Labcorp Holdings Inc. · NYSE:LH
Labcorp — Laboratory Corp of America Holdings — William Blair Growth Stock Conference 2016
32 slides from Labcorp's conference presentation, Jun 14, 2016
Slide 1: William Blair Growth Stock Conference June 14, 2016
WILLIAM BLAIR GROWTH STOCK CONFERENCE JUNE 14, 2016 | CHICAGO, IL
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: 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 • >$8.5B revenue in 2015 • >50
Slide 4: LabCorp Diagnostics Overview
LABCORP DIAGNOSTICS OVERVIEW 4 Pro Forma Segment Financial Summary2 Constant Year Ended Currency 2015 2014 Change Change Revenue 6,211$ 5,922$ 4.9% 5.7% Adj. O.I. 1,240$ 1,129$ 9.8% Adj. O.I. % 20.0% 19.1% 90 bps • >$6.2B revenue in 20151 • National network of 39 primary clinical laboratories and ap
Slide 5: Covance Drug Development Overview
COVANCE DRUG DEVELOPMENT OVERVIEW 5 Pro Forma Segment Financial Summary2 Constant Year Ended Currency 2015 2014 Change Change Revenue 2,629$ 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 6: Diversified Revenue Base (2015 Pro Forma Revenue)
DIVERSIFIED REVENUE BASE (2015 PRO FORMA REVENUE1) 6 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 7: Expanded Growth Opportunities with Increased Global Presence
EXPANDED GROWTH OPPORTUNITIES WITH INCREASED GLOBAL PRESENCE 7 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 singl
Slide 8: Our Mission: Improve Health and Improve Lives
OUR MISSION: IMPROVE HEALTH AND IMPROVE LIVES 8 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 Time and
Slide 9: Create Shareholder Value Through Acquisition of Complementary Businesses
CREATE SHAREHOLDER VALUE THROUGH ACQUISITION OF COMPLEMENTARY BUSINESSES 9 Acquisition Criteria Healthcare related businesses that leverage our core competencies Market leader Strong management team International Accretive to earnings and cash flow year 1 Earn cost of capital by year 4 Genzyme Genet
Slide 10: Long-Term Revenue Growth
10 LONG-TERM REVENUE GROWTH1 $3.3 $3.6 $4.1 $4.5 $4.7 $5.0 $5.5 $5.7 $5.8 $8.5 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $6.0 ($ Billions) 10-Year CAGR: 10% CAGR 3% 1. 2005-2014 revenue excludes Covance results. 2008 revenue i
Slide 11: Long-Term Revenue Growth
11 LONG-TERM REVENUE GROWTH1 $3.3 $3.6 $4.1 $4.5 $4.7 $5.0 $5.5 $5.7 $5.8 $8.5 $0.0 $1.0 $2.0 $3.0 $4.0 $5.0 $6.0 $7.0 $8.0 $9.0 $10.0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 $6.0 ~$9.3 ($ Billions) CAGR 3% 1. 2005-2014 revenue excludes Covance results. 2008 revenue includes a $7
Slide 12: Long-Term Adjusted EPS Growth
LONG-TERM ADJUSTED EPS GROWTH1,2 10-Year CAGR: 10% 1. EPS, as presented, represents adjusted, non-GAAP financial measures (excludes amortization, restructuring and other special charges). Diluted EPS, as reported in the Company’s Annual Report were: $2.71 in 2005; $3.24 in 2006; $3.93 in 2007; $4.16
Slide 13: Long-Term Adjusted EPS Growth
LONG-TERM ADJUSTED EPS GROWTH1,2 1. EPS, as presented, represents adjusted, non-GAAP financial measures (excludes amortization, restructuring and other special charges). Diluted EPS, as reported in the Company’s Annual Report were: $2.71 in 2005; $3.24 in 2006; $3.93 in 2007; $4.16 in 2008; $4.98 in
Slide 14: Free Cash Flow
$516 $567 $624 $748 $758 $759 $668 $617 $536 $727 $925 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 14 FREE CASH FLOW1,2 1. 2006-2014 figures exclude Covance results 2. Operating Cash Flow and Free Cash Flow in 2011 excludes the $49.5
Slide 15: Free Cash Flow
$516 $567 $624 $748 $758 $759 $668 $617 $536 $727 $925 $0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 FREE CASH FLOW1,2 1. 2006-2014 figures exclude Covance results 2. Operating Cash Flow and Free Cash Flow in 2011 excludes the $49.5 mil
Slide 16: Effective Capital Deployment to Build Shareholder Value
EFFECTIVE CAPITAL DEPLOYMENT TO BUILD SHAREHOLDER VALUE 16 Capital Expenditures 10% $2.8 billion Share Repurchase 23% Other Acquisitions 19% Approximately $11.8 billion in capital deployment since 20101 $5.6 billion $1.2 billion 1. Includes cash from operations (approximately $5.2 billion) as well a
Slide 17: Conclusion
CONCLUSION 17 • 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 18: William Blair Growth Stock Conference June 14, 2016
WILLIAM BLAIR GROWTH STOCK CONFERENCE JUNE 14, 2016 | CHICAGO, IL
Slide 19: Appendix
Appendix
Slide 20: 2016 Financial Guidance
2016 FINANCIAL GUIDANCE1 Excluding the impact of amortization, restructuring and special items, guidance for 2016 is: Current Guidance (assumes foreign exchange rates effective as of March 31, 2016) Implied Constant Currency Revenue Growth Total net revenue growth: 8.5% – 10.5%3 8.9% – 10.9% LabCorp
Slide 21: Footnotes to Slides
FOOTNOTES TO SLIDES 12 AND 13 (1) EPS, as presented, represents adjusted, non-GAAP financial measures (excludes amortization, restructuring and other special charges). Diluted EPS, as reported in the Company’s Annual Report were: $2.71 in 2005; $3.24 in 2006; $3.93 in 2007; $4.16 in 2008; $4.98 in 2
Slide 22: First Quarter Results
(1) Results in 2015 include measurement period adjustments related to the acquisition of Covance (2) Adjusted Operating Income and Adjusted EPS exclude amortization, restructuring and special items (3) See Reconciliation of non-GAAP Financial Measures in Appendix (4) Operating cash flow in the first
Slide 23: First Quarter Pro Forma Results
(1) The consolidated net revenue and adjusted operating income are presented net of inter-segment transaction eliminations (2) Adjusted Operating Income excludes amortization, restructuring and special items (3) See Reconciliation of non-GAAP Financial Measures in Appendix Pro forma results assume t
Slide 24: Reconciliation of Non-GAAP Financial Measures (First Quarter Results)
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (FIRST QUARTER RESULTS) The following consolidated results include Covance as of February 19, 2015; prior to February 19, 2015, all consolidated results exclude Covance Adjusted Operating Income 2016 2015 Operating Income 301.9$ 132.4$ Acquisition-relate
Slide 25: Reconciliation of Non-GAAP Financial Measures (First Quarter Results)
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (FIRST QUARTER RESULTS) 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 (used for) operating activities 123.0$
Slide 26: Reconciliation of Non-GAAP Financial Measures – Footnotes
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – FOOTNOTES (FIRST QUARTER RESULTS) 1) During the first quarter of 2016, the Company recorded net restructuring and other special charges of $19.2 million. The charges included $4.5 million in severance and other personnel costs along with $17.0 million
Slide 27: Reconciliation of Non-GAAP Financial Measures – Footnotes
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – FOOTNOTES (FIRST QUARTER RESULTS) 3) The Company continues to grow the business through acquisitions and uses Adjusted EPS Excluding Amortization as a measure of operational performance, growth and shareholder returns. The Company believes adjusting EP
Slide 28: 2015 Pro Forma Segment Results
2015 PRO FORMA SEGMENT RESULTS (DOLLARS IN MILLIONS) 28 1. Adjusted Operating Income excludes amortization, restructuring and special items 2. See Reconciliation of non-GAAP Financial Measures in Appendix Pro forma results assume that the acquisition of Covance closed on January 1, 2014 Twelve Month
Slide 29: Reconciliation of Non-GAAP Financial Measures (2015 Full-Year Results)
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (2015 FULL-YEAR RESULTS) 29 The following consolidated results include Covance as of February 19, 2015; prior to February 19, 2015, all consolidated results exclude Covance Adjusted Operating Income 2015 2014 Operating Income 1,002.9$ 910.4$ Acquisition-
Slide 30: Reconciliation of Non-GAAP Financial Measures (2015 Full-Year Results)
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES (2015 FULL-YEAR RESULTS) 30 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$
Slide 31: 1) During the fourth quarter of 2015, the Company recorded net restructuring and special
31 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 associated with facility closures and general integration i
Slide 32: 2) During the fourth quarter of 2014, the Company recorded net restructuring and special
32 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 associated with facility closures and general integration init
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