LH - Earnings call transcript Q2 2019 | Laboratory Corporation of America Holdings

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Q2 2019 LabCorp Earnings Conference Call. [Operator Instructions].

As a reminder, this conference call is being recorded for replay purposes. It is now my pleasure to hand the conference over to, Ms. Investor of VP Willett, Relations. Clarissa begin. Ma'am, you may

Clarissa Willett

Quarter Good Call. Second morning, welcome to and XXXX Conference LabCorp

in press telephone of Ratliff, detailed and President this me As and today's are Covance Chief conference replay be today Officer; Eisenberg, call Drug of Executive a Chief Officer; Development. available Executive King, Financial CEO via Dave and Glenn With release, Internet. Chairman there Vice will John and

press the Investor business we Relations section and website with our presentation www.labcorp.com, today's our include and a our in of posted reconciliation non-GAAP at additional both GAAP the call. of discussed morning to financial release which on during Relations' Investor the This information measures measures financial operations,

are guidance to, estimated factors opportunities Additionally, expected respect growth. and to the not and on with results, savings we impact and making include, synergies limited operating statements. are statements of XXXX forward-looking assumptions, These related the the forward-looking financial various future and but for statements

forward-looking Each current various affect results. financial statements change, expectations our factors that of upon to subject is based the is could and upon based

are factors and other set in with company's in our XXXX detail these Form forms XX-K the of Some filings SEC. the XX-Q, in and subsequent forth

even expectations any provide to have obligation no We to change. these if forward-looking updates statements our

Now I'll King. Dave turn the call over to

David King

I'll Thank by you, the discussing and good begin second Clarissa, morning. financial quarter. highlights of

world-class strategy and deliver driven change demand faster both across to way to consistent bringing to again of strong quarter is by the results were our the delivered. technology Our in businesses and new use execution care patients diagnostics, medicines

significantly impact by and the from of the operations X X.X% margin line PAMA an PAMA of increase performance. operational $X.XX. X.X% currency. of nonoperational of revenue and impact divestitures, performance, EPS negative We X.X% given the excellent from strength year, adjusted nominally of strong revenues of major grew but items, delivered was of another decreased X%, our last delivered We across billion enterprise, quarter X.X% continuing understates over this Top $X.X

We $XXX million strategic acquisitions for million and also $XXX repurchase. deployed to share

well the volume by our requisition continue changes. very performed Diagnostics excluding our volume, retaining PAMA PAMA. growing revenue Revenue Diagnostics as Despite per and team impact at outstanding organic deliver XX.X% margin. risk again of initiatives LaunchPad combined quarter, other the work, headwinds, was this adjusted Our excluding requisition divestitures in and X.X% at an business strong, impressive managed care per contract operating put to X

be backlog of business. our Envigo revenue our infrastructure solutions, end-to-end for on $XX time the points and driving Our of to differentiated our Investments book-to-bill new translated into Covance to key converting The offerings evidence delivery X.X% growth, basis resonating billion that XX and a margin backlog XX-month clients first on over global is exceeding profitable models. a capabilities, with data therapeutic growth X.XX. capitalizing net backlog differentiator priorities trailing of precision and over growth, expansion focusing driven medicine, revenue existing attracting and initiatives, in global new as $XX billion further and team, in such our investment Covance in is patient continue quarters, expertise strategic data

review the I'll Now highlights. quarter's performance

that Our our Diagnostics that I'll competitors ways cannot and Drug in value data several innovative review integrated continue to Development create and examples matched. these capabilities showcase capabilities.

our of patient access, participation market sponsors. trials assets locations, Diagnostics well and burden as and logistics Covance our labs, for ease bring central project our management, design more study data capabilities, capabilities. together as virtual LabCorp deliver PSC capabilities faster steady and First, and the including infrastructure, These cost-effective unique trial and hybrid combined Walgreens

deliver LabCorp track patient provide market data a important at opportunity. unique gene support therapy designed engaged business The lengthy Phase and kits the for blood through ability cell perform new over and selecting and including this awards, PSCs, cited to keep range draws X-year Covance compliance IIIb a and testing sponsors access the Covance's several In of the deliver quarter, labs, we specifically the central timeline. to patients study, conduct FDA full won an samples, in at LabCorp

center direct criteria, Second, to we introduced on for streamlining and test to to campaign likely recruitment to for connection the offering, the for results to appropriate routed of the patients direct targeted The in geographic study, contact testing. Based e-mails website e-mail this study Diagnostics patient's trials. based referred enrolled effectively of significantly compensated LabCorp LabCorp each We code, our for our of Taking sent the already they service and for for were results sponsor initial has then and data patient patient. using to for expanded innovative the new patient were our location. patients on set a by quickly a each the candidates emails the the cardiovascular qualify sponsors work. sponsor's and the we to scope enroll, testing

to study solution. and a rare unique disease, where recent Third, Diagnostics, from other and Covance recruitment partners a streaming LabCorp for won combined offer data acquisition very our LabCorp pediatric MNG

Our potentially the eligible identify study they the who diagnosis definitive misdiagnosed here but eligibility. patients and are unparalleled for for to are study, them condition capabilities been because of enable to screen and may us have for

of advance diagnostics for the breast PIKXCA introduction tests, our continue X and and companion to for position strong companion diagnostic leadership in in cancer. bladder oncology new cancer with Finally, we FGFR

capabilities desired nearly in year. and that customers' and last more highlights. our from deliver. can the all unique companion needs the now quarter second XX% for highly this of than quarter's create combined Diagnostics LabCorp diagnostics growing versus only number I'll points orders proof solutions of discuss are grew among our doubled These Revenue aspects that

to perform The with contracts volumes well. in won quarter key we care several in grew and portfolio and markets. managed continued second stable, holding Our the business Horizon United important

of lab all X. reminder, network included are in which UnitedHealthcare's on a brands effect the into LabCorp July As went our preferred

UnitedHealthcare in XXXX the are on opportunity grow beyond. impact XXXX, limited through PLN in volume PLN the about expect optimistic we the Although, and we with to

to and and Mount pathology new artificial our relationships. and we systems. health several NEL continue collaboration, other and grow We system digital quarter, announced our relationships Sinai intelligence the deepen hospital revenue In with the finalized

We reductions continue imposed overcome implementation PAMA. inequitable flawed of price work the by to to Medicare the

the Beneficiaries We fee introduction lab The are second step reforming of a Act, significant to schedule. Medicare ramp Access encouraged Medicine would PAMA and the of reimbursement. the commission on by for of delay deliver at PAMA first 'XX, with market-based Academy properly reporting Laboratory the market-based to produce by National of truly the quarter implement to having PAMA focused truly and study act

seamless we to quarter, the customer providing continue In work experience. a on

partnership to have XXX space year, at metropolitan this least on sites track at end the stores major including by Walgreens Our is LabCorp of new at markets.

least XXX by We achieve are XXXX. target at, our track on locations at to

We are capabilities continuing broader to and and discuss health also wellness on and integrations a other's our towards into each experiences digital and of platform, CRO. Care the moving collaboration and next-generation offerings Find locations Walgreens

also well in providers in expands option collected increasing testing and workflows. add available transparency including states This LabCorp testing access number our health our new are and options is to Pixel to to options to or of projects transforming LabCorp. offering at service operations, all giving care consumers enhances our We consumer underway, significant initiated Pixel phlebotomy-based have available and digital locations digitizing for and continues consumers the testing the them Walgreens number centers X self-directed LabCorp patients, by expanding by streamlining mobile where of available. progress business. of A and LaunchPad to convenience

the savings of We by million a track and end of deliver total to remain of $XXX on a net business XXXX. transformed

U.S. transaction, divesting Now technical I'll the business. talent discuss into enhancing June Europe highlights Covance and completed and the CRP the our and increases nonclinical business nonclinical and the expertise business reach our scope quarter. our and drug On development signs in footprint substantially with in global X, expanded of capacity transaction infused of Envigo This Covance the

in development to study, clinical be across Covance, conducted program, large are studies pharmacodynamic on excited pharmacology business, we X colleagues preclinical focus to full a capabilities strength -- including new included our welcome We molecule study the I sponsor indications. which in II unit Phase across to Development expanded a a awarded Covance program, two capacity a toxicology Phase recently our seamlessly. us a our Drug and our Recognizing integrating as pharmacokinetic, cardiovascular

driven through and to IACH discovery expertise Covance's and demonstrates regulatory unique which and biomarker to improve our monitoring guidelines. continues quality to approval. drugs complete management the award ability, according by capabilities Covance early our take FDA to facilitates This among risk based Xcellerate was study CROs platform, award-winning to its

of study a safety These more increase enhancements additions capabilities effective study company-wide and for action operations Xcellerate in study risks efficient to implementation subjects, deployment alerts. quality, of trial include risk and more the use leading budgets. of and managing Recent our improved study overall library

of We initiatives deliver Launchpad track are net Covance savings continue XXXX. by Launchpad through of on and Covance million execute to to the our initiative end $XXX

we exceptional game combined $XX strategic from our commitment sciences the Envigo company's the of colleagues team become from When to committed our the that confidence dedicated the unique in established around we by million are Covance, coalition, would vision world result end completed That cost our synergies knew in we integration a the achieve in offering would of Chiltern our we in synergies to decision of for and for in the power playing XXXX. with life to our differentiated us reflected the $XX to performance. position and XXXX We patients. million expect a acquired of deliver of that long In global company. pleased the future, that caring to the second cost net integration quarter

for to combined health mission and lives. pursue We improving the vision are as enterprise increasingly our seeing of we our improving become life

to I'll turn the call Now Glenn. over

Glenn Eisenberg

billion, X.X% our over XX and Revenue translation Thank primarily on the points. due of with acquisitions to review of each our foreign followed XXXX growth with our year. you, start for my last was currency X.X% partially quarter results, conclude second the divestitures of increase and going was guidance. performance quarter in by revenue organic comments X.X% X.X%, and offset $X.X segment to of increase of The discussion by an basis I'm of an Dave. update of

compared impact XX.X% PAMA Excluding the from of last X.X%. organic year. or of the Operating million revenue basis income $XXX for grew XX $XXX to points, revenue was or million XX.X% negative quarter

and excludes last of acquisition demand was compared to and XX.X% by special or $XX The Launchpad income, expenses cybersecurity margin impact charges of was PAMA million initiatives offset Adjusted due organic had the During and partially million, the charges and of XX.X% integration. restructuring $XXX operating primarily from to quarter, operating well $XXX costs decline as revenue higher in which personal adjusted as $XX million related million $XX year. special amortization and of we or savings. to million and Launchpad restructuring items, income items,

was XX.X% and to year. The primarily quarter the excluding to amortization, year. XX.X% rate, for was tax compared to special rate charges mix rate adjusted was last XX.X% The tax higher The the of last earnings. adjusted compared due tax XX.X%

expect company's compared for to and per to $X.XX to XX% and adjusted exclude be other diluted $XXX were We $X.XX were tax charges last Adjusted which continue for the or year in the rate amortization, the share. items, quarter EPS, the restructuring quarter, between XX%. X% million Net earnings year. special full down

higher flow last support was totaled ago. due revenue requirements or was quarter X% $XXX to million $XX to compared to year to $XXX expenditures the Capital cash growth. of million in million working operating million decrease cash The Operating compared or flow year. $XX X% a in primarily capital

was flow quarter XXXX. As flow to to last million remain million cash a $X.XX $XXX on billion cash track guidance in our free We in $XXX to free million achieve result, $XXX year. compared the of

throughout active the terms of in quarter remained capital We allocation.

$XXX invested in repurchased we and million $XXX quarter, stock. the million acquisitions During of

$XXX repurchase of our As end under end, had $X.X debt and EBITDA. the $XXX at gross of quarter first debt months $X.XX our to of balance quarter our last million XX, was June down quarter. XX we million, from billion was was Total cash program. the share leverage end At billion at authorization remaining X.Xx

of which due currency X.X% compared organic segment the Organic foreign and days was of negative beginning translation billion, our last a was impact Diagnostics. LabCorp divestitures the from year, decrease PAMA in fewer X.X% and performance review quarter, partially X.X%, down revenue of to offset to I'll of $X.X for revenue Revenue revenue, with by the includes X.X%. X.X% Now acquisitions. quarter

Organic excluding the to organic demand, divestitures by of due volume offset by to volume combination X.X% X.X%. reduced due managed acquisitions revenue year X.X% approximately last care by volume from Total decline of partially lower the days. in decreased consumer of changes contract fewer X.X% and genetics was

was X.X%. volume organic Excluding items, these up

agreements points from management due to X.X% impacted As X% have requisition we include hospital volume a growth. impact lab per basis approximately Revenue XXX not excluding per our PAMA. to Revenue the from divestitures, increased in do mix. added requisition, volume, reminder, negatively by which would by was our

the care compared changes, days and divestitures, in of the Diagnostics XXXX from fewer Launchpad of personnel deliver primarily adjusted organic to was Diagnostics and offset contract quarter million or managed million of acquisitions. Launchpad due decline last LabCorp XX.X% $XXX $XXX XX.X% our revenue adjusted track essentially PAMA operating negative cybersecurity cost We remain end on expenses, income other $XXX revenue savings, by operating million $XX to revenue by million. to net million for savings from growth of initiative. was $XX year. impact income was or The The

of organic investment, X.X% track for of the margins remain adjusted in partially improvement acquisitions increase last to to income XXXX was personnel XX We of support point compared the end Launchpad foreign demand, or cybersecurity translation Now of Company's of Adjusted by of X.X% expansion. savings, to income due partially in billion, to million revenue acquisitions by I'll increase X.X% to segment and million review expenses of costs, global the deliver organic and primarily operating million to translation, Revenue on X.X% Launchpad Drug the Development. $XXX million Covance's XX.X% due an X.X%. higher initiatives. the quarter were $XX growth from year net The $XXX facility for and and last was of divestitures of currency $X.X $XXX year. by compared savings offset performance XX.X% Covance currency offset basis operating or and

$X.X million strong approximately quarter. XX at X.XX, respectively. the and at end remain last the of months, $XX.X of For increase $XXX trailing was Backlog and an net billion, book-to-bill orders net quarter from billion the

billion into $X.X of the this over approximately months. XX revenue convert to expect We backlog next

rates the toward acquisitions, Now our as repurchases year from of of I'll and XX, which XXXX June debt discuss the impact guidance, flow the repayment. includes for foreign of deployment anticipated cash assumes exchange currently remainder share free and

We expect our guidance basis revenue of compared points. range narrowing the This of and revenue XXXX over from of to billion, impact guidance X% of to the as includes divestitures a prior of growth to XX $XX.X foreign X.X% of X% X.X% negative translation X.X%. currency

billion, from be This to revenue guidance XXXX expect includes as prior to improvement negative down LabCorp basis to We this over X% of of foreign to to currency an primarily approximately is points. down down XX revenue X% guidance of our X% Diagnostics down X% impact compared due of and divestitures $X translation X%, performance. organic the

$X.X X% foreign We X.X% points. revenue the Covance revenue prior the Development basis XX billion, XXXX of range Drug guidance a as This X.X% X%. of to of translation compared guidance to of expect growth of to over from impact our narrowing negative includes currency

XXXX compared and to adjusted a guidance narrowing prior Our increase over our X% to as of X% EPS to of is adjusted $XX.XX of EPS our range increase is of guidance $XX.XX. an $XX.XX, $XX.XX to which $XX.XX,

be $X.XX and billion, Free cash to was to XX% unchanged guidance. expected our $XXX an over which prior to increase is of flow from million XXXX X%

concludes formal take questions. and remarks, This now our we'll Operator?

Operator

Instructions]. [Operator

Our will come first with Jack question from Barclays. Meehan

Jack Meehan

given terms changes in built second fourth just, of the And what's the the of within half I for could consumer versus was and maybe to consumer into about managed back the some noise in in you the from impact quarter? in break genetics? out the lab was the the if X.X%, access the genetic us on the a care bit And in quarter wanted hoping comps the little the just quarter. and some business side, of talk what

David King

Dave. Yes, it's

be or last of So in a but chatter flat down over to X.X% business, the the seen said, for is the first into volume It's the volume to second genetics guidance. year. time for down balance consumer quarters, the built last quarter the was free of we terms consumer couple of 'XX, had volume the actually we genetics have as about we versus for that expected decline, we've

not thing in increase flat Horizon a the stable say United managed little of remain changes specifically, what volumes volumes from care basically access, second terms and to the that that you'd be and the number I'd first In was typical in and interested but us. quarter we've quarter, bit for basically at broken

the So broadly of the managed key quarter. but terms revenue basically those care book did stable increase overall for and in remained volume, X components

Jack Meehan

you Great. Is any provide... Also there Covance. color had two on quick follow-ups can

David King

You the precedence here morning. Use set now right right this your...

Jack Meehan

Okay.

Dave, want and few say a weeks. also congrats in appreciate So, see you to

Glenn Eisenberg

Thank you, Jack.

Operator

with line from Evercore. next the Muken And our will of Ross come question

Suzie Yoon

just Suzie post volumes what DTC X guess are on XXXX? expectations market? could consumer honing bounce the I your It's genomics, for or or those for the a was of overall And function partners low when X just in on Ross. demand back genomics

David King

First of sorry, XXXX, question all, genomics, XXXX mean follow-up, the into Jack, consumer of off expect just to to we're In flat as the you to what we cut consumer one on not entitled down. for you're answer one I still follow-up. volume didn't to set genetics save completely, to balance be to we've guiding

XXandMe. genetics partner we the primary which As is you know, have consumer one in business,

business to think going to I is volume looks of our that's coming a future. terms inference from. is And foreseeable like, what the it's for the of in assumption that, the be where the that decline down fair future consumer So flat genetics it's

Suzie Yoon

periods around XXandMe, color XXandMe is provide there Got some it. you post any And promotional passed? we around as a can follow-up, just

David King

of quarter, be this balance flat expect on responded the give up we year. what volumes quarter, year, were year, for is down the prior second to the I we in last to is, we're which in down first I guidance you only XXandMe The in question, the No. slightly the can

Operator

Jack the of with come And Barclays. line question next will our Meehan from

Jack Meehan

follow-up pass-throughs that? I just you follow-up think the accept can how now Wanted Covance, focus the to follow-up with how you any broad patient the in And quarter? for provide might on you patient have question. on address do a color to direct, with revenue impacted of can a is,

John Ratliff

in this Jack, we same up to pass-throughs, growth at the -- X.X% is John, On and the it currency were at was time stated comparable that organic pass-throughs quarter level. this constant

didn't anomaly had that So quarter. we have we in the first

David King

studies well issue that and Jack, what very And is optimization most potential that to, within LabCorp at catch we you're that direct, geographic because, the us with location, of winning show optimizing Covance the as look and items codes be to sponsor where is combined we what is comes terms likely to Dave, diagnosis it's have capabilities the there fit data see in of going the you're speak, differentiator most to so with lab where fishes. protocol ability results. been But where patient your and to -- of opportunity to patients the the the going highlighted, you're which part protocols, ponds significant criteria is a is

So to email each get the then we a study. going that direct and about compensated mentioned, that area. we for it's we're expect be continue that patient patient for as lab and we testing that in enrolls growing do the And for excited each to the send

Operator

Lisa will Gill line And come from our next of question JPMorgan. with the

Lisa Gill

being pricing. to would with I LabCorp up versus look to the presume competitive I competitive Dave, Quest. around said, heard per it X.X% at doesn't I capitated shifts just contracts, from about year, shifted some some to dive what last landscape your req and recent revenue news we When really talk seem around in want

we that two, today? about do think of profitability this So actual One, X shifted? And of really think there. piece do business the the we how landscape how competitive about questions just

David King

been, competition to which to competitor, us. excellent in competitors something have of is, the well. systems, same always excellent which ourselves the landscape as direct available Well, build excellent providers think And are an to internally, the as which is that it's I There of own option ability is Quest like course, as in an competitors. not an is market business is we competitive have in the actually to of other health

more challenging every than It's we're career. So the challenging, there -- day. in been remains landscape it's it's competitive but competing my single out no

always the On and contract, when I the about you contracts, specific contract, service, lose always the question quality would it's win think it's a and on price. you I when on just say,

$XX So per what LabCorp, last would I pricing I X.X%, the very at and income operating to those PAMA is around and XX.X%, decline our cutting, income we point due our That the disciplined including aggressive me was profitability not $XX would been up revenue to And PAMA, year adjusted of PAMA. does X%, price have observations million discount and somewhat is to requisition operating and indicate here ex in million in around pricing. things. was versus

We comment and specific bad going or continue business revenue that, on per pricing, out don't to -- go win profitability to solicit we requisition I but be that our our and expectations. contracts, is business per to not disciplined am and around price below or say I'm going that is

We it not it start we're haven't to and now. done doing going

Lisa Gill

follow my Glenn, down repurchase, you just then flow, And around share that helpful. acquisitions, pipeline in the very talked things have you cash about Do specific up would paying acquisitions That's debt. be, the we of Or look three these at? the we are of kind of the back things for be thinking should just half that general is that of language the about year? kind

Glenn Eisenberg

obviously, repurchasing share. financial second both free up the the pay be be of down of of it's, used as year. to debt cash Envigo free lot don't second to tuck-in our pursue our have market well with continue the half. think the of in obviously cash we part acquisitions will, flexibility flow the But on will the mean, acquisition, as to half have a a in you if I we little in generated I bit, did so bulk flow yes, lever We

the could well. to but businesses obviously, fair go tuck-in we to acquisitions that across as good as that assume I think part capital second evaluate the And of So it's without, that acquisition opportunities. be pipeline half both do that, will transactions in to saying continues we

Operator

from next Coldwell Eric And Baird. line the of with question will our come

Eric Coldwell

just on calendar. technical the question had I a

quarter for calendar exactly day tell And third you the the is this the there? revenue think in on Can rest row or where forward? calendar this thoughtful more maybe so calendar revenue you've of talked allow could we shake going day future modeling request about does the headwinds, get analysts going I out headwinds. this is be that I the And about how us what days year? can

David King

Yes, Dave. Eric, it's

when of calendar, So there's us same every what's of important days. calculate strength year, is the the number the we obviously, to days but

strong Saturdays and So are Wednesdays are impact holidays Mondays are days, not days, not of strong days, stronger there's three Tuesdays days. then and the holiday and obviously

as Wednesdays many it's and that month. saying there's this particular so many So a and not in Mondays. It's quite simple and as in month how Sundays days many in versus days so fall Tuesdays month

the of quarter, the revenue In look we're half strength about quarter days the below first quarter, In a fourth of this we In XXXX. calculate be identical the the of every a across calendar we first XXXX. a the more days of third quarter, day. and benefit year-over-year said, about year, we day and quarter one were we'll will the half have revenue of That the of number the below total year. day second a this the at quarter year, the

back to you to consider give the the that. is on we that and on of more request calendar balance earlier year in So for year, and the your come will you strength insight of the the calendar the

Operator

Kevin UBS. next with will the line Caliendo come our question And from of

Kevin Caliendo

it a Diagnostic lot had to better than I margin, was the about what modeled. talk wanted we

can the specifically quarter? the LaunchPad, you savings going out LaunchPad And from you forward? be that called diagnostic margin about You incremental should the how in thinking talk we about got

David King

might I'll on Yes, that I start any that, then let Glenn add I'll comments have.

Glenn Eisenberg

what is program. to throughout a go the we for as do years about the pro rata reality the Launchpad program. ramp three we as and said, is that actually X we the initiative up of total years Yes. Sure. use the talk the we each But the we realize, over and basically of Kevin, million $XXX expect

and quantify Launchpad drivers in performance the much we of don't initiatives quarter, it Diagnostics to has the So benefit. but we we one that will particular the the how how clearly, impact that all key performed, talk any had well headwinds about was continue to when

we As significant Diagnostics the that the think you will, we the margins is progresses because of year-on-year that, ramping impact decline for year-over-year year, as less was the in a year we expect about -- of what to see said if PAMA. second the up. the there, margins LaunchPad's decline given But

So even get into though margins second we be improvements will in than obviously, as expected will year-over-year, the be less they and down in the year-on-year, were half half they first yes, down XXXX.

David King

with just would everything And I say, said. agree Glenn

it's recognize think than I what also important lot to is more LaunchPad about of is savings. that a near-term just

without beyond streamlining the adding the we the able because heads, able do workflows because and we're the we to digitization So people redeploy business and XXXX that facing of to for ongoing is our position. more business from new have transformation the of an savings for business we're in customer out

and cost the to don't that a So that benefits profound want of greater there's transformation long-term than just savings. here lose I of pretty business near-term element sight has

Kevin Caliendo

follow-up that a period it quick it I just impact on on only Got for in time. of on? was you was And kind a brought book-to-bill? bookings, short any as there know it. of Envigo. Any But stuff of

John Ratliff

is this Kevin, John.

one only was it in month, effect. So so a nominal there for

that burn bit have on quarter. little development revenue know, you nominal area the the a but book-to-bill on quicker effect in early a lower as has side, the So

Operator

line Stanley. of with Goldwasser Morgan from And the our comes question Rivka next

Rivka Goldwasser

United today seemed the on more lab from you opportunity network. Dave, So positive preferred

you expected? when go of to do opportunity out restrictions for you certain about put next United to out network. how should than better that that what things think Is So requires about think the this we in place year? that providers came And

David King

As any in restrictions. think guidance this I become the adjusted in XXXX, remarks, the the I -- not of significant because that PLN to into my just going expecting providers prepared to impact up start or impact the to factoring take from it's said and we're times

to providers least before for that think out United do has go I at positive. requirements of what talk are network ask about would the they they

For those cost and think, also the incentives I to long-term, is for of network versus positions either of providers network, higher design the in or for more to for creating said referring appropriate the who are providers who long-term in patients in lower we real network. cost as are and out it's opportunity in us use the efficient benefit

is quality I'm PLN I'm are and taking. nice see talking pleased with the United to they the in way, and from benefit hopeful of And we're industry collaborative improve as lab how we cost services. reduce going which the to it. with the can some to a pleased So about initiative that use that to XXXX, us device I'm

Rivka Goldwasser

Okay. follow-up the earlier XQ comment, like, And that to XQ. said kind of is United stabilized in and then my you from Horizon an volumes

I points first impact think about the mentioned impact that XX -- the basis that quarter, was growth. on negative you in the volume

So as should quarter this points well? we assume XX basis

David King

by saw not I would point. what approximately, I to points in basis from not mean, in we're the But say, the point give the we basis quarter. going basis XX different ballpark first of and was materially it that

and the major in As us. that's impact played how be the it's we said, Ricky, to we out expected for first quarter

Glenn Eisenberg

big we XX We around about number three the our accounted opening the to consumer headwind. will you of in X.X% daily genetics get Dave, of X%. for talked kind volume to a headwinds the little the being remarks, is on way another if roughly bit, points Ricky, commented impact quantify basis about

of comp the as the to a around X% care little get can managed below. well bit you impact So

Operator

Bank. will Dan from Deutsche with the line of Leonard come question next our And

Daniel Leonard

more that? point, May consumer X%, was volume a down the business Glenn. decline meaning the quick the down clarification headwind genetics lot was be Or a that What X%? was consumer last than volume that on genetics from

Glenn Eisenberg

consumer was X.X% genetics the No, last versus year. volume down

Daniel Leonard

want I spend on And follow-up Okay. to that. my

a quick key I in Or here. in with your Dave, managed contracts elaboration that remarks mentioned elaborate? fee-for-service or you important have you be with care follow-up contract had were these companies, helpful? physician any hospitals, would contracts can capitated, So prepared wins networks you are markets,

David King

Horizon in markets contracts, where from contract markets Yes, the they were and reason changes they go greater. probably that every United the a of not were our exposure in but key contract, yes, couple into of and with we were that to I'm felt the was felt were we care detail going they managed

to were of to couple sort of reinforce well artificial There as a Mount another the health the and the digital growth So transactions pathology there. of the strength of with system of intelligence of Sinai, a they expansion business line helped the partnership also the collaboration.

Operator

And from question come will our Crédit line next Wright Suisse. with of the Erin

David King

for this the I I want genetics X.X% that ago for moments -- just I the to I'm genetics sure Before right. was I to just business. volume this, the which is to was we make consumer made not negative a year-over-year. want correct do It saying negative consumer misstatement

of So the we when about X.X% volume to number. the X.X% genetics down managed XX down, the was it consumer look for So managed how on organic being for at right? being the comparison the the we care, so days, year-over-year that's points basis right, balance got care, and

I for misstated So business, just the the genetics, within I'm delta the sorry, drag on it overall that. wasn't the consumer was volume that

Erin Wright

just the you're you prepared that you you winning of in? the those, the relatively improving? remarks. better asset, Covance win guess, haven't I in Okay, Erin. still say or Diagnostics to leveraging what the then did if we're of these At of you data customers rate that thanks, How you helpful, is I -- CRO with and on data quantify also that's how the with before in, switching leveraging inning this it's assets gears of feel And in kind platform. highlight are examples terms And is several the side? I'm early. CRO diagnostic platform cost could some But would kind curious of, you worked of the characterize guess, cost Covance,

John Ratliff

right From is we'll the point any in data that -- Yes, the in it every standpoint of John. call is of this the beginning inning, inning, -- what mandated do. we from and it let's is in say, deal Erin, game, the fourth

quality medics, we of on And yes, the project management, win, the et based team, so on, But quality when that so data. is of also it's based the cetera.

the going additional areas, there's the win. of get to into When the -- our at more -- potentially of being why majority So are you From because factors be we only we're data, in to specifically we're data. looking data, that of be continuing standpoint multiple data the data, middle -- the international at you looking you and additional world portfolio. very more oncology of game, need more

our a So data the strength of is myth.

the You of analog. the of capabilities very specific that week, that then and data, central nature we worldwide the having and data assessments have lab the Diagnostics $X.X million can of

to and wins to but We is have increase at we'll data tremendous. have feel be had, have we'll the the the additional capabilities and business future. data that looking increased enable continue we in So

Erin Wright

to thanks. a follow-up. that just influence And mix guess, What req the test per quarter? meaningfully revenue quick Okay, of kind in dynamics. underlying digging I

David King

Erin, it's Dave.

we strength genetics. So the have in non-consumer

noninvasive not prenatal genetics testing. So broadly

nice business which we having and women's previously growth We up, diagnostics business, we do had flat have trend the monitoring. lot and some of strength sort a oncology with medical been what allergy is have over a We to capabilities. strength strength oncology, a that in health has in strength companion in was of the in trending had

base Esoteric benefited and of So terms very in performed our broadly, Testing well mix. the that us

Operator

from And with Donnelly our of question line will come Sachs. Patrick next the Goldman

Patrick Donnelly

confidence moving just mean, John, Envigo half maybe for in, can to in growth digging talk obviously, Covance just talk pieces? there? the to the to even moving the obviously, ramp, just pieces midpoint looking at Can level there side, nice in rolls get back or Maybe ends, I back pretty one but some the half. just you order top in the through you the in on

John Ratliff

It's of Confidence currency have second of half there, less acquisitions, also Patrick. is to the in it's headwinds you organic the yes, Yes. the your combination that year. point but demand,

as XX% terms backlog the headwinds you've things, currency So on tactically. well line clearly, stated, as Glenn And billion, those $XX the in the seen backlog it's really you in of by today's first see enabled based of currencies, three as in the then of half. as the much as wouldn't sight the of kick then acquisitions

Patrick Donnelly

how just cost on through maybe then moving talk Envigo should just half, to just for the talk M&A maybe the and in we And are obviously, coming staying coming margin should cadence, the there Glenn, the one just through to there. really margins how Okay. back pieces But again trend, the on hold. expect trend? the again Can expect the we you in taking business, initiatives it with savings Covance

Glenn Eisenberg

Yes.

you driven second the kind we year as expect a will in to up our the points, hit of on in Now initiatives the of second as off the of of business The the half in have organic see the full a Launchpad improvement growth margins nice of it. kicking in. half mix well margin Envigo are with acquisition and we that the year

Operator

Ralph line And from our with Giacobbe next question Citi. of will come the

Ralph Giacobbe

impact that was win half you they an just when contract us you back those can of sense a and or quarter? more volume And were second the in story? give Dave, there of a won, mentioned, is to that

David King

believe I the February quarter. one March in Ralph, and at little impact would effect of the one X, them, a on there was of second of say took I end but first, X, most of bit started the the impact the

year, to but continue it's to the ramp throughout the going numbers. it's So in

Ralph Giacobbe

mean, I more, insights the guess req? any of, the a mean, argument I contracts? I per Okay. size as is any there's of there revenue capitative of there guess, those, volume And I not any, more there? is sort lot sort of sense Or is

David King

balance contracts won, answer say I and you don't because is, contracts to either I the the for honestly, that there competitors the price. quarter, that's think to number the impact is per at the number year our guys other volume that you the on have for they that talked the of to quarter referring look what a didn't at you the on anything revenue the specify we requisitions if or have I or and Well, look one the way it doesn't question are going contracts. that suggest will that about significant volume the me the But the know for

Ralph Giacobbe

But obviously then see the hear and of mean the opening of sort competitiveness of United Aetna And of enough. about market. Fair contracts you there's change. this sort the all the we a been and then

more So doing exclusivity where one-off just there's just more sort sort of United and status way to but this quo and of the that's contracts nationals are within regional Aetna the contracts it's of, be? the a going more

David King

hard for participating it. which it's generalize still we're the Horizon, a blue other before not up to is on contract, think because, I and exclusive hand the contract regional in it's opened example,

highest for we patients probably price I to would is the point. exclusive not of national of think broad say, quality do network the the I concentration I favorable think, are network located a more is But trend the patients because also at our regional So openness to -- and plans where trend contracts. increasingly the because need how the of the get a have the for optimize a having

Operator

line And De of Bank Bruin from our America next Lynch. question come will the with Derik Merrill of

Unidentified Analyst

[indiscernible] is Derik This for on today.

the the wanted early-stage for updated on as CRO trend? ask, Just industry side to an outlook growth what's overall versus late-stage

John Ratliff

with this from proposal to both areas RP labs. in actually well the growth as see in X% early-stage, is just most the growth John, the flows, the late-stage a and as our versus have that the We X% than higher the on X.X% to early-stage of I X% standpoint is growth, think range. based analysts around in later-stage central -- flows, bit the industry little on nice even

we So see strong. pipeline

Unidentified Analyst

That's very helpful, John.

there's Wanted also revenues the book-to-bill bookings? follow-up as see side. on Covance on the pass-through to the Just for impact and quarter? net any if what's And

John Ratliff

bookings quarterly. regularly trailing focused The the we're so XX-month period the shift between quarters on versus

than deliver, faster more in X.XXx seem X.XXx. little X to our We service expect And competitors. quarters. last to will over continue that the say our I to may we the heavily consistent to terms around is What did a been of that burning from bit raising some business to and remarkably of we've X.XXx

burning to clearly, X.XXx I over boost as been, said a to we've the provide slow X.XXx generation. revenue take that So But last bill the and four with consistent a out work can won't before, quarters. it

Operator

And Ellich Kevin the line of question from come our with will Craig-Hallum. next

Kevin Ellich

question. Two Dave. quick

you you also deal the guys Sinai pathology announced and recently AI So digital investment. announced first, the Mount path in AI strategic then

where the then is? And Pixel Just, think that question could the to give on and color second going? guys do is And bit add us and you you how time? growth over that much that how for more that see big little now could how a big is about you also opportunity

David King

I'll with the intelligence. Sure, artificial start Kevin.

the use the with actual do to towards and are terms both routine idea improvement don't So quality the of we're digital of the see I to impact, of pathology direct of and I pathology, with this Mount the long-term, any digital of and pathologist, the see resources. a introduce comparisons significant digital our optimize Sinai complex pathology in material pathologist opportunity near-term side-by-side in the cases. is we think is able how -- to is pathology pathology difficult going the more think care optimization

years and terms the So better impact XX any all I major in see do broadly business. introduced laboratory don't we market term is I diagnosis, intelligence of looking if forms path I of AI, of see in across say, digital opportunity that very path, mean, change the sphere. resources, But days, to we a long-term, dynamic which, be to in the there was way pathology traditional from -- will artificial continue expanding the remember in be was, with and thought at I would when in and more near image-guided to and help I a allocate I learning very and path machine significant was interested than ago deploy those

they time. takes it the these for and transformational transform to take are but hold to So time business, innovations over

they in results material around device continue website, was the But important Pixel, as partners, they they of health self-collection get abilities a devices, home. system into can the with go, in service view do offering as Pixel those the quarter can choose the testing, big refine to where it's secure right separate results. centers they can our initiative self-direct consumers the can get to tool this patient a time now. The self-collection On very for the we our care patients over We for not device. self-collection this

may component. there we're they and trying to is meet their reasons doesn't And we're to now back physician their want care as insurance health is, served. if through met So and get years why trying through be in said, people what we've we're to a to -- done be that to want the the primary are serve them wellness a multiple that do come of want way testing number or they company. their where consumer There

significant I for quite consumer testing with think is the us. direct long-term opportunity the

Operator

from And come line the next will Brian Tanquilut with question our of Jefferies.

Bryan Ross

and strategy This access is and the pressing areas the that the with where Or just other development the on discussed of the Ross as population not aligned where being certain Walgreens out a on located, lap you if on I sticking more retail regions easy have may peer those concurrently? process center to maybe Maybe you Brian. consumers pace with be for such to for as the thought on consumer on can other and follow-up, may Walgreens. side. collaborative side. want Bryan ultimately the thoughts your centers end What's up

on anything's front So last hear if over and your progressed to thoughts months? just there want couple that the

David King

Sure.

for As consumer XXXX over XXX consumer meet met. XXX stores the I is, on track where again, end and said, The wants be the we're time. the by goal of Ron, to

Walgreens centers, centers we service patients a they for versus ability the the buying that on service that's else of the we of numbers then Part other part reason patient the and Walgreens rationale something of so an don't prescription who patients research points to market places of about that like density draw the patient at quarter stores, at are fill choose a needs we have of standalone I access the feel or we have up And why density convenience think, may would it find we have. them Walgreens center. do our Walgreens is in who that where important so the is to or --

And partnership great with we Walgreens. have a

-- regularly. them talk are and We we with

talked and meeting executive senior ahead. have We just about week this the opportunities

quite yet forward exposure experiences, mobile remarks, I great integration now, the the we some specific integration of capabilities about Care us Walgreens to prepared more is those ahead. for in for very into we're then being Find couple there. aware opportunity will As step working that it, of And next quarters on LabCorp patients collaboration enthusiastic and with talk of the the opportunity have gives of and think that the I'm more and our highlighted we the things and next-generation on have and CRO, in digital about

Operator

the of question line And Matt Larew come our next William Blair. with will from

Matthew Larew

to new wins about alluded ask contract capital you're felt following and I some the on comments, Covance capabilities on Covance pipeline you then on capabilities John you that so wondering to the wanted quarter, side mentioned you think this just diagnostic the deployment, as obviously, in where last quarter, use the the about well Envigo both those side, transaction, capabilities good nice the the leverages across light and as your side how enterprise? of that can viewing

David King

think the we capabilities, Yes, said times, the look we the at about mentioned, we've and adding is number the as at Glenn financial thing robust. many one strategic bit, pipeline always criteria. look When then that's we

genetic there's critical me market. our our mass, example, are nextgen we no terms To significantly area in the are our nextgen for there, the as testing bring to where We increase always there significantly diagnostics side and increased which for out tests Or on because in we deficient sequencing acquisition, sequencing it us but small look out and rapidly. capabilities can MNG very of capabilities around the there? market ability significant to deal

Pac in as, and always gaining we'll it no look a very on financially fit but and does Covance us Asia side, mass pipeline appropriate way. attractive, give more and choose there looking returns in at robust there's would it strategically, every building the is area we're say, the opportunity So at critical -- among gonna does it strength John, that

Operator

[Operator Instructions].

line Canaccord will question the with next come Genuity. from Our Massaro Mark of

Mark Massaro

the growth. about strongest precision the liquid drive looking MRD needle? moving and to see renaissance offerings asked the you curious you're other in that I'm and space, I biopsy lab cancer growth? the strong on what you given detection monitoring to some to where side, to innovation to relative the this really the provide extent of a oncology be showing there seeing some seems in Dave, talked Can examples medicine, LabCorp's companies space

David King

involved, biopsy to them the a Covance ways liquid using actually of us you've business as looking innovative been years seen going for Covance, in in we've Mark, number of trials. cancer back at Yes, the very

for strength commercialized. a oncology I trials, would Covance showing or of of traditional Covance sort is diagnostics, is, business we're more And commercialization are developed again lot the developed companion across in the of I then flow and then that what think that cytometry. describe

important and really that cancer genetics we're much well. seeing to understood becoming becoming are testing better of the around it's so think, recognize genetic all I tumors, of tumors, around -- seeing is sequencing testing we're

that other part the and that area continuing due routine genetics, treatment, blood of recurrence look patient as are to and burden counts due of the course and tests also at to required at oncology other shop care. it's of and LabCorp look aspects tumor with of due Covance So capabilities it the base by LabCorp combined to business of highlights nice because the oncology, stop be can well obtained ones broad as our of doing a capabilities as growth the

Mark Massaro

question, a could space market view -- to to lack genetic a related utility direct my that people talked view we've back of given to how about for was DTC a you then has and whether it's array ancestry have Do transfer the And but for sequencing? genotyping. going potentially consumer to have that this perhaps how this health technology some perhaps, great more testing, testing, evolve limitations around

David King

very genetics My the that view in. is market market interested that consumer a consumers is are

in ancestry you of It side a of interest health. there it. of lot As sort say, or with it the genealogy -- been there's was complex side of a the is more

of genetics done to have based able companies getting job approve some consumer those on to in be and FDA claims think I very claims. the impressive educate the health health based consumers to a

more out to purposes going consumer's to genealogy from -- when there future or so I moving our a are what there to that think that health side based we're not of question answered. extent analysis I we sequencing, I that what is, the that movement that's array be opportunity do the going sequence, the consumer a would to genetic agree question. the know so think as long-term years that that think be real many and for going benefits do the is. obviously, Operator, much just before think, but of remains are other from question -- I testing you uncertainty be for confusion adopt to really known to of and consumer's genetics our it's to that is, things direct consumer based opposed I

Operator

are. sir, we Yes

You closing may proceed your with remarks.

David King

the morning the combined well. in every have And quarter and for the of thank again. joining enterprise of we're we in I about together. delivering bring the way this new solutions. and you highlight more performance the we this unique and a day are new Very points us more Covance result Well, that to the power attracting and want with Very LabCorp opportunities capabilities partners to as proof market which particularly, of that strong pleased

and this So you. outstanding Thank the I effort you day. colleagues XX,XXX world thank the wish around for a our great quarter, all

Operator

our all you thank conference. conclude wonderful a program. And today's does day. gentlemen, and have we Everybody, This Ladies on may participation for disconnect. your

Laboratory Corporation of America (LH) 25 Jul 192019 Q2 Earnings call transcript