Labcorp Q3 Earnings Call Highlights

Key Points

• Strong third-quarter performance: Labcorp’s revenue rose 7% to $3.8 billion, adjusted EPS increased 14.5% to $4.78, and adjusted operating margin expanded to 15%. Diagnostics and biopharma laboratory services both delivered higher revenue and margins.
• 2026 outlook raised: The company increased its full-year revenue and adjusted EPS guidance, now projecting 5.9%–6.7% enterprise revenue growth and adjusted EPS of $18.30–$18.70. Free cash flow guidance remained $1.24 billion–$1.36 billion.
• Growth initiatives alongside 2027 risk: Labcorp expects approximately $125 million of reimbursement pressure from preliminary PAMA changes in 2027, but plans to offset part of the impact through organic growth, productivity savings and acquisitions, including BioReference, Myriad’s prenatal testing business and Millennium Health.

Labcorp NYSE: LH reported third-quarter 2026 revenue growth, margin expansion and double-digit adjusted earnings-per-share growth, prompting the laboratory services company to raise the midpoint of its full-year revenue and earnings outlook.

Revenue rose 7% to $3.8 billion in the quarter, while adjusted operating income reached $517 million, or 15% of revenue, compared with $513 million, or 14.4% of revenue, a year earlier. Adjusted EPS increased 14.5% to $4.78, and free cash flow totaled $412 million, up from $281 million in the prior-year period.

“Our results reflect disciplined execution as we drive continued momentum in diagnostics and biopharma laboratory services,” Chairman and Chief Executive Officer Adam Schechter said on the company’s earnings call.

Segment Growth and Margin Expansion

Diagnostics revenue increased 6.5% to $2.9 billion. Organic revenue growth was 4.4%, including 3.1% volume growth and 1.3% favorable price mix, which the company said was largely driven by higher tests per accession. Acquisitions added 2.2% to diagnostics revenue growth.

Diagnostics adjusted operating income increased to $492 million, or 16.7% of segment revenue, from $450 million, or 16.3% of revenue, in the prior-year quarter. Chief Financial Officer Julia Wang said healthy organic growth and operating efficiencies drove 40 basis points of margin expansion.

Biopharma laboratory services, or BLS, revenue grew 8.5% to $867 million. On an organic constant-currency basis, revenue rose 9.6%, led by 11.3% growth in central laboratory services and 5% growth in early development. Wang said central laboratory growth reflected healthy underlying demand as well as favorable timing related to study starts.

BLS adjusted operating income climbed to $159 million, or 18.3% of segment revenue, from $132 million, or 16.5% of revenue, a year ago. The segment ended the quarter with an $8.9 billion backlog, with approximately $2.8 billion expected to convert into revenue over the following 12 months. Quarterly book-to-bill was 1.13, and trailing 12-month book-to-bill was 1.10.

Schechter said demand in central laboratories was being supported by large pharmaceutical clients, oncology and other specialty areas, as well as growing activity in cardiometabolic studies, including GLP-1-related trials.

Guidance Raised

Labcorp raised the midpoint of its 2026 revenue guidance by $65 million and its adjusted EPS midpoint by $0.18. The company now expects enterprise revenue growth of 5.9% to 6.7% for the full year and adjusted EPS of $18.30 to $18.70, representing implied midpoint growth of 12.5%.

• Diagnostics revenue is expected to grow 5.5% to 6.2%.
• BLS revenue is expected to grow 7.4% to 8.4%, with the midpoint raised by 109 basis points, primarily due to central laboratory strength.
• Central laboratory revenue is expected to grow in the high single digits on an organic constant-currency basis, while early development is expected to grow in the low single digits.
• Free cash flow guidance was maintained at $1.24 billion to $1.36 billion.

The updated outlook incorporates approximately $10 million of incremental foreign-exchange headwinds compared with the company’s earlier guidance. Wang said the revenue outlook increase was principally driven by underlying organic performance, while contribution from recently completed or expected acquisitions was limited in the 2026 update.

Labcorp said its LaunchPad productivity program remains on track to deliver $125 million in savings for 2026. The company expects capital expenditures to be nearly 4% of revenue for the full year.

PAMA Pressure Expected in 2027

Management also addressed the preliminary fee schedule changes under the Protecting Access to Medicare Act, or PAMA, which are expected to reduce Medicare reimbursement rates for hundreds of laboratory tests beginning in 2027.

Schechter said Labcorp was disappointed with the proposed schedule, arguing that the data relied on only 2% of laboratories paid under Medicare Part B in 2024 and did not adequately reflect physician-office and hospital outreach laboratories. The company estimates the 2027 PAMA impact at approximately $125 million based on the preliminary schedule.

Management said it had already incorporated PAMA-related reimbursement pressure into its 2026-to-2029 long-term outlook and reaffirmed that outlook. The company expects to offset part of the impact through continued diagnostics growth, biopharma momentum, LaunchPad initiatives and business development activity.

“The majority of the impact is in 2027, the first year,” Schechter said, adding that the company expects smaller impacts in 2028 and 2029. Labcorp continues to support the RESULTS Act, which it described as a bipartisan proposal intended to support a sustainable laboratory diagnostics system.

Acquisitions and Specialty Testing Initiatives

During the quarter, Labcorp acquired MLM Medical Labs, expanding its global central laboratory network. Schechter said the transaction makes Labcorp the only central laboratory provider with wholly owned laboratory operations in North America, Europe, Asia and Africa.

Following the quarter, the company signed agreements to acquire select assets of BioReference Health’s laboratory testing business, Myriad Genetics’ prenatal health testing business, and Millennium Health. Labcorp expects each deal to be accretive to adjusted EPS in the first year and to return the cost of capital by year three, subject to regulatory approvals and closing conditions.

The BioReference transaction is expected to generate $260 million in revenue during its first 12 months and contribute approximately $0.15 in adjusted EPS, including financing costs, according to Wang. Labcorp expects a mid-2027 close. The Myriad prenatal health acquisition is expected to add about $160 million in revenue, be slightly accretive in year one and reach average diagnostics segment margins by the end of year two after integration. That transaction is expected to close in early 2027.

Labcorp also highlighted specialty-testing advances, including FDA approval of a companion diagnostic for advanced melanoma and the post-quarter launch of an FDA-cleared pTau-217 test for Alzheimer’s disease. The company said specialty testing continues to grow about three times faster than the broader diagnostics market.

About Labcorp (NYSE:LH)

Labcorp NYSE: LH, formally Laboratory Corporation of America Holdings, is a global life sciences and healthcare company headquartered in Burlington, North Carolina. The company provides laboratory testing and diagnostic services to physicians, hospitals, health systems, employers, insurers and consumers.

Through its diagnostics operations, Labcorp offers routine and specialty testing, oncology diagnostics, women's health testing, genetic testing, pathology services and other laboratory services.

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