LabCorp Reports Q2 Diluted EPS of $1.56 and Adjusted EPS Excluding
Amortization of $1.77, up 7.9%
BURLINGTON, N.C.--(BUSINESS WIRE)--Jul. 19, 2012--
Laboratory Corporation of America® Holdings (LabCorp®)
(NYSE: LH) today announced results for the quarter ended June 30, 2012.
Second Quarter Results
Net earnings were $153.3 million and earnings per diluted share (EPS)
were $1.56 in the second quarter of 2012. Non-GAAP earnings per diluted
share, excluding amortization, restructuring and other special charges
recorded in the second quarter of 2012 and 2011 (Adjusted EPS Excluding
Amortization) were $1.77 and $1.64, respectively.
Operating income for the quarter was $276.0 million. Non-GAAP operating
income excluding restructuring and other special charges recorded in the
quarter (Adjusted Operating Income) was $280.3 million.
Revenues for the quarter were $1,423.4 million, an increase of 1.4% over
the second quarter of 2011. Testing volume, measured by requisitions,
was essentially flat and revenue per requisition increased 1.5%.
Operating cash flow for the quarter was $186.3 million. The balance of
cash at the end of the quarter was $124.4 million, and there were $450.0
million of borrowings outstanding under the Company’s $1.0 billion
revolving credit facility. During the quarter, the Company repurchased
$130.3 million of stock, representing 1.5 million shares. As of June 30,
2012, $331.9 million of repurchase authorization remained under the
Company’s previously approved share repurchase plan.
The Company recorded restructuring and other special charges of $3.4
million during the second quarter of 2012. In addition, during the
quarter the Company recorded $0.9 million in acquisition fees and
expenses relating to its planned acquisition of MEDTOX Scientific, Inc.;
as part of the Clearstone integration, the Company recorded a $6.9
million loss on the disposal of one of its European subsidiaries; and,
in conjunction with the liquidation of one of its joint ventures, the
Company recorded a $2.9 million increase in equity method income.
Year To Date Results
Net earnings were $314.9 million and earnings per diluted share were
$3.19 in the first half of 2012. Adjusted EPS Excluding Amortization in
the first half of 2012 and 2011 were $3.51 and $3.18, respectively.
Operating income was $563.1 million in the first half of 2012. Adjusted
Operating Income was $563.8 million, compared to $543.3 million in 2011.
Revenues were $2,846.7 million, an increase of 2.7% compared to the same
period in 2011. Compared to the first half of 2011, testing volume,
measured by requisitions, increased 1.3%, and revenue per requisition
increased 1.4%.
Operating cash flow for the first six months of 2012 was $383.4 million.
During the first six months of 2012, the Company repurchased $252.6
million of stock, representing 2.9 million shares.
“We delivered a solid quarter given that we continue to face a
low-volume-growth environment,” said David P. King, Chairman and Chief
Executive Officer. “We continued to build for the future as we received
clearance to proceed with our acquisition of MEDTOX Scientific, Inc.,
which will broaden our expertise in esoteric toxicology testing. At the
same time we achieved earnings growth through disciplined expense
management, particularly in selling, general and administrative
expenses.”
Outlook for 2012
The Company updated its 2012 guidance, expecting revenue growth of
approximately 2.0% - 3.0%; Adjusted EPS Excluding Amortization in the
range of $6.80 to $7.00, excluding the impact of any share repurchase
activity after June 30, 2012; operating cash flow of approximately $950
million; and capital expenditures of approximately $155 million. The
Company expects that Genzyme Genetics will be slightly accretive to 2012
earnings.
Use of Adjusted Measures
The Company has provided in this press release “adjusted” financial
information that has not been prepared in accordance with GAAP,
including Adjusted EPS, Adjusted EPS Excluding Amortization and Adjusted
Operating Income. 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 to use in evaluating
operating results and trends, and in comparing the Company’s financial
results with 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 filing an 8-K that will include additional
information on its business and operations. This information will also
be available on the Company's Web site. Analysts and investors are
directed to this 8-K and the Web site to review this supplemental
information.
A conference call discussing LabCorp's quarterly results will be held
today at 9:00 a.m. Eastern Time and is available by dialing 800-299-7098
(617-801-9715 for international callers). The access code is 87974742. A
telephone replay of the call will be available through July 26, 2012 and
can be heard by dialing 888-286-8010 (617-801-6888 for international
callers). The access code for the replay is 24097563. A live online
broadcast of LabCorp’s quarterly conference call on July 19, 2012 will
be available at http://www.labcorp.com/
or at http://www.streetevents.com/
beginning at 9:00 a.m. Eastern Time. This webcast will be archived and
accessible continuing through August 19, 2012.
About LabCorp®
Laboratory Corporation of America® Holdings, an S&P 500
company, is a pioneer in commercializing new diagnostic technologies and
the first in its industry to embrace genomic testing. With annual
revenues of $5.5 billion in 2011, over 31,000 employees worldwide, and
more than 220,000 clients, LabCorp offers more than 4,000 tests ranging
from routine blood analyses to reproductive genetics to companion
diagnostics. LabCorp furthers its scientific expertise and innovative
clinical testing technology through its LabCorp Specialty Testing Group:
The Center for Molecular Biology and Pathology, National Genetics
Institute, ViroMed Laboratories, Inc., The Center for Esoteric Testing,
Litholink Corporation, Integrated Genetics, Integrated Oncology, DIANON Systems,
Inc., Monogram Biosciences, Inc., Colorado Coagulation, and Endocrine
Sciences. LabCorp conducts clinical trials testing through its LabCorp
Clinical Trials division. LabCorp clients include physicians, government
agencies, managed care organizations, hospitals, clinical labs, and
pharmaceutical companies. To learn more about our organization, visit
our Web site at: www.labcorp.com.
This press release contains forward-looking statements. Each of the
forward-looking statements is subject to change based on various
important factors, including without limitation, competitive actions in
the marketplace and adverse actions of governmental and other
third-party payors. Actual results could differ materially from
those suggested by these forward-looking statements. Further information
on potential factors that could affect LabCorp’s financial results is
included in the Company’s Form 10-K for the year ended December 31,
2011, and subsequent SEC filings.
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LABORATORY CORPORATION OF AMERICA HOLDINGS
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|
Consolidated Statements of Operations
|
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(in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
1,423.4
|
|
|
$
|
1,403.3
|
|
|
$
|
2,846.7
|
|
|
$
|
2,771.7
|
|
|
Cost of sales
|
|
|
843.9
|
|
|
|
815.1
|
|
|
|
1,691.1
|
|
|
|
1,615.1
|
|
|
Selling, general and administrative
|
|
|
279.5
|
|
|
|
322.7
|
|
|
|
550.7
|
|
|
|
605.5
|
|
|
Amortization of intangibles and other assets
|
|
|
20.6
|
|
|
|
21.5
|
|
|
|
42.0
|
|
|
|
43.4
|
|
|
Restructuring and other special charges
|
|
|
3.4
|
|
|
|
18.3
|
|
|
|
(0.2
|
)
|
|
|
46.2
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
276.0
|
|
|
|
225.7
|
|
|
|
563.1
|
|
|
|
461.5
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense)
|
|
|
(6.7
|
)
|
|
|
(0.2
|
)
|
|
|
(7.2
|
)
|
|
|
(0.1
|
)
|
|
Investment income
|
|
|
0.2
|
|
|
|
0.2
|
|
|
|
0.4
|
|
|
|
0.5
|
|
|
Interest expense
|
|
|
(21.3
|
)
|
|
|
(21.0
|
)
|
|
|
(42.8
|
)
|
|
|
(45.0
|
)
|
|
Equity method income, net
|
|
|
8.0
|
|
|
|
2.6
|
|
|
|
12.3
|
|
|
|
4.1
|
|
|
Earnings before income taxes
|
|
|
256.2
|
|
|
|
207.3
|
|
|
|
525.8
|
|
|
|
421.0
|
|
|
Provision for income taxes
|
|
|
102.4
|
|
|
|
80.6
|
|
|
|
210.0
|
|
|
|
163.7
|
|
|
Net earnings
|
|
|
153.8
|
|
|
|
126.7
|
|
|
|
315.8
|
|
|
|
257.3
|
|
|
Less net earnings attributable to noncontrolling interest
|
|
|
(0.5
|
)
|
|
|
(3.8
|
)
|
|
|
(0.9
|
)
|
|
|
(7.3
|
)
|
|
Net earnings attributable to Laboratory Corporation of America
Holdings
|
|
$
|
153.3
|
|
|
$
|
122.9
|
|
|
$
|
314.9
|
|
|
$
|
250.0
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Operating Income
|
|
|
|
|
|
|
|
|
|
Operating Income
|
|
$
|
276.0
|
|
|
$
|
225.7
|
|
|
$
|
563.1
|
|
|
$
|
461.5
|
|
|
Restructuring and other special charges
|
|
|
3.4
|
|
|
|
53.9
|
|
|
|
(0.2
|
)
|
|
|
81.8
|
|
|
Acquisition fees and expenses
|
|
|
0.9
|
|
|
|
-
|
|
|
|
0.9
|
|
|
|
-
|
|
|
Adjusted operating income
|
|
$
|
280.3
|
|
|
$
|
279.6
|
|
|
$
|
563.8
|
|
|
$
|
543.3
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EPS Excluding Amortization
|
|
|
|
|
|
|
|
|
|
Diluted earnings per common share
|
|
$
|
1.56
|
|
|
$
|
1.20
|
|
|
$
|
3.19
|
|
|
$
|
2.44
|
|
|
Impact of restructuring and other special charges
|
|
|
0.08
|
|
|
|
0.32
|
|
|
|
0.06
|
|
|
|
0.48
|
|
|
Amortization expense
|
|
|
0.13
|
|
|
|
0.12
|
|
|
|
0.26
|
|
|
|
0.26
|
|
|
Adjusted EPS Excluding Amortization
|
|
$
|
1.77
|
|
|
$
|
1.64
|
|
|
$
|
3.51
|
|
|
$
|
3.18
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
98.0
|
|
|
|
102.8
|
|
|
|
98.6
|
|
|
|
102.6
|
|
|
LABORATORY CORPORATION OF AMERICA HOLDINGS
|
|
Consolidated Balance Sheets
|
|
(in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
June 30,
|
|
December 31,
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
Cash and short term investments
|
|
$
|
124.4
|
|
$
|
159.3
|
|
Accounts receivable, net
|
|
|
735.8
|
|
|
699.8
|
|
Property, plant and equipment
|
|
|
576.2
|
|
|
578.3
|
|
Intangible assets and goodwill, net
|
|
|
4,283.0
|
|
|
4,302.5
|
|
Investments in joint venture partnerships
|
|
|
79.0
|
|
|
76.8
|
|
Other assets
|
|
|
299.9
|
|
|
319.9
|
|
|
|
$
|
6,098.3
|
|
$
|
6,136.6
|
|
|
|
|
|
|
|
Zero-coupon subordinated notes
|
|
$
|
134.4
|
|
$
|
135.5
|
|
Senior notes
|
|
|
1,525.2
|
|
|
1,525.5
|
|
Credit facility
|
|
|
450.0
|
|
|
560.0
|
|
Other liabilities
|
|
|
1,336.7
|
|
|
1,391.9
|
|
Noncontrolling interest
|
|
|
20.2
|
|
|
20.2
|
|
Shareholders' equity
|
|
|
2,631.8
|
|
|
2,503.5
|
|
|
|
$
|
6,098.3
|
|
$
|
6,136.6
|
|
Consolidated Statement of Cash Flow Data
|
|
(in millions, except per share data)
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
|
|
June 30,
|
|
June 30,
|
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
383.4
|
|
|
$
|
400.2
|
|
|
Net cash used for investing activities
|
|
|
(101.6
|
)
|
|
|
(117.3
|
)
|
|
Net cash provided by (used for) financing activities
|
|
|
(316.7
|
)
|
|
|
(394.9
|
)
|
|
Effect of exchange rates on cash
|
|
|
-
|
|
|
|
0.2
|
|
|
Net (decrease) increase in cash
|
|
|
(34.9
|
)
|
|
|
(111.8
|
)
|
|
Cash at beginning of period
|
|
|
159.3
|
|
|
|
230.7
|
|
|
Cash at end of period
|
|
$
|
124.4
|
|
|
$
|
118.9
|
|
|
|
|
|
|
|
|
Free Cash Flow:
|
|
|
|
|
|
Net cash provided by operating activities
|
|
$
|
383.4
|
|
|
$
|
400.2
|
|
|
Less: Capital expenditures
|
|
|
(68.3
|
)
|
|
|
(75.2
|
)
|
|
Free cash flow
|
|
$
|
315.1
|
|
|
$
|
325.0
|
|
Notes to Financial Tables
1) During the second quarter of 2012, the Company recorded $3.4 million
in restructuring and other special charges. The restructuring charges
include $4.5 million in severance and other personnel costs along with
$0.4 million in facility-related costs primarily associated with the
ongoing integration of the Clearstone Central Laboratories acquisition
and costs associated with the previously announced termination of an
executive vice president. These charges were partially offset by the
reversal of previously established restructuring reserves of $1.5
million. The Company recorded $0.9 million in acquisition fees and
expenses relating to its planned acquisition of MEDTOX Scientific, Inc,
which was recorded in Selling, General and Administrative Expenses in
the Company’s Statement of Operations. As part of the Clearstone
integration, the Company also recorded a $6.9 million loss on the
disposal of one of its European subsidiaries. In addition, in
conjunction with the liquidation of one of its joint ventures, the
Company recorded a one-time increase of $2.9 million in equity method
income. The after tax impact of these net charges decreased net earnings
for the quarter ended June 30, 2012 by $7.8 million and diluted earnings
per share by $0.08 ($7.8 million divided by 98.0 million shares).
During the first quarter of 2012, the Company recorded a net credit of
$3.6 million in restructuring and other special charges. The Company
reversed previously established reserves of $3.8 million in unused
severance and $2.4 million in unused facility-related costs. This net
credit also includes charges of $1.7 million in severance and other
personnel costs along with $0.9 million in facility-related costs
primarily related to ongoing integration activities for Orchid and
Genzyme Genetics.
The after tax impact of the combined net charges decreased net earnings
for the six months ended June 30, 2012, by $5.6 million and diluted
earnings per share by $0.06 ($5.6 million divided by 98.6 million
shares).
2) During the second quarter of 2011, the Company recorded restructuring
and other special charges of $53.9 million. The restructuring charges
include $7.5 million in net severance and other personnel costs along
with $10.8 million in net facility-related costs primarily associated
with the ongoing integration of the Genzyme Genetics and Westcliff
acquisitions. The special charges also include $34.5 million ($49.5
million, net of previously recorded reserves of $15.0 million) relating
to the settlement of the Hunter Labs litigation in California, along
with $1.1 million for legal costs associated with the planned
acquisition of Orchid Cellmark incurred during the quarter, both of
which were recorded in Selling, General and Administrative Expenses in
the Company’s Statement of Operations. The after tax impact of these
charges decreased net earnings for the quarter ended June 30, 2011, by
$32.6 million and diluted earnings per share by $0.32 ($32.6 million
divided by 102.8 million shares).
During the first quarter of 2011, the Company recorded restructuring and
other special charges of $27.9 million. The charges included $4.0
million in severance and other personnel costs along with $9.8 million
in facility-related costs associated with the integration of Genzyme
Genetics. The charges also included a $14.8 million write-off of an
investment made in a prior year.
The after tax impact of these combined charges decreased net earnings
for the six months ended June 30, 2011, by $49.4 million and diluted
earnings per share by $0.48 ($49.4 million divided by 102.6 million
shares).
3) The Company continues to grow the business through acquisitions and
uses Adjusted EPS Excluding Amortization as a measure of operational
performance, growth and shareholder returns. The Company believes
adjusting EPS for amortization provides investors with better insight
into the operating performance of the business. For the quarters ended
June 30, 2012 and 2011, intangible amortization was $20.6 million and
$21.5 million, respectively ($12.5 million and $13.1 million net of tax,
respectively) and decreased EPS by $0.13 ($12.5 million divided by 98.0
million shares) and $0.12 ($13.0 million divided by 102.8 million
shares), respectively. For the six months ended June 30, 2012 and 2011,
intangible amortization was $42.0 million and $43.4 million,
respectively ($25.7 million and $26.5 million net of tax, respectively)
and decreased EPS by $0.26 ($25.7 million divided by 98.6 million
shares) and $0.26 ($26.5 million divided by 102.6 million shares),
respectively.
Source: Laboratory Corporation of America(R) Holdings
Laboratory Corporation of America Holdings
Stephen Anderson,
336-436-5274
[email protected]
