Labcorp Holdings Inc. · NYSE:LH
Labcorp — Laboratory Corp of America Holdings — Credit Suisse Healthcare Conference 2017
31 slides from Labcorp's conference presentation, Nov 7, 2017
Slide 1: Credit Suisse Healthcare Conference, November 7, 2017
NOVEMBER 7, 2017 | PHOENIX, AZ CREDIT SUISSE HEALTHCARE CONFERENCE
Slide 2: Forward Looking Statement
1 FORWARD LOOKING STATEMENT Cautionary Statement Regarding Forward Looking Statements This presentation contains forward-looking statements which are subject to change based on various important factors, including without limitation, competitive actions in the marketplace, and adverse actions of gov
Slide 3: Agenda
2 AGENDA Company Overview Capital Deployment Financial Performance
Slide 4: LabCorp Overview
3 LABCORP OVERVIEW • Provides diagnostic, drug development and technology-enabled solutions for >110 million patient encounters per year • Operates in two segments – LabCorp Diagnostics and Covance Drug Development • ~$10.2B revenue in 2017(2) • >57,000 mission-driven employees worldwide • Leadershi
Slide 5: LabCorp Diagnostics Overview
4 LABCORP DIAGNOSTICS OVERVIEW • ~$7.2B revenue in 2017(2) • National network of 41 primary clinical laboratories and approximately 1,750 patient service centers • Offers broad range of 4,800+ clinical, anatomic pathology, genetic and genomic tests • Processes ~500,000 patient specimens daily • Vast
Slide 6: Covance Drug Development Overview
5 COVANCE DRUG DEVELOPMENT OVERVIEW • ~$3.0B revenue in 2017(2) • Market leader in early development, central laboratory, and Phase I-IV clinical trial management services • Collaborated on 86% of the 22 new drugs approved by FDA in 2016, including 4 of 5 approved oncology drugs, and 8 of 9 drugs tr
Slide 7: Expanded Growth Opportunities with Increased Global Presence
6 EXPANDED GROWTH OPPORTUNITIES WITH INCREASED GLOBAL PRESENCE 1. 2014 revenue excludes Covance. 2. 2014 & 2016 revenue excludes Chiltern. 3. Based on industry publications and company estimates. 4. Over 30 currencies in 2016 and no single currency (other than US dollar) accounts for more than 10% o
Slide 8: Diversified Revenue Base
7 29% 32% 23% 11% 3% 3% Pharma & Biotech Managed Care (Fee for Service) Other Payers Medicare & Medicaid Patient Managed Care (Capitated) (2) DIVERSIFIED REVENUE BASE 1. Based on nine months ended September 30, 2017. Does not tie due to rounding. 2. Includes physicians and hospitals, occupational te
Slide 9: Agenda
8 AGENDA Company Overview Capital Deployment Financial Performance
Slide 10: Effective Capital Deployment to Build Shareholder Value
9 EFFECTIVE CAPITAL DEPLOYMENT TO BUILD SHAREHOLDER VALUE Share Repurchase $1.9 Billion (19%) LabCorp Diagnostics Acquisitions $1.3 Billion (13%) Covance Acquisition $5.6 Billion (57%) Approximately $10 Billion in Capital Deployment Between 2012 and 2016
Slide 11: Effective Capital Deployment to Build Shareholder Value
10 EFFECTIVE CAPITAL DEPLOYMENT TO BUILD SHAREHOLDER VALUE Share Repurchase $1.9 Billion (19%) LabCorp Diagnostics Acquisitions $1.3 Billion (13%) Covance Acquisition $5.6 Billion (57%) Approximately $10 Billion in Capital Deployment Between 2012 and 2016 Approximately $2.3 Billion in Capital Deploy
Slide 12: History of Value Added Acquisitions
11 HISTORY OF VALUE ADDED ACQUISITIONS Target Acquisition Criteria Healthcare related businesses that leverage our core competencies Market leader Strong management team International presence Accretive to earnings and cash flow year 1 Earn cost of capital by year 4 Mount Sinai Clinical Outreach Lab
Slide 13: Acquisition of Chiltern Complements and Strengthens Our Business
12 Advances our strategy of combining strengths of leading diagnostics and drug development capabilities to create a unique business whose mission is to Improve Health and Improve Lives • Enhances customer offering to include a dedicated focus on the high-growth emerging and mid-market biopharma seg
Slide 14: Acquisition of PAML Complements and Strengthens Our Existing Business
13 ACQUISITION OF PAML COMPLEMENTS AND STRENGTHENS OUR EXISTING BUSINESS Shared vision and commitment to provide high-quality, community-based laboratory services • LabCorp will provide outreach testing and reference laboratory services • Strengthens relationships with anchor health systems • Increa
Slide 15: Agenda
14 AGENDA Company Overview Capital Deployment Financial Performance
Slide 16: Long-Term Revenue Growth
15 LONG-TERM REVENUE(1) GROWTH (DOLLARS IN BILLIONS) (1) 2006-2014 revenues excludes Covance results. 2008 revenue includes a $7.5 million adjustment relating to certain historic overpayments made by Medicare for claims submitted by a subsidiary of the Company. $3.6 $4.1 $4.5 $4.7 $5.0 $5.5 $5.7 $5.
Slide 17: Long-Term Revenue Growth with 2017 Guidance
16 LONG-TERM REVENUE(1) GROWTH (DOLLARS IN BILLIONS) (1) 2006-2014 revenues excludes Covance results. 2008 revenue includes a $7.5 million adjustment relating to certain historic overpayments made by Medicare for claims submitted by a subsidiary of the Company. (2) Guidance issued on October 25, 201
Slide 18: Long-Term Adjusted EPS Growth
17 LONG-TERM ADJUSTED EPS(1)(2) GROWTH (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: $3.24 in 2006; $3.93 in 2007; $4.16 in 2008; $4.98 in 2009; $
Slide 19: Long-Term Adjusted EPS Growth with 2017 Guidance
18 LONG-TERM ADJUSTED EPS(1)(2) GROWTH (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: $3.24 in 2006; $3.93 in 2007; $4.16 in 2008; $4.98 in 2009; $
Slide 20: Free Cash Flow
19 FREE CASH FLOW(1) (DOLLARS IN MILLIONS) (1) Free Cash Flow represents Operating Cash Flow less Capital Expenditures in each of the years presented. 2007-2014 figures exclude Covance results, and other items discussed in the Appendix. $567 $624 $748 $758 $759 $668 $617 $536 $727 $897 $950 $0 $200
Slide 21: Free Cash Flow with 2017 Guidance
20 FREE CASH FLOW(1) (DOLLARS IN MILLIONS) (1) Free Cash Flow represents Operating Cash Flow less Capital Expenditures in each of the years presented. 2007-2014 figures exclude Covance results, and other items discussed in the Appendix. (2) Guidance issued on October 25, 2017. 2017 Guidance(2) Free
Slide 22: Well Positioned for Profitable Growth
21 WELL POSITIONED FOR PROFITABLE GROWTH • Protecting Access to Medicare Act (PAMA), if implemented • Organic revenue growth in LabCorp Diagnostics and Covance Drug Development • Continued progress with LaunchPad initiative • Full-year benefit of acquisitions (e.g. Chiltern, PAML, Mount Sinai clinic
Slide 23: Credit Suisse Healthcare Conference, November 7, 2017
NOVEMBER 7, 2017 | PHOENIX, AZ CREDIT SUISSE HEALTHCARE CONFERENCE
Slide 24: Appendix
23 Appendix
Slide 25: Reconciliation of Non-GAAP Financial Measures
24 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Adjusted Operating Income 2017 2016 2017 2016 Operating income 341.3$ 324.0$ 1,010.0$ 989.0$ Acquisition-related costs 23.2 7.7 35.6 15.1 Restructuring and other special charges 21.6 22.8 64.6 48.6 Consulting fees and executive transition expenses 3.1
Slide 26: Reconciliation of Non-GAAP Financial Measures
25 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES Free Cash Flow: 2017 2016 2017 2016 Net cash provided by operating activities 350.9$ 249.9$ 895.4$ 727.0$ Less: Capital expenditures (75.3) (66.2) (216.8) (204.6) Free cash flow 275.6$ 183.7$ 678.6$ 522.4$ LABORATORY CORPORATION OF AMERICA HOLDINGS Re
Slide 27: Reconciliation of Non-GAAP Financial Measures – Footnotes
26 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – FOOTNOTES 1) During the third quarter of 2017, the Company recorded net restructuring and other special charges of $21.6 million. The charges included $4.6 million in severance and other personnel costs along with $12.1 million in costs associated w
Slide 28: Reconciliation of Non-GAAP Financial Measures – Footnotes
27 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – FOOTNOTES 2) 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 ass
Slide 29: Reconciliation of Non-GAAP Financial Measures – Footnotes
28 RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – FOOTNOTES 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 EPS for amortization pr
Slide 30: Footnotes to Long-Term Adjusted EPS Growth Slide
29 FOOTNOTES TO “LONG-TERM ADJUSTED EPS GROWTH” SLIDE 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: $3.24 in 2006; $3.93 in 2007; $4.16 in 2008; $4
Slide 31: Footnotes to Free Cash Flow Slide
30 FOOTNOTES TO “FREE CASH FLOW” SLIDE(1) (1) 2007-2014 figures exclude Covance results. (2) Operating Cash Flow and Free Cash Flow in 2011 exclude the $49.5 million Hunter Labs settlement. LABORATORY CORPORATION OF AMERICA HOLDINGS Reconciliation of Non-GAAP Financial Measures (in millions) Free Ca
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