February 7, 2008
(Date of earliest event reported)
LABORATORY CORPORATION
OF
AMERICA HOLDINGS
DELAWARE | 1-11353 | 13-3757370 | ||
(State or other jurisdiction of Incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
358 SOUTH MAIN STREET, BURLINGTON, NORTH CAROLINA |
27215 | 336-229-1127 | ||
(Address of principal executive offices) | (Zip Code) |
(Registrant's telephone number including area code) |
ITEM 7.01. Regulation FD Disclosure
Summary information of the Company dated February 7, 2008.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Laboratory Corporation of America Holdings (Registrant) |
||||
Date: February 7, 2008 | By: | /s/Bradford T. Smith | ||
Bradford T. Smith, Executive Vice President and Secretary |
||||
8-K Filed February 7, 2008
1
Introduction
This slide presentation contains forward-looking statements
which are 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 the Companys financial
results
is included in the Companys Form 10-K for the year
ended December 31, 2006, and subsequent SEC filings.
2
The US Healthcare & Clinical
Laboratory Testing Market
Source: CMS, Office of the Actuary, G-2, and Company Estimates
Inpatient
Outpatient &
Outreach
3
The Value of Lab Testing
In the past, lab testing was primarily used to diagnose disease
Now, lab testing now plays an increasingly large role in the
full continuum of healthcare delivery
4
What is LabCorp
Clinical
Pathology
Anatomic
Pathology
Genomics
Esoteric
Testing
5
Our Infrastructure
1600+ conveniently
located PSCs
700 MDs & PhDs
6500+ phlebotomists
Lab
Information
System
2600 couriers
1000 sales reps
7 airplanes
Primary testing labs
Esoteric Labs
STAT Labs
Standardized Platforms
6
Primary LabCorp Testing Locations*
Esoteric Lab Locations
(CET, CMBP, Dianon, Esoterix, NGI, OTS, US Labs, Viromed)
Our Locations
Patient Service Centers*
7
Cancer diagnostics and monitoring
Advanced cardiovascular disease testing
Advancement through acquisitions and licensing
Strategic Focus Areas
Lab data enables better treatment and outcomes
Partner to control high cost leakage
Recognize value of lab services through appropriate pricing
Quality and service driven culture
First-time problem resolution
Continuous enhancements in customer connectivity
Scientific Leadership
Managed Care
Customer Focus
8
Revenue Growth Drivers
Industry
Consolidation
Hospital
Opportunity
Aging
Population
-Increased utilization
for older patients
Disease
Management
-Litholink Model
Companion
Diagnostics
-ARCA
-Warfarin
More Esoteric
Testing
-Cardiovascular Disease
- Cancer
Time
Margin
Potential
LabCorp Assets
Standardized Data
Clinical Trials
Dianon, USLabs, Esoterix,
NGI & Viromed
Industry Forces
Focus on Outcomes and Cost Containment (Medical & Drug)
Increased emphasis on drug efficacy, proper dosage and adverse effects
Advances in science and genomics
Expansion of
Managed Care
partnerships
9
EBITDA Margin Growth Drivers
3.
Further operational
efficiencies
Increase automation in
pre-analytic processes
Logistics / route structure
optimization
Supply chain
management
Improved patient experience and
data capture
Improvement in collections / bad
debt
1.
Increased volumes through fixed-cost infrastructure
2.
Larger number of esoteric tests offered, more
esoteric tests ordered
10
Industry-leading EBITDA margins
Significant free cash flow
Focus on returning value to shareholders
Strategic acquisitions
Organic growth opportunities
Share repurchase
$425.8 Million available as of 12/31/07
Flexibility for future growth opportunities
LabCorps Investment and
Performance Fundamentals
11
Revenue CAGR of 8.5% Diluted EPS CAGR of 18.6%
1.
Excluding the $0.09 per
diluted share impact in 2005
of restructuring and other
special charges, and a non-
recurring investment loss.
2.
Excluding the $0.07 per
diluted share impact in 2006
of restructuring and other
special charges, and the
$0.10 per diluted share
impact in 2006 of adoption
of SFAS 123(R).
3.
Excluding the $0.25 per
diluted share impact in 2007
of restructuring and other
special charges.
Five-Year Revenue
and EPS Trend
12
1.
Includes approximately
$50 million of benefit
from one-time tax
credits recorded in
2003.
2.
Excluding the impact in
2005 of restructuring
and other special
charges and a non-
recurring investment
loss.
3.
Excluding the impact in
2006 and 2007 of
restructuring and other
special charges
4.
As a result of adopting
FASB 123(R) in 2006,
the Company recorded
incremental stock
compensation expense
of $23.3 and $26.7 in
2006 and 2007,
respectively.
Five-Year OCF and
EBIDTA Margin Trend
OCF CAGR of 6% EBITDA Margin Growth of 210 bps
13
Fourth Quarter Results
(In millions, except per share data)
12/31/2006
12/31/2007
+/(-)
Revenue
898.6
$
1,005.8
$
11.9%
EBITDA
(1)
227.7
$
258.7
$
13.6%
EBITDA Margin
25.3%
25.7%
40
bp
Diluted EPS
(2)
0.85
$
1.04
$
22.4%
14
Full Year Results
(In millions, except per share data)
12/31/2006
12/31/2007
+/(-)
Revenue
3,590.8
$
4,068.2
$
13.3%
EBITDA
(1)
935.7
$
1,071.3
$
14.5%
EBITDA Margin
26.1%
26.3%
20
bp
Diluted EPS
(2)
3.30
$
4.18
$
26.7%
15
2007 Fourth Quarter
Financial Achievements
Diluted EPS of $1.04 (1)
EBITDA margin of 25.7% of net sales(2)
Operating cash flow of $240.4 million
Increased revenues 11.9% (11.0% volume; 0.9% price)
Repurchased approximately $403.4 million of
LabCorp stock
16
Diluted EPS of $4.18 (1)
EBITDA margin of 26.3% of net sales (2)
Operating cash flow of $709.7 million
Increased revenues 13.3% (12.3% volume; 1.0% price)
Repurchased approximately $924.2 million of
LabCorp stock
2007 Full Year
Financial Achievements
(1) Excludes the $0.25 per diluted share impact of the restructuring and other special charges recorded in 2007.
(2) Based on EBITDA of $1,071.3 million, excluding the $50.6 million impact of restructuring and other special charges recorded in 2007
17
Revenue by Payer
2007
(In millions)
Client
$1,081.0 (27%)
Patient
$367.7 (9%)
Managed Care
Capitated
$167.5 (4%)
Medicare & Medicaid
$745.8 (18%)
Managed Care
Fee-for-service
$1,706.2 (42%)
18
Core
$2,671.9 (66%)
Histology (Non-Pap)
$325.1 (8%)
Other Esoteric
$441.6 (11%)
Genomic
$629.6 (15%)
Revenue by Business Area
2007
(In millions)
19
Revenue Mix by
Business Area
(In millions)
30%
31%
34%
35%
34%
66%
65%
66%
69%
70%
20
Revenue by Payer - 2007
(in millions, except PPA)
21
Revenue Mix by
Business Area - 2007
(in millions, except PPA)
22
Financial Guidance - 2008
Excluding the impact of any share repurchase activity
after December 31, 2007, guidance for
2008 is as follows:
$66 million
$60 million
Net interest of approximately
$120 million to
$140 million
$115 million to
$130 million
Capital expenditures of approximately
$775 million to
$800 million
$770 million to
$790 million
Operating cash flow, excluding any
transition payments to UnitedHealthcare,
of approximately
$4.74 and $4.90
$4.73 and $4.88
Diluted earnings per share of between
25.6% to 26.0%
26.8% to 27.2%
EBITDA margins of approximately
13.0% to 14.3%
7.0% to 8.0%
Revenue growth
Post-JV
Transaction
Pre-JV
Transaction
23
Reconciliation of Non-GAAP
Financial Measures
(In millions)
1) EBITDA represents earnings before interest, income taxes, depreciation, amortization,
and nonrecurring charges, and
includes the Companys proportional share of the underlying EBITDA of the income from joint venture partnerships. The
Company uses EBITDA extensively as an internal management performance measure and believes
it is a useful, and
commonly used measure of financial performance in addition to earnings before taxes and other profitability measurements
under generally accepted accounting principles (GAAP). EBITDA is not a measure of financial
performance under GAAP. It
should not be considered as an alternative to earnings before income taxes (or any other performance measure under
GAAP) as a measure of performance or to cash flows from operating, investing or financing activities as an
indicator of cash
flows or as a measure of liquidity. The following table reconciles earnings before income taxes, representing the most
comparable measure under GAAP, to EBITDA for the three-month period and year ended December 31, 2007
and 2006:
2007
2006
2007
2006
Earnings before income taxes
186.9
$
169.8
$
802.3
$
720.9
$
Add (subtract):
Interest expense
18.8
12.4
56.6
47.8
Investment income
(2.1)
(3.3)
(5.4)
(7.7)
Other (income) expense, net
(0.1)
0.9
1.4
2.8
Depreciation
27.4
26.0
106.4
102.2
Amortization
14.3
13.2
54.9
52.2
Restructuring and other special charges
12.3
7.7
50.6
13.4
Joint venture partnerships' depreciation
and amortization
1.2
1.0
4.5
4.1
EBITDA
258.7
$
227.7
$
1,071.3
$
935.7
$
Three Months
Year Ended
Ended December 31,
December 31,
24
Supplemental Financial
Information
25
26