LH Stock Expected to Gain From the Ballad Health Acquisition Deal
Labcorp LH has announced a strategic collaboration with Ballad Health to provide outreach laboratory services across the Appalachian Highlands region. Under the agreement, the company will acquire select operating assets of Ballad Health’s outreach lab services, which, combined with their ongoing partnership, aim to enhance patient care, expand access to advanced testing and improve efficiency for the health system and its patients.
The companies expect to close the transaction in December 2024, subject to customary closing conditions and regulatory approvals.
Following the news release, shares of LH declined 2.9% to $220.33 at yesterday’s close. However, Labcorp has continued to excel in its strategic priority of being a top partner for health systems and regional local laboratories. The latest partnership with Ballad Health is expected to further solidify this position. As a result, we expect that the market sentiment toward the stock will improve shortly.
Benefits of Labcorp’s New Collaboration
An integrated community health improvement organization, Ballad Health serves 29 counties of the Appalachian Highlands in Northeast Tennessee, Southwest Virginia, Northwest North Carolina and Southeast Kentucky. It runs a system of 20 hospitals, post-acute care and behavioral health services and a large multi-specialty group physician practice that works closely with an active independent medical community and its stakeholders to improve the health of nearly one million people.
By partnering with Ballad Health, Labcorp can enable broader access to its comprehensive testing and laboratory services for patients and physicians, particularly in underserved rural areas, leveraging the combined expertise and resources. The organizations are committed to working together to plan and implement a smooth, thoughtful transition that maintains continuity of services for patients, hospitals, clinicians and clients while providing direct access to the additional capabilities of Labcorp.
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Meanwhile, Ballad Health will continue to operate its inpatient and emergency department laboratory, as well as lab services for hospital-based practices, such as oncology. The collaboration aligns with its broader strategy to provide high-quality, accessible healthcare to the communities.
Industry Prospects Favoring LH
A Grand View Research report valued the global clinical laboratory service market at $233.24 billion in 2023 and forecast it to grow at a compound annual rate of 3.5% through 2030.
The market growth is driven by factors such as the increasing burden of chronic diseases, the growing demand for early diagnostic tests and the rapid advancements in data management and sample preparation. The growing adoption of laboratory automation systems is expected to favor the market for clinical lab services.
Labcorp’s Recent Developments
In August 2024, Labcorp purchased the select assets of the medical genetics company, Invitae. The acquisition expands the company’s specialty testing capabilities and its ability to utilize genetic data to improve clinical trials and treatment regimens in oncology and select rare diseases. By integrating Invitae's genetic testing technology, Labcorp looks forward to offering a complete set of insights for each patient, from testing to diagnosis to treatment.
LH Stock Price Performance
In the past year, Labcorp shares have risen 9.3% against the industry’s 0.5% fall.
Consensus Estimates for LH
The Zacks Consensus Estimate for Labcorp’s 2024 earnings indicates an 8.2% year-over-year improvement to $14.67. Revenues are expected to increase slightly by 0.4%, totaling $12.95 billion.
LH’s Zacks Rank and Top MedTech Stocks
Labcorp currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Boston Scientific BSX, AxoGen AXGN and SiBone SIBN, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Boston Scientific’s shares have risen 52.2% in the past year. Estimates for the company’s earnings per share have remained constant at $2.40 in 2024 and $2.71 in 2025 in the past 30 days. BSX’s earnings beat estimates in each of the trailing four quarters, delivering an average surprise of 7.2%. In the last reported quarter, it posted an earnings surprise of 6.9%.
Estimates for AxoGen’s 2024 loss per share have narrowed to 1 cent from 19 cents in the past 30 days. Shares of the company have surged 126.3% in the past year compared with the industry’s growth of 13.9%. AXGN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 96.5%. In the last reported quarter, it delivered an earnings surprise of 200%.
Estimates for SiBone’s 2024 loss per share have remained constant at 89 cents in the past 30 days. Shares of the company have dropped 27.4% in the past year against the industry’s 13.9% growth. SIBN’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 13.4%. In the last reported quarter, it delivered an earnings surprise of 15.4%.
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