Q3 2025 Laboratory Corp of America Holdings Earnings Call

Participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising your hand is raised to withdraw your question. Please press star one again, please be advised.

Speaker #1: Good day and thank you for standing by . Welcome to the Q3 2025 LABCORP HOLDINGS INC. Earnings Conference Call . At this time , all participants are in a listen only mode .

Operator: Good day, and thank you for standing by. Welcome to the Q3 2025 Labcorp Holdings Inc. Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Christin O'Donnell, Vice President of Investor Relations. Please go ahead.

Today's conference is being recorded I would now like to hand, the conference how where do your speaker today, Christine O'donnell, Vice President of Investor Relations. Please go ahead.

Thank you operator, good morning, and welcome to the Lab Corp. Third quarter 2025 Conference call are included in today's press release, there will be a replay of this conference call available with me today are out of the sector, Chairman and Chief Executive Officer, and Julia Lang Executive Vice President and Chief Financial Officer. This morning in the end.

Christin O'Donnell: Thank you, Operator. Good morning and welcome to Labcorp Holdings Inc.'s third quarter 2025 conference call. As detailed in today's press release, there will be a replay of this conference call available. With me today are Adam Schechter, Chairman and Chief Executive Officer, and Julia Wang, Executive Vice President and Chief Financial Officer. This morning, in the Investor Relations section of our website at www.labcorp.com, we posted both our press release and an Investor Relations presentation with additional information on our business operations, which include a reconciliation of the non-GAAP financial measures to the most comparable GAAP financial measures. Please see the use of adjusted measures section in our press release and Investor Relations presentation for more information regarding our use of non-GAAP financial measures. Additionally, we are making forward-looking statements.

That's the relations section of our website at Www Dot lab core Dot Com, we posted both our press release and on the Investor Relations presentation with additional information on our business operation, which include a reconciliation of the non-GAAP financial measures to the most comparable GAAP financial measure. Please see the use of adjusted measures section in our press.

Please an investor relations presentation for more information regarding our use of non-GAAP financial measures.

Additionally, we are making forward looking statements. These forward looking statements include but are not limited to statements with respect to the estimated 2025 guidance and related assumptions the projected impact of various factors on the company's businesses operating and financial results cash flows and financial condition, including.

And global economic and market condition future business strategies expected savings benefits and synergies from the Launchpad initiative and from acquisition and other strategic transactions and partnerships. The completed holding company reorganization and opportunities for future growth each of the forward looking statements are subject to change based upon various.

Christin O'Donnell: These forward-looking statements include, but are not limited to, statements with respect to the estimated 2025 guidance and the related assumptions, the projected impact of various factors on the company's businesses, operating and financial results, cash flows and/or financial condition, including global economic and market conditions, future business strategies, expected savings, benefits, and synergies from the Launchpad Initiative and from acquisitions, and other strategic transactions and partnerships, the completed holding company reorganization, and opportunities for future growth. Each of the forward-looking statements is subject to change based upon various factors, many of which are beyond our control. More information is included in our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q and in the company's other filings with the SEC. We have no obligation to provide any updates to these forward-looking statements, even if our expectations change.

Factors, many of which are beyond our control more information is included in our most recent annual report on Form 10-K, and subsequent quarterly reports on Form 10-Q and in the company's other filings with the SEC. We have no obligation to provide any updates to these forward looking statements, even if our expectations change now I'll turn the call over to al.

Adam Schechter.

That's interesting and good morning, everyone. Thank you for joining us today to discuss our third quarter 2025 financial results.

First one on strategy.

During the quarter, we delivered strong revenue growth and margin improvement leading to double digit EPS growth.

Christin O'Donnell: Now, I'll turn the call over to Adam Schechter.

Our financial results reflect continued momentum in our diagnostic laboratories and <unk>.

Adam Schechter: Thank you, Christin, and good morning, everyone. Thank you for joining us today to discuss our third quarter 2025 financial results and progress on our strategy. During the quarter, we delivered strong revenue growth and margin improvement, leading to double-digit EPS growth. Our financial results reflect continued momentum in our diagnostic laboratories and central laboratory businesses. At an enterprise level, revenue increased to $3.6 billion, representing 9% growth compared to last year. Margin for the quarter improved 100 basis points, driven by diagnostics. Adjusted EPS grew 19%, and we generated strong free cash flow of $281 million. Moving to our business segments, diagnostics revenue increased 8.5%, primarily due to strong organic growth of 6%. Margin improved 110 basis points, driven by strong organic demand and Invitae. Invitae was accretive in the quarter and will be slightly accretive for the full year. BLS revenue increased 8%, or 5% constant currency.

Intra laboratory businesses.

At an enterprise level revenue increased to $3 $6 billion, representing 9% growth compared to last year.

Margin for the quarter improved 100 basis points driven by diagnostics.

Adjusted EPS grew 19%.

And we generated strong free cash flow of $281 million.

Moving to our business segments.

<unk> revenue increased eight 5%, primarily due to strong organic growth of 6%.

Margin improved 110 basis points, driven by strong organic demand and then because.

And do you think it was accretive in the quarter and will be slightly accretive for the full year.

U S revenue increased 8% or 5% constant currency.

Central laboratories growth was strong at 10% or 7% constant currency.

More than offsetting softness in early development.

Be honest margin improved 20 basis points and a quarterly book to Bill was <unk> nine with the trailing 12 months remaining strong at 1.09.

Adam Schechter: Central laboratories growth was strong at 10%, or 7% constant currency, more than offsetting softness in early development. BLS margin improved 20 basis points, and the quarterly book-to-bill was 0.9, with the trailing 12 months remaining strong at 1.09. In response to the lower than anticipated revenue in early development, we are beginning to divest or restructure through site consolidation, approximately $50 million of annual revenue. We will focus these actions on non-core areas, which will result in a more streamlined business and slight improvement to operating income. Julia will provide more details on our results and full-year 2025 outlook in just a moment.

In response to a lower than anticipated revenue in early development, we're beginning to divest or restructure through site consolidation approximately $50 million of annual revenue.

We will focus these actions on non core areas, which will result in a more streamlined business and slight improvement to operating income.

Julian will provide more details on our results and full year 2025 outlook in just a moment.

We continue to make progress on our strategy to be the partner of choice for health systems and regional local laboratories.

To lead in high growth therapeutic areas and to use science and technology to accelerate growth to enhance the customer experience.

To improve operational efficiency across our business.

Adam Schechter: We continue to make progress on our strategy to be the partner of choice for health systems and regional local laboratories, to lead in high-growth therapeutic areas, and to use science and technology to accelerate growth, to enhance the customer experience, and to improve operational efficiency across our business. Starting with health systems and regional local laboratories, we've added a significant number of strong strategic relationships over the past several years. Through these partnerships and acquisitions, we've expanded our patient and provider network, and we've strengthened our presence in key markets. These partnerships have increased access to our broad test menu, they've improved patient care, and exhibit efficiencies for our customers. This quarter, we signed an agreement to acquire select clinical laboratory assets of Empire City Laboratories, which serves the New York Tri-State area.

Starting with health systems and regional local laboratories we've.

Added a significant number of strong strategic relationships over the past several years.

Through these partnerships and acquisitions, we've expanded our patient and provider network and we've strengthened our presence in key markets.

These partnerships have increased access to our broad test menu, they've improved patient care and a driven efficiencies for our customers.

This quarter, we signed an agreement to acquire select clinical laboratory assets of Empire City Laboratories, which serves the New York Tri State area.

We signed an agreement to acquire select assets of Laboratory Alliance with Central New York, a pathology reference laboratory.

In parallel we signed an agreement we're proud to help to manage their inpatient labs.

We expect these transactions to close in the first quarter of 2026.

Adam Schechter: We signed an agreement to acquire select assets of Laboratory Alliance of Central New York, a pathology reference laboratory. In parallel, we signed an agreement with Kraus Health to manage their inpatient labs. We expect these transactions to close in the first quarter of 2026. We continue to make progress on the acquisition of select assets of the outreach business from Community Health Systems across 13 states, which we expect to close by year-end. We completed our acquisition of select oncology and clinical testing assets from BioReference Health. This acquisition further solidifies Labcorp Holdings Inc.'s position as an industry leader in oncology. We continue to have a very robust pipeline of opportunities, and we look forward to updating you on our progress. Additionally, we are expanding our business in high-growth specialty areas, including oncology, women's health, neurology, and autoimmune diseases.

We continue to make progress on the acquisition of select assets of the outreach business from community health systems across 13 states.

Which we expect to close by year end.

We completed our acquisition of select oncology and clinical testing assets from bio reference selling.

This acquisition further solidifies <unk> position as an industry leader in oncology.

We continue to have a very robust pipeline of opportunities and we look forward to updating you on our progress.

Additionally, we are expanding our business in high growth specialty areas, including oncology women's health neurology and autoimmune diseases. These.

These are areas, where science clinical need.

Use of genetic testing and innovation are accelerating.

We're experiencing strong growth across these segments, which also is pieces demand in our core test menu as physicians rely on labcorp for comprehensive diagnostic solutions.

Adam Schechter: These are areas where science, clinical need, the use of genetic testing, and innovation are accelerating. We are experiencing strong growth across these segments, which also increases demand in our core test menu, as physicians rely on Labcorp Holdings Inc. for comprehensive diagnostic solutions. In the quarter, we introduced several innovative testing capabilities. We expanded our leading oncology and genetic testing portfolio. OmniSeq Insight, our comprehensive genomic profiling test for solid tumors in support of therapy selection, now evaluates ovarian tumors for HRD. Labcorp Tissue Complete, used for therapy selection for pan-solid tumors, became the first and remains the only tissue-based tumor profiling test with CE marking under the European Union's in vitro diagnostic regulation. This enhances our global tissue profiling capabilities in support of clinical trials. Genoscopy received FDA approval for a simplified at-home collection method for ColoSense for colorectal cancer screening.

In the quarter, we introduced several innovative testing capabilities.

We expanded our leading oncology and genetic testing portfolio.

I'm going to seek insight our comprehensive genomic profiling test for solid tumors and supportive therapy selection.

Now about weights ovarian tumors for HRD.

<unk> earlier tissue complete used for therapy selection for Pan solid tumors became the first and remains the only tissue based tumor profiling test with CE, marking under the European Union in vitro diagnostic regulation.

This enhances our global tissue profiling capabilities in support of clinical trials.

Geography received FDA approval for a simplified at home collection method for polo Adsense for colorectal cancer screening.

As a commercial partner, we will be expanding access to this test to patients and providers.

We also expanded access to and retain genetic tests through epic Ora, enabling streamlined ordering and results delivery for epic customers.

In neurology, we have one of the most comprehensive test menu in the industry, we expanded our leadership position.

Adam Schechter: As a commercial partner, we will be expanding access to this test to patients and providers. We also expanded access to our Invitae genetic test through Epic Aura, enabling streamlined ordering and results delivery for Epic customers. In neurology, where we have one of the most comprehensive test menus in the industry, we expanded our leadership position. We introduced the first blood-based test cleared by the FDA to aid in the diagnosis of Alzheimer's disease in specialty care settings. In early 2026, we're planning to offer the only FDA-cleared blood test to rule out Alzheimer's-related amyloid pathology in a primary care setting. Separately, we continue to experience strong momentum in our consumer business. In the quarter, we launched several consumer-initiated tests through Labcorp OnDemand, including tests for lead exposure, ApoB for heart health, and a panel for healthy aging.

We introduced the first blood based test cleared by the FDA to aid in the diagnosis of Alzheimer's disease and specialty care settings.

In early 2026, we're planning to offer the only FDA cleared blood test to rule out all timers related amyloid pathology in the primary care setting.

Separately, we continued to experience strong momentum in our consumer business.

In the quarter, we launched several consumer initiated tests through that profile demand.

<unk> test for let exposure April beef, a heart health and a panel for healthy aging.

Labcorp partnered where prior health and consumer experience platform for health systems to help close care gaps and to deliver better experiences for patients.

Moving now to review, our use of science and technology to accelerate growth to enhance the customer experience and to improve operational efficiency.

Adam Schechter: Labcorp partnered with Priya Health, a consumer experience platform for health systems, to help close care gaps and to deliver better experiences for patients. Moving now to review our use of science and technology to accelerate growth, to enhance the customer experience, and to improve operational efficiency. This quarter, we launched Labcorp TestFinder, a generative AI tool developed with Amazon Web Services to improve test selection for providers and health systems. It allows clinicians to easily search for lab tests using plain language, streamlining decision-making, and improving care. In our core laboratory operations, we're investing in digital and AI capabilities to improve in areas such as pathology, cytology, and microbiology. Through a collaboration with Roche, we are digitalizing pathology workflows using slide scanners to enhance diagnostic speed and scalability.

This quarter, we launched Labcorp test binder, a generative AI tool developed with Amazon Web services to improve test selection for providers and health systems.

It allows clinicians to easily search for lab tests, using plain language streamlining decision, making and improving care.

In our core laboratory operations, we're investing in digital and AI capabilities to improve in areas, such as pathology psychology and microbiology.

Through our collaboration with Roche, we are Digitalized and pathology workflows, using slide scanners to enhance diagnostic speed and scalability.

We've also deployed a new FDA cleared AI platform for digital cytology enables remote viewing and rapid analysis of cell based samples improving turnaround times.

Finally, we're using AI and automation to accelerate microbiology workflows to reduce turnaround times.

Adam Schechter: We've also deployed a new FDA-cleared AI platform for digital cytology that enables remote viewing and rapid analysis of cell-based samples, improving turnaround times. Finally, we're using AI and automation to accelerate microbiology workflows to reduce turnaround times. These are just a few examples where we are using technology, robotics, and AI. We look forward to discussing others in the future. In summary, we delivered a strong quarter and made meaningful progress on our strategy. We have momentum as we finish 2025 and move into 2026. Our focus remains on driving value for both our customers and shareholders. With that, I'll turn the call over to Julia to discuss our financial results and 2025 outlook in greater detail.

These are just a few examples where we are using technology robotics and AI.

Look forward to discussing others in the future.

In summary, we delivered a strong quarter.

Meaningful progress on our strategy.

We have momentum as we finished 2025 and move into 2026.

Our focus remains on driving value for both our customers and shareholders.

With that I'll turn the call over to Julia to discuss our financial results and 2025 outlook in greater detail.

Thank you now let me start with a review of our Q3 financials and my remarks today will focus on our adjusted financial results.

Please see our earnings press release, and supplemental financial presentation for detail that for themselves.

Revenue for the quarter was three $6 million.

Julia Wang: Thank you, Adam. Now, let me start with a review of our Q3 financials, and my remarks today will focus on our adjusted financial results. Please see our earnings press release and the supplemental financial presentation for details on our GAAP results. Revenue for the quarter was $3.6 billion, an increase of 8.6% compared to last year, driven by organic growth of 6.2%, the impact from acquisitions of 1.7%, and the foreign currency translation of 0.7%. Adjusted operating income in the quarter was $513 million, or 14.4% of revenue, compared to $441 million, or 13.4% of revenue last year. The increase in adjusted operating income and operating margin was primarily driven by organic demand, including the strong performance of Invitae. Our Launchpad Initiative continued to be on track in the quarter, which offsets typical increases in personnel costs.

The increase of eight 6% compared to last year, driven by organic growth of six 2% the impact from acquisitions of one 7% and foreign currency translation of <unk>, 7%.

Adjusted operating income in the quarter was $513 million or 14, 4% of revenue compared to $441 million. That's one 4% of revenue last year.

<unk> adjusted operating income and all types of margin was primarily driven by organic demand, including the strong performance of <unk>.

Our large pad in nature and has continued to be talking a quarter, which offset typical increases in personnel costs.

The adjusted tax rate for the quarter was $23 per ton.

Compared to 22, 8% last year.

We continue to expect our adjusted tax rate for full year, 'twenty, putting five to be approximately 23%.

Adjusted EPS was $4 18 in the quarter up 19% from last year.

Julia Wang: The adjusted tax rate for the quarter was 23.3%, compared to 22.8% last year. We continue to expect our adjusted tax rate for full year 2025 to be approximately 23%. Adjusted EPS was $4.18 in the quarter, up 19% from last year. Free cash flow for the quarter was $281 million, compared to $162 million last year. The $119 million increase in free cash flow was primarily driven by higher cash earnings. For the full year, we expect capital expenditures to be approximately 3.5% of revenue. During the quarter, the company invested $268 million in acquisitions and partnerships, paid off $60 million in dividends, and repurchased $25 million of stock. At the quarter end, we had $598 million in cash, while total debt was $5.6 billion.

Turning to cash flow for the park tower with $281 million compared to $162 million last year.

The $119 million increase on a free cash flow was primarily driven by higher cash Armando.

For the full year, we expect capital expenditures to be approximately three 5% of revenue.

He remains a part of a company investing $268 million in amortization from the partnership paid.

Paid out $60 million in dividends and repurchased $25 million of stock.

At quarter end, we had $598 million in cash while total debt was $5 $6 billion.

Our debt leverage as of quarter end was two four times gross debt to trailing 12 month, adjusted EBITDA and <unk>.

The low end of our targeted leverage range of two five time, Pennsylvania tons.

Now I will review our segment performance, beginning with diagnostics and our Barton.

Julia Wang: Our debt leverage as of quarter end was 2.4 times gross debt to trailing 12-month adjusted EBITDA, and slightly under the low end of our targeted leverage range of 2.5 times to 3 times. Now, I will review our segment performance, beginning with diagnostics laboratories. Revenue for the quarter was $2.8 billion, an increase of 8.5% compared to last year, with organic growth of 6.3% and acquisitions of 2.2%. Total volume increased 4.7% compared to last year, with organic volume contributing 3.5% as we continued to execute our strategy and drive strong demand. Acquisitions contributed 1.2%. Price mix increased 3.7% versus last year. Organic price mix was 2.8% as we benefited from mix, primarily due to the annualization of Invitae as well as an increase in tests per accession. Acquisitions contributed 1%.

Revenue for the quarter was $2 $8 billion.

An increase of eight 5% compared to last year with organic growth of six 3% and acquisitions up two 2%.

Total loan only increased four 7% compared to last year with organic volume contributed three 5% as we continued to execute our strategy and strong demand.

Acquisitions contributed one 2%.

Price mix increased three 7% was last year.

Price mix was two 8% as we benefited from mix.

Primarily due to the annualized thats, helping you maintain as well as an increase in test part of the question.

And so they can continue to pay the 1%.

Diagnostics adjusted operating income for the full entire it was $415 million.

16, 3% of revenue.

Compared to <unk> $387 million or 15, 2% of revenue last year.

Adjusted operating margin was up 110 basis points.

Julia Wang: Diagnostics adjusted operating income for the quarter was $450 million, or 16.3% of revenue, compared to $387 million, or 15.2% of revenue last year. Adjusted operating margin was up 110 basis points. Adjusted operating income and operating margin increased, primarily driven by organic demand, including the strong performance of Invitae, coupled with slight variability from weather year over year. Now, I will review the segment performance of biopharma laboratory services, or BLS. Revenue for the quarter was $799 million, an increase of 8.3% compared to last year, due to an increase in organic revenue of 5.3% and the foreign currency translation of 3%. We continue to perform well in central labs. In constant currency, central labs' revenue was up 7% in the quarter. Early development revenue was up 1.1%, lower than expected due to delayed study starts.

Adjusted operating income and operating margin increased primarily driven by organic demand, including the strong performance, helping you maintain compound with a slight <unk> from weather year over year.

Now I will review the segment performance of Biopharma Laboratory services.

L S.

Revenue for the quarter was $799 million.

An increase of eight 3% compared to last year due to increased organic revenue of five 3% and foreign currency translation of 3%.

We continue until performed well with central lab.

In constant currency Central lab revenue was up 7% in the quarter.

Are they divide up on the revenue was up one 1% lower than expected due to delayed start they stopped.

Yeah, it's possible below at that pace to pick up revenue early development work with Daniel to divest or restructure from our site consolidation.

Impacting approximately $15 million in annual revenue in non core areas.

We expect this access towards ultimately a more streamlined business with a slight improvement in operating income.

Julia Wang: In response to the lower than anticipated revenue in early development, we are beginning to divest or restructure through site consolidation, impacting approximately $50 million in annual revenue in non-core areas. We expect this action to result in a more streamlined business with a slight improvement in operating income. BLS adjusted operating income for the quarter was $132 million, or 16.5% of revenue, compared to $121 million, or 16.4% of revenue last year. Adjusted operating income grew 9% year over year, driven by organic demand. We ended the quarter with a backlog of $8.6 billion, and we expect approximately $2.7 billion of this backlog to convert into revenue over the next 12 months. Our segment quarterly book-to-bill was 0.89. Our trailing 12-month book-to-bill remains strong at 1.09.

<unk> adjusted operating income for the quarter was $172 million or.

16, 5% of revenue comps.

Compared to $121 million or 16, 4% of revenue last year.

Adjusted operating income grew 9% year over year to them by organic demand.

We ended the quarter with a backlog of $8 $6 billion and we expect approximately $2 $7 billion of this backlog to come walking into revenue over the next 12 months.

All the settlement a quarterly book to Bill was some single 0.89, our trailing 12 month book to Bill remains strong at one part of the sale of nine.

Now I will discuss our updated 2025 for full EFI event.

Which assumes foreign exchange rates effective as of September that have 2025 for the remainder of the year.

The enterprise guidance also in close to the impact from currently on pace to pay for the capital allocation utilizing free cash flow for acquisitions share repurchases and dividends.

Julia Wang: Now, I will discuss our updated 2025 full-year guidance, which assumes foreign exchange rates effective as of September 30, 2025, for the remainder of the year. The enterprise guidance also includes the impact from currently anticipated capital allocation, utilizing free cash flow for acquisitions, share repurchases, and dividends. Beginning with the segments, diagnostics continues to execute well in the marketplace. We have maintained the midpoint versus prior guidance and narrowed the growth range to 7.2% to 7.8%, which assumes approximately 4.5% organic revenue growth. In BLS, we expect to grow 5.7% to 7.1% versus prior year. We have lowered the midpoint by 14 basis points versus prior guidance due to the unfavorable impact of currency. In constant currency, we have maintained the midpoint versus prior guidance, as strength in central labs is offsetting softness in early development.

Beginning with the sediment diagnostics continues to execute well in the market place.

We have maintained the midpoint of what just quantify that.

And then most of the growth went to seven 2% to seven 8%.

Which has seen an approximate today's fall, 5% organic revenue growth.

E L F. We expected to grow five 7% to seven 1% once as prior year.

We have lowered the midpoint by 14 basis points, what's the supply up items due to be obsolete or about one type of currency.

In constant currency, we have maintained the midpoint of what as part of either as a strengthening of central that is offsetting softness in Arlington last month.

We continue to expect a central lab to grow in the mid single digits for the full year.

We now expect the Rd divestments to grow low single digits for the full year.

Would kill for presenting the most challenging year over year comparison.

We updated that 2025 enterprise revenue growth guidance range to seven 4% four 8%.

Julia Wang: We continue to expect central labs to grow in the mid-single digits for the full year. We now expect early development to grow low single digits for the full year, with Q4 presenting the most challenging year-over-year comparison. We updated the 2025 enterprise revenue growth guidance range to 7.4% to 8%. We lowered the midpoint by 14 basis points due to timing of acquisition revenue, which are held at the enterprise, and the unfavorable impact from currency. We continue to expect full-year enterprise margins to increase, with margins improving in both diagnostics and biopharma laboratory services (BLS) in 2025 versus 2024. Our guidance range for adjusted EPS is $16.15 to $16.50, with an implied growth rate at the midpoint of 12%. As compared to prior guidance, we have narrowed the range and raised the midpoint by approximately $0.05. Our free cash flow guidance range is $1,165 million to $1,285 million.

We lowered the midpoint by 40 basis points due to a timing of acquisition revenue, which are held at the enterprise and they also about impact from currency.

We continue to expect our full year enterprise margins, taking place with margins improving in both diagnostics and CLS in 2025 Watts has plenty of times before.

All the diverse range for adjusted EPS is the $16 15 per.

So the $16.50.

The implied growth rate at the midpoint of 12%.

As compared to prior guidance, we have narrowed the range and raised the midpoint by approximately 5%.

Our free cash flow guidance range is one point it was six $5 billion to $1 $285 million.

We know what the rent and the rates the midpoint by $25 million worth of supply of either then.

Our strong cash flow generation year to date.

In closing our core operating performance reflects a small execute our strategy and the continued efforts of our teams across the organization.

Julia Wang: We narrowed the range and raised the midpoint by $25 million versus prior guidance, given our strong cash flow generation year to date. In closing, our quarterly performance reflects a strong execution of our strategy and the continued efforts of our teams across the organization. As we look ahead, we are confident in our ability to deliver sustainable growth and long-term value for our shareholders. We look forward to updating you in the coming quarters. Operator, we will now take questions.

As we look ahead, we are confident in our opinion Haynes took the name of sustainable growth and long term value for our shareholders.

We look forward to updating you in the coming quarters.

Operator, we will now take questions.

Thank you as a reminder to ask a question. Please press star one on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one again in the interest of time, we ask that you. Please limit yourself to one question. Please standby, while we compile the Q&A roster.

Operator: Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. In the interest of time, we ask that you please limit yourself to one question. Please stand by while we compile the Q&A roster. Our first question comes from Lisa Gill of JP Morgan. Your line is open.

And our first question comes from Lisa Gill of Jpmorgan. Your line is open good morning.

Lisa.

Thanks, very much good morning, Adam and Julia I, just wanted to better understand when we think about the revenue and the updated guidance around revenue. So Julian I heard you talk about currency and acquisitions I'm curious what are you seeing an increase in utilization from for example, the exchange population as people anticipate that they potential.

Adam Schechter: Morning, Lisa.

[Analyst 1]: Thanks very much. Good morning, Adam and Julia. I just want to better understand when we think about the revenue and the updated guidance around revenue. Julia, I heard you talk about currency and acquisitions. I'm curious, one, are you seeing an increase in utilization from, for example, the exchange population as people anticipate that they potentially could lose their benefit or it could cost more going into 2026? Is there a way for you to break down that 40 basis point between currency and acquisitions? Is the acquisitions just a timing aspect and you know we'll see that come through in 2026?

We could lose their benefit or it could cost more going into 2026, and then is there a way for you to break down that that 40 basis point.

Between currency and acquisitions and again, if the acquisition is just the timing aspect and so we'll see that come through in 'twenty six.

Hi, Lisa I'll start first I'd say that $13 million of it was from the foreign exchange. The rest was from the acquisitions. It is fully timing related some of the acquisitions. This year closed a little bit later than what we anticipated. So that impact is that just a little bit and then a few fell into next year, but overall the pipeline room.

Adam Schechter: Hi, Lisa. I'll start. First, I'd say that $13 million of it was from the foreign exchange. The rest was from the acquisitions, and it's fully timing related. Some of the acquisitions this year closed a little bit later than what we anticipated, so that impacted us just a little bit, and a few fell into next year. Overall, the pipeline remains strong. The acquisitions remain strong, so it's purely timing related. With regard to your question on utilization, I'll first start off by saying we had a very strong quarter when you look at the diagnostic business.

<unk> strong.

The acquisitions remains strong so it's purely timing related with regard to your question on utilization I'll first start off by saying we had a very strong quarter. When you look at the diagnostic business.

And when you look at the organic volume was up three 5%.

And when I think about the volume, we're certainly seeing some uptick I think from demographics in the marketplace from a <unk>.

Market share that we're gaining I don't necessarily believe it's sort of people concerned about losing the ACI because doctors can only take so many appointments.

[Analyst 1]: Yeah.

Adam Schechter: When you look at the organic volume, it was up 3.5%. When I think about the volume, we're certainly seeing some uptake, I think, from demographics in the marketplace, from market share that we're gaining. I don't necessarily believe it's due to people concerned about losing the ACA because doctors can only take so many appointments, and they're usually very booked. It would be hard to get a large number of people into those offices that quickly. I think we're seeing it more from organic volume increases.

And as you say very books, so it would be hard to get a large number of people into those offices that quickly. So I think we're seeing it more from organic volume increases.

That's helpful. Thank you.

Thank you.

And our next question comes from Michael Cherny of Leerink Partners. Your line is open good morning, Michael.

Good morning, Adam Thanks for the question and congrats on the nice quarter.

[Analyst 1]: That's helpful. Thank you.

Maybe if I could dig in a little bit on organic priced per mix in particular, it's been strong you've got a tough comp this quarter and yet it still grew nicely as you're thinking about the behavioral changes that you're making a good organization how much of it do you feel is proactive versus reactive in terms of what you can push versus what the mark.

Operator: Thank you. Our next question comes from Michael Cherney of Leerink Partners. Your line is open.

Adam Schechter: Morning, Michael.

[Analyst 2]: Morning, Adam. Thanks for the question. Congrats on a nice quarter. Maybe if I can dig in a little bit on organic price per mix in particular. It's been strong. You had a tough comp this quarter, and yet it still grew nicely. As you think about the behavioral changes that you're making as an organization, how much of it do you feel is proactive versus reactive in terms of what you can push versus what the market is bringing to you as we think about how that builds beyond this year? Thank you.

He is bringing to you as we think about how that builds beyond this year. Thank you.

Sure Mike I'll give you some context and I'll ask Julia to jump in and give you some specifics on the price mix. So when I looked at the diagnostic revenue grew eight 5% versus last year organically. It was about 6% when I look at the organic volume that grew three 5% and price mix grew about two 8%.

Adam Schechter: Yep. Sure, Michael. I'll give you some context, and I'll ask Julia to jump in and give you some specifics on the price mix. When I look at the diagnostic revenue, it grew 8.5% versus last year. Organically, it was about 6%. When I look at the organic volume, that grew 3.5%, and price mix grew about 2.8%. Some of that was from mix but also from Invitae. I'll ask Julia to give you some more specifics about the price mix.

Some of that was from mix, but also from in detail.

But I'll ask Julia to give you some more specifics about the price mix.

Yes, Hi, Michael H P.

You want to break down the impact between unit price and the mix, we continue to see unit price being relatively flat. Therefore, the price mix Young Tech has really been benefiting from mix and then Adam just share in the third quarter, our organic price mix was up two eight.

Julia Wang: Yes. Hi, Michael. If you were to break down the impact between unit price and the mix, we continue to see unit price being relatively flat. Therefore, the price mix impact has really been benefiting from this. As Adam just shared, in the third quarter, our organic price mix was up 2.8%. That was driven primarily by an increase in tests per accession as well as Invitae. The impact on Invitae was more pronounced in Q3 due to the timing of the annualization being in the middle of Q3. Going into Q4, we expect Invitae to drive continued price mix favorability, and the impact will somewhat moderate when compared to Q3. If we step back and look at the price mix in general, over time, we have seen a slight yet consistent growth in tests per accession post-COVID year.

8% that was driven primarily by an increase in test kitchen as well as E D T.

The use happening and they pay it was more pronounced in Q3 due to the timing of the annualized nation being in the middle of Q3 and going into Q4, we expect the MBP peptide continue with price mix and see what if any P and the impact will somewhat moderate when compared to Q.

Three.

And if we step back and look at the types of mixing channel Oh, what time, we have seen a slight yeah to consistent growth in test prep assertion post colli Pee Yoga lounge.

It sounds like some we continue to believe that the mixed growth will be supported by the increasing our partnership with the large hospital and the health systems.

As well as the aging population the health and the wellness trend the breath of our test menu as well as our focus on specialty testing and for the full year you might have seen that in terms of our updated guidance. We maintained the mid point of diagnostic revenue by themselves for seven five <unk>.

Julia Wang: Longer term, we continue to believe that the mix growth will be supported by the increase in our partnerships with the large hospitals and the health systems, as well as the aging population, the health and wellness trend, the breadth of our test menu, as well as our focus on specialty testing. For the full year, you might have seen that in terms of our updated guidance, we maintained the midpoint of diagnostic revenue guidance of 7.5% and updated the organic revenue growth expectation to 4.5%, whereby the price mix is going to be a big contributor to that expectation.

Scent and update you see organic revenue growth expectation to fall, 5%, whereby the price mix is going to be a big contributor to that expectation.

Thank you.

Okay.

And our next question comes from Jack Meehan of Nephron Research. Your line is open good morning, Jeff.

Wearing Adam good morning Julien.

I was hoping to get a little bit more color on.

Answer around the site consolidation in the early development business can you just talk about what the factors where are you seeing in the market that led you to make this decision and it sounds like you've got the revenue impact is it possible to think about.

Operator: Thank you. Our next question comes from Jack Meehan of Nephron Research. Your line is open.

Adam Schechter: Morning, Jack.

[Analyst 3]: Morning, Adam. Good morning, Julia. I was hoping to get a little bit more color on the announcement around the site consolidation in the early development business. Can you just talk about what the factors were you're seeing in the market that led you to make this decision? It sounds like we got the revenue impact. Is it possible to think about, you know, it sounds like this might be a low margin, just what the earnings impact might be from the decision? Thanks.

It sounds like this might be a low margin just what the earnings impact might be from the decision.

Yes, absolutely Jack.

Jack I'll start off with giving some additional color and then I'll answer the question specifically, but if you look at the bio.

Biopharma Laboratory services businesses performed well and you saw an 8% increase in revenue of 5% in constant currency, but it was really driven by strength in central laboratories that was up 10%.

Adam Schechter: Absolutely. Jack, I'll start off with giving some additional color, and then I'll answer the question specifically. If you look at the biopharma laboratory services businesses, it performed well. You saw an 8% increase in revenue or 5% in constant currency, and it was really driven by strength in central laboratories that was up 10%, 7% if you look at constant currency. It more than offset the weakness that we saw in early development. Based upon what we're seeing in early development, we've decided to look at some non-core areas. We're going to divest certain things there, and we're also going to have some site consolidation. That will be leading to approximately $50 million of annualized revenue. Without that revenue, we expect to see a slight increase in operating income. It actually was negatively impacting our accretion, so that'll be a positive for us.

7%, if you look at constant currency and it more than offset the weakness that we saw in early development based upon what we're seeing in early development, we decided to.

Look at some non core areas, we're going to divest certain things are but we're also going to have some site consolidation.

And that will be leading to approximately $50 million of annualized revenue, but without that revenue, we expect to see a slight increase in operating income. So it actually was negatively impacting our accretion so that'll be a positive for us what drove us that decision was we.

Look at three things with the early development business, we look at Rfps coming into US then we look at what's our win rate and then we looked at through the trials start on time, if you look at the Rfps. The numbers, we're getting about the same number of rfps that we've gotten in the past if you look at our win rate, it's about the same or mark.

Adam Schechter: What drove us to that decision was we look at three things with the early development business. We look at RFPs coming into us, then we look at what's our win rate, and then we look at, do the trials start on time? If you look at the RFPs in numbers, we're getting about the same number of RFPs that we've gotten in the past. If you look at our win rate, it's about the same. Our market share is stable as it's been in the past. The issue that we're seeing is with timing of study starts. They're just not starting in a timely fashion that we would have expected based upon historical timelines. We expected that to start to come back to more normalcy. Unfortunately, it has not. Based upon that, we've decided to streamline the business and to take the actions we talked about today.

Sure it's stable as it's been in the past the issue that we're seeing is with timing of study starts theyre just not starting in a timely fashion that we would've expected based upon historical timelines we.

We expected that to start to come back to more normalcy. Unfortunately, it has not based upon that we've decided to streamline the business and to take the actions we talked about today.

Thank you.

And our next question comes from Patrick Donnelly with Citi. Your line is open.

Good morning, Patrick.

Hey, good morning, Thanks for thanks for taking the question.

Maybe just given that Panama is little more topical here heading into year end can you just talk about the expectations. There I know you've talked about the $100 million top line impact and.

Operator: Thank you. Our next question comes from Patrick Donnelly of Citi. Your line is open.

I think during competencies and you were talking about some levels of mitigation efforts, maybe there's something like $25 million can you talk about I guess the probability what you're hearing on Panama results et cetera, and then again, what youre doing on the offset there you're already you're kind of getting things in line would love just your thoughts on your expectations and then the potential mitigation efforts.

Adam Schechter: Good morning, Patrick.

[Analyst 4]: Hey, good morning, Adam. Thanks for taking the question. Maybe just given that PAMA is a little more topical here heading into year-end, can you just talk about the expectations there? I know you've talked about the $100 million top-line impact. I think during conference season, you were talking about some levels of mitigation efforts. Maybe it was something like $25 million. Can you talk about, I guess, the probability, what you're hearing on PAMA results, etc., and then again, what you're doing on the offset? Are you already kind of getting things in line? We'd love just your thoughts on the expectations and then the potential mitigation efforts you guys could do into next year. Thank you so much.

Guys could do into next year. Thank you. So much yes, absolutely Patrick So we've consistently said that we believe that CMS is execution of Panama was not accurate and it's.

Should it be implemented in its current form we've worked really closely with our trade organization a CLA.

Advocates for the results Act, which was put a freeze on the cuts for a period of time. When you look at that it has strong bipartisan support I mean Democrats Republicans sponsored the Bill we think that we have very strong support. The question is with everything that's happening right now in the shutdown and everything else will we see additional legislation approved.

Adam Schechter: Absolutely, Patrick. We've consistently said that we believe the CMS's execution of PAMA was not accurate, and it shouldn't be implemented in its current form. We've worked really closely with our trade organization, ACLA, to advocate for the Results Act, which would put a freeze on the cuts for a period of time. When you look at that, it has strong bipartisan support. Democrats and Republicans sponsored the bill. We think that we have very strong support. The question is, with everything that's happening right now and the shutdown and everything else, will we see additional legislation approved by the end of this year? We're going to continue to advocate for it. We have strong support for it, but it's very hard to handicap whether or not that will happen by year-end.

By the end of this year, we're going to continue to advocate for it we have strong support for it but it's very hard to handicap, whether or not that will happen by year end.

We also are continuing to work to see if it should be and can be delayed again as it has been for the last number of years and that's really going to come down to I believe the OBO score, which we've not seen a final score.

The OBO score is positive or may be kind of neutral to slightly negative I think theres a good chance that it could be delayed again, if its not and it goes in a different direction, then I think there'll be more difficult with everything else that's going to have to happen by the end of the year. So it's really it's really difficult to predict whether we'll be able to get the results.

Adam Schechter: We also are continuing to work to see if it should be and can be delayed again, as it has been for the last number of years. That's really going to come down to, I believe, the OBO score, which we've not seen a final score. If the OBO score is positive or maybe kind of neutral to slightly negative, I think there's a good chance that it could be delayed again. If it's not and it goes in a different direction, then I think it'll be more difficult with everything else that's going to have to happen by the end of the year. It's really difficult to predict whether we'll be able to get the results legislation implemented and/or get another delay.

Legislation implemented <unk> get another delay. So therefore, we think the prudent strategy is for us to plan that there'll be 100 million dollar impact on both the topline and Bottomline for full year 2026, and with that we are already planning and we have work underway to offset like you said approximately $25 million of that impact and that's in it.

Isn't to the commitment that we have for launchpad, which roughly offsets the cost of inflation. So we're going to do that in addition to and a lot of that's going to come from the things that we've started to discuss for AI implementation and things that we're doing to increase our efficiency and use AI more effectively so those things are underway.

Adam Schechter: Therefore, we think the prudent strategy is for us to plan that there'll be a $100 million impact on both the top line and bottom line for full year 2026. With that, we are already planning and we have work underway to offset, like you said, approximately $25 million of that impact. That's in addition to the commitment that we have for Launchpad, which roughly offsets the cost of inflation. We're going to do that in addition to. A lot of that's going to come from the things that we've started to discuss for AI implementation and things that we're doing to increase our efficiency and use AI more effectively. Those things are underway, and we'll provide guidance for 2026 in February, and we'll give you more specifics.

And we will provide guidance for 2026 in February and we'll give you more specifics.

Yeah.

Great. Thank you guys.

Thank you.

Okay.

And our next question comes from Erin Wright of Morgan Stanley. Your line is open.

Good morning, Aaron.

Hi, Good morning could you speak a little bit to your efforts.

Around the consumer driven testing the contribution you're seeing now from that I know one of your peers was talking about that at the margin profile growth rate of that business and is it starting to move the needle in terms of volume or overall revenue growth.

[Analyst 4]: Great. Thank you, guys.

Operator: Thank you. Our next question comes from Aaron Wright of Morgan Stanley. Your line is open.

Adam Schechter: Good morning, Adam.

[Analyst 1]: Hi. Good morning. Could you speak a little bit to your efforts around the consumer-driven testing, the contribution you're seeing now from that? I know one of your peers was talking about that, the margin profile growth rate of that business, and is it starting to move the needle in terms of volume or overall revenue growth? Thanks.

Yes. So if you look at our consumer business, we continue to have a strong focus on consumerism.

To meet the patients where they are through a whole bunch of different channels and importantly, we interact or engage with over 75 million patients through all the different avenues that people come to get Labcorp results or information from Labcorp. So as the consumers are taking a much greater control of their health care, we want to be a resource for them.

Adam Schechter: Yeah. If you look at our consumer business, we continue to have a strong focus on consumerism. We're trying to meet the patients where they are through a whole bunch of different channels. Importantly, we interact or engage with over 75 million patients through all the different avenues that people come to get Labcorp results or information from Labcorp. As the consumers are taking a much greater control of their healthcare, we want to be a resource for them and offer solutions that put them in the driver's seat, frankly. Today, a lot of them engage with us through our on-demand e-commerce platform. We also have the Ovia Health app where many people interact with us as well. What we're seeing is a very significant increase in terms of growth rate. There's no doubt about it.

And offer solutions that put them in the driver's seat.

Today, a lot of them engage with us through our on demand E Commerce platform.

Also have the obeah app, where many people interact with us as well and what we're seeing is a very significant increase in terms of growth rate, there's no doubt about it it.

It hasn't reached critical mass at the moment for us to pull out the numbers and provide separate numbers, but we're continuing to add new tests. Just this quarter. We added test for let exposure April beef, a heart health and even a panel for healthy aging and we're going to continue to add new things. There. In addition to that if you look at <unk> health is a leading.

Adam Schechter: It hasn't reached critical mass at the moment for us to pull out the numbers and provide separate numbers, but we're continuing to add new tests. Just this quarter, we added tests for lead exposure, ApoB for heart health, and even a panel for healthy aging. We're going to continue to add new things there. In addition to that, if you look at Ovia Health, it's a leading app that supports women's health, and it guides through all different stages, including pregnancy, postpartum, menopause, and a lot more. These are really important capture points for us. I do believe we're going to continue to see growth in these areas. As it reaches critical mass, we'll figure out when to start to report it separately.

That supports women's health and it guides through all different stages, including pregnancy, postpartum menopause and a lot more. So these are really important capture points for us I do believe we're going to continue to see growth in these areas and as it reaches critical mass we will figure out when to start to report it separately.

Thank you.

And our next question comes from Andrew Brachman of William Blair. Your line is open.

Great Hi, good.

Good morning, Thanks for taking the question, maybe I guess on the diagnostics segment margin expansion I think it was 110 basis points in the quarter can you maybe pick that apart a bit more for us and I guess, how should we be thinking about the go forward, there and considerations around things like.

Operator: Thank you. Our next question comes from Andrew Brackman of William Blair. Your line is open.

Price and VK and just underlying improvements there. Thanks.

[Analyst 2]: Great. Hi. Good morning. Thanks for taking the question. Maybe, I guess, on the diagnostic segment margin expansion, I think it was 110 basis points in the quarter. Can you maybe pick that apart a bit more for us? I guess, how should we be thinking about the go-forward there and considerations around things like price, VPA, and just underlying improvements there? Thanks.

Yes, Hi, Andrew let me provide some color on margin.

As you can see we delivered meaningful margin expansion at the enterprise level, yet that's not quanta.

100 basis points, what's this prior year supported by both segments.

As we shared before the year over year margin comparison in the second half of this year, that's tough bar for PL S. I'm guessing you'd say Oh for diagnostics.

Julia Wang: Yes. Hi, Andrew. Let me provide some color on margins. As you can see, we delivered meaningful margin expansion at the enterprise level in the third quarter, up 100 basis points versus prior year, supported by both segments. As we shared before, the year-over-year margin comparison in the second half of this year gets tougher for biopharma laboratory services (BLS) and gets easier for diagnostics, given the margin evolution throughout 2024. As such, in the third quarter of this year, BLS margin was up 20 basis points, driven by organic demand. Diagnostics had a strong margin improvement of 110 basis points versus prior year, which was primarily driven by organic demand, including strong performance of Invitae. You might recall that Invitae annualized in August of this year and is now fully integrated into our broader business infrastructure.

Lindsay margin evolution in some of our 2024 as such in the third quarter of this year B O S. Montana was up 20 basis points driven by organic demand.

Diagnostics had strong margin improvement of 110 basis points versus prior year.

Which was primarily driven by organic demand, including strong performance, helping you maintain you might recall that in the PE annualized in August of this year and it's now fully integrated into our broader business the infrastructure.

As you look at the diagnostics margin gained two for me.

<unk> maintained that with some other puts and takes for example, the savings from our large heavy Alicia test coupled with a slight <unk> from weather helped us offset tape you call annual wage increases and the mix the impact from <unk> Hospital lab management agreements.

Julia Wang: As you look at the diagnostics margin in Q3, in addition to Invitae, there were some other push and takes. For example, the savings from our Launchpad Initiative, coupled with a slight favorability from weather, helped us offset typical annual wage increases and mixed impact from in-hospital lab management agreements. As we think about Q4 margin for diagnostics, we expect Invitae to continue to be a tailwind. Sequentially speaking, we expect margins to moderate in Q4 versus Q3, reflecting typical seasonality. Overall, I would say that we expect a full-year margin expansion by both segments to support enterprise margin expansion in 2025, which contributes to our expectation of growing adjusted EPS by 12% for the full year at the midpoint of our guidance.

As we think about Q4 margins for diagnostics leaks.

We expect <unk> to continue to be a tailwind.

<unk> speaking, we expect margins to moderate in Q4, what's in Q3, reflecting typical seasonality.

Overall, I would say that we expect a full year margin expansion by both segments to support enterprise margin expansion in 2025, which contributes to our expectation of growing adjusted EPS by 12% for the full year at the midpoint of our guidance.

Thank you.

Our next question comes from Elizabeth Anderson with Evercore ISI. Your line is open good morning.

Goodbye.

Hi, Adam Thanks for the question this is Joanne.

So I have a question about 25 guidance.

Have a one quarter lag.

Operator: Thank you. Our next question comes from Elizabeth Anderson of Evercore ISI. Your line is open.

His guidance do you have a very wide range of Citibank.

What are the major moving pieces that goes when you towards the high and the low end of that guidance range.

Adam Schechter: Morning, Elizabeth.

Julia Wang: Hi, Adam. Thanks for the question. This is Joanna for Elizabeth. I have a question about 2025 guidance. We only have one quarter left, yet the EPS guidance does have a very wide range of $0.35. What are the major moving pieces that could bring you towards the high end or the lower end of that guidance range? Thank you.

Yes. Thank you for the question and.

I looked at the guidance, we've narrowed the ranges and our overall revenue guidance and our diagnostic guidance, we purposely kept the range and BLS are little bit larger we didn't adjust that this quarter and the primary reason is as we're looking to.

Do some of the divestitures and or the site consolidation the timing of what could impact that this quarter is a little bit uncertain, we're moving as fast as we can but there are certain things that we can only move so fast on and that's why we've kept that range a bit wider than we typically would.

Adam Schechter: Thank you for the question. As I look at the guidance, we've narrowed the ranges in our overall revenue guidance and our diagnostic guidance. We purposely kept the range in BLS a little bit larger. We didn't adjust it this quarter. The primary reason is, as we're looking to do some of the divestitures and/or the site consolidation, the timing of what could impact us this quarter is a little bit uncertain. We're moving as fast as we can, but there are certain things that we can only move so fast on. That's why we've kept that range a bit wider than we typically would.

Thank you.

Yeah.

And our next question comes from Kevin Caliendo with UBS. Your line is open.

Good morning, Kevin.

Good morning, Thanks for taking my question.

I'm still a little confused about why the margins were maybe a little bit better in Q and wondering if there was anything discretionary but.

Operator: Thank you. Our next question comes from Kevin Caliendo of UBS. Your line is open.

Any discretionary spend on top of that just given the put my my real my real question is more around 26, if we think about the.

Adam Schechter: Morning, Kevin.

[Analyst 2]: Good morning. Thanks for taking my question. I'm still a little confused about why the margins weren't maybe a little bit better in Q3. I'm wondering if there was anything discretionary, any discretionary spend on top of that, just given this. My real question is more around 2026. If we think about the impact, if PAMA comes back, let's say you said the net impact would be $70 million, $75 million. Given all the other puts and takes that you have with Invitae and some of the other deals that you have, can you still meet your LRP if PAMA comes back? I know there's a chance that you could be updating your LRP at some point next year, but I'm just thinking out loud here, just given sort of where the headwinds and tailwinds are.

The impact of Pampa comes back.

You said, the net impact would be $70 million to $75 million.

Given all the other puts and takes that you have within the pay and some of the other other deals that you have can you still meet your MRP if travel comes back.

And they know their chance that you could be updating your L. R. P. At some point next year, but I am just thinking thinking out loud here, just given sort of where.

Where are the headwinds and tailwind there.

Yeah, So Kevin first of all.

Thank you for the question and Theres nothing unusual for the margins the 110 basis point improvement improvement in diagnostics, we think is strong.

Driven partially by and repay but Theres also offset when you think about some of the hospital deals that we do they typically start off being dilutive to margins and over time get to the average margins. So there's always some puts and takes to the margins as we think about that we also are on track for our Labcorp, Our Launchpad initiative, which is taking out.

Adam Schechter: Thank you for the question. There's nothing unusual for the margins. The 110 basis point improvement in diagnostics we think is strong, driven partially by Invitae, but there's also offsets when you think about some of the hospital deals that we do. They typically start off being diluted to margins and over time get to the average margins. There's always some puts and takes to the margins as we think about that. We also are on track for our Labcorp or our Launchpad Initiative, which is taking out a significant amount of cost, covering almost all of the inflation that we have from employees. If you then think about biopharma laboratory services, we also saw an increase in the margin of about 20 basis points. When you put those two together, we thought we had a strong margin improvement of 100 basis points for the quarter.

A significant amount of cost covering almost all of the inflation that we have from <unk>.

Employees. So if you then think about Biopharma Laboratory services. We also saw an increase in our margin of about 20 basis points. When you put those two together we felt we had a strong margin improvement of 100 basis points for the quarter as we think about next quarter, we expect to see continued strength, particularly in diagnostics. It's.

And to note that this quarter, we overlapped two or three months from the <unk> acquisition next quarter it'll be three out of three months.

And in addition to that we will continue to make progress in the other areas.

There will be more difficult because as you may recall it was an easier compare in the first half of the year. It's a much more difficult compare in the fourth quarter for BLS, but net net margins for both businesses.

Adam Schechter: As we think about next quarter, we expect to see continued strength, particularly in diagnostics. It's important to note that this quarter we overlap two of three months from the Invitae acquisition. Next quarter, it'll be three out of three months. In addition to that, we'll continue to make progress in the other areas. BLS will be more difficult because, as you may recall, it was an easier compare in the first half of the year. It's a much more difficult compare in fourth quarter for BLS. Net net margins for both businesses, we expect to improve this year versus last year. It's frankly too early to give specifics about 2026.

We expect to improve this year versus last year, it's frankly too early to give specifics about 2026, we're going to provide that guidance in February but I would say, we're working really hard to do everything we can to not only get the launch pad, but also additional savings from some of the AI initiatives.

We have underway, which would offset.

As much as we can from the impact of Panama, which is both on the top line and importantly, as well as the bottom line. So it has an impact both topline and bottomline there.

Adam Schechter: We're going to provide that guidance in February, but I would say we're working really hard to do everything we can to not only get the Launchpad, but also additional savings from some of the AI initiatives that we have underway, which would offset as much as we can from the impact of PAMA, which is such both on the top line, importantly, as well as the bottom line. It's an impact to both top line and bottom line there.

Thank you.

And our next question comes from Luca <unk> of Barclays. Your line is open.

Luke.

Hi, guys. This is Anna presents kiosks.

Thank you for taking my questions sure good morning, it sounds like that.

Morning, It sounds like the hospital M&A pipeline has three accelerated given all of the macro and policy uncertainty and just curious if you can talk about whether you deal criteria has changed at all given this large opportunity set and would you be willing to take on a lower margin asset that offers meaningful potential share gains in a particular geography, where do you like.

Operator: Thank you. Our next question comes from Luke Surgot of Berkeley. Your line is open.

Adam Schechter: Morning, Luke.

[Analyst 1]: Hi, guys. This is Anna Kozinski on for Luke. Thank you for taking our questions.

Adam Schechter: Sure. Good morning.

[Analyst 1]: Good morning. It sounds like the hospital M&A pipeline has reaccelerated given all the macro and policy uncertainty. Just curious if you can talk about whether your deal criteria has changed at all given this larger opportunity set, and would you be willing to take on a lower margin asset that offers meaningful potential share gains in a particular geography where you're less penetrated?

Penetrated.

Yeah no. Thank you for the question and the hospital pipeline does remain strong and I expect it to continue to be strong when I think about the hospital business I think about three different parts of it one is running the laboratories in the hospital. Those are typically the lowest margin business, but it has a very high return on cost of capital. So we will do that.

Adam Schechter: Thank you for the question. The hospital pipeline does remain strong, and I expect it to continue to be strong. When I think about the hospital business, I think about three different parts of it. One is running the laboratories in the hospital. Those are typically the lowest margin business, but it has a very high return on cost of capital. We will do that business, even though it's a bit lower in margin because it does have a great return on cost of capital. The second thing we look at is the reference work. If it's business that they can't do in the hospital lab, will they send it to us as reference? That's good margin business, about the same as our average margin. The third part is acquiring the outreach business, which also is about the same as our average margin.

Business, even though it's a bit lower in margin because it does have a great return on cost of capital. The second thing. We look at is the reference work. So if it's business that they can't do it in a hospital lab, where they send it to us as reference and that's good margin business you know about the same as our average margin and then the third part is acquiring the outreach business.

Which also is about the same as our average margin most hospitals when we do all three of those things it ends up being about the same as our average margin. If we were to only do the hospital.

Running of the labs will be lower but that's not typical typical we would do running the labs, along with either the reference and or the outreach business. So net net it should be neutral to margins over time.

Adam Schechter: Most hospitals, when we do all three of those things, it ends up being about the same as our average margin. If we were to only do the hospital, running of the labs, it would be lower, but that's not typical. Typically, we would do running the labs along with either the reference and/or the outreach business. Net net, it should be neutral to margins over time.

Got it that's helpful. Thank you.

Thank you.

And our next question comes from Michael Riskin of Bank of America. Your line is open.

Michael.

Hey, Good morning, this is Aaron on for Mike.

It looks like.

[Analyst 1]: Got it. That's helpful. Thank you.

So Terry testing is growing almost double routine I guess, how are you guys prioritizing R&D investments into those more esoteric tests and then.

Operator: Thank you. Our next question comes from Michael Riskin of Bank of America. Your line is open.

Following that line of questioning Virginia Oscar Please call a sense how are you thinking about your commercialization strategy and reimburse the updates that you guys can provide us.

Adam Schechter: Morning, Michael.

[Analyst 2]: Hey, good morning. This is Aaron on for Mike. It looks like esoteric testing is growing almost double routine. I guess, how are you guys prioritizing R&D investments into those more esoteric tests? Following that line of questioning, for genioscopies, coloscents, how are you thinking about your commercialization strategy, and any reimbursement updates that you guys can provide us?

Yeah, So I'll start with the SME business and we certainly are seeing growth in esoteric business and <unk>.

Continued synthetic increases over time, but when you think about 700 million tests that were doing a year, it's hard to move the meter the needle and typically esoteric tests are lower and volume overall, but theyre very important because when you run the esoteric tests you typically do all of the routine tests that come along with it we have been launching many.

Adam Schechter: Yeah. I'll start with the esoteric business. We certainly are seeing growth in esoteric business, and it's continued asymptotic increases over time. When you think about 700 million tests that we do in a year, it's hard to move the needle. Typically, esoteric tests are lower in volume overall, but they're very important because when you run the esoteric test, you typically do all the routine tests that come along with it. We have been launching many esoteric tests, but importantly, we're focused on oncology, women's health, neurology, and the autoimmune areas. In those areas, we see growth rates that should be two to three times faster than the overall diagnostic market. It's certainly an area that we want to be competing in. When we think about how to compete, some of those tests we develop ourselves, some of those tests we license or acquire.

Esoteric tests, but importantly, we're focused on oncology women's health neurology and the autoimmune areas and in those areas, we see our growth.

Growth rates that should be two to three times faster than the overall diagnostic market. So it's certainly an area that we want to be competing in when we think about how to compete some of those tests, we develop ourselves some of those tests, we license or acquire and we're really focused on what's the best way to get the best path to March.

Get it as quickly as we can.

To us it's more about having all of the tests that a physician would be for patients as opposed to developing any one test internally. So we're really agnostic to developing it ourselves or to acquiring or licensing it.

Adam Schechter: We're really focused on what's the best way to get the best test to market as quickly as we can. To us, it's more about having all of the tests that a physician would need for a patient as opposed to developing any one test internally. We're really agnostic to developing it ourselves or to acquiring or licensing it.

Thank you.

Okay.

And our next question comes from <unk> Park of Baird. Your line is open.

Morning Adjourn.

Hi, Good morning, Thanks for taking my question on <unk> can you provide more color on bookings between Central lab and early development I recognize central lab bookings can be more chunky quarter by quarter and fairly Damon.

Operator: Thank you. Our next question comes from Eugene Park of Baird. Your line is open.

Demand environment as you said didn't change much but wanted to hear your thoughts between the two.

Adam Schechter: Morning, Eugene.

Julia Wang: Hi. Good morning. Thanks for taking my question. On BLS, can you provide more color on bookings between central lab and early development? I recognize central lab bookings can be more chunky quarter by quarter, and early development demand environment, as you said, didn't change much, but wanted to hear your thoughts between the two.

Yeah, So I'll start off with overall on.

On the book to Bill.

Specifically.

If you look at the book to Bill was about <unk> nine for the quarter, a little bit lower than we typically like we like to be about a one point to 1.15, but if you look at the trailing 12 months. It was a 1.09 and I've always said that you have to be careful looking at any one quarter, because there are ups and downs to any one quarter, but over time, the trailing 12 months that's it.

Adam Schechter: Yeah. I'll start off with, you know, overall, on the book-to-bill, then I'll talk specifically. If you look at the book-to-bill, it was about a 0.9 for the quarter, a little bit lower than we typically like. We like to be about a 1.0 to a 1.05. If you look at the trailing 12 months, it was a 1.09. I've always said that you have to be careful looking at any one quarter because there are ups and downs to any one quarter. Over time, the trailing 12 months, that's a better predictor. I would expect.

<unk> predictor.

Expect the book to Bill in the fourth quarter to be better than it was in the third quarter. If you look at it sequentially, albeit it'll be a tough year over year compare because last year fourth quarter was very strong as well if I look at the book to Bill I feel confident that we're in a very good place book to Bill is a good measurement for the Central laboratory business and it remains.

Adam Schechter: Book-to-bill in fourth quarter to be better than it was in the third quarter. If you look at it sequentially, it'll be a tough year-over-year to compare because last year fourth quarter was very strong as well. If I look at the book-to-bill, I feel confident that we're in a very good place. Book-to-bill is a good measurement for the central laboratory business, and it remains very strong. I've always said book-to-bill is a little bit more difficult for early development business, with the primary reason being that many studies in early development start and end in the same year. Therefore, there's not a lot of two or three-year trials that kind of build your book-to-bill over time. You would expect the early development book-to-bill to be lower than the central laboratory, which it is, but I would say the central laboratory is very strong for the early development.

Very strong I've always said book to Bill is a little bit more difficult for early development business with the primary reason being that many studies really development start and end in the same year and therefore, there's not a lot of two or three year trials that kind of build your book to bill over time. So you would expect the early development book to Bill.

Build to be lower than the Central laboratory, which it is but I would say the central laboratory is very strong for the early development I look at the Rfps the win rates are strong.

<unk> starts that are really the issue in early development.

Thank you.

And our next question comes from David Westenburg of Piper Sandler Your line is open good morning.

Adam Schechter: I look at the RFPs. The win rate are strong. It's the study starts that are really the issue in early development.

David.

Good morning, Hi, This is sky on for Dave. Thanks for taking the question could you provide some more color on the expected revenue and EPS accretion from the completed and progression acquisitions for 2025, and if you can 2026 kind of what are the key integration milestones, we should be looking out for in potential.

Operator: Thank you. Our next question comes from David Westenberg of Piper Sandler. Your line is open.

Adam Schechter: Good morning, David.

Christin O'Donnell: Good morning. This is Skye on for Dave. Thanks for taking the question.

Synergies expected from these transactions.

Adam Schechter: Sure.

Christin O'Donnell: Could you provide some more color on the expected revenue and EPS accretion from the completed and progressing acquisitions for 2025 and, if you can, 2026? What are the key integration milestones we should be looking out for and potential synergies expected from these transactions?

Yes, so I think it's.

If you look at what we've provided we say typically we expect.

The acquisitions to provide one and a half to two 5% growth in a given year and that's what we are projecting in our longer term guidance, which we continue to expect that type of growth. The pipeline remains strong. It remains good we don't give specific.

Adam Schechter: Yeah. I think it's, if you look at what we've provided, you know, we say typically we expect the acquisitions to provide 1.5% to 2.5% growth in a given year, and that's what we are projecting in our longer-term guidance, which we continue to expect that type of growth. The pipeline remains strong. It remains good. We don't give specific operating income or margin for the individual deals. What I would say is, as I look at the hospital deals in general, when you do all three pieces of the business, meaning the reference laboratory work, the in-house laboratory work for the hospital itself, as well as the acquisition of the reference or of the outpatient labs, you tend to have a margin that's about the same as our average margin.

Operating income or margin for the individual deals, but I would say is as I look at hospital deals in general when you do all three pieces of the business, leaving the reference laboratory work. The in House Laboratory work for the hospital itself as well as the acquisition of the referenced.

The outpatient labs, you tend to have our margins at about the same as our average margin.

Thank you.

And our next question comes from Tycho Peterson of Jefferies. Your line is open.

Good morning, Tycho Hey, good morning, I wanted to probe on the central lab strength a bit more I understand your book to Bill comments earlier, but can you maybe just talk about the acceleration you saw here in <unk>.

Operator: Thank you. Our next question comes from Tycho Peterson of Jefferies. Your line is open.

Nice step up from <unk>, maybe just talk about the durability of what Youre seeing now on the Central lab side.

Yeah. So if you look at our Central lab business. It remains strong it had 10% growth.

Adam Schechter: Morning, Tycho.

Adam Schechter: Hey, good morning. I want to probe on the central lab strengths a bit more. I understand your book-to-bill comments earlier, but can you maybe just talk about the acceleration you saw here in Q3? A nice step up from Q2. Maybe just talk about the durability of what you're seeing now on the central lab side.

The top line, but it was 7% if you looked at the constant currency growth rate, which is very healthy growth. We expect that it will be in the mid single digit growth for the full year. That's typically where you would expect the central laboratory business to grow we're seeing strong book to Bill last quarter, we announced that we had several large studies that we're gonna go over multi.

Adam Schechter: Yeah. If you look at our central lab business, it remains strong. It had 10% growth on the top line, but it was 7% if you looked at the constant currency growth rate, which is very healthy growth. We expect that it will be in the mid-single-digit growth for the full year. That's typically where you'd expect the central laboratory business to grow. We're seeing strong book-to-bill. Last quarter, we announced that we had several large studies that were going to go over multiple years. The more large studies over multiple years you have, the better you are. Overall, I would say that that business we expect to continue to grow and to do well as we look for that to offset some of the softness that we're seeing for the early development for the rest of the year.

Of all years.

The more large studies over multiple years you have the better you are but overall I would say that that business. We expect to continue to grow and to do well as we look for that to offset some of the softness that we're seeing for the early development for the rest of the year.

Okay. Thanks.

Thank you I show no further questions at this time I'd like to turn it back to Adam Schechter for closing remarks.

Well. Thank you everybody for joining us today and I don't want to just take a moment to recognize our 70000 person team members around the world. Our employees really are the driving force behind our mission to improve health and improve lives.

Adam Schechter: Okay. Thanks.

Operator: Thank you. I show no further questions at this time. I'd like to turn it back to Adam Schechter for closing remarks.

Hopefully you see we have momentum based upon our third quarter results going into the fourth quarter and we look forward to sharing our 2026 guidance in February of next year. Thank you all.

Adam Schechter: Thank you, everybody, for joining us today. I want to just take a moment to recognize our 70,000-person team members around the world. Our employees really are the driving force behind our mission to improve health and improve lives. Hopefully, you see we have momentum based upon our third-quarter results going into fourth quarter, and we look forward to sharing our 2026 guidance in February of next year. Thank you all.

This concludes today's conference call. Thank you for participating and you may now disconnect.

Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.