Lab Corp. (NYSE: LH) reported Q4 EPS of $2.45, $0.07 better than the analyst estimate of $2.38. Revenue for the quarter came in at $2.7 billion versus the consensus estimate of $2.69 billion.

Highlights:

• Net Revenue: Q4 of $2.7 billion, up 13% over 2016; Full year of $10.2 billion, up 8% over 2016
• Diluted EPS: Q4 of $6.81, up 289% over 2016; Full year of $12.21, up 74% over 2016
• Adjusted EPS: Q4 of $2.45, up 14% over 2016; Full year of $9.60, up 9% over 2016
• Free Cash Flow: Q4 of $468 million, up 25% from 2016; Full year of $1.1 billion, up 28% over 2016
• 2018 Adjusted EPS guidance of $11.30 to $11.70
• 2018 Free Cash Flow guidance of $1.1 billion to $1.2 billion

Outlook for 2018

The following guidance includes the estimated impact from adoption of the new revenue recognition accounting standard (ASC 606) as of January 1, 2018, the implementation of the TCJA, and currently anticipated capital allocation. The following guidance also assumes foreign exchange rates effective as of December 31, 2017 for the full year. In addition, to support the comparison of year-on-year results, the Company has provided a preliminary reconciliation that restates revenue in 2017 to show the impact of the new revenue recognition accounting standard for illustrative purposes. This calculation will be finalized upon adoption in the first quarter of 2018 and the amounts are therefore subject to change.

• Revenue growth of 9.5% to 11.5% over 2017 restated revenue of $10.42 billion, which includes the benefit of approximately 60 basis points of foreign currency translation and equates to constant currency revenuegrowth of 8.9% to 10.9%.
• Revenue growth in LabCorp Diagnostics of 3.0% to 5.0% over 2017 restated revenue of $6.86 billion, which includes the negative impact of the Protecting Access to Medicare Act (PAMA) as well as the benefit of approximately 20 basis points of foreign currency translation. This outlook equates to constant currency revenue growth of 2.8% to 4.8%.
• Revenue growth in Covance Drug Development of 20.0% to 24.0% over 2017 restated revenue of $3.56 billion, which includes the benefit of approximately 140 basis points of foreign currency translation and equates to constant currency revenue growth of 18.6% to 22.6%.
• Adjusted EPS of $11.30 to $11.70, an increase of approximately 17.7% to 21.9% as compared to $9.60 in 2017. The expected growth in adjusted EPS includes the benefit of an assumed lower tax rate in 2018 of 25%, contributing approximately $1.30 in adjusted EPS over 2017.
• Free cash flow (operating cash flow less capital expenditures) of $1.1 billion to $1.2 billion, compared to $1.1 billion in 2017.

GUIDANCE:

Lab Corp. sees FY2018 EPS of $11.30-$11.70, versus the consensus of $10.79.

For earnings history and earnings-related data on Lab Corp. (LH) click here.