Labcorp Holdings Inc. · NYSE:LH
Labcorp — Laboratory Corp of America Holdings — Raymond James Institutional Investors Conference 2018
31 slides from Labcorp's conference presentation, Mar 6, 2018
Slide 1: Raymond James Institutional Investors Conference
RAYMOND JAMES INSTITUTIONAL INVESTORS CONFERENCE MARCH 6, 2018 | ORLANDO, FL
Slide 2: Forward Looking Statement and Use of Adjusted Measures
1 FORWARD LOOKING STATEMENT AND USE OF ADJUSTED MEASURES 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 savin
Slide 3: Agenda
2 AGENDA Company Overview 2018 Priorities Long-term Strategic Initiatives Financial Strength
Slide 4: Who We Are
3 WHO WE ARE Our Mission is to improve health and improve lives LabCorp is a leading global life sciences company that is deeply integrated in guiding patient care Our Strategic Objectives are to: Deliver World-Class Diagnostics Bring Innovative Medicines to Patients Faster Use Technology to Improve
Slide 5: LabCorp Overview
4 LABCORP OVERVIEW • $6.9B revenue in 2017 (1) • Patient database reaching ~50% of U.S. population • Proprietary data sets with >30 billion lab test results across a growing menu of nearly 5,000 assays • Broad physician, health system and managed care relationships • Consumer engagement through ~1,9
Slide 6: Attractive Customer Mix and Geographic Presence
5 30% 23% 11% 31% 3% 3% 29% 23% 11% 32% 3%3% Pharma & Biotech Other Payers Medicare & Medicaid Managed Care (Fee for Service) Patient Managed Care (Capitated) (2) Attractive Customer Mix and Geographic Presence(1) EXPANDED REVENUE BASE 1. Based on full year 2017 results, which include results from C
Slide 7: Agenda
6 AGENDA Company Overview 2018 Priorities Long-term Strategic Initiatives Financial Strength
Slide 8: Our 2018 Priorities
7 OUR 2018 PRIORITIES Drive Profitable Growth Optimize Enterprise Margins Integrate Key Acquisitions
Slide 9: Driving Profitable Growth
8 DRIVING PROFITABLE GROWTH Diagnostics: Capitalize on Growth Opportunities • Health systems, large physician groups and managed care partnerships • Expand 23andMe collaboration • Mitigate pricing impact of PAMA Drug Development: Build on Existing Momentum to Exceed Historical Growth Rates • Convert
Slide 10: Integrating Key Acquisitions
9 • Generates approximately $500 million in profitable revenue growth in 2018 from Chiltern, PAML, and Mount Sinai transactions • Successful “Best of the Best” approach to selecting and retaining talent • Dedicated and experienced integration teams, focused on customer retention and synergies Maximi
Slide 11: Optimizing Enterprise Margins
10 OPTIMIZING ENTERPRISE MARGINS Continue Value Creation Through the LaunchPad Business Process Improvement Initiative Covance LaunchPad • Applying LaunchPad principles to Drug Development • Rightsizing implemented in mid-2017 generating $20 million in savings • Expect $130 million in additional net
Slide 12: Agenda
11 AGENDA Company Overview 2018 Priorities Long-term Strategic Initiatives Financial Strength
Slide 13: Healthcare Is Undergoing a Period of Unprecedented Change
12 HEALTHCARE IS UNDERGOING A PERIOD OF UNPRECEDENTED CHANGE Transition to Value-Based Care Enhance Drug Development Process Role of the Consumer • Improve efficiency in care delivery • Reduce the overall cost of patient care • Utilize advanced tools and analytics to deliver better outcomes via pers
Slide 14: Expanding LabCorp's Role in the Healthcare System of the Future
13 EXPANDING LABCORP’S ROLE IN THE HEALTHCARE SYSTEM OF THE FUTURE • National access • Comprehensive test menu • Sales and service organization • Scientific innovation • Power of scale Clinical Decision Support • Programs on key disease states • Lab reports support care guidelines • Developed by phy
Slide 15: Expanding LabCorp's Role in the Healthcare System of the Future
14 EXPANDING LABCORP’S ROLE IN THE HEALTHCARE SYSTEM OF THE FUTURE Reduces the time, cost and risk of specimen based research. Increases value of existing assets with advanced analytics, visualizations, and first-to-market patient consent mapping. Most modern, end-to-end clinical trial solution. Dec
Slide 16: Power of the LabCorp Data for Trial Design
15 Real World Data • Not biased and represents people as they live with their disease • Patient data is granular and identifiable Vast Test Menu • 30+ billion test results across thousands of diagnostic assays • >2.5 million samples collected (>30% by LabCorp phlebotomists) and processed weekly acro
Slide 17: Power of the Xcellerate Investigator Database
16 Covance supports ~50% of all clinical trials Number of Patients Date of First Patient In Quality Lab Cancellations and Queries Standardized Site Rank > 175,000 unique investigators > 15,000 unique protocols Investigator Performance Database Power of the Xcellerate Investigator Database EXPANDING
Slide 18: Increasing Our Leadership in Companion and Complementary Diagnostics
17 On pace to significantly exceed $100 million in cumulative new CDx-related revenue from the acquisition of Covance through 2018 • Dedicated CDx organization with capabilities across development, validation, testing, regulatory support, commercialization and market access • Opened purpose built, s
Slide 19: Developing a Broad Consumer Platform
18 EXPANDING LABCORP’S ROLE IN THE HEALTHCARE SYSTEM OF THE FUTURE Developing a Broad Consumer Platform to Create Deep Relationships • Organizing around the empowered consumer • Creating a convenient, seamless experience • Providing easy access to lab test results and personalized content • Offering
Slide 20: Bringing our High-Quality Offering to Consumers
19 • Patient Service Centers opened inside Walgreens stores • Strong patient volume, net promoter scores, and patient feedback • Start to roll out to new markets in 2018 • Launch new at-home, self-collection offering built on LabCorp’s 10 years of experience with dried blood spot testing • Invest in
Slide 21: Our Differentiated Solutions Are Resonating with Customers
20 2016 >$200 million 2017 ~$500 million OUR DIFFERENTIATED SOLUTIONS ARE RESONATING WITH CUSTOMERS Value-Based Care Solutions Streamlining Clinical Studies Consumer Platform Completed 3 marquee transactions in 2017 Cumulative new orders won through the combination of LabCorp patient data and Covanc
Slide 22: Agenda
21 AGENDA Company Overview 2018 Priorities Long-term Strategic Initiatives Financial Strength
Slide 23: Revenue Growth
22 $4.5 $4.7 $5.0 $5.5 $5.7 $5.8 $6.0 $6.2 $0.0 $2.0 $4.0 $6.0 $8.0 $10.0 $12.0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 $8.5 $9.4 $11.5 $6.6 $6.9 $2.3 $2.8 $7.1 $10.4 $4.3 $3.6 $3.6 REVENUE(1) GROWTH (DOLLARS IN BILLIONS) (1) 2008-2014 revenues excludes Covance results. 2008 revenue i
Slide 24: Adjusted EPS Growth
23 ADJUSTED EPS(1)(2) GROWTH (1) EPS, as presented, represents adjusted, non-GAAP financial measures (excludes amortization, restructuring and other special charges). See Appendix for non-GAAP reconciliation. (2) 2008-2014 figures exclude Covance results. (3) Guidance issued on February 6, 2018. 201
Slide 25: Strong Free Cash Flow
24 STRONG FREE CASH FLOW(1) (DOLLARS IN MILLIONS) (1) Free Cash Flow represents Operating Cash Flow less Capital Expenditures in each of the years presented. 2009-2014 figures exclude Covance results, and other items discussed in the Appendix. (2) Guidance issued on February 6, 2018. 10 Year Average
Slide 26: Track Record of Effective and Balanced Capital Deployment
25 TRACK RECORD OF EFFECTIVE AND BALANCED CAPITAL DEPLOYMENT TO BUILD SHAREHOLDER VALUE Approximately $2.5 Billion in Capital Deployment in 2017 2018 Free Cash Flow M&A Priorities • Diagnostics “tuck-in” transactions Return of Capital to Shareholders • Continue share repurchases Debt Reduction • Pay
Slide 27: Our Market Opportunity and Differentiated Capabilities
26 OUR MARKET OPPORTUNITY AND DIFFERENTIATED CAPABILITIES POSITION US TO DELIVER UNPARALLELED VALUE Beyond CRO Beyond Lab • Engage consumers through clinical study participation and care management tools • Provide health systems, physicians, and ACOs with greater access to cutting-edge care through
Slide 28: Raymond James Institutional Investors Conference
RAYMOND JAMES INSTITUTIONAL INVESTORS CONFERENCE MARCH 6, 2018 | ORLANDO, FL
Slide 29: Appendix
28 Appendix
Slide 30: Preliminary Reconciliation for the New Revenue Recognition Standard (ASC 606)
29 29 PRELIMINARY RECONCILIATION FOR THE NEW REVENUE RECOGNITION ACCOUNTING STANDARD (ASC 606) Effective January 1, 2018, the Company adopted the FASB-issued converged standard on revenue recognition, using the full retrospective method. Although the Company has not completed all of the analysis req
Slide 31: Reconciliation of Non-GAAP Financial Measures
30 (in millions, except per share data) Twelve Months Ended December 31, Adjusted EPS 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Diluted earnings per common share 4.16$ 4.98$ 5.29$ 5.11$ 5.99$ 6.25$ 5.91$ 4.35$ 7.02$ 12.21$ One-time benefit from Tax Cuts and Jobs Act - - - - - - - - - (5.00)
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