Labcorp Holdings Inc. · NYSE:LH
Labcorp — Laboratory Corp of America Holdings — J.P. Morgan Healthcare Conference 2016
32 slides from Labcorp's conference presentation, Jan 13, 2016
Slide 1: J.P. Morgan Healthcare Conference January 13, 2016
J.P. MORGAN HEALTHCARE CONFERENCE JANUARY 13, 2016 | SAN FRANCISCO, CA
Slide 2: Forward Looking Statement
1 FORWARD LOOKING STATEMENT Cautionary Statement Regarding Forward Looking Statements This presentation contains forward-looking statements including with respect to estimated 2015 and 2016 guidance and the impact of various factors on operating results. Each of the forward-looking statements is sub
Slide 3: Agenda
2 Strategic Priorities Financial Strength Company and Strategic Vision AGENDA
Slide 4: LabCorp Overview
3 LABCORP OVERVIEW 1. Based on guidance issued on October 26, 2015 • 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) – Covan
Slide 5: LabCorp Diagnostics Overview
4 LABCORP DIAGNOSTICS OVERVIEW • Approximately $6.2B revenue expected in 20151 • National network of 39 primary clinical laboratories and approximately 1,700 patient service centers • Offers broad range of 4,700+ clinical, anatomic pathology, genetic and genomic tests • Processes approximately 500,0
Slide 6: Covance Drug Development Overview
5 Pro Forma Segment Financial Summary2 Constant Nine Months Ended Currency 9/30/2015 9/30/2014 Change Change Revenue 1,937$ 1,950$ -0.7% 3.4% Adj. O.I. 261$ 251$ 4.2% Adj. O.I. % 13.5% 12.8% 70 bps COVANCE DRUG DEVELOPMENT OVERVIEW • Approximately $2.6B revenue expected in 20151 • Only provider of f
Slide 7: Diversified Revenue Base
6 DIVERSIFIED REVENUE BASE1 (2015 REVENUE DISTRIBUTION THROUGH SEPTEMBER 30, 2015) Unique Customer Mix 29% 31% 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 Co
Slide 8: Expanded Growth Opportunities with Increased Global Presence
7 EXPANDED GROWTH OPPORTUNITIES WITH INCREASED GLOBAL PRESENCE 1. 2014 revenue excludes Covance. 2015 revenue presented on a pro forma basis (from January 1st through September 30th) as if the acquisition of Covance closed on January 1st, 2015. 2. Based on industry publications and company estimates
Slide 9: Our Strategic Vision: Improve Health and Improve Lives
8 OUR STRATEGIC VISION: IMPROVE HEALTH AND IMPROVE LIVES 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
Slide 10: Our Strategic Vision: Improve Health and Improve Lives
9 OUR STRATEGIC VISION: IMPROVE HEALTH AND IMPROVE LIVES Delivering World Class Diagnostics Bringing Innovative Medicines to Patients Faster Changing the Way Care is Provided
Slide 11: Grow the Base Through Customer Focus and Enterprise Partnerships
10 GROW THE BASE THROUGH CUSTOMER FOCUS AND ENTERPRISE PARTNERSHIPS Drive Organic Growth to Serve Multiple Customers Across Care Settings • Increase breadth and scope of partnerships with managed care • Seek innovative partnerships with government payers • Increase breadth and depth of partnerships
Slide 12: Expand Diagnostic Offering with New Tests
11 EXPAND DIAGNOSTIC OFFERING WITH NEW TESTS Maintain Leadership in Scientific Innovation • Introduced over 75 assays in 2015 • Industry-leading position in companion diagnostics (CDx) with differentiated capabilities and unparalleled experience • Continue expansion of next-generation sequencing cap
Slide 13: Create Shareholder Value Through Acquisition of Complementary Businesses
12 CREATE SHAREHOLDER VALUE THROUGH ACQUISITION OF COMPLEMENTARY BUSINESSES Target Acquisition Considerations Attractive market opportunity that leverages our core competencies Meets financial criteria Proven technology Attractive customer set Global scope Strong management team Genzyme Genetics
Slide 14: Our Strategic Vision: Improve Health and Improve Lives
13 OUR STRATEGIC VISION: IMPROVE HEALTH AND IMPROVE LIVES Delivering World Class Diagnostics Bringing Innovative Medicines to Patients Faster Changing the Way Care is Provided
Slide 15: Deliver Highest Quality, End-to-End Drug Development Solutions
14 DELIVER HIGHEST QUALITY, END-TO-END DRUG DEVELOPMENT SOLUTIONS TO THE MARKET • Create therapeutically-driven solutions that span the drug development and testing continuum • Pursue pull-through opportunities and broaden customer segment coverage globally • Leverage scale, cost efficiencies and in
Slide 16: Create Differentiated Drug Development Approaches
15 CREATE DIFFERENTIATED DRUG DEVELOPMENT APPROACHES Help Partners Rethink and Redesign their Global R&D Decisions Early Development Phase Solutions • Innovative offering to connect the customers’ non-clinical and clinical development goals • Consistent and focused project team • Continuity of drug
Slide 17: Deploy Innovative Tools and Technology to Address Partner Needs
16 DEPLOY INNOVATIVE TOOLS AND TECHNOLOGY TO ADDRESS PARTNER NEEDS • Deliver SaaS platform to replace internally- built clinical IT structures while improving value and insight • Create scientific solutions that accelerate discovery and development of innovative medicines • Lower patient burden and
Slide 18: Develop Informatics-Driven Solutions in Patient Recruitment and Study Start Up
17 DEVELOP INFORMATICS-DRIVEN SOLUTIONS IN PATIENT RECRUITMENT AND STUDY START UP • Health information from >100 million patient encounters annually • Identify desired patient populations and relevant investigator sites • Inform study design • Facilitate faster clinical trial enrollment Filtered pat
Slide 19: Our Strategic Vision: Improve Health and Improve Lives
18 OUR STRATEGIC VISION: IMPROVE HEALTH AND IMPROVE LIVES Delivering World Class Diagnostics Bringing Innovative Medicines to Patients Faster Changing the Way Care is Provided
Slide 20: Commercialize Innovative Technology-Enabled Solutions: BeaconLBS
19 • Decision support tool to guide lab and test selection • Designed to: • Improve quality of lab services • Support evidence-based guidelines for patient care • Help payers manage laboratory cost and trend • Integrated into provider workflow • Developed and implemented by collaborative team with e
Slide 21: Provide Better Insights to Help Customers Manage Health
20 PROVIDE BETTER INSIGHTS TO HELP CUSTOMERS MANAGE HEALTH Innovative Decision Support Tools • Programs include: • Chronic Kidney Disease (CKD) • Cardiovascular Disease • Type 2 Diabetes • Kidney Stones • Medical Drug Monitoring • Delivered more than 5 million enhanced reports in 2015 • Reports prov
Slide 22: Xcellerate Monitoring: Unique Risk-Based Monitoring Tool
21 • Proactively identify and mitigate risks at the individual site and patient level for a single study or worldwide portfolio • Designed to: • Allow partners to make more informed clinical trial decisions • Lower clinical trial execution risk • Drive faster results • Utilizes data visualization ca
Slide 23: Focused on Profitable Growth
22 FOCUSED ON PROFITABLE GROWTH 1. Results presented on a pro forma basis as if the acquisition of Covance closed on January 1, 2014. Adjusted operating income excludes amortization, restructuring and other special items. See Appendix for reconciliation. 2. Reported results include Covance as of Feb
Slide 24: Effective Capital Deployment to Build Shareholder Value
23 EFFECTIVE CAPITAL DEPLOYMENT TO BUILD SHAREHOLDER VALUE Capital Expenditures 9% $2.8 billion Share Repurchase 24% Other Acquisitions 17% Approximately $11.8 billion in capital deployment between 2010 and Sep. 30, 20151 $5.6 billion $1.0 billion 1. Includes cash from operations (approximately $4.7
Slide 25: Conclusion
24 CONCLUSION • Unique business with unique capabilities • Expanded growth opportunities in the US and around the globe • Focus on execution of our strategy to increase shareholder value Key Points
Slide 26: J.P. Morgan Healthcare Conference January 13, 2016
J.P. MORGAN HEALTHCARE CONFERENCE JANUARY 13, 2016 | SAN FRANCISCO, CA
Slide 27: Appendix
Appendix cc.
Slide 28: Year-to-Date Pro Forma Segment Results
27 1. Adjusted Operating Income excludes amortization, restructuring and special items 2. See Reconciliation of non-GAAP Financial Measures in Appendix Pro forma results assume that the acquisition of Covance closed on January 1, 2014 Nine Months Nine Months Ended 9/30/15 Ended 9/30/14 % Change Net
Slide 29: Reconciliation of Non-GAAP Financial Measures
28 The following consolidated results include Covance as of February 19, 2015; prior to February 19, 2015, all consolidated results exclude Covance RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Adjusted Operating Income 2015 2014 Operating Income 759.5$ 691.4$ Acquisition-related costs 118.0 - Restr
Slide 30: Reconciliation of Non-GAAP Financial Measures: Free Cash Flow
29 The following consolidated results include Covance as of February 19, 2015; prior to February 19, 2015, all consolidated results exclude Covance RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Free Cash Flow: 2015 2014 Net cash provided by operating activities 597.8$ 525.3$ Less: Capital expenditur
Slide 31: Notes: Third Quarter 2015 Restructuring and Special Items
30 1) During the third quarter of 2015, the Company recorded net restructuring and special items of $26.4 million. The charges included $24.4 million in severance and other personnel costs along with $2.3 million in facility-related costs associated with facility closures and general integration ini
Slide 32: Notes: Third Quarter 2014 Restructuring and Special Items
31 2) During the third quarter of 2014, the Company recorded net restructuring and special items of $5.8 million. The charges included $4.6 million in severance and other personnel costs along with $1.6 million in facility-related costs associated with facility closures and general integration initi
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