UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
July 21, 2011
(Date of earliest event reported)
LABORATORY CORPORATION OF
AMERICA HOLDINGS
(Exact Name of Registrant as Specified in its Charter)
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Delaware
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1-11353
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13-3757370
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(State or other jurisdiction of Incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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358 South Main Street,
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Burlington, North Carolina
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27215
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336-229-1127
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(Address of principal executive offices)
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(Zip Code)
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(Registrant’s telephone number including area code)
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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
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Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 7.01
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Regulation FD Disclosure
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Summary information of the Company dated July 21, 2011.
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
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By:
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/s/ F. SAMUEL EBERTS III
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F. Samuel Eberts III
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Chief Legal Officer and Secretary
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July 21, 2011
8-K Filed July 21, 2011
2
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.
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 Company’s financial results is included in the Company’s Form 10-K for the
year ended December 31, 2010, and subsequent SEC filings. The Company
has no obligation to provide any updates to these forward-looking statements
even if its expectations change.
looking statements. Further information on potential factors that could affect
the Company’s financial results is included in the Company’s Form 10-K for the
year ended December 31, 2010, and subsequent SEC filings. The Company
has no obligation to provide any updates to these forward-looking statements
even if its expectations change.
GENZYME GENETICS and its logo are trademarks of Genzyme Corporation
and used by Esoterix Genetic Laboratories, LLC, a wholly-owned subsidiary of
LabCorp, under license. Esoterix Genetic Laboratories and LabCorp are
operated independently from Genzyme Corporation.
and used by Esoterix Genetic Laboratories, LLC, a wholly-owned subsidiary of
LabCorp, under license. Esoterix Genetic Laboratories and LabCorp are
operated independently from Genzyme Corporation.
3
Second Quarter Results
(In millions, except per share data)
(In millions, except per share data)
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Three Months Ended Jun 30,
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2011
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2010
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+/(-)
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Revenue
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$ 1,403.3
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$ 1,238.4
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13.3%
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Adjusted Operating Income (1)
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$ 279.6
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$ 270.5
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3.4%
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Adjusted Operating Income Margin (1)
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19.9%
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21.8%
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-190
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bp
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Adjusted EPS Excluding Amortization(1)
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$ 1.64
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$ 1.56
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5.1%
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Operating Cash Flow
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$ 184.9
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$ 216.2
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-14.5%
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Less: Capital Expenditures
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$ (45.8)
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$ (34.5)
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32.8%
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Free Cash Flow
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$ 139.1
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$ 181.7
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-23.4%
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(1) See Reconciliation of non-GAAP Financial Measures (included herein)
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4
Cash Flow Trends
9.4% FCF CAGR
2004-2010
5
Financial Guidance - 2011
Excluding the impact of restructuring and other special charges
and share repurchase activity after June 30, 2011,
guidance for 2011 is:
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• Revenue growth:
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Approximately 9.5% - 11.5%
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• Adjusted EPS Excluding Amortization:
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$6.17 - $6.32
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• Operating cash flow:
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Approximately $900 Million,
excluding the Hunter Labs settlement |
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• Capital expenditures:
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Approximately $150 Million
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6
Supplemental Financial
Information
Information
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Laboratory Corporation of America
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Other Financial Information
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June 30, 2011
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($ in millions)
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Q1 11
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Q2 11
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YTD 11
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Depreciation
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$ 35.5
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$ 35.4
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$ 70.9
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Amortization
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$ 21.9
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$ 21.5
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$ 43.4
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Capital expenditures
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$ 29.4
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$ 45.8
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$ 75.2
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Cash flows from operations
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$ 215.3
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$ 184.9
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$ 400.2
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Bad debt as a percentage of sales
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4.7%
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4.7%
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4.7%
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Effective interest rate on debt:
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Zero coupon-subordinated notes
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2.00%
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2.00%
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2.00%
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3 1/8% Senior Notes
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3.27%
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3.27%
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3.27%
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4 5/8% Senior Notes
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4.74%
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4.74%
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4.74%
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5 1/2% Senior Notes
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5.38%
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5.38%
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5.38%
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5 5/8% Senior Notes
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5.75%
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5.75%
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5.75%
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Term loan
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0.93%
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0.87%
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0.87%
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Revolving credit facility (weighted average)
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0.59%
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0.54%
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0.54%
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Days sales outstanding
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47
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46
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46
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7
Reconciliation of non-GAAP
Financial Measures
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Reconciliation of non-GAAP Financial Measures
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(In millions, except per share data)
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Three Months Ended Jun 30,
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Adjusted Operating Income
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2011
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2010
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Operating income
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$ 225.7
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$ 270.5
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Restructuring and other special charges (1) (2)
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53.9
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-
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Adjusted operating income
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$ 279.6
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$ 270.5
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Adjusted EPS Excluding Amortization
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Diluted earnings per common share
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$ 1.20
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$ 1.46
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Impact of restructuring and other special charges (1) (2)
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0.32
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-
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Amortization expense
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0.12
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0.10
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Adjusted EPS Excluding Amortization (3)
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$ 1.64
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$ 1.56
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1) During the second quarter of 2011, the Company recorded restructuring and other special charges of $53.9 million. The restructuring charges include $7.5 million in net severance and other personnel costs along with
$10.8 million in net facility-related costs primarily associated with the ongoing integration of the Genzyme Genetics and Westcliff acquisitions. The special charges also include $34.5 million ($49.5 million, net of previously recorded reserves of $15.0 million) relating to the settlement of the Hunter Labs litigation, along with $1.1 million for legal costs associated with the planned acquisition of Orchid Cellmark incurred during the quarter, both of which were recorded in Selling, General and Administrative Expenses in the Company’s Statement of Operations. The after tax impact of these charges decreased net earnings for the quarter ended June 30, 2011, by $32.6 million and diluted earnings per share by $0.32 ($32.6 million divided by 102.8 million shares). |
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During the first quarter of 2011, the Company recorded restructuring and other special charges of $27.9 million. The charges included $4.0 million in severance and other personnel costs along with $9.8 million in facility-
related costs associated with the integration of Genzyme Genetics. The charges also included a $14.8 million write-off of an investment made in a prior year. For the six months ended June 30, 2011, the after tax impact of these combined charges decreased net earnings by $49.4 million and diluted earnings per share by $0.48 ($49.4 million divided by 102.6 million shares). |
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2) During the first quarter of 2010, the Company recorded net charges of $9.3 million relating to severance payments and the closing of redundant and underutilized facilities as well as the write-off of development costs
incurred on systems abandoned during the quarter. The after tax impact of these charges decreased net earnings for the six months ended June 30, 2010, by $5.7 million and diluted earnings per share by $0.06 ($5.7 million divided by 105.9 million shares). |
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3) The Company continues to grow its business through acquisitions and uses Adjusted EPS Excluding Amortization as a measure of operational performance, growth and shareholder returns. The Company believes
adjusting EPS for amortization will provide investors with better insight into the operating performance of the business. For the quarters ended June 30, 2011 and 2010, intangible amortization was $21.5 million and $17.7 million, respectively ($13.0 million and $10.8 million net of tax, respectively) and decreased EPS by $0.12 ($13.0 million divided by 102.8 million shares) and $0.10 ($10.8 million divided by 105.9 million shares), respectively. For the six months ended June 30, 2011 and 2010, intangible amortization was $43.4 million and $35.1 million, respectively ($26.5 million and $21.5 million net of tax, respectively) and decreased EPS by $0.26 ($26.5 million divided by 102.6 million shares) and $0.20 ($21.5 million divided by 105.9 million shares), respectively. |
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8
Reconciliation of non-GAAP
Financial Measures
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Reconciliation of non-GAAP Financial Measures
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(In millions, except per share data)
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Six Months Ended Jun 30,
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Adjusted Operating Income
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2011
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2010
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Operating income
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$ 461.5
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$ 504.7
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Restructuring and other special charges (1) (2)
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81.8
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9.3
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Adjusted operating income
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$ 543.3
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$ 514.0
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Adjusted EPS Excluding Amortization
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Diluted earnings per common share
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$ 2.44
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$ 2.70
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Impact of restructuring and other special charges (1) (2)
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0.48
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0.06
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Amortization expense
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0.26
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0.20
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Adjusted EPS Excluding Amortization (3)
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$ 3.18
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$ 2.96
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1) During the second quarter of 2011, the Company recorded restructuring and other special charges of $53.9 million. The restructuring charges include $7.5 million in net severance and other personnel costs along with $10.8
million in net facility-related costs primarily associated with the ongoing integration of the Genzyme Genetics and Westcliff acquisitions. The special charges also include $34.5 million ($49.5 million, net of previously recorded reserves of $15.0 million) relating to the settlement of the Hunter Labs litigation, along with $1.1 million for legal costs associated with the planned acquisition of Orchid Cellmark incurred during the quarter, both of which were recorded in Selling, General and Administrative Expenses in the Company’s Statement of Operations. The after tax impact of these charges decreased net earnings for the quarter ended June 30, 2011, by $32.6 million and diluted earnings per share by $0.32 ($32.6 million divided by 102.8 million shares). |
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During the first quarter of 2011, the Company recorded restructuring and other special charges of $27.9 million. The charges included $4.0 million in severance and other personnel costs along with $9.8 million in facility-related
costs associated with the integration of Genzyme Genetics. The charges also included a $14.8 million write-off of an investment made in a prior year. For the six months ended June 30, 2011, the after tax impact of these combined charges decreased net earnings by $49.4 million and diluted earnings per share by $0.48 ($49.4 million divided by 102.6 million shares). |
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2) During the first quarter of 2010, the Company recorded net charges of $9.3 million relating to severance payments and the closing of redundant and underutilized facilities as well as the write-off of development costs
incurred on systems abandoned during the quarter. The after tax impact of these charges decreased net earnings for the six months ended June 30, 2010, by $5.7 million and diluted earnings per share by $0.06 ($5.7 million divided by 105.9 million shares). |
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3) The Company continues to grow its business through acquisitions and uses Adjusted EPS Excluding Amortization as a measure of operational performance, growth and shareholder returns. The Company believes adjusting
EPS for amortization will provide investors with better insight into the operating performance of the business. For the quarters ended June 30, 2011 and 2010, intangible amortization was $21.5 million and $17.7 million, respectively ($13.0 million and $10.8 million net of tax, respectively) and decreased EPS by $0.12 ($13.0 million divided by 102.8 million shares) and $0.10 ($10.8 million divided by 105.9 million shares), respectively. For the six months ended June 30, 2011 and 2010, intangible amortization was $43.4 million and $35.1 million, respectively ($26.5 million and $21.5 million net of tax, respectively) and decreased EPS by $0.26 ($26.5 million divided by 102.6 million shares) and $0.20 ($21.5 million divided by 105.9 million shares), respectively. |
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