Labcorp announces initiatives to enhance shareholder value
Board of Directors Approves Plans to Initiate Quarterly Cash Dividend and Authorizes $2.5 Billion Share Repurchase Program
Capital Allocation Plan Enables Continued Investments in Key Growth Areas, Science and Innovation
- Initiating a dividend in the second quarter of 2022. The Board is targeting a dividend payout ratio of between 15-20% of adjusted earnings;
- Authorizing a
$2.5 billion share repurchase program. As part of this program,$1 billion will be repurchased under an accelerated share repurchase plan; - Implementing a new LaunchPad business process improvement initiative, targeting savings of
$350 million over the next three years; - Providing a longer-term outlook in connection with the announcement of Labcorp’s 2021 year-end results in addition to the Company’s annual guidance;
- Providing additional business insights through enhanced disclosures beginning with Labcorp’s first quarter 2022 results; and
- Continuing a commitment to profitable growth through investments in science, innovation and new technologies.
The above actions follow the conclusion of Labcorp’s thorough review of its structure and capital allocation strategy, as announced in
Labcorp’s updated capital allocation plan:
- Enables the Company to continue to invest in key growth areas such as oncology, Alzheimer’s, autoimmune and women’s health;
- Fuels growth through innovation by using Labcorp’s unparalleled data and insights to bring scientific advancements—both
Labcorp -developed, as well as those of other scientists—to market at scale; - Reflects the Board’s confidence in Labcorp’s strong balance sheet and cash flow generation profile; and
- Demonstrates the Board’s commitment to deploying capital to enhance value for shareholders, patients, providers and pharmaceutical customers worldwide who rely on
Labcorp to help make health care decisions that lead to better outcomes.
“We are positioning
“The initiation of a dividend and new share repurchase program will enable us to enhance returns to shareholders while maintaining financial flexibility to continue investing in key higher-growth opportunities,” said
The new share repurchase program approved by the Board authorizes the Company to repurchase an additional
Advisors
About
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements, including, but not limited to, statements with respect to (i) the Company’s plan to initiate a dividend, (ii) the Company’s expectations to repurchase its stock and to enter into an accelerated repurchase program, (iii) the Company’s operations, performance and financial condition, including cash flow generation, balance sheet and investment-grade rating, (iv) the Company’s strategic objectives, including expectations for future investment, growth and deployment of capital and (v) the return to shareholders.
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, that the timing of share repurchases and the number of shares of common stock that are repurchased depend on market conditions, other developments and any decision by the Company to suspend repurchase activities in the future, the trading price of the Company’s stock, competitive actions and other unforeseen changes and general uncertainties in the marketplace, and the Company’s ability (or inability) to execute on its plans to respond to the outcome of its review of the Company’s structure and changes in capital allocation strategy, 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, federal, state, and local government responses to the COVID-19 pandemic, 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, the ability to develop or acquire new products and adapt to technological changes, failure in information technology, systems or data security, the impact of potential losses under repurchase agreements, adverse weather conditions, the number of revenue days in a financial period, employee relations, personnel costs, 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 its 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 these 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
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