Laboratory Corporation of America Holdings Earnings: Higher Expenses Shrinks Margins, Profit Declines

S&P 500 (NYSE:SPY) component Laboratory Corporation of America Holdings (NYSE:LH) reported its results for the third 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 Third Quarter

Results: Net income for Laboratory Corporation of America Holdings fell to $134.3 million ($1.31 per share) vs. $140 million ($1.34 per share) a year earlier. This is a decline of 4.1% from the year earlier quarter.

Revenue: Rose 10% to $1.4 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: LH reported adjusted net income of $1.61 per share. By that measure, the company was about in line with expectations as the mean analyst estimate was $1.60 per share. Analysts were expecting revenue of $1.41 billion.

Quoting Management: “We are very pleased with our third quarter and year-to-date results,” said David P. King, Chairman and Chief Executive Officer. “We delivered another quarter of solid revenue and volume growth, made significant progress on our acquisition integration activities and achieved strong earnings.”

Key Stats:

The company has now seen net income fall in each of the last four quarters. In the second quarter, net income fell 20% while the figure fell 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 2 cents in the second quarter, by 16 cents in the first quarter, and by 15 cents in the fourth quarter of the last fiscal year.

Gross margin shrank 0.9 percentage point to 40.5%. The contraction appeared to be driven by increased costs, which rose 11.6% from the year earlier quarter while revenue rose 10%.

Revenue has risen the past four quarters. Revenue increased 13.3% to $1.4 billion in the second quarter. The figure rose 14.6% in the first quarter from the year earlier and climbed 11.2% in the fourth quarter of the last fiscal year 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 fourth quarter has moved down from $1.56 a share to $1.53 over the last ninety days. For the fiscal year, the average estimate has moved down from $6.32 a share to $6.30 over the last ninety days.

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), RadNet Inc. (NASDAQ:RDNT), Interleukin Genetics, Inc (ILIU), and NeoGenomics, Inc. (NGNM).

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(Source: Xignite Financials)