Labcorp Holdings Inc. · NYSE:LH
Labcorp — Laboratory Corp of America Holdings — Q3 2017 Earnings Presentation
20 slides from Labcorp's earnings presentation, Oct 25, 2017
Slide 1: Third Quarter 2017 Supplemental Financial Information
8-K FURNISHED OCTOBER 25, 2017 THIRD 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, Adjusted EBITDA, Free Cash Flow, and certain segment information. The Company believes thes
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: Third Quarter Consolidated Results
4 THIRD 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 – 19 3Q17 3Q16 % Change Net Revenue $2,597
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 – 19 Nine Months Nine Months Ended 9/30/17
Slide 7: Third Quarter Pro Forma Segment Results
6 THIRD 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 commi
Slide 8: Year-to-Date Pro Forma Segment Results
7 YEAR-TO-DATE PRO FORMA SEGMENT RESULTS(1) (DOLLARS IN MILLIONS) Nine Months Nine Months Ended 9/30/17 Ended 9/30/16 % Change Net Revenue LabCorp Diagnostics $5,354.2 $4,922.1 8.8% Covance Drug Development(2) $2,151.1 $2,126.6 1.2% Total Net Revenue(2) $7,504.4 $7,048.3 6.5% Adjusted Operating Inco
Slide 9: Select Financial Metrics
8 SELECT FINANCIAL METRICS (DOLLARS IN MILLIONS) 3Q16 4Q16 1Q17 2Q17 3Q17 Total Depreciation $77.9 $79.3 $78.4 $73.5 $76.4 Total Amortization(1) $41.1 $48.8 $47.6 $51.4 $54.6 Total Adjusted EBITDA(2) $485.0 $469.3 $472.2 $515.7 $526.4 Total Debt to Last Twelve Months Adjusted EBITDA(2) (3) 3.3x 3.1x
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 September 30, 2017(2) $3.82 billion 1.33x 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 b
Slide 11: Third 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 70.7% Covance Drug Development 29.3% USA 81.6% Geographic Distribution Rest of World(1) 18.4% THIRD QUARTER 2017 NET REVENUE DISTRIB
Slide 12: Third Quarter 2017 Foreign Exchange Impact to Net Revenue
11 THIRD QUARTER 2017 FOREIGN EXCHANGE IMPACT TO NET REVENUE(1) (DOLLARS IN MILLIONS) Year over Year Dollars % Growth Consolidated Net Revenue, as Reported $2,598 9.5% Foreign Exchange Impact ($7) (0.3%) Net Revenue, Constant Currency $2,591 9.2% LabCorp Diagnostics Net Revenue, as Reported $1,837 9
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 $7,504 6.5% Foreign Exchange Impact $17 0.2% Net Revenue, Constant Currency $7,521 6.7% LabCorp Diagnostics Net Revenue, as Reported $5,354 8.8%
Slide 14: 2017 Financial Guidance
13 2017 FINANCIAL GUIDANCE Prior Guidance (assumes foreign exchange rates effective as of June 30, 2017) Current Guidance (assumes foreign exchange rates effective as of September 30, 2017) Total net revenue growth: 5.0% – 6.5%(2) 8.0% – 8.5%(3) LabCorp Diagnostics net revenue growth: 7.0% – 8.0% 8.
Slide 15: Reconciliation of Non-GAAP Financial Measures – Adjusted EBITDA
14 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – ADJUSTED EBITDA (DOLLARS IN MILLIONS) 3Q16 4Q16 1Q17 2Q17 3Q17 LabCorp Operating Income $324.0 $323.4 $332.7 $336.0 $341.3 Add: Restructuring and other special charges $22.8 $9.8 $3.9 $39.1 $21.6 Other special charges(1) $16.1 $5.8 $7.1 $10.8 $29.0
Slide 16: Reconciliation of Non-GAAP Financial Measures
15 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Adjusted Operating Income 2017 2016 2017 2016 Operating income 341.3$ 324.0$ 1,010.0$ 989.0$ Acquisition-related costs 23.2 7.7 35.6 15.1 Restructuring and other special charges 21.6 22.8 64.6 48.6 Consulting fees and executive transition expenses 3.1
Slide 17: Reconciliation of Non-GAAP Financial Measures
16 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Free Cash Flow: 2017 2016 2017 2016 Net cash provided by operating activities 350.9$ 249.9$ 895.4$ 727.0$ Less: Capital expenditures (75.3) (66.2) (216.8) (204.6) Free cash flow 275.6$ 183.7$ 678.6$ 522.4$ LABORATORY CORPORATION OF AMERICA HOLDINGS Re
Slide 18: Reconciliation of Non-GAAP Financial Measures - Footnotes
17 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - FOOTNOTES 1) During the third quarter of 2017, the Company recorded net restructuring and other special charges of $21.6 million. The charges included $4.6 million in severance and other personnel costs along with $12.1 million in costs associated w
Slide 19: Reconciliation of Non-GAAP Financial Measures - Footnotes
18 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - FOOTNOTES 2) During the third quarter of 2016, the Company recorded net restructuring and special items of $22.8 million. The charges included $14.1 million in severance and other personnel costs along with $9.1 million in facility-related costs ass
Slide 20: Reconciliation of Non-GAAP Financial Measures - Footnotes
19 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - FOOTNOTES 3) 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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