BUZZ-Delay in reimbursement cut to ease pressure on U.S. lab operators, analysts say

Reuters · 09/27 14:37
BUZZ-Delay in reimbursement cut to ease pressure on U.S. lab operators, analysts say

** Delay in cuts to reimbursement rates for some lab tests under Medicare to aid 2025 rev and earnings of U.S. lab owners such as Labcorp LH.N and Quest Diagnostics DGX.N, analysts say

** LH shares rise 1.1% to $222.73, DGX shares up nearly 1% to $155.51

** U.S. Congress on Wednesday deferred cuts to reimbursement rates from 2025 to 2026

** "The delay was in-line with expectations as both LH and DGX have previously said another delay was likely" - J.P. Morgan

** J.P. Morgan and Jefferies analysts, both, estimate an increased revenue of ~$85 million for DGX and ~$80 million for LH in FY25, with both saying this is at least the fifth delay in cuts

** "This is also an opportunity for companies to use a portion of temporarily foregone earnings cuts to re-invest in operational improvements in their businesses, fund tuck-in M&A or return value to shareholders" - Jefferies

** Including session gains, LH stock down 2.3% and DGX shares up 12.5% YTD


(Reporting by Mariam Sunny in Bengaluru)

((Mariam.ESunny@thomsonreuters.com))