Labcorp Raises 2026 Outlook After Third-Quarter Revenue Growth of 6.9%
Key Facts
Labcorp reported results on October 28 for the third quarter ended September 30, with revenue of $3.81 billion, diluted earnings per share of $3.22 and adjusted earnings per share of $4.78. Revenue rose 6.9% from $3.56 billion a year earlier, while diluted earnings per share increased 3.3% from $3.12. Adjusted earnings per share grew 14.5% from $4.18. The results exceeded published consensus estimates of $3.76 billion in revenue and $4.64 in adjusted earnings per share, according to MarketBeat. Chief Executive Adam Schechter said the company delivered "7% revenue growth, continued margin expansion and 14.5% growth in adjusted earnings per share."
The company raised its 2026 revenue growth target range to 5.9%–6.7%, an increase of 50 basis points at the midpoint. It also raised its adjusted earnings per share range to $18.30–$18.70, an increase of 18 cents at the midpoint. The outlook update followed a quarter in which revenue and adjusted earnings per share exceeded published consensus estimates. Labcorp kept its full-year free cash flow forecast at $1.24 billion to $1.36 billion. It also raised its 2026 revenue growth outlook for its Biopharma Laboratory Services segment to 7.4%–8.4%, from a previous range of 5.5%–6.5%.
Revenue growth comprised 5.5% organic growth and a 1.5% contribution from acquisitions, net of divestitures, while foreign exchange reduced growth by 0.1%. The Diagnostics Laboratories segment recorded revenue of $2.95 billion, up 6.5% from $2.77 billion a year earlier. Biopharma Laboratory Services revenue was $866.7 million, up 8.5%. In that segment, the adjusted operating margin rose to 18.3% from 16.5% in the year-earlier period. The results show the segments' differing contributions to quarterly growth, with Biopharma Laboratory Services growing faster than Diagnostics Laboratories.
The company's margins diverged depending on the operating measure used: the reported margin declined to 10.6% from 11.1% a year earlier, while the adjusted margin rose to 15.0% from 14.4%, an increase of 60 basis points. Labcorp attributed the improvement in adjusted operating income and margin to organic growth and operating efficiency. For the nine months ended September 30, revenue was $11.08 billion, compared with $10.44 billion in the corresponding period of 2025. Adjusted earnings per share for the period rose to $14.02 from $12.37. Quarterly operating cash flow was $563.8 million, versus $387.2 million a year earlier, and free cash flow rose to $412.2 million from $280.5 million.
The company expanded its business through acquisitions, saying four transactions had been announced or closed by October 28. It expects each to be accretive to adjusted earnings per share in its first year and to generate a return on invested capital by the third year. Among them was an October 15 agreement with OPKO Health to acquire selected BioReference assets for $722 million in cash at closing, plus a potential payment of up to $150 million tied to 4Kscore test revenue. Labcorp estimates the business will generate about $250 million in revenue in the first year after the deal closes. On October 20, it also agreed to acquire Myriad Genetics' prenatal testing business for $210 million in cash, plus the value of inventory at closing. It expects the business to contribute about $160 million in revenue in its first year, with the transaction targeted to close by early 2027.
Diagnostic developments included U.S. Food and Drug Administration approval of the PGDx elio tissue complete CDx test as a companion diagnostic to help identify patients with advanced melanoma. After the quarter ended, the company launched the FDA-cleared Elecsys pTau-217 blood test for Alzheimer’s detection. Regarding the Myriad deal, the company said the test portfolio includes Prequel, Foresight, SneakPeek and FirstGene. Myriad is scheduled to provide further commentary on the deal and regulatory changes during its earnings call on November 4, 2026. Labcorp announced on October 21 a quarterly cash dividend of $0.72 per share, payable on December 11 to shareholders of record on November 24.