Labcorp Holdings Inc. · NYSE:LH
Labcorp — Laboratory Corp of America Holdings — William Blair Growth Stock Conference 2018
24 slides from Labcorp's conference presentation, Jun 12, 2018
Slide 1: William Blair Growth Stock Conference June 12, 2018
WILLIAM BLAIR GROWTH STOCK CONFERENCE JUNE 12, 2018 | CHICAGO, IL
Slide 2: Forward Looking Statement and Use of Adjusted Measures
FORWARD LOOKING STATEMENT AND USE OF ADJUSTED MEASURES 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
Slide 3: LabCorp Overview
LABCORP OVERVIEW A Leading Global Life Sciences Company Consolidated Financial Summary(2) (3) • $11.4B revenue in 2018(1) Year Ended 2017 2016 Change • Global footprint with business in ~125 countries; Revenue $10,308 $9,553 7.9% ~60,000 employees Adj. O.I. $1,673 $1,548 8.0% • Unmatched real-world
Slide 4: LabCorp Diagnostics Segment Overview
LABCORP DIAGNOSTICS SEGMENT OVERVIEW Leading National Clinical Laboratory Segment Financial Summary(2) (3) Year Ended • $7.2B revenue in 2018(1) 2017 2016 Change • Patient database reaching ~50% of U.S. population Revenue $6,858 $6,308 8.7% Adj. O.I. $1,449 $1,317 10.0% • Proprietary data sets with
Slide 5: Covance Drug Development Overview
COVANCE DRUG DEVELOPMENT OVERVIEW Leading CRO / Drug Development Services Provider Segment Financial Summary(3) (4) • $4.2B revenue in 2018(1) Year Ended • Serving the top 20 biopharma 2017 2016 Change • Serving high-growth emerging and mid-market Revenue $3,452 $3,246 6.3% segments through Chiltern
Slide 6: Attractive Growth Opportunities Across Multiple Global Markets
ATTRACTIVE GROWTH OPPORTUNITIES ACROSS MULTIPLE GLOBAL MARKETS (1) Leadership in Large, Growing, Fragmented Markets U.S. Clinical Lab Global Addressable Ex-U.S. Clinical Global Addressable Market Testing Market Outsourced R&D Spend Lab Testing Market ~$200 billion ~$80 billion ~$35 billion ~$100 bil
Slide 7: Expanded Revenue Base
EXPANDED REVENUE BASE Attractive Customer Mix and Geographic Presence(1) 81% 23% 11% 30% 31% 3% 3% 19% Pharma & Biotech Other Payers (2) Medicare & Medicaid Managed Care (Fee for Service) USA Rest of World Patient Managed Care (Capitated) 1. Based on full year 2017 results, which include results fro
Slide 8: Our 2018 Priorities
OUR 2018 PRIORITIES Optimize Drive Profitable Integrate Key Enterprise Growth Acquisitions Margins 7
Slide 9: The LabCorp Playbook: Delivering Long-Term Shareholder Value
THE LABCORP PLAYBOOK: DELIVERING LONG-TERM SHAREHOLDER VALUE Margin Revenue Growth Optimization EPS Growth Capital Capital Expenditures Expenditures and Strategic and LaunchPad Acquisitions Strong Cash Flow Initiatives Disciplined Capital Deployment Return Capital to Shareholders 8
Slide 10: Track Record of Effective and Balanced Capital Deployment
TRACK RECORD OF EFFECTIVE AND BALANCED CAPITAL DEPLOYMENT TO BUILD SHAREHOLDER VALUE Approximately $2.5 Billion in Capital Deployment in 2017 Chiltern Acquisition $1.2 Billion (47%) Other Acquisitions $0.7 Billion (27%) 9
Slide 11: Targeted Capital Expenditures That Strengthen Capabilities and Support Growth
TARGETED CAPITAL EXPENDITURES THAT STRENGTHEN CAPABILITIES AND SUPPORT GROWTH 2017 Capital Expenditures ► Investments in 2018 to support future growth include: • Capacity and automation for 23andMe collaboration IT • Patient service centers in Walgreens stores 45% • Genomics and immunotoxicology cap
Slide 12: Track Record of Acquisitions That Drive Growth
TRACK RECORD OF ACQUISITIONS THAT DRIVE GROWTH AND A DIFFERENTIATED OFFERING Target Acquisition Criteria • 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 3 11
Slide 13: Optimizing the Portfolio
OPTIMIZING THE PORTFOLIO Definitive Agreement to Sell Covance Food Solutions for $670 Million “Over the three years LabCorp has owned Covance, • Global provider of innovative product design and it has become clear that the greatest opportunities product integrity services for end-user segments for u
Slide 14: Strong Balance Sheet Enables Return of Capital to Shareholders
STRONG BALANCE SHEET ENABLES RETURN OF CAPITAL TO SHAREHOLDERS Covance Debt and Leverage: Acquisition Date: Feb. 19, 2015 Leverage = 4.2x • Investment grade philosophy with targeted Share Repurchases Chiltern Acquisition (In Millions) leverage of 2.5x – 3.0x gross debt to EBITDA Date: Sept. 1, 2017
Slide 15: Revenue Growth
REVENUE(1) GROWTH (DOLLARS IN BILLIONS) – ASC 605 10-Year CAGR : 10% $12.0 $3.6 $10.2 $10.0 $9.4 $3.0 $8.5 $2.8 $8.0 $2.3 Drug $2.3 Development $5.8 $6.0 $7.2 $6.0 $5.5 $5.7 $6.6 Diagnostics $5.0 $6.2 $4.5 $4.7 $4.1 $4.0 $2.0 $0.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1. 2007-2014 r
Slide 16: Adjusted EPS Growth
ADJUSTED EPS(1)(2) GROWTH – ASC 605 10-Year CAGR : 8% $10.00 $9.60 $8.83 $7.91 $8.00 $6.82 $6.95 $6.80 $6.37 $6.00 $5.98 $5.24 $4.91 $4.45 $4.00 $2.00 $0.00 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 1. EPS, as presented, represents an adjusted, non-GAAP financial measure (excludes amort
Slide 17: Strong Free Cash Flow
STRONG FREE CASH FLOW(1) (DOLLARS IN MILLIONS) 10-Year Average Free Cash Flow: $747 million $1,200 $1,138 $1,000 $897 $800 $758 $759 $748 $727 $668 $624 $617 $600 $536 $400 $200 $0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 (2) 1. Free Cash Flow represents Operating Cash Flow less Capital Exp
Slide 18: Financial Performance Under ASC
FINANCIAL PERFORMANCE UNDER ASC 606 Revenue Adjusted EPS(2) Free Cash Flow(3) 2018 Guidance(1) 2018 Guidance(1) 2018 Guidance(1) Midpoint Midpoint Midpoint (In Billions) (In Millions) $11.4 $12.00 $11.50 $1,200 $1,138 $1,150 $12.0 $10.3 $9.6 $10.00 $9.25 $1,000 $10.0 $4.2 $8.63 $897 $3.5 $8.0 $3.2 $
Slide 19: Key Takeaways
KEY TAKEAWAYS Multi-faceted platform for profitable growth through organic initiatives, strategic acquisitions, and margin optimization Track record of strong and reliable free cash flow, and disciplined capital deployment Execution of the LabCorp playbook continues to generate long-term shareholder
Slide 20: William Blair Growth Stock Conference June 12, 2018
WILLIAM BLAIR GROWTH STOCK CONFERENCE JUNE 12, 2018 | CHICAGO, IL
Slide 21: Appendix
Appendix SLabCorp
Slide 22: Reconciliation of Non-GAAP Financial Measures – Adjusted EPS
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES – ASC 605 Twelve Months Ended December 31, Adjusted EPS 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Diluted earnings per common share $ 3.93 $ 4.16 $ 4.98 $ 5.29 $ 5.11 $ 5.99 $ 6.25 $ 5.91 $ 4.35 $ 7.02 $ 12.21 One-time benefit from Tax Cuts
Slide 23: Reconciliation of Non-GAAP Financial Measures
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES(1) LABORATORY CORPORATION OF AMERICA HOLDINGS Reconciliation of Non-GAAP Financial Measures (in millions, except per share data) Twelve Months Ended December 31, Adjusted Operating Income 2017 2016 Operating income $ 1,305.6 $ 1,270.6 Acquisition-related
Slide 24: Reconciliation of Non-GAAP Financial Measures – Free Cash Flow
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES(1) (in millions) Twelve Months Ended December 31, Free Cash Flow 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Net cash provided by operating activities $ 781 $ 862 $ 884 $ 905 (2) $ 841 $ 819 $ 739 $ 982 $ 1,176 $ 1,451(3) Less: Capital expenditures
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