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
February 10, 2011
(Date of earliest event reported)
LABORATORY CORPORATION OF
AMERICA HOLDINGS
(Exact Name of Registrant as Specified in its Charter)
| 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 communication 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 February 10, 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
| By: | /s/ F. SAMUEL EBERTS III | |
| F. Samuel Eberts III | ||
| Chief Legal Officer and Secretary |
February 10, 2011
8-K Filed February 10, 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, 2009, and subsequent SEC filings, and will be
available in the Company’s Form 10-K for the year ended December 31, 2010,
when filed. 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, 2009, and subsequent SEC filings, and will be
available in the Company’s Form 10-K for the year ended December 31, 2010,
when filed. 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
Fourth Quarter Results
(In millions, except per share data)
(In millions, except per share data)
Three Months Ended Dec 31, | |||||||
2010 | 2009 | +/(-) | |||||
Revenue | $ 1,295.4 | $ 1,165.1 | 11.2% | ||||
Adjusted Operating Income (1) | $ 252.4 | $ 221.9 | 13.7% | ||||
Adjusted Operating Income Margin (1) | 19.5% | 19.0% | 50 | bp | |||
Adjusted EPS (1) | $ 1.34 | $ 1.16 | 15.5% | ||||
Operating Cash Flow | $ 259.2 | $ 224.7 | 15.4% | ||||
Less: Capital Expenditures | $ (32.8) | $ (37.6) | -12.8% | ||||
Free Cash Flow | $ 226.4 | $ 187.1 | 21.0% | ||||
(1) See Reconciliation of non-GAAP Financial Measures (included herein) | |||||||
4
Cash Flow Trends
9.4% FCF CAGR
5
Revenue by Payer- US
2010
2010
6
Revenue by Business Area - US
2010
2010
7
Revenue by Payer
(in millions, except PPA)
(in millions, except PPA)
YTD Q4-2008 | YTD Q4-2009 | YTD Q4-2010 | ||||||||||||
Revenue | Revenue | Revenue | ||||||||||||
$'s | % | Accns | PPA | $'s | % | Accns | PPA | $'s | % | Accns | PPA | |||
Client | $ 1,195.3 | 28% | 35.521 | $ 33.65 | $ 1,207.4 | 27% | 34.802 | $ 34.69 | $ 1,297.2 | 27% | 34.425 | $ 37.68 | ||
Patient | 369.6 | 9% | 2.240 | $165.00 | 337.6 | 8% | 2.087 | $161.76 | $ 347.5 | 7% | 2.082 | $166.92 | ||
Third Party (Medicare/Medicaid) | 803.1 | 19% | 18.939 | $ 42.40 | 896.4 | 20% | 19.645 | $ 45.63 | $ 970.5 | 21% | 20.025 | $ 48.46 | ||
Managed Care: | ||||||||||||||
- Capitated | 180.0 | 4% | 15.227 | $ 11.82 | 167.4 | 4% | 15.055 | $ 11.12 | $ 155.1 | 3% | 13.918 | $ 11.15 | ||
- Fee for service | 1,715.7 | 40% | 37.725 | $ 45.48 | 1,838.5 | 41% | 38.828 | $ 47.35 | $ 1,953.6 | 41% | 40.072 | $ 48.75 | ||
Total Managed Care | 1,895.7 | 44% | 52.952 | $ 35.80 | 2,005.8 | 45% | 53.883 | $ 37.23 | $ 2,108.7 | 45% | 53.990 | $ 39.06 | ||
LabCorp Total - US | $ 4,263.7 | 100% | 109.652 | $ 38.88 | $ 4,447.2 | 100% | 110.417 | $ 40.28 | $ 4,723.9 | 100% | 110.522 | $ 42.74 | ||
LabCorp Total - Canada | $ 249.0 | 8.052 | $ 30.92 | $ 247.5 | 9.088 | $ 27.23 | $ 280.0 | 9.129 | $ 30.68 | |||||
LabCorp Total | $ 4,512.7 | 117.704 | $ 38.34 | $ 4,694.7 | 119.505 | $ 39.28 | $ 5,003.9 | 119.651 | $ 41.82 | |||||
8
Revenue by Business Area
(in millions, except PPA)
(in millions, except PPA)
YTD Q4-2008 | YTD Q4-2009 | YTD Q4-2010 | ||||||||||||
Revenue | Revenue | Revenue | ||||||||||||
$'s | % | Accns | PPA | $'s | % | Accns | PPA | $'s | % | Accns | PPA | |||
All Genomic | $ 654.8 | 15% | 8.843 | $ 74.05 | $ 697.9 | 16% | 9.117 | $ 76.55 | $ 756.5 | 16% | 8.990 | $ 84.15 | ||
Other Esoteric | 510.1 | 12% | 12.232 | 41.70 | 608.0 | 14% | 14.223 | 42.75 | 677.0 | 14% | 15.860 | 42.68 | ||
Histology | 321.0 | 8% | 2.583 | 124.26 | 295.6 | 7% | 2.433 | 121.50 | 295.0 | 6% | 2.381 | 123.89 | ||
All Genomic / Esoteric | 1,485.8 | 35% | 23.658 | 62.80 | 1,601.6 | 36% | 25.773 | 62.14 | 1,728.5 | 37% | 27.231 | 63.48 | ||
Core | 2,777.9 | 65% | 85.994 | 32.30 | 2,845.6 | 64% | 84.644 | 33.62 | 2,995.3 | 63% | 83.291 | 35.96 | ||
LabCorp Total - US | $ 4,263.7 | 100% | 109.652 | $ 38.88 | $ 4,447.2 | 100% | 110.417 | $ 40.28 | $ 4,723.9 | 100% | 110.522 | $ 42.74 | ||
LabCorp Total - Canada | $ 249.0 | 8.052 | $ 30.92 | $ 247.5 | 9.088 | $ 27.23 | $ 280.0 | 9.129 | $ 30.68 | |||||
LabCorp Total | $ 4,512.7 | 117.704 | $ 38.34 | $ 4,694.7 | 119.505 | $ 39.28 | $ 5,003.9 | 119.651 | $ 41.82 | |||||
9
Financial Guidance - 2011
Excluding the impact of restructuring and other special charges
and share repurchase activity under our new share repurchase
program announced today, guidance for 2011 is:
program announced today, guidance for 2011 is:
• Revenue growth: | Approximately 9.5% - 11.5% |
• Adjusted EPS Excluding Amortization (1): | $6.12 - $6.32 |
• Operating cash flow: | Approximately $900 Million |
• Capital expenditures: | $140 Million - $150 Million |
(1) Adjusted EPS Excluding Amortization includes $0.16 - $0.26 of dilution from the Company’s acquisition of Genzyme Genetics
10
Supplemental Financial
Information
Information
Laboratory Corporation of America | |||||||
Other Financial Information | |||||||
December 31, 2010 | |||||||
($ in millions) | |||||||
Q1 10 | Q2 10 | Q3 10 | Q4 10 | 2010 | |||
Depreciation | $ 32.2 | $ 32.0 | $ 32.2 | $ 32.7 | $ 129.1 | ||
Amortization | $ 17.4 | $ 17.7 | $ 18.0 | $ 19.6 | $ 72.7 | ||
Capital expenditures | $ 24.5 | $ 34.5 | $ 34.3 | $ 32.8 | $ 126.1 | ||
Cash flows from operations | $ 232.0 | $ 216.2 | $ 176.2 | $ 259.2 | $ 883.6 | ||
Bad debt as a percentage of sales | 5.05% | 4.80% | 4.80% | 4.70% | 4.80% | ||
Effective interest rate on debt: | |||||||
Zero coupon-subordinated notes | 2.00% | 2.00% | 2.00% | 2.00% | 2.00% | ||
3 1/8% Senior Notes | 3.27% | 3.27% | |||||
4 5/8% Senior Notes | 4.74% | 4.74% | |||||
5 1/2% Senior Notes | 5.38% | 5.38% | 5.38% | 5.38% | 5.38% | ||
5 5/8% Senior Notes | 5.75% | 5.75% | 5.75% | 5.75% | 5.75% | ||
Term loan | 3.67% | 3.67% | 3.67% | 3.67% | 3.67% | ||
Revolving credit facility (weighted average) | 0.58% | 0.70% | 0.61% | 0.61% | 0.61% | ||
Days sales outstanding (excluding Genzyme Genetics) | 46 | 45 | 44 | 43 | 43 | ||
UnitedHeathcare transition payments - Billed | $ 10.1 | $ 1.1 | $ - | $ - | $ 11.2 | ||
UnitedHeathcare transition payments - Paid | $ 14.5 | $ 2.1 | $ 0.2 | $ - | $ 16.8 | ||
11
Reconciliation of non-GAAP
Financial Measures
Reconciliation of non-GAAP Financial Measures | |||||
(In millions, except per share data) | |||||
Three Months Ended Dec 31, | |||||
Adjusted Operating Income | 2010 | 2009 | |||
Operating income | $ 238.8 | $ 215.8 | |||
Restructuring and other special charges (1) (2) | 13.6 | 6.1 | |||
Adjusted operating income | $ 252.4 | $ 221.9 | |||
Adjusted EPS | |||||
Diluted earnings per common share | $ 1.26 | $ 1.33 | |||
Impact of restructuring and other special charges (1) (2) | 0.08 | (0.17) | |||
Adjusted EPS | $ 1.34 | $ 1.16 | |||
(1) During the fourth quarter of 2010, the Company recorded restructuring and other special charges of $13.6 million, consisting of $14.8 million in professional fees and expenses associated with recent acquisitions, which were offset by a net restructuring credit of $1.2 million resulting from the reversal of unused severance and facility closure liabilities. The after tax impact of these charges decreased net earnings for the three months ended December 31, 2010, by $8.3 million and diluted earnings per share by $0.08 ($8.3 million divided by 104.5 million shares). | |||||
(2) During the fourth quarter of 2009, the Company recorded net charges of $3.3 million ($2.0 million after tax) relating to severance payments for the reduction of certain management positions and the closing of redundant and underutilized facilities. The Company also adopted amendments to its employee pension plans, effective January 1, 2010, resulting in the recognition of a one-time net curtailment charge of $2.8 million ($1.7 million after tax). In addition, the Company recorded favorable adjustments of $21.5 million to its fourth quarter tax provision relating to the resolution of certain state tax issues under audit, as well as the realization of foreign tax credits. Combined, these net after tax adjustments increased net earnings for the quarter ended December 31, 2009 by $17.8 million and increased diluted earnings per share for the quarter by $0.17 ($17.8 million divided by 107.5 million shares). | |||||
12
Reconciliation of non-GAAP
Financial Measures
Reconciliation of non-GAAP Financial Measures | |||||
(In millions, except per share data) | |||||
Year Ended Dec 31, | |||||
Adjusted Operating Income | 2010 | 2009 | |||
Operating income | $ 978.8 | $ 935.9 | |||
Restructuring and other special charges (1) (2) | 37.7 | 19.0 | |||
Adjusted operating income | $ 1,016.5 | $ 954.9 | |||
Adjusted EPS | |||||
Diluted earnings per common share | $ 5.29 | $ 4.98 | |||
Impact of restructuring and other special charges (1) (2) (3) (4) | 0.26 | (0.09) | |||
Adjusted EPS | $ 5.55 | $ 4.89 | |||
(1) 2010 includes net restructuring and other special charges of $44.7 million ($27.4 million after tax), consisting of $25.7 million in professional fees and expenses associated with recent acquisitions; $7.0 million in bridge financing fees; and $12.0 million in severance related liabilities associated with workforce reduction initiatives. | |||||
(2) 2009 includes net restructuring charges of $13.5 million ($8.1 million after tax), a one-time charge of $2.8 million ($1.7 million after tax) for curtailment of employee pension plans, and $2.7 million ($1.6 million after tax) transaction fees and expenses associated with the acquisition of Monogram Biosciences. | |||||
(3) In 2009, the Company recorded favorable adjustments of $21.5 million to its fourth quarter tax provision relating to the resolution of certain state tax issues under audit, as well as the realization of foreign tax credits. In 2008, the Company recorded a $7.1 million reduction to its fourth quarter tax provision as a result of tax treaty amendments with Canada. These adjustments had no impact on operating income, but did increase net earnings by $21.5 million and $7.1 million, respectively. | |||||
(4) 2010: $27.4 million divided by 105.4 million shares | |||||
2009: $10.1 million divided by 109.1 million shares | |||||
