Labcorp Holdings Inc. · NYSE:LH
Labcorp — Laboratory Corp of America Holdings — Q3 2018 Earnings Presentation
23 slides from Labcorp's earnings presentation, Oct 24, 2018
Slide 1: Third Quarter 2018 Supplemental Financial Information
THIRD QUARTER 2018 SUPPLEMENTAL FINANCIAL INFORMATION 8-K FURNISHED OCTOBER 24, 2018
Slide 2: Forward Looking Statement
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 fro
Slide 3: Use of Adjusted Measures and Adoption of ASC 606
USE OF ADJUSTED MEASURES AND ADOPTION OF ASC 606 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
Slide 4: Third Quarter Consolidated Results
THIRD QUARTER CONSOLIDATED RESULTS (1) (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) Restated for ASC 606 and ASU 2017-17 3Q18 3Q17 % Change Revenue $2,831.3 $2,621.4 8.0% (5) Adjusted Operating Income (2) (3) $429.2 $431.9 (0.6%) Adjusted Operating Margin 15.2% 16.5% (130 bps) Adjusted EPS (2) (3) $
Slide 5: Year-to-Date Consolidated Results
YEAR-TO-DATE CONSOLIDATED RESULTS (1) (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) Restated for ASC 606 and ASU 2017-17 Nine Months Nine Months Ended 9/30/18 Ended 9/30/17 % Change Revenue $8,545.9 $7,563.3 13.0% (5) Adjusted Operating Income (2) (3) $1,328.4 $1,239.8 7.2% Adjusted Operating Margin
Slide 6: Third Quarter Pro Forma Segment Results
THIRD QUARTER PRO FORMA SEGMENT RESULTS (1) (DOLLARS IN MILLIONS) Restated for ASC 606 and ASU 2017-17 3Q18 3Q17 % Change Revenue LabCorp Diagnostics $1,752.0 $1,754.7 (0.2%) Covance Drug Development (2) $1,081.5 $867.1 24.7% Total Revenue $2,831.3 $2,621.4 8.0% Adjusted Operating Income (3) (4) Lab
Slide 7: Year-to-Date Pro Forma Segment Results
YEAR-TO-DATE PRO FORMA SEGMENT RESULTS (1) (DOLLARS IN MILLIONS) Restated for ASC 606 and ASU 2017-17 Nine Months Nine Months Ended 9/30/18 Ended 9/30/17 % Change Revenue LabCorp Diagnostics $5,336.3 $5,115.5 4.3% Covance Drug Development (2) $3,214.1 $2,448.8 31.3% Total Revenue $8,545.9 $7,563.3 1
Slide 8: Select Financial Metrics
SELECT FINANCIAL METRICS (DOLLARS IN MILLIONS) Restated for ASC 606 and ASU 2017-17 3Q17 4Q17 1Q18 2Q18 3Q18 Total Depreciation $76.4 $78.5 $78.3 $77.3 $76.3 Total Amortization (1) $54.6 $62.9 $62.3 $58.5 $54.7 Total Adjusted EBITDA (2) $511.8 $512.7 $517.2 $543.9 $508.9 Total Debt to Last Twelve Mo
Slide 9: Covance Drug Development: Select Financial Metrics Under ASC 606
COVANCE DRUG DEVELOPMENT: SELECT FINANCIAL METRICS UNDER ASC 606 (1) Trailing Twelve Month (TTM) Results (2) Net Orders Net Book-to-Bill TTM Ending September 30, 2018 $5.3 billion 1.25x TTM Ending June 30, 2018 $4.9 billion 1.22x TTM Ending March 31, 2018 $4.8 billion 1.29x TTM Ending December 31, 2
Slide 10: Covance Drug Development: Select Financial Metrics Under ASC 605
COVANCE DRUG DEVELOPMENT: SELECT FINANCIAL METRICS UNDER ASC 605 (1) Trailing Twelve Month (TTM) Results (2) Net Orders Net Book-to-Bill TTM Ending September 30, 2018 $4.4 billion 1.25x TTM Ending June 30, 2018 $4.2 billion 1.24x TTM Ending March 31, 2018 $4.3 billion 1.34x TTM Ending December 31, 2
Slide 11: Third Quarter 2018 Revenue Distribution Under ASC 606
THIRD QUARTER 2018 REVENUE DISTRIBUTION UNDER ASC 606 Segment Distribution Covance Drug Development 38.2% Geographic Distribution (1) Rest of World (2) 19.9% LabCorp Diagnostics 61.8% USA 80.1% (1) The percentage of total revenue generated outside of the United States for the first, second, and thir
Slide 12: Third Quarter 2018 Foreign Exchange Impact to Revenue
THIRD QUARTER 2018 FOREIGN EXCHANGE IMPACT TO REVENUE(1) (DOLLARS IN MILLIONS) Year over Year Dollars % Growth Consolidated Revenue, as Reported $2,831 8.0% Foreign Exchange Impact $8 0.3% Revenue, Constant Currency $2,839 8.3% LabCorp Diagnostics Revenue, as Reported $1,752 (0.2%) Foreign Exchange
Slide 13: Year-to-Date 2018 Foreign Exchange Impact to Revenue
YEAR-TO-DATE 2018 FOREIGN EXCHANGE IMPACT TO REVENUE(1) (DOLLARS IN MILLIONS) Year over Year Dollars % Growth Consolidated Revenue, as Reported $8,546 13.0% Foreign Exchange Impact ($47) (0.6%) Revenue, Constant Currency $8,499 12.4% LabCorp Diagnostics Revenue, as Reported $5,336 4.3% Foreign Excha
Slide 14: Third Quarter Pro Forma Results Excluding Business Disruptions
THIRD QUARTER PRO FORMA RESULTS EXCLUDING BUSINESS DISRUPTIONS (1) (DOLLARS IN MILLIONS) Three Months Estimated Results Ended September Ransomware Hurricane Excluding Impact from 30, 2018 Attack (3) Florence (4) Business Disruptions Consolidated (Reported Basis ) Revenue $ 2,831.3 (2) $ 9.8 $ 3.8 $
Slide 15: 2017 Quarterly Segment Financial Results Restated for ASC 606 and ASU 2017-17
2017 QUARTERLY SEGMENT FINANCIAL RESULTS RESTATED FOR ASC 606 AND ASU 2017-17 (1) Three Months Ended Three Months Ended Three Months Ended Three Months Ended Twelve Months Ended (Dollars in millions, except per share data) March 31, 2017 June 30, 2017 September 30, 2017 December 31, 2017 December 31
Slide 16: 2017 Quarterly Financial Results – GAAP Basis Restated
2017 QUARTERLY FINANCIAL RESULTS – GAAP BASIS RESTATED FOR ASC 606 AND ASU 2017-17 LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS -RESTATED FOR ASC 606 AND ASU 2017-17 (Dollars in Millions, except per share data) Quarter Ended Quarter Ended Quarter
Slide 17: 2018 Financial Guidance
2018 FINANCIAL GUIDANCE Prior Guidance Current Guidance (assumes foreign exchange (assumes foreign exchange rates effective as of rates effective as of June 30, 2018) September 30, 2018) Total revenue growth (1) : 10.5% – 11.5% (3) 10.5% - 11.0% (4) LabCorp Diagnostics revenue growth (1) : 3.0% – 4.
Slide 18: Reconciliation of Non-GAAP Financial Measures – Adjusted EBITDA
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – ADJUSTED EBITDA (DOLLARS IN MILLIONS) Restated for ASC 606 and ASU 2017-17 3Q17 4Q17 1Q18 2Q18 3Q18 LabCorp Operating Income $326.7 $330.6 $305.4 $369.2 $343.4 Add: Restructuring and other special charges $21.6 $6.3 $14.3 $12.2 $10.0 Other special char
Slide 19: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES LABORATORY CORPORATION OF AMERICA HOLDINGS Reconciliation of Non-GAAP Financial Measures (Dollars in millions, except per share data) Three Months Ended Nine Months Ended September 30, September 30, Adjusted Operating Income 2018 2017 2018 2017 Operating
Slide 20: Reconciliation of Non-GAAP Financial Measures – Free Cash Flow
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES LABORATORY CORPORATION OF AMERICA HOLDINGS Reconciliation of Non-GAAP Financial Measures (Dollars in millions) Three Months Ended Nine Months Ended September 30, September 30, Free Cash Flow: 2018 2017 2018 2017 Net cash provided by operating activities
Slide 21: Reconciliation of Non-GAAP Financial Measures - Footnotes
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - FOOTNOTES 1) During the third quarter of 2018, the Company recorded net restructuring and other special charges of $10.0 million. The charges included $6.6 million in severance and other personnel costs along with $4.0 million in costs associated with
Slide 22: Reconciliation of Non-GAAP Financial Measures - Footnotes
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - FOOTNOTES 3) In its continuing assessment of the impact of the passage of the TCJA in the fourth quarter of 2017, along with related actions from certain state jurisdictions, the Company recorded a net increase in its provision for income taxes (and a
Slide 23: Reconciliation of Non-GAAP Financial Measures - Footnotes
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES - FOOTNOTES 5) 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 provi
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