Labcorp cuts 2023 profit forecast on drug development woes

(Reuters) – Laboratory Corp of America (NYSE:) Holdings cut its annual profit forecast on Thursday, as the clinical lab operator grapples with a shortage of lab monkeys and a sharp decline in COVID testing sales.

Demand has been waning for contract research services offered by life sciences companies such as Labcorp, as they face a shortage of non-human primates (NHP) after a Cambodian supplier was charged in connection with illegal imports into the United States.

Labcorp now expects revenue from core business to grow in the range of 11.3%-12.6% for the year, compared with 9.5%-11% estimated earlier.

COVID testing sales are projected to fall between 85% and 89% this year compared with the previous forecast of 80%-90%, the company said.

The life sciences company now expects to earn between $13 and $14 per share on an adjusted basis this year, compared with its prior forecast of between $16.25 and $17.75 per share. Analysts on average estimate $14.02 per share, according to Refinitiv data.

In April, Labcorp said NHP supply issues are projected to negatively impact its second-quarter drug development revenues by $30 million to $40 million.

Rival Quest Diagnostics (NYSE:) beat quarterly profit estimates on Wednesday helped by a rebound in routine test volumes as people returned for regular health checkups which they delayed during the pandemic.

North Carolina-based Labcorp reported a revenue of $699 million from its early-stage drug development business for the quarter ended June 30, lower than the average of three analysts’ estimates of $1.24 billion, according to Refinitiv data.