This morning, Laboratory Corporation of America Holdings (LH) reported strong third quarter financials. The company’s earnings per share of $1.22 surpassed the Zacks Consensus Estimate of $1.15 as well as the $1.10 reported in the year-ago period. Revenues recorded a 4.4% year-over-year increase to $1.2 billion, driven by a 0.7% increase in testing volume (measured by accessions) and a 3.7% increase in revenue per accession.

Lab Corp’s gross margin reported an improvement of 137 basis points during the reported quarter. While revenues increased 4.4%, cost of goods sold grew by 2%. The company recorded an improvement in operating margin (excluding restructuring and other special charges) by 60 basis points to 20% compared to 19.4% in the year-ago period.

At the end of the September quarter, Lab Corp had $126.8 million of cash and short-term investments, down from $219.7 million at the end of December 2008. Free cash flow position improved significantly to $560.6 million at the end of the reported quarter compared to $445.2 million in the corresponding period.

To enhance shareholder value, the company repurchased $165.1 million of stock representing approximately 2.4 million shares during the quarter with another 180.2 million of repurchase authorization remaining under its share repurchase plan. Lab Corp had $70.8 million remaining under its $500 million revolving credit facility.

Back in August, Lab Corp announced the completion of the formalities related to the acquisition of Monogram Biosciences. Following this, Monogram became a wholly owned subsidiary of Lab Corp. Per the deal, announced in June 2009 all outstanding shares of Monogram were to be acquired by Lab Corp at $4.55 per share.

In addition to posting a strong third quarter performance, Lab Corp provided its 2009 full-year guidance. The company now expects its earnings per share in the range of $4.84 – $4.89, not taking into consideration the dilution due to the acquisition of Monogram.
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