Labcorp Announces 2024 Third Quarter Results

LABCORP HOLDINGS INC.

CONSOLIDATED RESULTS

Three Months Ended Sep 30,

Nine Months Ended Sep 30,

2024

2023

Delta

2024

2023

Delta

Revenue Summary (Dollars in billions)

Total Revenue

$ 3.28

$ 3.06

7.4 %

$   9.68

$   9.13

6.0 %

Organic

4.2 %

3.4 %

Base Business ⁽¹⁾

4.8 %

4.5 %

COVID 19 Testing ⁽²⁾

(0.6 %)

(1.1 %)

Acquisitions net of Divestitures

3.1 %

2.4 %

Foreign Exchange

0.1 %

0.2 %

⁽¹⁾ Base Business includes Labcorp's operations except for COVID-19 Testing.

⁽²⁾ COVID-19 Testing represents COVID-19 PCR Testing.

Earnings Summary (Dollars in millions, except per share data)

Operating Income ("OI")

$  254.1

$  252.3

$ 870.2

$ 848.4

OI as % of Revenue

7.7 %

8.3 %

(50) bps

9.0 %

9.3 %

(30) bps

Adjustments ⁽³⁾

$  187.0

$  171.6

$ 503.6

$ 471.6

Adjusted Operating Income  ("AOI") ⁽⁴⁾

$  441.1

(5)

$  423.9

$  1,373.8

$  1,320.0

AOI as % of Revenue

13.4 %

13.9 %

(40) bps

(6)

14.2 %

14.5 %

(30) bps

Net Earnings from Cont. Ops

$  169.6

$  183.6

$ 603.5

$ 547.2

Diluted EPS from Cont. Ops

$ 2.00

$ 2.11

$   7.13

$   6.19

Adjusted EPS ⁽⁴⁾

$ 3.50

$ 3.38

$ 11.12

$ 10.26

⁽³⁾ Adjustments include amortization, impairment charges, restructuring charges, and special items.

⁽⁴⁾ Non-GAAP financial measure[s]. See "Reconciliation of Non-GAAP Measures" for additional information.

⁽⁵⁾ The increase in adjusted operating income was primarily due to organic demand and LaunchPad savings, 
partially offset by higher personnel costs and the loss from Invitae.

⁽⁶⁾ The decrease in adjusted operating margin was due to Invitae.

LABCORP HOLDINGS INC.

CONSOLIDATED RESULTS

Three Months Ended Sep 30,

Nine Months Ended Sep 30,

2024

2023

2024

2023

Cash Flow Summary (Dollars in millions)

Operating Cash Flow from Cont. Ops

$  277.3

(7)

$  275.5

$   808.6

$   622.7

Capital Expenditures

115.8

104.9

$   377.8

$   286.4

Free Cash Flow from Cont. Ops

$  161.5

$  170.6

$   430.8

$   336.3

⁽⁷⁾ Includes a use of cash from Invitae.

LABCORP HOLDINGS INC.

Diagnostics Laboratories Segment Summary

Three Months Ended Sep 30,

2024

2023

Delta

Revenue Summary (Dollars in billions)

Total Revenue

$          2.55

$      2.34

8.9 %

Organic

5.0 %

Base Business

5.7 %

COVID 19 Testing

(0.7 %)

Acquisitions net of Divestitures

4.0 %

Foreign Exchange

(0.1 %)

Earnings Summary ⁽¹⁾ (Dollars in millions)

Adjusted Operating Income ("AOI") ⁽²⁾

$        387.4

$    386.3

AOI as % of Revenue

15.2 %

16.5 %

(130) bps

(3)

⁽¹⁾ Non-GAAP financial measure[s]. See "Reconciliation of Non-GAAP Measures" for additional information.

⁽²⁾ Excludes amortization, restructuring charges, special items, and unallocated corporate expenses.

⁽³⁾ Adjusted operating margin was down due to Invitae, the impact from days and weather.

Three Months Ended Sep 30,

2024

Requisition

Price/Mix

Volume Delta ⁽⁴⁾

Delta ⁽⁴⁾

Metrics Summary ⁽¹⁾

Total

5.1 %

3.8 %

Organic ⁽⁵⁾

2.2 %

2.7 %

Base Business

2.7 %

(6)

3.0 %

COVID 19 Testing

(0.5) %

(0.3) %

Acquisitions net of Divestitures

2.8 %

1.2 %

Foreign Exchange

— %

(0.1) %

⁽⁴⁾ Column shows changes versus the three months ended September 30, 2023.

⁽⁵⁾ Organic price/mix includes lab management agreements.

⁽⁶⁾ Includes the negative impact from adverse weather of approximately 40 bps.

LABCORP HOLDINGS INC.

Biopharma Laboratory Services Segment Summary

Three Months Ended Sep 30,

2024

2023

Delta

Revenue Summary (Dollars in millions)

Total Revenue

$  737.7

$  719.1

2.6 %

⁽¹⁾

Organic

2.0 %

Acquisitions net of Divestitures

— %

Foreign Exchange

0.6 %

⁽¹⁾ Central Labs revenue growth of 9.4%, partially offset by Early Development revenue decline of (11.1%).

Earnings Summary ⁽²⁾ (Dollars in millions)

Adjusted Operating Income ("AOI") ⁽³⁾

$  120.9

⁽⁴⁾

$  109.0

AOI as % of Revenue

16.4 %

15.2 %

120 bps

⁽⁴⁾

⁽²⁾ Non-GAAP financial measure[s]. See "Reconciliation of Non-GAAP Measures" for additional information.

⁽³⁾ Excludes amortization, restructuring charges, special items, and unallocated corporate expenses.

⁽⁴⁾ Adjusted operating income and margin increased due to organic demand and LaunchPad savings, 
partially offset by higher personnel costs.

As of Sep, 30,

2024

Metrics Summary ⁽²⁾ (Orders and backlog in billions)

TTM Net Orders

$                          2.90

TTM BTB

1.02

Backlog

$                          8.14

⁽⁵⁾

Forecast Backlog Conversion

$                          2.59

⁽⁵⁾ Backlog increased 4.6% compared to last year.

(Dollars in billions, except per share data)

Previous

Updated

Results

2024 Guidance

2024 Guidance

2023

Low

High

Low

High

Revenue

Labcorp Enterprise ⁽¹⁾⁽²⁾

$12.2

6.4 %

7.5 %

6.6 %

7.3 %

Diagnostics Laboratories

$9.4

6.9 %

7.9 %

7.2 %

7.8 %

Biopharma Laboratory Services ⁽³⁾

$2.8

3.7 %

5.0 %

4.7 %

5.6 %

Adjusted EPS

$13.56

$14.30

$14.90

$14.30

$14.70

Free Cash Flow from Cont. Ops⁽⁴⁾

$0.89

$0.85

$1.00

$0.85

$0.98

(1) 2024 Guidance includes an impact from foreign currency translation of 0.3%.

(2) Enterprise level revenue is presented net of intersegment transaction eliminations.

(3) 2024 Guidance includes an impact from foreign currency translation of 1.5%.

(4) 2023 Free Cash Flow from continuing operations excluding spin-related items.

LABCORP HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Millions, except per share data)

Three Months Ended 
September 30,

Nine Months Ended 
September 30,

2024

2023

2024

2023

Revenues

$  3,282.0

$  3,056.8

$  9,679.5

$  9,128.3

Cost of revenues

2,377.6

2,205.6

6,951.4

6,584.8

Gross profit

904.4

851.2

2,728.1

2,543.5

Selling, general and administrative expenses

568.6

525.5

1,634.8

1,488.5

Amortization of intangibles and other assets

63.7

55.7

186.0

160.6

Goodwill and other asset impairments

—

10.2

2.5

15.2

Restructuring and other charges

18.0

7.5

34.6

30.8

Operating income

254.1

252.3

870.2

848.4

Other income (expense):

Interest expense

(50.4)

(50.3)

(144.9)

(150.8)

Investment income

3.1

15.9

7.3

22.6

Equity method income (expense), net

(0.5)

(0.3)

(0.7)

(1.5)

Other, net

4.3

21.1

43.8

(2.7)

Earnings from continuing operations before income taxes

210.6

238.7

775.7

716.0

Provision for income taxes

41.0

55.1

172.2

168.8

Earnings from continuing operations

169.6

183.6

603.5

547.2

Earnings from discontinued operations, net of tax

—

—

—

38.8

Net earnings

169.6

183.6

603.5

586.0

Less: Net earnings attributable to the noncontrolling interest

(0.3)

(0.3)

(0.9)

(0.9)

Net earnings attributable to Labcorp Holdings Inc.

$     169.3

$     183.3

$     602.6

$     585.1

Basic earnings per common share:

Basic earnings per common share continuing operations

$        2.02

$        2.12

$        7.17

$        6.22

Basic earnings per common share discontinued operations

$           —

$           —

$           —

$        0.44

Basic earnings per common share

$        2.02

$        2.12

$        7.17

$        6.66

Diluted earnings per common share:

Diluted earnings per common share continuing operations

$        2.00

$        2.11

$        7.13

$        6.19

Diluted earnings per common share discontinued operations

$           —

$           —

$           —

$        0.44

Diluted earnings per common share

$        2.00

$        2.11

$        7.13

$        6.63

Weighted average basic shares outstanding

84.0

86.6

84.0

87.9

Weighted average diluted shares outstanding

84.4

87.0

84.5

88.3

LABCORP HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Dollars in Millions)

September 30, 2024

December 31, 2023

ASSETS

Current assets:

Cash and cash equivalents

$                1,517.3

$                 536.8

Accounts receivable, net

2,058.5

1,913.3

Unbilled services

166.3

185.4

Supplies inventory

483.1

474.6

Prepaid expenses and other

684.7

655.3

Total current assets

4,909.9

3,765.4

Property, plant and equipment, net

3,050.0

2,911.8

Goodwill, net

6,482.4

6,142.5

Intangible assets, net

3,540.7

3,342.0

Joint venture partnerships and equity method investments

16.9

26.9

Other assets, net

612.6

536.5

Total assets

$               18,612.5

$             16,725.1

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

Accounts payable

$                   660.9

$                 827.5

Accrued expenses and other

757.5

804.0

Unearned revenue

403.1

421.7

Short-term operating lease liabilities

184.3

165.8

Short-term finance lease liabilities

6.3

6.4

Short-term borrowings and current portion of long-term debt

1,399.9

999.8

Total current liabilities

3,412.0

3,225.2

Long-term debt, less current portion

5,352.1

4,054.7

Operating lease liabilities

701.3

648.9

Financing lease liabilities

75.2

78.6

Deferred income taxes and other tax liabilities

358.3

417.9

Other liabilities

528.2

409.3

Total liabilities

10,427.1

8,834.6

Commitments and contingent liabilities

Noncontrolling interest

15.2

15.5

Shareholders' equity:

Common stock, 83.8 and 83.9 shares outstanding at September 30, 2024, and December 31, 
2023, respectively

7.6

7.7

Additional paid-in capital

—

38.4

Retained earnings

8,275.8

7,888.2

Accumulated other comprehensive loss

(113.2)

(59.3)

Total shareholders' equity

8,170.2

7,875.0

Total liabilities and shareholders' equity

$               18,612.5

$             16,725.1

LABCORP HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Millions)

Three Months Ended

September 30,

Nine Months Ended 
September 30,

2024

2023

2024

2023

CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings

$    169.6

$    183.6

$    603.5

$    586.0

Earnings from discontinued operations, net of tax

—

—

—

(38.8)

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization

161.5

145.9

472.9

430.9

Stock compensation

27.0

34.4

89.4

101.7

Operating lease right-of-use asset expense

48.1

43.4

136.7

128.5

Goodwill and other asset impairments

—

10.2

2.5

15.2

Deferred income taxes

(19.5)

(34.4)

(58.6)

(18.2)

Other

9.4

0.8

46.0

3.9

Change in assets and liabilities (net of effects of acquisitions and divestitures):

(Increase) decrease in accounts receivable

49.0

(66.0)

(143.2)

(173.6)

(Increase) decrease in unbilled services

(4.0)

29.3

22.8

103.4

(Increase) decrease in supplies inventory

(25.7)

25.8

2.0

9.7

(Increase) decrease in prepaid expenses and other

(61.4)

(44.7)

(39.8)

(74.9)

Increase (decrease) in accounts payable

(86.5)

(28.3)

(138.2)

(188.6)

Increase (decrease) in unearned revenue

2.9

15.9

(27.9)

50.7

Increase (decrease) in accrued expenses and other

6.9

(40.4)

(159.5)

(313.2)

Net cash provided by continuing operating activities

277.3

275.5

808.6

622.7

Net cash provided by discontinued operating activities

—

—

—

125.4

Net cash provided by operating activities

277.3

275.5

808.6

748.1

CASH FLOWS FROM INVESTING ACTIVITIES:

Capital expenditures

(115.8)

(104.9)

(377.8)

(286.4)

Proceeds from sale of assets

0.4

0.1

0.6

0.3

Proceeds from sale or distribution of investments

—

6.7

—

6.7

Proceeds from sale of business

—

—

13.5

—

Investments in equity affiliates

(5.6)

(9.7)

(42.3)

(20.1)

Acquisition of businesses, net of cash acquired

(458.1)

(379.8)

(751.2)

(516.7)

Net cash used in continuing investing activities

(579.1)

(487.6)

(1,157.2)

(816.2)

Net cash used in discontinued investing activities

—

—

—

(24.7)

Net cash used for investing activities

(579.1)

(487.6)

(1,157.2)

(840.9)

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from revolving credit facilities

1,511.8

547.6

2,463.7

1,968.5

Payments on revolving credit facilities

(1,531.6)

(458.0)

(2,463.7)

(1,878.9)

Proceeds from accounts receivable securitization

300.0

—

300.0

—

Proceeds from issuance of senior notes

2,000.0

—

2,000.0

—

Payments on senior notes

(600.0)

—

(600.0)

—

Net share settlement tax payments from issuance of stock to employees

(0.9)

(0.9)

(38.7)

(39.6)

Net proceeds from issuance of stock to employees

26.3

—

53.0

54.4

Dividends paid

(60.5)

(63.9)

(183.0)

(192.9)

Purchase of common stock

(75.0)

(1,009.0)

(175.0)

(1,009.0)

Other

(21.8)

(3.6)

(29.7)

(15.0)

Net cash provided by (used for) continuing financing activities

1,548.3

(987.8)

1,326.6

(1,112.5)

Net cash provided by discontinued financing activities

—

—

—

1,499.7

Net cash provided by (used for) financing activities

1,548.3

(987.8)

1,326.6

387.2

Effect of exchange rate changes on cash and cash equivalents

5.7

(2.8)

2.5

3.5

Net increase (decrease) in cash and cash equivalents

1,252.2

(1,202.7)

980.5

297.9

Cash and cash equivalents at beginning of period

265.1

1,930.6

536.8

430.0

Cash and cash equivalents at end of period

$ 1,517.3

$    727.9

$ 1,517.3

$    727.9

LABCORP HOLDINGS INC.

Condensed Combined Non-GAAP Segment Information

(Dollars in Millions)

Three Months Ended 
September 30,

Nine Months Ended

September 30,

2024

2023

2024

2023

Diagnostics Laboratories

Revenues

$     2,553.5

$     2,344.7

$     7,558.1

$     7,068.3

Adjusted Operating Income

$        387.4

$        386.3

$     1,246.8

$     1,237.5

Adjusted Operating Margin

15.2 %

16.5 %

16.5 %

17.5 %

Biopharma Laboratory Services

Revenues

$        737.7

$        719.1

$     2,155.6

$     2,079.4

Adjusted Operating Income

$        120.9

$        109.0

$        328.2

$        287.2

Adjusted Operating Margin

16.4 %

15.2 %

15.2 %

13.8 %

Consolidated

Revenues

$     3,282.0

$     3,056.8

$     9,679.5

$     9,128.3

Adjusted Segment Operating Income

$        508.3

$        495.3

$     1,575.0

$     1,524.7

Unallocated corporate expense

$         (67.2)

$         (71.4)

$       (201.2)

$       (204.7)

Consolidated Adjusted Operating Income

$        441.1

$        423.9

$     1,373.8

$     1,320.0

Adjusted Operating Margin

13.4 %

13.9 %

14.2 %

14.5 %

LABCORP HOLDINGS INC.

Reconciliation of Non-GAAP Measures

(Dollars in millions, except per share data)

Three Months Ended 
September 30,

Nine Months Ended

September 30,

2024

2023

2024

2023

Adjusted Operating Income

Operating Income

$            254.1

$            252.3

$            870.2

$            848.4

Amortization of intangibles and other assets ^(a)

63.7

55.7

186.0

160.6

Restructuring and other charges ^(b)

18.0

7.5

34.6

30.8

Acquisition and disposition-related costs ^(c)

49.1

10.8

95.1

39.5

Launchpad Costs ^(d)

18.3

—

58.7

—

Spin off transaction costs ^(e)

—

19.8

—

71.5

Asset impairments ^(f)

—

10.2

2.5

15.2

Other

19.5

44.9

63.0

61.8

TSA Reimbursement ^(g)

18.4

22.7

63.7

22.7

CDCS not included in discontinued operations ^(h)

—

—

—

69.5

Adjusted operating income

$            441.1

$            423.9

$         1,373.8

$         1,320.0

Adjusted Net Income

Net Income

$            169.3

$            183.3

$            602.6

$            585.1

Impact of adjustments to operating income

187.0

171.6

503.6

402.1

(Gains) / losses on venture fund investments, net ⁽ⁱ⁾

1.6

(2.5)

7.3

1.4

(Gain) / loss on sale of business ^(j)

—

—

(4.9)

—

Pension settlement ^(k)

2.3

2.9

2.3

10.8

TSA Reimbursement ^(g)

(18.4)

(22.7)

(63.7)

(22.7)

Other

—

(1.0)

0.3

0.5

Income tax impact of adjustments ^(l)

(46.1)

(37.9)

(107.6)

(107.2)

Earnings from discontinued operations, net of tax ^(h)

—

—

—

(38.8)

CDCS not included in discontinued operations ^(h)

—

—

—

74.4

Adjusted net income

$            295.7

$            293.7

$            939.9

$            905.6

Weighted average diluted shares outstanding

84.4

87.0

84.5

88.3

Adjusted net income per share

$              3.50

$              3.38

$            11.12

$            10.26

(a)

Amortization of intangible assets acquired as part of business acquisitions.

(b)

Restructuring and other charges represent amounts incurred in connection with the elimination of redundant positions and facilities within the organization in connection with our LaunchPad initiatives, the spin-off of Fortrea Holdings Inc. (Fortrea), and acquisitions or dispositions of businesses by the company.

(c)

Acquisition and disposition-related costs include due-diligence legal and advisory fees, retention bonuses, impact of delayed contract or license transfers and other integration or disposition related activities.

(d)

LaunchPad costs include non-capitalized costs associated with the implementation of systems, consolidation of processes, and consulting costs incurred as part of various business process improvement initiatives.

(e)

The company incurred various costs to prepare for the spin-off of Fortrea and reorganization of the remaining Labcorp business.

(f)

The company impaired certain fixed assets and capitalized software costs which are no longer realizable by the business.

(g)

Represents transition services fees charged to Fortrea related to administrative and IT systems support.  The costs to provide these services are included in operating income but the service fees are included in other income.

(h)

These adjustments remove the impact of the Clinical Development and Commercialization Services business pursuant to the spin-off of Fortrea.

(i)

The company makes investments in companies or investment funds developing promising technology related to its operations. The company recorded net gains and losses related to several distributions from venture funds, increases in the market value of investments, and impairments of other investments due to the underlying performance of the investments.

(j)

The company recorded a gain on the disposition of the Beacon Laboratory Benefits Solutions business.

(k)

The company incurred a charge related to the US pension plan due to settlement of certain obligations to retired employees.

(l)

Income tax impact of adjustments calculated based on the tax rate applicable to each item.