Earnings call transcript Q1 2023

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Hello, and thank you for standing by. Welcome to Labcorp’s Q1 2023 Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference over to Chas Cook. Sir, you may begin.

Chas Cook

operator. you, Thank welcome and first XXXX quarter Good to call. conference morning, Labcorp’s

there today’s available a Internet. in detailed will via press and call As conference release, be this replay telephone of

Officer; Schechter, Chief and the Officer. posted our include on This Investor and Adam website and financial Vice the Financial of are in both section today Eisenberg, Relations information Executive and Investor me the Chief With Executive Relations release and morning, at to Glenn President today’s we Chairman financial of non-GAAP additional an discussed our our a operations, GAAP which press with presentation business during reconciliation measures measures call. www.labcorp.com,

and/or XXXX pandemic and conditions, are limited company’s strategies, the various related assumptions, guidance but forward-looking cash future and making including the synergies, forward-looking including transactions These acquisitions the are proposed flows results, LaunchPad market we spinoff to, statements development growth. and of respect for not with condition, economic impact of from business, the initiative, COVID-XX businesses, include, estimated and and Additionally, statements financial future clinical savings factors the statements. general the and other financial the the opportunities expected on to operating business and

most the on quarterly are other company’s SEC. annual of are subsequent factors, our and many is report with based beyond information and subject of on XX-Q XX-K reports our forward-looking Each recent the on in statements in filings included which change Form to a use Form control. the More

expectations obligation if to change. We these to have forward-looking our updates any even no provide statements

Schechter. Adam over Now I’ll the call turn to

Adam Schechter

making. great that discuss today XXXX start Thank and the you, the is we’re to with be you Good to Chas. everyone. morning, of progress It

solid for development. for Our across laboratories, strong first was leadership quarter and by early development mixed diagnostic driven set this quarter staffing clinical very a quarter and in and our business, momentum central foundation fundamentals industry improvements a strong continued Performance the XXXX. results

development, more continues drug noted XXXX second lower we to be NHP first For half be FSP of loss half shortages, and previously first contract to by the of than the challenging work. COVID-related impacted expected an the as the

track on business rate complete positive second our the short-term officially once been of accelerate progress Fortrea anticipate and and to business compared half to as as previous development years. well slightly our midyear, launched. the burn we Customers clinical some in of are transaction slower We spin about to XXXX, the backlog with customer delays is a the have

we business, transaction a is with our customer Sometimes they dialogue but are an of new remains quarter. this evidenced pharma large award complete a encouraging close until after as contract the to FSP waiting by as approach renewal the

totaled billion, our $XX flow In business performing adjusted Overall, the well. free first is $X.X quarter, million. share earnings and was cash $X.XX was revenue per base

as testing grew development CAGR. COVID at prior business prior performance esoteric Ascension continues a year-over-year Base be partnership. by quarter. hospital This and to grew routine Business same the revenue XXXX, drug businesses the in top line our revenue revenue, and The Diagnostics Excluding to including well period the of XX% approximately from driven XX% deals, year. both testing enterprise-based revenue both diagnostics in strong COVID, grown versus X% benefit first have quarter based as Since

XX-month Development declined the ended Drug Drug book-to-bill For versus year. X.XX. quarter with Development, revenue of first prior trailing quarter X% a

prior than margins were lower year. Business Base Enterprise

XXXX. However, for slight margin we expansion anticipate still

overcome we supply LaunchPad integration, As we initiative. benefits and continue realized the from Ascension the NHP we issues,

both cost businesses implement controls inflationary across to are to offset pressures. We continuing

performed and per averaging COVID totaling day. testing XXX,XXX volumes Finally, declined expected, tests the during more than quarter, PCR more than XX,XXX tests

a will continue quarterly our results outlook our as well in to We to just COVID decline. XXXX additional as on testing provide Glenn expect detail moment.

of our spin Moving track the now the on approval complete Business, to spin Clinical to we subject regulatory are to process. midyear, on Development planned the an update

despite been in has foundation short-term pressures. that the confidence have We established

the from the the to future. to Fortrea of the and announce benefit Directors more. Board We learn Tom leadership will you Fortrea near of plan We Pike encourage as in visit team leadership CEO. fortrea.com to

Upon completion, transaction. to customer profitable Labcorp will we’ll to through Both with returns. attractive from and strong growth, create sustainable two shareholder companies Fortrea deliver better a independent and to meet emerge ability transaction and a needs, tax-fee their drive

now enterprise I’ll our move to strategy.

by initiatives. future strategic are the executing against groundwork laying We for the our

to quarter. is continue operations and laboratories assets XXX Ascension now integrate Labcorp hospitals. in first We the nearly Ascension managing in

announced to relationship generate other deals these right are of and our adapting shortages, future to Health and inflation, labor growth are laboratory systems Health Barnabus challenges, the strong and RWJ including proof other partnerships. strategic points financial they’re healthcare amidst through laboratories seeking system headwinds. with health ability pressures, previously Ascension our partner system

patients health to to tailored, solutions We needs their with partners cost are working develop agreement the that of laboratory and entered into month, system Last Enzo its unique providers. division. our with we of innovative assets meet the Biochem acquire and effective clinical

relationships hospital acquisition in new is robust. investment and throughout other local to partners. engagements we And and in existing new partnerships with the and updating Today, year. forward on The lab expand are discussions we you look active execute to pipeline for

an access cancer. with sponsored Turning for ImmunoGen program to Immunohistochemistry increase testing partnered patients oncology, with we ovarian to on

This low diagnostic metastatic eligibility with reporting patient breast for outcomes. and is cancer, breast HERX low can improve test therapies for to FDA-approved HERX the of added cancer. patients treatments for IHC impacting only test the status that Labcorp companion Additionally,

access decision care for to capabilities to also entered our collaboration community care cancer to This with providers. into VieCure on builds access high Labcorp strategic quality oncology improve clinicians cancer collaboration their patients and a support. provide to precision greater

our hepatitis prostate tests cancer a fatigue. platform expand test chronic first health fatigue OnDemand. systems including with for We digital PSA continue We and quarter, new test, three immunity to the launched including test, a B fatigue screening post-COVID people a Labcorp in

near are we to investors color forward two looking to upcoming on provide future. up, though wrap I mid-term events Before our more

tentatively which Day Investor X June ahead. in Fortrea have discuss for scheduled exciting we’ll the opportunities We

meeting. the available in Form expect of We to XX advance be the

September. Investor and will which tentatively is Labcorp the Labcorp scheduled of today for Day, Additionally, completion the we stronger. strong planning are even emerge from is spin upcoming a

Our with laboratory, fundamentals. research development central businesses leaders laboratory and solid market laboratory early are diagnostics

against that We’re these will our strategy position for executing in businesses long-term continued future. growth the

every transformational strong a I team want preparing to for mid-year. thank to and Labcorp continued business while our to take more team moment our than strong, performance is base The XX,XXX for contributions At customers. our transaction their generating progress technology team attractive find lives to stakeholders. to betterment health and of harness innovation, the science, and improve mission generating day for for works shareholders. improve Labcorp our ways new returns while well-positioned to our to is

I’ll Glenn. over the turn that, to With call

Glenn Eisenberg

of Thank our guidance. my our first results you, a update full Adam. discussion with of a conclude quarter comments start in I’m review followed by year an each on segment performance going to with and

business reference, found included additional information can also website. our our have that on in For supplemental deck we Relations be Investor

testing year. X.X% business $X.X Revenue of organic for due impact the last the year testing billion, year, business XX% growth based testing to was from compared the last compared acquisitions. to grew by and last foreign down the while was and COVID a base COVID to COVID decrease revenue partially negative the was lower X.X% currency. from offset business to quarter This impact compared base

X% Ascension management lab constant the benefiting from agreement, base X.X%, approximately organic the business Organically currency, the of contributed in which grew growth.

million reminder, the management X% outreach acquisition is a of acquired or quarter income As lab organic we $XXX the business an Ascension treated is treated was while from for as that as the Operating revenue. agreement growth.

and During items, the amortization LaunchPad special we charges and initiatives, primarily of restructuring Fortrea. related acquisitions, quarter, and proposed $XX of the million had of spin million $XX

of adjusted million or compared to or XX.X% the in income was Excluding these $XXX last year. items, $XXX million operating quarter revenue XX.X%

was the The lower The decrease income testing margin negatively mixed decline TSA Ascension related impact NHP constraints. COVID by due also in and demand. adjusted from operating affected the was to

items, slightly R&D these been as costs, increased partially personnel margins expense, Excluding were savings oncology. of inflationary and the in and demand investments benefit would’ve by higher LaunchPad upset up

three to The savings quarter XX.X% year. continues was initiative due XX.X% R&D was The tax to the year increased LaunchPad tax credits. from on million of benefit adjusted quarter The for for XXXX. compared adjusted ending rate to rate tax $XXX period XX.X%. rate last primarily deliver the Our to tax lower the over track the was be

approximately We continue to adjusted be tax XX%. expect our to rate full year

business partially $XXX higher flow to the in lower in was for quarter, the quarter Adjusted and share. or was spin base quarter costs, were earnings $XXX XX% down million cash COVID was due related base earnings EPS testing XX%. $X.XX to a Net ago. $XXX cash by up the compared year due flow adjusted decrease per earnings. million business diluted testing offset The operating in as million were earnings last $X.XX lower COVID Operating from EPS to year

expenditures year. $XX $XXX million down million totaled Capital from last

expenditures that and company the For X.X% flow $XX quarter full capital was paid of base million will the cash expect business $XX revenue. we out for Free in the dividends. be year, continue million to approximately

softest cash the quarter company’s is quarter generally free first for The flow.

free We be cash $X.X billion our expect flow continue to to full to $X billion. year between

to a Now review X.X% testing was last our COVID segment which of being revenue due the and down while compared by for the grew the of organically decrease acquisitions the business year, to COVID while benefited last Ascension by to management diagnostics. X%. testing, impact to was $X.X offset year. driven X.X%, the XX.X% testing partially compared of quarter revenue Revenue was X%. organic performance base billion, growth, lab base beginning approximately with by revenue COVID down XX% days agreement growth by compared approximately year, The business X% of contributed last weather

the and year, by X.X% partially year-over-year due to grew decreased rate approximately The business than normal in due benefit decreased volume COVID of including was testing. The compared XXXX, volume impacted of by in revenue X.X%, also to XX% strong business organic as base of acquisitions growth last to acquisition decline year, favorable days volume weather first X.X%. the compared volume volume offset Base lower quarter was Omicron. volume and Total of last X.X% to X%. from by

improved the X.X% approximately last by business business Price mix partially COVID and to of X%. lower year compared increased of base the of acquisitions Base X.X% last management base of price benefiting was X.X% was lab testing versus offset mix from currency and year, up Ascension business X.X% agreement X.X%, X.X%. as

million was XX.X% $XXX to in $XXX was reduction quarter which due the or decrease The for or for carried the income income approximately and of to operating of year. adjusted million operating compared revenue XX.X% COVID in quarter. margin testing, adjusted last a XX% a Diagnostics margin

TSA. lower margin savings, partially LaunchPad for expect offset points was the mix margin the segment but Going driven expense business XX above approximately higher growth COVID testing, by up we impact and and from Base basis Ascension forward, the average. organic a still by personnel

Revenue to development. last decreased $X.X billion, The drug of X% in year, of due of performance primarily decrease for adjusted the compared related most the the loss. constrained to the of was these approximately impacted NHP foreign X.X%. previously revenue reduced by quarter X.X% review COVID and The business Now and was a early organic to negatively therapeutic decrease X% development currency organic work, revenue vaccine was due FSP contract by items. and mentioned constraints,

early revenue organic these central business the grew with up X% XX%, development up up base lab Excluding segment for clinical development X%. impacts, approximately and X%

COVID was due XXXX. Reported $XXX or basis The grew the the revenue first impacted contract which quarter year. of to reduced work X.X% million approximately last points. to drug segment decrease for to negatively income of XX.X% margin was million margins adjusted NHP-related and annual and operating a constraints, basis XXX revenues the FSP income Adjusted or development X.X% compounded on operating quarter compared first and loss, compared by vaccine in therapeutic $XXX

increased quarter of a backlog biotech into have due by next savings LaunchPad approximately ended and $X.X demand we billion $XX.X revenue and months. to costs the backlog primarily over We would write-off personnel margins of related items, these customers. to offset this billion, expect higher and being receivables to of inflationary XX partially Excluding expense, convert small the with

The that assumes capital with updated enterprise for assumes guidance anticipated flow repurchases free year. effective foreign allocation, exchange the part full of also targeted dividends. the year and XXXX which March includes full discuss will from share guidance currently for XXXX rates year. XX, impact the cash of full for as Fortrea be acquisitions, our Labcorp Also, guidance, I’ll Now our

the the updated guidance. spin currently middle year, expect anticipated in to we of Following provide its

been XX%. from to our revenue compared to increase of lowered business X% Enterprise XX increase X.X% has to reflects to midpoint at an guidance expect to to the range is This guidance XX% minus base We increasing This points. XX%, the XXXX. while grow testing range to prior COVID X.X% basis

We perform in taking year to continue guidance well diagnostics our up full range. are and

X.X% this base Business to This up approximately to from midpoint X% diagnostics Base an compared down prior expectation points, has XXXX, XXX our that primarily the at We includes of to XX.X% the business the grow which basis is guidance X% increase due Ascension. volume. stronger be will to expect now revenue to due to XX%, growth guidance

expect from Business margin Ascension. up XXXX, We impact including XXXX to mix Diagnostics in unfavorable the Base be versus

X.X%, currency We guidance, basis due At lower-than-expected from first due the compared to impact and grow This midpoint compared to constraints to XXXX at X.X% organic X.X% slower-than-expected annual guidance rate XXXX. XXX is orders. to of XX midpoint points foreign guidance compound growth of growth. expect includes quarter is drug the our development backlog of from to positive primarily points. our decrease revenue due a the to prior conversion, site investigator primarily This the basis to

drug expect the increase in compared also to development We XXXX. slightly to margin will continue that XXXX

$X guidance is the our guidance midpoint. Base unchanged increase the Business $X.X from EPS $XX.XX. guidance tightening Our lower our Free guidance. testing; prior EPS earnings unchanged. cash range range at to to COVID reflects is is from $XX.XX billion, flow expected from adjusted adjusted the a to midpoint This is XX% for is guidance, This while while of prior billion

continued we decline expect expected COVID to profitable the drive in through year. to Business, continue summary, our Base testing In are volumes growth while to

to that shareholders generation to repurchase growth, supplement a free to also through and capital program expect for our dividends. while share continue returning cash We organic our use acquisitions flow

now we will take Operator, questions.

Operator

comes Thank Group. from Ann with question line you. first Instructions] Mizuho the [Operator Hynes Our of

Your line is open.

Ann Hynes

Hi. Good morning.

Adam Schechter

Good Ann. morning,

Ann Hynes

doesn’t think the get the And in or in when do your think year-end, prepared CRO some think if the you said confidence? Good I it second half. issue? you do color maybe improvement you you half Maybe you that what resolve Can morning. in type just NHP second gives late-stage And more when Thanks. resolve it this you provide of better the on we some with impact remarks, could it in would by issue? think NHP general maybe business? get

Adam Schechter

good Yes. you, Thank and Ann, morning.

give you stand. some additional and context we where NHPs I’ll on So

we we we’re impact continuing in you keep leverage people, and important the of If was But first the have look confident half at million. note confident we does year, and to into now $XX not NHP we well development of quarter, because it’s that that early hire the continuing $XX to to because people enough the we’re to feel million approximately feel go supply second as year. next that,

you the it that business, If good. the looks at development look impact, underlying excluding of early demand

It XX%. actually grew to XX%

it acclimate ready year still NHPs quarter. and to So about first study impact be second to highest in, that supply the and the as that quarter we reason. expect said be be is, get for between reason still half time good there’ll of for the of $XX takes the have impact to new second the impact feel the and the second $XX the train we to starts. would We why in quarter, million. we some The million to In

about So good we feel next half year. feel our supply good the We about the about situation. good second We going of year. into feel

million. The the certainly of first $XX was biggest million $XX to quarter impact

most $XX importantly, XX% of the the to business for quarter not impact have be it Second development grown XX% would less NHPs. would early But million to $XX been million. an of underlying had

Ann Hynes

Great. Thank you.

Operator

Our Nephron comes the of Research. question Meehan line Instructions] [Operator you. Thank from Jack next with

open. is line Your

Adam Schechter

morning, Jack. Good

Jack Meehan

Good morning.

going are to focused business. diagnostics So the on my be questions

sequentially we’ve first historically. really seen X% strong they look at one sales which up were what I in first The versus the quarter, is base is, if

were calendar there probably sequential guessing to and I’m I the was the view explain weather out So Medicare else call favorable, helpful there, drop too. heard would Is pickup? days anything of you sort

Adam Schechter

Yes.

routine, us hospital, up in look look So the if look very, at say strong Jack, at that we’re our base pleased in that I’d first diagnostics, and you the which very it to ex-hospital, diagnostic esoteric, look we’re mix, the our enabled business. every guidance you you business, whether all, at looking for performance way at of range with very

you versus that base then this acquisitions, XX% to revenue weather remember favorable was last last If this Omicron specifically, was of and business to where year year was volumes, last about year that impacting the days at look business. up About year. compared it and we’re X.X% X%, also but year, comparing our was

to very very, bit would So a little look, but expect. more when strong you it’s typical you still what it’s

just we not look we the business that also things part happening good the TSA, and Ascension we As that with of but where at Ascension I really with in the the difference, sequential acquisition feel bought. about are are

if I’ll to wants Glenn additional But color. see add some

Glenn Eisenberg

No.

it that think I hits in.

you anytime look think of seasonality in I business. talked the diagnostics business, about the we’ve especially the

have issues you the at impact the the well as to if looking sequential, – So as factor of you issue fundamental are Adam those to in I to strong guess, do of the expect days, that acquisitions sequentially, will, demand we continue annualizing that we go look see similarly just the throughout year-over-year we and continue as forward. is to And spoke good year. the growth comps obviously

Jack Meehan

the what on then And And in margin can business How first share TSA trending? can quantify quarter? the Ascension you segment, front you margin is Great. that was like the in the Diagnostics is? how the big

Adam Schechter

Yes.

always in the the in beginning So digits. the at I’ll the give will if be Glenn, which when you that as be low-single the doing some well. we and context integration, could point, we were lowest But said jump first margin will

never will continue and started to through as margin we closer not into Over expect our that the see we mid-single margin to margin But some time, reach go business. improvement, we to going have this year the that’s now, It there. year. improve. quite continue current saying although getting actually of next to already digits We’re will the average

Glenn Eisenberg

Yes.

Just, and the the it earlier early [ph] question the – speaks a on to little sequential. two

revenues to continue grow. Ascension to continue see We within

grew sequentially. it So

you’ll at around still, the of our around and third will as upper We’re revenue million as quarter. guidance, $XXX based be in it contribute it. end recall announced would this annualize our our current even X% you to transaction, upon growth know, when expected the the or above It’s going million after to we $XXX maybe slightly revenue year,

fourth quarter it So periods. the will in comp have both

it in call the impacted good seeing revenue around growth. our we’re So quarter, Obviously, X.X% first year-on-year. it

So talked we’re low-to-mid-single while And upper as we’re especially in with the beyond margins, margin – digit the of that we will about nicely. the of through continue coming Adam that the year, but right forward as we expectation or improvement mid-to end that. revenues said, now are kind at go range growth

Jack Meehan

Glenn. you, Thank

Operator

Thank you. the [Operator Caliendo Instructions] comes Our Kevin of next line from question UBS. with

line open. is Your

Adam Schechter

Good morning, Kevin.

Kevin Caliendo

that? of how you’re of guys. we morning, that guiding get guess for I How on sort of for taking question. CRO want What’s bit. margin little execution a just Good expansion Like to get Thanks I we of cadence margin understand year-over-year I in what the the my business. that? year-over-year segment progression the talk you the of the through there? expansion business? margin do what sort the Can drives understand

Adam Schechter

business CAGR, of And you said strong. first strong. that much constraints, as the to. I think Same there mean, quarter especially glad margin significantly three business when was I the we NHP our if very you central at we better. that at a that mixed I’ll for if the as But will to you are in development, I business impacted that which you quarter through least look our development year; saying start underlying look start in look in that business, before, at is the And things them it at go talk clinical It looks about. as laboratory look early the strength well. the thing, Yes, by excluding can off see two can

that first million The first million revenue. one was already impact to is $XX quarter. NHP stated I $XX in a

have doesn’t $XX to second be It quarter. $XX It one million people. we we’re continuing the That was loss we to like takes because and leverage in to it been business time hire run million It’s train continuing It faced we’re bottom find line. issues people. expect falls to that to hard constraints. the We year. the of didn’t last people, well to to

the though run decided hire low business purposely reason. that rate and to at we for margins So the to people, we manage for differently. was revenue that continue very NHP to the a Even we constraints, down continue

that a a The had write-down and was second bad small was actually bankrupt company. thing company there about was debt a biotech of is $XX It $XX for one million. to million write-off went small we

a of a third think XXXX. then where clinical we are kits the things not were the because to that’s will rate expect to get coming those And better three seen a back, bit not flowing in clinical. thing lower prior seeing first It’s two, they is bit surprising the overly business. But now burn certainly. we we’ve through We

to think we one will we improve third The year. as the continue go through

Glenn Eisenberg

in the that have revenue nine line would question; say and margins. delivered I’d the to the for in first seasonality goes other low slightly above I XX% too, growth if at a drug year, top Kevin, our obviously, our little what we we for full we in that’s quarter, margin. at margins next months. implied but But did business X.X% guidance around the last roughly part, the the have is this look around if look expectation historically did we first lowest. But you the are first a the at year, quarter get Yes. for again, development the will that looked you remaining year, margin. XX.X% And that said, quarter in we back you you year, be When thing, it constraints bit it expect

having growth, the LaunchPad margin will constraints drive savings, improvement. So, top the line not

Kevin Caliendo

any and the or by the Can terms the maybe But describe even to on that ask how just backlogs backlog the or maybe a that for like? what or segment helpful. Any customer in would year-over-year not clinical look between changed quick changed Form or I’m has are year-over-year of the to XX if How the has color That’s even on follow-up ask I you really Thanks. duration? backlog? look forward two trying helpful. sequentially, be type can businesses. going on

Adam Schechter

I biotech Yes, in we our as business, pharma. backlog of to if look less in much early say, do a small in you at would general, development, more medium percent

business, do look medium-sized you it’s mean more in it’s then it it’s you small we business. than Laboratory, do fully it’s And – but pharma less large is in clinical more pharma, our more at biotech than look two, in evenly we I our to but our biotech. pretty small, split, much if at If development Central in between the towards

So middle-sized X.XX development I it’s early book-to-bill And months. pharma, for XX lab of business. well the And to to as the the clinical was the is pharma would large majority say skewed business. biotech much central as medium-sized the the overall, small our in business trailing more book-to-bill in

Kevin Caliendo

early versa? When months, that stage, I XX book-to-bill and all the way say now the the between mix, any last more early in that clinical over hasn’t like has vice there the in or clinical stage less meaning changed migrated backlog at stage is the in or that

Adam Schechter

really Obviously, out different than closer will it But segments. be time, broken way. we the that Yes, do today. it by spin, at out differently we we we breaking to business really haven’t don’t get we out break this as

Kevin Caliendo

guys. that, appreciate thanks I

Glenn Eisenberg

you. thank Yes,

Operator

stand Please for next question. our you. Thank by

comes question Tanquilut with Brian the next Jefferies. from line of Our

Adam Schechter

Good morning, Brian.

Brian Tanquilut

little improvement as a from book-to-bill the being the than gives earlier, on half expected, book-to-bill? your remarks in about slower comment, prepared conversion question of as to you year Hey, just good follow-up maybe guys. Kevin’s we the think morning. of what visibility about the I you and confidence think back Good the Thanks. the on morning Glenn, Maybe to

Glenn Eisenberg

have we the trend down. no, seen go So

around at the the look you where of rounding we’re this conversion XX% we at backlog kind quarter, were If quarter, fourth XX.X%.

So, assume down. seen going we this level We’d the that forward. kind of have trend

that as you see half that, down we look quarter bit softer bit to new we of know, of decline revenue the that little had reason roughly was year, in our a as the other current need the softness a a at still did little come the orders orders for year outlook XX% first of the for So, of with there. the you when call from around being effectively revenues we in

bit. we’re overall, contracts, backlog, there’s the current we’re rate that at we say of the always feel were looking see that the at in bit a have, pick caused and contracts conversion looking we up couple comfortable that contracts expectation. you it see we particular a Frankly, But come There we a lower. can can a range currently from large burn that the those that little the with to

burn a is bit a bit we’re for improves, the hopefully, So assuming. XX.X-ish little kind pickup. kind mix once those of a or see that through little of now, we’ll conversion of But right what percent

Brian Tanquilut

Awesome, thank you.

Operator

next standby you. question. Thank our for Please

Our question Patrick the from next comes of line Donnelly with Citi.

open. is line Your

Adam Schechter

Good morning Patrick.

Patrick Donnelly

to tone story bit for trend of Diagnostics you more bit what again, kind a payer front? expect the Hey to love guys. color the conversations? there? Any price just in give to on more should a good terms bit we of And improved the give have terms change with Any morning. nice the pretty color Thank to for we but know year? mix a Can of in business, the that the things that you should continues a payers? on on that how there, would rest change guys of be I be for year taking one of the remainder questions. thinking just there Maybe you the

Adam Schechter

will conversations the that of payers, Yes, very good terms we have have. ask payers, in start, good access about hi constructive. with I’ll to very our But we continued specifics. Glenn some Patrick, feel and give access I I’ll and the

in significant we’re see of the past. pressure care. same at in to price time, of happened But changes You what’s single seeing trends to every part continue the health any the not

price can I as you go good price mix through year give about Maybe So to feel some next we Glenn. year. specifics, and this

Glenn Eisenberg

all at of extension was TSA commented you price. over year When from mix X.X%. Sure, a talked as X.X% price growth we little organically that kind we X%, the The look the benefit the diagnostics. treat about – We Patrick. that this in

was X.X%, that So you if will.

mix, did to when it the we – is where too you been. X.X% where not price call dissimilar ascension in back we’ve out done So around, which we’ve

We track continue to well.

kind at full what our year, will guidance help midpoint which look to even have growth. convey around expect, you revenue of we for When of guidance, our XX.XX% the at we the continue

We’re Ascension to as points X% well X.X picking as M&A. from close around probably from up around

and overall, acquisitions, call it, Ascension X%. around up that be So midpoint, excluding we’d

similarly. we’re So tracking

We doesn’t it again, expect it that from include roughly volume, price, from of Ascension. it of X% around the X% now

X%. said it, have would organic or we historically, So around revenue of, volume call

price from You mix point a pick of X%. a up

So right to mix be that. now where with we payer see as pretty continues the Adam said, price helped. has consistent And

a see positive our in to continue tests trend per We Ascension.

to with than positive our faster continue growing a see We esoteric trend routine.

a we continue pricing. We unit headwinds draw also little the fee, picked to do from on up bit but

that So business headwinds. any mixed continue the really is favorable our than the pricing of to see mix impact price fact we more offsetting

Patrick Donnelly

side. helpful. that’s maybe No, one the And then a just quick discovery Yes. drug on

write the had mentioned just in fallout any as little quarter those mid biotech one Obviously down You tone biotech progressed? you to of quarter. contract. from change Can banking bit early a talk about the customers

you, that customer in in Just guys. from wondering change if appetite a quarter for base you as the tone, change progressed? Thank sensed spend the

Adam Schechter

mid is they represent What to there part pharma biotech. Yes. overall, smaller I our a the than size business, of obviously say large would and

pretty in, something moment. our obviously closely. that’s or environment market it of are business our small companies small RFPs the it’s we’re represent of And impacted bit, the struggling companies dollar you our with harder that in watching but hear right the now at which cash, and a that very really very small RFPs startup the for amount little these Some hasn’t of that frankly. we’re amount flow a bit a But

Glenn Eisenberg

The the small which your bankrupt so point, the add I’d $XX biotech place. to or that was thing, million Yes. too in went large $X only is put around but of we customer million that the

the to in of were sure So were some some there Adam that any business have built potential part the issues as that that given said, current reserves we if the for just we we we’re up that just hopefully small smaller adequately reserved establishing have other the would environment being issues. But other prudent could that make for. reserve players feel

Patrick Donnelly

helpful. Thank guys. you, That’s Okay.

Adam Schechter

Yes.

Operator

question Derek you. Bank Thank America. the of comes line from Instructions] next of with Our DeBruin [Operator

is Your line open.

Adam Schechter

Good morning, Derek.

Derek DeBruin

to Thank taking question. for want Patrick’s question follow-up Hey, Hey, morning. on there. my just you good

How on Is Just it You talked X%. is we just forward? think – it this that like in back Does – of about X% off color that historically about revert some to historical sort volume levels? X%, of easier about a comps? year, high that the volume, how price going think to forward? is X% X% going do the

Adam Schechter

we kind Derek, outlook in what X.X% February So that kind gave our year, see I of for felt of of this X.X%. longer-term diagnostics we we’d guess to

So little bit again than better done range. in that historically, what X%-ish we’ve

we So had quarter. extent, the of quarter quarter a had ago point, Omicron. strong that soft such a we fact to a year In the your of some to first because

So to we volumes would expect higher. be

stage, throughout number think favorable But of guidance. kind this X% frankly, this that’s a to one what that doing call CAGR we of is full say at to call guidance we’re compared talked But midpoint our in our base it that year we’re a look how tracking I of CAGR volume. XXXX the you we see around X%-ish to the as let’s really are XXXX at the diagnostics the about reasons the at when tracking well, year continue we revenue

to point always have we a this us couple acquisition. and for a benefit of Ascension around year around points, is going

around So to compared from X%. this growing a revenue standpoint, pre-pandemic, year we’re it

to our So it the of again, end call range. upper middle targeted

comparison a last than softer issues that the issues we diagnostics, on the part of given So all year again, was COVID expect. is year-on-year with in

through expect the experiencing. we’re So rate, as we’re is what growth recovery, which the would stronger we now coming

Glenn Eisenberg

I health to and would the you we pipeline spillover systems. that believe thing that we’re the very believe those in But I occurs geographies with that it to only underlying there’s demand. the systems winning It’s quantify. is, I have, when our add do surrounding helps health that And the that win hard that with

Derek DeBruin

back contracts any Have like follow-up. you any seen in over? given your competitors have from of moving you shifts the you’ve That’s sort one – seen Great. And got question helpful. year main business still mark, and really some over half of business the quick NHP supply this a just moving any sort of the that NHP

Adam Schechter

point, this of have in At not, discussions. but a lot we we’re

Derek DeBruin

much. very you Thank Great.

Operator

Instructions] Fargo. line [Operator Our from the next Thank Daley you. with question comes of Wells Tim

line open. Your is

Adam Schechter

Tim. morning, Good

Tim Daley

Hey, thank you.

for at available guys was any I NHP situ overcoming there, the supply question supply the price – elevated class back? their we issue is being and any or price gains. headwinds I levels. on in concerns is quickly customer the potential pushing prob you we that supply – on Is bread domestically share customers situation Just are seeing pricing was Are know angle? think it the still an probably where in

Adam Schechter

pricing to mean, studies the I customers done issues understand get Yes. they and we’re all that their facing. the want

that they even they we’re pricing to that are with issues facing. So studies want all the complete, though continue to there fill pipeline

Tim Daley

No, just appreciate question And then SALSA right. the here. that. obligatory All

SALSA noise That’d in an us you to the of really can looking calm How progress With not anytime great. Washington, soon. update there? be down PAMA, give

Adam Schechter

Yes.

I of very certainly we SALSA was I of bipartisan wish it last glad have year at support. to I’m has year. the bipartisan So legislation the happy PAMA passed about reprieve. continues had one support end would’ve and

talk anybody doesn’t issues anybody into supportive. that that I anybody of give to, the you and haven’t I SALSA, isn’t the them read So understand understanding

good I base you. like chance have is some current our feel to in to I we’ll easy to trade continue not legislation agree very to approved. get heard. will our get make with still PAMA this as that I cautiously the impact of type environment. that working we we in know way we I And find be I It’s although, that put year. year. ACLA a So continue case to next voice a our sure group, go us optimistic continue have hard to But approved through SALSA

Tim Daley

Thank right. All you.

Adam Schechter

Yes. Thank you.

Operator

Our [Operator of Eric comes the next you. line Thank Baird. question from Instructions] Coldwell with

Your line is open.

Eric Coldwell

$XX about a exposed? million other similarly did Thank talked of in of level there morning. case? see – as right space. that bad many an you, small have to however, I small down. get first that say, how It’s want the what client pretty the a on for plus to expand write-down. might be biotech this and kind I this watching clients I’m bio good decades outlook receivables debt rare curious to hit And is to just

Glenn Eisenberg

or Yes. we two, as believe receivable the both This I was as $XX on a a of a is bankrupt the took reserves. question well buildup from I commented write-down went million think – of a that we on last customer that

So to obviously went for $X on bankrupt. had before they we that million the did a gone a exposure customer biotech obviously small while have

write-off. And so that the was

is $X business, it debt unusual normally appropriate if again. just bad do don’t it was than again, which once something we other reserve going we your The then our build to do the to occurs point, million speak to what’s rather additional an just and given with up but development in regard about drug current felt later, on we environment, it

we’re feel the reserved environment, – total the but $XX a one to which again, extent is the unique we is So adequately the is customer. that in unusual, but $X is that’s million current and million

Adam Schechter

don’t I Eric, think And this a new trend… is

Eric Coldwell

Yes. Thanks.

Adam Schechter

thing think or think new this this very I was happened trend don’t is a that something here. that a Eric, specific I

Eric Coldwell

here. on I calls I’m – was sorry, the follow-up juggling that. a I’m of couple I missed

Adam Schechter

problem. No

Eric Coldwell

ups, the hopefully. a couple I follow quick of had So –

LCD? normal sustainable QX the better quarter us signaled COVID everything’s when be of year phasing may the front. just again mentioned on ballpark out margin in curious margin be XQ you any if you margin on Can cetera. give I’m we First particularly sense on make a back it PHE, could around be reimbursement a the thinking give believe, aware given in would what XX% lower operating should the et year. of this directionally plays And rest think PCR, half than us and a you might timing COVID COVID you’re XQ on the of bigger adjusted you of perhaps the there I in is be where more

Glenn Eisenberg

Yes.

So half. overall, is a that rate mid-XXs emergency about at we’ve in average probably will around and the CMS that $XXX in public expect post we that overall. it the CMS reimbursement about to But we talked drop talked health call our the reimbursement obviously low

per then PCR where we that’s So that’s coming the tests we’re to quarter. down closer on the that’s around XX,XXX And spoke ultimately, and in to, currently going did Really, rate day we our expectation a pricing. forward. at X,XXX really we’re volumes

you’re looking the volumes kind at half low at So of of pricing. relatively

base least businesses the to expect currently believe from it So with if it’s off look should full we and we that’s that do to of call in XX% high that come stronger at overall the the pricing COVID the teens, the But the going benefiting – two. will margins you margin, start volume. you at

than margins have at lower overall greater the we for be the volumes. again, it’ll So that but segment,

Eric Coldwell

specific Just hole then hit few might And below there’s was you helpful. I Just sense That’s know what average? net of the it been out last me, the a it above one? digging Was progressed a on spend. towards in book-to-bill times, – be clinical Okay. development be but it’s for on QX? could kind a – one you get of overall significantly it if trying to more on

Glenn Eisenberg

Yes.

X.XX. focus a information provide yes, was do XX, quarterly, Adam which our normally supplemental said a the provided trailing we X.XX. which when as So the the at on We we book-to-bill, in was

feel the We of on the be we more contract benefit the FSP again, continues healthy XX. overall, that – on remarks or comment in of quarter. So book-to-bill did have to orders focusing – in the Adam’s what the renewal an we the the overall, trailing did

backlog But again, the saw first bit which overall, So, your with we the a this really clinical business, on we comes is what also spending expected. but it’s conversion’s all up. in all we spoke in driven quarter, And time issue than good, lower, the on the to our come periodically in the to spin. looks little orders which again, that point, softer part

even FSP. to shoot for able renewal a mid support digit a X.X running orders before after rates. to at and the high to Adam independent we And forward. giving quarter, overall, the customers and growth But going commented try X.XX, single until always focused waiting again, a for very us to be that are of benefiting but the book-to-bill, is up spin some the currently, with of we’re an

Adam Schechter

to will done Eric, said temporary. is get pleased add, the we’re the is work that increased customers that saying, about would the actually spin after mid-year, the then that occur It’s come I I’ve excited spin. with thing only They’re They’re you’ve The the and Yes. doing. are spoken just back. focus

there’s sense So get don’t a any that facing. there’s issue. this I think that we’re other short-term I than anything short-term issue

about the overall fact, the customers are excited In spin.

Eric Coldwell

Okay. Thank you much. very

Adam Schechter

Thank you.

Operator

Thank stand question. for next you. by Please our

comes of next Our Wright Morgan Stanley. with the from question line Erin

open. is line Your

Adam Schechter

Erin. morning, Good

Erin Wright

morning. Good Great.

were M&A M&A seeing diagnostics, what now? in pipeline relative ago On pipeline year is a the up would the that how you you maybe core to shaping how characterize or

Adam Schechter

robust. not when than that size it’s of systems We’ll you, better number I the to, But for ago. year many deals there’s systems the that mean, of and the forward at say, Ascension. are. number with looking have I it’s was is health would of you as too I we it more question. pipeline of today and a Erin, a at. so the we’re deals health local tuned. Thank we pipeline mean, to very pleased this But laboratories robust where talking move look announce stay very I’m year, we’re the

Erin Wright

anything bit the CRO nature you win or the on Thanks. a else the something of CRO new FSP little of mentioned win? – new think in contract side terms can of in you a this that side, I can Okay, nature the describe of large quick describe the more front one of that a And business great. on pharma that business. the Was this business you or was on

Adam Schechter

mentioned a a is the the as excited reason spin, customers I was pharma we’re it’s the that important but renewal of are I because about It some FSP. large with Yes. we going spin, And through they’ve FSP business. This that no, large said, done the the more so let’s pharma company pleased that work now. spin, said, we’re want you’ve about until to wait we’ll talk renew that after think

have there. we spin the into go continuing momentum to you gives just spin, good we it as sense some through despite the So pressures a and short-term that are

Erin Wright

Okay. Got Thank you. it.

Adam Schechter

you. Thank

Operator

Thank over to you. like the closing will remarks. I call back I’m to for showing queue. no turn further in the Adam questions now

Adam Schechter

Well, thank us today. you joining for

September. Day mid-year have wait of soon. to provide further businesses, I bright the Labcorp making across Fortrea completing you forward performance you future, drive in we’re our continuing additional to at planned June. towards and the to we to believe with information Talk great clinical you while our spin in We’re look And about can’t updating progress upcoming We Investor I development.

Operator

Ladies and today’s your gentlemen, concludes participation. call. conference you for this Thank

may disconnect. You now

Laboratory Corporation of America (LH) 25 Apr 232023 Q1 Earnings call transcript