LabCorp releases a stronger than expected earnings report for Q2

Laboratory Corporation of America (NYSE: LH) published its quarterly financial results on Tuesday that topped analysts’ estimates for profit. The company attributed its hawkish performance to the Coronavirus pandemic that fuelled demand in recent months. The company highlighted to have been processing roughly 180K COVID-19 tests now on a daily basis.

The Coronavirus pandemic has so far infected more than 4 million people in the United States and caused over 150,000 deaths. The U.S. FDA reissued the emergency use authorisation (EUA) for LabCorp’s test last week.

Shares of the company opened roughly 1% up on Tuesday but closed about 3% down. At £152 per share, Laboratory Corporation of America is currently more than 15% up year to date in the stock market after recovering from a low of £76 per share in March when the impact of COVID-19 was at its peak. Learn more about how can you start trading on the stock market.

LabCorp received £43.21 million in funding under CARES act

According to LabCorp, it generated a revenue of £1.31 billion from its diagnostics segment in the second quarter that represents a 3.9% decline on a year over year basis. The decline, LabCorp said, was sufficiently evened out by robust demand for its Coronavirus tests.

The U.S. clinical lab operator, however, highlighted on Tuesday that its non-COVID-19 tests saw demand plunge below historical levels. It hit the lowest point in April and was seen recovering slowly in recent months.

The Burlington-based company also reported £840 million of sales from Covance business that marks a 2.9% decline as compared to the same quarter last year. This segment primarily handles trials for drugmakers.

LabCorp approached the U.S. government for financial support in the second quarter. Under the state-backed CARES (Coronavirus Aid, Relief, and Economic Security) act, the company secured access to £43.21 million.

LabCorp’s Q2 financial results versus analysts’ estimates

Excluding the impact of funding under the Cares scheme and items, the company recorded £1.99 of profit per share in Q2. According to Refinitiv, experts had forecast LabCorp to print a much lower 77 pence of earnings per share in the recent quarter.

In terms of net revenue, the S&P 500 firm registered £2.14 billion that represents a 4% decline on an annualised basis. Analysts, however, had estimated a lower £1.93 billion in revenue in the second quarter.

At the time of writing, LabCorp has a market cap of £14.76 billion and a price to earnings ratio of 60.01.