Laboratory Corporation of America Holdings or Labcorp LH has been benefiting from the solid execution of its strategic priorities. Investment in targeted high-growth areas should continue the momentum. Yet, severely declining COVID-19 testing revenues dent growth. The stock carries a Zacks Rank #3 (Hold) currently.

In its efforts to expand, Labcorp is focusing more on key growth areas such as oncology, women’s health, autoimmune disease and neurology. The company’s ability to develop, license and ultimately scale specialty testing, including companion diagnostics, can be pivotal in significantly driving near-term growth.

Developing specialty tests and companion diagnostics establishes Labcorp as an attractive partner to health systems and biopharma, as they continue to develop more therapies in the highest specialty areas. In addition, the company is well-positioned for long-term success in Cell & Gene Therapy, expanding into the consumer market and international growth through the specialty testing and biopharma business.

In addition, the company is investing in innovation and technology that supports diagnostic and drug development testing for various diseases such as cancer and Alzheimer’s. Labcorp is the first company to nationally avail of an ATN profile — a blood-based test that combines three well-researched blood biomarkers to identify and assess biological changes associated with Alzheimer's disease, Amyloid-Tau Alzheimer's and neurodegeneration targeted for patients being evaluated for mild dementia.

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Further, Labcorp boasts a robust pipeline of potential hospital and local laboratory acquisitions, which present ample opportunities for growth. The company also continues to progress in terms of integrating hospital partnerships and acquisitions.

In the fourth quarter of 2023, the momentum from the health systems and regional local lab partnership strategy remained strong. Labcorp announced a strategic partnership with Baystate Health in Western Massachusetts to acquire its outreach laboratory business and select operating assets. It also completed the acquisition of select assets from Legacy Health and currently manages Legacy's inpatient hospital laboratories, serving patients throughout Oregon and Southwest Washington.

On the flip side, with the end of the pandemic, Labcorp witnessed a significant decline in COVID-19 PCR testing volumes. In the fourth quarter of 2023, testing revenues were down 73% and affected some of the company’s key metrics.

Besides, Labcorp’s operations are also subject to the effects of macroeconomic factors in the United States and globally. These include significant economic fluctuations as a result of the disturbed geopolitical situation and inflation, all leading to an increase in the costs of goods and services. Throughout most of the months of 2023, Labcorp.’s Early Development Research Laboratories business grappled with non-human primate (NHP)-related supply chain issues. The company experienced higher-than-normal cancellations and lower orders, primarily due to small biotech funding.