- Revenue: Q4 of $3.0 billion, up 6% over 2018; Full year of
$11.6 billion, up 2% over 2018
- Diluted EPS: Q4 of $2.32, up from $1.56 last year; Full year of
$8.35, down from $8.61 last year
- Adjusted EPS: Q4 of $2.86, up 13% over 2018; Full year of
$11.32, up 3% over 2018
- Free Cash Flow: Q4 of $442 million, up 21% over 2018; Full year
of $1.04 billion, up 13% over 2018
- 2020 Adjusted EPS guidance of $11.75 to $12.15
- 2020 Free Cash Flow guidance of $950 million to $1.05
billion
LabCorp® (or the Company) (NYSE: LH) today announced results for
the fourth quarter and year ended December 31, 2019, and provided
2020 guidance.
"We had a strong finish to 2019, a year where we delivered solid
revenue growth, adjusted EPS, and free cash flow," said Adam H.
Schechter, president and CEO of LabCorp. "We start 2020 with a
clear strategy that leverages our science, technology, and delivery
focused on our customers to improve health and improve lives. We
are well positioned to drive continued growth and shareholder value
in 2020 and beyond."
Consolidated Results
Fourth Quarter Results
Revenue for the quarter was $2.95 billion, an increase of 6.0%
over $2.79 billion in the fourth quarter of 2018. The increase in
revenue was due to acquisitions of 4.5% and organic growth of 2.3%
(which includes the negative impact from lower Medicare and
Medicaid pricing as a result of PAMA of 0.9%), partially offset by
the disposition of businesses of 0.6% and negative foreign currency
translation of 0.2%.
Operating income for the quarter was $336.4 million, or 11.4% of
revenue, compared to $307.7 million, or 11.0%, in the fourth
quarter of 2018. The increase in operating income and margin was
primarily due to acquisitions, organic growth, and LaunchPad
savings, partially offset by the negative impact from PAMA and
higher personnel costs. The Company recorded restructuring charges,
special items, and amortization, which together totaled $85.6
million in the quarter, compared to $87.2 million during the same
period in 2018. Adjusted operating income (excluding amortization,
restructuring charges, and special items) for the quarter was
$422.0 million, or 14.3% of revenue, compared to $394.9 million, or
14.2%, in the fourth quarter of 2018. Excluding the negative impact
from PAMA, adjusted operating income and margin grew $53.3 million
and 90 basis points, respectively, over last year.
Net earnings for the quarter were $227.1 million, compared to
$157.9 million in the fourth quarter of 2018. Diluted EPS were
$2.32 in the quarter, an increase of 48.7% compared to $1.56 in the
same period in 2018. During the fourth quarter of 2019, the Company
recorded $19.0 million in net gains on venture fund investments,
partially offset by losses of $1.4 million on the disposition of
businesses and a cost of $3.1 million related to debt refinancing.
In the fourth quarter of 2018, the Company recorded a $24.6 million
loss on the disposition of its U.S. forensics laboratory testing
business, a non-cash pension settlement charge of $7.5 million, and
a loss of $5.2 million on a venture fund investment. Adjusted EPS
(excluding amortization, restructuring charges, and special items)
were $2.86 in the quarter, an increase of 13.5% over $2.52 in the
fourth quarter of 2018.
Operating cash flow for the quarter was $569.8 million, compared
to $486.4 million in the fourth quarter of 2018, which was
negatively impacted by approximately $105 million from the net tax
payment in the fourth quarter of 2018 related to the disposition of
businesses. The increase in operating cash flow was primarily due
to higher cash earnings, partially offset by increased working
capital to support growth. Capital expenditures totaled $128.2
million, compared to $122.2 million a year ago. As a result, free
cash flow (operating cash flow less capital expenditures) was
$441.6 million, compared to $364.2 million in the fourth quarter of
2018.
At the end of the quarter, the Company’s cash balance and total
debt were $337.5 million and $6.2 billion, respectively. During the
quarter, the Company invested $23.1 million in acquisitions,
repurchased $50.0 million of stock, representing approximately 0.3
million shares, and paid down $402.7 million of debt. As of
December 31, 2019, the Company had $900.0 million of authorization
remaining under its share repurchase program.
Full Year Results
Revenue was $11.55 billion, an increase of 2.0% over last year's
$11.33 billion. The increase in revenue was due to growth from
acquisitions of 2.3% and organic growth of 1.6% (which includes the
negative impact from PAMA of 0.9%), partially offset by the
disposition of businesses of 1.4% and negative foreign currency
translation of 0.5%.
Operating income was $1,330.2 million, or 11.5% of revenue,
compared to $1,325.7 million, or 11.7%, in 2018. The Company
recorded restructuring charges, special items, and amortization
which together totaled $380.6 million, compared to $397.6 million
during the same period in 2018. Adjusted operating income
(excluding amortization, restructuring charges, and special items)
was $1,710.8 million, or 14.8% of revenue, compared to $1,723.3
million, or 15.2%, in 2018. The decrease in operating income and
margin was primarily due to the negative impact from PAMA, higher
personnel costs, disposition of businesses, cybersecurity
investments, and a favorable one-time legal settlement in 2018,
partially offset by organic growth, the Company’s LaunchPad
initiatives, and acquisitions. Excluding the negative impact from
PAMA, adjusted operating income and margins grew $94.5 million and
40 basis points, respectively, over last year.
Net earnings in 2019 were $823.8 million, or $8.35 per diluted
share, compared to $883.7 million, or $8.61 per diluted share, last
year. During 2019, the Company recorded net gains of $20.9 million
on venture fund investments, partially offset by losses of $13.3
million on the disposition of businesses and a cost of $3.1 million
related to debt refinancing. During 2018, the Company recorded a
net gain of $184.8 million on the disposition of businesses,
partially offset by a charge of $45.0 million due to the
implementation of the Tax Cuts and Jobs Act of 2017 (TCJA), a
non-cash pension settlement charge of $7.5 million, and a $5.2
million loss on a venture fund investment.
Adjusted EPS (excluding amortization, restructuring, and special
items) were $11.32, an increase of 2.7% compared to $11.02 in
2018.
Operating cash flow was $1,444.7 million, compared to $1,305.4
million in 2018, which was negatively impacted by approximately
$105 million from the net tax payment in the fourth quarter of 2018
related to the disposition of businesses. The increase in operating
cash flow was due to higher cash earnings, partially offset by
increased working capital to support growth. Capital expenditures
totaled $400.2 million, compared to $379.8 million in 2018. As a
result, free cash flow (operating cash flow less capital
expenditures) was $1,044.5 million, compared to $925.6 million in
2018.
During the year, the Company invested $876.0 million in
acquisitions and repurchased $450.0 million of stock representing
approximately 2.9 million shares.
***
The following segment results exclude amortization,
restructuring charges, special items, and unallocated corporate
expenses.
Fourth Quarter Segment Results
LabCorp Diagnostics
Revenue for the quarter was $1.76 billion, an increase of 3.7%
over $1.69 billion in the fourth quarter of 2018. The 3.7% increase
in revenue was due to acquisitions of 3.5% and organic growth of
0.8%, partially offset by the negative impact from the disposition
of businesses of 0.5%. The organic revenue increase of 0.8%
includes the negative impact from PAMA of 1.5%.
Total volume (measured by requisitions), excluding the
disposition of businesses, increased by 2.6%, as acquisition volume
contributed 1.8% and organic volume increased by 0.8%. Organic
volume includes the negative impact from managed care contract
changes and lower consumer genetics demand, which largely offset
the benefit of one additional revenue day. Excluding the
disposition of businesses, revenue per requisition increased by
1.6% due to acquisitions and favorable mix, partially offset by the
negative impact from PAMA and the nonrenewal of the BeaconLBS -
UnitedHealthcare contract pertaining to the Florida market.
Adjusted operating income (excluding amortization, restructuring
charges, and special items) for the quarter was $277.1 million, or
15.8% of revenue, compared to $279.3 million, or 16.5%, in the
fourth quarter of 2018. The $2.2 million decline in adjusted
operating income and 70 basis point decline in adjusted operating
margin were primarily due to the negative impact from PAMA of $26.2
million and 130 basis points, higher personnel costs, and
cybersecurity investments, partially offset by LaunchPad savings,
organic growth, and acquisitions. The Company remains on track to
deliver approximately $200 million of net savings from its
three-year Diagnostics LaunchPad initiative by the end of 2021.
Covance Drug Development
Revenue for the quarter was $1.20 billion, an increase of 9.3%
over $1.10 billion in the fourth quarter of 2018. The increase in
revenue was due to acquisitions of 6.0% and organic growth of 4.6%,
partially offset by the disposition of the Covance Research
Products business of 0.9% and negative foreign currency translation
of 0.4%. Excluding pass-throughs, organic revenue grew mid-to-high
single digits.
Adjusted operating income (excluding amortization, restructuring
charges, and special items) for the quarter was $183.2 million, or
15.2% of revenue, compared to $153.5 million, or 14.0%, in the
fourth quarter of 2018. The $29.7 million increase in adjusted
operating income and 130 basis point increase in adjusted operating
margin were primarily due to LaunchPad savings, acquisitions, and
organic growth, partially offset by higher personnel costs. The
Company remains on track to deliver approximately $150 million of
net savings from its three-year Drug Development LaunchPad
initiative by the end of 2020.
Net orders and net book-to-bill during the trailing twelve
months were $5.91 billion and 1.29, respectively. Backlog at the
end of the quarter was $11.30 billion, compared to $10.71 billion
last quarter, and the Company expects approximately $4.2 billion of
its backlog to convert into revenue in the next twelve months.
***
Outlook for 2020
The following guidance assumes foreign exchange rates effective
as of December 31, 2019 for the full year. Enterprise level
guidance includes the estimated impact from currently anticipated
capital allocation, including acquisitions and share
repurchases.
- Revenue growth of 4.0% to 6.0% over 2019 revenue of $11.55
billion, which includes the negative impact from the disposition of
business of approximately 0.2% as well as the benefit from foreign
currency translation of 0.4%.
- Revenue growth in LabCorp Diagnostics of 0.5% to 2.5% over 2019
revenue of $7.00 billion, which includes the negative impact from
PAMA of approximately 1.3% as well as the benefit from one
additional revenue day of 0.4% and foreign currency translation of
0.1%.
- Revenue growth in Covance Drug Development of 7.0% to 9.5% over
2019 revenue of $4.58 billion, which includes the negative impact
from the disposition of business of approximately 0.5% as well as
the benefit from foreign currency translation of 0.7%.
- Adjusted EPS of $11.75 to $12.15, an increase of 3.8% to 7.3%
over 2019 adjusted EPS of $11.32.
- Free cash flow (operating cash flow less capital expenditures)
of $950 million to $1.05 billion, compared to $1.04 billion in
2019.
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 provide 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 and an identification
of the components that comprise "special items" used for certain
adjusted financial information 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 9:00 a.m. EST and is available by dialing
844-634-1444 (615-247-0253 for international callers). The access
code is 8663007. A telephone replay of the call will be available
through Feb. 27, 2020, and can be heard by dialing 855-859-2056
(404-537-3406 for international callers). The access code for the
replay is 8663007. A live online broadcast of LabCorp’s quarterly
conference call on Feb. 13, 2020, will be available at http://www.labcorp.com or at http://www.streetevents.com beginning at 9:00 a.m.
EST. This webcast will be archived and accessible through Jan. 29,
2021.
About LabCorp
LabCorp (NYSE: LH), an S&P 500 company, is a leading global
life sciences company that is deeply integrated in guiding patient
care, providing comprehensive clinical laboratory and end-to-end
drug development services. With a mission to improve health and
improve lives, LabCorp delivers world-class diagnostic solutions,
brings innovative medicines to patients faster, and uses technology
to improve the delivery of care. LabCorp reported revenue of more
than $11.5 billion in 2019. To learn more about LabCorp, visit
www.LabCorp.com, and to learn more
about Covance Drug Development, visit www.Covance.com.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains forward-looking statements,
including, but not limited to, statements with respect to estimated
2020 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, 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 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 SEC. The information in this press
release should be read in conjunction with a review of the
Company’s filings with the SEC including the information in the
Company’s most recent Annual Report on Form 10-K, and subsequent
Forms 10-Q, under the heading MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
LABORATORY CORPORATION OF
AMERICA HOLDINGS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Dollars in Millions, except per
share data)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Revenues
$
2,953.4
$
2,787.5
$
11,554.8
$
11,333.4
Cost of revenues
2,132.7
2,015.1
8,302.3
8,157.0
Gross profit
820.7
772.4
3,252.5
3,176.4
Selling, general and administrative
expenses
413.9
396.9
1,624.5
1,570.9
Amortization of intangibles and other
assets
64.2
56.2
243.2
231.7
Restructuring and other charges
6.2
11.6
54.6
48.1
Operating income
336.4
307.7
1,330.2
1,325.7
Other income (expense):
Interest expense
(64.4
)
(58.2
)
(240.7
)
(244.2
)
Equity method income, net
1.9
3.1
9.8
11.6
Investment income
4.0
3.3
8.8
7.5
Other, net
15.0
(41.4
)
(3.2
)
167.7
Earnings before income taxes
292.9
214.5
1,104.9
1,268.3
Provision for income taxes
65.6
56.3
280.0
384.4
Net earnings
227.3
158.2
824.9
883.9
Less: Net earnings (loss) attributable to
the noncontrolling interest
(0.2
)
(0.3
)
(1.1
)
(0.2
)
Net earnings attributable to Laboratory
Corporation of America Holdings
$
227.1
$
157.9
$
823.8
$
883.7
Basic earnings per common share
$
2.34
$
1.58
$
8.42
$
8.71
Diluted earnings per common share
$
2.32
$
1.56
$
8.35
$
8.61
Weighted average basic shares
outstanding
97.2
100.2
97.9
101.4
Weighted average diluted shares
outstanding
98.0
101.2
98.6
102.6
LABORATORY CORPORATION OF
AMERICA HOLDINGS AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(Dollars in Millions)
December 31, 2019
December 31, 2018
ASSETS
Current assets:
Cash and cash equivalents
$
337.5
$
426.8
Accounts receivable
1,543.9
1,467.9
Unbilled services
481.4
394.4
Supplies inventory
244.7
237.3
Prepaid expenses and other
373.7
309.0
Total current assets
2,981.2
2,835.4
Property, plant and equipment, net
2,611.6
1,740.3
Goodwill, net
7,865.0
7,360.3
Intangible assets, net
4,034.5
3,911.1
Joint venture partnerships and equity
method investments
84.9
60.5
Deferred income taxes
8.8
1.7
Other assets, net
435.4
276.0
Total assets
$
18,021.4
$
16,185.3
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
632.3
$
634.6
Accrued expenses and other
942.4
870.0
Unearned revenue
451.0
356.4
Short-term operating lease liabilities
197.5
—
Short-term finance lease liabilities
8.4
7.9
Short-term borrowings and current portion
of long-term debt
415.2
10.0
Total current liabilities
2,646.8
1,878.9
Long-term debt, less current portion
5,789.8
5,990.9
Operating lease liabilities
580.6
—
Financing lease liabilities
91.1
51.0
Deferred income taxes and other tax
liabilities
942.8
940.0
Other liabilities
383.2
334.0
Total liabilities
10,434.3
9,194.8
Commitments and contingent liabilities
Noncontrolling interest
20.1
19.1
Shareholders’ equity
Common stock, 97.2 and 98.9 shares
outstanding at December 31, 2019 and 2018, respectively
9.0
11.7
Additional paid-in capital
26.8
1,451.1
Retained earnings
7,903.6
7,079.8
Less common stock held in treasury
—
(1,108.1
)
Accumulated other comprehensive loss
(372.4
)
(463.1
)
Total shareholders’ equity
7,567.0
6,971.4
Total liabilities and shareholders’
equity
$
18,021.4
$
16,185.3
LABORATORY CORPORATION OF
AMERICA HOLDINGS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Dollars in Millions)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net earnings
$
227.3
$
158.2
$
824.9
$
883.9
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
155.8
137.7
577.2
552.1
Stock compensation
23.5
20.8
107.0
91.6
Loss (gain) on sale of business
1.3
24.5
13.2
(184.9
)
Operating lease right-of-use asset
expense
50.0
—
194.1
—
Deferred income taxes
5.9
10.1
29.2
22.2
Other
(7.1
)
7.0
(6.5
)
10.8
Change in assets and liabilities (net of
effects of acquisitions):
(Increase) decrease in accounts
receivable
80.2
58.7
(64.1
)
50.2
Increase (decrease) in unbilled
services
0.5
(75.5
)
(59.0
)
(81.0
)
Increase in inventory
(7.4
)
(10.1
)
(21.9
)
(18.9
)
Increase in prepaid expenses and other
(48.4
)
(17.8
)
(42.6
)
(57.9
)
Increase (decrease) in accounts
payable
15.4
123.2
(12.8
)
43.3
Increase (decrease) in deferred
revenue
39.1
60.6
38.1
(33.8
)
Increase (decrease) in accrued expenses
and other
33.7
(11.0
)
(132.1
)
27.8
Net cash provided by operating
activities
569.8
486.4
1,444.7
1,305.4
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures
(128.2
)
(122.2
)
(400.2
)
(379.8
)
Purchases of investments
(6.2
)
(8.0
)
(27.5
)
(22.3
)
Proceeds from sale of assets
1.9
—
7.7
50.1
Proceeds from sale or distributions of
investments
1.8
—
11.2
—
Proceeds from sale of business
—
3.7
—
658.2
Proceeds from exit of swaps
1.7
18.3
1.7
18.3
Acquisition of businesses, net of cash
acquired
(23.1
)
(38.7
)
(876.0
)
(117.8
)
Net cash (used for) provided by investing
activities
(152.1
)
(146.9
)
(1,283.1
)
206.7
CASH FLOWS FROM FINANCING
ACTIVITIES:
Proceeds from Senior Notes offerings
1,050.0
—
1,050.0
—
Payments on Senior Notes
(687.9
)
(400.0
)
(687.9
)
(400.0
)
Proceeds from term loan
—
—
850.0
—
Payments on term loan
(752.0
)
—
(1,002.0
)
(295.0
)
Proceeds from revolving credit
facilities
22.0
18.0
495.0
467.2
Payments on revolving credit
facilities
(22.0
)
(18.0
)
(495.0
)
(467.2
)
Payment of debt issuance costs
(11.6
)
—
(11.6
)
—
Net share settlement tax payments from
issuance of stock to employees
(0.2
)
(1.8
)
(40.6
)
(48.0
)
Net proceeds from issuance of stock to
employees
5.7
1.7
64.7
69.1
Purchase of common stock
(50.0
)
(400.0
)
(450.0
)
(700.0
)
Other
(3.4
)
(2.8
)
(25.3
)
(16.0
)
Net cash used for financing activities
(449.4
)
(802.9
)
(252.7
)
(1,389.9
)
Effect of exchange rate changes on cash
and cash equivalents
8.1
(2.4
)
1.8
(12.0
)
Net increase (decrease) in cash and cash
equivalents
(23.6
)
(465.8
)
(89.3
)
110.2
Cash and cash equivalents at beginning of
period
361.1
892.6
426.8
316.6
Cash and cash equivalents at end of
period
$
337.5
$
426.8
$
337.5
$
426.8
LABORATORY CORPORATION OF
AMERICA HOLDINGS
Condensed Combined Non-GAAP
Pro Forma Segment Information
(Dollars in Millions)
Three Months Ended December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
LabCorp
Diagnostics
Revenues
$
1,757.8
$
1,694.4
$
6,999.9
$
7,030.8
Adjusted Operating Income
$
277.1
$
279.3
$
1,229.1
$
1,350.9
Adjusted Operating Margin
15.8
%
16.5
%
17.6
%
19.2
%
Covance Drug
Development
Revenues
$
1,201.7
$
1,099.0
$
4,578.1
$
4,313.1
Adjusted Operating Income
$
183.2
$
153.5
$
637.9
$
516.2
Adjusted Operating Margin
15.2
%
14.0
%
13.9
%
12.0
%
Consolidated
Revenues
$
2,953.4
$
2,787.5
$
11,554.8
$
11,333.4
Adjusted Segment Operating Income
$
460.3
$
432.8
$
1,867.0
$
1,867.1
Unallocated corporate expense
$
(38.3
)
$
(37.9
)
$
(156.2
)
$
(143.8
)
Consolidated Adjusted Operating Income
$
422.0
$
394.9
$
1,710.8
$
1,723.3
Adjusted Operating Margin
14.3
%
14.2
%
14.8
%
15.2
%
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 December
31,
Twelve Months Ended December
31,
2019
2018
2019
2018
Adjusted
Operating Income
Operating Income
$
336.4
$
307.7
$
1,330.2
$
1,325.7
Amortization of intangibles and other
assets
(a)
64.2
56.2
243.2
231.7
Restructuring and other charges
(b)
6.2
11.6
54.6
48.1
Acquisition and disposition-related
costs
(c)
15.3
11.6
69.2
54.7
LaunchPad system implementation costs
(d)
2.7
2.5
10.1
9.8
Executive transition expenses
(e)
7.0
5.3
15.2
9.6
Costs (reimbursements) related to
ransomware attack
(f)
(9.8
)
—
(9.1
)
12.6
Costs related to data breach
(g)
0.2
—
11.5
—
Adjustment to acquisition contingent
consideration
(h)
(0.2
)
—
(14.1
)
—
Special tax reform bonus for employees
(i)
—
—
—
31.1
Adjusted operating income
$
422.0
$
394.9
$
1,710.8
$
1,723.3
Adjusted Net
Income
Net Income
$
227.1
$
157.9
$
823.8
$
883.7
Impact of adjustments to operating
income
85.6
87.2
380.6
397.6
Gains and losses on venture fund
investments, net
(j)
(19.0
)
5.2
(20.9
)
5.2
(Gain) and loss on sale of business
(k)
1.4
24.6
13.3
(184.8
)
Debt refinancing costs
(l)
3.1
—
3.1
—
Pension settlement charge
(m)
—
7.5
—
7.5
Tax reform adjustments
(n)
—
0.9
—
45.0
Income tax impact of adjustments
(o)
(17.6
)
(28.4
)
(83.4
)
(23.4
)
Adjusted net income
$
280.6
$
254.9
$
1,116.5
$
1,130.8
Weighted average diluted shares
outstanding
98.0
101.2
98.6
102.6
Adjusted net income per share
$
2.86
$
2.52
$
11.32
$
11.02
(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 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. In the fourth quarter of 2019, we
received a partial payment of our insurance claim.
(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)
Represents the costs and accelerated
amortization of deferred financing costs associated with the
issuance and early repayment of debt.
(m)
Represents a settlement charge related to
the Company's pension plans triggered by the election of
participants to take lump-sum cash settlements.
(n)
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.
(o)
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/20200213005398/en/
Clarissa Willett (investors) – 336-436-5076
Investor@LabCorp.com
Pattie Kushner (media) – 336-436-8263
Media@LabCorp.com
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