Labcorp on Tuesday reported a 10% increase in its base business revenue in the first quarter and said the proposed spinoff of its clinical development unit would be completed as expected at mid-year.
The company’s base business benefited from an agreement to manage laboratories for the Ascension health system, Labcorp said. That relationship contributed about 4% of Labcorp’s organic growth in the first quarter, CEO Adam Schechter said on the company’s earnings call.
Labcorp is now managing laboratories in nearly 100 Ascension hospitals, Schechter said. The partnership, established early last year, covers Ascension hospital-based labs in 10 states.
Labcorp reported first-quarter revenue of $3.78 billion, down 3.1% from a year ago, pressured by a decrease of 11.6% in COVID-19 PCR and antibody testing, as well as the negative impact of foreign currency translations.
Net earnings for the quarter were $212.9 million, down from $491.6 million in the first quarter of 2022. On an adjusted basis, earnings per share excluding amortization, restructuring charges, and special items were $3.82, compared to $6.11 a year ago.
Labcorp announced plans in July 2022 to spin off its clinical development business into an independent company. The new company will be called Fortrea, and will be led by Thomas Pike, who will become its CEO and chairman.
Schechter said Fortrea’s leadership team and board of directors will be announced in the near future.
The business manages clinical trials for pharmaceutical and biotechnology companies.
LabCorp narrowed its expected range for adjusted earnings per share to $16.25 to $17.75, from $16 to $18 previously.
"Labcorp's first quarter results set the foundation for a strong 2023, led by continued industry leadership and strength in our Diagnostics and Central Laboratories, and strong fundamentals in our Early Development Research Laboratories," Schechter said.
Shares of Labcorp fell $5.73, or 2.5%, to $226.78 in morning trading on the New York Stock Exchange.