LabCorp Announces 2019 Third Quarter Results and Updates 2019 Guidance
- Q3 revenue of
$2.9 billion , up 3.4% over$2.8 billion last year - Q3 diluted EPS of
$2.25 , down from$3.10 last year, which included the net gain on the disposition of the Food Solutions business of$1.22 per share - Q3 adjusted EPS of
$2.90 , up 5.8% over$2.74 last year - Q3 free cash flow of
$363 million , up 136% over$154 million last year - 2019 adjusted EPS guidance of
$11.20 to $11.30 , up 2% to 3% over 2018 - 2019 free cash flow guidance of
$950 million to $1.05 billion , up 3% to 13% over 2018
“LabCorp delivered another excellent quarter, with solid results driven by strong demand across both businesses,” said
Consolidated Results
Third Quarter Results
Revenue for the quarter was
Operating income for the quarter was
Net earnings for the quarter were
Operating cash flow for the quarter was
At the end of the quarter, the Company’s cash balance and total debt were
Year-To-Date Results
Revenue was
Operating income was
Net earnings in the first nine months of 2019 were
Operating cash flow was
***
The following segment results exclude amortization, restructuring charges, special items, and unallocated corporate expenses.
Third Quarter Segment Results
LabCorp Diagnostics
Revenue for the quarter was
Total volume (measured by requisitions), excluding the disposition of businesses, increased by 0.7%, as acquisition volume contributed 0.5% and organic volume increased by 0.3%. Organic volume was negatively impacted by approximately 1.0% from managed care contract changes. Excluding the disposition of businesses, revenue per requisition increased by 1.0%, despite the negative impact from PAMA of 1.5%.
Adjusted operating income (excluding amortization, restructuring charges, and special items) for the quarter was
Covance Drug Development
Revenue for the quarter was
Adjusted operating income (excluding amortization, restructuring charges, and special items) for the quarter was
Net orders and net book-to-bill during the trailing twelve months were
***
Outlook for 2019
The following guidance assumes foreign exchange rates effective as of
- Revenue growth of 1.5% to 2.0% over 2018 revenue of
$11.33 billion , which includes the negative impact from the disposition of businesses of approximately 1.5% and foreign currency translation of 0.6%. This is an increase over the prior guidance of 1.0% to 2.0%.
- Revenue in LabCorp Diagnostics is expected to be -1.5% to -0.5% as compared to 2018 revenue of
$7.03 billion , which includes the negative impact from the disposition of businesses of approximately 2% and foreign currency translation of 0.1%. This is an improvement over the prior guidance of -3.0% to -2.0%.
- Revenue growth in Covance Drug Development of 5.5% to 7.5% over 2018 revenue of
$4.31 billion , a reduction from the prior guidance of 5.5% to 8.5%. The reduction of the midpoint of guidance is due to an additional unfavorable foreign currency translation impact of 0.4% compared to prior guidance. This revised guidance includes the full year negative impact from foreign currency translation of 1.3%.
- Adjusted EPS of
$11.20 to $11.30 , an increase of 1.6% to 2.5% over 2018 adjusted EPS of$11.02 . This is a narrowing of the range as compared to the prior guidance of$11.10 to $11.40 .
- Free cash flow (operating cash flow less capital expenditures) of
$950 million to $1.05 billion , which is an increase of 2.6% to 13.4% over 2018 and unchanged from the prior guidance.
Use of Adjusted Measures
The Company has provided in this press release and accompanying tables “adjusted” financial information that has not been prepared in accordance with GAAP, including adjusted net income, adjusted EPS (or adjusted net income per share), adjusted operating income, adjusted operating margin, free cash flow, and certain segment information. The Company believes these adjusted measures are useful to investors as a supplement to, but not as a substitute for, GAAP measures, in evaluating the Company’s operational performance. The Company further believes that the use of these non-GAAP financial measures provides an additional tool for investors in evaluating operating results and trends, and growth and shareholder returns, as well as in comparing the Company’s financial results with the financial results of other companies. However, the Company notes that these adjusted measures may be different from and not directly comparable to the measures presented by other companies. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the tables accompanying this press release.
The Company today is providing an investor relations presentation with additional information on its business and operations, which is available in the investor relations section of the Company's website at http://www.labcorp.com. Analysts and investors are directed to the website to review this supplemental information.
A conference call discussing LabCorp's quarterly results will be held today at
About LabCorp
LabCorp (NYSE: LH), an
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements, including, but not limited to, statements with respect to estimated 2019 guidance and the related assumptions, the impact of various factors on operating and financial results, future business strategies, expected savings and synergies (including from the LaunchPad initiative and from acquisitions), and the opportunities for future growth.
Each of the forward-looking statements is subject to change based on various important factors, many of which are beyond the Company’s control, including without limitation, competitive actions and other unforeseen changes and general uncertainties in the marketplace, changes in government regulations, including healthcare reform, customer purchasing decisions, including changes in payer regulations or policies, other adverse actions of governmental and third-party payers, changes in testing guidelines or recommendations, the effect of public opinion on the Company’s reputation, adverse results in material litigation matters, the impact of changes in tax laws and regulations, failure to maintain or develop customer relationships, our ability to develop or acquire new products and adapt to technological changes, failure in information technology, systems or data security, adverse weather conditions, the number of revenue days in a financial period, employee relations, and the effect of exchange rate fluctuations. These factors, in some cases, have affected and in the future (together with other factors) could affect the Company’s ability to implement the Company’s business strategy and actual results could differ materially from those suggested by these forward-looking statements. As a result, readers are cautioned not to place undue reliance on any of our forward-looking statements.
The Company has no obligation to provide any updates to these forward-looking statements even if its expectations change. All forward-looking statements are expressly qualified in their entirety by this cautionary statement. Further information on potential factors, risks and uncertainties that could affect operating and financial results is included in the Company’s most recent Annual Report on Form 10-K and subsequent Forms 10-Q, including in each case under the heading RISK FACTORS, and in the Company’s other filings with the
- End of Text -
- Tables to Follow -
|
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Millions, except per share data) |
||||||||||||||||
|
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
|
Revenues |
|
$ |
2,928.5 |
|
|
$ |
2,831.3 |
|
|
$ |
8,601.4 |
|
|
$ |
8,545.9 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Cost of revenues |
|
2,111.2 |
|
|
2,041.4 |
|
|
6,169.6 |
|
|
6,141.9 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Gross profit |
|
817.3 |
|
|
789.9 |
|
|
2,431.8 |
|
|
2,404.0 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Selling, general and administrative expenses |
|
401.5 |
|
|
381.8 |
|
|
1,210.6 |
|
|
1,174.0 |
|
||||
|
Amortization of intangibles and other assets |
|
61.7 |
|
|
54.7 |
|
|
179.0 |
|
|
175.5 |
|
||||
|
Restructuring and other special charges |
|
14.2 |
|
|
10.0 |
|
|
48.4 |
|
|
36.5 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating income |
|
339.9 |
|
|
343.4 |
|
|
993.8 |
|
|
1,018.0 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Other income (expense): |
|
|
|
|
|
|
|
|
||||||||
|
Interest expense |
|
(60.5 |
) |
|
(59.4 |
) |
|
(176.3 |
) |
|
(186.0 |
) |
||||
|
Equity method income, net |
|
2.4 |
|
|
3.0 |
|
|
7.9 |
|
|
8.5 |
|
||||
|
Investment income |
|
2.9 |
|
|
2.8 |
|
|
4.8 |
|
|
4.2 |
|
||||
|
Other, net |
|
2.7 |
|
|
209.8 |
|
|
(18.2 |
) |
|
209.1 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Earnings before income taxes |
|
287.4 |
|
|
499.6 |
|
|
812.0 |
|
|
1,053.8 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Provision for income taxes |
|
66.4 |
|
|
180.6 |
|
|
214.4 |
|
|
328.1 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net earnings |
|
221.0 |
|
|
319.0 |
|
|
597.6 |
|
|
725.7 |
|
||||
|
Less: Net earnings (loss) attributable to the noncontrolling interest |
|
(0.3 |
) |
|
(0.2 |
) |
|
(0.9 |
) |
|
0.1 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net earnings attributable to Laboratory Corporation of America Holdings |
|
$ |
220.7 |
|
|
$ |
318.8 |
|
|
$ |
596.7 |
|
|
$ |
725.8 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Basic earnings per common share |
|
$ |
2.26 |
|
|
$ |
3.14 |
|
|
$ |
6.08 |
|
|
$ |
7.13 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Diluted earnings per common share |
|
$ |
2.25 |
|
|
$ |
3.10 |
|
|
$ |
6.04 |
|
|
$ |
7.04 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted average basic shares outstanding |
|
97.6 |
|
|
101.6 |
|
|
98.1 |
|
|
101.8 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted average diluted shares outstanding |
|
98.3 |
|
|
102.7 |
|
|
98.8 |
|
|
103.1 |
|
||||
|
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Millions) |
||||||||
|
|
September 30, |
|
December 31, |
|||||
|
ASSETS |
|
|
|
|||||
|
|
|
|
|
|||||
|
Current assets: |
|
|
|
|||||
|
Cash and cash equivalents |
$ |
361.1 |
|
|
$ |
426.8 |
|
|
|
Accounts receivable |
1,617.2 |
|
|
1,467.9 |
|
|||
|
Unbilled services |
476.9 |
|
|
394.4 |
|
|||
|
Supplies inventory |
234.9 |
|
|
237.3 |
|
|||
|
Prepaid expenses and other |
297.7 |
|
|
309.0 |
|
|||
|
Total current assets |
2,987.8 |
|
|
2,835.4 |
|
|||
|
|
|
|
|
|||||
|
Property, plant and equipment, net |
2,453.0 |
|
|
1,740.3 |
|
|||
|
Goodwill, net |
7,832.0 |
|
|
7,360.3 |
|
|||
|
Intangible assets, net |
4,021.3 |
|
|
3,911.1 |
|
|||
|
Joint venture partnerships and equity method investments |
86.0 |
|
|
60.5 |
|
|||
|
Deferred income tax assets |
15.7 |
|
|
1.7 |
|
|||
|
Other assets, net |
458.9 |
|
|
276.0 |
|
|||
|
Total assets |
$ |
17,854.7 |
|
|
$ |
16,185.3 |
|
|
|
|
|
|
|
|||||
|
LIABILITIES AND SHAREHOLDERS’ EQUITY |
|
|
|
|||||
|
|
|
|
|
|||||
|
Current liabilities: |
|
|
|
|||||
|
Accounts payable |
$ |
607.8 |
|
|
$ |
634.6 |
|
|
|
Accrued expenses and other |
847.0 |
|
|
870.0 |
|
|||
|
Unearned revenue |
403.8 |
|
|
356.4 |
|
|||
|
Short-term operating lease liabilities |
202.1 |
|
|
— |
|
|||
|
Short-term finance lease liabilities |
8.3 |
|
|
7.9 |
|
|||
|
Short-term borrowings and current portion of long-term debt |
502.6 |
|
|
10.0 |
|
|||
|
Total current liabilities |
2,571.6 |
|
|
1,878.9 |
|
|||
|
|
|
|
|
|||||
|
Long-term debt, less current portion |
6,101.3 |
|
|
5,990.9 |
|
|||
|
Operating lease liabilities |
520.9 |
|
|
— |
|
|||
|
Financing lease liabilities |
92.8 |
|
|
51.0 |
|
|||
|
Deferred income taxes and other tax liabilities |
969.0 |
|
|
940.0 |
|
|||
|
Other liabilities |
348.3 |
|
|
334.0 |
|
|||
|
Total liabilities |
10,603.9 |
|
|
9,194.8 |
|
|||
|
|
|
|
|
|||||
|
Commitments and contingent liabilities |
|
|
|
|||||
|
Noncontrolling interest |
19.7 |
|
|
19.1 |
|
|||
|
|
|
|
|
|||||
|
Shareholders’ equity: |
|
|
|
|||||
|
Common stock, 97.4 and 98.9 shares outstanding at September 30, 2019 and December 31, 2018, respectively |
9.0 |
|
|
11.7 |
|
|||
|
Additional paid-in capital |
47.8 |
|
|
1,451.1 |
|
|||
|
Retained earnings |
7,676.5 |
|
|
7,079.8 |
|
|||
|
Less common stock held in treasury |
— |
|
|
(1,108.1 |
) |
|||
|
Accumulated other comprehensive earnings |
(502.2 |
) |
|
(463.1 |
) |
|||
|
Total shareholders’ equity |
7,231.1 |
|
|
6,971.4 |
|
|||
|
Total liabilities and shareholders’ equity |
$ |
17,854.7 |
|
|
$ |
16,185.3 |
|
|
|
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Millions) |
||||||||||||||||
|
|
Three Months Ended September 30, |
|
Nine Months Ended September 30, |
|||||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|||||||||
|
CASH FLOWS FROM OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|||||||||
|
Net earnings |
$ |
221.0 |
|
|
$ |
319.0 |
|
|
$ |
597.6 |
|
|
$ |
725.7 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
|
|||||||||
|
Depreciation and amortization |
144.3 |
|
|
133.1 |
|
|
421.4 |
|
|
414.4 |
|
|||||
|
Stock compensation |
31.5 |
|
|
18.8 |
|
|
83.5 |
|
|
70.8 |
|
|||||
|
Gain on sale of assets |
(8.3 |
) |
|
(1.6 |
) |
|
(3.8 |
) |
|
(1.9 |
) |
|||||
|
Loss (gain) on sale of business |
3.1 |
|
|
(209.4 |
) |
|
11.9 |
|
|
(209.4 |
) |
|||||
|
Contingent consideration adjustments |
(13.9 |
) |
|
— |
|
|
(13.9 |
) |
|
— |
|
|||||
|
Accreted interest on zero-coupon subordinated notes |
— |
|
|
— |
|
|
— |
|
|
0.1 |
|
|||||
|
Operating lease right-of-use asset expense |
50.1 |
|
|
— |
|
|
144.1 |
|
|
— |
|
|||||
|
Earnings less distributions deficit from equity method investments |
10.3 |
|
|
1.6 |
|
|
18.3 |
|
|
0.3 |
|
|||||
|
Asset impairment |
— |
|
|
3.0 |
|
|
— |
|
|
5.3 |
|
|||||
|
Deferred income taxes |
8.1 |
|
|
(23.9 |
) |
|
23.3 |
|
|
12.1 |
|
|||||
|
Change in assets and liabilities (net of effects of acquisitions): |
|
|
|
|
|
|
|
|||||||||
|
Increase in accounts receivable |
(53.2 |
) |
|
(21.7 |
) |
|
(144.3 |
) |
|
(8.5 |
) |
|||||
|
Increase (decrease) in unbilled services |
7.9 |
|
|
31.0 |
|
|
(59.5 |
) |
|
(5.5 |
) |
|||||
|
Increase in supplies inventory |
(12.8 |
) |
|
(4.1 |
) |
|
(14.5 |
) |
|
(8.8 |
) |
|||||
|
Decrease (increase) in prepaid expenses and other |
(10.3 |
) |
|
(12.9 |
) |
|
5.8 |
|
|
(40.1 |
) |
|||||
|
Increase (decrease) in accounts payable |
80.8 |
|
|
11.4 |
|
|
(28.2 |
) |
|
(79.9 |
) |
|||||
|
Increase (decrease) in unearned revenue |
4.0 |
|
|
(102.7 |
) |
|
(1.0 |
) |
|
(94.4 |
) |
|||||
|
Increase (decrease) in accrued expenses and other |
(7.0 |
) |
|
110.3 |
|
|
(165.8 |
) |
|
38.8 |
|
|||||
|
Net cash provided by operating activities |
455.6 |
|
|
251.9 |
|
|
874.9 |
|
|
819.0 |
|
|||||
|
|
|
|
|
|
|
|
|
|||||||||
|
CASH FLOWS FROM INVESTING ACTIVITIES: |
|
|
|
|
|
|
|
|||||||||
|
Capital expenditures |
(92.6 |
) |
|
(97.9 |
) |
|
(272.0 |
) |
|
(257.6 |
) |
|||||
|
Proceeds from sale of assets |
1.6 |
|
|
0.3 |
|
|
5.8 |
|
|
50.1 |
|
|||||
|
Proceeds from sale of investments |
6.0 |
|
|
— |
|
|
9.4 |
|
|
— |
|
|||||
|
Proceeds from sale of business |
— |
|
|
654.5 |
|
|
— |
|
|
654.5 |
|
|||||
|
Investments in equity affiliates |
(5.5 |
) |
|
(7.0 |
) |
|
(21.3 |
) |
|
(14.3 |
) |
|||||
|
Acquisition of businesses, net of cash acquired |
(149.2 |
) |
|
— |
|
|
(852.9 |
) |
|
(79.1 |
) |
|||||
|
Net cash (used for) provided by investing activities |
(239.7 |
) |
|
549.9 |
|
|
(1,131.0 |
) |
|
353.6 |
|
|||||
|
|
|
|
|
|
|
|
|
|||||||||
|
CASH FLOWS FROM FINANCING ACTIVITIES: |
|
|
|
|
|
|
|
|||||||||
|
Proceeds from term loan |
— |
|
|
— |
|
|
850.0 |
|
|
— |
|
|||||
|
Payments on term loan |
— |
|
|
— |
|
|
(250.0 |
) |
|
(295.0 |
) |
|||||
|
Proceeds from revolving credit facilities |
48.5 |
|
|
54.5 |
|
|
468.0 |
|
|
449.2 |
|
|||||
|
Payments on revolving credit facilities |
(83.5 |
) |
|
(54.5 |
) |
|
(468.0 |
) |
|
(449.2 |
) |
|||||
|
Payments on zero-coupon subordinated notes |
— |
|
|
(0.3 |
) |
|
(5.2 |
) |
|
(0.3 |
) |
|||||
|
Noncontrolling interest distributions |
(0.3 |
) |
|
(0.2 |
) |
|
(0.8 |
) |
|
(6.1 |
) |
|||||
|
Deferred payments on acquisitions |
(0.3 |
) |
|
— |
|
|
(5.0 |
) |
|
— |
|
|||||
|
Payments on other long-term obligations |
(4.2 |
) |
|
(1.7 |
) |
|
(10.9 |
) |
|
(6.8 |
) |
|||||
|
Net share settlement tax payments from issuance of stock to employees |
(0.3 |
) |
|
(1.1 |
) |
|
(40.4 |
) |
|
(46.2 |
) |
|||||
|
Net proceeds from issuance of stock to employees |
25.1 |
|
|
24.4 |
|
|
59.0 |
|
|
67.4 |
|
|||||
|
Purchase of common stock |
(100.0 |
) |
|
(150.0 |
) |
|
(400.0 |
) |
|
(300.0 |
) |
|||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Net cash (used for) provided by financing activities |
(115.0 |
) |
|
(128.9 |
) |
|
196.7 |
|
|
(587.0 |
) |
|||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Effect of exchange rate changes on cash and cash equivalents |
(5.2 |
) |
|
(1.7 |
) |
|
(6.3 |
) |
|
(9.6 |
) |
|||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Net increase (decrease) in cash and cash equivalents |
95.7 |
|
|
671.2 |
|
|
(65.7 |
) |
|
576.0 |
|
|||||
|
Cash and cash equivalents at beginning of period |
265.4 |
|
|
221.4 |
|
|
426.8 |
|
|
316.6 |
|
|||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Cash and cash equivalents at end of period |
$ |
361.1 |
|
$ |
892.6 |
|
|
$ |
361.1 |
|
$ |
892.6 |
|
|||
|
LABORATORY CORPORATION OF AMERICA HOLDINGS Condensed Combined Non-GAAP Pro Forma Segment Information (Dollars in Millions) |
||||||||||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|||||||||
|
LabCorp Diagnostics |
|
|
|
|
|
|
|
|||||||||
|
Revenues |
$ |
1,759.2 |
|
|
$ |
1,752.0 |
|
|
$ |
5,242.1 |
|
|
$ |
5,336.3 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Adjusted Operating Income |
$ |
296.3 |
|
|
$ |
331.5 |
|
|
$ |
952.1 |
|
|
$ |
1,071.6 |
|
|
|
Adjusted Operating Margin |
16.8 |
% |
|
18.9 |
% |
|
18.2 |
% |
|
20.1 |
% |
|||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Covance Drug Development |
|
|
|
|
|
|
|
|||||||||
|
Revenues |
$ |
1,175.4 |
|
|
$ |
1,081.5 |
|
|
$ |
3,376.4 |
|
|
$ |
3,214.1 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Adjusted Operating Income |
$ |
175.0 |
|
|
$ |
131.3 |
|
|
$ |
454.7 |
|
|
$ |
362.7 |
|
|
|
Adjusted Operating Margin |
14.9 |
% |
|
12.1 |
% |
|
13.5 |
% |
|
11.3 |
% |
|||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Consolidated |
|
|
|
|
|
|
|
|||||||||
|
Revenues |
$ |
2,928.5 |
|
|
$ |
2,831.3 |
|
|
$ |
8,601.4 |
|
|
$ |
8,545.9 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Adjusted Segment Operating Income |
$ |
471.3 |
|
|
$ |
462.8 |
|
|
$ |
1,406.8 |
|
|
$ |
1,434.3 |
|
|
|
Unallocated corporate expense |
$ |
(40.8 |
) |
|
$ |
(33.7 |
) |
|
$ |
(118.0 |
) |
|
$ |
(105.9 |
) |
|
|
Consolidated Adjusted Operating Income |
$ |
430.5 |
|
|
$ |
429.1 |
|
|
$ |
1,288.8 |
|
|
$ |
1,328.4 |
|
|
|
Adjusted Operating Margin |
14.7 |
% |
|
15.2 |
% |
|
15.0 |
% |
|
15.5 |
% |
|||||
The consolidated revenue and adjusted segment operating income are presented net of intersegment transaction eliminations. Adjusted operating income and adjusted operating margin are non-GAAP measures. See the subsequent reconciliation of non-GAAP financial measures.
|
LABORATORY CORPORATION OF AMERICA HOLDINGS Reconciliation of Non-GAAP Measures (Dollars in millions, except per share data) |
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Adjusted Operating Income |
|
|
|
|
|
|
|
|
|||||||||||||||||
|
Operating Income |
|
|
|
$ |
339.9 |
|
|
$ |
343.4 |
|
|
$ |
993.8 |
|
|
$ |
1,018.0 |
|
|||||||
|
Amortization of intangibles and other assets (a) |
|
61.7 |
|
|
54.7 |
|
|
179.0 |
|
|
175.5 |
|
|||||||||||||
|
Restructuring and other special charges (b) |
|
14.2 |
|
|
10.0 |
|
|
48.4 |
|
|
36.5 |
|
|||||||||||||
|
Acquisition and disposition-related costs (c) |
|
9.6 |
|
|
5.5 |
|
|
53.9 |
|
|
43.1 |
|
|||||||||||||
|
LaunchPad system implementation costs (d) |
|
2.4 |
|
|
3.1 |
|
|
7.4 |
|
|
7.3 |
|
|||||||||||||
|
Consulting fees and executive transition expenses(e) |
|
5.3 |
|
|
(0.2 |
) |
|
8.2 |
|
|
4.3 |
|
|||||||||||||
|
Costs related to ransomware attack (f) |
|
— |
|
|
12.6 |
|
|
0.7 |
|
|
12.6 |
|
|||||||||||||
|
Costs related to data breach (g) |
|
11.3 |
|
|
— |
|
|
11.3 |
|
|
— |
|
|||||||||||||
|
Adjustment to acquisition contingent consideration (h) |
|
(13.9 |
) |
|
— |
|
|
(13.9 |
) |
|
— |
|
|||||||||||||
|
Special tax reform bonus for employees (i) |
|
— |
|
|
— |
|
|
— |
|
|
31.1 |
|
|||||||||||||
|
Adjusted operating income |
|
$ |
430.5 |
|
|
$ |
429.1 |
|
|
$ |
1,288.8 |
|
|
$ |
1,328.4 |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Adjusted Net Income |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net Income |
|
$ |
220.7 |
|
|
$ |
318.8 |
|
|
$ |
596.7 |
|
|
$ |
725.8 |
|
|||||||||
|
Impact of adjustments to operating income |
|
90.6 |
|
|
85.7 |
|
|
295.0 |
|
|
310.4 |
|
|||||||||||||
|
Gains and losses on venture fund investments, net (j) |
|
(5.8 |
) |
|
— |
|
|
(1.9 |
) |
|
— |
|
|||||||||||||
|
(Gain) and loss on sale of business (k) |
|
3.1 |
|
|
(209.4 |
) |
|
11.9 |
|
|
(209.4 |
) |
|||||||||||||
|
Tax reform adjustments (l) |
|
— |
|
|
28.1 |
|
|
— |
|
|
44.1 |
|
|||||||||||||
|
Income tax impact of adjustments (m) |
|
(23.1 |
) |
|
58.6 |
|
|
(65.8 |
) |
|
5.0 |
|
|||||||||||||
|
Adjusted net income |
|
$ |
285.5 |
|
|
$ |
281.8 |
|
|
$ |
835.9 |
|
|
$ |
875.9 |
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted average diluted shares outstanding |
|
98.3 |
|
|
102.7 |
|
|
98.8 |
|
|
103.1 |
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Adjusted net income per share |
|
$ |
2.90 |
|
|
$ |
2.74 |
|
|
$ |
8.46 |
|
|
$ |
8.50 |
|
|||||||||
| (a) |
Amortization of intangible assets acquired as part of business acquisitions. |
|
(b) |
Restructuring and other special charges represent amounts incurred in connection with the elimination of redundant positions within the organization in connection with our LaunchPad initiatives and acquisitions or dispositions of businesses by the Company. |
|
(c) |
Acquisition and disposition-related costs include due-diligence legal and advisory fees, retention bonuses and other integration and disposition related activities in connection with contemplated and completed transactions. |
|
(d) |
LaunchPad system implementation costs include non-capitalized costs associated with the implementation of a system as part of the LaunchPad business process improvement initiative. |
|
(e) |
Represents executive transition expenses related to various management reorganizations. |
|
(f) |
Costs related to ransomware attack including incremental consulting and employee costs incurred to remediate the impact of a ransomware attack, which occurred during the third quarter of 2018. |
|
(g) |
Costs related to the response and remediation of a previously announced vendor data breach, which occurred in the second quarter of 2019. |
|
(h) |
During the third quarter of 2019, the Company settled a contingent purchase price for an acquisition completed in 2016. |
|
(i) |
During 2018, the Company paid a special one-time bonus to its non-bonus eligible employees in recognition of the benefits the Company is receiving from the passage of the Tax Cuts and Jobs Act of 2017 (TCJA). |
|
(j) |
The Company makes venture fund investments in companies or investment funds developing promising technology related to its operations. The Company recorded net gains and losses for the quarter and year-to-date periods related to several distributions from venture funds, increases in the market value of investments, and impairments of other investments due to the underlying performance of the investments. |
|
(k) |
Represents the loss on sale of the CRP business as part of the Envigo transaction during the second quarter of 2019 and the gain on sale of the Food Solutions business, which occurred during the third quarter of 2018. |
|
(l) |
During 2018, the Company recorded a net increase in its provision for income taxes primarily relating to the repatriation tax associated with the adoption of the TCJA. |
|
(m) |
Income tax impact of adjustments calculated based on the tax rate applicable to each item. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20191024005467/en/
Source: LabCorp
Clarissa Willett (investors) – 336-436-5076
[email protected]
Pattie Kushner (media) – 336-436-8263
[email protected]