Any way you look at it, Laboratory Corporation of America Holdings (LH -0.01%) is on a roll. Its shares soared 20% last year. The stock is up by a double-digit percentage already in 2021. And the company continues to deliver good news.
Labcorp's latest good news came before the market opened on Thursday with the company announcing its fourth-quarter results. The healthcare stock jumped more than 3% in early trading after its update. Here are the highlights from Labcorp's Q4 results.
By the numbers
Labcorp reported revenue in the fourth quarter of $4.49 billion. This reflected a 52% increase from the prior-year period revenue total of $2.95 billion. It also handily beat the Wall Street consensus revenue estimate of $3.95 billion.
The company announced net income of $938.3 million, or $9.54 per share, based on generally accepted accounting principles (GAAP). In the same period of 2019, Labcorp generated GAAP earnings of $227.1 million, or $2.32 per share.
Labcorp's adjusted net income in the fourth quarter was $10.56 per share. This result trounced the company's adjusted earnings in the prior-year period of $2.86 per share. It also blew past the average analyst adjusted earnings estimate of $8.11 per share.
Behind the numbers
The company's diagnostics business turned in an especially strong performance in the fourth quarter. Revenue totaled $3.15 billion, a 79.5% year-over-year jump. Labcorp said that most of this growth stemmed from COVID-19 testing.
Drug development revenue in the fourth quarter increased 16.4% year over year to $1.4 billion. COVID-19 testing accounted for more than one-fourth of this growth. However, the biggest factor was Labcorp's base business, which consists of all of the company's operations except polymerase chain reaction (PCR) and antibody COVID-19 testing.
Labcorp stated that its drug development segment delivered its best quarter of organic base business growth in 2020. CEO Adam Schechter attributed this improvement to "more people focused on managing their health and chronic conditions."
Labcorp appears to be confident about its prospects this year. The company provided full-year 2021 guidance that projects adjusted earnings per share between $19 and $23. The midpoint of that range ($21) is higher than the consensus Wall Street estimate of $20.14.
Will President Joe Biden's strategy to address the COVID-19 pandemic boost Labcorp's fortunes in 2021? After all, the president wants to aggressively increase COVID-19 testing. Maybe, but Labcorp isn't expecting growth on that front. The company projects its COVID-19 testing revenue will decline this year by at least 35% and perhaps as much as 50%.