Labcorp Holdings Inc. · NYSE:LH
Labcorp — Laboratory Corp of America Holdings — Q2 2017 Earnings Presentation
19 slides from Labcorp's earnings presentation, Jul 26, 2017
Slide 1: Second Quarter 2017 Supplemental Financial Information
8-K FILED JULY 26, 2017 SECOND QUARTER 2017 SUPPLEMENTAL FINANCIAL INFORMATION
Slide 2: Forward Looking Statement
1 FORWARD LOOKING STATEMENT This presentation contains forward-looking statements which are 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 payers. Actual results co
Slide 3: Use of Adjusted Measures
2 USE OF ADJUSTED MEASURES 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, Free Cash Flow, and certain segment information. The Company believes these adjusted measur
Slide 4: Operating Segment Overview
3 LabCorp Diagnostics The LabCorp Diagnostics segment includes historical LabCorp business units, excluding its Clinical Trials operations (which are part of the Covance Drug Development segment), and including the Nutritional Chemistry and Food Safety operations acquired as part of the Covance acqu
Slide 5: Second Quarter Consolidated Results
4 SECOND QUARTER CONSOLIDATED RESULTS (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) (1) Adjusted Operating Income and Adjusted EPS exclude amortization, restructuring charges and special items (2) See Reconciliation of non-GAAP Financial Measures on slides 15 – 18 2Q17 2Q16 % Change Net Revenue $2,49
Slide 6: Year-to-Date Consolidated Results
5 YEAR-TO-DATE CONSOLIDATED RESULTS (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) (1) Adjusted Operating Income and Adjusted EPS exclude amortization, restructuring charges and special items (2) See Reconciliation of non-GAAP Financial Measures on slides 15 – 18 Six Months Six Months Ended 6/30/17 En
Slide 7: Second Quarter Pro Forma Segment Results
6 SECOND QUARTER PRO FORMA SEGMENT RESULTS(1) (DOLLARS IN MILLIONS) (1) The consolidated net revenue and adjusted operating income are presented net of inter-segment transaction eliminations (2) Covance Drug Development’s results exclude the impact from the wind-down of operations relating to a comm
Slide 8: Year-to-Date Pro Forma Segment Results
7 YEAR-TO-DATE PRO FORMA SEGMENT RESULTS(1) (DOLLARS IN MILLIONS) (1) The consolidated net revenue and adjusted operating income are presented net of inter-segment transaction eliminations (2) Covance Drug Development’s results exclude the impact from the wind-down of operations relating to a commit
Slide 9: Select Financial Metrics
8 SELECT FINANCIAL METRICS (DOLLARS IN MILLIONS) 2Q16 3Q16 4Q16 1Q17 2Q17 Total Depreciation $77.9 $77.9 $79.3 $78.4 $73.5 Total Amortization(1) $45.3 $41.1 $48.8 $47.6 $51.4 Total Adjusted EBITDA(2) $505.4 $485.0 $469.3 $472.2 $515.7 Total Debt to Last Twelve Months Adjusted EBITDA(2) 3.3x 3.3x 3.1
Slide 10: Covance Drug Development: Select Financial Metrics
9 COVANCE DRUG DEVELOPMENT: SELECT FINANCIAL METRICS(1) Trailing Twelve Month (TTM) Results Net Orders Net Book-to-Bill TTM Ending June 30, 2017 $3.44 billion 1.23x TTM Ending March 31, 2017 $3.24 billion 1.15x TTM Ending December 31, 2016 $3.15 billion 1.11x Backlog Estimated revenue expected to co
Slide 11: Second Quarter 2017 Net Revenue Distribution
10 (1) Revenues recognized in over 30 currencies; the largest foreign currency accounts for less than 10% of total net revenue Segment Distribution LabCorp Diagnostics 72.0% Covance Drug Development 28.0% USA 81.5% Geographic Distribution Rest of World(1) 18.5% SECOND QUARTER 2017 NET REVENUE DISTRI
Slide 12: Second Quarter 2017 Foreign Exchange Impact to Net Revenue
11 SECOND QUARTER 2017 FOREIGN EXCHANGE IMPACT TO NET REVENUE(1) (DOLLARS IN MILLIONS) Year over Year Dollars % Growth Consolidated Net Revenue, as Reported $2,498 4.9% Foreign Exchange Impact $15 0.6% Net Revenue, Constant Currency $2,513 5.5% LabCorp Diagnostics Net Revenue, as Reported $1,799 8.4
Slide 13: Year-to-Date 2017 Foreign Exchange Impact to Net Revenue
12 YEAR-TO-DATE 2017 FOREIGN EXCHANGE IMPACT TO NET REVENUE(1) (DOLLARS IN MILLIONS) Year over Year Dollars % Growth Consolidated Net Revenue, as Reported $4,907 4.9% Foreign Exchange Impact $24 0.5% Net Revenue, Constant Currency $4,931 5.5% LabCorp Diagnostics Net Revenue, as Reported $3,517 8.2%
Slide 14: 2017 Financial Guidance
13 2017 FINANCIAL GUIDANCE Prior Guidance (assumes foreign exchange rates effective as of March 31, 2017) Current Guidance (assumes foreign exchange rates effective as of June 30, 2017) Total net revenue growth: 3.5% – 5.5%(2) 5.0% – 6.5%(3) LabCorp Diagnostics net revenue growth: 5.0% – 7.0%(4) 7.0
Slide 15: Reconciliation of Non-GAAP Financial Measures – Adjusted EBITDA
14 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – ADJUSTED EBITDA (DOLLARS IN MILLIONS) 2Q16 3Q16 4Q16 1Q17 2Q17 LabCorp Operating Income $365.5 $324.0 $323.4 $332.7 $336.0 Add: Restructuring and other special charges $6.6 $22.8 $9.8 $3.9 $39.1 Other special charges(1) $7.9 $16.1 $5.8 $7.1 $10.8 De
Slide 16: Reconciliation of Non-GAAP Financial Measures
15 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Adjusted Operating Income 2017 2016 2017 2016 Operating income 336.0$ 365.5$ 668.7$ 665.0$ Acquisition-related costs 8.0 4.5 12.4 7.4 Restructuring and other special charges 39.1 6.6 43.0 25.8 Consulting fees and executive transition expenses - 0.4 -
Slide 17: Reconciliation of Non-GAAP Financial Measures – Free Cash Flow
16 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Free Cash Flow: 2017 2016 2017 2016 Net cash provided by operating activities 310.7$ 349.5$ 544.5$ 477.1$ Less: Capital expenditures (69.3) (67.0) (141.5) (138.4) Free cash flow 241.4$ 282.5$ 403.0$ 338.7$ Free Cash Flow: Net cash provided by operatin
Slide 18: Reconciliation of Non-GAAP Financial Measures - Footnotes
17 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - FOOTNOTES 1) During the second quarter of 2017, the Company recorded net restructuring and other special charges of $39.1 million. The charges included $19.9 million in severance and other personnel costs along with $4.2 million in costs associated
Slide 19: Reconciliation of Non-GAAP Financial Measures - Footnotes
18 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - FOOTNOTES 2) During the second quarter of 2016, the Company recorded net restructuring and special items of $6.6 million. The charges included $4.5 million in severance and other personnel costs along with $4.6 million in facility-related costs asso
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