Laboratory Corp of America Earnings Cheat Sheet: Margins Shrink as Costs Rise, Profit Falls

Rising costs hurt S&P 500 (NYSE:SPY) component Laboratory Corporation of America Holdings (NYSE:LH) in the second quarter as profit dropped from a year earlier. Laboratory Corp. of America Holding provides testing services used by the medical profession in patient diagnosis and in the monitoring and treatment of disease.

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Laboratory Corporation of America Holdings Earnings Cheat Sheet for the Second Quarter

Results: Net income for the medical laboratories and research company fell to $122.9 million ($1.20 per share) vs. $153.7 million ($1.46 per share) a year earlier. This is a decline of 20% from the year earlier quarter.

Revenue: Rose 13% to $1.4 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: LH fell short of the mean analyst estimate of $1.62 per share. Analysts were expecting revenue of $1.39 billion.

Quoting Management: “We delivered another very strong quarter despite mounting economic headwinds,” said David P. King, Chairman and Chief Executive Officer. “We are very pleased with our second quarter and year-to-date results, and we will continue to execute our five-pillar strategy to enhance shareholder value.”

Key Stats:

Gross margin shrank 1.3 percentage points to 41.8%. The contraction appeared to be driven by increased costs, which rose 15.6% from the year earlier quarter while revenue rose 13%.

Revenue has risen the past four quarters. Revenue increased 14.6% to $1.37 billion in the first quarter. The figure rose 11.2% in the fourth quarter of the last fiscal year from the year earlier and climbed 7.7% in the third quarter of the last fiscal year from the year-ago quarter.

The company has now seen net income fall in each of the last three quarters. In the first quarter, net income fell 4.2% from the year earlier, while the figure fell 7.6% in the fourth quarter of the last fiscal year.

The company fell short of forecasts after beating estimates in the previous two quarters. In the first quarter, it topped the mark by 16 cents, and in the fourth quarter of the last fiscal year, it was ahead by 15 cents.

Competitors to Watch: Quest Diagnostics Inc. (NYSE:DGX), Orchid Cellmark, Inc. (NASDAQ:ORCH), Clarient, Inc. (NASDAQ:CLRT), Bio-Reference Laboratories, Inc. (NASDAQ:BRLI), Psychemedics Corp. (NASDAQ:PMD), MEDTOX Scientific, Inc. (NASDAQ:MTOX), Enzo Biochem, Inc. (NYSE:ENZ) and RadNet Inc. (NASDAQ:RDNT).

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(Source: Xignite Financials)

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