Laboratory Corp of America Holdings Earnings: Margins Suffer for Five Quarters Straight, but Net Income Climbs

S&P 500 (NYSE:SPY) component Laboratory Corporation of America Holdings (NYSE:LH) reported its results for the first quarter. Laboratory Corporation of America provides testing services used by the medical profession in patient diagnosis and in the monitoring and treatment of disease.

Investing Insights: What’s the Future of Microsoft’s Stock?

Laboratory Corporation of America Holdings Earnings Cheat Sheet for the First Quarter

Results: Net income for the medical/dental supplies rose to $161.6 million ($1.63 per share) vs. $127.1 million ($1.23 per share) in the same quarter a year earlier. This marks a rise of 27.1% from the year-earlier quarter.

Revenue: Rose 4% to $1.42 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Laboratory Corporation of America Holdings reported adjusted net income of $1.74 per share. By that measure, the company beat the mean estimate of $1.67 per share. Analysts were expecting revenue of $1.4 billion.

Quoting Management: “We delivered another quarter of strong earnings and margin growth. Our core business continues to perform well, and we remain extremely pleased with the performance of the Genzyme Genetics and Orchid Cellmark acquisitions,” said David P. King, Chairman and Chief Executive Officer.

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 1.1 percentage points to 40.5% from the year-earlier quarter. In that span, margins have contracted an average of 0.9 percentage point per quarter on a year-over-year basis.

The company has now surpassed analyst estimates for four quarters in a row. It beat the mark by 4 cents in the fourth quarter of the last fiscal year, by one cent in the third quarter of the last fiscal year, and by 2 cents in the second quarter of the last fiscal year.

Revenue has risen the past four quarters. Revenue increased 5.5% to $1.37 billion in the fourth quarter of the last fiscal year. The figure rose 10% in the third quarter of the last fiscal year from the year earlier and climbed 13.3% in the second quarter of the last fiscal year from the year-ago quarter.

The company has now seen net income increase for two quarters in a row. In the fourth quarter of the last fiscal year, net income rose 2.7% from the year earlier.

Looking Forward: Analysts have a more positive outlook about the company’s results for next quarter. The average estimate for second quarter is $1.80 per share, an increase from $1.79 sixty days ago. For the fiscal year, the average estimate has moved up from $6.95 a share to $6.98 over the last sixty days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

Don’t Miss These Additional Hot Stories:

Here’s What to Expect from Airline Earnings

Will Hyper-Local Movement Help Internet Properties Reap Profits?

Are Taxi Drivers Buying Gold or Apple?