Labcorp grew Q2 2026 revenue 5.8% to $3.73B (4.2% organic) and lifted adjusted EPS 14.9% to $4.99 on flat SG&A and wider Biopharma margins; it raised full-year guidance, though free cash flow fell 42%.
Revenue
$3.7B
+5.8% YoY
Net income
$299M
+25.6% YoY
Diluted EPS
$3.64
+28.5% YoY
Operating margin
12.1%
Q2 2026: 5.8% revenue growth, profit up faster as costs grew slower than sales
Labcorp's second-quarter revenue rose 5.8% to $3.73 billion. GAAP operating income rose 14.5% to $451.6 million, and GAAP diluted EPS rose 28.5% to $3.64. Two things drove the gap between sales growth and profit growth. First, costs rose more slowly than revenue: selling, general and administrative (SG&A) expense was flat in dollars ($577.2M vs. $579.3M), so it fell from 16.4% to 15.5% of revenue. Second, the prior-year quarter carried a $32.7M loss on venture-fund investments that did not recur. Management also raised its full-year revenue and adjusted EPS guidance and added $1.0 billion to its share buyback authorization.
Labcorp has two businesses. Diagnostics Laboratories (Dx) runs routine and specialty tests ordered by doctors and hospitals and is about three-quarters of revenue. Biopharma Laboratory Services (BLS) runs lab work for drug companies' clinical trials.
Key figures
Metric
Q2 2026
Q2 2025
YoY Change
Revenue
$3,731.1M
$3,527.3M
+5.8%
Organic revenue growth
+4.2%
—
—
Operating income (GAAP)
$451.6M
$394.5M
+14.5%
Operating margin (GAAP)
12.1%
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Organic growth excludes acquisitions, divestitures, currency and Labcorp's cutbacks in its Early Development business. Adjusted figures are the company's non-GAAP measures. They exclude intangible amortization, restructuring, acquisition costs, LaunchPad efficiency-program costs, and investment gains and losses. A basis point (bps) is one-hundredth of a percentage point.
Where the growth came from
Of the 5.8% revenue growth, 4.2 points were organic, meaning growth from the existing business. Acquisitions added 1.2 points and currency added 0.4 points. The organic rate is the one that shows underlying demand.
Diagnostics (+5.5% to $2,900.7M). Growth was 3.6% organic and 1.9% from acquisitions. The 10-Q splits the organic part into two roughly equal pieces. Organic requisition volume (the number of test orders) rose 1.8%. Organic price/mix rose 1.8%. Price/mix means revenue per order, which goes up when customers order pricier specialty tests or when prices rise. Acquired outreach lab businesses added 1.3% to volume. These are labs bought from hospitals and regional players, including Parkview Health's outreach labs in Indiana and Ohio and Tribal Diagnostics in Oklahoma and Texas, both closed this quarter. Labcorp spent $225.7M on acquisitions in the quarter and $427.9M in the first half. The quarter shows modest volume growth plus a richer mix, not a demand surge. The company names oncology and other specialty testing as focus areas, which fits a mix-driven price/mix gain, but the filing does not break that figure down further.
Biopharma Lab Services (+6.5% to $836.2M). The organic rate was stronger at 6.2%. Currency added 1.8 points. Labcorp's deliberate shrinking of Early Development, its preclinical research labs, subtracted 1.4 points. Within BLS the two parts moved in opposite directions. Central Labs, which processes samples from late-stage clinical trials, grew 9.8%. Early Development revenue fell 1.4%. Some of the headline 6.5% came from a weaker dollar, so the underlying trend is a little softer than the reported number.
Margins: operating leverage and some one-offs
Gross margin changed little. Cost of revenues fell only slightly as a share of sales, from 70.3% to 70.2%. Management attributes the improvement to "organic growth and operating efficiencies, partially offset by increased personnel costs." In other words, wage inflation used up most of the lab-level efficiency gains. Most of the margin gain came from overhead leverage: SG&A stayed flat while revenue grew $204M. The 10-Q says unallocated corporate expense fell $9.2M to $130.0M, "primarily due to lower LaunchPad costs and other expenses, partially offset by higher acquisition and disposition-related costs."
Both segments improved on an adjusted basis:
Dx adjusted operating margin was 18.0%, up from 17.6%, credited to organic growth and operating efficiencies.
BLS adjusted operating margin was 17.0%, up from 15.7%, a 130 bps gain. The 10-Q credits "organic growth in the Central Laboratory business and operating efficiencies from the strategic actions taken in ED." Cutting back the lower-margin preclinical business costs a little revenue but raises the segment's margin.
Amortization of acquired intangibles, an accounting charge that spreads the cost of acquired assets like customer relationships over time, rose 14.3% to $78.1M. That reflects the acquisition pace. It holds GAAP operating income back without affecting cash.
Why GAAP EPS (+28.5%) grew nearly twice as fast as adjusted EPS (+14.9%)
Headline EPS overstates the underlying improvement. Below the operating line, Other, net improved from a $32.7M loss to a $3.5M loss. The 10-Q attributes the change to "a decrease in investment losses." Those were mainly venture-fund investment losses, and the company removes them from adjusted results. That $29.2M swing, about $0.35 of pre-tax income per share, is why GAAP net earnings rose 25.6% while adjusted net income rose 12.3% ($409.2M vs. $364.5M).
Partly offsetting it:
A larger equity-method loss of $6.2M vs. $1.7M. The 10-Q attributes it to the minority investment in SYNLAB, a European lab operator.
Interest expense up 6.9% to $61.1M on higher average debt.
A higher tax rate, 22.6% vs. 21.8%, which management attributes to the jurisdictional mix of earnings.
Buybacks also helped per-share growth. Diluted shares fell 2.3% to 82.0M, and Labcorp repurchased $353.8M of stock in the quarter. That accounts for about 2.6 points of the gap between adjusted net income growth (+12.3%) and adjusted EPS growth (+14.9%).
Cash flow and balance sheet
Cash conversion was the weak spot. Free cash flow, meaning operating cash flow minus capital spending, fell to $313.9M from $542.7M. Operating cash flow fell to $445.5M from $620.6M despite higher earnings, and capital spending rose to $131.6M from $77.9M. The company attributes the drop to "working capital timing and planned increases in capital expenditures." The cash-flow statement shows where the working capital went: receivables grew $59.2M, supplies inventory $65.1M, and payables fell $11.7M, where a year earlier these items had contributed cash. First-half free cash flow is $384.4M, against full-year guidance of $1,240–1,360M that the company kept unchanged. That implies roughly $0.86–0.98B in the second half.
The quarter's cash uses exceeded what the business generated. Labcorp spent $225.7M on acquisitions, $353.8M on buybacks and $58.7M on dividends, and repaid $500M of senior notes. Cash fell from $981.1M at the start of the quarter to $141.8M. Total debt was $5.86B at June 30. Long-term debt rose from $5.08B at year-end, partly because of a $750M term loan drawn in Q1.
Takeaway: The best evidence in this quarter is margin, not revenue. Organic growth of 4.2% is solid but not exceptional. Flat SG&A and a 130 bps BLS margin gain from shrinking Early Development turned that growth into a 14.9% rise in adjusted EPS. The 28.5% GAAP EPS gain is inflated by a non-recurring prior-year investment loss. The number to watch is free cash flow, which fell 42% in the quarter and has to more than double in the second half to meet the unchanged full-year target.
Guidance and outlook
Management raised its 2026 guidance, which assumes exchange rates as of June 30:
Enterprise revenue: $14,710–14,827M (+5.4% to +6.3%), up from $14,649–14,803M. The range includes about 0.4 points of currency benefit.
Dx revenue: +5.3% to +6.0%, up from +5.1% to +5.9%.
BLS revenue: +5.5% to +6.5%, up from +3.8% to +5.4%. This is the biggest increase, and about 1.5 points of it is currency.
Adjusted EPS: $18.10–18.55, up from $17.70–18.35.
Free cash flow: $1,240–1,360M, unchanged.
Our read: First-half adjusted EPS was $9.24, so the guidance implies second-half adjusted EPS of about $8.86–9.31. That is roughly flat to modestly above the first half. First-half revenue was $7,268.7M, so the revenue range implies second-half growth of about 5.1–6.8% over H2 2025's $7,079.6M, similar to the first-half pace. The guidance is not a stretch on these numbers. The larger BLS increase suggests management expects Central Labs to stay strong, but backlog grew only 0.2% and book-to-bill (new orders relative to revenue) is 1.03, so BLS is adding orders only slightly faster than it works through them. That limits how far BLS can outgrow its current pace into 2027. The biggest risks to the forecast are the second-half cash-flow catch-up and continued personnel-cost inflation eroding Dx lab margins.
Source: Labcorp Form 10-Q for the quarter ended June 30, 2026 (filed 2026-08-05), and the Q2 2026 earnings release (Form 8-K Exhibit 99.1, 2026-07-30) for segment metrics and guidance.