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, 2005
(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) |
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:
¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM 7.01. Regulation FD Disclosure
Summary information of the Company dated July 21, 2005.
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: July 21, 2005 | By: | /s/Bradford T. Smith | ||
| Bradford T. Smith, Executive Vice President and Secretary | ||||
8-K Filed July 21, 2005
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 Company’s financial results is
included in the Company’s Form 10-K for the year
ended December 31, 2004, and subsequent filings.
2
The Clinical Laboratory Testing
Market - $40 billion Annually
Independent clinical lab share
is $16 billion
Represents 2% to 3% of all
health care spending
Influences /directs
approximately 80% of health
care spending
Rapidly evolving technology,
emphasis on preventative
medicine and aging of
population are all driving
growth
Has grown at a CAGR of
between 5% and 6%
Source: Company estimates, industry reports and 2004 revenue for LabCorp.
3
Profile of LabCorp
A leader in the esoteric and genomic testing
market and second-largest clinical laboratory
company in North America
Offers a broad range of routine and
esoteric/genomic tests
Conducts testing on more than 360,000
specimens daily
Provides lab services to physicians and other
health care providers
Approximately 25,000 employees nationwide
4
Primary Testing Locations & PSCs
Primary LabCorp Testing Locations
Patient Service Centers
PR
AK
Corporate Headquarters
Burlington, NC
5
LabCorp’s Investment and
Performance Fundamentals
History of Strong Financial
Performance
Significant Cash Generator
Industry leading EBITDA margins
Strong Balance Sheet
Investment Grade Credit Ratings
6
Net Sales (in millions)
7
EBITDA Margin
8
EPS
9
Operating Cash Flow (in millions)
(1) Includes approximately $50 million of benefit from one-time tax credits recorded in 2003.
(1)
10
To lead the industry in achieving
long-term growth and profitability
by strengthening our nationwide
core testing business and
expanding our higher-growth,
higher-value esoteric and
genomic businesses.
LabCorp’s Strategy
11
Strategic Focus Areas
Scientific
Leadership
Managed
Care
Customer
Retention
-Licensing/partnerships
-Cancer
-Specimen tracking
-Call center consolidation
-Report improvement
-Acquisitions
-Appropriate prices
-Reduce leakage
-Value of new lab tests
-Customer connectivity
12
Second Quarter Results (in millions, except per share data)
6/30/04
6/30/05
+/(-)
Revenue
$784.3
$853.3
8.8%
EBITDA
(1)
$210.8
$225.2
6.8%
EBITDA Margin
26.9%
26.4%
(50
bp)
Diluted EPS
(2)
$0.66
$0.76
15.2%
13
(1) For definition of EBITDA and a reconciliation to the most comparable measure under Generally Accepted
Accounting Principles, see Company’s 2nd quarter 2005 earnings release furnished on Form 8-K on July 21, 2005.
(2) Excluding $0.02 per diluted share impact of a non-recurring investment loss.
Six-Month Results (in millions, except per share data)
6/30/04
6/30/05
+/(-)
Revenue
$1,536.8
$1,652.4
7.5%
EBITDA
(1)
$401.9
$432.6
7.6%
EBITDA Margin
26.2%
26.2%
-
Diluted EPS
(2)
$1.24
$1.43
15.3%
14
(1) For definition of EBITDA and a reconciliation to the most comparable measure under Generally Accepted
Accounting Principles, see Company’s 2nd quarter 2005 earnings release furnished on Form 8-K on July
21,2005.
(2) Excluding a $0.02 per diluted share impact of a non-recurring investment loss.
2005 Six-Month Financial
Achievements
Diluted EPS of $1.43 (1)
EBITDA margin of 26.2% of sales
Operating cash flow of $240.9 million
Increased revenues 7.5% (0.7% volume; 6.8%
price)
Repurchased approximately $122 million of
LabCorp stock
Completed US LABS and Esoterix acquisitions
(1) Excluding a $0.02 per diluted share impact of a non-recurring investment loss.
15
Financial Performance
Price & Volumes: Trends by Payor Type
Client (Physicians)
Patient
Third Party
(MC/MD/Insurance)
Managed Care
Capitated
Fee for service
Total
LabCorp Total
2003
PPA
$
Accessions
millions
$27.07
118.48
34.25
9.95
45.68
32.74
$33.43
31.7
2.5
18.1
12.9
22.7
35.6
87.9
2004
PPA
$
millions
$26.61
123.59
34.84
10.36
46.01
33.67
$33.86
32.7
2.5
18.9
12.8
24.2
37.0
91.1
Accessions
YTD 2005
PPA
$
millions
$29.18
129.80
37.98
10.31
46.94
34.30
$35.75
15.9
1.2
9.8
6.7
12.6
19.3
46.2
Accessions
16
Financial Performance
Revenue Analysis by Business Area
YTD JUN 2004
Revenue
% Accns
Accns
PPA
$Million
to total
000
$
Genomic
Identity/Gene
Probes
All Genomic
Other Esoteric
Histology
All Genomic/
Esoteric
Core
Total
$143.1
1,228.2
2.7%
$116.47
82.5
225.6
144.3
102.6
472.5
1,064.3
$1,536.8
1,884.2
3,112.4
3,497.5
1,128.4
7,738.3
38,155.0
45,893.3
4.1%
6.8%
7.6%
2.5%
16.9%
83.1%
100.0%
43.80
72.48
41.26
90.92
61.06
27.90
$33.49
YTD JUN 2005
Revenue
% Accns
Accns
$Million
to total
000
$164.4
1,401.1
3.1%
$117.32
87.7
252.1
159.4
134.5
546.0
1,106.4
$1,652.4
1,949.3
3,350.4
3,891.6
1,195.2
8,437.2
37,781.4
46,218.6
4.2%
7.3%
8.4%
2.6%
18.3%
81.7%
100.0%
44.98
75.23
40.97
112.53
64.71
29.28
$35.75
PPA
$
0.7%
2.7%
3.8%
(0.7%)
23.8%
6.0%
5.0%
6.8%
05 vs 04
PPA
Incr/(Decr)
17
Free Cash Flow Investment
Strategy
Acquisitions
Repayment of revolving line of credit
Stock repurchase program
Retain flexibility in utilizing remaining cash
18
Updated 2005 Financial Guidance
Revenue growth of approximately 8.5% to 9% compared
to 2004, including in-year revenues of $25 to $35 million
from small acquisitions and/or new contracts
EBITDA margins of 25.5% of revenues
Diluted EPS in the range of $2.75 to $2.80, including the
$0.02 impact of a non-recurring investment loss.
Capital expenditures of between $110 and $125 million
Free cash flow of between $440 and $465 million
19
Financial Guidance for 2005
(cont’d.)
Net interest expense of approximately $32 million
Bad debt rate of approximately 5.3% of sales for the
remainder of the year
Guidance does not include:
Possible significant contributions from new tests, or
The impact of new accounting for stock based
compensation, or
Any potential restructuring charges as a result of the US
LABS and Esoterix acquisitions.
20
Other Financial Information
June 30, 2005
Depreciation
Amortization
Capital expenditures
Bad debt as a percentage of sales
Q1
Q2
23.2
Zero coupon-subordinated notes
Revolving credit facility
(weighted average)
Cash flows from operations
Effective interest rate on debt:
5 1/2% Senior Notes (including
effect of interest rate swap)
Days sales outstanding
YTD
2005
$
24.1
$
47.3
$
12.1
13.1
25.2
25.5
20.2
45.7
154.4
86.5
240.9
5.5%
5.3%
5.4%
2.00%
2.00%
2.00%
5.38%
5.38%
5.38%
3.31%
3.62%
3.62%
55
55
55
$
$
$
$
$
$
$
$
$
($ in millions)
21
