Clinical laboratory services company LabCorp saw its shares slide yesterday after cutting back its sales and earnings targets for 2009 in light of the economic downturn.
Shares in the company, the second largest clinical testing company in North America behind Quest Diagnostics, slipped back 6.5 per cent to close at $61.40, well below its 52-week high of nearly $81.
North Carolina-based LabCorp said it now expects to earn $4.75-$4.95 per share, excluding the impact of any share repurchase activity after September 30 last year. This is well down on its previous forecast of $5.00-$5.25 per share, and reflects the fact that the company is now forecasting revenue growth of just 2-4 per cent, down from 3.5-5.5 per cent.
"Given the ongoing deterioration in the economy, it seems prudent to forecast lower growth for 2009," said LabCorp CEO David King in a statement.
LabCorp said full year 2008 earnings guidance would be maintained at $4.57 to $4.61 per share, with revenue growth of about 11 per cent for the year.
The company recorded revenues of $4.07bn in 2007, an increase of 13.3 per cent , with operating profit of $777m. The 2008 figures are due for release on February 12.
LabCorp services the drug development market – from preclinical testing through to Phase IV - via its Esoterix Clinical Trial Services subsidiary, which specialises in cancer, haematology, central nervous system, infectious disease and metabolic and endocrinology testing. LabCorp bought the unit from private equity company Behrman Capital in 2005.
Rise in uninsured?
This Esoterix unit is expected to weather the downturn better than LabCorp’s primary business, the provision of clinical testing services for patients, healthcare professionals and health insurers.
Health concerns are being set aside as people cope with the tougher economic climate, and that is resulting in a downturn in the number of people taking health insurance in the US.