Labcorp Holdings Inc. · NYSE:LH
Labcorp — Laboratory Corp of America Holdings — Q4 2017 Earnings Presentation
20 slides from Labcorp's earnings presentation, Feb 6, 2018
Slide 1: Fourth Quarter 2017 Supplemental Financial Information
8-K FURNISHED FEBRUARY 6, 2018 FOURTH QUARTER 2017 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
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: Fourth Quarter Consolidated Results
3 FOURTH QUARTER CONSOLIDATED RESULTS (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) (1) Adjusted Operating Income excludes amortization, restructuring charges and special items. Adjusted EPS exclude the impact from the implementation of the Tax Cuts and Jobs Act of 2017, amortization, restructuring c
Slide 5: Full Year 2017 Consolidated Results
4 FULL YEAR 2017 CONSOLIDATED RESULTS (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) (1) Adjusted Operating Income excludes amortization, restructuring charges and special items. Adjusted EPS exclude the impact from the implementation of the Tax Cuts and Jobs Act of 2017, amortization, restructuring c
Slide 6: Fourth Quarter Pro Forma Segment Results
5 FOURTH 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 7: Full Year 2017 Pro Forma Segment Results
6 FULL YEAR 2017 PRO FORMA SEGMENT RESULTS(1) (DOLLARS IN MILLIONS) Twelve Months Twelve Months Ended 12/31/17 Ended 12/31/16 % Change Net Revenue LabCorp Diagnostics $7,170.5 $6,593.9 8.7% Covance Drug Development(2) $3,037.2 $2,842.2 6.9% Total Net Revenue(2) $10,205.9 $9,435.6 8.2% Adjusted Opera
Slide 8: Select Financial Metrics
7 SELECT FINANCIAL METRICS (DOLLARS IN MILLIONS) 4Q16 1Q17 2Q17 3Q17 4Q17 Total Depreciation $79.3 $78.4 $73.5 $76.4 $78.5 Total Amortization(1) $48.8 $47.6 $51.4 $54.6 $62.9 Total Adjusted EBITDA(2) $469.3 $472.2 $515.7 $526.4 $536.4 Total Debt to Last Twelve Months Adjusted EBITDA(2) (3) 3.1x 3.1x
Slide 9: Covance Drug Development: Select Financial Metrics
8 COVANCE DRUG DEVELOPMENT: SELECT FINANCIAL METRICS(1) Trailing Twelve Month (TTM) Results Net Orders Net Book-to-Bill TTM Ending December 31, 2017(2) $4.14 billion 1.36x 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 $3.2
Slide 10: Fourth Quarter 2017 Net Revenue Distribution
9 (1) Revenues recognized in over 30 currencies; the largest foreign currency accounts for less than 10% of total net revenue Segment Distribution LabCorp Diagnostics 67.2% Covance Drug Development 32.8% USA 78.6% Geographic Distribution Rest of World(1) 21.4% FOURTH QUARTER 2017 NET REVENUE DISTRIB
Slide 11: Fourth Quarter 2017 Foreign Exchange Impact to Net Revenue
10 FOURTH QUARTER 2017 FOREIGN EXCHANGE IMPACT TO NET REVENUE(1) (DOLLARS IN MILLIONS) Year over Year Dollars % Growth Consolidated Net Revenue, as Reported $2,702 13.2% Foreign Exchange Impact ($15) (0.6%) Net Revenue, Constant Currency $2,686 12.5% LabCorp Diagnostics Net Revenue, as Reported $1,8
Slide 12: Full Year 2017 Foreign Exchange Impact to Net Revenue
11 FULL YEAR 2017 FOREIGN EXCHANGE IMPACT TO NET REVENUE(1) (DOLLARS IN MILLIONS) Year over Year Dollars % Growth Consolidated Net Revenue, as Reported $10,206 8.2% Foreign Exchange Impact $2 0.0% Net Revenue, Constant Currency $10,207 8.2% LabCorp Diagnostics Net Revenue, as Reported $7,171 8.7% Fo
Slide 13: Impact from Change in Revenue Recognition Accounting Standard (ASC 606)
12 IMPACT FROM CHANGE IN REVENUE RECOGNITION ACCOUNTING STANDARD (ASC 606) Effective January 1, 2018, the Company will adopt the FASB-issued converged standard on revenue recognition, using the full retrospective method. Although the Company has not completed all of the analysis required to finalize
Slide 14: 2018 Financial Guidance
13 2018 FINANCIAL GUIDANCE Current Guidance (assumes foreign exchange rates effective as of December 31, 2017) Total net revenue growth(1): 9.5% – 11.5%(3) LabCorp Diagnostics net revenue growth(1): 3.0% – 5.0%(4) Covance Drug Development net revenue growth(1): 20.0% – 24.0%(5) Adjusted EPS(2): $11.
Slide 15: Reconciliation of Non-GAAP Financial Measures – Adjusted EBITDA
14 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – ADJUSTED EBITDA (DOLLARS IN MILLIONS) 4Q16 1Q17 2Q17 3Q17 4Q17 LabCorp Operating Income $323.4 $332.7 $336.0 $341.3 $354.2 Add: Restructuring and other special charges $9.8 $3.9 $39.1 $21.6 $6.3 Other special charges(1) $5.8 $7.1 $10.8 $29.0 $32.8 D
Slide 16: Reconciliation of Non-GAAP Financial Measures
15 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Adjusted Operating Income 2017 2016 2017 2016 Operating income 354.2$ 323.4$ 1,364.2$ 1,312.4$ Acquisition-related costs 14.1 3.3 49.7 18.4 Restructuring and other special charges 6.3 9.8 70.9 58.4 Consulting fees and executive transition expenses 1.3
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 564.0$ 448.9$ 1,459.4$ 1,175.9$ Less: Capital expenditures (96.1) (74.3) (312.9) (278.9) Free cash flow 467.9$ 374.6$ 1,146.5$ 897.0$ LABORATORY CORPORATION OF AMERICA HOLDI
Slide 18: Reconciliation of Non-GAAP Financial Measures - Footnotes
17 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - FOOTNOTES 1) During the fourth quarter of 2017, the Company recorded net restructuring and other special charges of $6.3 million. The charges included $8.9 million in severance and other personnel costs along with $0.9 million in costs associated wi
Slide 19: Reconciliation of Non-GAAP Financial Measures - Footnotes
18 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - FOOTNOTES 3) During the fourth quarter of 2016, the Company recorded net restructuring charges and special items of $9.8 million. The charges included $8.1 million in severance and other personnel costs along with $2.8 million in facility-related co
Slide 20: Reconciliation of Non-GAAP Financial Measures - Footnotes
19 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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