Labcorp Announces 2024 Fourth Quarter and Full Year Results

LABCORP HOLDINGS INC.

CONSOLIDATED RESULTS

Three Months Ended  ,

Year Ended  ,

2024

2023

Delta

2024

2023

Delta

Revenue Summary (Dollars in billions)

Total Revenue

$    3.33

$     3.03

9.8 %

$   13.01

$    12.16

7.0 %

Organic

5.4 %

3.9 %

Base Business ⁽¹⁾

6.2 %

4.9 %

COVID-19 Testing ⁽²⁾

(0.8 %)

(1.0 %)

Acquisitions, net of Divestitures

4.0 %

2.8 %

Foreign Exchange

0.3 %

0.2 %

⁽¹⁾ Base Business includes Labcorp's operations except for COVID-19 Testing.

⁽²⁾ COVID-19 Testing represents COVID-19 PCR Testing.

Earnings Summary (Dollars in millions, except per share data)

Operating Income ("OI")

$  216.5

$ (122.8)

$  1,086.7

$    725.6

OI as % of Revenue

6.5 %

(4.0) %

1,050 bps

8.4 %

6.0 %

240 bps

Adjustments ⁽³⁾

$  206.7

$   517.7

$   710.3

$    989.3

Adjusted Operating Income  ("AOI") ⁽⁴⁾

$  423.2

(5)

$   394.9

$  1,797.0

$ 1,714.9

AOI as % of Revenue

12.7 %

13.0 %

(40) bps

(6)

13.8 %

14.1 %

(30) bps

(6)

Net Earnings from Cont. Ops

$  143.6

$ (166.8)

$   747.1

$    380.4

Diluted EPS from Cont. Ops

$    1.70

$   (1.95)

$     8.84

$      4.33

Adjusted EPS ⁽⁴⁾

$    3.45

$     3.30

$   14.57

$    13.56

⁽³⁾ Adjustments include amortization, impairment charges, restructuring charges, and special items.

⁽⁴⁾ Non-GAAP financial measure. See "Reconciliation of Non-GAAP Measures" for additional information.

⁽⁵⁾ The increase in adjusted operating income was primarily due to organic demand and LaunchPad savings, partially offset by higher personnel costs.

⁽⁶⁾ The decrease in adjusted operating margin was due to Invitae.

LABCORP HOLDINGS INC.

CONSOLIDATED RESULTS

Three Months Ended  ,

Year Ended  ,

2024

2023

2024

2023

Cash Flow Summary (Dollars in millions)

Operating Cash Flow from Cont. Ops

$          777.2

(1)

$          579.6

$      1,585.8

$      1,202.3

Capital Expenditures

112.1

167.2

489.9

453.6

Free Cash Flow from Cont. Ops

$          665.1

$          412.4

$      1,095.9

$          748.7

⁽¹⁾ The increase in operating cash flow was primarily due to higher cash earnings.

LABCORP HOLDINGS INC.

Diagnostics Laboratories Segment Summary

Three Months Ended  ,

2024

2023

Delta

Revenue Summary (Dollars in billions)

Total Revenue

$          2.59

$      2.35

10.2 %

Organic

5.1 %

Base Business

6.1 %

COVID-19 Testing

(1.0 %)

Acquisitions, net of Divestitures

5.2 %

Foreign Exchange

(0.1 %)

Earnings Summary ⁽¹⁾ (Dollars in millions)

Adjusted Operating Income ("AOI") ⁽²⁾

$        359.5

$    353.7

AOI as % of Revenue

13.9 %

15.1 %

(120) bps

(3)

⁽¹⁾ Non-GAAP financial measure. See "Reconciliation of Non-GAAP Measures" for additional information.

⁽²⁾ Excludes amortization, restructuring charges, special items, and unallocated corporate expenses.

⁽³⁾ Adjusted operating margin was lower due to Invitae and the unfavorable impacts of days and weather.

Three Months Ended  ,

2024

Requisition

Price/Mix

 ⁽⁴⁾

Delta ⁽⁴⁾

Metrics Summary ⁽¹⁾

Total

6.8 %

3.4 %

Organic ⁽⁵⁾

4.0 %

1.1 %

Base Business

4.6 %

1.5 %

COVID-19 Testing

(0.6) %

(0.4) %

Acquisitions, net of Divestitures

2.8 %

2.4 %

Foreign Exchange

— %

(0.1) %

⁽⁴⁾ Column shows changes versus the three months ended  .

⁽⁵⁾ Organic price/mix includes lab management agreements.

LABCORP HOLDINGS INC.

Biopharma Laboratory Services Segment Summary

Three Months Ended  ,

2024

2023

Delta

Revenue Summary (Dollars in millions)

Total Revenue

$        767.0

$        694.8

10.4 %

⁽¹⁾

Organic

8.9 %

Acquisitions, net of Divestitures

— %

Foreign Exchange

1.5 %

⁽¹⁾ Central Labs revenue growth of 9.6%, Early Development revenue growth of 12.3%.

Earnings Summary ⁽²⁾ (Dollars in millions)

Adjusted Operating Income ("AOI") ⁽³⁾

$        130.8

⁽⁴⁾

$        109.0

AOI as % of Revenue

17.0 %

15.7 %

140 bps

⁽⁴⁾

⁽²⁾ Non-GAAP financial measure. See "Reconciliation of Non-GAAP Measures" for additional information.

⁽³⁾ Excludes amortization, restructuring charges, special items, and unallocated corporate expenses.

⁽⁴⁾ Adjusted operating income and margin increased due to organic demand and LaunchPad savings, partially offset by higher personnel costs.

As of  ,

2024

Metrics Summary (Dollars in billions)

TTM Net Orders

$                                         2.91

TTM Book-to-Bill

1.00

Backlog

$                                         7.99

⁽⁵⁾

Next Twelve Months Forecast Backlog Conversion

$                                         2.53

⁽⁵⁾ Backlog decreased 3.2% compared to last year due to foreign exchange

(Dollars in billions, except per share data)

Results

2025 Guidance

2024

Low

High

Revenue

Labcorp Enterprise ⁽¹⁾⁽²⁾

$13.01

6.7 %

8.0 %

Diagnostics Laboratories ⁽³⁾

$10.14

6.5 %

7.7 %

Biopharma Laboratory Services ⁽⁴⁾

$2.92

3.0 %

5.0 %

Adjusted EPS

$14.57

$15.60

$16.40

Free Cash Flow

$1.10

$1.10

$1.25

(1) 2025 Guidance includes an impact from foreign currency translation of (0.5%).

(2) Enterprise level revenue is presented net of intercompany transaction eliminations.

(3) 2025 Guidance includes an impact from foreign currency translation of (0.2%).

(4) 2025 Guidance includes an impact from foreign currency translation of (1.4%).

LABCORP HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In Millions, Except Per Share Data)

Three Months Ended 
,

Year Ended

,

2024

2023

2024

2023

Revenues

$  3,329.4

$ 3,033.3

$  13,008.9

$ 12,161.6

Cost of revenues

2,433.1

2,211.9

9,384.5

8,796.7

Gross profit

896.3

821.4

3,624.4

3,364.9

Selling, general and administrative expenses

595.2

532.9

2,230.0

2,021.4

Amortization of intangibles and other assets

70.4

59.2

256.4

219.8

Goodwill and other asset impairments

2.8

333.8

5.3

349.0

Restructuring and other charges

11.4

18.3

46.0

49.1

Operating income (loss)

216.5

(122.8)

1,086.7

725.6

Other (expense) income:

Interest expense

(63.4)

(48.8)

(208.3)

(199.6)

Equity method (loss) income, net

(0.7)

0.1

(1.4)

(1.4)

Investment income

15.0

6.2

22.3

28.8

Other, net

16.4

18.2

60.2

15.5

Earnings (loss) from continuing operations before income taxes

183.8

(147.1)

959.5

568.9

Provision for income taxes

40.2

19.7

212.4

188.5

Earnings (loss) from continuing operations

143.6

(166.8)

747.1

380.4

Earnings from discontinued operations, net of tax

—

—

—

38.8

Net earnings (loss)

143.6

(166.8)

747.1

419.2

Less: Net earnings attributable to the noncontrolling interest

(0.2)

(0.3)

(1.1)

(1.2)

Net earnings (loss) attributable to Labcorp Holdings Inc.

$     143.4

$   (167.1)

$      746.0

$       418.0

Basic earnings per common share:

Basic earnings (loss) per common share from continuing operations

$       1.72

$     (1.97)

$        8.89

$         4.35

Basic earnings per common share from discontinued operations

$           —

$          —

$            —

$         0.45

Basic earnings (loss) per common share

$       1.72

$     (1.97)

$        8.89

$         4.80

Diluted earnings per common share:

Diluted earnings (loss) per common share from continuing operations

$       1.70

$     (1.95)

$        8.84

$         4.33

Diluted earnings per common share from discontinued operations

$           —

$          —

$            —

$         0.44

Diluted earnings (loss) per common share

$       1.70

$     (1.95)

$        8.84

$         4.77

Weighted average basic shares outstanding

83.6

84.9

83.9

87.1

Weighted average diluted shares outstanding

84.2

85.5

84.4

87.6

LABCORP HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In Millions)

,

2024

2023

ASSETS

Current assets:

Cash and cash equivalents

$             1,518.7

$              536.8

Accounts receivable, net

1,944.1

1,913.3

Unbilled services

152.9

185.4

Supplies inventory

493.2

474.6

Prepaid expenses and other

697.6

655.3

Total current assets

4,806.5

3,765.4

Property, plant and equipment, net

3,045.4

2,911.8

Goodwill, net

6,369.7

6,142.5

Intangible assets, net

3,488.9

3,342.0

Joint venture partnerships and equity method investments

16.3

26.9

Other assets, net

652.2

536.5

Total assets

$           18,379.0

$         16,725.1

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$                875.8

$              827.5

Accrued expenses and other

871.2

804.0

Unearned revenue

392.2

421.7

Short-term operating lease liabilities

184.6

165.8

Short-term finance lease liabilities

6.1

6.4

Short-term borrowings and current portion of long-term debt

1,000.3

999.8

Total current liabilities

3,330.2

3,225.2

Long-term debt, less current portion

5,331.2

4,054.7

Operating lease liabilities

676.3

648.9

Financing lease liabilities

74.3

78.6

Deferred income taxes and other tax liabilities

383.1

417.9

Other liabilities

517.4

409.3

Total liabilities

10,312.5

8,834.6

Commitments and contingent liabilities

Noncontrolling interest

14.3

15.5

Shareholders' equity:

Common stock, 83.4 and 83.9 shares outstanding at   and
2023, respectively

7.6

7.7

Additional paid-in capital

2.8

38.4

Retained earnings

8,303.4

7,888.2

Accumulated other comprehensive loss

(261.6)

(59.3)

Total shareholders' equity

8,052.2

7,875.0

Total liabilities and shareholders' equity

$           18,379.0

$         16,725.1

LABCORP HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In Millions)

Three Months Ended 
,

Year Ended

,

2024

2023

2024

2023

CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings (loss)

$       143.6

$     (166.8)

$       747.1

$       419.2

Earnings from discontinued operations, net of tax

—

—

—

(38.8)

Adjustments to reconcile net earnings (loss) to net cash provided by operating 
activities:

Depreciation and amortization

170.6

146.4

643.5

577.3

Stock compensation

27.3

27.0

116.7

128.7

Operating lease right-of-use asset expense

48.6

39.5

185.3

168.0

Goodwill and other asset impairments

2.8

333.8

5.3

349.0

Deferred income taxes

38.5

(59.9)

(20.1)

(78.1)

Other, net

16.1

35.0

62.1

38.9

Change in assets and liabilities (net of effects of acquisitions and divestitures):

Decrease (increase) in accounts receivable

90.9

69.8

(52.3)

(103.8)

Decrease (increase) in unbilled services

7.6

(74.9)

30.4

28.5

Increase in supplies inventory

(14.6)

(10.4)

(12.6)

(0.7)

Decrease (increase) in prepaid expenses and other

(14.7)

49.1

(54.5)

(25.8)

Increase (decrease) in accounts payable

210.3

146.2

72.1

(42.4)

Increase (decrease) in unearned revenue

3.3

54.8

(24.6)

105.5

Increase (decrease) in accrued expenses and other

46.9

(10.0)

(112.6)

(323.2)

Net cash provided by continuing operating activities

777.2

579.6

1,585.8

1,202.3

Net cash provided by discontinued operating activities

—

—

—

125.4

Net cash provided by operating activities

777.2

579.6

1,585.8

1,327.7

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

(112.1)

(167.2)

(489.9)

(453.6)

Proceeds from sale of assets

1.4

0.3

2.0

0.6

Proceeds from sale or distribution of investments

—

—

—

6.7

Purchase of investments

(12.7)

(8.9)

(55.0)

(29.0)

Proceeds from sale of business

1.6

—

15.1

—

Acquisition of businesses, net of cash acquired

(87.8)

(154.8)

(839.0)

(671.5)

Net cash used for investing activities

(209.6)

(330.6)

(1,366.8)

(1,146.8)

Net cash used in discontinued investing activities

—

—

—

(24.7)

Net cash used for investing activities

(209.6)

(330.6)

(1,366.8)

(1,171.5)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from revolving credit facilities

—

519.7

2,463.7

2,488.2

Payments on revolving credit facilities

—

(609.3)

(2,463.7)

(2,488.2)

Proceeds from accounts receivable securitization

—

—

300.0

—

Proceeds from senior note offerings

—

—

2,000.0

—

Payments on senior notes

(400.0)

(300.0)

(1,000.0)

(300.0)

Net share settlement tax payments from issuance of stock to employees

(7.7)

(0.2)

(46.4)

(39.8)

Net proceeds from issuance of stock to employees

3.2

—

56.2

54.4

Dividends paid

(60.1)

(61.1)

(243.1)

(254.0)

Purchase of common stock

(75.1)

9.0

(250.1)

(1,000.0)

Other

(7.0)

(4.6)

(36.7)

(19.6)

Net cash (used for) provided by continuing financing activities

(546.7)

(446.5)

779.9

(1,559.0)

Net cash provided by discontinued financing activities

—

—

—

1,499.7

Net cash (used for) provided by financing activities

(546.7)

(446.5)

779.9

(59.3)

Effect of exchange rate changes on cash and cash equivalents

(19.5)

6.4

(17.0)

9.9

Net increase (decrease) in cash and cash equivalents

1.4

(191.1)

981.9

106.8

Cash and cash equivalents at beginning of period

1,517.3

727.9

536.8

430.0

Cash and cash equivalents at end of period

$    1,518.7

$       536.8

$    1,518.7

$       536.8

LABCORP HOLDINGS INC.

Condensed Combined Non-GAAP Segment Information

(Dollars in Millions)

Three Months Ended 
,

Year Ended

,

2024

2023

2024

2023

Diagnostics Laboratories

Revenues

$  2,586.2

$  2,346.9

$  10,144.3

$  9,415.1

Adjusted Operating Income

$     359.5

$     353.7

$  1,606.3

$  1,591.3

Adjusted Operating Margin

13.9 %

15.1 %

15.8 %

16.9 %

Biopharma Laboratory Services

Revenues

$     767.0

$     694.8

$  2,922.6

$  2,774.2

Adjusted Operating Income

$     130.8

$     109.0

$     458.9

$     396.3

Adjusted Operating Margin

17.0 %

15.7 %

15.7 %

14.3 %

Consolidated

Revenues

$  3,329.4

$  3,033.3

$  13,008.9

$  12,161.6

Adjusted Segment Operating Income

$     490.3

$     462.7

$  2,065.2

$  1,987.6

Unallocated Corporate Expense

(67.1)

(67.8)

(268.2)

(272.7)

Total Adjusted Operating Income

$     423.2

$     394.9

$  1,797.0

$  1,714.9

Adjusted Operating Margin

12.7 %

13.0 %

13.8 %

14.1 %

LABCORP HOLDINGS INC.

Reconciliation of Non-GAAP Measures

(Dollars and Shares in Millions, Except Per Share Data)

Three Months Ended 
,

Year Ended

,

2024

2023

2024

2023

Adjusted Operating Income

Operating income (loss)

$       216.5

$     (122.8)

$    1,086.7

$       725.6

Amortization of intangibles and other assets ^(a)

70.4

59.2

256.4

219.8

Restructuring and other charges ^(b)

11.4

18.3

46.0

49.1

Acquisition and disposition-related costs ^(c)

51.3

16.5

146.4

56.0

Launchpad Costs ^(d)

7.0

—

65.7

—

Spin off transaction costs ^(e)

—

22.6

—

94.1

COVID-19 related costs ^(f)

—

20.7

—

59.6

Asset impairments ^(g)

2.8

333.8

5.3

349.0

Customer and vendor cyber-event costs  ^(h)

16.8

—

24.1

—

Other

30.7

23.2

86.4

46.1

TSA Reimbursement ⁽ⁱ⁾

16.3

23.4

80.0

46.1

CDCS not included in discontinued operations ^(j)

—

—

—

69.5

Adjusted operating income

$       423.2

$       394.9

$    1,797.0

$    1,714.9

Adjustments impacting revenues

$         15.0

$             —

$         15.0

$             —

Adjusted operating profit margin

12.7 %

13.0 %

13.8 %

14.1 %

Adjusted Net Income

Net income (loss)

$       143.4

$     (167.1)

$       746.0

$       418.0

Impact of adjustments to operating income

206.7

517.7

710.3

919.8

Losses on venture fund investments, net ^(k)

4.1

3.4

11.4

4.8

Gain on sale of business ^(l)

(1.5)

—

(6.4)

—

Pension settlement ^(m)

(2.3)

—

—

10.8

TSA Reimbursement ⁽ⁱ⁾

(16.3)

(23.4)

(80.0)

(46.1)

Other

—

—

0.3

0.5

Income tax impact of adjustments ⁽ⁿ⁾

(43.7)

(48.5)

(151.3)

(155.7)

Earnings from discontinued operations, net of tax ^(j)

—

—

—

(38.8)

CDCS not included in discontinued operations ^(j)

—

—

—

74.4

Adjusted net income

$       290.4

$       282.1

$    1,230.3

$    1,187.7

Weighted average diluted shares outstanding

84.2

85.5

84.4

87.6

Adjusted net income per share

$         3.45

$         3.30

$       14.57

$       13.56

(a)

Amortization of intangible assets acquired as part of business acquisitions.

(b)

Restructuring and other charges represent amounts incurred in connection with the elimination of redundant positions and facilities within the organization in connection with our LaunchPad initiatives, the spin-off of Fortrea Holdings Inc. (Fortrea), and acquisitions or dispositions of businesses by the company.

(c)

Acquisition and disposition-related costs include due-diligence legal and advisory fees, retention bonuses, impact of delayed contract or license transfers, and other integration or disposition related activities.

(d)

LaunchPad costs include non-capitalized costs associated with the implementation of systems, consolidation of processes, and consulting costs incurred as part of various business process improvement initiatives.

(e)

The company incurred various costs to prepare for the spin-off of Fortrea and reorganization of the remaining Labcorp business.

(f)

Costs of incremental operating expenses incurred as a result of the COVID-19 pandemic.

(g)

Asset impairments relate primarily to goodwill within the early development reporting unit and other assets deemed impaired.

(h)

The company incurred cost and additional collection reserves as the result of customer and vendor cyber events.

(i)

Represents transition services fees charged to Fortrea related to administrative and IT systems support.  The costs to provide these services are included in operating income but the service fees are included in other income.

(j)

These adjustments remove the impact of the Clinical Development and Commercialization Services (CDCS) business pursuant to the spin-off of Fortrea.

(k)

The company makes investments in companies or investment funds developing promising technology related to its operations. The company recorded net gains and losses 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.

(l)

The company recorded a gain on the disposition of the Beacon Laboratory Benefits Solutions business.

(m)

The company incurred a charge related to the US pension plan due to settlement of certain obligations to retired employees.

(n)

Income tax impact of adjustments calculated based on the tax rate applicable to each item.