Laboratory Corp. of America Holdings (LH - Get Report) slid nearly 11% to $144.30 after the life sciences company reduced its 2018 guidance due to lower-than-expected volume growth in LabCorp Diagnostics.
The Burlington, North Carolina-based company said it expects revenue to grow 9.9% to 10.3%, down from its Oct. 24 guidance of 10.5% to 11%. LabCorp also said it expects adjusted earnings of $10.95 to $11.05 a share, down from the earlier projection of $11.25 to $11.45 per share.
LabCorp said the revised outlook was primarily driven by lower-than-expected volume growth in LabCorp Diagnostics, which the company expects to continue for the remainder of the year.
Revenue growth at LabCorp Diagnostics is expected to range from 2.1% to 2.5%, down from a prior range of 3% to 3.5%.
The softness in demand is largely due to slower growth in referred direct-to-consumer genetic testing, lower referral volume from hospitals and health systems, volume declines from certain managed care plans that will no longer be exclusive to LabCorp in 2019, and adverse weather.
The company previously had warned in its third-quarter earnings call that it has begun reducing costs, but these steps weren't enough to maintain the prior outlook in light of the unanticipated volume shortfall.
"We are disappointed with this shortfall in diagnostics but continue to be confident in our outlook in Covance Drug Development," David P. King, chairman and CEO, said in a statement. "Looking to next year, we continue to expect modest EPS growth over our updated 2018 earnings."
Covance Inc. is a contract research organization headquartered in Princeton, New Jersey. LabCorp announced in November 2014 it would purchase Covance for $6.1 billion.
The company said it expects to report its financial results for 2018 and provide guidance for 2019 on its fourth-quarter earnings call, which is scheduled for Feb. 7.