Labcorp Q2 Earnings Call Highlights

Key Points

• Labcorp delivered strong Q2 results: Revenue increased 5.8% to $3.7 billion, adjusted EPS rose 14.9% to $4.99, and adjusted operating margin expanded to 15.8%.
• Both major segments gained momentum. Diagnostics revenue grew 5.5%, supported by specialty testing and new offerings such as ColoSense, while Biopharma Laboratory Services revenue rose 6.5% and ended the quarter with an $8.7 billion backlog.
• Labcorp raised its 2026 outlook: The company increased its revenue-growth midpoint and narrowed adjusted EPS guidance to $18.10–$18.55, while maintaining free-cash-flow guidance of $1.24–$1.36 billion and expanding its share-repurchase authorization to $1.4 billion.

Labcorp NYSE: LH reported second-quarter 2026 revenue growth, margin expansion and higher adjusted earnings, prompting the laboratory services company to raise the midpoint of its full-year revenue and adjusted EPS guidance.

Revenue rose 5.8% year over year to $3.7 billion, while adjusted operating margin expanded 70 basis points to 15.8%, according to Chairman and Chief Executive Officer Adam Schechter. Adjusted earnings per share increased 14.9% to $4.99, and free cash flow was $314 million.

“Labcorp delivered another very strong quarter, driven by solid revenue growth, margin expansion, and progress across our strategic priorities,” Schechter said on the company’s earnings call.

Diagnostics Growth and Specialty Testing

The Diagnostics segment generated $2.9 billion in revenue, up 5.5% from a year earlier. Organic revenue grew 3.6%, including 1.8% accession volume growth and 1.8% favorable price mix, while acquisitions contributed 1.9% growth. Segment adjusted operating income rose to $523 million, and adjusted operating margin increased 50 basis points to 18%.

Schechter said the company’s specialty testing areas—oncology, neurology, autoimmune disease and women’s health—collectively posted double-digit revenue growth in the first half. He said specialty testing also contributes to higher tests per accession, as patients with complex conditions such as cancer may require multiple types of laboratory testing over time.

During the quarter, Labcorp launched ColoSense nationwide, an FDA-approved RNA-based colorectal cancer screening test with at-home collection. Schechter said the test has Medicare coverage and expanding commercial payer access. The company also expanded its cancer-testing offerings with a clinical trial collaboration with Fox Chase Cancer Center involving its PlasmaDetect genome MRD test for non-small cell lung cancer recurrence, as well as broader access to a Roche companion diagnostic for prostate cancer.

Labcorp also cited expanded access to its myOLARIS-KTdx kidney-transplant surveillance test and said its NASHnext blood-based liver-disease test is scheduled to receive Medicare coverage beginning in mid-August.

On reimbursement and collection trends, Chief Financial Officer Julia Wang said Labcorp continues to assume a 30-basis-point full-year impact to Diagnostics volume from Affordable Care Act-related changes. The affected payer cohort represents less than 4% to 5% of total Diagnostics volume, she said. The second quarter saw a 20- to 30-basis-point headwind to Diagnostics volume from this source.

Wang also said Diagnostics bad debt remained in line with prior-year and historical levels, at less than or around 5% of revenue. Schechter noted that growth in Labcorp OnDemand, where consumers pay upfront for testing, is included in patient-pay revenue and does not increase bad debt.

Biopharma Segment Shows Improved Momentum

Biopharma Laboratory Services, or BLS, revenue rose 6.5% to $836 million. On an organic constant-currency basis, Central Laboratory Services revenue grew 7.6%, while Early Development revenue increased 2.7%.

BLS adjusted operating income increased to $142 million, or 17% of segment revenue, from $123 million, or 15.7%, a year earlier. Wang attributed the 130-basis-point margin improvement to organic growth and operating efficiencies from strategic actions in the Early Development business. She said those actions have all been announced and are largely complete.

Schechter said Central Laboratory Services represents about 70% of the BLS segment and remains the primary driver of segment growth. He added that Early Development has seen strong request-for-proposal activity, consistent win rates and study starts occurring more on time than in prior periods.

The BLS segment ended the quarter with an $8.7 billion backlog, with approximately $2.7 billion expected to convert into revenue over the next 12 months. Quarterly book-to-bill was 1.14, bringing the trailing 12-month figure to 1.03.

Capital Deployment and Raised Outlook

Labcorp deployed capital through acquisitions, share repurchases and dividends during the quarter. The company invested $226 million in acquisitions, repurchased $354 million of shares and paid $59 million in dividends. After retiring $500 million in senior notes, it ended the quarter with $142 million in cash and $5.9 billion in total debt.

In July, the board increased the company’s share-repurchase authorization by $1 billion, bringing the remaining authorization to $1.4 billion.

For 2026, Labcorp now expects enterprise revenue growth of 5.4% to 6.3%, raising the midpoint by 30 basis points. Diagnostics revenue is projected to grow 5.3% to 6%, a 20-basis-point midpoint increase, while BLS revenue is expected to rise 5.5% to 6.5%, with the midpoint raised by 140 basis points.

• Adjusted EPS guidance was raised and narrowed to $18.10 to $18.55, implying growth of more than 11% at the midpoint.
• Full-year free-cash-flow guidance was maintained at $1.24 billion to $1.36 billion.
• The company continues to expect capital expenditures of about 4% of revenue.
• Labcorp expects both Diagnostics and BLS margins to improve in 2026, with BLS margin expansion exceeding that of Diagnostics.

Technology, Consumer Testing and Partnerships

The company said its consumer business continued to grow at a double-digit rate, supported by demand for consumer-initiated testing and digital tools. Labcorp plans to launch its Marker by Labcorp genetic health offering through Labcorp OnDemand in August, combining biomarker and genetic testing options for consumers.

Schechter said the company is focused on its own consumer-testing platform while remaining selective about partnerships, citing the importance of maintaining a favorable margin profile. Labcorp OnDemand includes more than 200 biomarkers, he said, with offerings across cancer screening, men’s and women’s health, allergies and wellness.

Labcorp also expanded its collaboration with Epic, making more than 6,500 Labcorp diagnostic tests available through Epic’s Aura platform. The company completed acquisitions of select outreach laboratory services from Parkview Health in Indiana and Ohio, as well as Tribal Diagnostics, which serves communities in Oklahoma and Texas.

Looking ahead, Schechter said Labcorp’s pipeline for hospital and laboratory partnership transactions remains strong. He said the company requires acquisitions to be accretive in the first year and to return their cost of capital within two to three years.

About Labcorp (NYSE:LH)

Laboratory Corporation of America Holdings, commonly known as Labcorp NYSE: LH, is a global life sciences company that provides comprehensive clinical laboratory and drug development services. The company operates a broad network of laboratories, patient service centers and specialty testing sites to deliver diagnostic information and testing solutions that support patient care, clinical decision-making and population health initiatives.

Labcorp's core businesses encompass clinical laboratory testing and pharmaceutical development services.

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