LabCorp swung to a quarterly loss of more than $300 million as demand for its COVID-19 tests only marginally offset a sharp decline in diagnostic testing volumes due to the pandemic.
For the first quarter, the company reported a net loss of $317.2 million compared to earnings of $185.6 million a year earlier. Revenue rose 1% to $2.82 billion.
“During the first quarter, both diagnostics and drug development began experiencing the impact of the global pandemic, with clients postponing programs and lower demand for diagnostic testing,” CEO Adam Schecter said in an earnings call.
“The increased testing we performed for COVID-19 did not nearly offset the decline in other testing,” he added, noting that diagnostics revenue declined 1.2% year over year.
CFO Glenn Eisenberg told analysts that demand for diagnostic tests declined 50% to 55% versus the company’s normal daily levels at the end of the quarter. “This reduction in demand impacted testing volume broadly but was more heavily weighted toward routine procedures,” he said.
The company said the decline in demand reflected “overall customer caution as well as government restrictions and social distancing guidelines.”
LabCorp’s drug development business, meanwhile, “has been impacted by customer-initiated trial delays, limitations and access to certain trial sites and interruptions to the supply chain,” according to Eisenberg.
With COVID-19 adding $21.9 million in costs, adjusted operating income fell to $366 million or 12.9% of revenue compared to $411 million or 14.7% last year.
“The decrease in adjusted operating income and margin was due to the negative impact from COVID-19 of $72 million,” LabCorp said. “Excluding the impact from COVID-19, adjusted operating income and margins grew approximately $27 million and 20 basis points, respectively.”
To help offset the slump in testing demand, LabCorp is planning to ramp up the availability of its antibody test for COVID-19 from 50,000 tests per day to 200,000 per day by mid-May. It is also increasing capacity for its at-home COVID-19 nasal swab test offering, which was approved by the U.S. Food and Drug Administration earlier this month.