The following is a final analysis of DaVita, LabCorp and Quest Diagnostics’ recent strategic actions, how they harness and affect each company’s financials, recommendations for improving each company’s financial policies and reasonings as to which company will be the most successful in the future.
DaVita has seen some ups and downs recently when it comes to financial performance. Back in October, there was a major plummet in their stock, which was a result of a devastating third-quarter report. This report made DaVita suffer their worst performance in more than two decades, after the dialysis company reported their third quarter that fell well below expectations and slashed its full-year outlook, citing declining treatments and rising labor costs. The stock, 0.93% dove 27.1% to $70.54, the lowest close since April 3, 2020. Trading volume swelled to about 5.4 million shares, compared with the full-day average over the past 30 days of about 629,500 shares. It was the biggest one-day selloff for the stock since it tumbled 32.2% on Jan. 19, 2000. DaVita’s CEO stated, “The third quarter was a challenging quarter for us. Like others in the healthcare community, negative volume trends due to COVID and continued labor pressure impacted our financial performance more than expected.” said Javier Rodriguez. “Despite this, I’m incredibly proud of the execution of our teams in a challenging operating environment and the unwavering focus of our frontline teammates on patient care. Looking ahead, I remain confident in our business and ability to leverage our end-to-end kidney care platform as a differentiated asset.”
There are a lot of unknowns and uncertainties that are hindering DaVita’s financial performances. One way DaVita can improve their financial policies is by tackling problems as soon as they arise. It is always very stressful facing financial problems as a business, but there is help and advice available that can help DaVita tackle problems before it gets too much to handle. Therefore, seeking advice from others and looking at what other healthcare services are doing to attack this problem is a way to stay ahead. There are also some initial steps DaVita can take to minimize the impact such as tackling priority debts first and assessing how they can improve their cash flow management. I believe DGX is going to be the most successful company when looking toward the future of each company. This is a company that others can look at to strive to do the same. The financial health and growth prospects of DGX demonstrate its potential to outperform the market, which is why I believe this is the best company going forward.
LabCorp has found success in navigating – and leading, the healthcare industry’s ongoing response to COVID-19. Despite this, LabCorp shareholders have seen underperformance in the last fiscal year, with shares declining 16.4% compared with the industry’s 9.1% fall (Zacks Equity Research, 2022).
In October 2022, LabCorp reported third quarter revenue at $3.6 billion, versus $4.1 billion in the previous year. Additionally, diluted EPS was $3.90 versus $6.05 in the previous year, and a free cash flow of $270 million versus last year’s $650 million (LabCorp, 2022). The revenue decrease was cited as a result of a decrease COVID-19 PCR test demand, forgein currency translation and acquisition offsets. Similar reasoning was also provided for LabCorp’s year-to-date results, which have been in “red” for the first nine months of 2022 (LabCorp, 2022).
However, many analysts still regard LabCorp as a “buy” for its potential earnings. LabCorp aims to align its expansion goals strategically and with the needs of the industry, from corporate partnerships to everyday patients. Recent strategic actions by LabCorp include the continued prioritization of its Drug Development sector, industry acquisitions and partnerships, and filing for a mixed shelf offering (Block, 2022).
As the demand for COVID-19 testing decreases, LabCorp’s Drug Development sector has protected the company from any sort of drastic decrease in revenue. This diversification of revenue streams has benefited the company and helped growth remain stable. Additionally, LabCorp reported the completion of transactions that establish a long-term relationship with Ascension laboratories. The company stated that acquiring and managing Ascension labs in over 10 states will allow LabCorp to expand access and services for both patients and providers (LabCorp, 2022). Lastly, in November 2022 LabCorp filed for a mixed shelf offering. This essentially means that the company has filed with the SEC to issue securities at an undisclosed time in the future for a strategic reason (Johnson, 2022). LabCorp has stated the proceeds will be used for “general corporate purposes” (Block, 2022).
Two key recommendations for the future of LabCorp include using the mixed shelf offering in a way that will benefit shareholders and to continue the company’s diversified revenue stream model. Although the purpose was not disclosed, it is imperative for LabCorp to use the mixed shelf offering proceeds in a way that will benefit its shareholders. As a public company, executives do have a fiduciary responsibility to its stakeholders. Using the mixed shelf offering in a way that will dilute the company’s shares could create distrust and decrease shareholder confidence. Additionally, LabCorp’s strategic corporate structure continues to allow for growth and value provided to patients and the industry at large.
In conclusion, based on LabCorp’s recent strategic actions, shareholder investment and our financial analysis throughout the course, LabCorp shows a high potential to be the most successful of the group in the future. Diversification over specialization and rapid expansion have been key for LabCorp’s growth and success.
Quest Diagnostics- Need to write on this company-Our Answer
Block, J. (2022, November 18). Labcorp files for mixed shelf offering (NYSE:LH). SeekingAlpha. Retrieved December 10, 2022, from
DaVita. (2022, October 28). Davita Inc. 3rd quarter 2022 results. DaVita Inc. 3rd Quarter 2022 Results. Retrieved December 10, 2022, from
Johnson, J. (2019, September 9). Can you explain what a mixed shelf is? for example, Raytheon announced a $3 billion mixed shelf. Investment House. Retrieved December 10, 2022, from
Kilgore, T. (2022, October 28). Dialysis company Davita Stock suffered worst day in 22 years after Big Profit Miss, disappointing outlook. MarketWatch. Retrieved December 10, 2022, from
Laboratory Corporation of America Holdings. (2022, October 27). Form 8‐K. Retrieved from
Zacks Equity Research. (2022, December 9). Here’s Why Investors Should Retain LabCorp (LH) Stock for Now. Retrieved from
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