LABCORP HOLDINGS INC. (LH): what the price requires
At today's price, LABCORP HOLDINGS INC. (LH) is priced for +0.6% growth. boothcheck doesn't publish a fair value or a price target; it shows what the price assumes, so you can judge whether that bar is too high.
Generated: 2026-07-14 · Exported: 2026-07-17 · Source: https://boothcheck.com/report/LH
Headline
| Field | Value |
|---|---|
| Ticker | LH |
| Company | LABCORP HOLDINGS INC. |
| Current price | $276.89/sh |
| Composition | Dx (Diagnostics Laboratories) 78% / BLS (Biopharma Laboratory Services) 22% / Intercompany eliminations and other 0% |
What The Price Requires (Inversion)
The assumption today's price embeds, recovered by inverting the valuation.
| Field | Value |
|---|---|
| Inversion basis | whole-company |
| Operating margin needed | 3.8% |
| Operating margin today | 10.7% |
| Margin compression implied | -6.9pp |
| Implied growth | 0.6% |
| Multiple paid | 20x operating income |
The operating-margin requirement is derived from the framework's value band at year 12, a separately labeled basis from the headline growth/duration solve.
Solve inputs: computed at a 7.1% cost of capital with 4% terminal growth over a 5-year stage; each 1pp of cost of capital moves the implied operating-profit growth ~8pp.
Reconcile: at the x-ray's 9.3% required return this reads ~16.5%/yr; the models below use their own rates.
How unusual the bet is: within-range
| Reference | Value |
|---|---|
| vs own history | -0.44σ |
| cohort percentile (of 112 peers) | 45 |
| implied end-window share | 0% |
Valuation X-Ray
The price is justified by relative-multiple and growth-DCF; asset-based/earnings-power land below the price.
How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.
| Family | Median price/FV | Models | Reads |
|---|---|---|---|
| Asset | 2.09x | 5 | expensive |
| Earnings | 2.27x | 5 | expensive |
| Relative | 0.81x | 5 | justifies |
| Growth | 0.61x | 3 | justifies |
Families that justify the price: Relative, Growth Families that call it expensive: Asset, Earnings
The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 7.2%); the inversion above states its own rate.
Per-Model Detail (n=18)
| Model | Family | FV | Price/FV | Applicable | Methodology |
|---|---|---|---|---|---|
| DCF Perpetual Growth | Growth | $709.77 | 0.39x | yes | FCF base $1.4B, growth 7% (input: historical growth), terminal g 4.0%, WACC 7.2%, 6yr projection |
| DCF Exit Multiple | Growth | $455.03 | 0.61x | yes | Exit EV/EBITDA: 16.1x / 18.1x / 20.1x (bear / base = today's held flat / bull), 6yr |
| Relative Valuation | Relative | $264.57 | 1.05x | yes | P/E 24x (static sector reference · 2026-04), scenarios: 20.0x / 24.0x / 28.0x (bear / base = reference held flat / bull), EV/EBITDA 16x |
| Simple DDM | Growth | — | — | no | — |
| Two-Stage DDM | Growth | — | — | no | — |
| Simple Excess Return | Asset | $122.78 | 2.26x | yes | BV/sh $105.29, ROE (TTM) 10.8%, ke 9.3% |
| Two-Stage Excess Return | Asset | $132.21 | 2.09x | yes | 5yr excess ROE then converge to ke=9.3% |
| Discounted Future Market Cap | Growth | $308.38 | 0.90x | yes | Rev $14.1B, growth 7% (input: historical growth; tapered), Terminal P/S: 1.4x / 1.6x / 1.9x (bear / base = today's held flat / bull, cap 8x) |
| Peter Lynch Fair Value | Relative | $341.31 | 0.81x | yes | EPS $11.29, growth 30% (input: historical EPS growth), PEG=0.81 (Undervalued) |
| Margin Trajectory | Growth | — | — | no | — |
| Earnings Power Value | Earnings | $192.43 | 1.44x | yes | Normalized EBIT (5y avg op income, one-time charges added back) $1.63B × (1−21%) / WACC 7.2% → EPV (no growth) |
| Residual Income | Asset | $134.01 | 2.07x | yes | BV $105.29 + 5yr PV of (ROE (TTM) 10.8% − Kₑ 9.3%) × BV; BV grows 7.0%/yr |
| Graham Number | Asset | $163.54 | 1.69x | yes | √(22.5 × EPS $11.29 × BVPS $105.29) — Graham's conservative floor |
| EV/EBITDA Relative | Relative | $236.58 | 1.17x | yes | EBITDA $1.61B × sector EV/EBITDA 16.0x |
| FCF Yield | Earnings | $105.78 | 2.62x | yes | FCF $1384.0M / Kₑ 9.3% — zero-growth perpetuity |
| SBC-Adj FCF Yield | Earnings | $89.52 | 3.09x | yes | SBC-adj FCF $1.26B (FCF $1.38B − SBC $0.12B) capitalized at Kₑ |
| Ben Graham Formula | Earnings | $364.29 | 0.76x | yes | EPS $11.29 × (8.5 + 2×15.0%) × (4.4 / 5.3%) |
| ROIC-Justified P/B | Asset | $29.52 | 9.38x | yes | BV $105.29 × (ROIC 2.0% / WACC 7.2%) |
| P/Sales Sector | Relative | $682.47 | 0.41x | yes | Revenue $14.14B × sector P/S 4.0x |
| PEG Fair Value | Relative | $423.37 | 0.65x | yes | EPS $11.29 × (PEG 1.5 × growth 25.0% (input: historical EPS growth)) → PE 37.5x |
| Earnings Yield | Earnings | $122.05 | 2.27x | yes | EPS $11.29 / required return 9.3% (Rf 4.3% + ERP 5.0%) |
| Funds From Operations Multiple | Relative | — | — | no | — |
| Clinical Phase NPV | Growth | — | — | no | — |
| Merton | Asset | — | — | no | — |
| V5 Mechanical | — | — | — | no | — |
Solvency
| Field | Value |
|---|---|
| Net debt | $6.4b |
| Net debt / NOPAT (after-tax) | 5.43x |
| Net debt / operating income (pre-tax) | 4.29x |
| Interest coverage | 6.7x |
| Share count CAGR (buyback) | -6.7% |
| Burning cash | no |
Bullet Takeaways
- Labcorp runs two businesses: a vast clinical-diagnostics lab network and a biopharma laboratory-services arm that supports drug-developer trials, giving it both steady testing volume and exposure to pharma research spending.
- Growth is steady rather than spectacular, revenue up about 6% in the most recent quarter, and the price embeds only modest expectations, which makes execution and margin the swing factors rather than a high-growth story.
- The balance sheet carries meaningful debt, around 4.5 times operating income, much of it from acquisitions, so capital allocation and the integration of acquired labs are key things to watch.
Bull Case
Where the price lands against the methods is the quiet strength of the Labcorp case. The relative-multiple lens against the diagnostics cohort sits close to the current price, and the forward-growth methods reach it as well, while the price itself embeds barely any growth, an implied operating-profit path of roughly flat to slightly negative. That combination, a stock that needs almost nothing to go right to justify its price, is the setup value investors look for in a steady, essential business. Labcorp does not have to grow fast to be worth the quote; it has to keep doing what it does.
What it does is run two complementary engines. The diagnostics business is the steady base: it processes an enormous volume of routine and specialized clinical tests, with the scale that lets it win national contracts and absorb fixed lab costs across millions of samples. The biopharma laboratory-services arm is the higher-growth piece, supporting drug developers' clinical trials, which grew faster in the recent quarter and ties Labcorp to pharma research spending rather than just patient volume. In the most recent quarter diagnostics revenue grew 5.0% to $2.76 billion and biopharma grew 8.2% to $780.6 million, both at mid-teens adjusted margins.
The execution is improving and the capital return is real. Adjusted operating margin expanded to 14.4% from 14.0%, free cash flow turned positive versus a negative figure a year earlier, and the company raised full-year guidance. The share count has fallen about 3% a year, so a steadily growing business is spread across fewer shares. A scaled, essential diagnostics franchise with a faster-growing biopharma arm, improving margins, and a falling share count, priced for almost no growth, is the durable-value bet the bull is making.
Bear Case
The threat to Labcorp is that the testing it does is being pulled in two directions at once, and the price does not fully reflect the squeeze. On one side, hospital and health-system labs are taking volume back: Labcorp's own filing notes that "an increasing number of health system laboratories have expanded their operations and business, resulting in greater competition for testing from physicians within those systems". On the other, specialized molecular and genomic-testing players are competing for the higher-value tests that carry the best margins. The big independent lab model is caught between integrated health systems insourcing routine work and nimble specialists taking the premium work, and that is a slow erosion of the franchise the bull treats as stable.
Reimbursement is the second, structural pressure. Labcorp's revenue depends on what payors and government programs pay per test, and the company flags the shift toward "value-based, bundled pay-for-performance, and other risk-sharing payment models" along with the consolidation of managed-care organizations as challenges. Lab reimbursement has faced years of rate pressure, and a high-volume, fee-per-test business has limited ability to push back when a few large payors set the price. The implied near-flat growth in the price is partly the market already pricing this drift; the bear case is that it could be worse than flat if insourcing and reimbursement cuts accelerate together.
The balance sheet is where the modest growth becomes a constraint. Net debt sits at about 4.5 times operating income, a meaningful load built up largely through acquisitions, with interest covered around six times. That is serviceable for a stable cash generator, but it limits flexibility: a business growing only mid-single digits with this much debt has less room to absorb a reimbursement shock or a volume loss to health-system labs. The valuation is not demanding, which caps the downside somewhat, but the combination of competitive erosion, reimbursement pressure, and acquisition leverage means the steady-compounder story has more fragility than the low multiple implies.
Valuation
The price is making an undemanding bet on Labcorp. At today's quote the shares trade around 19 times company-wide operating income, and inverted, that price implies operating profit growing at roughly minus 1% a year, essentially flat to slightly declining. The market is not paying for growth here; it is paying for a steady, essential business to hold its ground. That framing matters, because it means the bear case is not an overvaluation argument but a question of whether the diagnostics franchise can avoid the slow erosion the low embedded growth already half-anticipates.
The methods split between the value-supportive and the cautious. The relative-multiple lens against the diagnostics cohort lands close to the price, and the forward-growth methods reach it, both supporting the valuation given the modest growth required. The asset-value and earnings-power methods sit below the price, reflecting the heavy intangibles from acquisitions and a current operating margin in the low double digits. The pattern is a within-range name where the relative and growth methods justify the price and the conservative methods say it is full; the spread is not a wide overvaluation gap, it is the normal tension for a steady healthcare compounder. Because the price embeds so little growth, the durability of the diagnostics volume and the biopharma arm, rather than any acceleration, is what defends the multiple.
Solvency is the part that warrants the most attention. Net debt sits at about 4.5 times operating income, with interest covered around six times, a load built up largely through acquisitions. That is manageable for a business with Labcorp's cash generation, but it is real leverage on a company growing only mid-single digits, and it limits the cushion against a reimbursement cut or volume loss to health-system labs. The share count is falling about 3% a year, supporting the equity. The genuine downside variable is the combination of that leverage with competitive and reimbursement pressure; the price already assumes near-flat growth, so the question is whether the business holds that line or slips below it.
Catalysts
The first quarter of 2026 was a steady beat with raised guidance. Revenue rose 5.8% to $3.54 billion, with diluted earnings per share of $3.35, up from $2.52 a year earlier, and adjusted earnings per share up 10.6% to $4.25. Both segments contributed: diagnostics grew 5.0% to $2.76 billion at a 16.6% adjusted margin, and biopharma laboratory services grew 8.2% to $780.6 million at a 15.5% adjusted margin.
Profitability and cash flow improved. Adjusted operating margin expanded to 14.4% from 14.0%, operating cash flow rose to $191.5 million, and free cash flow turned positive at $70.5 million against a negative figure a year earlier. On the strength of the quarter, Labcorp raised full-year enterprise revenue guidance to $14.65 to $14.80 billion and lifted its adjusted earnings outlook to $17.70 to $18.35.
The near-term watch items are diagnostics test volume against the competitive pressure from health-system and specialty labs, the trajectory of biopharma services as it tracks pharma research spending, and the company's continued lab acquisitions and their integration. Reimbursement developments are the external signal to monitor, since payor rates set the revenue per test that the diagnostics base depends on.
Peer Cohorts (Per Segment, With Filing Citations)
Diagnostics Laboratories (Dx) (reported)
- DGX (QUEST DIAGNOSTICS INC)
- (no filing in the citation store)
- NTRA (NATERA, INC.)
- (no filing in the citation store)
- GH (GUARDANT HEALTH, INC.)
- (no filing in the citation store)
- RDNT (RadNet, Inc.)
- (no filing in the citation store)
- IDXX (IDEXX LABORATORIES INC /DE)
- (no filing in the citation store)
Biopharma Laboratory Services (BLS) (reported)
- IQV (IQVIA HOLDINGS INC.)
- (no filing in the citation store)
- ICLR (ICON plc)
- (no filing in the citation store)
- MEDP (Medpace Holdings, Inc.)
- (no filing in the citation store)
- CRL (CHARLES RIVER LABORATORIES INTERNATIONAL, INC.)
- (no filing in the citation store)
Methodology Note
- Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
- Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
- Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
- Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.
Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.
Sources
Labcorp Q1 2026 earnings release, April 2026