Labcorp Holdings Inc. · NYSE:LH
Labcorp — Laboratory Corp of America Holdings — Q3 2016 Earnings Presentation
22 slides from Labcorp's earnings presentation, Oct 26, 2016
Slide 1: Third Quarter 2016 Supplemental Financial Information
8-K FILED OCTOBER 26, 2016 THIRD QUARTER 2016 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, adverse actions of governmental and other third-party payers and the results from La
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, and Free Cash Flow. The Company believes these adjusted measures are useful to investors as
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(1) (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) (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 Reconcili
Slide 6: Year-to-Date Consolidated Results
5 YEAR-TO-DATE CONSOLIDATED RESULTS(1) (DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA) (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 Reconcilia
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) Adjusted Operating Income excludes amortization, restructuring and special items (3) See Reconciliation of
Slide 8: Year-to-Date Pro Forma Segment Results
7 YEAR-TO-DATE 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) Adjusted Operating Income excludes amortization, restructuring and special items (3) See Reconciliation of
Slide 9: Select Financial Metrics
8 SELECT FINANCIAL METRICS(1) (DOLLARS IN MILLIONS) 3Q15 4Q15 1Q16 2Q16 3Q16 Total Depreciation $72.2 $72.7 $75.9 $77.9 $78.0 Total Amortization(2) $44.9 $43.9 $44.3 $45.3 $41.1 Total Adjusted EBITDA(3) $459.1 $442.2 $450.7 $505.4 $485.0 Total Debt to Last Twelve Months Adjusted EBITDA(3) (4) 3.8x 3
Slide 10: Covance Drug Development: Select Financial Metrics
9 COVANCE DRUG DEVELOPMENT: SELECT FINANCIAL METRICS (DOLLARS IN MILLIONS) 3Q15 4Q15 1Q16 2Q16 3Q16 Net Revenue $669 $691 $703 $722 $701 Net Orders $811 $816 $830 $818 $755 Ending Backlog $6,653 $6,738 $6,901 $7,061 $7,059 Quarter Net Book to Bill 1.21x 1.18x 1.18x 1.13x 1.08x Trailing Twelve Month
Slide 11: Third Quarter 2016 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 70.5% Covance Drug Development 29.5% USA 81.0% Geographic Distribution Rest of World(1) 19.0% THIRD QUARTER 2016 NET REVENUE DISTRIB
Slide 12: Third Quarter 2016 Foreign Exchange Impact to Net Revenue
11 THIRD QUARTER 2016 FOREIGN EXCHANGE IMPACT TO NET REVENUE (DOLLARS IN MILLIONS) Year over Year Dollars % Growth Consolidated Net Revenue, as Reported $2,373 4.5% Foreign Exchange Impact $11 0.5% Net Revenue, Constant Currency $2,384 5.0% LabCorp Diagnostics Net Revenue, as Reported $1,672 4.4% Fo
Slide 13: Year-to-Date 2016 Foreign Exchange Impact to Pro Forma Net Revenue
12 YEAR-TO-DATE 2016 FOREIGN EXCHANGE IMPACT TO PRO FORMA NET REVENUE (DOLLARS IN MILLIONS) Year over Year Dollars % Growth Consolidated Net Revenue, as Reported $7,048 6.8% Foreign Exchange Impact $38 0.6% Net Revenue, Constant Currency $7,086 7.4% LabCorp Diagnostics Net Revenue, as Reported $4,92
Slide 14: 2016 Financial Guidance
13 2016 FINANCIAL GUIDANCE Excluding the impact of amortization, restructuring and special items, guidance for 2016 is: Prior Guidance (assumes foreign exchange rates effective as of June 30, 2016) Current Guidance (assumes foreign exchange rates effective as of September 30, 2016) Total net revenue
Slide 15: 2015 Pro Forma Segment Reconciliation
14 2015 PRO FORMA SEGMENT RECONCILIATION (DOLLARS IN MILLIONS) (1) During the third quarter of 2016, the Company reclassified certain gross receipts taxes from its provision for income taxes to selling, general and administrative expenses. This revision impacts both segments' Adjusted Operating Inco
Slide 16: 2016 Segment Reconciliation
15 2016 SEGMENT RECONCILIATION (DOLLARS IN MILLIONS) 1Q16 2Q16 3Q16 YTD16 LabCorp Diagnostics Adjusted Operating Income, as reported $310.3 $356.5 $343.2 $1,009.9 Reclassification of certain gross receipts taxes from income tax expense(1) (2.3) (1.2) (1.4) (4.8) LabCorp Diagnostics Adjusted Operatin
Slide 17: 2016 Impact of Adoption of FASB Accounting Standard on Share-Based Payment Accounting
16 2016 IMPACT OF ADOPTION OF FASB ACCOUNTING STANDARD ON SHARE-BASED PAYMENT ACCOUNTING(1) (DOLLARS AND SHARES IN MILLIONS) (1) In the third quarter of 2016, the Company adopted the provision of the new FASB Accounting Standard on Share-Based Payment Accounting. The standard requires that companies
Slide 18: Reconciliation of Non-GAAP Financial Measures – Adjusted EBITDA
17 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – ADJUSTED EBITDA (DOLLARS IN MILLIONS) 3Q15 4Q15 1Q16 2Q16 3Q16 LabCorp Operating Income, as reported $309.4 $237.9 $302.0 $366.9 -- Reclassification of certain gross receipts taxes from income tax expense(1) (1.3) (1.4) (2.4) (1.4) -- LabCorp Operat
Slide 19: Reconciliation of Non-GAAP Financial Measures
18 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES The following consolidated results include Covance as of February 19, 2015; prior to February 19, 2015, all consolidated results exclude Covance Adjusted Operating Income 2016 2015 2016 2015 Operating Income 324.0$ 308.1$ 989.0$ 760.3$ Acquisition-rel
Slide 20: Reconciliation of Non-GAAP Financial Measures – Free Cash Flow
19 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES The following consolidated results include Covance as of February 19, 2015; prior to February 19, 2015, all consolidated results exclude Covance Free Cash Flow: 2016 2015 2016 2015 Net cash provided by operating activities 249.9$ 288.0$ 727.0$ 597.8$
Slide 21: Restructuring and Special Items Footnotes
20 1) 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 associated with facility closures and general integration ini
Slide 22: 2015 Restructuring and Other Special Charges Notes
21 During the first two quarters of 2015, the Company recorded net restructuring and other special charges of $33.5 million. The charges included $9.5 million in severance and other personnel costs along with $9.8 million in costs associated with facility closures and general integration initiatives
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