Why Is Labcorp (LH) Down 4.6% Since Last Earnings Report?

It has been about a month since the last earnings report for Labcorp Holdings (LH). Shares have lost about 4.6% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Labcorp due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Labcorp Tops Q4 Earnings Estimates

Labcorp reported fourth-quarter 2025 adjusted earnings per share of $4.07, which beat the Zacks Consensus Estimate by 3%. The figure rose 18% from the year-ago level.

The adjusted figure excludes the impact of certain amortization expenses and restructuring charges, among others.

On a GAAP basis, earnings per share was $1.98 compared with $1.70 in the year-ago period.

Full-year adjusted earnings was $16.44 per share, which rose 12.8% year over year and beat the Zacks Consensus Estimate by 0.8%.

LH Revenues

Fourth quarter revenues rose 5.7% year over year to $3.52 billion. The figure missed the Zacks Consensus Estimate by 1%.

The year-over-year increase was driven by organic revenue growth of 3.8%, acquisitions (net of divestitures) of 1.2% and a foreign currency translation gain of 0.6%.

Full-year revenues rose 7.2% year over year to $13.95 billion. The figure missed the Zacks Consensus Estimate by 0.3%.

Labcorp’s Q4 Performance by Segments

The company currently operates under two segments — Diagnostics Laboratories and Biopharma Laboratory Services (comprised of its Central Laboratories and Early Development Research Laboratories).

For the fourth quarter, Diagnostics Laboratories reported revenues of $2.73 billion, reflecting a 5.5% improvement year over year.

On an organic basis, revenues were up 4.1%. The company’s total volumes (measured by requisitions) increased 2.2%, as acquisition volumes contributed 1.1% and organic volumes rose 1.1%.

Biopharma Laboratory Services revenues rose 3.4% to $793 million in the fourth quarter. The year-over-year increase was primarily driven by organic growth of 0.6% and a foreign currency translation gain of 2.8%.

Labcorp’s Margin Performance

The gross margin expanded 133 basis points (bps) to 28.2% in the fourth quarter despite a 3.7% rise in the cost of revenues.

The adjusted operating income improved 51% year over year to $454.6 million. The adjusted operating margin expanded 389 bps year over year to 12.9% due to a 9.5% decline in SG&A expenses ($538.6 million).

Labcorp’s Cash Position

Labcorp exited the fourth quarter with cash and cash equivalents of $532.3 million compared with $1.52 billion at the end of the fourth quarter of 2024. Long-term debt totaled $5.08 billion, in line sequentially.

Cumulative net cash provided by operating activities at the end of the fourth quarter was $1.64 billion compared with $1.59 billion a year ago.

LH’s 2026 Guidance

Labcorp provided full-year 2026 enterprise revenue and adjusted EPS guidance. Enterprise level guidance includes the estimated impact from currently anticipated capital allocation, including acquisitions, share repurchases and dividends.

Total revenues for 2026 are now expected to be in the range of $14.61-$14.79 billion, representing growth of 4.7- 6%. The Zacks Consensus Estimate for full-year revenues is pegged at $14.69 billion, representing growth of 5%.

Labcorp expects 2026 adjusted earnings per share to be in the band of $17.55-$18.25. The Zacks Consensus Estimate for the metric is pegged at $17.62.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates.

VGM Scores

Currently, Labcorp has a strong Growth Score of A, though it is lagging a bit on the Momentum Score front with a B. Following the exact same course, the stock was allocated a score of B on the value side, putting it in the top 40% for value investors.

Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, Labcorp has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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This article originally published on Zacks Investment Research (zacks.com).

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