LH - Earnings call transcript Q3 2020 | Laboratory Corporation of America Holdings

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Operator

Ladies and gentlemen, thank you for standing by and welcome to the LabCorp Third Quarter 2020 Earnings Conference Call. [Operator Instructions]. I would now like to hand the conference over to your speaker today, Clarissa Willett, Vice President of Investor Relations. Please go ahead.

Clarissa Willett

Thank you, Operator. to Quarter welcome Conference and morning LabCorp's XXXX Third Call. Good

With there in available a Internet. Glenn Investor Adam Eisenberg, operations, today's Chief on Officer; section detailed our of financial President our call. Officer. Chief will includes Chairman via and today and Schechter, discussed press and an Executive both our reconciliation call As website press information and during conference additional and posted This release, the Relations be morning, Executive are we this of replay telephone and the with Vice me Financial of Investor measures which GAAP Relations a to today's business presentation financial release non-GAAP the in measures

forward-looking and to, and based not the many business which results, statements well economic, subject are more general the our on conditions. generally Additionally, and that pandemic of current responses COVID-XX change expected factors, future include, and/or statements the company's affect we our market assumptions, are statements and as financial upon COVID-XX the expectations of operating based results. could to business the control conditions; respect pandemic is upon Each XXXX forward-looking financial various as impacts for but impact limited is making on the expectations related projected beyond of on businesses, to including These statements. the with to flows are of cash our forward-looking our

with in the on Some Form and reports XX-K other quarterly detail our filings and on of in most recent these factors Form the annual report set are in forth XX-Q SEC. company's subsequent

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

Adam turn call the Now to Schechter. I'll over

Adam Schechter

in has visits, was wins Good had ahead The and people trial down quarter. Non-COVID-related for third global both as progress Diagnostics business for morning, chronic routine and important clinical care recover and Thank to the elective with is preventive conditions base procedures. delivered move We us joining improving fight non-COVID-related other actively we've strong activity their you, as trials. and pandemic. X% our well approximately business significant quarter Clinical results their recovered achieved to was the volume the in you continued for today. COVID thank Clarissa. surgeries and resume and everyone

the experienced support on was funding the Development the significantly and pandemic current when grew CARES was versus appreciate strength we As a Relief business. future Based growth EPS and billion, result, COVID-XX This adjusted quarter to of cash versus Throughout base prior and is our year, of decided Funds. the $X.XX the to helped the free we Provider million. base days afforded revenue in and reported prior year We our our quarter our impacted businesses both in Drug with greatly testing return the third of has total the in us the the the pressure business, Act CARES of first $XXX the offset business year. Diagnostics expected flow $X.X Act where uncertain. early have that of

in We this moments. are on expand take pleased now. we this a can will Glenn action few

country our do Importantly, will remains after we the LabCorp COVID-XX. and pandemic world. did to what important extends prior to strategy the beyond the pandemic to What and the

million To the We customers made advancing oncology; in in COVID, across and continue leveraging based our long-term fourth, second, our the million which our is position leadership over to approximately analytics date, third growth putting will and which quarter. that we represents I'll tests. and third, opportunities. Development all PCR power the XX tests fight XX X move the capabilities. digitalization first, Drug million highlights antibody priorities: high to of business; we evaluate capabilities the about tests, and at execute progress Development; Diagnostics and do; across COVID-XX Diagnostic we following our AI, data, against integrating Drug and significant center performed strategy Our on of on now finally, combined

more greater We across XX tests and States COVID per the in PCR are laboratories antibody our and XXX,XXX capacity than than day. XXX,XXX United testing performing over tests is

to Thus result We tests increase of an also continue X performing far day our time COVID we're this month, XXX,XXX about to with per day. PCR capacity. approximately average

offer test treatment to quarter, respiratory infections, a will a were series combined season. of order first appropriate test COVID-XX, physicians accurately the laboratory and quickly we launched including flu help RSV flu. ability during determine The also We to combined During the innovations. for the and

We combined and and we LabCorp multiple also utilize matrix July, LabCorp kits, the individuals At filed collection by testing to available our received an Emergency method, once requires make In to test a EUA test Pixel an at patient Use through Home. supplies. pools Authorization which samples at-home to fewer

the speed and and testing certain PCR We for reliance of technology efficiency extraction also an heat recently reduces received the improves a EUA on reagents. that our new the

We will respond core on help innovations continue to the grow and pandemic work our business. to to to

Drug to Development. now Moving

momentum our to and XX months trailing billion business. We our book-to-bill was see Development strong $XX.X continue Drug nearly in to X.XX. grew The backlog

orders our The studies, of which factor many net of the To been These nonclinical each in consecutive we differentiating approximately winning trials. XXX XX% again programs late-stage and of have the capabilities, small roughly business second past our represented from once a a For the opportunities combined Diagnostic the the power demonstrates through business these COVID in clinical of disproportionate businesses. vaccine in from won of data have we and studies. opportunities share date, quarters. quarter, the insights our X therapeutic won

to collaboration launch clinical several the of with oncology, late-stage major Lung, leadership In several the test, and from award highlights accelerated accelerate Tempus non-small ctDx new patient cancer; to including outside of to liquid a with the biopsy participation. with Now studies for a lung we Resolution noninvasive pharmaceutical quarter. company; COVID-XX our trial oncology patients position cell the significant important partner let's for for choice turn a of advancements, be

Our including breakthroughs therapies, precision diagnostics, clinical record to our in treatments. with companion leadership successful cancer helping develop executing in medicine are in combined track trials, future

we quarter, also with other Health test Health, agreement to of to for development agreement the extension announcements Infirmary further our of have strategy, to laboratory the of system to Japan Outreach including the diagnostic footprint, Miami University advance diagnostics collaborations with and companion NASH. our acquired such the Health System Paramount a and Laboratory noninvasive During System. Health service an hospital University business BML commercialize We several as an GENFIT several in made new for and Rush broaden blood-based

that delivered quarter acquisitions results capabilities, trial during of In in relationship decentralized the encouraged Trials quarter. with the clinical amid that in anticipated were to It strong accordingly. ramp-up and we is made and early to Strategic We're to continued uncertain we the season routine increase will returning fall times. We also outbreaks renewed closing, people care are flu that the fourth the long-standing our preparing move as are including acquisition continue continuing snapIoT. be trials Clinical and Swedish. development October, we there GlobalCare and drug into

the all I call over turn of I employees to thank want world. Glenn, the before our around to Finally,

I'm that place a the have at right team right great by and countless worked and against across XX,XXX our world and needed their the of tirelessly inspired their continue for most. customers stories passion sustained has leader. a I the strategy them are cannot enough colleagues commitment our time I'm our have Our confident we its patients us health to the care to work. performance global of strong business when of on every executing thank part and in LabCorp's course serve

Now over turn call the Glenn. to I'll

Glenn Eisenberg

Thank each a of comments segment to start quarter and on you, performance Adam. in outlook. comments going of with third a end with I'm our followed results, our our my by discussion review some

you and Funding, in For third with the so we Relief $XX Provider base results, change CARES can which from million the we tests, the included during PCR in is COVID-XX revenue excluded business. earnings flow. the see in Also have the cash but associated quarter, received Act antibody quarter that quantified

as fourth the of $XX in second quarter, mentioned, as in well received we As return we decided the Adam quarter. million to the the funds funds

$XX third in our As million a CARES earnings we Act the have reversed the result, quarter. funds from

negative COVID-XX by reduction third which billion organic was of of million or or the driven XX% over $X.X of favorable year organic currency foreign an last due XX.X% by revenue X.X%. PAMA of of increase last $XXX X% to points. compared in to the was of review a translation quarter increase Now from growth base our testing impact of basis quarter XX.X%, billion, revenue XX for I'll Revenue was The our Operating performance. year. revenue for business and organic the XX.X%, income quarter acquisitions of in includes $X XX.X% partially X.X%, offset

which CARES the flow million which Adjusted restructuring EPS, EPS the Act due year and diluted to investments primarily expenditures adjusted items, personnel reversal growth. last amortization, million in and quarter X% compared and year. in foundation. $X.XX and exclude to offset the increase capacity. quarter and to The the due last compared LaunchPad year. which COVID-XX and charitable and compares During assets the by COVID-XX-related for million operating to billion LaunchPad operating and acquisition. the of adjusted The excludes tax adjusted geographic XX.X% the third and savings, X.X% period flow was million of of This $XXX second or last or charges, million of quarter, up $X.XX $X.XX $X.X testing $X.XX the was year. earnings, increase Net quarter, quarter due higher special acquisition reduced by initiatives, revenue increase diluted from cash of rate from we $XXX share. were $XX income, intangible in amortization, includes cash to primarily The was XX.X% tax Adjusted charges, included to to was costs per funding offset had net last capital these in revenue higher earnings. quarter, support in testing income the our million by ago. per $XX by received items, was items higher to rate, impairments earnings and PAMA, share year. quarter or Operating the related compared costs partially LabCorp we cash restructuring tax a Capital of of The were earnings excluding to quarter special compared the to revenue integration, working same an revenue $XXX items was in XX.X% restructuring last of higher $XXX partially COVID-XX or funds The $XX for $XX rate to and $XX charges XX.X% margin to million, operating XX.X% in an mix impairment XX.X% primarily the or year. amortization totaled million special million the was

As flow a result, million compared $XXX to last free cash was the $XXX million year. quarter in

$XXX paid end $XXX quarter, and end, debt million $X.X balance million, quarter and at of the second XX up debt million months our the at quarter invested end the At leverage down was Total $XXX debt. During to last was of acquisitions we from X.Xx $XXX EBITDA. our in quarter. cash billion million was gross

repurchase Given share our the company's improved financial performance, we reinstating are program.

in beginning X.X%, growth impact organic by review I'll to of acquisitions of negative offset performance which by year segment decline quarter of in testing XX.X% of organic in compared for increase The X.X%. was increase partially base with XX.X%, of LabCorp driven the Now an includes the PAMA billion, the which and Diagnostics. from to was the Revenue COVID-XX last of was business $X.X XX.X% our due revenue revenue in X.X%. XX.X% over was decline volume XX.X% a XX% last an of growth volumes volume of total and in increase growth The due quarter our increase XX.X% business by volume due year XX.X%, a The was was the increase contributing to to XX.X% in organic partially organic COVID-XX volumes. in of base the X.X%. price/mix. The due to and offset acquisitions testing volume X.X% increase

price/mix end COVID-XX PAMA impact offset for The of reminder, billion revenue driven $X target of The was margin business of partially net would agreements approximately testing organic base by initiative lab XX.X% the X%, track adjusted operating compared income with deliver organic base XXXX. have of to negative $XXX by remains the PAMA volume from our COVID-XX $XXX $XX volume, Diagnostics we primarily million. of to management mix includes from which and in which the the savings primarily or added year. last do or of LaunchPad was impact quarter savings and in X.X% a hospital operating in income by testing not increase LabCorp our increase on favorable business million X.X%. include XX.X% million due XX.X% Diagnostics the As LaunchPad growth. of to our was and XX.X% of negative adjusted to X-year

the acquisitions revenue of foreign Development. Drug billion, currency of compared review was I'll $X.X quarter to of XXX to organic the X.X% performance due increase increase of X.X%, year driven an Now testing. points. last Covance X.X% organic Revenue of basis for COVID-XX translation in and favorable by growth The was

Excluding was revenue compared last COVID-XX flat organic to year. testing,

to to point currency due exclude COVID-XX However, mid- offset higher LaunchPad negative by segment was targeted pandemic, by initiative end to with in or compared this if savings revenue XXX and with income million personnel $XXX $XXX line that operating our costs. $XX or have year. grown last in our the for in performance. from primarily partially were we translation, year. remains million income track LaunchPad $XXX operating target margins XX.X% our adjusted X-year in we to Adjusted increase impact XX.X% Drug the million the deliver and organic high-single the The revenue the Development's on estimate net testing, digits, of of basis savings would million improvement of

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

the a strong convert We backlog recovery this COVID-XX approximately we've we months. outlook, in by $X.X Drug Development improve revenue October, X XX businesses of related quarter Diagnostics overall In fall expect potential our regard continues of the base final range financial in while testing both and performance our and and and flu next unusually the continued as our the and over quarter, With third businesses. to driven billion months the year, delivered seen an in sequentially be the the summary, throughout resulting to significant into into there season enter we of to outcomes. to into pandemic wide uncertainty

we'll we to continuing a concludes As our result, take Operator? provide This questions. now and remarks are guidance. XXXX not formal

Operator

[Operator Instructions].

Meehan Our first Nephron question from Research. Jack comes of

Jack Meehan

any in about just the saw wanted rev at base base asking Is around I by negative also, recovery. to business, quarter? was can It the there color volume, but than were trend expecting. month-by-month rec. And business stronger we the start you impact the how you if then, coming Glenn, on throughout look provide I on positive

what us maybe you're a from well help category seeing as there. perspective, Just test

Adam Schechter

the is before recovered. base this of start with Adam. Jack, surprised I'll recovery the how it that, the business. business has I fast it me base said

go If at is you the our prior point versus business base to down was XX% And back looking year. March, Diagnostics. this that at

was quarter, for June, XX% business it our then But you at would second quarter, the base down of month If look about for the was down June. XX%.

at look we're for you we've which discussed, If third quarter. the just quarter, down X%

improvements sequential are quarter-over-quarter. And seeing you seeing we're So it month-over-month. frankly,

prior bit month month. little the better each is than So a

in of see X the bit that seen business, come not not work back. business, Last stage the back Development slower, Diagnostic What business our that's clinical is the business. preclinical, a coming Development. Drug back early our quickly coming to continue fastest business. Drug other coming has as central as the to back we quickly we've the So development laboratory the as as quarter, was With regard businesses

actually a seen faster we've back quarter, significant that our development bit laboratory this the For central come acceleration business and clinical has in than a business.

business, access about of have sites XX% development clinical the With to the we now.

that about XX% but quarter, than better the open at last access sites are the not there's of for that's So moment. still

Glenn Eisenberg

is Glenn. Jack, this

Adam, up question volume the but kind volume favorable other the through on down, being being just went and of price/mix decline. to Just obviously, the your

does you in On up environment. a point environment. X% of of the last pick obviously, price/mix, normal to kind as And Diagnostics in and normal organic a volume of know, overall but anything kind around are we favorable price/mix. couple on X% the the quarters a then

like price/mix some health the We than the increase bigger other. The to last around to We X% improvement factor test an we're be have particular, again, per last around X% test point, and driver an rate screening NIPT quarter seen growth biggest favorable in session. of the biggest amount doing quarter. we've women's up that your seem tests has or categories, to the improvement or higher in We've seen a over now hepatitis two seen in the But overall, parts the And per price/mix really quarters. been but mix, also driving the a our session. up in were this being favorable mix.

Jack Meehan

strong thoughts to into around COVID the detection we Could incremental of as there just go obviously per And off your Should margins And thoughts share building Diagnostics sustain collecting the expect on you test? any rate follow-up testing. that in And kind great. that, Great. this of sustainability durability you're were around rate your fourth very quarter? the as quarter. be we the would a

Adam Schechter

when testing, we three PCR core had we principles. the so launched Jack,

to as was as The innovation capacity as and and science first could. use much one build we quickly

was second equal testing. to access have that The would everybody the

we nobody upfront out-of-pocket charge cost rate. charge the and So we Medicare everybody

asked was to served think tests And And have first, the sit with those we for us when into was. what test, first third as before the Medicare anybody prioritized thing launched laboratories, else. we when prioritize, over today. the here launched even that we to principles inpatients. be nobody And for we hospital as CDC example, adhere was knew I then and the well. do those fact, would principles In rate so the us would only test HHS the exception came those it a that That we we

it as is of consistent. the that think which the and In here, the terms January if I emergency is is now extended through after pricing as month declaration longevity, we'll for that, see of gets I long the think

You slight reimbursed is there is X recently is will was still within where days. saw news change turnaround if $XXX, turnaround your that for to day. people Medicare, our a a time about be good to up the it And time

we And us of of January emergency end have significant the impact next declaration on shouldn't change. what over that then have a the happens that after year. So the with Medicare see for time to

Operator

our Chickering Deutsche Pito And at from next comes Bank. question

Philip Chickering

could new you're a through COVID accelerating I earnings through aren't revenues you near During excess COVID the investments walk Or but the considering the that bottom during costs flow we the understand line. fourth lot you quarter? any if quarter, taking to giving in from guidance of can the any term. us see and

Adam Schechter

Yes. Go ahead, Glenn.

Glenn Eisenberg

Yes.

Just a guidance. just for an of, outcomes the demand. issue relative significant It's less the it, the potential call variance cost. It's comment business in to the on more

So quarter, better obviously, the remarks, where ending we've seen well I third our than in and quarter the in is Adam sequentially, business commented even we performing as the started.

at the see expect would obviously, rates, So results. continued we run current good to

fall, the place, into enter forward. in the again, that the base the just be will the season, flu businesses don't going be restrictions we may As what we of know impact

more if of softness, could leverage while the really, is what's cost continued seeing see we business, be the And uncertainty some of overall, is control, off in demand benefits of bad revenues. strength, being we're margin the be driven to cost the that improvement frankly, the company one ahead the being of could flu season to enhanced So structure us. able the But a of pretty place.

Adam Schechter

tests little additional we context. weeks of about XXX,XXX you ago, a give a averaging couple to PCR day. just A And were

season. XXX,XXX day. the the over day flu averaging We XXX,XXX during tests a PCR could up needed if it go we're Now country a to

other season, the countries hasn't particularly season. Argentina flu If you flu and that some Australia, look big been Brazil, through it gone a have at

That flu it it be fact, help lockdown in small for they Yes, was because those with COVID? would the in season? possibly. very were Could very In countries.

the we're it, knowing of without season at much see So you could flu be. could just and how there bring right could what start the variability

Philip Chickering

recent as repurchases. historically, activity been it measured going be Should quarterly expect flows a similar we Then Okay. cash influx a for on could share repurchases, because a fairly more you've accelerated? follow-up, forward of of or your

Adam Schechter

and are capital very become to foremost and very hospital our laboratories, business, return buy we've so next them. of very cost do And tell thing that these those can to we several They at. makes where and local these possibilities allocation has we're There allocation how of first tuck-in we is their year sense this quickly time period within number of it looked a bring at thoughtfully. we opportunistic that through as you, know laboratories there looking with acceleration an carefully local that I always into look we'll I be lens Well, then repurchases. we of our Yes. look capital been the into integrate believe And short acquisitions, our first they where the accretive. and can in capital share to at them from we'll those go that year.

Operator

our question Erin next comes of from Wright Suisse. And Crédit

Erin Wilson

Great.

of contributing with side vaccine How clinical COVID. much Covance therapeutic meaningfully thinking is across associated the you how growth? bookings bookings business, of about On Covance XX% to more And COVID work the mentioned we COVID-related to the top then compared be trials? line should

Adam Schechter

you, Thank Erin. Yes.

things. types we're materially design So with XXX on won and we're are that not the the we've doing Many impacting trials, studies stage, and trial doing in we're in are the And about progress then that moment. They early significant work where at involved or making vaccine are those them the Many at smaller of are where of there clinical preclinical of both we've done space XXX said late-stage others the in the of opportunities. about business. revenue very the -- -- diagnostic work those actively the moment. COVID we're

us. for we time, So that's become more But revenue we through why call didn't out specifically. they'll as go meaningful

types but versus vaccines vaccine out much are there's treatments, less the terms the other there, much, trials vaccine In than trials. the of of other bigger

through at of numbers say would when you outside in the of are there's a vaccines. volume of But I coming look of vaccines. most them trials, So volume, lot

Erin Wilson

positioning opportunities how market should Where in or opportunities about this world? Okay. there And in a what your deployment. a then guess, less I like? thinking as capital more we in be the pipeline are quickly acquisition does and post-COVID consolidator look Again, on

Adam Schechter

Yes.

start the in with I'll So Diagnostic business.

has things hospital said lots and laboratories, One surprised discussions acquiring of since occur of local are November is last lots that that here opportunities me that the before about that as bit take I looking would had laboratory than just they I they so but I that go the longer expected. thought LabCorp sense both be much for to make starting a or there faster. acquired the of CEO that's economic they laboratories that I've thought for and

moment, we're So at size more me I are there longer to past, today before, expected. than fast they than they have, the said at in you the taken I if many have of predict but that would and looking some is what go the impossible of at for because particularly them, look how scale

of smaller help strategy terms they to trials were were two In trials. our acquisitions critical strategy. We've types Those those with we that snapIoT. mentioned help to acquisitions, said and us other that acquisitions with were and and tuck-in would GlobalCare decentralized our clinical of hybrid

So as we'll continue here that type very to large to I not the need, strategically. us help look today, scale for tuck-in of I acquisitions sit acquisition. do see any do smaller

successful strategic have I acquisitions. and targeted we think what need we it with to augment can that we smaller be

Operator

UBS. And from our Kevin next question of Caliendo comes

Kevin Caliendo

you a basis? Or shape of year-over-year it of makeup if form? in prior? you much in to that has there How any way, of terms What are on your or had call still changes, you Is seeing mix? were business the are any it out mix base of the type same seeing changed sort you

Adam Schechter

What's business Kevin, business. our business Yes. fall was fast about our when both quarter, that mix Last pandemic, the the the were about our as other equal. businesses is been did down base back interesting as beginning significantly, same. is of said esoteric in coming the we not

came say I faster quarter, in than the esoteric business. business bit Now actually base third the back a our would

mix we're through as but we've a So the X on gone not the year. impact long-term shift we've seeing seen different a necessarily businesses

Kevin Caliendo

the what planning be? you where a add that to as sort testing. And XXX,XXX take about capacity terms -- just to Is within helpful. said And times we XX-hour get still you COVID do is turnaround some it might what us when were how is think of Can sort That's period? through your you should tests you many think follow-up, done you and of about? that in can breaking point that of

Adam Schechter

Yes.

So than XXX,XXX do today X Kevin, I we mentioned, is more day. turnaround tests our And time now, as day. right per about can

if we're time average right XXX,XXX within hours. we much current I think and I an just the testing turnaround now, does tests. Now XXX,XXX XX about The could And our additional would still in pooling do. our we're pooling, to also, that include But that to not be higher we're capabilities. able and And significantly. we machines terms needed or say go looking adding pretty could do maintain increase more we of at capacity

bit capacity March. fast still We've In built the as little that core capacity, a was behind. were tenets we can. been we quickly since no how number of from there had we a receiving. was our significant beginning, as And July, the fell as said of in we we to that build samples So one increase doing matter

get though buy to larger not even our buy. the the of running we're number season. that at about can go biggest flu machines rate-limiting to of as And to continue capacity, down. slowing now going So machines we are fall into me, we we is we XX% can the that that's right the We're

Operator

Gill And our question next from comes JPMorgan. of Lisa

Lisa Gill

reimbursement think PCR start -- when like then talk Great. about test. that? a for that that about and And just secondly, as flu Or the we flu combination volumes? think Can about let how you test? just me COVID test will we count Adam, count of the will do combined with tests as a

Adam Schechter

Yes. Absolutely, Lisa.

to So we currently and test through also the flu, physicians. do able RSV are PCR

At an with LabCorp to do We to test. our able also our notably filed be Home Pixel and EUA it

and season, I doctor. think somebody go to the get that to send Their can that might test, if have test they doctor into as can a them has symptoms, so of flu it order a a go nice lot even we a not results. be they

going we've If rates, the you Medicare we as the we've $XXX done and combined be rate in about pandemic the as it's the the we've for past, gone at believe And test. as Medicare the through guide our look to emergency declaration. used

we'll Lisa, So With have I to through. we we to think regard continue record that do to how think that. that,

we're certainly flu gotten the sure we're we let not few so date, external decide, we season how it. very we'll the because talk make about environment really yet. and we've To in that you to As know thinking

been a real hasn't test. So there combined at need for the the moment

Lisa Gill

testing we do how guidance we for do vaccines how -- But giving about of you're point come do think I you or any vaccine? think have start have What's Adam, into about as quarter in fourth the XXXX? testing your when And market know XXXX. not we around for and view a to

Adam Schechter

Yes.

So in experience year I'm start next marketplace, U.S., have significant we of personal could Phase if I'll before year. of vaccines talking more thoughts all forward a but end my into probably in about part the of based certainty believe you're vaccinate And the it, be tells you to I the that effectiveness significant middle that data to without the helpful. But have And it they is lot early that's of we'll the that knowing III. by wrong. upon the that about year, on this next know facts. That's you various opinion, the going to vaccines move I'm only could can what my think you certain very I the a have population anybody number I give any about, of degree that say. are think

testing first they're year of testing. for least that next going the PCR think I So at through for continued need quarter to

vaccine broadly going to time disseminated the have and And through could like testing one, you the continue summertime, are: two of the to as the to need year. the look what for relatively be diminished. second need you're significantly will PCR go then questions it we think into you I know hopefully, the The we'll certain January. it we by have pricing part get the

are to winter, the to the going neutralizing vaccine antibody like helpful the know be know but have as And antibody thing go look we don't titer is have tests, will to to second be with we people that see after tests you is vaccine. January. that might authorization emergency they're that the going tests, the My be pricing don't to realize through wouldn't through there just the We then what why continue for sure. assumption

We what So our in for we're a analysis used helpful. test give help antibodies understand quantitative that announced tests. might suite to be try developing pharmaceuticals, we of last to you week the

lot we still to be to we there So wait that going probably, the to My months. can going be coming after T we're it still the to to in the assumption additional is be cells? a future do Is even have There's but help more data. to it will see antibody? tests vaccine? is learn Or going over

Operator

from Coldwell comes next And our question of Eric Baird.

Eric Coldwell

wanted to confirm these. things and maybe I just talk through a couple of

last and net First this that's COVID-XX I book-to-bills quarter off, coming from getting the clinical awards that to -- And I XX% to based on one-for-one your with which if of trials out you're X.XX also strip right tests bookings. segment, up infection quarter ballpark? with active Is here? around numbers the Am the think I in COVID disclosure in putting revenue, Covance of I'm testing the X.X. on

Glenn Eisenberg

back I Are impact you just a of the Eric, question. out the trying guess, to award...

Eric Coldwell

the how much down much the thanks. then much has everyone think, at CRO look -- The I impact, are the the COVID-XX yes, world side trials. of the coming big to to are the road. from the comps Trying And -- revenue, Yes. in how be is question, what awards I what how think going of

at the hate for central to labs. what legacy to trying to non-COVID and the also testing make do, been you that of but business that I'm would adjustment revenue in all this but additional done is have an I base the it's then bookings. because what we work you're know have I historically a X:X getting at putting core say on -- kind Covance to So look shifted over LCD, in

two I I'm everything out up X.X. if the quarters strip at with of and around think I book-to-bills look coming the for still base, last So

Glenn Eisenberg

that distinction, the -- is commented. and think you though, Adam I of when kind

early to We lot have, the that a have of of a our of business. come more side be lot in, on obviously, awards tending

a call what awards the will, vaccine the book-to-bill if coming for book-to-bill, overall. that's experiencing lower you the that non-COVID we're be, look So but testing, at when in it, from, call getting we've at you than would therapeutics it, been or

awards for other least out taking the way. anything, the if So of ratio book-to-bill it a could even at argue, lower have, you that we could somewhat move

for time awards, be tend the I that those longer the are more book-to-bill clinical to on businesses periods. seeing that think for trials late-stage

than a see might currently different we're what experiencing. You outcome

Eric Coldwell

a you the strip some inbound then what getting quarter, that. hoping core on margin we on was of the out was XX% color I'm around coming in with lend could if And Covance but on testing. lot something COVID-XX Okay. margin, up the I questions

Adam Schechter

Yes.

you give So me context. some let

One reduce that We had. the -- that in the the we of I of of reason back. these train. the the seeing had in to before size mentioned a thought people decline hard hard and Covance, did our find. number to the saw lot not is things business and And business coming we we're why when is are They're we people

same So I'd we to a a because But bit because the be have than at had. time, refine the margins the already bit the the for come didn't with we be that still people revenue back. so we're little typically are expenses would and rehire careful of to that kept worse we they seeing the people try margins

Glenn Eisenberg

that of PCR really I'd about you add was kind to organic talked revenue is thing only The that the the -- growth when we've that Yes. testing.

would we have So been otherwise. flat

revenue. the organically, positive, organic pandemic, it, flat flat So still in call a

excluding PCR minus, that flat be margins, margin standpoint, a our or as testing, plus relatively from the assume well. So would

it, from, also the kind it, Adam tailwind LaunchPad As the our the personnel but initiative. call side of of from we headwind have said,

get leverage would we additive talked acquisitions be well. some addition, In from the that as and -- currency conversion we about some

Eric Coldwell

is XH, to get I you Right. last year? flat trying flat, it, I'm last understand flat. am implying just guess, with trying And you're say what flat with flat what with to I by quarter, when a on sense

Glenn Eisenberg

the in The around, flat our call it, explaining we're up in margin. points in be basis XXX change where margins, would

overall to with Adam would flat I gave that. Assume margins and explanation be that's and for the testing relatively being the attributable both that that PCR

Eric Coldwell

Right.

around you XX%. XX.X% said So -- I did year. around last

correct? that's So

Glenn Eisenberg

relatively That's flat. Yes.

Operator

Hooker our KeyBanc. with And next comes Don question from

Donald Hooker

Great.

So love managed a an update hear on sort kind Would update. two kind lot but environment. topic, hit We've maybe of to a of care questions issues just On different for of me. an already movement know morning, maybe the -- relationship seeing I of updated a disruption other with at with that. to there's with of there? markets. Are lot standstills? thoughts of the those sort on the we love some your are We'd United, in hear this

Adam Schechter

Sure.

that year. where we'll with July the p.r.n. United. of a year that PLN, ourselves. and to those we because necessarily very worked. you continue with believe and unfortunately, running were we to while, -- something makes PLNs to shift have they if the shift though economic a in realizes lot more into care continuing Laboratory how that it's begun of in go p.r.n. the relationship put cost And don't advantage to of I And managed I United be to that to pleased this I -- want it year, able we ago. these time progress, to think up on into that which help them place. it that are talk even plans but or not, Preferred works of see this have this give is And we'll about it get we at business thought significant it strong lower think And forward we're since of So we as we a know were about worked future. it we more things. haven't of with has the sense as everybody a we the pandemic, optimistic types the to, PLN a update more it now again waited like entered waiting I'll laboratories to might to the an seen to to Network, p.r.n. And other they and they've and on amount Frankly, of if be we having be to work I see able see the is the we move high-quality,

So stay tuned.

Donald Hooker

Okay. And last one then one. Super. quick

kind question from done? crowding it You activity the I at of crowding kind at Or on COVID-XX guys -- Covance testing not doing the -- is the rest out of any that facilities. effect would of -- are putting Covance business? have Does last was COVID-XX out testing otherwise that the any work you on you driving the Covance? guess, there have the of Or is some

Adam Schechter

No.

using we As had XXX,XXX doing would I obviously if run that to But do we XXX,XXX could we to that we facility, before, We're opportunistically. needed the use said We're test. that do other day. tests. tests facility in other a things facilities

things One did on of run our and was the we multiple that platforms. good to go tests

we this laboratory, to basis. it time. on very samples we to sent send But a say, X time, across one, more more materials to to can our can to on United we samples platforms. of and can the use the have we're States this and that have less have one network And best network turnaround the same running So the let's that at kind a that routine we will different laboratories do

ability flex have need where we the flex. So we to to

Operator

And our from next question Tanquilut comes Brian at Jefferies.

Brian Tanquilut

flipping follow-up you quick How ex it the during once margin are the to Eric's very COVID I business. core a thinking Just to mean, margins about opportunity? obviously, the question, out strong Diagnostics you quarter. sustainability

you forward. going So margins trying to just figure out think could core what be

Glenn Eisenberg

even a COVID the Yes. Diagnostics. pointed of, in the margin you Brian, improvement, the big We testing as COVID kind leverage in was opposite testing. This out, driver little Drug well, Development business bit, the I guess, excluding the similar. did on actually Obviously, side.

for have. As we business Adam said, we the the that have personnel

the of bit business. the growth more a little because So significant of have we headwind on in a Diagnostics

We continue as we're to personnel add going.

So standpoint, leverage. really we we from a -- personnel

PAMA were held LaunchPad negative in margins underlying well, very we came Diagnostics. with business impact the the call strong. in -- quarter, despite with savings the So it, up even the had under, the of But base strong the really margins

Operator

from Wolfe Baxter of question next our Research. Stephen comes And

Stephen Baxter

reimbursement. PCR you ask about to wanted I

provide precise you around revenue helpful testing COVID. the very it's figures and So

for was to hoping look disclosures, your was QX. what you that was When something average compares thank a like your mid- mid-XXs little I talk QX, QX more reimbursement high-XXs. the in in and So for that. how to about whereas QX, something backing backing I I'm at saw you bit I into what you into for PCR could in

your So just just to ability PCR there wondering as an managed true-up reimbursement in of more care. in on we be would if was maybe QX. anything related that you extension in thinking how to be And about confidence there collect should got

Adam Schechter

Sure. Yes.

as our as So this to the mid-XXs was rate, that's three It And consistent. same before, been Medicare XXs is in second about the and our principle mentioned which with that $XXX. the people principles, charge in reimbursement I quarter. was is upper last quarter the we

continue I As reimbursement to declaration. think through emergency we have first which of emergency the on or reimbursement. without The they January, they question is believe do, will think declaration? of pricing continue they will I continue be, the the believe pressure continue will If emergency we'll have declaration, don't, next I if in good that year, to or the like the month be we'll something I XXnd

days X other that with The The Medicare average if that is still reimbursing two per is news your at and about the time. we're only for now patient, good days $XXX did but is for brings before a time you two the thing to two day And is turnaround be see month you days. test. have turnaround

But feel fall increase, that. season numbers we So the go that extraordinarily as closely. continue we watch pretty we'll comfortable we with and see through

Stephen Baxter

follow-up. related And somewhat it. just Got X

the on at on numbers pricing a going the Just there's Obviously, payer with mix. ton moment.

like what potentially of terms or debt any wondering if mix and around increases payer assumptions bad shift you're update you an like? seeing give could on Just accruals us in in

Adam Schechter

past. seeing significant the not consistent change payer It's really We're in mix. any pretty been as Yes. it's in

Glenn Eisenberg

Yes.

bad accruals. debt I the on end think that's

Stephen Baxter

you're trends economic in concerning the across country. Wondering bad debt. obviously, any Yes, if increase seeing

Glenn Eisenberg

want just standpoint, obviously, Yes. quarter, make bad in the right. debt I sure you From reserved $XX million. know, question, a as the Yes, Good. we to I first understood

in that there's reserves obviously question impacting bad have financial We we debt, that increase that little adequate an the forward. the We that very established feel for the is we've in is feel relative strain pickup no have rate are to of for our we some expectations that that going a we've debt, accrue bit we the but seen seen the a given adequate, just clients. but our of bad

Operator

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

Rivka Goldwasser

you with to with conversations testing anticipate response you sort role the think the use any So that? available. downplayed based vaccine the any Adam, of biopharma testing -- guidelines think earlier in a question, do Do of I you conjunction around serology historical you in is once a just having COVID vaccine? context around company of are on And

Adam Schechter

analysis, Yes, serology quantitative to the to absolutely, antibodies, antibodies, that total science cell it Is we antibodies. Ricky. us. it T have And just I testing don't still outside is neutralizing believe is involvement yet the future. I important going of think tell the be in

say you'll going more year, needs Or of it be years? it's my lot of titers to be it If So an that types If need done. things. every annual every meant there's measured a it going is than really was to to science to those and is, is vaccine? more couple that comment be only

leaders science pharma So and and with with there major conversations other think I in will conversations all area. We're the say, this speed in not role. be companies, with conversations, a most if I'd operation many more thought

is you So has can there of ready to to we we're historically tell measure work. we're something, there ways series if can tell do as going the is to be going been, building I to which whole vaccines. everything one for can't you, which impact But potential of a it. I

Rivka Goldwasser

Okay.

and to going to So be? some know PCR? So half your to we're you are at don't if the of of point, right, Are there's just test to into to the is point, this going we questions think going of second that's just we in kind of sort one getting because 'XX like drivers, the clarify, post-PCR? which what of be 'XX it's replace testing

Adam Schechter

short-term is ability I at that's then Ricky, look there's impact And look is testing some some. underlying want But of almost to like there a to what business. the of be I So opportunity gone, to going what type once will to time. think grow. PCR be our I a period to the would you're as that say going But at in

to that trial number you're you're the XXX trials, starting into says now. testing. is having I to trials. So which a company. looking based business done XXX to What we very that see what approximately see Development we're or COVID I the mentioned to matters, power than which X We combined of won mentioned total we've Drug with the oncology translating starting for the is we're that that with proof that major more have COVID show significant And the of Diagnostics you going changing. start is really see core pharma to on our what

and it So with forth. depends mean, yes, think to years. you that what how it I know. continue the on I as it often to we is we're things testing, where future underlying time, growth into do showing But be see we'll don't going do with and and that our will work what go COVID importantly, out business Whether there is, be do vaccines some you'll completely offsets PCR I testing so over so with forth.

Rivka Goldwasser

filtering pandemic impact? of systems on So focus the health payers this think already with the beyond you increased then the and seeing into if role that, clearly critical Are you testing. about discussions COVID

Adam Schechter

things. the be how have out you future. Development. have and that the hearing with the how think to COVID to resistance treatment antibiotic people going importance that could importance figure treat about of to and other I occurring going think upon to testing other bugs a talk and And new in of I people there based Drug are we're detect already for to testing And combined of recognition be

this that removed of not of be as strongly PAMA. we do understand that and we reason starved I'm diagnostic were prepared so pandemic because the one old entirely think is I testing testing. impact year. and of greatest of advocating for reimbursement. the it have example, were using But for to There's think for as to antiquated underestimated for of diagnostic testing. payers next world continue chains, now the we a fair latest for the that us that different dual to capacity, years, of the part have I us importance should of supply diagnostic needed So we believe is that no us to need for view going business. And has for because have excess machines I that to importance the things very be They the the to PAMA State be to innovations, laboratories, and for have people need government were removal to

Operator

next from William Matt with our comes And Larew Blair. question

Matthew Larew

Adam, October despite second the a further improvement base you in sequential record recent and despite the case referenced QX, business improvement in QX weeks. wave here in to then consent

just And that. seeing. has as then about comment trends of available seeing where just maybe at actually places So on PPE for what are improvements Is when curious Are this in kind being demand point? growth as geographies underlying already offices the Curious occurred. it perhaps key peak you're there simple open? year-over-year a some you're

Adam Schechter

saw What now open pretty getting of procedures down months-over-months. while And hospitals telemedicine, seen them able Yes. routine a have have sequential have enough surgeries PPE, outbreak, enough Matt, it was a significant were shut and PPE. for to offices even is they didn't procedures we've overwhelmed frankly. significant almost have people that get so saw over capabilities When routine continue have it the back the stay physician's hospitals forth. And now didn't seen forth. And and or the telemedicine ventilators. therefore, We've to and move to all seen and we so They to offices in that to the took have areas to or improvement we hard March, keep physicians country so in some do we routine people that to care. down. many shut offices are still physicians

sneezing wait I to I'm physicians' have The again, once don't a So you'll of saw a is of know caveat routine offices if say, going continue what, major unless my COVID, or may again coughing it's people flu significant it's really season care and you see you and you care. only I get know and the are if think improvement. path I to system sequential the think that people flu health to shutdown

degree, will hesitant is So to we to some on happen hard to think that's I'm because depend months season what a opinion, really, in say my hit. the why I coming in it flu how going

Matthew Larew

preference of Obviously, Okay. your what whether up that understanding and maybe on hearing just And point or very regarding team about combinations will asymptomatic symptomatic you I physicians the Obviously, patients? appreciate modalities both or then combination medical here, season. from are the be for that. own just it's test, actually following there's maybe it's a but variety early curious versus what raised flu that available. your flu you're now test for preferred

Adam Schechter

Yes.

based geography, question seeing other answer thing, consistent to geography So growth. We're your not really upon we're by difference first pretty a about significant seeing outbreaks.

to do have so the the But major With to using if to using think some don't forth. COVID alone, demand somebody and are they've point-of-care I tests any somebody continue regard a do other tests, asymptomatic with test there's in the think see multiple has the by test, disease. more don't exposed doesn't you for in that been geographies are in contact to if for they'll reason symptoms. person laboratories they've us. general, difference if I been or geography Some I patients, think

of And may we'll COVID. I tested may And if care it say, think you have a they go flu it's doesn't point-of-care okay, if a if for yourself. resolve office, doctor's positive, in take do test. somebody themselves presents they itself, home,

what, I COVID let's be just to you for positive for test think in you going some a just they flu flu say, even test, know certain. situations, anyway, are and to

sometimes you say of add negative test point-of-care then have for they be have let's know I they flu you will certainly the is, you And the because think a get they're a with on it a COVID just if there. test to going and If flu easier to test care, on you test add question point flu test may negatives symptoms. false

So we're as preparing those all scenarios go different forward. we of for

could be RSV. combination think still a be of I will majority but flu are that symptomatic particularly for number, alone, patients and/or that tests there significant the for COVID in

Operator

And of Fargo. Leonard Wells our next question Dan comes from

Daniel Leonard

entrants new there and characterize in time up market? seems spinning new how first labs any So off, would this as of maintain that it you molecular underway testing you share COVID efforts are have the all to your

Adam Schechter

so with start first our Yes. laboratories. you Dan, if look at share, I'll ACLA off

could growing the though, seen you're have So point-of-care is out can with tests we and get a more asking, go know we tests question to sense there, date, And future our number with is, of ACLA slightly if What we bring? laboratories, what share labs. impact. The additional you quarter-over-quarter. I reports local would what haven't say tests. very a significant of are, strong in a I ACLA calculate it's fact, very total I of number actual the our share so

frankly. many as it I this as tests country can get, think needs

point-of-care for a there think tests. I need is

think I tests helpful. antigen for are surveillance, available having

you PCR And cases, to you hospitals then positive surveillance. in think do want I test. and have homes, do if faster tests actually you nursing

a scenario So role people works in still the we think you the in a what time. vaccine, first tests so only is vaccine over have of vaccine, of look little place. it a that of and Well, don't role XX% XX% is asked a have work me, question and does for once lot people other I there's if the would doesn't where was X all because get XX% it's like? to there's of actually get in And types that a in that's To answer the testing PCR what different really the before, difficult the what marketplace. there's of people testing want in that the XX% that of which

have more we that still So scenario. to for learn

Daniel Leonard

if in then, your I that combo LabCorp the test how opposed higher But appreciate for stand-alone. you to that around COVID Adam, demand for to test uncertainty characterize you'd would capacity as And for at there's my that. meet appreciate came the on market the test follow-up, anticipate, the demand I than combo demand?

Adam Schechter

discussions. a think, need. up to capacity, for ongoing you, XXX,XXX last bit talk we And we're Dan, that week not can tell I When reagents might that the Yes. I at continuing we're with I gearing have the team, a necessarily it's about meeting are and tests it was as many different, the machinery.

So have need as be if to those many do should that as able do to. we we to we long as reagents as tests,

can continue we -- to capacity go enough we're and we're get So have need reagents going the then to to. we'll to either trying way that build if we

Operator

Citi. next from comes Ralph of And Giacobbe our question

Ralph Giacobbe

you to back and COVID increasing comment session. consequence is COVID physicians go of to of a uplift there wanted Do test your I you ordering of that panels that's of Glenn, even on Great. where you sustainability continued more of sort where there? are do get a per kind think outside think

Glenn Eisenberg

fair haven't Yes, Ralph, routine especially as it, pent-up call for people the speculative, but a testing. demand been there's of is going been amount probably the feeling

you now they're will, is, more catch-up, call if that if session back, you coming as so a doing tests, they're And it, will. per

couple that, assumption The start to to for seen down, be that see. couple have seen we probably over the It but but come levels seen be, wait quarters, back we've we'll not least favorable quarters. price/mix We've to that this obviously, would the us, and quarter. positive still of the at a So it it. in have would of for picked up last

Ralph Giacobbe

Got it.

And Makes quickly on just -- could then if the Okay. help you sense. on of mix COVID. volume

but coming split out volume then First the between, if of be versus And kind terms if providers. it's would the it from. if commercial don't understand have of could across versus of up versus universities employers to health where just you between COVID. that helpful from also versus where essentially volumes drive I sites breakout, Medicaid versus mix know in help could you you come Medicare

Adam Schechter

Yes.

majority but all the the we from the talking with The let the start we question of centers, tests are that me So some physician about in first. We I'm that We of that second in from care care tests coming people urgent the but those do, still types not do and some, hospitals the vast employers. marketplace, majority ones still, from in centers, offices, patients. the physician obviously, urgent are is treating those do for from vast do offices places.

We our It's well. see Pixel doing to of continue to X% volume. XX% about

than look primarily of at it's the overall of breakout, expect And our lot be too and in tests urgent of we you portion continue that some to would you it's And that but of a and reimbursement terms at expect from our physicians. of then just a not is employers, be cares breakout to good if what coming will people mix. ordering is that different with home the because business

Adam Schechter

joining way will suppliers, to LabCorp Have long-term we're of we same our strategy. remains I as you with the with mission lead want commitment can I partner other today. our thank improving is going appreciate time, it's commitment strategy this at share our continue never at you science. the So organizations customers, to our can our time, that for Hopefully, consistent unwavering to our everybody for important your We health been believe through more a who than to growth, today. importantly, the right day. time our to continue same And more see lives. now tell great leading continue on to team and apparent which our crisis. execute us And that improving or I

Laboratory Corporation of America (LH) 27 Oct 202020 Q3 Earnings call transcript