Publicly-Traded Lab Revenue Falls 1.4% In First-Half 2020

Publicly-Traded Lab Revenue Falls 1.4% In First-Half 2020

Publicly-Traded Lab Revenue Falls 1.4% In First-Half 2020

On a combined basis, 20 publicly-traded labs reported a revenue decrease of 1.4% to $9.8 billion during the first six months of 2020 (after adjusting for acquisitions), according to financial reports collected by Laboratory Economics.

Among five national clinic al labs (Quest Diagnostics, LabCorp, Sonic, BioReference and Enzo), combined revenue fell by 3.1% (after adjusting for acquisitions). BioReference had the strongest revenue growth, up 18% to $421.8 million, driven by Covid-19 PCR testing. BioReference processed approximately 2.2 million Covid-19 PCR tests during the first six months of 2020.

Among 15 specialty and genetic testing labs, combined pro-forma revenue increased by 7.3%.

Pro-forma revenue growth was fastest at DermTech, up 98.4% to $2.4 million. Other fast-growing companies included Castle Biosciences, up 54.9% to $30.1 million; Guardant Health, up 47.7% to $133.8 million; and CareDx, up 39.6% to $80.2 million.

Top 25 Fastest-Growing Labs by Medicare Part B Volume of Services

LabCorp Mid-Year 2020 Review

LabCorp Mid-Year 2020 Review

LabCorp Mid-Year 2020 Review

LabCorp (Burlington, NC) reported a net loss of $86 million for the six months ended June 30, 2020, down from net income of $376 million in the same period for 2019. Overall, LabCorp’s reported half-year revenue was down by 1.4% to $5.593 billion.

Looking specifically at LabCorp’s lab testing business, revenue was down 2.5% to $3.395 billion, including 1.4% gained from acquisitions. On July 28, the company held a conference call with analysts and investors to discuss its mid-year results. Here’s a summary of some key topics discussed:

Volume Trends
Total volume (measured by requisitions) decreased by 12%, as organic volume declined by 13.4%, partially offset by acquisition volume of 1.4%. The decline in organic volume included a 21% reduction in base business (due to the pandemic), partially offset by Covid-19 testing of 7.6%. LabCorp reports that its base business improved to an approximate decline of 17% in the month of June versus a year ago, which was more than offset by Covid-19 testing, which contributed roughly 23% to total volume in June.

Pooled Covid-19 PCR Testing
As of the end of July, LabCorp was performing an average of roughly 125,000 Covid-19 PCR tests per day and had capacity to perform up to 180,000 tests per day. LabCorp says its average turnaround time for hospitalized patients was at 1-2 days, with 2-3 day TAT for other patients.

On July 24, LabCorp received FDA emergency use authorization (EUA) to perform pooled Covid-19 PCR testing on up to five patient samples at a time. A positive result would require each sample to be individually retested “I believe that the standard PCR testing in the fall will remain the most significant by far of the testing that we do for PCR. But, I do think that the pool testing will add to our capacity and give us additional capabilities,” said LabCorp CEO Adam Schechter.

Covid-19 Antibody Testing
As of the end of July, LabCorp was performing an average of approximately 8,500 Covid-19 antibody tests per day and had capacity to perform up to 300,000 tests per day.

New Acquisitions
LabCorp acquired RDL Reference Laboratory (Los Angeles, CA) in mid-June. RDL was formed in 1977 by two UCLA-trained rheumatologists, Robert Morris, MD, and Allan Metzger, MD. RDL specializes in rheumatologic and autoimmune testing with the majority of its business coming from Southern California.

In July, LabCorp acquired the outreach testing business and entered into a comprehensive laboratory services contract with Franciscan Missionaries of Our Lady Health System (Baton Rouge, LA), one of the largest health systems serving Louisiana and Mississippi.

Swedish Flag

Top 25 Lab and Pathology Companies Receiving PRF Payments

Top 25 Lab and Pathology Companies Receiving PRF Payments

Top 25 Lab and Pathology Companies Receiving PRF Payments

Not surprisingly, Quest Diagnostics ($65 million) and LabCorp ($56 million) top the list in terms of highest PRF payments received by lab and pathology companies. Exact Sciences, including Genomic Health, received $23.5 million, while Sonic Healthcare, including Aurora Diagnostics, received $12.4 million. In total, the top 25 lab and pathology companies received $222.6 million in PRF payments.

Top 25 Fastest-Growing Labs by Medicare Part B Volume of Services

LabCorp Mid-Year 2020 Review

LabCorp Reports First-Quarter Results

LabCorp Reports First-Quarter Results

LabCorp reported a net loss of $317.2 million for the three months ended March 31, 2020, down from net income of $185.6 million in the same period a year ago; revenue was up 1.2% to $2.824 billion. A summary of key topics discussed by CEO Adam Schechter and CFO Glenn Eisenberg on an April 29 conference call follows.

Diagnostics Division
LabCorp’s Diagnostics Division reported a 1.2% decline in revenue to $1.702 billion. Volume decreased by 4.4%, including an organic volume decrease of 6.1%, partially offset by acquisition volume of 1.6%. LabCorp’s requisition volume is currently down by roughly 50% to 55% versus the company’s normal preCovid-19 crisis volumes.

Increased demand for Covid-19 testing is marginally offsetting the loss in routine test volumes, according to Schechter. He said that LabCorp is currently able to perform more than 60,000 PCR-based Covid-19 tests per day, or 1.8 million per month, and is seeking to expand to over 100,000 tests per day.

LabCorp’s primary PCR-based Covid-19 testing locations are Burlington, NC; Indianapolis, IN; Phoenix, AZ; and Raritan, NJ. LabCorp is performing the majority of its testing on analyzers from Thermo Fisher and Roche, in addition to the Hologic Panther Fusion System. “The issue that you run into is you need additional machines and you can imagine there’s lots of back orders and you know doing these RNA tests and the PCR test takes a lot of equipment. But we’re going to try to build to get to over 100,000 as quickly as we can,” said Schechter.

Home Sample Collection Kits
LabCorp launched its Covid-19 at-home self-collection kits through its branded Pixel service in late April. The kits allow patients to swab their own nasal passages and mail the samples back to LabCorp for PCRbased Covid-19 testing. The service is currently available only for healthcare workers and first responders who have Covid-19 symptoms. To obtain a collection kit, an individual must first fill out an online questionnaire, which is then reviewed and authorized by a physician. LabCorp will bill private insurance or utilize federal funds to cover the upfront cost of the test, while self-paying customers pay $119. LabCorp intends to make the collection kits available to all consumers in the coming weeks. However, the service is not available in MD, NJ, NY, and RI, due to state restrictions.

Covid-19 Antibody Testing
LabCorp can currently perform more than 50,000 Covid-19 antibody tests per day and expects to increase its capacity to over 200,000 tests per day by mid-May. LabCorp is using Abbott’s antibody test. “When you think about those numbers, over 200,000 tests today in serology and maybe 100,000 tests over time for PCR, it’s still a very small number compared to the 530 million or so tests that we do across all of our testing [pre-Covid-19]. So unless we start to see that come back, it will be hard for these tests to make up for the difference in what we’ve seen since the last weeks of March,” according to Schechter.

Accounts Receivable
LabCorp said that, as a result of increase in unemployment and the potential financial difficulties of medical practices from the impact of the Covid-19 crisis, it took a first-quarter charge of $17 million to increase its accounts receivable reserves.

Cost Cutting

Some of the actions that LabCorp has taken to help offset the impact of Covid-19 include employee furloughs, delays in new hiring, reducing temporary and contract workers, and suspension of merit pay hikes
and 401(k) plan contributions.

The CARES Act
LabCorp received $56 million in April through the CARES Act, which the company is using to ramp up
its Covid-19 testing capacity

LabCorp Mid-Year 2020 Review

LabCorp Reports Full-Year 2019 Financial Results

LabCorp Reports Full-Year 2019 Financial Results

LabCorp (Burlington, NC) reported net income of $823.8 million for the full-year 2019, down from $883.7 million in 2018. LabCorp’s overall revenue increased by 2.0% to $11.6 billion in 2019.

Revenue from LabCorp’s lab testing business decreased by 0.4% to $7 billion in full-year 2019. This year LabCorp expects its lab testing business to increase its revenue by 0.5% to 2.5%. This guidance includes a -1.3% impact from PAMA and -0.9% from UnitedHealth’s nonrenewal of the BeaconLBS contract in Florida.

LabCorp expects revenue from its Covance Drug Development division to grow by 7% to 9.5% in 2020.

On February 13, LabCorp held a conference call with analysts and investors. Here are some comments on a few key topics from CEO Adam Schechter.

Impact from PAMA
Schechter said that the PAMA rate cuts reduced the company’s lab testing revenue by approximately $100 million in 2019. He expects a similar $100 million revenue loss from PAMA this year and again in 2021.

UnitedHealth’s Preferred Laboratory Network (PLN)
“I don’t assume there’ll be a significant shift [to PLN labs] in 2020 because they’re rolling it out as we speak….If it works for United, I think that other organizations may see this as an opportunity to help them reduce their laboratory costs by moving over business to a lab like ours.”

Hospital Lab Acquisitions
“As I look at the hospital tuck-in acquisitions, I can tell you that our list is long. There are many discussions that we’re having around the country with both local and regional labs and hospitals… I believe over time it [hospital lab deals] will begin to accelerate, particularly as they feel the continued impact from PAMA.”

Direct to Consumer Genetic Testing
“We saw a significant decline in 2019 versus 2018. It’s now a very small amount of our total volume and of our total revenue and operating income.” Laboratory Economics notes that LabCorp has had a contract to provide genotyping services to 23andMe Inc. (Sunnyvale, CA) since 2008. After years of strong demand for
its ancestry and health testing services, 23andMe recently laid off 100 employees, or 14% of its workforce, citing a slowdown in consumer demand.

Swedish Flag
LabCorp Mid-Year 2020 Review

More Executive Changes At Labcorp’s Diagnostic Division

More Executive Changes At Labcorp’s Diagnostic Division

After only a few days in the position, LabCorp Diagnostics’ CEO John Ratliff has resigned to take a top executive position at an unnamed company. Ratliff, age 59, had become head of LabCorp’s diagnostic testing business effective November 1. He had formerly been CEO of Covance, LabCorp’s drug development business.

Former LabCorp President and CEO Dave King, 62, had been serving as interim head of LabCorp’s diagnostic testing business since January 1, 2019. King retired from his day-to-day executive positions at LabCorp on November 1, but is staying on as Chairman through at least the end
of next year.

LabCorp says that its diagnostics division will now be led by two individuals. Brian Caveney, MD, 46, has been named Executive Vice President and President of Diagnostics. Caveney was formerly Chief Medical Officer at LabCorp. In addition, Mark Schroeder, 58, has become Executive Vice President and President of Laboratory Operations and Global Supply Chain. Schroeder was formerly LabCorp’s Chief Supply Chain Officer.