Lab Corp. (NYSE: LH) reported Q1 EPS of $2.62, $0.09 better than the analyst estimate of $2.53. Revenue for the quarter came in at $2.79 billion versus the consensus estimate of $2.83 billion.

• Q1 revenue of $2.79 billion, down 2% from $2.85 billion last year
• Q1 diluted EPS of $1.86, up 11% from $1.67 last year; Q1 adjusted EPS of $2.62, down 6% from $2.78 last year
• 2019 adjusted EPS guidance increased to $11.05 to $11.45, from $11.00 to $11.40
• 2019 free cash flow guidance of $950 million to $1.05 billion, unchanged from prior guidance

“During the quarter we delivered strong performance in both businesses, translating into solid revenue and earnings in light of the outsized impact of price reductions due to PAMA on our results,” said David P. King, chairman and CEO of LabCorp. “Our Diagnostics business delivered a solid performance in light of PAMA, with organic growth in revenue and volume. Covance grew revenue on a constant currency basis, expanded margins and continued to drive earnings. We deployed capital to share repurchase and several strategic acquisitions, further demonstrating our commitment to returning capital to shareholders and providing clients with innovative solutions that deliver value today and in the future. The value of our combination is increasingly apparent and we are well-positioned to drive growth in 2019 and the years to come.”

GUIDANCE:

Lab Corp. sees FY2019 EPS of $11.05-$11.45, versus the consensus of $11.21.

The following guidance assumes foreign exchange rates effective as of March 31, 2019, for the remainder of the year and includes the estimated impact from capital allocation, including share repurchases and acquisitions.

• Revenue growth of 0.5% to 2.5% over 2018 revenue of $11.33 billion, unchanged from prior guidance. This guidance includes the negative impact from the 2018 disposition of businesses of approximately 1.2% and foreign currency translation of approximately 0.5%.
• Revenue in LabCorp Diagnostics is expected to be -4.0% to -2.0% as compared to 2018 revenue of $7.03 billion, unchanged from prior guidance. This guidance includes the negative impact from the 2018 disposition of businesses of approximately 2% and foreign currency translation of approximately 0.2%.
• Revenue growth in Covance Drug Development of 5.0% to 9.0% over 2018 revenue of $4.31 billion, unchanged from prior guidance. This guidance includes the negative impact from foreign currency translation of approximately 0.9%. Organic revenue growth excluding pass-throughs is also expected to be 5.0% to 9.0% over 2018.
• Adjusted EPS of $11.05 to $11.45, an increase of 0% to 4% as compared to $11.02 in 2018. This is an increase over prior guidance of $11.00 to $11.40.
• Free cash flow (operating cash flow less capital expenditures) of $950 million to $1.05 billion, compared to $925.6 million in 2018, unchanged from prior guidance.

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