Laboratory Corporation of America® Holdings Announces 2014 Third Quarter Results and Increases 2014 EPS Guidance
- Strong volume growth drives sales of
$1.55 billion - Diluted EPS of
$1.59 ; Adjusted EPS of$1.80 - Operating Cash Flow of
$176 million ; Free Cash Flow of$123 million - 2014 Adjusted EPS guidance raised to
$6.70 - $6.80
Third Quarter Results
Sales for the quarter were approximately
Operating income for the quarter was
Net earnings for the third quarter were
“We are pleased that strong volume growth generated an increase in the Company’s sales, which in turn generated improved adjusted operating income during the quarter,” said
During the quarter, the Company:
- Reached an agreement to acquire
LipoScience , a premier esoteric laboratory focused on personalized diagnostics for cardiovascular and metabolic disorders, for approximately$85 million ; - Launched Enlighten Health Genomics, a new business that enhances the diagnostic potential of Next-Generation Sequencing technology;
- Supported the launch of the Beacon LBS program, providing physicians with point of care decision support to assist in test and lab selection; and
- Repurchased approximately
$66 million of shares, bringing the year-to-date total to$228 million . The Company has$824 million of repurchase authorization remaining under its Board-authorized share repurchase plan.
Operating cash flow for the third quarter was
Year-To-Date Results
Sales for the first nine months of 2014 were approximately
Operating income for the first nine months of 2014 was
Net earnings for the first nine months of 2014 were
Operating cash flow for the first nine months of 2014 was
Outlook for 2014
The Company expects revenue growth in 2014 of approximately 3.0% over 2013; Adjusted EPS of
Use of Adjusted Measures
The Company has provided in this press release and accompanying tables “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 a supplement to, but not as a substitute for, GAAP measures, in evaluating the Company’s operational performance. The Company further believes that the use of these non-GAAP financial measures provides an additional tool for investors in evaluating operating results and trends, and growth and shareholder returns, as well as in comparing the Company’s financial results with the financial results of other companies. However, the Company notes that these adjusted measures may be different from and not directly comparable to the measures presented by other companies. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the tables accompanying this press release.
The Company today is furnishing a Current Report on Form 8-K that will include additional information on its business and operations. This information will also be available on the Company's website. Analysts and investors are directed to the Current Report on Form 8-K and the website to review this supplemental information.
A conference call discussing LabCorp's quarterly results will be held today at
About LabCorp®
This press release contains forward-looking statements including with respect to estimated 2014 guidance and the impact of various factors on operating results. Each of the forward-looking statements is subject to change based on various important factors, including without limitation, competitive actions in the marketplace and adverse actions of governmental and other third-party payers. Actual results could differ materially from those suggested by these forward-looking statements. Further information on potential factors that could affect LabCorp’s operating and financial results is included in the Company’s Form 10-K for the year ended
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES | ||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||
(Dollars in Millions, except per share data) | ||||||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | |||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||||||
Net sales | $ | 1,551.8 | $ | 1,462.2 | $ | 4,498.9 | $ | 4,371.3 | ||||||||||||
Cost of sales | 980.6 | 914.6 | 2,842.3 | 2,674.2 | ||||||||||||||||
Gross profit | 571.2 | 547.6 | 1,656.6 | 1,697.1 | ||||||||||||||||
Selling, general and administrative expenses | 305.7 | 279.0 | 888.5 | 843.1 | ||||||||||||||||
Amortization of intangibles and other assets | 18.3 | 20.3 | 61.3 | 60.3 | ||||||||||||||||
Restructuring and other special charges | 5.8 | 3.7 | 15.4 | 17.8 | ||||||||||||||||
Operating income | 241.4 | 244.6 | 691.4 | 775.9 | ||||||||||||||||
Other income (expense): | ||||||||||||||||||||
Interest expense | (25.9 | ) | (24.7 | ) | (77.4 | ) | (72.3 | ) | ||||||||||||
Equity method income, net | 3.7 | 3.6 | 10.4 | 12.3 | ||||||||||||||||
Investment income | 0.3 | 1.8 | 0.9 | 2.2 | ||||||||||||||||
Other, net | (0.5 | ) | 4.7 | 13.9 | 3.3 | |||||||||||||||
Earnings before income taxes | 219.0 | 230.0 | 639.2 | 721.4 | ||||||||||||||||
Provision for income taxes | 81.5 | 81.3 | 246.5 | 272.7 | ||||||||||||||||
Net earnings | 137.5 | 148.7 | 392.7 | 448.7 | ||||||||||||||||
Less: Net earnings attributable to the noncontrolling | ||||||||||||||||||||
interest | (0.3 | ) | (0.4 | ) | (1.1 | ) | (1.2 | ) | ||||||||||||
Net earnings attributable to Laboratory Corporation | ||||||||||||||||||||
of America Holdings | $ | 137.2 | $ | 148.3 | $ | 391.6 | $ | 447.5 | ||||||||||||
Basic earnings per common share | $ | 1.62 | $ | 1.66 | $ | 4.61 | $ | 4.90 | ||||||||||||
Diluted earnings per common share | $ | 1.59 | $ | 1.63 | $ | 4.53 | $ | 4.81 | ||||||||||||
Weighted average basic shares outstanding | 84.9 | 89.2 | 84.9 | 91.4 | ||||||||||||||||
Weighted average diluted shares outstanding | 86.5 | 90.9 | 86.5 | 93.0 |
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES | |||||||||||||||
CONSOLIDATED BALANCE SHEETS | |||||||||||||||
(Dollars in Millions, except per share data) | |||||||||||||||
September 30, | December 31, | ||||||||||||||
2014 | 2013 | ||||||||||||||
ASSETS | |||||||||||||||
Current assets: | |||||||||||||||
Cash and cash equivalents | $ | 575.7 | $ | 404.0 | |||||||||||
Accounts receivable, net of allowance for doubtful accounts of $216.1 and | |||||||||||||||
$198.2 at September 30, 2014 and December 31, 2013, respectively | 841.6 | 784.7 | |||||||||||||
Supplies inventories | 138.8 | 136.5 | |||||||||||||
Prepaid expenses and other | 126.3 | 106.9 | |||||||||||||
Deferred income taxes | 5.4 | - | |||||||||||||
Total current assets | 1,687.8 | 1,432.1 | |||||||||||||
Property, plant and equipment, net | 754.7 | 707.4 | |||||||||||||
Goodwill | 3,066.4 | 3,022.8 | |||||||||||||
Intangible assets, net | 1,489.4 | 1,572.0 | |||||||||||||
Joint venture partnerships and equity method investments | 94.7 | 88.5 | |||||||||||||
Other assets, net | 138.8 | 143.1 | |||||||||||||
Total assets | $ | 7,231.8 | $ | 6,965.9 | |||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | |||||||||||||||
Current liabilities: | |||||||||||||||
Accounts payable | $ | 286.2 | $ | 304.5 | |||||||||||
Accrued expenses and other | 365.2 | 310.0 | |||||||||||||
Deferred income taxes | - | 9.9 | |||||||||||||
Current portion of long-term debt | 97.6 | 111.3 | |||||||||||||
Total current liabilities | 749.0 | 735.7 | |||||||||||||
Long-term debt, less current portion | 2,917.1 | 2,889.1 | |||||||||||||
Deferred income taxes and other tax liabilities | 552.6 | 563.9 | |||||||||||||
Other liabilities | 223.9 | 266.5 | |||||||||||||
Total liabilities | 4,442.6 | 4,455.2 | |||||||||||||
Commitments and contingent liabilities | - | - | |||||||||||||
Noncontrolling interest | 18.4 | 19.4 | |||||||||||||
Shareholders' equity: | |||||||||||||||
Common stock | 10.4 | 10.5 | |||||||||||||
Additional paid-in capital | - | - | |||||||||||||
Retained earnings | 3,685.6 | 3,373.5 | |||||||||||||
Less common stock held in treasury | (965.5 | ) | (958.9 | ) | |||||||||||
Accumulated other comprehensive income | 40.3 | 66.2 | |||||||||||||
Total shareholders' equity | 2,770.8 | 2,491.3 | |||||||||||||
Total liabilities and shareholders' equity | $ | 7,231.8 | $ | 6,965.9 |
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES | |||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||||||
(Dollars in Millions) | |||||||||||||||||||||||
For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||||||||
September 30, | September 30, | ||||||||||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||||||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||||||||||||||||||
Net earnings | $ | 137.5 | $ | 148.7 | $ | 392.7 | $ | 448.7 | |||||||||||||||
Adjustments to reconcile net earnings to net cash | |||||||||||||||||||||||
provided by operating activities: | |||||||||||||||||||||||
Depreciation and amortization | 58.5 | 57.9 | 182.0 | 170.3 | |||||||||||||||||||
Stock compensation | 11.5 | 6.8 | 35.1 | 28.9 | |||||||||||||||||||
(Gain) loss on sale of assets | 0.2 | (5.0 | ) | (16.0 | ) | (4.3 | ) | ||||||||||||||||
Accreted interest on zero-coupon subordinated notes | 0.4 | 0.6 | 1.5 | 1.8 | |||||||||||||||||||
Cumulative earnings less than (in excess of) | |||||||||||||||||||||||
distributions from equity affiliates | (0.1 | ) | 2.0 | (3.3 | ) | (1.7 | ) | ||||||||||||||||
Deferred income taxes | (2.4 | ) | - | (3.5 | ) | 28.3 | |||||||||||||||||
Change in assets and liabilities: | |||||||||||||||||||||||
(Increase) decrease in accounts receivable, net | (11.7 | ) | 4.2 | (59.7 | ) | (95.5 | ) | ||||||||||||||||
(Increase) decrease in inventories | (4.7 | ) | 0.1 | (1.3 | ) | (5.6 | ) | ||||||||||||||||
(Increase) decrease in prepaid expenses and other | (22.6 | ) | (4.4 | ) | 1.7 | (5.3 | ) | ||||||||||||||||
Increase (decrease) in accounts payable | 9.5 | 8.3 | (16.2 | ) | 25.2 | ||||||||||||||||||
Increase (decrease) in accrued expenses and other | (0.5 | ) | 15.0 | 12.3 | (20.8 | ) | |||||||||||||||||
Net cash provided by operating activities | 175.6 | 234.2 | 525.3 | 570.0 | |||||||||||||||||||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||||||||||||||||||
Capital expenditures | (52.6 | ) | (52.1 | ) | (157.2 | ) | (142.6 | ) | |||||||||||||||
Proceeds from sale of assets | 0.6 | 0.2 | 0.9 | 0.6 | |||||||||||||||||||
Proceeds from sale of investments | 0.4 | 7.5 | 31.7 | 7.5 | |||||||||||||||||||
Investments in equity affiliates | (4.4 | ) | - | (12.9 | ) | (3.3 | ) | ||||||||||||||||
Acquisitions of businesses, net of cash acquired | 0.4 | (2.8 | ) | (65.3 | ) | (109.0 | ) | ||||||||||||||||
Net cash used for investing activities | (55.6 | ) | (47.2 | ) | (202.8 | ) | (246.8 | ) | |||||||||||||||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||||||||||||||||||
Proceeds from revolving credit facilities | - | 157.0 | - | 412.0 | |||||||||||||||||||
Payments on revolving credit facilities | - | (10.0 | ) | - | (40.0 | ) | |||||||||||||||||
Payments on zero-coupon subordinated notes | (0.9 | ) | - | (16.8 | ) | (21.3 | ) | ||||||||||||||||
Payments on long-term debt | - | - | - | (350.0 | ) | ||||||||||||||||||
Debt issuance costs | - | - | (0.1 | ) | - | ||||||||||||||||||
Payments on long-term lease obligations | (0.4 | ) | - | (0.6 | ) | - | |||||||||||||||||
Noncontrolling interest distributions | (0.3 | ) | (0.6 | ) | (0.9 | ) | (0.6 | ) | |||||||||||||||
Deferred payments on acquisitions | (1.7 | ) | (5.2 | ) | (5.2 | ) | (5.6 | ) | |||||||||||||||
Net tax impact of conversion of zero-coupon convertible debt | - | - | - | - | |||||||||||||||||||
Tax benefit adjustments related to stock based compensation | 3.3 | 0.8 | 5.5 | 8.7 | |||||||||||||||||||
Net proceeds from issuance of stock to employees | 47.3 | 17.5 | 106.2 | 148.6 | |||||||||||||||||||
Purchase of common stock | (65.7 | ) | (286.3 | ) | (229.9 | ) | (765.5 | ) | |||||||||||||||
Net cash used for financing activities | (18.4 | ) | (126.8 | ) | (141.8 | ) | (613.7 | ) | |||||||||||||||
Effect of exchange rate changes on cash and cash equivalents | (5.4 | ) | 2.6 | (9.0 | ) | (2.2 | ) | ||||||||||||||||
Net increase (decrease) in cash and cash equivalents | 96.2 | 62.8 | 171.7 | (292.7 | ) | ||||||||||||||||||
Cash and cash equivalents at beginning of period | 479.5 | 111.3 | 404.0 | 466.8 | |||||||||||||||||||
Cash and cash equivalents at end of period | $ | 575.7 | $ | 174.1 | $ | 575.7 | $ | 174.1 |
LABORATORY CORPORATION OF AMERICA HOLDINGS | ||||||||||||||||
Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||
(in millions, except per share data) | ||||||||||||||||
Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
Adjusted Operating Income |
2014 | 2013 | 2014 | 2013 | ||||||||||||
Operating Income | $ | 241.4 | $ | 244.6 | $ | 691.4 | $ | 775.9 | ||||||||
Restructuring and other special charges | 5.8 | 3.7 | 15.4 | 17.8 | ||||||||||||
Consulting fees and CFO transition expenses | 5.5 | - | 10.2 | - | ||||||||||||
Adjusted operating income | $ | 252.7 | $ | 248.3 | $ | 717.0 | $ | 793.7 | ||||||||
Adjusted EPS |
||||||||||||||||
Diluted earnings per common share | $ | 1.59 | $ | 1.63 | $ | 4.53 | $ | 4.81 | ||||||||
Restructuring and special items | 0.08 | 0.03 | 0.18 | 0.12 | ||||||||||||
Amortization expense | 0.13 | 0.14 | 0.44 | 0.40 | ||||||||||||
Adjusted EPS | $ | 1.80 | $ | 1.80 | $ | 5.15 | $ | 5.33 | ||||||||
|
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Free Cash Flow: |
||||||||||||||||
Net cash provided by operating activities | $ | 175.6 | $ | 234.2 | $ | 525.3 | $ | 570.0 | ||||||||
Less: Capital expenditures | $ | (52.6 | ) | $ | (52.1 | ) | $ | (157.2 | ) | $ | (142.6 | ) | ||||
Free cash flow | $ | 123.0 | $ | 182.1 | $ | 368.1 | $ | 427.4 |
Notes to Financial Tables
1) During the third quarter of 2014, the Company recorded net restructuring and special items of
During the first two quarters of 2014, the Company recorded net restructuring and special items of
The after tax impact of these combined charges decreased net earnings for the nine months ended
2) During the third quarter of 2013, the Company recorded net restructuring and other special charges of
During the first two quarters of 2013, the Company recorded net restructuring and other special charges of
The after tax impact of these combined charges decreased net earnings for the nine months ended
3) The Company continues to grow the business through acquisitions and uses Adjusted EPS (excluding restructuring, special items and amortization) as a measure of operational performance, growth and shareholder returns. The Company believes adjusting EPS for these items provides investors with better insight into the operating performance of the business. For the quarters ended
Source:
LabCorp®
Stephen Anderson, 336-436-5076
[email protected]