Laboratory Corporation of America Holdings, or LabCorp, reported a net loss of $317.2 million for the first quarter of this year as a direct result of low demand and high costs due to the ongoing coronavirus pandemic. The loss incurred by the company during the first three months of the year has prompted it to withdraw its guidance for the entire year.
Revenues for the first quarter had slightly increased by 1 percent to $2.82 billion. However, higher overall operating costs and expenses erased its profits for the quarter. The North Carolina-based clinical laboratory network operator stated that it had spent around $437.4 million in expenses that were "triggered" by the coronavirus pandemic. The company reported another $21.9 million in expenses related directly to the spread of the virus during the quarter.
According to the company, the shelter-in-place orders and lockdowns had resulted in a 50 percent drop in demand for its diagnostic testing services. However, demand for COVID-19 tests in its laboratories had managed to offset the losses.
LabCorp CEO Adam Schechter mentioned in a statement to stakeholders that the company managed to perform admirably during the quarter despite the loss, particularly given the challenges posed by the coronavirus pandemic.
In order to control its finances, LabCorp announced that it has already imposed certain measures to scale back spending. This included the suspension of its stock buyback program, the cutting of its workforce, a hiring freeze, and the suspension of employee contributions. Apart from the cost-cutting measures, LabCorp announced that it is looking to tap into all available federal stimulus programs it is eligible to apply to.
Despite its losses, LabCorp stated that its liquidity still remains adequate to endure the economic effects of the pandemic. As of last month, LabCorp revealed that it had around $324 million in cash available and more than $924 million it can immediately tap into through its revolving credit facility.
To improve its performance in the coming quarters, LabCorp is planning to shift its resources to ramp up its capacity to produce coronavirus antibody testing. The company hopes to reach a capacity of more than 200,000 screenings per day by next month.
LabCorp has already begun rolling out its Covid-19 screenings throughout the country, including screenings at several Walgreens outlets. It is also making the tests available at its more than 100 LabCorp centers, with plans to make the tests available to at-home service providers after it had received approval from the Food and Drug earlier this week.
