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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
FEBRUARY 13, 1996
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(Date of earliest event reported)
LABORATORY CORPORATION OF AMERICA HOLDINGS
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(Exact name of registrant as specified in its charter)
DELAWARE 1-11353 13-3757370
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(State or other (Commission (IRS Employer
jurisdiction or File Number) Identification
organization) Number)
358 SOUTH MAIN STREET, BURLINGTON, NORTH CAROLINA 27215
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(Address of principal executive offices)
800-222-7566
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(Registrant's telephone number, including area code)
Item 5. Other Events
On February 13, 1996, the Registrant issued a press release
dated as of such date announcing operating results of the
Registrant for the three and twelve month periods ended
December 31, 1995 as well as certain other information. The
press release is attached as an exhibit hereto and the text
thereof is incorporated in its entirety herein by reference.
Item 7. Financial Statements, Pro Forma
Financial Information and Exhibits
(c) Exhibit
20 Press release of the Registrant dated February 13,
1996.
SIGNATURES
Pursuant to the requirements of the Securities and
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned hereunto
duly authorized.
LABORATORY CORPORATION OF AMERICA HOLDINGS
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(Registrant)
By: /s/ BRADFORD T. SMITH
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Bradford T. Smith
Executive Vice President,
General Counsel and Secretary
Date: February 19, 1996
FOR IMMEDIATE RELEASE Contact: Pamela Sherry
Telephone: (910)584-5171
Ext. 6768
LABORATORY CORPORATION OF AMERICA REPORTS RESULTS
FOR FOURTH QUARTER AND YEAR
Burlington, NC, February 13, 1996 - Laboratory Corporation of
America Holdings (NYSE: 1LH), LabCorp, today announced
results for the fourth quarter and year ended December 31,
1995. Results for the 1995 periods reflect the April 28th
merger of LabCorp's predecessor companies -- National Health
Laboratories Holdings Inc. (NHL) and Roche Biomedical
Laboratories, Inc. (RBL) -- and, therefore, are not directly
comparable to prior periods.
For the quarter, net sales were $403.4 million.
Operating income was $32.6 million, net income was $8.5
million, and earnings per share were $0.07 before a pretax
special charge of $15.0 million. After the special charge,
operating income was $17.6 million, and net income was $0.4
million. The special charge reflects the Company's
determination, based on trends that became evident in the
fourth quarter, that additional reserves were needed
primarily to cover potentially lower collection rates from
several third-party payors.
For the year, net sales were $1,432.0 million, an
increase of 64% from $872.5 million reported in 1994. The
inclusion of RBL since April 28, 1995, increased net sales
by approximately $514.7 million. In connection with the
merger, the Company took a second quarter pretax
special charge of $75.0 million relating to restructuring
and other provisions and had an extraordinary loss of $8.3
million, net of taxes, related to the early extinguishment
of debt.
Operating results for 1995 before the special charges
and extraordinary loss were as follows: operating income of
$157.2 million, net earnings of $50.9 million, and net
earnings per share of $0.46. Operating results after the
special charges and extraordinary item were as follows:
operating income of $67.2 million, net loss of $12.3
million, and net loss per share of $0.11.
The combined pro forma results of NHL and RBL for 1995
resulted in net sales of $1,678.6 million, with operating
income of $184.2 million before the special charges and
extraordinary loss. Including the increased amortization
and interest expense associated with the merger, pro forma
net income was $63.4 million and earnings per share were
$0.52, based on approximately 122.9 million shares
outstanding. These pro forma results include only a portion
of the cost savings expected from the synergies for the
combined companies.
"Our results for the quarter were not up to our
expectations, but we are taking the actions necessary to
control costs and preserve revenues in this difficult
environment in order to remain on course to fulfill our
objectives as an industry leader," said Dr. James B. Powell,
President and Chief Executive Officer.
"Several factors, some industry-wide in nature,
combined to produce the results reported in the fourth
quarter," said Dr. Powell. "First, we experienced lower-
than-expected revenues in November and December primarily
because of seasonal factors, which reduced revenues by
approximately $12-14 million. We continue to manage our
costs and note that specimen volumes per day, adjusted for
the severe January weather impact, have recovered somewhat
from the depressed levels sustained late in the fourth
quarter.
"Second, although the price pressures in the fourth
quarter of 1995 moderated compared to the second and third
quarters of 1995, changes primarily in payor mix negatively
impacted fourth quarter revenues compared to the same period
in 1994. The Company's selected price increases late in
1995 and early in 1996 are designed to offset some of this
pressure.
"Third, our continued acceleration of efforts to
achieve synergies from the merger resulted in our incurring
certain expenses sooner than had been anticipated in our
budget. In other words, we have experienced some
duplication of costs earlier than expected while we shift
operations from one site to another, maintaining both sites
in operation as we do so. Because our synergy program is
proceeding more swiftly, some costs of this nature that had
been budgeted for 1996 were instead incurred during 1995.
The important thing, though, is that we are on target to
exceed the reductions in our cost base that we had predicted
at the time of the merger. In 1996, we expect to achieve
incremental synergy savings of at least $60 million above
the savings in 1995."
Downsizing of several facilities is under way, and the
Company expects the closing of its reference laboratory in
Nashville to be completed by the end of the first quarter of
1996. The consolidation of the Company's facilities in Raritan
and Cranford, New Jersey, has been initiated, with projected
completion in mid 1996.
In total, the Company acquired nine laboratories in
1995, representing approximate annual sales of $30 million,
for an aggregate purchase price of approximately $36
million. Most of this activity occurred early in the year.
"We have now been able to reactivate our selective acquisition
program and will remain alert to further opportunities to increase
our market share as the industry continues to consolidate,"
said Dr. Powell.
Since January 1, 1995, LabCorp's business generated
from hospital affiliations and institutional relationships
has totaled more than $20 million annually in contracts
completed. "The Company is currently finalizing two
additional laboratory contracts as part of its ongoing plan
to actively penetrate the hospital and outpatient testing
area," commented Dr. Powell. "This activity supports the
conviction that our low-cost provider status positions
LabCorp for future growth opportunities in the laboratory
management marketplace." These contracts will add to the
current laboratory management business which was augmented
by the third quarter Columbia/HCA Healthcare Corporation
agreement with three of Columbia's hospitals in Louisville.
Contracts in managed care continued to increase through
the fourth quarter of 1995 as managed care continued to grow
in importance in the changing healthcare environment. From
January 1, 1995, through December 31, 1995, LabCorp added
153 new managed care contracts representing 8.8 million new
lives.
The Company noted that each of the above forward-
looking statements was 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. Further
information on potential factors which could affect the
Company's financial results will be included in the
Company's Form 10-K for the year ended December 31, 1995,
which is anticipated to be filed with the SEC in late March
1996.
Laboratory Corporation of America Holdings (LabCorp)
is a national clinical laboratory organization with
estimated annualized revenues of $1.7 billion. The Company
operates primary testing facilities nationally, offering
more than 1,700 different clinical assays, from routine
blood analysis to more sophisticated technologies. LabCorp
performs diagnostic tests for physicians, managed care
organizations, hospitals, clinics, nursing homes, industrial
companies and other clinical laboratories.
- End of Text -
- Table to Follow -
LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
Summarized Financial Information
(Dollars in Millions, except per share data)
Three Months Ended Twelve Months Ended
December 31, December 31,
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Before Special After Special
Charges and Charges and
Before Special After Special Extraordinary Extraordinary
Charge Charge Item Item
1995 1995 1994 1995 1995 1994(a)
------------------------------------- ------------------------------------------
Net sales $ 403.4 $ 403.4 $ 234.9 $ 1,432.0 $ 1,432.0 $ 872.5
======= ======= ======= ======= ======= =======
Operating income $ 32.6 $ 17.6 $ 26.3 $ 157.2 $ 67.2 $ 109.9
======= ======= ======= ======= ======= =======
Earnings (loss) before
income taxes and
extraordinary item $ 15.7 $ 0.7 $ 14.2 $ 93.1 $ 3.1 $ 55.4
Provision for income
taxes (7.2) (0.3) (6.5) (42.2) (7.1) (25.3)
------- ------- ------ ------ ------ -------
Earnings (loss) before
extraordinary item 8.5 0.4 7.7 50.9 (4.0) 30.1
Extraordinary Item - loss
on early extinguishment
of debt, net of income
tax benefit of $5.2 - - - - (8.3) -
------- ------- ------ ------ ------ ------
Net earnings (loss) $ 8.5 $ 0.4 $ 7.7 $ 50.9 $ (12.3) $ 30.1
======= ======= ====== ======= ======= ======
Earnings (loss) per common share (b):
Earnings (loss) per share
before extraordinary
item $ 0.07 - $ 0.10 $ 0.46 $ (0.03) $ 0.36
Extraordinary loss - - - - (0.08) -
-------- ------- ------ ------- ------- ------
Net earnings (loss)
per common share $ 0.07 - $ 0.10 $ 0.46 $ (0.11) $ 0.36
======== ======= ====== ======= ======= ======
(a) In 1994, National Health Laboratories Holdings Inc., the predecessor of Laboratory Corporation
of America Holdings, recorded a pretax special charge of $21.0 ($12.8 net of tax) related to
the settlement of shareholder derivative litigation. This pretax special charge reduced net
earnings for the twelve-month period ended December 31, 1994 by $12.8 and net earnings per common
share for the twelve-month period ended December 31, 1994 by $0.16.
(b) Earnings (loss) per common share are based on the weighted average number of shares outstanding
during the three- and twelve-month periods ended December 31, 1995 of 122,908,722 and 110,579,096
shares, respectively, and the weighted average number of shares outstanding during the three- and
twelve-month periods ended December 31, 1994 of 84,760,786 and 84,754,183 shares, respectively.
The increase in the weighted average number of shares in 1995 is the result of shares issued in
connection with the merger with Roche Biomedical Laboratories, Inc. on April 28, 1995.