Wednesday morning trade on the New York Stock Exchange, shares of LabCorp were down 1 percent at $136.58. Shares of Sequenom were up nearly 180 percent at $2.37 on the Nasdaq.