Labcorp Holdings Inc. · NYSE:LH
Labcorp — Laboratory Corp of America Holdings — Q1 2018 Earnings Presentation
21 slides from Labcorp's earnings presentation, Apr 25, 2018
Slide 1: First Quarter 2018 Supplemental Financial Information
8-K FURNISHED APRIL 25, 2018 FIRST QUARTER 2018 SUPPLEMENTAL FINANCIAL INFORMATION
Slide 2: Forward Looking Statement
1 FORWARD LOOKING STATEMENT This presentation contains forward-looking statements including but not limited to statements with respect to estimated 2018 guidance and the related assumptions, the impact of various factors on operating and financial results, expected savings and synergies (including f
Slide 3: Use of Adjusted Measures and Adoption of ASC 606
2 USE OF ADJUSTED MEASURES AND ADOPTION OF ASC 606 The Company has provided in this presentation “adjusted” financial information that has not been prepared in accordance with GAAP, including Adjusted EPS, Adjusted Operating Income, Adjusted EBITDA, Free Cash Flow, and certain segment information. T
Slide 4: First Quarter Consolidated Results
3 FIRST QUARTER CONSOLIDATED RESULTS(1) (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) (1) The table presented above reflects the application of ASU 2017-17 for all periods presented. This application increased LabCorp Diagnostics adjusted operating income in the first quarter of 2017 by $0.8 million
Slide 5: First Quarter Pro Forma Segment Results
4 FIRST QUARTER PRO FORMA SEGMENT RESULTS(1) (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) LABORATORY CORPORATION OF AMERICA HOLDINGS Condensed Combined Non-GAAP Pro Forma Segment Information Current Revenue Recognition Prior Revenue Recognition Accounting Standard (ASC 606) Accounting Standard (ASC
Slide 6: Select Financial Metrics
5 SELECT FINANCIAL METRICS (DOLLARS IN MILLIONS) Restated for ASC 606 and ASU 2017-17 1Q17 2Q17 3Q17 4Q17 1Q18 Total Depreciation $78.4 $73.5 $76.4 $78.5 $78.3 Total Amortization(1) $47.6 $51.4 $54.6 $62.9 $62.3 Total Adjusted EBITDA(2) $457.5 $509.6 $511.8 $512.7 $517.2 Total Debt to Last Twelve Mo
Slide 7: Covance Drug Development: Select Financial Metrics Under ASC 606
6 COVANCE DRUG DEVELOPMENT: SELECT FINANCIAL METRICS UNDER ASC 606(1) Trailing Twelve Month (TTM) Results Net Orders Net Book-to-Bill TTM Ending March 31, 2018(2) $4.8 billion 1.29x TTM Ending December 31, 2017(2) $4.6 billion 1.34x Backlog Estimated revenue expected to convert from backlog in the n
Slide 8: Covance Drug Development: Select Financial Metrics Under ASC 605
7 COVANCE DRUG DEVELOPMENT: SELECT FINANCIAL METRICS UNDER ASC 605(1) Trailing Twelve Month (TTM) Results Net Orders Net Book-to-Bill TTM Ending March 31, 2018(2) $4.3 billion 1.34x TTM Ending December 31, 2017(2) $4.1 billion 1.36x TTM Ending September 30, 2017(2) $3.8 billion 1.33x TTM Ending June
Slide 9: First Quarter 2018 Revenue Distribution
8 (1) Revenues recognized in over 30 currencies; the largest foreign currency accounts for less than 10% of total revenue. Segment Distribution LabCorp Diagnostics 62.1% Covance Drug Development 37.9% USA 78.0% Geographic Distribution Rest of World(1) 22.0% FIRST QUARTER 2018 REVENUE DISTRIBUTION
Slide 10: First Quarter 2018 Foreign Exchange Impact to Revenue
9 FIRST QUARTER 2018 FOREIGN EXCHANGE IMPACT TO REVENUE(1) (DOLLARS IN MILLIONS) Year over Year Dollars % Growth Consolidated Revenue, as Reported $2,848 18.0% Foreign Exchange Impact ($35) (1.5%) Revenue, Constant Currency $2,813 16.5% LabCorp Diagnostics Revenue, as Reported $1,770 8.0% Foreign Ex
Slide 11: 2017 Financial Results Restated for ASC 606
10 2017 FINANCIAL RESULTS RESTATED FOR ASC 606(1) Effective January 1, 2018, the Company adopted the FASB-issued converged standard on revenue recognition (ASC 606), using the full retrospective method. The table below presents the Company’s restated financial results in 2017, and is being provided
Slide 12: 2017 Quarterly Segment Financial Results Restated for ASC 606 and ASU 2017-17
11 2017 QUARTERLY SEGMENT FINANCIAL RESULTS RESTATED FOR ASC 606 AND ASU 2017-17(1) (1) The table presented above reflects the application of ASU 2017-17 for all periods presented. (2) In LabCorp Diagnostics, the impact of the accounting change reduced revenue and increased margins, as bad debt is t
Slide 13: 2017 Quarterly Financial Results – GAAP Basis Restated
12 2017 QUARTERLY FINANCIAL RESULTS – GAAP BASIS RESTATED FOR ASC 606 AND ASU 2017-17 The table presented includes approximately $79.7 million of special items in selling, general and administrative expenses in full-year 2017. LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES CONSOLIDATED
Slide 14: 2017 Quarterly Segment Results Reported Under ASC 605
13 2017 QUARTERLY SEGMENT FINANCIAL RESULTS REPORTED UNDER ASC 605 AND RESTATED FOR ASU 2017-17(1) (1) The table presented above reflects the application of ASU 2017-17 for all periods presented. (Figures in millions, except per share data) Three Months Ended March 31, 2017 Three Months Ended June 3
Slide 15: 2016 Financial Results Restated for ASC 606
14 Effective January 1, 2018, the Company adopted the FASB-issued converged standard on revenue recognition (ASC 606), using the full retrospective method. The table below presents the Company’s restated financial results in 2016. The adoption of ASC 606 had no impact on cash flow; however, it resul
Slide 16: 2018 Financial Guidance
15 2018 FINANCIAL GUIDANCE Prior Guidance (assumes foreign exchange rates effective as of December 31, 2017) Current Guidance (assumes foreign exchange rates effective as of March 31, 2018) Total revenue growth(1): 9.5% – 11.5%(3) 10.0% – 12.0%(4) LabCorp Diagnostics revenue growth(1): 3.0% – 5.0%(5
Slide 17: Reconciliation of Non-GAAP Financial Measures – Adjusted EBITDA
16 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – ADJUSTED EBITDA (DOLLARS IN MILLIONS) Restated for ASC 606 and ASU 2017-17 1Q17 2Q17 3Q17 4Q17 1Q18 LabCorp Operating Income $318.1 $329.9 $326.7 $330.5 $305.4 Add: Restructuring and other special charges $3.9 $39.1 $21.6 $6.3 $14.3 Other special ch
Slide 18: Reconciliation of Non-GAAP Financial Measures
17 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Adjusted Operating Income 2018 2017 Operating income 305.4$ 318.1$ Acquisition-related costs 17.9 4.4 Restructuring and other special charges 14.3 3.9 Consulting fees and executive transition expenses 3.1 - Special tax reform bonus for employees 31.0
Slide 19: Reconciliation of Non-GAAP Financial Measures
18 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (1) Operating cash flow in 2017 has been reduced by $7.9 million as the result of implementation of ASU 2016-18. This amount represents the amount of historical payments made on the Company’s zero-coupon subordinated notes deemed to be accreted intere
Slide 20: Reconciliation of Non-GAAP Financial Measures - Footnotes
19 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - FOOTNOTES 1) During the first quarter of 2018, the Company recorded net restructuring and other special charges of $14.3 million. The charges included $11.3 million in severance and other personnel costs along with $1.2 million in costs associated w
Slide 21: Reconciliation of Non-GAAP Financial Measures - Footnotes
20 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - FOOTNOTES 4) 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 pr
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