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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
AUGUST 1, 1996
---------------------------------
(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
- --------------- ------------ --------------
(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)
910-229-1127
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(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS
On August 1, 1996, the Registrant issued a press release dated as
of such date announcing operating results of the Registrant for
the three and six month periods ended June 30, 1996, 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 August 1,
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
-----------------------------------------
(Registrant)
By:/s/ BRADFORD T. SMITH
---------------------------
Bradford T. Smith
Executive Vice President,
General Counsel and Secretary
Date: August 2, 1996
EXHIBIT INDEX
Exhibit
Number Exhibit
- ------- -------
20 - Press release of the Registrant dated August 1,
1996.
Exhibit 20
FOR IMMEDIATE RELEASE
Contact: Pamela Sherry
Telephone: (910)584-5171
Ext. 6768
LABORATORY CORPORATION OF AMERICA REPORTS RESULTS FOR
SECOND QUARTER
Burlington, NC, August 1, 1996 -- Laboratory Corporation of
America Holdings (LabCorp) (NYSE: LH) today announced results
for the second quarter and six months ended June 30, 1996.
Results for the 1996 periods reflect the April 28, 1995 merger
of Laboratory Corporation of America Holdings' predecessor
companies -- National Health Laboratories Holdings Inc.
(NHL) and Roche Biomedical Laboratories, Inc. (RBL) -- and,
therefore, are not directly comparable to prior periods.
Net sales for the three months ended June 30, 1996 were
$410.0 million. Operating income was $30.1 million, net
income was $5.9 million, and earnings per share were $0.05
before a special pretax charge of $23.0 million related to
restructuring and other non-recurring charges and a $10.0
million increase to the allowance for doubtful accounts.
After the special charge and allowance increase, the Company
posted an operating loss of $2.9 million and a net loss of $14.2
million. LabCorp reported a net loss per share of $0.12 for
the quarter.
Net sales for the six month period ended June 30, 1996 were
$813.9 million. Operating income for the six month period
ended June 30, 1996, before the special charge and allowance
increase, was $57.9 million, net income $11.8 million and
earnings per share $0.10. After the special charge and
allowance increase, the Company posted operating income of
$24.9 million and a net loss of $8.3 million. The net loss per
share was $0.07 for the six month period.
The special charge consists of $23.0 million in additional
restructuring and non-recurring charges related to the
merger of RBL and NHL, including the closure of the former NHL
corporate offices in La Jolla, California and other
restructuring of operations not included in the original
merger restructuring charge taken in the second quarter of
1995. The $10.0 million in additional accounts receivable
allowances primarily relates to increased medical necessity and
related diagnosis code requirements of third-party payors
placed on the Company at the beginning of 1996 and reflects
the lower collection rates experienced in the second quarter
as a result of the more stringent requirements.
As a result of LabCorp's second quarter performance and its
higher than projected debt levels, the Company obtained
waivers for the quarter ended June 30, 1996 of certain
covenants contained in its existing credit agreement.
Because of the limited period covered by the waivers,
approximately $998 million of the Company's debt that
otherwise would have been classified as long-term has been
classified as current in the June 30, 1996 consolidated
balance sheet. Therefore, the Company has commenced a
comprehensive analysis of its capital structure and is
considering a range of alternatives for recapitalizing its
balance sheet. Because of the time frame necessary to
complete any recapitalization, additional waivers may be
necessary.
As previously disclosed, the government is presently
investigating certain past laboratory marketing practices of NHL,
RBL and Allied Clinical Laboratories, Inc., a Company
subsidiary. These investigations and related settlement
discussions have become more active in recent months. Due to
the nature of these discussions, the Company is still unable
to predict with certainty the likely outcome of these
negotiations or whether the ultimate resolution of these
matters will materially and adversely affect the Company.
"We are certainly disappointed in our results for the
quarter," said Dr. James B. Powell, President and Chief
Executive Officer. "Lower than expected pricing and
utilization during the quarter have continued to negatively
impact our overall performance. And, while our synergy
savings program continues solidly ahead of schedule, the
savings in the quarter, as expected, were partially offset
by duplicate expenses related to that plan's implementation,"
noted Dr. Powell.
"In addition, we are diligently implementing measures to
improve our results as we focus on stabilizing and growing a more
profitable revenue base. For example, we have:
Made headway in our hospital affiliations,
institutional relationships and other strategic alliances,
recently announcing a joint venture with PCS Health
Systems, Inc. to provide a nationwide clinical laboratory
benefit program;
Continued our targeted price increases and business
development efforts as we become more judicious in pricing
new business and in selectively repricing or removing
existing business not meeting our requirements;
Created a special task force to identify effective methods
to address the increasing medical necessity and diagnosis
code requirements of third-party payors affecting our
industry;
Increased our efforts to further accelerate other cost
reduction opportunities in addition to our merger savings
program;
Implemented a six month deferral on increasing wages
and adding new positions; and
Focused on improving the profitability of our drug testing
program, which has experienced recent, correctable cost
increases."
"Clearly, these are difficult times not only for our
industry but for all of health care," concluded Dr. Powell.
"LabCorp is confronting extensive challenges in dealing with both
the merger and this changing environment. Yet, we do know that
diagnostic services have great value in medicine, and we firmly
believe that LabCorp has both the strategies and tactics to
manage the challenges ahead of it. Not all solutions are near-
term, but we remain focused and confident that we can
implement our plans to benefit the long-term growth and health
of the Company."
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 is included
in the Company's Form 10-K for the year ended December 31,
1995.
Laboratory Corporation of America Holdings (LabCorp) is a
national clinical laboratory organization with estimated
annualized revenues of $1.6 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, long-term care facilities, 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 SIX MONTHS ENDED
JUNE 30, JUNE 30,
------------------------------------------------- ----------------------------------------------------------
(1) (1) (1) (1) (1) (1) (1) (1)
Before Charges After Charges Before Charges After Charges
Before After and Extra- and Extra- Before After and Extra- and Extra-
Charges Charges ordinary Item ordinary Item Charges Charges ordinary Item ordinary Item
1996 1996 1995 1995 1996 1996 1995 1995
------------------------------------------------- ----------------------------------------------------------
Net Sales $ 410.0 $410.0 $367.2 $367.2 $813.9 $813.9 $ 611.1 $611.1
======= ====== ====== ====== ====== ====== ======= ======
Operating income
(loss) $ 30.1 $ (2.9) $ 44.9 $(30.1) $ 57.9 $ 24.9 $ 81.5 $ 6.5
======= ====== ====== ======
Earnings (loss)
before income taxes
and extra-ordinary
item $ 13.3 $(19.7) $ 27.8 $(47.2) $ 25.1 $ (7.9) $ 51.2 $(23.8)
Provision for income
taxes (7.4) 5.5 (12.6) 15.6 (13.3) (0.4) (23.2) 5.0
------- ------ ------ ------ ------ ------ ------ ------
Earnings (loss) before
extraordinary item $ 5.9 $(14.2) $ 15.2 $(31.6) $ 11.8 $ (8.3) $ 28.0 $(18.8)
Extraordinary Item -
Loss on early extin-
guishment of debt, net
of income tax benefit
of $5.2 -- -- -- (8.3) -- -- -- (8.3)
------- ------ ------ ------ ------ ------ ------ ------
Net earnings (loss) $ 5.9 $(14.2) $ 15.2 $(39.9) $ 11.8 $ (8.3) $ 28.0 $(27.1)
======= ====== ====== ====== ====== ====== ====== ======
Earnings (loss) per
common share (2):
Earnings (loss) per
common share before
extraordinary item $ 0.05 $(0.12) $ 0.14 $(0.28) $ 0.10 $(0.07) $ 0.29 $(0.20)
Extraordinary loss
per common share -- -- -- (0.08) -- -- -- (0.08)
------ ------ ------ ------ ------ ------ ------ -------
Net earnings (loss) per
common share $ 0.05 $(0.12) $ 0.14 $(0.36) $ 0.10 $(0.07) $ 0.29 $(0.28)
====== ====== ====== ====== ====== ====== ====== ======
(1) Charges in 1996 include $23.0 million for restructuring and other non-recurring items and $10.0 million to increase
the provision for doubtful accounts. Charges in 1995 include $65.0 million for restructuring related to the merger
with Roche Biomedical Laboratories, Inc. on April 28, 1995 and a $10.0 million provision for settlements related to
various matters including billing matters.
(2) Earnings (loss) per common share are based on the weighted average number of shares outstanding during the three-and
six-month periods ended June 30, 1996 of 122,920,200 shares and 122,914,474 shares, respectively and the weighted
average number of shares outstanding during the three- and six-months ended June 30, 1995 of 111,117,517 shares and
98,045,102 shares, respectively.