LH - Earnings call transcript Q4 2021 | Laboratory Corporation of America Holdings

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Operator

Good day, and welcome to Labcorp's Q4 2021 Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation there’ll be a question-and-answer session. [Operator Instructions] As a reminder, this call is being recorded. I would now like to turn the call over to Chas Cook, Vice President, Investor Relations.

begin. may You

Chas Cook

Good XXXX operator. welcome Labcorp’s to Thank Call. morning, Quarter Conference Fourth you, and

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

are Form XX-K the company's quarterly information included the SEC. recent opportunities business subsequent savings strategies, is report various These market longer-term in and on which making COVID-XX company's forward-looking the future pandemic XXXX responses related the pandemic, growth. and and for including of each, and/or to More control. synergies Each forward-looking include, are are with general cash on to, the to factors but estimated on most our condition, with the assumptions limited to beyond we expected forward-looking and our the factors, as and change are and outlook statements well business, Form of our economic various many statements and subject financial not Additionally, respect the the future and reports statements the financial filings other in COVID-XX XX-Q of flows based guidance results, conditions, as statements. of impact upon annual operating

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

turn to the call Adam. I'll over Now

Adam Schechter

harnessing the a and for Thank effectively strategy, against our power doing our on we're strong In execute you by be and respond to technology improve improve mission Labcorp health to stakeholders you, science, like global the everyone. Good with deliver to innovation. morning, to to is lives Chas. challenges so, pleasure to and It's today. carrying able of pandemic. results

rounded company cash In that the strong totaled million. fourth flow further $X.X quarter, $XXX success sets and for stage with XXXX XXXX quarter an another in was Our $X.XX, the per reached earnings billion, historic free and out beyond. revenue share adjusted

flow For the revenue full $XX.X reached billion. $XX.XX, billion, year, EPS cash and adjusted was totaled free $X.X

Base and its Business Diagnostics respectively. In quarter, growth. progress Diagnostics, volume Development Our ended continued increased as and their Drug esoteric X.X%, the Base Business with Drug growing year-over-year and revenue during procedures organic X.X% continued Development routine trial net clinical representing trailing billion, with year decentralized XX-month a the backlog a third up awards strong year. in over XX% book-to-bill quarter. were a the the prior Also of $XXX X.XX and solid increase million $XX of

pandemic. the to Moving

Our example an remains can how of innovation success. ongoing response drive

two significant the has nearly of to spread the stemming For Labcorp resources years, virus. dedicated

that We variants and we've our rates make work though Omicron like are the made far, clear of not and thus surges of it the proud infection is over. progress rise

We the In testing than therapy and volumes were fourth vaccine quarter, capabilities and testing continue variants leverage greater access, to advance new comprehensive expand identify Labcorp's monitor development. to to COVID and to anticipated.

test COVID This performed volume Year, million latest heightened X.X for in December significantly have New less Time January. the the for than two days in to although continued which tests one were during We results PCR XX approximately the on over or of to to-date, is into COVID average remained surge. million now demand quarter. even fourth

to levels high are spikes we quickly needs. to pandemic, the testing throughout done we've and capacity respond As keeping

elevated chain. We equipment, our and levels in continuing staffing are to supply invest

at-home patient or and for tissue-based the followed additional significant has PCR combined and opportunities. company's growth patients COVID existing clinical collection few tumor year, Through fourth our we and Oncology a at position where significant hospitals sponsors COVID access on portfolio we commitment additional solutions, capabilities. kit. accessible. which introduced quarter, through drug access. of enable targeted best innovative to a profiling At In a the the remain quarter Enterprise These novel and at of centralized These we of PGDx-kitted business fortifying flu enterprise oncology PGDx. find our cancer and offerings also are testing strong reflective agreement acquire And globally our we Genomic COVID-related pharmaceutical now addition, to same in laboratories. I'll included to patients. profiling right diagnostic improve we Genome offerings can key oncologists the a our work of of in our to sense including COVID the testing turn is our announced we Use announced one our unit, strategy, the make start give X,XXX oncology, to our to we innovations are service liquid products, company expanding to our trial highlights support self-collection therapy FDA time, we of Oncology Personal Diagnostics, biopsy Last boosters, treated or therapies. offering. formed rollout will or prepared XXXX. profiling help provide momentum. where and to our faster, solutions and may us our by work care centers. December, at The you identifying provide for of to complement patients. treatment easier Emergency observed made the tumor The of expand we as for our a the tumors over leader made vaccines, staffed In Authorization I'll for more development strides the the In forward receipt that for in to progress

residual only test OmniSeq and our pan-cancer tumors. the INSIGHT, included We of and expect the with test first Other to blood people for quarter monitoring clonoSEQ, tissue-based the cancer; oncology transaction menu a close late-stage solid first year. exciting for test sequencing in this expansions of FDA-cleared

treatments decisions focus data their XXXX, help our experience market physicians intensified about All new to and upgrades visits center offerings throughout embedded more results. service centers. we the our our In patient a to service make and and to scheduling This customer for of technology these in easier on These cancer. for medicines to journey can access patients business. appointment informed help bring included creating focused improvements seamless from to

Health source Our as well information Ovia an our testing specialty as which diagnostics, and trials. women's position as genetic health, acquisition of of through for we expertise support enhanced important clinical

family Health's support. that to and provides opportunities parenting innovative platform planning, Ovia pregnancy identify to continue will We enhance

its Test, directly more pursued the Vectra the Pacific a is that Health, Labcorp stay are It's just offers and people one announced Ascension, LabCorp. to of detailed Assistant. tuck-in diagnostic assets Yesterday, began laboratories point long-term in systems We Singapore, we XX health Belgium and to we launch in million. inform opportunities view agreement states, Myriad we wide including laboratory manage in month, which services and new purchase have the arthritis. integrated with trusted Labcorp people its variety healthy. which biomarkers OnDemand, And line rheumatoid announced we the care of We convenient to comprehensive in to suite in builds we options a history with an the which tool and that potential. on of with throughout Ascension, Labcorp to Additionally, PGDx offering strengthens Ovia will region. where United in patient's spring. new Through of deploy they health Autoimmune’s numerous tests This and strategic long-term will we opened automated our the States. and $XXX access production by approximately the We strategic business an for Diagnostics the opened delivers along way outreach easy fourth of to for decisions. acquisitions, a Pixel meeting clinical insights high-growth kit tests. and measure did in another of quarter, And a year success deals lab services relationship laboratory select This this of our of OmniSeq, analyzes hospital-based Asia bioanalytical largest the

revenues the asset acquisition. first combined business lab the to annualized from million and between $XXX expect hospital $XXX and be million year We

segment our ability similar and expected capital and notable to one industry-wide is builds our and record expands clinical are help While of be in they systems initially, and us shifts. to deals on our with year be each health the country, for relationships. opportunity two. transaction is should in margins operating of a across than are of of deal the kind This one states it track sector. cash building its underscores less the margins accretive earnings its services in also It Ascension expected expected cost The year by The to several strong to year. most manage improve flow our to significant return

part we explore access. new welcoming We opportunities to the oncology look that As enhance and this of ultimately patient clinical to collaboration, partnership forward trial colleagues new and to will Labcorp.

and agreements Minnesota-based including Health. systems, also reached We hospitals with hospital Memorial other North

the months. be We XXXX, excited provided and meaningful in we and highest-quality pipeline people. we expect service customers more continue in the activity made to to patients, our and investments In coming about robust our M&A

And of recently for place Human has Labcorp named fifth our place as America's value We the XXXX the Responsible work employees. and We year, work for Rights the Magazine's impact Newsweek. on Companies. one Campaign also for the list of designated for recognized of LGBTQ+ World's Most fact, Admired Labcorp we for best Equality. by consistently to In were the Fortune again Companies been our consecutive named the Foundation were Most

with reviewed Board in the of capital and thoroughly management Importantly, our outside advisors, structure allocation. and worked Directors XXXX,

repurchased structure, of as company's the time. our billion to fully divestitures, being well Labcorp as a that as of businesses extensive those stakeholders them partners. Board to interest an second of existing spinning is billion and spinning enhance concluded unanimously the further end, of off the at on said, of all shareholder with structure $X the strategic including are the actions Board review well wide believe XXXX we marketplace. considered The part options, we share as continue That which discussions value. businesses initiation comprehensive parties, in As that $X.X this quarter valued a the are program, merging range in To designed and had that accelerated third basis. of dividend shares the several significant of repurchase is Among starting best announced not we a in with acquisitions,

guidance, implementing with We outlook. first additional And to a savings giving enhanced today, also quarter addition process initiative provide the next also longer-term in will are beginning new in business XXXX And that million over will improvement through results, targets disclosures. share $XXX insights business we three LaunchPad years. a we

innovation science, in new investments through growth technology. profitable to and committed are we forward, Moving

XXXX will stakeholders. our year on As us all and what progress accomplished for our strategic proud longer-term great that will XXXX, shareholder priorities team and Glenn to execute we with all our with you XXXX, take the into am in all our sets gives deliver In for to our growth-oriented in Board Base I up guidance. avenues along Business for which future to continue enhancing I performance, strong of evaluate value. us in confidence together continue outlook, formidable as this strategy, management This excited am Labcorp bright success. conclusion, our long-term for through, coupled at of and against we the come

it to Now Glenn. over turn I'll

Glenn Eisenberg

by the organic revenue Operating and XX.X% of business. driven in our was translation company's going offset in X% XXXX. of last for year The million, by by XX% segment, favorable was declines XXXX divestitures longer-term I'm year, followed partially testing, our then Adam. of organic our X.X% COVID foreign to of $X.X a by in of fourth XX full was X.X%, quarter with revenue offset for decrease $XXX X.X% base compared you, review organic a increase revenue. of and basis to of guidance partially my due acquisitions quarter quarter discussion income Revenue to the performance results, points. XX.X% a with currency or conclude each decrease XX.X% Thank comments the a decline our billion, in through and a start outlook of in

restructuring of During the items. $XX and had quarter, $XX of special million we million amortization and charges

COVID adjusted of the these adjusted XX.X% billion income testing. operating margin and to The XX.X% items, year. to was $X.X in a compared $XXX decrease or was or in Excluding in million due income last revenue operating reduction quarter

to was The Excluding compared the charges, compared XX.X%. to last The the and tax COVID experienced adjusted to costs. income last XX.X% operating Business excluding for year. quarter rate partially offset amortization, by was items year rate, testing, the higher organic and margins Base personnel restructuring LaunchPad Business and adjusted XX.X% growth savings, due special higher Base tax

quarter tax be items, to $XXX were impact compared cash the flow year ago. totaled to last $XXX to year. to diluted from million was a flow The $XXX amortization, for Capital the as approximately million the we decrease quarter, Adjusted favorable XX%, reform. million cash operating by special in offset compared And in due in exclude free year. quarter million quarter $XX.XX capital. last a earnings $XXX was $XX down rate earnings, Net adjusted the to was continue $X.XX lower $XXX compared expenditures cash forward, per partially potential working $XXX million million EPS, year. million any expect cash result, $X.XX which Going flow or restructuring the and excluding last in share. from to Operating tax charges were

used our on accelerated During repurchase and flow the million cash acquisitions. quarter, our program for of $XXX we $X share invested billion

was savings its X.X% the which operating of base our adjusted testing of performance, X%, from organic last to revenue and testing, to acquisitions by partially recovery volume, to offset Business year volume was growth. $X.X decline X.X% of and average of a due revenue growth quarter revenue basis our in in X.X%, for LaunchPad and of income were due the of of initiative. compared Business points. Now a quarter Base decrease a Diagnostics personnel Base being approximately versus from decline of increase increase of to year Base beginning organic of of million to in currency X.X% lower partially net or partially offset by down COVID compound company the due reduction a due $X.X COVID price. The billion, savings, as partially quarter a operating X.X% a revenue volume growth with was margins Base testing, million or primarily to Diagnostics. Price/mix compared by business in partially to year, the margins its from year Relative carries with I'll offset Base X% XX.X%, and testing deliver last primarily organic volume decrease Base from decreased higher foreign COVID due of the last requisition price/mix. decline $XXX X.X% approximately organic Business Total continued higher was year the acquisitions Business. organic to maintain X.X%. was achieved translation XXXX, lower partially partially business, compared to adjusted organic compared offset for the XX.X% review Revenue in to last XX.X% rate to to XX.X% segment to last X.X%. fourth to by costs. X.X% coming to by was in a compared XX.X% was favorable decreased due down acquisition by Business by its price/mix Business decreased testing. due annual X.X% goal COVID organic the a currency to The Diagnostics COVID growth offset $XXX reduction revenue year, XX offset X.X% a by LaunchPad of year. primarily billion Base due compared Diagnostics Business. decrease three-year last X.X% X.X%, while in due and lower to Canadian margin income for volume XX.X% offset to The decline decrease XX% The last were capacity. the volume was

by to partially business of offset by annual rate compared X% X.X% performed growth of X.X%, of performance revenue fourth centralized X.X%, Development. compound $X.X was for organic lower and billion, the COVID to Business testing for higher in income Relative divestitures its income through X.X%. due Now quarter increase decrease million, of The revenue the growth In costs last XXXX, as growth quarter due savings. was growth. operating Base capabilities year acquisitions X.X% XX.X% of $XXX million, lower Business, $XXX Adjusted operating of or business were an for organic year. to base adjusted oncology other compared and segment Revenue I'll primarily the of organic investments and COVID the LaunchPad and in margin or personnel primarily testing. to review was Drug Base XX.X% and the the as to last driven partially offset inflationary well by of was

Development the bonus which in enterprise million We component is $XX reflected the Drug of corporate continue for and exclude unallocated quarter. expense, totaled to

and continue full the compared down in they XXXX, we in the were year up to XXXX. increase quarter, expect While margins to were margins to for

trailing increase the strong net of the book-to-bill X.XX, at revenue $X.X an at billion and quarter expect $XX of convert orders the next compared was months, year. respectively. billion, $X XX we to months. backlog net X.X% XX this into the and of last Backlog remained over For to end billion And approximately

rates which full Now foreign December effective I'll the of as guidance, XXXX, our discuss exchange for XXXX assumes XX, year.

addition, second we to which we repurchases the also guidance and to acquisitions, we due allocation, softness targeted from expect quarter. rebound will Omicron, flow quarter. with currently free rest will guidance share the In experienced cash dividends, impact the January anticipated in enterprise capital through of initiate includes the which in The the the includes

the XXXX. COVID decline Base We XX%, to enterprise the expect is to X.X% XX%. Business X.X% that This expected to to guidance will decline revenue while compared to includes X.X% XX% range expectation to grow testing

organic and midpoint to expected both includes the X.X%, XXXX. Base would grow to guidance the annual growth Base revenue COVID expectation by XX% to We is volume in will Business to compound expect that guidance price range Diagnostics mix. the decline XX.X% primarily X.X% to be rate compared This revenue to XX.X% growth testing compared decline to XXXX range, XX%. our At Business driven of the X%.

to Drug the XX% from impact X% points. expectation This This expect currency We Business includes will to the Base revenue X.X% grow to compared foreign translation XXXX. negative Development guidance to compared to the also guidance includes XX that basis range grow X.X% XXXX. of

Given the will in central amount testing Development we lab business be capacity we've of performed no that Drug Diagnostics, assumed in have XXXX. within COVID

annual to continued benefit guidance growth At the growth helping three We XX.X%. our segment. drive rate improvement Base of the compared the in to businesses, Business from expect be in all compound broad-based margin midpoint XXXX would range,

guidance $XX.XX. The $X.X XXXX compared XXXX. lower adjusted guidance billion expected EPS compared of $XX.XX of continues in adjusted to the in to between grow. adjusted be Our testing is Base billion to while profitably $X.X EPS COVID Business flow $XX.XX to $X.X to is EPS Free cash reflects and expectation the XXXX, billion

outlook, our which reflects the view I'll Now XXXX. current from of discuss XXXX to longer-term business our

enterprise XXXX. revenue of Business Base compound growth expect X% to grow to to X% We organic a at compared rate annual

We acquisitions revenue additional to expect growth X% represent also growth from X%. to annual of

to outlook XXXX, historical Business lower growth impact our Base expect higher compared at driven incremental broad-based Business than revenue systems, in is health grow a Base to in CAGR organic to of relative XXXX. We the growth, recovery to continued period. outlook hospitals Diagnostics a This by the X.X% PAMA and X.X% and including

inorganic XX% businesses. last our XXXX. have outlook to Development faster-growing is Drug few we years grow late-stage to growth, the Business higher This development expect to than added and investments X% historical organic Base We capacity clinical a and early in in our revenue CAGR compared at and

finally, profitable average time part period is EPS XX.X%. inflationary This to we to the in deliver expect period to XX% expansion which margin $XX.XX. to adjusted growth, expansion outlook compared expected to savings margin was on And - EPS continue LaunchPad approximately is basis help we due CAGR points XXXX, to of grow expect XX% $XXX company's through XX of the to of which XX emphasize million we the XXXX to costs. cost adjusted an to at annually offset enterprise compared As initiative, over XXXX

expectation as continue profitably of both that EPS for reflects power the the base COVID will The the organically. grow comparison better use company, to earnings base outlook testing. year to excluding XXXX to earnings businesses We continue the reflect growth adjusted

to repurchases and X allocation our In from capital addition, times. benefit towards acquisitions within accretive we of leverage expect X.X directed while to keeping debt targeted share gross

to of in We our purposes, also growing role year company included Investor of quarter comparison had additional pandemic Relations In view performing the Business. outlook. our remain a we've longer-term a while the deck full another For results, also our XXXX performance. fourth strong critical the website and on summary, focused and global response XXXX Base quarter on supplemental guidance in

profitable are year. the For expected Base in volumes testing while XXXX, Business, drive our to growth continued we expect to decline COVID through

In growth, Operator, addition, double-digit deliver longer-term by our margin allocation. outlook driven questions. growth expected line and capital top EPS now is to take improvement adjusted we'll

Operator

Nephron question [Operator first Research. Instructions] Jack Our comes from with Meehan

open. is line Your

Jack Meehan

to Wanted about long-term ask and start the outlook.

to versus and XX% XXXX? the is And of benefit return CAGR ongoing you're about assuming in talk terms related adjusted of your beyond also you in the what maybe COVID assumption pricing EPS can XX% what to XXXX? XXXX, So just diagnostics in PAMA any

Adam Schechter

couple of Jack. Yes. morning, a Yes, things. Good

assuming $XXX think So half for with first XXXX, that to start for There obviously in you pricing, year. be ACLA, future. PAMA the about of we're rational to to be of organization, diagnostics XXXX, we're way look that. the it'd trade going our this base no if in million is case, is through Working fight I'll at continue PAMA which a impact PAMA. of And But in there'd more about about impact. all,

of what So for PAMA. we're that's thinking kind

where might go a you OnDemand, type we're at and build see as things to pricing, different if I of like that. you pricing don't I going have there's we a areas. forth. pricing don't to increase directly would to think acceleration plan other looking certain the lot consumers see into any pricing of for in But not terms to We're easy. of other also Labcorp decline. way try so That's In any

is being think performance. Base base continue see less we'll And frame, the PAMA in would can So hopefully, as strong business see I pricing the is and XXXX general, to underlying where time the what we Business to have into in the you strong pressure that about commitment a the that overall we continuing, go pressure Diagnostics.

built about it's think out. turns about have COVID, it about our we any, to continue is in But the we'll into XXXX get geographies see and you to that if where to If you we're in, all really as ability frankly, Business, beyond, grow much how our start Base don't strong.

You about with our Ascension. of deal deals. types heard It's about doing today of those more

think we continue more pricing to So bright for segment itself. is through Diagnostics the the geographic through future it's be our in not continued that but expansion, ability grow, and deals It's very will and pricing, and to growth hospital there pressure.

Glenn Eisenberg

Yes, supplemented Jack, we obviously of do capital the expect across or good businesses. when over provided coming businesses, growth look margin top see time from from that but margin that improvement improvement the thing the by the to acquisitions you you line see for what just outlook to both at net obviously I'd only add allocation, and is this period longer-term, we guidance discussion was the the that

beyond some helping really point, of at sheet potentially costs your PAMA, as flow. And our free XXXX the utilizing to inflationary that that's cash in, So and our it, and offset then least it's as also that. balance call well

within to be period that back times we time. our So three targeted X.X expect over of leverage to that times of

to capital returning repurchase be acquisitions to and our again, dividends, with share targeted through going flow cash to back that, will at then X% the that X% and support using then remainder least program. So obviously,

Jack Meehan

was Was follow-up, might have some be just for weighed of your can I industry talk looking at that focus much And just deal. it had some then that Ascension other more Ascension because this. what lot you the toward pipeline brought lab as on I there's ask hoping color in pertains labor. wanted how challenges some the up about a the might the finally, to I how at to been together, into of you And the this. then things as of And curious stack moment? versus Great. long working you on been a

Adam Schechter

been in term, them good in long with very some to them. they're of so, been partnership Yes, the at types strategic had that for discussion really team we've are And frankly. the to quite work We've a It's a time, these with Ascension. nature. deals pleasure talking

So it takes time.

to they the tend and same have come are sure before that get the that's to types fruition. you to know that have of make culture, other. And organizations take cultures each You a deals a fit, what the to while these

So again, now. and what more that discussions. not colleagues that would serious the to, many partners for would very could that fit, that they're about and over time quite about near deal. ensure work into to large good to a even pipeline. realize there Typically, talking our say on get I once we've together as it's good some been this. have time is when well, partnership hospital systems that the over cultural we focus we large And we of a the patient get the need, Labcorp and they that This move new the they they a needs that experience, the that care that's continue physicians they to the that we and talking services as the as are feel is one want, ensuring But or ensure get more the - patients test to that and we're to there's to hospitals able began

Operator

Instructions] [Operator Rice Suisse. next Our from question with A.J. Credit comes

Your open. line is

A.J. Rice

of have on testing assumed around giving, pretty almost assumptions and much any it think, you've about high-end. just course that. the pricing at some the already I now at Obviously, And change seen fourth what over high-end ask progresses us quarter assumptions the COVID additional surges, Does you're I'll in $XXX you're flu? you in cold at relevant - and some Just year? the where with the And the low-end, $X.X the so PAG the equates cough, the Maybe the low-end billion to Is assume range quarter? versus for give flavor about million first in all? how XXXX. the

Adam Schechter

Good Sure. morning, A.J.

So I'll give about sense give you how you we think and I'll of a some it. context,

those of about for for did date, to date and million tests we XX in X.X million the So X.X fourth quarter. COVID - million,

in gives that XX,XXX fourth tests quarter. day you per about So the

you you in last significantly than of end look of at fourth than the actually higher XX,XXX. the December. end saw January, quarter year, we If beginning more at of of the actually And saw average the the

in of we fourth back a throughout at average we If are closer peak look we where saw the first in the of in to weeks actually December So where back quarter. and we right now, real in were we're January. most couple the

you testing. and ways XX% a be seen a COVID another So because range. that you increase you've the would We within in never know already could saw therefore, summer. there's multitude the is And decline when a also reason gave something to we another summer, minus to of saw XX% The in there's happen be that that significant range Last variant, One volume. minus happen. and anything would year, expected we in I of in wintertime. in we have surge to the have don't

is year, not that that would it could through be and is and/or is emergency the after there surge. through the the see a our don't if go If not stays As if where be a the price we is we another other range price But that could surge, offset situation April, price get there'll and this thing is another know decrease, there's to if increase surge emergency a declared another you could again variant that. you released.

consistent. decline continue testing. happening. of in see situation think going pressure things XX% would But be to always I through hit keep price. personally be which the There'll I within emergency will year, this different believe we're be range that a think relatively the price would to on about as the multiple it, I So XX% to

data exact an we to give and it have. best our quarter, to that's so hard estimate we But can you did as and information, each we at we're number, we time. think. have information what based changed break inform it's seeing last new year, A.J., we what you gave best because we We'll of you new So this it continue separately on the we out

Glenn Eisenberg

the A.J., only Yes. thing…

A.J. Rice

Okay.

Glenn Eisenberg

range going obviously call in what in you on in add but to But would than just the expect first second the as unfolds. trend as your be would outcomes, this lower, to purposes, expect, and first it, quarter at the year that we the wide additionally of would I half then half expect the period clearly modeling for strongest time. be we the

Operator

Morgan Goldwasser with comes next from question Our Ricky Stanley.

is open. line Your

Ricky Goldwasser

the when like we we XX% to of apply? long-term is of grew faster XXXX, should right, sort - kind base should of than XX% right XXXX XX%. what of XXXX XX% that your based on to results, we line how EPS think about So guidance about Because think the

also, And cost EPS So about what long-term your think for assumptions how in and right off? calculate we to supply should labor are the that underlying inflation? guide, baseline base

Adam Schechter

could you, Thank Yes. happened the a tricky with a about to of trying obviously are Ricky. the COVID. spent lot baselines And you think we we best everything that's because information you give time as bit

where to with $XXX closely, We're and hit give wage Glenn you there's away, you watching it significant takes time have in increases Ricky, hit and increases. Labor I'll the So issue getting very out. seeing doubt and is help LaunchPad million cost that place That's and with we issues there. that. is the some Labor we're inflation. that it we you supply, something supply put get and initiative we're right The lightly. specifics occurs, and get then not labor take supply wage additional the and the that offset supply no to

harder weather and think the we we be to the and than point quarter which But very That's all some by and over us you given the the our hard cost it basis we're So you the year out, we've working with this we get takes hit we've guidance to time some on. this year first time quarter And time. given the and variant XX get fourth of because inflation, get had the over our that for example, to million will continue and the averages But time, going timing inflation, why feel to out. million feel Omicron improvement per give But you pressure so with to it's we XX outlook. to it We we wage there is forth. confident go do you something as the ways discussion. get Phase can through maybe, you where to And wages give long-term on assume we a don't wage the because and little year takes Glenn, be reduce will time then because the we average supply confident get we and you we X some be have on that. and hit the can. bit hard think to with where different that's cost supply temporary, that's continued I find costs can

Glenn Eisenberg

was number. we a off long-term horizon, rate expect into de end chose call Yes. that of and the, do the COVID pre-pandemic Hi, by level Ricky. it, be that XXXX get we the that growth to reason to The a minimis will to of obviously, why,

number the Business. the shared are an Base that you COVID again, proxy, a further your a a you XX% - a call from COVID expect Base around the would we and margin as $XX of around the roughly, in show Business. down So that to off revenue, base, rate Business that Base time, XX% business We took Base lot to if the EPS an to get a because and share why the double-digit go get XXXX And And say would we it's reason supporting Base comment because of is a we was the we to estimate the talking because improvement margin just revenue CAGR. set that did XX.X% about margins, kind when Business, from on XX% Business both on between were that that margin revenue. a would XX.X% we But can expect growth that we adjusted at of and there's see distinguish we from you over roughly just do but did proxy. resources that's to comment it,

or base growth do from and Base you same We call earnings that use for still double-digits forward horizon. and XXXX, you trend in going base a growing the within roughly either each So double-digit expect the our Business, outlook to in that in, clean XXXX business get beyond. a the of XX% it, estimate base which is of number of the periods

Operator

from question Patrick Donnelly Our next with Citi. comes

is line Your open.

Patrick Donnelly

pretty equity a Maybe the it's backdrop? expecting about to questions. the healthy with funding fundamentals just Obviously, taking guide, XX% Can the you on there. for one Drug you're side. the talk Development too the X% Obviously, action. in many questions get in out much just general. of not we the capital environment terms lot volatile, too of And not markets, been biotech Thanks pretty

Is And to thinking that? feel Obviously, growth? of Drug seeing secondarily, support that how So sufficient the balance side guys are of you terms change, you think on the Development what perspective pharma on would similar in of the Thank of healthy side, about China overall? sheets then way. think activity region kind biotech and you're that on love you how just unverified you. about given week the your business terms about some any or that the how you news of this the list, in

Adam Schechter

Hi, Patrick. Good morning.

to of that continue So our biotech to a RFPs very and strong and need with clients is lot number be we be strong, pipelines, significant to they to do still get they continue that RFPs. have funded. Discussions there's a pharma and

was orders. it orders, is $X.X look we the itself. net had still at strong for billion what in very net mean, And is we you X.X, and trailing XX-month If quarter be, book-to-bill our to I which look above our

year. the billion, expect billion backlog, about into over You XX increase And so next to last look at it's that convert we our it's revenue $X months. versus X% almost backlog $XX of

we to remains to that to the you. we range So in RFPs, be indication every we strong for the be of have us long-term funding gave the is the within expect growth that outlook that

In China, I that an very they a China important market for growth terms important be believe will of pharma. continue remains to market.

there. it of and presence to right that continue do to right thing the to perform it therefore, do, in it to over country, be So significant there. have We're the think We time. capabilities show built was organic the will significant in able and will we studies a terms people and thing I

Operator

Our question Baird. Eric comes next from from Coldwell

Your is open. line

Eric Coldwell

on A much. very Thanks lot Ascension. of questions

you're just us over first, here. percentage if many road? could taking total Ascension you the or Any with expansion could think has potential Ascension revenue actually I how over? hospitals you down lab Number that of two, the XXX. the share outlook taking give for us you're initially

they're finally, operating the Thanks of states XX outreach the $XXX estimate? that I much. mix getting hospital the you're in. to management was then revenue million could And of million in XX give you're that think very versus us lab $XXX assuming if curious I you the

Adam Schechter

in to I'll you Glenn some numbers some with And context, give as and jump well. ask I'll

trial go hospital explore work ways by work, just not future, clinical $XXX would patient is that a between we of business we what and oncology there the the with as relationship just year think Ascension wanted about million hospital first do to acquisition. serves opportunity and be But partnership. different that all, annualized patients us terms going at great believe to of have they them. this on it for we're And first So a access. from we're say way. for work the to scale size be the excited many and opportunity, we the them to with the into I that opportunities and asset million we'll together, not that the of their time expect with revenues work in lab together opportunities and in we is the we What enhance $XXX And will the long-term

opportunities future. go of of for revenue. want speak lots don't much them the I there's So too percent about and as into us to we their

that's to need think do give further something you this partnership I But Ascension. for, for would context? you you organizations. to tell we ask very, that very we that going be is can So to little both is long-term fruitful want believe a what Glenn,

Glenn Eisenberg

of it in Labs, And had that the put putting what was that the the full revenues, said, would the I year $XXX approximately then agree. the release have Adam and acquiring, it being million, that but that $XXX well. the difference. within year the in Outreach $XXX did revenue got the up assets in-hospital to what we growth by Would as we're million with as that, we No, from partnership Yes. we're million Eric, annualized million, strategic some $XXX labs versus business of the on outreach compression managing taking size

Eric Coldwell

I limits typically, peers, time I on under I'm another But have at management in least actually have I on what deals. seeing to half your you're lab the that. volumes I to like rev or the probably think, that's what see of Glenn, on question. squeeze trying similar the for And don't of can XX%. the on repricing my hospital something in revenue. know outreach requisition repricing see here. if a normal ballpark question at rec here. it's typically we be, then the did would thank - they it deals you expanded is, know should - I

I was So deal. with dynamics just the could curious you on give if this pricing sense some us

Glenn Eisenberg

to with and have, we're picking Again, Eric, outreach grow. be the Yes. labs with say compressed we comes there will and that's said compression. that the and revenues we would up, approximately it But is million. that is, point, your then that again, what I reflected we'll $XXX

of outreach. margins an at it that give have a with your indication call least price will. you normal, labs, pricing, pricing lower again, the are they the the if with would at to So From you expect a of point. mix, similarly, kind does to in-hospital it, we point, But come

see that impact, size you would and strategic much and improve commented margins. the in-hospital management, start mix look expect forth. so that segment that see at there partnership and with remarks, and see that the But that year we and positive lower Adam grow is compression, to this of than, expect you then lab through in to efficiencies once the we from we obviously, productivity when first So going his margin the

for Obviously, it's improve drive will occur with continue could excited will that margins and the is returns the that time. that to company for over we strategic time. standpoint attractive. the Excited partnership, additional to dilutive good about over That So margins a growth very transaction sure. return that partnership about a potential from think

Operator

from Our Tanquilut next with Brian Jefferies. comes question

Your line is open.

Brian Tanquilut

years comps? being I more guidance above-average of you've mean, And I right, of again, Good assumption. are you congrats the to the my And How kind about I given last on of how maybe is morning Glenn, like about think that as easier over do as that what of quarter. then base the long-term revenue then about some to thinking that the the guys X.X% capabilities added kind timing, and like drivers X.X% front-end the contributing that growth lab, are above? question, think like being growth? the or loaded Thanks. guess few I

Glenn Eisenberg

investments to the year. again growth such a your organic first, XXXX, is within we made rate the the is based historical it, a that the find upon the if the CAGRs, fully we've and growth So little bit would the higher point, growth will, and which as so see our hospital continue systems to business. opportunities lot But of with a than that are forth, focus and recovered growth, strategic where additional Those not to you have growth. been, call of

So that not that new we so but have get base, done, have it, have been call annualized. the some fully of done already, acquisitions we've ones recent that the in benefits necessarily acquisitions not that The growth. been of

from continue the it for in that the growth historically just than supports that. And that. The been additional less topline get LaunchPad growth had impactful our PAMA We well. outlook for continues what overall to the that fact that as period's expectation some efficiencies, us

good cadence hit on we're numbers and good those momentum horizon. over think able planning be a to So we to the

Operator

[Operator Kevin Caliendo Instructions] Our next question comes with from UBS.

open. line Your is

Kevin Caliendo

sort alternatives time, a to you just of it little comes has I'm highlight then Obviously, strategic whole Thanks Thanks. I did this changed. nice process that acquisition. to a you taking for you wanted wondering my a bit call. here, say when enter still anything if and the at

a willing the very change sort have regards back the something strategic and what Is through big just the alternatives? a need of revisit What Can go to us need Ascension to with conditions? alternatives? strategic rethink what for for partner? to you to it potential Is you would take prompt might it of the change market this more You deal. or would strategic

Adam Schechter

we a that structure also we Board I process, are things sure be our But a Good and the were we everything, Kevin. in should alternative and realized that that we mean additional that a all shareholder this fully thorough. fully is if help always talking went and looked morning. other and When things spent the and externally, at at shares that people the to of we're Board through We time the management at also marketplace. in believed time, guidance, we always not which with scenarios the disclosures be in valued over and strategic as you, looked we return. long-term making looking just review, year structure doing marketplace. but we help almost evaluating that we of more alternatives, capital sense. very there's Thank the the open will lot not agreed entire But unanimously shares allocation still think we makes And allocation. this And after should agree at should that capital we terms value believe right.

another continually it's way you not how you're a of So the one-and-done in us how things of look type continually performing, where are do, it's that analysis. refresh, It's acknowledging analysis are, that you marketplace an you continually at evolving. you

expect you're look moment. We're anybody to you going continue at to So that's would the hearing at options as to do. all our

Kevin Caliendo

quick Fair enough. follow-up. I if really do a could And

cadence for Just the on the year.

out Ascension might issues model timing you be associated be should normally year? a thinking the affect You that inputs COVID the as what with expect about for Any could any we higher. Is costs there cadence that Is regular say other we company? to upfront? be there did any

Adam Schechter

as Kevin, a January, in mentioned, weather. The you only of say, I thing would I had lot

even weren't centers. a they with our some work, but people because had - - of when ill United Drug get the for you have open we faced almost in of States. issues aren't charge every we to You business that Development, up employees working to able had saw in And people where service lot in Omicron if to you they're

So, into as the that's all full guidance looked be that. one the of And first But the year. at all taken for is been other probably and we quarters evaluation. quarter longer-term, XXXX our versus tougher going to in quarters of we've provided

about than we we and are. where and guidance look optimistic that, continue the other strong, So to things I think be

Operator

Chickering Deutsche with Pito comes question next from Bank. Our

open. is line Your

Pito Chickering

you lot us points lot question. talk of achieve to outlook and inflation $XXX XX were XX seems expansion. understand Can that. on more can details question headwinds to there's sales taking XXXX give that of guiding the margins LaunchPad impact? increasing modeling like did Diagnostics you you're supply labor PAMA And a offset my a your about on to despite It costs. margin coming here and XXXX for how some of impacted? going those of think Did from I more million margins you PAMA, of just to basis in My a I Thanks understand is guys I EBIT lot. pressures here the in of details how in on increasing. some Thanks long-term want

Adam Schechter

Yes.

be to going $XXX but going the right material million, into at wouldn't ultimately there's $XXX to away, have So The the test the around moving sample we of lab. do inflation the little you the million go often. good to do the It's your as can and good be a and for you hits now, I'll the patients log results have for we're assess I things but it million in $XXX And you to will seeing following going diagnostic year you you one seeing also that you faster, years. mentioned And different. type But a those that in a earlier, first streamline we're country. get And ways with, then not our out are sense, as timing, then the no pressure it's as savings. place fly through it in ESG might that could of We're to start give cost reduce year. as bit take to also in lab doubt try to that's another there as system inflation, get you at, and the The off Right so things. we're over wage be in the we might cost. you million, out looking for costs and more And is but up $XXX why costs years. you goals, a much to We're might in of three in then example, area. area. part different looking another it another sample, meaning that put but have

of can It type a reshuffle propel those at that get like happen kind that a little system doesn't ultimately reduce cost, results in to of initiatives of it a do. of necessary like but we're we're to less put because additional But to you're So could but reorganize days. have take automated initiatives, reduce takes what bit that, matter It's pressure, we can putting looking going things lot time. people which also as of to doesn't time we're quality, in wage you it cost. faster many run, better laboratories, at our trying

confident XX time change margin a basis and why we over why in to of it little if So to XX we're that's longer. at on average. we're look it takes improvement fundamentally you looking processes, on some bit the can But business things for also that our point that's deliver

Operator

Our with next question comes Derik America. Bruin of from De Bank

is line open. Your

Derik De Bruin

for Thank question. taking you my

long-term of more to of relative going - that bit outlook Thank on sort on acceleration what's much segments? sort additional mix view of very You're historical give you the business us to late-stage, the some in are there? a Drug just us So the little kind trends business? seeing more assumptions like business And and come underlying bigger a you just better for of are drivers you're early-stage Central seeing and a and on Lab the bit could Development obviously to the your much. a on specifically, in willing on for detail color little give just what you

Adam Schechter

Sure, in. Derik. bit. you Glenn give a I'll jump can little

that going is The some quarter earnings when report additional April. to our tell Derik, first first we're I'd in thing give you, we disclosures

invested great when will growth more things becoming So terms clinical a there. well like and that our helpful. to which later-stage But the that more presence in GlobalCare growth, Japan as the from at decentralized of be lot trials, in see mean, important. us time. We there clinical you give China and business. is in trial I look at do We think the clearly, of capabilities We've that business. that in as opportunities built are snapIOT in with I coming good We've

that's the there, where business. mean business, grow we we a very And feel - see to an ability we're can significant get the Central growth as isn't easy then in business. necessarily early-stage and to And area terms we're want you be continue as laboratory that leadership. we our and the to believe ability the we because you'll is leader and So look in that trials, last able then I at strong business margin I'd you're area a But also still improvement. where clinical if that compete. like a is thing grow not we're yet smaller in to of say to leader,

a the or that's strong to businesses. growth the expect scale We than that first but We the size not other have smaller the business of do businesses. ability two compete at effectively business, in two magnitude in that it's but the

Glenn Eisenberg

that late-stage the development at and businesses, early Lab than The business. businesses of higher-growth thing have when components is the Central historically only clinical I'd point, to the you look the your businesses are add

targeted so those we've it's in late areas whether in areas The Toxicon, in rather. have within And Lab higher-growth in in able we've to two to continue that that of ED Central made or been lot a GlobalCare, investments and done, snapIOT capacity to growth be stage particular. fuel the acquisitions

parts business we've to faster-growing the just weighted of towards the our more that mix So made. continues be

rate was get us are what long-term kind we've of into So that mid- investments the aspirational lot high made that overall, targets been have we to growth enable that of We've reinforcing growth. that kind said range. to we've should of doing single-digits a always the

Operator

comes Our Blair. Matt next Larew question from with William

Your open. line is

Madeline Mollman

This is your growing? awards just Can contextualize win from rate versus they you decentralized trials? were Madeline clinical that And that what's what were you Mollman up you on in will what there for said Larew. standard XXXX? like trial were be And clinical you do us anticipate We a little Matt then tell bit? Can wondering, XX%.

Adam Schechter

Yes.

So small good rate that's a question. relatively a growth And off still the is base.

trials that you hybrid. going new some them clinical actually in the component of total terms we single-digits the now. if look virtual or decentralized that right So includes at of RFPs, at fully still you trial have look trials is in most is But as

So looking I of we to outlook, believe that significant for trials. last clinical we're over trials for that fully of become and running. trials more decentralized take see that total total time, you're a amount five-year it's look ongoing, you're say, going continue have not significant to to and that percent then year particularly the this in the it mix terms more starts you of a at albeit increase, very if would year, the

Operator

with next JPMorgan. question comes Peterson Our from Tycho

open. is Your line

Tycho Peterson

less X% just the plan, reinvesting on to of Drug review is learnings how might on kind kind differently, are the the talk long-range A of you the I follow-up kind what there's where business the long-range of be are in able I'm the but to growth may of also on A Derik's XX% And impressive. anything your CRO run terms XX%-plus in if to peers plan, growth. comments of that number the appreciate then were. review you strategic the question of Development. of more? came curious you out

So do you plan see as long-range upside to well? that

Adam Schechter

Tycho. morning. Yes. Good

look business the would quarter, additional second Drug provide at look it we're First the thing insights mix to because I try in when at business, different going helpful that say be compare I'd when you have is CROs. you across think, the to to of Development the you

an growth most laboratory a trials in mix fast laboratory than is And different earlier big have the business later-stage isn't Our general stage. very business. central central of as as the with because clinical we

we to to the you very made those a we're at continue to our apart it's When to meet our look is I earlier, to also that break avenues comparisons. avenues continue move also we've I our giving but the we're because what in our success provide. past. providing we're in know of our look guidance we hard both long-term we And we've make as we the from we at some little continuing businesses believe there's and believe all bit said additional we that to past So the don't observed we're when at accelerated we strong. context any when if at see and same look growth, returns, But of competitors, as is all we do guidance of of that the the believe versus investments that. customers the Glenn will time, you the committed starting needs and shareholder forward, for that

Glenn Eisenberg

our investments, say run we think a organically the we've No, of I lot I really, point the that believe you think oncology you made when again, within differently, business, time, focus targeted and those parts will of investments to faster-growing the if organic acquisitions in over that the will, growth continue the have that you PGDx, our other our help fuel plus, Toxikon, business. the we Yes.

Tycho Peterson

And then one on quick follow-up oncology.

kind a out it right emerging because approach? are was it of liquid there market. got your in why that asset of perspective? PGDx in Just What stood Obviously, players number the biopsy? Was a from kitted

Adam Schechter

that's important first And we liquid biopsy. question. an Yes. all, of No, capabilities have internal for

thought our were using available we are out internally. we we match experts, look to what for able be the decide what what would developing assets a there good to at So internal were

kitted as trials. think actually a but both before, liquid first PGDx globally one was there think was important ability we areas. this by us, we start might But think to about specialty haven't to important, like kitted be us test taking done and we has having be in approved trials. like solution capabilities and also Having laboratory the very those Kitted a might solution in to the solution of particularly do a having I biopsy. the frankly, think a clinical FDA solutions central the a launch clinical as and start to helpful which we globally, tests to about ability for both

the patient you care for think a enable So test. of think us good more if do We trials. test to to but it's it's with for patient, globally could easily closer go it also good clinical type we this can

last Chas end that's any the or of there So, the are question questions?

Chas Cook

going it. be, That's to

Adam Schechter

Okay.

lays you thank promising progress all I that the around considerable have it for year growth. great hopefully So none say only I us of short-term world. last also wasn't coupled XXXX to colleagues And will store but groundwork what possible to for and long-term today can see want our joining with be not we just in want everybody actually a our of if for it for

we'll Our you company and you. have see and Thank soon. of our look to improve and lives. them delivers We be ensuring each continue world And to dialog around safe forward XX,XXX health improve our mission to continue play the role on please you. to with a employees

Operator

the concludes program. This

You great a have disconnect. now may Everyone day.

Laboratory Corporation of America (LH) 10 Feb 222021 Q4 Earnings call transcript