Laboratory Corp of America Holdings Earnings: The Streak is Broken

S&P 500 (NYSE:SPY) component Laboratory Corporation of America Holdings (NYSE:LH) reported its results for the fourth quarter. Laboratory Corporation of America 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 Fourth Quarter

Results: Net income for Laboratory Corporation of America Holdings rose to $135.4 million ($1.34 per share) vs. $131.8 million ($1.26 per share) in the same quarter a year earlier. This marks a rise of 2.7% from the year earlier quarter.

Revenue: Rose 5.5% to $1.37 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: Laboratory Corporation of America Holdings reported adjusted net income of $1.56 per share. By that measure, the company beat the mean estimate of $1.53 per share. Analysts were expecting revenue of $1.38 billion.

Quoting Management: “We had a great year and achieved meaningful progress on each pillar of our five-pillar strategy during 2011,” said David P. King, Chairman and Chief Executive Officer. “We also made great progress on the integration of the Westcliff, Orchid Cellmark and Genzyme Genetics acquisitions. We will continue our progress on all of these components of our growth in 2012.”

Key Stats:

Last quarter’s profit increase breaks a streak of four consecutive quarters of year-over-year profit drops. In the third quarter, net income fell 4.1% from the year earlier, while the figure fell 20% in the second quarter, 4.2% in the first quarter and 7.6% in the fourth quarter of the last fiscal year.

The company has now topped analyst estimates for the last four quarters. It beat the mark by one cent in the third quarter, by 2 cents in the second quarter, and by 16 cents in the first quarter.

Gross margin shrank 0.7 percentage point to 40.2%. The contraction appeared to be driven by increased costs, which rose 6.6% from the year earlier quarter while revenue rose 5.5%.

Revenue has risen the past four quarters. Revenue increased 10% to $1.4 billion in the third quarter. The figure rose 13.3% in the second quarter from the year earlier and climbed 14.6% in the first quarter from the year-ago quarter.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the first quarter of the next fiscal year has moved down from $1.69 a share to $1.67 over the last ninety days. The average estimate for the fiscal year has remained at $6.30 per share.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at

To contact the editor responsible for this story: Damien Hoffman at