Laboratory Corporation of America(R) Announces 2003 Third Quarter Results Oct 23, 2003 at 7:44 AM EDT PDF Version Reports Growth in EPS, Operating Cash Flow and EBITDA in Excess of 25 Percent; EBITDA Margins of 24.5 Percent; Increase in Combined Genomic and Esoteric Testing Revenues of 31 Percent BURLINGTON, N.C., Oct. 23 /PRNewswire-FirstCall/ -- Laboratory Corporation of America(R) Holdings (NYSE: LH) (LabCorp(R)) today announced results for the quarter ended September 30, 2003. Third Quarter Results Revenues for the quarter were $752.0 million, an increase of 14.8 percent compared to the same period in 2002. Testing volume, measured by accessions, increased approximately 9.3 percent and price per accession increased approximately 5.5 percent compared to third quarter 2002. Net earnings before restructuring and other special charges for the quarter increased 26.1 percent to $85.1 million, compared to 2002 third quarter net earnings of $67.5 million. Before the charges, earnings per diluted share increased 28 percent to $0.59 per diluted share, versus $0.46 per diluted share in the third quarter of 2002. Earnings before interest, taxes, depreciation, amortization and nonrecurring restructuring charges (EBITDA) were $183.9 million for the quarter, or 24.5 percent of net sales, compared to $145.9 million, or 22.3 percent of net sales, for the same period in 2002. The Company recorded pre-tax restructuring charges of $3.3 million and $17.5 million during the third quarters of 2003 and 2002, respectively, in connection with the integrations of DIANON Systems, Inc. and Dynacare, Inc. The 2003 charge negatively impacted diluted earnings per share by approximately $0.01. During the quarter, the Company repaid $60 million in borrowings under its revolving line of credit, and repurchased approximately $63 million of Company stock. Operating cash flow increased 33.7 percent to $161.9 million, and the cash balance at the end of the quarter was $30 million. "We are truly pleased with this quarter's financial performance," said Thomas P. Mac Mahon, chairman and chief executive officer. "By every measure, our results demonstrate the continuing effectiveness of our strategic plan. Not only did we have substantial growth in revenues, profitability and EPS, we also reduced our bad debt rate, continued to pay down our revolving line of credit, completed our stock repurchase program and generated significant amounts of cash. Additionally, the integrations of Dynacare and DIANON have been tracking as expected, with both achieving our synergy savings targets." Mr. Mac Mahon added, "Looking ahead, we expect that our strategic plan will continue to strengthen our financial performance, with added benefit from shifts in our test mix toward higher-value genomic and esoteric tests. One example of our plan at work is PreGen-Plus(TM), a noninvasive screening test for colon cancer launched in August. We are excited by the early sales of this test, and look forward to soon introducing Correlogic's new blood test for ovarian cancer." Nine-Month Results Revenues for the period were approximately $2,207.9 million, an increase of 18.9 percent compared to the same period in 2002. Testing volume, measured by accessions, increased approximately 13.2 percent and price per accession increased approximately 5.7 percent, compared to the same period in 2002. Net earnings before restructuring and other special charges for the period increased to $245.4 million, or $1.69 per diluted share, compared to 2002 nine-month net earnings of $211.8 million, or $1.47 per diluted share. EBITDA was $537.0 million, or 24.3 percent of net sales, compared to $439.9 million, or 23.7 percent of net sales, for the same period in 2002. Operating cash flow increased 28.7 percent to $420.1 million. A live broadcast of LabCorp's quarterly conference call on October 23, 2003 will be available online at www.labcorp.com or at www.streetevents.com beginning at 9:00 a.m. Eastern Time, with an online rebroadcast continuing through November 23, 2003. The live call at 9:00 a.m. is also available in a listen-only mode by dialing 415-908-6291. A telephone replay of the call will be available through October 30, 2003 and can be heard by dialing 800- 633-8284 (402-977-9140 for international callers). The access code for the replay is 211-60-358. Laboratory Corporation of America(R) Holdings is a pioneer in commercializing new diagnostic technologies and the first in its industry to embrace genomic testing. With annual revenues of $2.5 billion in 2002, over 24,000 employees nationwide, and more than 200,000 clients, LabCorp offers over 4,000 clinical assays ranging from blood analyses to HIV and genomic testing. LabCorp combines its expertise in innovative clinical testing technology with its Centers of Excellence: The Center for Molecular Biology and Pathology, in Research Triangle Park, NC; National Genetics Institute, Inc. in Los Angeles, CA; ViroMed Laboratories, Inc. based in Minneapolis, MN; The Center for Esoteric Testing in Burlington, NC; and DIANON Systems, Inc. based in Stratford, CT. LabCorp clients include physicians, government agencies, managed care organizations, hospitals, clinical labs, and pharmaceutical companies. To learn more about our growing organization, visit our web site at: www.LabCorp.com. Each of the above 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 payors. Actual results could differ materially from those suggested by these forward-looking statements. Further information on potential factors that could affect LabCorp's financial results is included in the Company's Form 10-K for the year ended December 31, 2002 and subsequent SEC filings. LABORATORY CORPORATION OF AMERICA HOLDINGS Consolidated Statements of Operations (in millions, except per share data) Three Months Ended Nine Months Ended September 30, September 30, (Unaudited) (Unaudited) 2003 2002 2003 2002 Net sales $752.0 $655.2 $2,207.9 $1,857.6 Cost of sales 441.1 381.9 1,284.0 1,049.7 Selling, general and administrative 162.7 153.4 490.1 427.3 Amortization of intangibles and other assets 9.5 6.2 27.5 16.4 Restructuring and other special charges 3.3 17.5 3.3 17.5 Operating income 135.4 96.2 403.0 346.7 Other income (expense) (0.3) -- (0.6) (0.4) Investment income 0.1 0.9 4.8 2.9 Interest expense (9.5) (5.3) (30.9) (13.7) Income from equity investments 11.5 6.2 32.6 6.2 Earnings before income taxes 137.2 98.0 408.9 341.7 Provision for income taxes 54.1 40.7 165.5 140.1 Net earnings $83.1 $57.3 $243.4 $201.6 Net earnings before restructuring and other special charges $85.1 $67.5 $245.4 $211.8 Diluted earnings per common share: Net earnings $0.58 $0.39 $1.67 $1.40 Net earnings before restructuring and other special charges $0.59 $0.46 $1.69 $1.47 Weighted average shares outstanding 144.4 145.7 145.4 143.7 EBITDA $183.9 $145.9 $537.0 $439.9 LABORATORY CORPORATION OF AMERICA HOLDINGS Consolidated Balance Sheets (in millions, except per share data) (Unaudited) September 30, December 31, 2003 2002 Cash and cash equivalents $30.0 $56.4 Accounts receivable, net 446.8 393.0 Property, plant and equipment 367.2 351.2 Intangible assets and goodwill, net 1,862.6 1,217.5 Investments in equity affiliates 482.5 400.6 Other assets 143.0 173.3 $3,332.1 $2,592.0 Total bank debt $27.9 $3.5 Zero coupon-subordinated notes 520.6 512.9 5 1/2% senior note 353.9 -- Other liabilities 647.5 463.9 Shareholders' equity 1,782.2 1,611.7 $3,332.1 $2,592.0 Notes to Financial Tables 1) During the third quarters of 2003 and 2002, the Company recorded restructuring and other special charges of $3.3 million and $17.5 million, respectively, principally relating to costs to be incurred as part of its integration efforts on its DIANON and Dynacare acquisitions. 2) EBITDA represents earnings before interest, income taxes, depreciation, amortization, and nonrecurring charges, and includes the Company's proportional share of the underlying EBITDA of the income from equity investments. The Company uses EBITDA extensively as an internal management performance measure and believes it is a useful, and commonly used measure of financial performance in addition to earnings before taxes and other profitability measurements under generally accepted accounting principles ("GAAP"). EBITDA is not a measure of financial performance under GAAP. It should not be considered as an alternative to earnings before income taxes (or any other performance measure under GAAP) as a measure of performance or to cash flows from operating, investing or financing activities as an indicator of cash flows or as a measure of liquidity. The following table reconciles earnings before income taxes, representing the most comparable measure under GAAP, to EBITDA for the three- and nine-month periods ended September 30, 2003 and 2002: Three Months Nine Months Ended September 30, Ended September 30, 2003 2002 2003 2002 Earnings before income taxes $137.2 $98.0 $408.9 $341.7 Add (subtract): Interest expense 9.5 5.3 30.9 13.7 Investment income (0.1) (0.9) (4.8) (2.9) Other (income) expense, net 0.3 -- 0.6 0.4 Depreciation 23.4 19.2 68.1 52.5 Amortization 9.5 6.2 27.5 16.4 Restructuring and other special charges 3.3 17.5 3.3 17.5 Equity investments' depreciation and amortization 0.8 0.6 2.5 0.6 EBITDA $183.9 $145.9 $537.0 $439.9 3) The following table reconciles net earnings to net earnings before restructuring and other special charges: Three Months Nine Months Ended September 30, Ended September 30, 2003 2002 2003 2002 Net earnings $83.1 $57.3 $243.4 $201.6 Restructuring and other special charges 3.3 17.5 3.3 17.5 Provision for income taxes (1.3) (7.3) (1.3) (7.3) 2.0 10.2 2.0 10.2 Net earnings before restructuring and other special charges $85.1 $67.5 $245.4 $211.8 SOURCE Laboratory Corporation of America Holdings -0- 10/23/2003 /CONTACT: Pamela Sherry of Laboratory Corporation of America Holdings, +1-336-436-4855, or Investor@labcorp.com, or Shareholder Direct, +1-800-LAB-0401/ /Audio: http://www.streetevents.com / /Web site: http://www.labcorp.com / (LH) CO: Laboratory Corporation of America Holdings ST: North Carolina IN: HEA MTC SU: ERN CCA JB-MG -- CHTH003 -- 7604 10/23/2003 07:43 EDT http://www.prnewswire.com
