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
October 23, 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) |
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 October 23, 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: October 23, 2008 | By: | /s/Bradford T. Smith | ||
| Bradford T. Smith, Executive Vice President and Secretary | ||||
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 Company’s financial
results is included in the Company’s Form 10-K for the year
ended December 31, 2007, and subsequent SEC filings.
The Role of Lab Testing
in Healthcare
In the past, lab testing was primarily used to diagnose disease. Now, lab testing plays
an increasingly large role in the full continuum of healthcare delivery
Source: Deloitte (OAML)
3
The US Healthcare & Clinical
Laboratory Testing Market
Source: CMS, Office of the Actuary, G-2, and Company Estimates
Our Infrastructure
1600+ conveniently
located PSCs
700 MDs & PhDs
6700+ phlebotomists
Lab
Information
System
2600 couriers
1000 sales reps
7 airplanes
Primary testing labs
Esoteric Labs
STAT Labs
Standardized Platforms
Primary LabCorp Testing Locations*
Esoteric Lab Locations
(CET, CMBP, Dianon, Esoterix, NGI, OTS, US Labs, Viromed)
Our Locations
Patient Service Centers*
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
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
Competitive Advantages
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
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
1.
Increased volumes through fixed-cost infrastructure
2.
Larger number of esoteric tests offered, more
esoteric tests ordered
Industry-leading EBITDA margins
Significant free cash flow
Focus on providing value to shareholders
Strategic acquisitions
Organic growth opportunities
Share repurchase
$95.4 Million available as of 9/30/08
Flexibility for future growth opportunities
LabCorp’s Investment and
Performance Fundamentals
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 $0.06 per
diluted share impact in 2006
of restructuring and other
special charges.
3.
Excluding the $0.25 per
diluted share impact in 2007
of restructuring and other
special charges.
Five-Year Revenue
and EPS Trend
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
2008 Third Quarter
Financial Achievements
Diluted EPS of $1.10 (1)
EBITDA margin of 23.4% of net sales(2)
Operating cash flow of $194.4 million
Increased revenues
11.2% (10.6% volume; 0.6% price)
Excl. Canada 5.4% (3.1% volume, 2.3% price)
Repurchased approximately $263.9 million of
LabCorp stock
2008 YTD Third Quarter
Financial Achievements
Diluted EPS of $3.48 (1)
EBITDA margin of 25.2% of net sales(2)
Operating cash flow of $565.6 million
Increased revenues
10.6% (9.4% volume; 1.2% price)
Excl. Canada 4.3% (2.0% volume, 2.3% price)
Repurchased approximately $330.4 million of
LabCorp stock
Revenue by Payer- US
YTD Q3 2008
(In millions)
Client
$895.7 (28%)
Patient
$280.1 (9%)
Managed Care
Capitated
$135.5 (4%)
Medicare & Medicaid
$602.0 (19%)
Managed Care
Fee-for-service
$1,282.4 (40%)
Core
$2,088.5 (65%)
Histology (Non-Pap)
$241.9 (8%)
Other Esoteric
$378.6 (12%)
Genomic
$486.7 (15%)
Revenue by Business Area - US
YTD Q3 2008
(In millions)
Financial Guidance - 2008
Excluding the impact of restructuring and other special
charges and share repurchase activity after Sept 30,
2008, guidance for 2008 is:
$70 million
Net interest of approximately
$140 million to $160 million
Capital expenditures of approximately
$750 million to $770 million
Operating cash flow of approximately
(Excluding any transition payments to UnitedHealthcare)
$4.57 and $4.61
Diluted earnings per share of between
(includes a $0.03 negative impact from weather)
25%
EBITDA margins of approximately
11%
Revenue growth of approximately
Financial Guidance - 2009
Excluding the impact of restructuring and other special
charges and share repurchase activity after Sept 30,
2008, preliminary guidance for 2009 is:
$5.00 and $5.25
Diluted earnings per share of between
3.5% to 5.5%
Revenue growth of approximately
Reconciliation of Non-GAAP
Financial Measures
(In millions)
EBITDA represents earnings before interest, income taxes, depreciation and amortization, and includes the
Company’s 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- and none-month periods ended
September 30, 2008 and 2007:
