Labcorp forecasts a gain in 2023 revenue — even as testing for COVID-19 continues to plunge — as it moves forward with plans to provide laboratory diagnostic services for St. Louis-based hospital chain Ascension.
The company said in a statement on Thursday it expects full-year total revenue to increase 1% to 4%, even with an estimated 70% to 90% decline in COVID testing revenue. Labcorp also forecasts earnings per share of $16 to $18, an increase from its 2022 earnings per share of $13.97.
Labcorp and Ascension struck an agreement in early 2022 for Labcorp to manage Ascension’s hospital-based laboratories in 10 states, and acquire some of its outreach laboratory business.
Last quarter, the two companies began integrating with Labcorp adding about 5,000 employees and providing laboratory management services for just short of 100 hospitals across the system. That helped grow Labcorp’s base testing business by about 7% in the fourth quarter.
Labcorp announced plans to spin off its clinical development business in July 2022 and more recently hired former Quintiles CEO Tom Pike to lead the business. The spinoff is still on track to be completed in mid-2023, CEO Adam Schechter said in the statement.
In 2022, the segment brought in $5.7 billion in revenue, a 1.7% decrease from a year earlier. In the fourth quarter, Labcorp incurred $29 million in costs related to the planned spinoff, CFO Glenn Eisenberg said on an earnings call.
Labcorp, based in Burlington, North Carolina, reported total diagnostics revenue of $2.29 billion in the fourth quarter, a 13% decrease from the year-earlier period. That was attributed to a 13% drop in COVID testing and a smaller impact from foreign currency rates.
For the full year, Labcorp had $9.2 billion in diagnostics revenue including $1.1 billion from COVID testing.
“We finished the year strong, with accelerated revenue growth in Diagnostics, continued strong underlying fundamentals in Drug Development and margin expansion,” Schechter said. “In 2022, we also advanced our strategy with the announcement of the spin of our Clinical Development business, which will be named Fortrea, and acceleration of several hospital partnerships and acquisitions.”