LabCorp reported lower-than-expected earnings on Wednesday after a recent ransomware attack and the negative effects of Hurricane Florence on its revenues.
The global life sciences company reported an adjusted earnings per share of $2.74, 14 cents lower than analyst estimates polled by Yahoo Finance. The combined effects of the ransomware attack and Hurricane Florence reduced its earnings 10 cents.
Despite lower-than-expected earnings, the Burlington-based company saw revenues increase by eight percent to $2.83 billion, compared to $2.62 billion in the third-quarter of 2017.
“We are pleased with our performance in the quarter, highlighted by excellent results in our Covance Drug Development business and solid results in LabCorp Diagnostics,” said David P. King, chairman and chief executive officer, in a statement.
Its Covarance Drug Development business saw revenues increase 24.7 percent to $1.08 billion, significantly attributable to a 17.9 percent growth from acquisitions.
LabCorp’s backlogged orders increased 4.8 percent to $9.4 billion. It expects that $3.8 billion of that backlog, or 40.4 percent, will convert to revenue within the next 12 months.
Two of LabCorp’s underperforming businesses were divested in the quarter. The company’s food solutions business was divested on Aug. 1, and its UK-based forensic laboratory tested business was divested on Aug. 7. The two businesses contributed $14.6 million in revenue for the quarter, compared to $43 million in the third quarter of 2017.
The company is optimistic of its future growth once it realizes cost savings from its LaunchPad and Chiltern businesses.
It expects to realize $150 million in net savings from LaunchPad by the end of 2020. The savings are a result of the integration of LaunchPad with its Covarance Drug Development business.
LabCorp acquired the clinical research company Chiltern in September 2017. It expects to realize $30 million from cost synergies with Chiltern by the end of 2019.
The earnings announcement Wednesday put a damper on LabCorp’s share price. The company opened the day down 2.9 percent from Tuesday’s closing price. Its share price was down 4.1 percent after the first hour of trading.
King is hopeful about the future outlook for LabCorp and isn’t dismayed about the short-term impacts of the recent ransomware attack and Hurricane Florence.
“Despite the dynamically changing market, we have two strong businesses, outstanding cash flow and a strong balance sheet, positioning us well to deliver growth for the balance of this year and in the years ahead,” said King.
The announcement can be found here.
