Labcorp Holdings Inc. · NYSE:LH
Labcorp — Laboratory Corp of America Holdings — Raymond James Institutional Investors Conference 2016
34 slides from Labcorp's conference presentation, Mar 9, 2016
Slide 1: Raymond James Institutional Investors Conference
RAYMOND JAMES INSTITUTIONAL INVESTORS CONFERENCE MARCH 9, 2016 | ORLANDO, FL
Slide 2: Forward Looking Statement
FORWARD LOOKING STATEMENT Cautionary Statement Regarding Forward Looking Statements This presentation contains forward-looking statements including with respect to estimated 2016 guidance and the impact of various factors on operating results. Each of the forward-looking statements is subject to cha
Slide 3: Agenda
AGENDA Strategic Priorities Financial Strength Company and Strategic Vision 3
Slide 4: LabCorp Overview
LABCORP OVERVIEW • Provides diagnostic, drug development and technology-enabled solutions for >100 million patient encounters per year • Leading national clinical laboratory – LabCorp Diagnostics • Leading Contract Research Organization (CRO) – Covance Drug Development • >$8.5B revenue in 2015 • >50
Slide 5: LabCorp Diagnostics Overview
LABCORP DIAGNOSTICS OVERVIEW 5 Pro Forma Segment Financial Summary2 Constant Year Ended Currency 2015 2014 Change Change Revenue 6,211$ 5,922$ 4.9% 5.7% Adj. O.I. 1,240$ 1,129$ 9.8% Adj. O.I. % 20.0% 19.1% 90 bps • >$6.2B revenue in 20151 • National network of 39 primary clinical laboratories and ap
Slide 6: Covance Drug Development Overview
COVANCE DRUG DEVELOPMENT OVERVIEW 6 Pro Forma Segment Financial Summary2 Constant Year Ended Currency 2015 2014 Change Change Revenue 2,629$ 2,611$ 0.7% 4.3% Adj. O.I. 372$ 340$ 9.2% Adj. O.I. % 14.1% 13.0% 110 bps • >$2.6B revenue in 20151 • Only provider of full spectrum of drug development servic
Slide 7: Diversified Revenue Base (2015 Pro Forma Revenue)
DIVERSIFIED REVENUE BASE (2015 PRO FORMA REVENUE1) 7 Unique Customer Mix 30% 30% 23% 11% 3% 3% Pharma & Biotech Managed Care (Fee for Service) Other Payers Medicare & Medicaid Patient Managed Care (Capitated) 1. Presented on a pro forma basis as if the acquisition of Covance closed on January 1st, 2
Slide 8: Expanded Growth Opportunities with Increased Global Presence
EXPANDED GROWTH OPPORTUNITIES WITH INCREASED GLOBAL PRESENCE 8 1. 2014 revenue excludes Covance. 2015 revenue presented on a pro forma basis as if the acquisition of Covance closed on January 1st, 2015. 2. Based on industry publications and company estimates 3. Over 30 currencies in 2015 and no sing
Slide 9: Our Strategic Vision: Improve Health and Improve Lives
OUR STRATEGIC VISION: IMPROVE HEALTH AND IMPROVE LIVES 9 Build / Acquire Complementary Capabilities Organic Growth Through New Tests, Customers and Markets Integrate Diagnostic Information and Content Build / Acquire Complementary Capabilities Use Tools and Technology to Improve Success, and Reduce
Slide 10: Our Strategic Vision: Delivering World Class Diagnostics
OUR STRATEGIC VISION: IMPROVE HEALTH AND IMPROVE LIVES 10 Delivering World Class Diagnostics Bringing Innovative Medicines to Patients Faster Changing the Way Care is Provided
Slide 11: Grow the Base Through Customer Focus and Enterprise Partnerships
GROW THE BASE THROUGH CUSTOMER FOCUS AND ENTERPRISE PARTNERSHIPS 11 Drive Organic Growth to Serve Multiple Customers Across Care Settings • Increase breadth and scope of partnerships with managed care • Seek innovative partnerships with government payers • Increase breadth and depth of partnerships
Slide 12: Expand Diagnostic Offering with New Tests
EXPAND DIAGNOSTIC OFFERING WITH NEW TESTS 12 Maintain Leadership in Scientific Innovation • Introduced over 75 assays in 2015 • Industry-leading position in companion diagnostics (CDx) with differentiated capabilities and unparalleled experience • Continue expansion of next-generation sequencing cap
Slide 13: Create Shareholder Value Through Acquisition of Complementary Businesses
CREATE SHAREHOLDER VALUE THROUGH ACQUISITION OF COMPLEMENTARY BUSINESSES 13 Target Acquisition Considerations Attractive market opportunity that leverages our core competencies Meets financial criteria Proven technology Attractive customer set Global scope Strong management team Genzyme Genetics
Slide 14: Our Strategic Vision: Bringing Innovative Medicines to Patients Faster
OUR STRATEGIC VISION: IMPROVE HEALTH AND IMPROVE LIVES 14 Delivering World Class Diagnostics Bringing Innovative Medicines to Patients Faster Changing the Way Care is Provided
Slide 15: Deliver Highest Quality, End-to-End Drug Development Solutions
DELIVER HIGHEST QUALITY, END-TO-END DRUG DEVELOPMENT SOLUTIONS TO THE MARKET 15 • Create therapeutically-driven solutions that span the drug development and testing continuum • Pursue pull-through opportunities and broaden customer segment coverage globally • Leverage scale, cost efficiencies and in
Slide 16: Create Differentiated Drug Development Approaches
CREATE DIFFERENTIATED DRUG DEVELOPMENT APPROACHES 16 Help Partners Rethink and Redesign their Global R&D Decisions Early Development Phase Solutions • Innovative offering to connect the customers’ non-clinical and clinical development goals • Consistent and focused project team • Continuity of drug
Slide 17: Deploy Innovative Tools and Technology to Address Partner Needs
DEPLOY INNOVATIVE TOOLS AND TECHNOLOGY TO ADDRESS PARTNER NEEDS 17 • Deliver SaaS platform to replace internally-built clinical IT structures while improving value and insight • Create scientific solutions that accelerate discovery and development of innovative medicines • Lower patient burden and i
Slide 18: Develop Informatics-Driven Solutions in Patient Recruitment and Study Start Up
DEVELOP INFORMATICS-DRIVEN SOLUTIONS IN PATIENT RECRUITMENT AND STUDY START UP 18 • Health information from >100 million patient encounters annually • Identify desired patient populations and relevant investigator sites • Inform study design • Facilitate faster clinical trial enrollment Filtered pat
Slide 19: Develop Informatics-Driven Solutions in Patient Recruitment and Study Start Up
DEVELOP INFORMATICS-DRIVEN SOLUTIONS IN PATIENT RECRUITMENT AND STUDY START UP 19 • Health information from >100 million patient encounters annually • Identify desired patient populations and relevant investigator sites • Inform study design • Facilitate faster clinical trial enrollment • >30,000 pa
Slide 20: Our Strategic Vision: Changing the Way Care is Provided
OUR STRATEGIC VISION: IMPROVE HEALTH AND IMPROVE LIVES 20 Delivering World Class Diagnostics Bringing Innovative Medicines to Patients Faster Changing the Way Care is Provided
Slide 21: Commercialize Innovative Technology-Enabled Solutions: BeaconLBS
COMMERCIALIZE INNOVATIVE TECHNOLOGY-ENABLED SOLUTIONS 21 • Decision support tool to guide lab and test selection • Designed to: • Improve quality of lab services • Support evidence-based guidelines for patient care • Help payers manage laboratory cost and trend • Integrated into provider workflow •
Slide 22: Provide Better Insights to Help Customers Manage Health
PROVIDE BETTER INSIGHTS TO HELP CUSTOMERS MANAGE HEALTH 22 Innovative Decision Support Tools • Programs include: • Chronic Kidney Disease (CKD) • Cardiovascular Disease • Type 2 Diabetes • Kidney Stones • Medical Drug Monitoring • Delivered more than 5 million enhanced reports in 2015 • Reports prov
Slide 23: Commercialize Innovative Technology-Enabled Solutions: Xcellerate Monitoring
COMMERCIALIZE INNOVATIVE TECHNOLOGY-ENABLED SOLUTIONS 23 • Proactively identify and mitigate risks at the individual site and patient level for a single study or worldwide portfolio • Designed to: • Allow partners to make more informed clinical trial decisions • Lower clinical trial execution risk •
Slide 24: Focused on Profitable Growth
FOCUSED ON PROFITABLE GROWTH 24 1. Results presented on a pro forma basis as if the acquisition of Covance closed on January 1, 2014. Adjusted operating income excludes amortization, restructuring and other special items. See Appendix for reconciliation. 2. Reported results include Covance as of Feb
Slide 25: 2016 Financial Guidance
2016 FINANCIAL GUIDANCE1 25 Excluding the impact of amortization, restructuring and special items, guidance for 2016 is: Current Guidance (assumes foreign exchange rates effective as of January 31, 2016) Implied Constant Currency Revenue Growth Total net revenue growth: 7.5% – 9.5%(3) 8.5% – 10.5% L
Slide 26: Effective Capital Deployment to Build Shareholder Value
EFFECTIVE CAPITAL DEPLOYMENT TO BUILD SHAREHOLDER VALUE 26 Capital Expenditures 10% $2.8 billion Share Repurchase 23% Other Acquisitions 18% Approximately $11.9 billion in capital deployment between 2010 and 20151 $5.6 billion $1.1 billion 1. Includes cash from operations (approximately $5.1 billion
Slide 27: Conclusion
CONCLUSION 27 • Unique business with unique capabilities • Expanded growth opportunities in the US and around the globe • Focus on execution of our strategy to increase shareholder value Key Points
Slide 28: Raymond James Institutional Investors Conference
RAYMOND JAMES INSTITUTIONAL INVESTORS CONFERENCE MARCH 9, 2016 | ORLANDO, FL
Slide 29: Appendix
29 Appendix
Slide 30: 2015 Pro Forma Segment Results
2015 PRO FORMA SEGMENT RESULTS (DOLLARS IN MILLIONS) 30 1. Adjusted Operating Income excludes amortization, restructuring and special items 2. See Reconciliation of non-GAAP Financial Measures in Appendix Pro forma results assume that the acquisition of Covance closed on January 1, 2014 Twelve Month
Slide 31: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES 31 The following consolidated results include Covance as of February 19, 2015; prior to February 19, 2015, all consolidated results exclude Covance Adjusted Operating Income 2015 2014 Operating Income 1,002.9$ 910.4$ Acquisition-related costs 119.1 - Res
Slide 32: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES 32 The following consolidated results include Covance as of February 19, 2015; prior to February 19, 2015, all consolidated results exclude Covance Free Cash Flow: 2015 2014 Net cash provided by operating activities 982.4$ 739.0$ Less: Capital expenditur
Slide 33: Reconciliation of Non-GAAP Financial Measures (Footnotes)
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (FOOTNOTES) 33 1) During the fourth quarter of 2015, the Company recorded net restructuring and special items of $54.0 million. The charges included $25.3 million in severance and other personnel costs along with $17.0 million in facility-related costs a
Slide 34: Reconciliation of Non-GAAP Financial Measures (Footnotes)
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (FOOTNOTES) 34 2) During the fourth quarter of 2014, the Company recorded net restructuring and special items of $2.4 million. The charges included $0.7 million in severance and other personnel costs along with $1.7 million in facility-related costs asso
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