Company Raises Full Year Guidance
- Revenue: Q1 of $4.2 billion, up from $2.8 billion last
year
- Diluted EPS: Q1 of $7.82, up from ($3.27) last year
- Adjusted EPS: Q1 of $8.79, up from $2.37 last year
- Free Cash Flow: Q1 of $1.1 billion, up from $97 million last
year
- Opened automated clinical trial kit production facility in
Belgium
- Full Year 2021 Guidance: Revenue raised to 2.0% to 6.5%;
Adjusted EPS raised to $20.00 to $24.00; Free Cash Flow raised to
$1.8 billion to $2.0 billion
Labcorp (NYSE: LH), a leading life sciences company, today
announced results for the first quarter ended March 31, 2021 and
raised 2021 guidance.
“We delivered very strong results in the first quarter driven by
revenue growth across both our Diagnostics and Drug Development
businesses,” said Adam H. Schechter, chairman and CEO, Labcorp.
“Overall revenue in our base business grew 14.6% as people
continued to return to their pre-pandemic healthcare routines and
our biopharmaceutical clients resumed their important research and
development. Our drug development pipeline remained robust, with a
book-to-bill of 1.47 on a trailing twelve-month basis driven by
strong demand across major therapeutic areas.”
In the quarter, Labcorp continued to bring science and
technology innovations to market quickly to improve health and
improve lives. The company opened a fully automated kit production
facility in Belgium to support its Central Lab customers,
ultimately improving access and cost efficiency for biopharma and
clinical trial clients across Europe, the Middle East and Africa.
In the fight against COVID-19, Labcorp expanded its work with the
CDC to identify variants to the virus, and now offers Pixel by
Labcorp COVID-19 home collection kits in thousands of pharmacies
across the United States.
“We are pleased with our strong first quarter performance and
improved outlook, and are raising our full year adjusted EPS
guidance range to between $20.00 and $24.00. I am proud of our more
than 70,000 employees and their commitment to our patients and
customers during this pandemic and the difference they are making
in the lives of people around the world,” said Schechter.
Consolidated Results
First Quarter Results
Revenue for the quarter was $4.16 billion, an increase of 47.4%
over $2.82 billion in the first quarter of 2020. The increase in
revenue was due to organic growth of 45.0%, acquisitions of 0.9%,
and favorable foreign currency translation of 1.4%. The 45.0%
increase in organic revenue includes a 32.9% contribution from PCR
and antibody testing (COVID-19 Testing) and a 12.2% increase in the
company's organic Base Business. Base Business includes Labcorp's
business operations except for COVID-19 Testing.
Operating income for the quarter was $1,057.9 million, or 25.4%
of revenue, compared to ($192.6) million, or (6.8%), in the first
quarter of 2020. The increase in operating income and margin was
primarily due to COVID-19 Testing, organic Base Business growth,
acquisitions, and LaunchPad savings, partially offset by higher
personnel costs. The company recorded amortization, restructuring
charges, and special items, which together totaled $124.0 million
in the quarter, compared to $558.5 million during the same period
in 2020. This decrease was primarily due to the goodwill impairment
recorded in the first quarter of 2020. Adjusted operating income
(excluding amortization, restructuring charges, and special items)
for the quarter was $1,181.9 million, or 28.4% of revenue, compared
to $365.9 million, or 12.9%, in the first quarter of 2020.
Net earnings (losses) for the quarter were $769.6 million,
compared to ($317.2) million in the first quarter of 2020. Diluted
EPS were $7.82 in the quarter, up from ($3.27) in the same period
in 2020. Adjusted EPS (excluding amortization, restructuring
charges, and special items) were $8.79 in the quarter, up from
$2.37 in the first quarter of 2020.
Operating cash flow for the quarter was $1,157.6 million,
compared to $203.8 million in the first quarter of 2020. The
increase in operating cash flow was due to higher cash earnings and
lower working capital. Capital expenditures totaled $95.4 million,
down from $106.6 million a year ago. As a result, free cash flow
(operating cash flow less capital expenditures) was $1,062.2
million, up from $97.2 million in the first quarter of 2020.
At the end of the quarter, the company’s cash balance and total
debt were $1.9 billion and $5.4 billion, respectively. During the
quarter, the company invested $34.1 million on acquisitions,
repurchased $68.5 million of stock representing approximately 0.3
million shares, and paid down $375.0 million of debt. As of March
31, 2021, the company had $731.5 million of authorization remaining
under its share repurchase program.
First Quarter Segment Results
The following segment results exclude amortization,
restructuring charges, special items, and unallocated corporate
expenses.
Diagnostics
Revenue for the quarter was $2.76 billion, an increase of 62.0%
over $1.70 billion in the first quarter of 2020. The increase in
revenue was primarily due to organic growth of 60.8%, acquisitions
of 0.9%, and favorable foreign currency translation of 0.4%. The
increase in organic revenue was due to a 54.5% contribution from
COVID-19 Testing and a 6.3% increase in the Base Business, which
includes the unfavorable impact of weather of approximately
(2.0%).
Total volume (measured by requisitions) increased by 27.3% as
organic volume increased by 26.6% and acquisition volume
contributed 0.7%. The organic volume growth was due to a 27.9%
contribution from COVID-19 Testing demand, partially offset by a
(1.3%) reduction in organic Base Business, which includes the
unfavorable impact from weather of approximately (2.0%). Price /
mix increased by 34.7% primarily due to COVID-19 Testing of 26.6%
and organic Base Business of 7.5%.
Adjusted operating income for the quarter was $991.6 million, or
36.0% of revenue, compared to $254.2 million, or 14.9%, in the
first quarter of 2020. The increase in adjusted operating income
and adjusted operating margin were primarily due to the increase in
COVID-19 Testing, organic Base Business growth and LaunchPad
savings, partially offset by higher personnel costs. 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.
Drug Development
Revenue for the quarter was $1.44 billion, an increase of 25.7%
over $1.14 billion in the first quarter of 2020. The increase in
revenue was due to organic growth of 21.9%, acquisitions of 1.0%,
and favorable foreign currency translation of 2.9%. The increase in
organic revenue was due to a 19.7% increase in the Base Business
and a 2.2% contribution from COVID-19 Testing performed through its
Central Laboratories business. Drug Development benefited from
broad-based demand across businesses, including COVID-19 vaccine
and therapeutic work.
Adjusted operating income for the quarter was $234.1 million, or
16.3% of revenue, compared to $150.8 million, or 13.2%, in the
first quarter of 2020. The increase in adjusted operating income
and adjusted operating margin were primarily due to organic Base
Business growth, COVID-19 Testing, and LaunchPad savings, partially
offset by higher personnel costs. The company continues to develop
and execute new LaunchPad programs to support profitable growth in
Drug Development.
Net orders and net book-to-bill during the trailing twelve
months were $7.61 billion and 1.47, respectively. Backlog at the
end of the quarter was $13.97 billion, compared to $13.76 billion
last quarter, and the company expects approximately $4.62 billion
of its backlog to convert into revenue in the next twelve
months.
Outlook for 2021
Labcorp is raising its 2021 full year guidance to reflect the
improved recovery in the Diagnostics and Drug Development base
businesses, while the COVID-19 Testing contribution remains within
the original guidance range provided. The following guidance
assumes foreign exchange rates effective as of March 31, 2021 for
the remainder of the year. Enterprise level guidance includes the
estimated impact from currently anticipated capital allocation,
including acquisitions and share repurchases.
(Dollars in billions, except per share
data)
Previous
Updated
Results
2021
Guidance
2021
Guidance
2020
Low
High
Low
High
Revenue
Total Labcorp Enterprise (1)(2)
$
13.98
(1.0%)
4.5%
2.0%
6.5%
Base Business (2)
$
11.19
11.0%
13.5%
13.5%
16.0%
COVID-19 Testing (2)
$
2.78
(50.0%)
(35.0%)
(50.0%)
(35.0%)
Total Diagnostics (3)
$
9.25
(7.5%)
(0.5%)
(5.0%)
0.0%
Base Business
$
6.47
11.0%
14.0%
13.5%
16.0%
COVID-19 Testing
$
2.78
(50.0%)
(35.0%)
(50.0%)
(35.0%)
Total Drug Development (4)
$
4.88
8.0%
10.5%
12.0%
14.0%
Base Business
$
4.76
9.5%
12.0%
14.0%
16.0%
Adjusted EPS
$
23.94
$
19.00
$
23.00
$
20.00
$
24.00
Free Cash Flow (5)
$
1.75
$
1.70
$
1.90
$
1.80
$
2.00
(1) 2021 Updated Guidance includes a
benefit from foreign currency translation of 0.7%, Previous 2021
Guidance was 0.9%
(2) Enterprise level revenue is presented
net of intersegment transaction eliminations, including Drug
Development COVID-19 Testing revenue
(3) 2021 Updated Guidance includes a
benefit from foreign currency translation of 0.3%, Previous 2021
Guidance was 0.1%
(4) 2021 Updated Guidance includes a
benefit from foreign currency translation of 1.4%, Previous 2021
Guidance was 2.2%
(5) Free Cash Flow consists of operating
cash flow less capital expenditures
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 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. ET and is available by dialing 877-898-8036
(720-634-2811 for international callers). The conference ID is
6566853. A telephone replay of the call will be available through
May 13, 2021, and can be heard by dialing 855-859-2056
(404-537-3406 for international callers). The conference ID for the
replay is 6566853. A live online broadcast of Labcorp’s quarterly
conference call on April 29, 2021, will be available at
Labcorp Investor Relations website
beginning at 9:00 a.m. ET. This webcast will be archived and
accessible through April 15, 2022.
About Labcorp
Labcorp is a leading global life sciences company that provides
vital information to help doctors, hospitals, pharmaceutical
companies, researchers, and patients make clear and confident
decisions. Through our unparalleled diagnostics and drug
development capabilities, we provide insights and accelerate
innovations to improve health and improve lives. With over 70,000
employees, we serve clients in more than 100 countries. Labcorp
(NYSE: LH) reported revenue of $14.0 billion in 2020. Learn more
about us at www.labcorp.com or follow
us on LinkedIn and Twitter
@Labcorp.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains forward-looking statements,
including, but not limited to, statements with respect to the
estimated 2021 guidance and the related assumptions, the impact of
various factors on operating and financial results, including the
projected impact of the COVID-19 pandemic on the company’s
businesses, operating results, cash flows and/or financial
condition, statements relating to our responses to and the expected
future impacts of the COVID-19 pandemic, on our business more
generally as well as on general economic, business, and market
conditions, 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, the impact of the
COVID-19 pandemic and its impact on our business and financial
condition and on general economic, business, and market conditions,
our ability (or inability) to execute on our plans to respond to
the COVID-19 pandemic, 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, federal,
state, and local government responses to the COVID-19 pandemic, the
effect of public opinion on the company’s reputation, the outcome
of our review of our structure and changes in capital allocation
strategy, 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 our 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.
- 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 March
31,
2021
2020
Revenues
$
4,161.5
$
2,823.8
Cost of revenues
2,562.5
2,095.8
Gross profit
1,599.0
728.0
Selling, general and administrative
expenses
429.8
395.5
Amortization of intangibles and other
assets
92.1
62.3
Goodwill and other asset impairments
—
437.4
Restructuring and other charges
19.2
25.4
Operating income (loss)
1,057.9
(192.6
)
Other income (expense):
Interest expense
(48.5
)
(55.0
)
Equity method income (loss), net
4.5
(6.6
)
Investment income
2.4
2.6
Other, net
5.5
(16.1
)
Earnings (loss) before income taxes
1,021.8
(267.7
)
Provision for income taxes
251.7
49.2
Net earnings (loss)
770.1
(316.9
)
Less: Net earnings attributable to the
noncontrolling interest
(0.5
)
(0.3
)
Net earnings (loss) attributable to
Laboratory Corporation of America Holdings
$
769.6
$
(317.2
)
Basic earnings (loss) per common share
$
7.88
$
(3.27
)
Diluted earnings (loss) per common
share
$
7.82
$
(3.27
)
Weighted average basic shares
outstanding
97.6
97.2
Weighted average diluted shares
outstanding
98.5
97.2
LABORATORY CORPORATION OF
AMERICA HOLDINGS AND SUBSIDIARIES
CONSOLIDATED BALANCE
SHEETS
(Dollars in Millions)
March 31, 2021
December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents
$
1,890.8
$
1,320.8
Accounts receivable, net of allowance for
doubtful accounts of $21.0 and $22.1 as of March 31, 2021, and
December 31, 2020, respectively
2,323.5
2,479.8
Unbilled services
579.5
536.8
Supplies inventory
427.5
423.2
Prepaid expenses and other
416.8
364.8
Total current assets
5,638.1
5,125.4
Property, plant and equipment, net
2,697.0
2,729.6
Goodwill, net
7,720.5
7,751.5
Intangible assets, net
3,834.0
3,961.1
Joint venture partnerships and equity
method investments
85.0
73.5
Deferred income taxes
20.2
20.6
Other assets, net
422.3
410.0
Total assets
$
20,417.1
$
20,071.7
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities:
Accounts payable
$
621.3
$
638.9
Accrued expenses and other
1,508.1
1,357.7
Unearned revenue
540.3
506.5
Short-term operating lease liabilities
191.3
192.0
Short-term finance lease liabilities
6.3
6.7
Short-term borrowings and current portion
of long-term debt
501.4
376.7
Total current liabilities
3,368.7
3,078.5
Long-term debt, less current portion
4,920.9
5,419.0
Operating lease liabilities
657.8
677.6
Financing lease liabilities
82.7
84.4
Deferred income taxes and other tax
liabilities
857.7
905.4
Other liabilities
486.9
526.4
Total liabilities
10,374.7
10,691.3
Commitments and contingent liabilities
Noncontrolling interest
20.9
20.7
Shareholders’ equity:
Common stock, 97.8 and 97.5 shares
outstanding at March 31, 2021, and December 31, 2020,
respectively
9.0
9.0
Additional paid-in capital
67.1
110.3
Retained earnings
10,171.9
9,402.3
Accumulated other comprehensive loss
(226.5
)
(161.9
)
Total shareholders’ equity
10,021.5
9,359.7
Total liabilities and shareholders’
equity
$
20,417.1
$
20,071.7
LABORATORY CORPORATION OF
AMERICA HOLDINGS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Dollars in Millions)
Three Months Ended March
31,
2021
2020
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net earnings (loss)
$
770.1
$
(316.9
)
Adjustments to reconcile net earnings
(loss) to net cash provided by operating activities:
Depreciation and amortization
183.9
144.6
Stock compensation
28.7
17.9
Operating lease right-of-use asset
expense
48.3
57.2
Goodwill and other asset impairments
—
437.4
Deferred income taxes
(27.8
)
5.1
Other
(3.2
)
43.3
Change in assets and liabilities (net of
effects of acquisitions and divestitures):
Decrease in accounts receivable
146.7
46.7
Increase in unbilled services
(42.5
)
(1.1
)
Increase in supplies inventory
(4.7
)
(10.6
)
Increase in prepaid expenses and other
(51.9
)
(3.0
)
Decrease in accounts payable
(16.9
)
(56.5
)
Increase (decrease) in unearned
revenue
31.8
(11.2
)
Increase (decrease) in accrued expenses
and other
95.1
(149.1
)
Net cash provided by operating
activities
1,157.6
203.8
CASH FLOWS FROM INVESTING
ACTIVITIES:
Capital expenditures
(95.4
)
(106.6
)
Proceeds from sale of assets
2.6
7.0
Proceeds from sale or distribution of
investments
—
0.9
Investments in equity affiliates
(5.5
)
(7.9
)
Acquisition of businesses, net of cash
acquired
(34.1
)
—
Net cash used for investing activities
(132.4
)
(106.6
)
CASH FLOWS FROM FINANCING
ACTIVITIES:
Payments on term loan
(375.0
)
—
Proceeds from revolving credit
facilities
—
(151.7
)
Payments on revolving credit
facilities
—
151.7
Net share settlement tax payments from
issuance of stock to employees
(28.1
)
(22.0
)
Net proceeds from issuance of stock to
employees
24.7
26.9
Purchase of common stock
(68.5
)
(100.0
)
Other
(3.2
)
(7.7
)
Net cash used for financing activities
(450.1
)
(102.8
)
Effect of exchange rate changes on cash
and cash equivalents
(5.1
)
(8.3
)
Net increase in cash and cash
equivalents
570.0
(13.9
)
Cash and cash equivalents at beginning of
period
1,320.8
337.5
Cash and cash equivalents at end of
period
$
1,890.8
$
323.6
LABORATORY CORPORATION OF
AMERICA HOLDINGS
Condensed Combined Non-GAAP
Segment Information
(Dollars in Millions)
Three Months Ended March
31,
2021
2020
Diagnostics
Revenues
$
2,757.8
$
1,702.0
Adjusted Operating Income
$
991.6
$
254.2
Adjusted Operating Margin
36.0
%
14.9
%
Drug
Development
Revenues
$
1,438.2
$
1,143.8
Adjusted Operating Income
$
234.1
$
150.8
Adjusted Operating Margin
16.3
%
13.2
%
Consolidated
Revenues
$
4,161.5
$
2,823.8
Adjusted Segment Operating Income
$
1,225.7
$
405.0
Unallocated corporate expense
(43.8
)
$
(39.1
)
Consolidated Adjusted Operating Income
$
1,181.9
$
365.9
Adjusted Operating Margin
28.4
%
12.9
%
The consolidated revenue and adjusted segment operating income
are presented net of intersegment transaction eliminations and
other amounts not used in determining segment performance. 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 March
31,
2021
2020
Adjusted
Operating Income
Operating Income
$
1,057.9
$
(192.6
)
Amortization of intangibles and other
assets (a)
92.1
62.3
Restructuring and other charges (b)
19.2
25.4
Acquisition and disposition-related costs
(c)
5.7
8.4
LaunchPad system implementation costs
(d)
1.3
0.9
Executive transition expenses (e)
2.3
2.8
COVID-19 related costs (f)
5.9
21.9
Goodwill and other asset impairments
(g)
—
437.4
Other
(2.5
)
(0.6
)
Adjusted operating income
$
1,181.9
$
365.9
Adjustments impacting revenues
$
—
$
17.0
Adjusted operating margin
28.4
%
12.9
%
Adjusted Net
Income
Net Income
$
769.6
$
(317.2
)
Impact of adjustments to operating
income
124.0
558.5
Losses and (gains) on venture fund
investments, net(h)
—
20.2
Other
0.5
—
Income tax impact of adjustments (i)
(29.0
)
(29.4
)
Adjusted net income
$
865.1
$
232.1
Weighted average diluted shares
outstanding
98.5
97.9
Adjusted net income per share
$
8.79
$
2.37
(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 or disposition related activities.
(d)
LaunchPad system implementation costs
include non-capitalized costs associated with the implementation of
systems as part of the LaunchPad business process improvement
initiative.
(e)
Represents executive transition expenses
related to various management reorganizations.
(f)
Costs related to incremental operating
expenses and receivables reserves incurred as a result of the
COVID-19 pandemic.
(g)
During the first quarter of 2020, the
Company determined that certain goodwill and long-lived assets were
impaired. These charges were triggered by the economic conditions
resulting from the COVID-19 pandemic.
(h)
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 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.
(i)
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/20210429005567/en/
Chas Cook (investors) – 336-436-5076 Investor@Labcorp.com
Christopher Allman-Bradshaw (media) – 336-436-8263
Media@Labcorp.com
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