Strong Revenue Growth Drives Adjusted EPS of $1.30 and Operating
Cash Flow of $182.4 Million
Laboratory Corporation of America® Holdings (LabCorp®)
(NYSE: LH) today announced results for the quarter ended June 30, 2009.
Second Quarter Results
Net earnings were $136.4 million, compared to $104.2 million in the
second quarter of 2008. Earnings per diluted share (EPS) were $1.24
compared to $0.92 in 2008. Earnings per diluted share excluding
restructuring charges recorded in both periods and a bad debt adjustment
recorded in the second quarter of 2008 (Adjusted EPS) were $1.30
compared to $1.24 in 2008.
Operating income was $244.7 million. Operating income excluding
restructuring and other special charges (Adjusted Operating Income)
recorded in the second quarter of 2009 was $254.9, or 21.4% of net sales.
Revenues were $1,188.8 million, an increase of 3.6% compared to the same
period in 2008. Compared to the second quarter of 2008, testing volume,
measured by accessions, increased 2.4%, and revenue per accession
increased 1.1%. Excluding the consolidation of the Company’s Ontario,
Canada joint venture, revenue increased 4.3%, with volume increasing
1.6% and revenue per accession increasing 2.6%.
Operating cash flow for the quarter was $182.4 million, net of $10.5
million in transition payments to UnitedHealthcare. The balance of cash
at the end of the quarter was $226.6 million, and there was $70.8
million outstanding under the Company’s $500 million revolving credit
facility.
The Company recorded pre-tax net restructuring and other special charges
of $10.2 million during the second quarter of 2009 primarily related to
the closing of redundant and underutilized facilities. The Company
recorded pre-tax restructuring and other special charges of $16.0
million during the second quarter of 2008 primarily related to the
closing of redundant and underutilized facilities.
Year To Date Results
Net earnings were $269.2 million, compared to $234.5 million in the
first half of 2008. Earnings per diluted share (EPS) were $2.46 compared
to $2.06 in 2008. Adjusted EPS were $2.51 compared to $2.38 in 2008.
Operating income was $485.2. Adjusted Operating Income was $495.4
million, or 21.1% of net sales.
Revenues were $2,344.5 million, an increase of 4.2% compared to the same
period in 2008. Compared to the first half of 2008, testing volume,
measured by accessions, increased 3.1%, and revenue per accession
increased 1.0%. Excluding the consolidation of the Company’s Ontario,
Canada joint venture, revenue increased 5.1%, with volume increasing
2.1% and revenue per accession increasing 2.9%.
Operating cash flow for the first six months was $391.3 million, net of
$16.0 million in transition payments to UnitedHealthcare.
"We are very pleased with our second quarter and year-to-date results,
which demonstrate the strength of our business and the effectiveness of
our strategy,” said David P. King, Chairman and Chief Executive
Officer. “We will continue to focus on our priorities of gaining new
customers, maintaining price and controlling costs while advancing our
leadership in personalized medicine.”
Outlook for 2009
The Company expects revenue growth of approximately 4.0% and Adjusted
EPS in the range of $4.85 to $4.95 (versus previous EPS guidance of
$4.75 to $4.95), excluding the impact of any share repurchase activity
after June 30, 2009; operating cash flow, excluding any transition
payments to UnitedHealthcare, of approximately $800 million; and capital
expenditures of approximately $130 million. The operating cash flow
guidance includes a $54.8 million reduction due to required
contributions to the Company’s defined benefit retirement plan. The
guidance excludes any impact from the expected acquisition of Monogram
Biosciences, which is expected to close in the third quarter of 2009.
The acquisition is expected to be approximately $0.12 dilutive in 2009,
including approximately $0.04 of transaction related expenses.
Use of Adjusted Measures
The Company has provided in this press release “adjusted” financial
information that has not been prepared in accordance with GAAP. The
Company believes these adjusted measures are useful to investors, as a
supplement to, but not as a substitute for, GAAP measures, in evaluating
the Company’s operational performance, and that the use of these
non-GAAP financial measures provides an additional tool for investors to
use in evaluating operating results and trends, and in comparing the
Company’s financial results with other companies. Reconciliations of
these non-GAAP measures to the most comparable GAAP measures are
included in the tables accompanying this press release.
The Company today is filing an 8-K that will include additional
information on its business and operations. This information will also
be available on the Company's Web site. Analysts and investors are
directed to this 8-K and the Web site to review this supplemental
information.
A conference call discussing LabCorp's quarterly results will be held
today at 9:00 a.m. Eastern Time and is available by dialing 866-700-6979
(617-213-8836 for international callers). The access code is 61606107. A
telephone replay of the call will be available through July 30, 2009 and
can be heard by dialing 888-286-8010 (617-801-6888 for international
callers). The access code for the replay is 18077339. A live online
broadcast of LabCorp’s quarterly conference call on July 23, 2009 will
be available at http://www.labcorp.com/
or at http://www.streetevents.com/
beginning at 9:00 a.m. Eastern Time. This webcast will be archived and
accessible continuing through August 23, 2009.
About LabCorp®
Laboratory Corporation of America® Holdings, a S&P 500
company, is a pioneer in commercializing new diagnostic technologies and
the first in its industry to embrace genomic testing. With annual
revenues of $4.5 billion in 2008, over 28,000 employees worldwide, and
more than 220,000 clients, LabCorp offers clinical assays ranging from
routine blood analyses to HIV and genomic testing. LabCorp combines its
expertise in innovative clinical testing technology with its Centers of
Excellence: The Center for Molecular Biology and Pathology, National
Genetics Institute, ViroMed Laboratories, Inc., The Center for Esoteric
Testing, Litholink Corporation, DIANON Systems, Inc., US LABS,
and Esoterix and its Colorado Coagulation, Endocrine Sciences, and
Cytometry Associates laboratories. LabCorp conducts clinical trial
testing through its Esoterix Clinical Trials Services division. LabCorp
clients include physicians, government agencies, managed care
organizations, hospitals, clinical labs, and pharmaceutical companies.
To learn more about our organization, visit our Web site at: www.labcorp.com.
This press release contains forward-looking statements. Each of the
forward-looking statements is subject to change based on various
important factors, including without limitation, competitive actions in
the marketplace and adverse actions of governmental and other
third-party payors. Actual results could differ materially from
those suggested by these forward-looking statements. Further information
on potential factors that could affect LabCorp’s financial results is
included in the Company’s Form 10-K for the year ended December 31,
2008, and subsequent SEC filings.
LABORATORY CORPORATION OF AMERICA HOLDINGS
Consolidated
Statements of Operations
(in millions, except per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
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Three Months Ended
June 30,
|
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Six Months Ended
June 30,
|
|
|
|
|
|
|
|
2009
|
|
2008
|
|
2009
|
|
2008
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
1,188.8
|
|
|
$
|
1,147.8
|
|
|
$
|
2,344.5
|
|
|
$
|
2,251.0
|
|
|
Cost of sales
|
|
|
681.4
|
|
|
|
656.0
|
|
|
|
1,347.7
|
|
|
|
1,288.7
|
|
|
Selling, general and administrative
|
|
|
237.3
|
|
|
|
266.0
|
|
|
|
471.1
|
|
|
|
481.6
|
|
|
Amortization of intangibles and other assets
|
|
|
15.2
|
|
|
|
14.6
|
|
|
|
30.3
|
|
|
|
28.4
|
|
|
Restructuring and other special charges
|
|
|
10.2
|
|
|
|
16.0
|
|
|
|
10.2
|
|
|
|
16.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
244.7
|
|
|
|
195.2
|
|
|
|
485.2
|
|
|
|
436.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
(0.7
|
)
|
|
|
(0.7
|
)
|
|
|
(1.2
|
)
|
|
|
(1.3
|
)
|
|
Investment income
|
|
|
0.4
|
|
|
|
0.6
|
|
|
|
0.8
|
|
|
|
1.1
|
|
|
Interest expense
|
|
|
(16.2
|
)
|
|
|
(17.3
|
)
|
|
|
(33.2
|
)
|
|
|
(37.2
|
)
|
|
Income from joint venture partnerships
|
|
|
3.9
|
|
|
|
3.6
|
|
|
|
6.7
|
|
|
|
8.0
|
|
|
Earnings before income taxes
|
|
|
232.1
|
|
|
|
181.4
|
|
|
|
458.3
|
|
|
|
406.9
|
|
|
Provision for income taxes
|
|
|
92.7
|
|
|
|
73.6
|
|
|
|
183.1
|
|
|
|
165.2
|
|
|
Net earnings
|
|
|
139.4
|
|
|
|
107.8
|
|
|
$
|
275.2
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|
|
$
|
241.7
|
|
|
Less net earnings attributable to noncontrolling interest
|
|
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(3.0
|
)
|
|
|
(3.6
|
)
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|
$
|
(6.0
|
)
|
|
$
|
(7.2
|
)
|
|
Net earnings attributable to Laboratory Corporation of America
Holdings
|
$
|
136.4
|
|
|
$
|
104.2
|
|
|
$
|
269.2
|
|
|
$
|
234.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Income
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
$
|
244.7
|
|
|
$
|
195.2
|
|
|
$
|
485.2
|
|
|
$
|
436.3
|
|
|
Restructuring and other special charges
|
|
$
|
10.2
|
|
|
$
|
61.0
|
|
|
$
|
10.2
|
|
|
$
|
61.0
|
|
|
Adjusted operating income
|
|
$
|
254.9
|
|
|
$
|
256.2
|
|
|
$
|
495.4
|
|
|
$
|
497.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EPS
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
|
$
|
1.24
|
|
|
$
|
0.92
|
|
|
$
|
2.46
|
|
|
$
|
2.06
|
|
|
Impact of restructuring and other special charges
|
|
|
0.06
|
|
|
|
0.32
|
|
|
$
|
0.05
|
|
|
$
|
0.32
|
|
|
Adjusted EPS
|
|
$
|
1.30
|
|
|
$
|
1.24
|
|
|
$
|
2.51
|
|
|
$
|
2.38
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
109.5
|
|
|
|
113.7
|
|
|
|
109.4
|
|
|
|
113.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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LABORATORY CORPORATION OF AMERICA HOLDINGS
Consolidated
Balance Sheets
(in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
June 30,
2009
|
|
December 31,
2008
|
|
|
|
|
|
|
|
|
|
|
|
Cash and short term investments
|
|
$
|
226.6
|
|
|
$
|
219.7
|
|
|
Accounts receivable, net
|
|
|
655.3
|
|
|
|
631.6
|
|
|
Property, plant and equipment
|
|
|
496.8
|
|
|
|
496.4
|
|
|
Intangible assets and goodwill, net
|
|
|
3,011.3
|
|
|
|
2,994.8
|
|
|
Investments in joint venture partnerships
|
|
|
68.8
|
|
|
|
72.0
|
|
|
Other assets
|
|
|
254.4
|
|
|
|
255.0
|
|
|
|
|
$
|
4,713.2
|
|
|
$
|
4,669.5
|
|
|
|
|
|
|
|
|
Zero-coupon subordinated notes
|
|
$
|
289.4
|
|
|
$
|
573.5
|
|
|
5 1/2% senior notes due 2013
|
|
|
351.5
|
|
|
|
351.7
|
|
|
5 5/8% senior notes due 2015
|
|
|
250.0
|
|
|
|
250.0
|
|
|
Term loan and credit facility
|
|
|
520.8
|
|
|
|
545.8
|
|
|
Other liabilities
|
|
|
1,163.1
|
|
|
|
1,138.9
|
|
|
Noncontrolling interest
|
|
|
129.1
|
|
|
|
121.3
|
|
|
Shareholders' equity
|
|
|
2,009.3
|
|
|
|
1,688.3
|
|
|
|
|
$
|
4,713.2
|
|
|
$
|
4,669.5
|
|
|
|
|
|
|
|
Consolidated Statement of Cash Flow Data
(in
millions, except per share data)
|
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
|
|
June 30,
2009
|
|
June 30,
2008
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
391.3
|
|
|
$
|
371.2
|
|
|
Net cash used for investing activities
|
|
|
(66.9
|
)
|
|
|
(237.5
|
)
|
|
Net cash used for financing activities
|
|
|
(318.0
|
)
|
|
|
(35.0
|
)
|
|
Effect of exchange rates on cash
|
|
|
0.5
|
|
|
|
0.2
|
|
|
Net (decrease)/increase in cash
|
|
|
6.9
|
|
|
|
98.9
|
|
|
Cash at beginning of period
|
|
|
219.7
|
|
|
|
56.4
|
|
|
Cash at end of period
|
|
$
|
226.6
|
|
|
$
|
155.3
|
|
|
|
|
|
|
|
|
Free Cash Flow:
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
391.3
|
|
|
$
|
371.2
|
|
|
Less: Capital expenditures
|
|
|
(54.4
|
)
|
|
|
(78.9
|
)
|
|
Free cash flow
|
|
$
|
336.9
|
|
|
$
|
292.3
|
|
Notes to Financial Tables
1) During the second quarter of 2009, the Company recorded net charges
of approximately $10.2 million related to actions directed at reducing
the Company’s redundant and underutilized facilities along with the
related work force. The after tax impact of these charges reduced net
earnings for the quarter and for the six months ended June 30, 2009, by
$6.0 million and diluted earnings per share by $0.06 and $0.05 for the
quarter and the six months ended June 30, 2009, respectively ($6.0
million divided by 109.5 and 109.4 million shares, respectively).
2) During the second quarter of 2008, the Company recorded charges of
approximately $16.0 million related to actions directed at reducing the
Company’s redundant and underutilized facilities along with the related
work force. The after tax impact of these charges reduced net earnings
for the quarter and for the six months ended June 30, 2008, by $9.5
million.
In addition, the Company increased its allowance for doubtful accounts
by $45 million as of June 30, 2008, due to the impact of the economy,
higher patient deductibles and co-payments, and recent acquisitions on
the collectability of accounts receivable balances. The after tax impact
of this provision for doubtful accounts reduced net earnings for the
quarter and for the six months ended June 30, 2008, by $26.4 million.
These combined charges reduced operating income by $61.0 million for the
quarter and the six months ended June 30, 2008, and reduced diluted EPS
for the quarter and for the six months ended June 30, 2008 by $0.32
($35.9 million divided by 113.7 and 113.8 million shares, respectively).
Laboratory Corporation of America® Holdings (LabCorp®)
Bill
Bonello, 336-436-7732
Investor@labcorp.com
