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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 22, 1999
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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 of File Number) Identification
incorporation) Number)
358 SOUTH MAIN STREET, BURLINGTON, NORTH CAROLINA 27215
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(Address of principal executive offices)
336-229-1127
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(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS
On February 22, 1999, the Company issued a press release
announcing operating results of the Company for the quarter
and twelve months ended December 31, 1998. 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 Company dated
February 22, 1999.
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, Secretary
and Compliance Officer
Date: March 29, 1999
Laboratory Corporation of America-Registered Trademark Holdings
358 South Main Street
Burlington, NC 27215
Telephone: 336-584-5171
FOR IMMEDIATE RELEASE
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CONTACT: 336-584-5171 SHAREHOLDER DIRECT: 800-LAB-0401
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Media - Cynthia Jay, Ext. 6652 www.labcorp.com
Investors - Pamela Sherry, Ext. 4855
LABORATORY CORPORATION OF AMERICA-REGISTERED TRADEMARK- REPORTS
FOURTH QUARTER AND FULL YEAR RESULTS
Burlington, NC, February 22, 1999 - Laboratory Corporation of America-
Registered Trademark- Holdings (LabCorp-Registered Trademark-) (NYSE:LH)
today announced results for the quarter and twelve months ended
December 31, 1998.
FOURTH QUARTER RESULTS
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Net sales for the fourth quarter of 1998 were $407.8 million, compared to net
sales of $376.7 million in the fourth quarter of 1997. Fourth quarter of 1998
operating income was $26.6 million and net income was $35.3 million, compared
to an operating loss of $177.3 million and a net loss of $118.7 million in the
fourth quarter of 1997, after pretax charges of $182.7 million. After
deducting preferred stock dividends, the basic and diluted earnings per
common share were $0.20 and $0.11, respectively, in the fourth quarter of
1998, compared to a loss per share of $1.05 for the same period in 1997.
As part of the Company's rigorous process toward converting to one billing
system, certain amounts formerly classified as net sales adjustments have been
reclassified to bad debt expense to achieve consistency between the Company's
two major billing systems. The reclassification will result in increases of
equal amounts to both net sales, and selling, general, and administrative
(SG&A) expenses in the Company's Statement of Operations. The amounts
related to the current period and the reclassified amounts for the prior
period were as follows: $16.6 million and $15.3 million for the fourth
quarters of 1998 and 1997, respectively; and $64.0 million and $61.0 million
for the years 1998 and 1997, respectively. The reclassification of these
amounts has no effect on operating income, EBITDA, or earnings per share.
Additionally, based on improved current and projected operating results, the
Company reduced its deferred tax asset valuation allowance by approximately
$27.5 million during the fourth quarter of 1998. This was reflected as a
reduction in the provision for income taxes and had the effect of increasing
earnings per share by approximately $0.22 for both the fourth quarter and the
year ended December 31, 1998.
"We are pleased with our fourth quarter financial performance," said Thomas P.
Mac Mahon, president and chief executive officer. "Revenue growth was
exceptionally strong and our cost cutting measures continued to pay off." The
revenue increase of 8.2% is the result of a 5.0% increase in price and a 3.2%
increase in volume, and is directly related to the Company's ongoing program to
improve price and implement its strategic plan to build market share and
maintain profitable business.
LabCorp's key performance measure, earnings before interest, taxes,
depreciation, and amortization (EBITDA), was $47.7 million for the fourth
quarter of 1998, versus a negative $155.8 million for the comparable period in
1997. Operating cash flow for the fourth quarter of 1998 was $35.2 million.
The balance owed on LabCorp's $450 million revolving line of credit remained at
zero at the end of the quarter.
FULL YEAR RESULTS
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Net sales for the year ended December 31, 1998, were $1,612.6 million, versus
net sales of $1,579.9 million for 1997. The revenue increase of 2% is
attributable to a 3.2% increase in price partially offset by a 1.2% decrease in
volume. Operating income for the year ended December 31, 1998, was $127.6
million and net income was $68.8 million, compared to an operating loss of
$92.0 million and a net loss of $106.9 million for 1997. After deducting
preferred stock dividends, the basic and diluted earnings per common share
were $0.20 in 1998 compared to a loss per share of $1.06 in 1997.
EBITDA for 1998 was $210.4 million, versus a negative $6.9 million in 1997.
Operating cash flow was $125.1 million in 1998.
"LabCorp achieved healthy progress in 1998 by crafting an aggressive strategy to
anticipate and capitalize on a host of new opportunities in a changing health
care environment," noted Mac Mahon. "In the days ahead, continued growth and
increased profitability are anticipated as we continue to press forward with
our strategic plan for the benefit of our customers, our employees and our
shareholders."
ANNUAL MEETING DATE SET
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LabCorp also announced that its annual meeting of stockholders is scheduled for
June 16, 1999, in Burlington, North Carolina. Stockholders of record as of
April 19, 1999, will be entitled to vote at the meeting.
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 that could
affect the Company's financial results is included in the Company's Form 10-K
for the year ended December 31, 1997, and will be included in the Company's
Form 10-K for the year ended December 31, 1998.
Laboratory Corporation of America Holdings-Registered Trademark -
(LabCorp-Registered Trademark-) is a national clinical laboratory with
annual revenues of $1.6 billion in 1998. With more than 18,000 employees
and over 200,000 clients nationwide, the company offers more than 2,000
clinical tests, ranging from simple blood analyses to more sophisticated
technologies. In addition to the major testing sites, the Center for Molecular
Biology and Pathology, LabCorp's leading edge esoteric testing facility located
in Research Triangle Park, North Carolina, develops applications for polymerase
chain reaction (PCR) technology, a revolutionary technique used to produce some
of the most sensitive diagnostic tests ever developed. LabCorp's clients
include physicians, state and federal governments, managed care organizations,
hospitals, clinics, long-term care facilities, companies, and other clinical
laboratories.
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LABORATORY CORPORATION OF AMERICA HOLDINGS
Summarized Financial Information
(Dollars in millions, except per share data)
(Unaudited) (Unaudited)
Three Months Ended Year Ended
December 31, December 31,
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1998 1997 1998 1997
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Net sales $ 407.8 $ 376.7 $1,612.6 $1,579.9
======= ======= ======== ========
Operating income (loss) 26.6 (177.3) 127.6 (92.0)
======= ======= ======== ========
Earnings (loss) before
income taxes 14.9 (190.8) 81.5 (161.3)
Provision for income taxes (2) (20.4) (72.0) 12.7 (54.3)
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Net earnings (loss) 35.3 (118.7) 68.8 (106.9)
Less preferred stock dividends
and accretion of mandatorily
redeemable preferred stock 10.4 10.5 44.4 23.8
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Net income (loss) attributable
to common shareholders $ 24.9 $(129.2) $ 24.4 $ (130.8)
======= ======= ======== ========
Basic earnings (loss) per
share (3) $ 0.20 $ (1.05) $ 0.20 $ (1.06)
Diluted earnings (loss) per
share (3) $ 0.11 $ (1.05) $ 0.20 $ (1.06)
(1) In order to achieve consistency between the Company's two major billing
systems, certain amounts formerly classified as net sales adjustments have
been reclassified to bad debt expense. The reclassification will result in
increases of equal amounts to both net sales, and selling, general and
administrative expenses in the Company's Statement of Operations. The
amounts related to the current period and the reclassified amounts for the
prior period were as follows: $16.6 million and $15.3 million for the
fourth quarters of 1998 and 1997, respectively; and $64.0 million and $61.0
million for the years 1998 and 1997, respectively. The reclassification of
these amounts will have no effect on operating income, EBITDA, or earnings
per share.
(2) Based on improved current and projected operating results, the Company
reduced its deferred tax asset valuation allowance by approximately $27.5
million during the fourth quarter of 1998. This was reflected as a
reduction in the provision for income taxes and had the effect of
increasing earnings per share by approximately $0.22 for both the fourth
quarter and the year ended December 31, 1998.
(3) Basic 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, 1998, of 125,269,903 shares and 124,846,812 shares,
respectively (318,739,501 shares for diluted earnings per share for the
three-month period ended December 31, 1998), and the weighted average
number of shares outstanding during the three- and twelve-month periods
ended December 31, 1997, of 123,542,614 shares and 123,241,222 shares,
respectively.
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