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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
April 23, 2001
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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 9. Regulation FD Disclosure.
Summary information of the Company dated April 23, 2001.
This information contains forward-looking statements which are
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, 2000 and subsequent filings.
Overview of LabCorp
- Nationwide network of 24 primary testing facilities and 900
patient service centers
- Conducts tests on 260,000 specimens daily
- Offers more than 4,000 test procedures
- Serves over 200,000 physicians and other health care
providers
- More than 18,000 employees nationwide
The Clinical Laboratory Testing Market
US market is approximately $32-34 billion
CLINICAL LABORATORY TESTING INDEPENDENT CLINICAL LABORATORIES
Hospitals 49% All others 85%
Independent Clinical Labs 39% LabCorp($1.919b) 15%
Physician Offices 12%
Source: Company estimates, industry reports & 2000YE revenue
for LabCorp
Strategic Goals
- Strengthen standing as a national laboratory that provides a
full range of laboratory services
- Leverage broad-reaching infrastructure to expand leadership
position in esoteric and genomic testing
2001 Strategic Approach
- Maintain national coverage for all key customers
- Expand upon leading position in genomic testing
- Evaluate appropriate acquisition candidates
- Continue to move to single billing system
- Develop strategy to tap full potential of LabCorp's extensive
database
Genomic Strategy
UTILIZE DNA TESTING LEADERSHIP TO EXECUTE GENOMIC LEADERSHIP
STRATEGY
- First to offer HIV PCR
- First to offer HIV viral load
- First to offer HIV genotyping and phenotyping
- Leader in hepatitis C PCR testing (CMBP;NGI)
- Leader in pharmacogenomic clinical trials testing
(Her-2 neu/Herceptin)
- Partner with specialized test companies
- Acquire specialized test companies
- Use clinical trials to identify diagnostic opportunities first
- License/co-develop new technologies (NGI-oncology markers)
- Provide bridge from "Classic Genomic" companies to first
patient applications-diagnostic testing
Financial Performance
Price & Volumes: Trends by Payor Type
*Pro-Forma YTD MAR
1999 2000 2001
PPA Accessions PPA Accessions PPA Accessions
$ millions $ millions $ millions
----------------- ---------------- -----------------
Client (Physicians) 21.46 27.0 22.42 27.1 22.87 6.8
Patient 92.56 2.3 102.87 2.2 107.84 0.6
Third Party 27.75 11.7 29.80 10.3 32.26 2.9
(MC/MD/Insurance)
Managed Care
- Capitated 10.06 8.4 9.61 10.6 10.50 2.8
- Fee for service 39.28 12.7 42.32 16.0 43.21 4.2
----- ---- ----- ---- ----- ---
Total 27.68 21.1 29.25 26.6 29.93 7.0
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LabCorp Total $27.35 62.1 $28.98 66.2 $30.34 17.3
*(1) Adjusted accessions for Client
(2) Reported PPA for Client was $22.36 with 25.9 accessions
(3) Reported PPA for Company was $27.84 with 61.0 accessions
Financial Performance
Revenue Analysis by Business Area
YTD MAR 2000
REVENUE ACCN %ACCNS PPA
$Million 000 to total $
--------- ------ -------- ------
Esoteric:
Genomic
(CMBP/NGI)
30.6 275.0 1.7% 111.22
Other Esoteric
(Powell CET)
43.2 925.9 5.7% 46.71
Core: 388.9 15,135.5 92.6% 25.69
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Total: 462.7 16,336.4 100.0% 28.32
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Financial Performance
Revenue Analysis by Business Area
YTD MAR 2001 00 vs 01
PPA
REVENUE ACCN %ACCNS PPA Incr/
$Million 000 to total $ (Decr)
--------- ----- -------- ----- ---------
Esoteric:
Genomic
(CMBP/NGI)
39.7 330.0 1.9% 120.38 8.2%
Other Esoteric
(Powell CET)
48.2 1,085.2 6.3% 44.39 (5.0)%
Core: 437.5 15,903.1 91.8% 27.51 7.1%
----- -------- ----- ----- ----
Total: 525.4 17,318.3 100.0% 30.34 7.1%
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Year-End Financials
12-31-98 12-31-99 12-31-00*
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Revenue 1,612.6 1,698.7 1,919.3
Operating Expense 1,485.0 1,549.0 1,669.2
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Operating Income 127.6 149.7 250.1
======= ======= =======
Margin 7.9% 8.8% 13.0%
EBITDA 210.4 233.4 339.7
======= ======= =======
Margin 13.0% 13.7% 17.7%
Bad Debt % to revenue 10.2% 11.3% 10.2%
DSO 83 74 68
*2000 actual excludes restructuring charge of $4.5. If this
charge is included, operating income would be $245.6 and EBITDA
would be $335.2.
First Quarter Operating Results
03/31/00 03/31/01
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Revenue 462.7 525.4
Operating Expense 405.3 438.1
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Operating Income 57.4 87.3
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Margin 12.4% 16.6%
EBITDA 78.3 110.3
===== =====
Margin 16.9% 21.0%
Bad Debt % to revenue 10.2% 9.7%
DSO 72 67
2001 First Quarter Achievements
- Increased revenues 13.6% (price 7.4%; volume 6.2%)
- Increased EBITDA 41%
- Increased diluted EPS 63%
- Announced acquisition of Path Labs in New England
- Two-for-one stock split planned(announced in April)
2000 Financial Achievements
- Increased revenues 13% (volume 9%; price 4%)
- Increased EBITDA 46%
- Increased diluted EPS 186%*
- Increased operating cash flow 37%
- DSO reduced 6 days from year end 1999 to 68 days
- Reduced interest rate to LIBOR plus 37.5 basis points
*Does not include effects of a $4.5 million restructuring charge.
If this charge is included, diluted EPS increased 178.0%
2000 Accomplishments
- Six acquisitions, including National Genetics Institute in
Los Angeles
- 1 for 10 Reverse Stock Split completed
- Preferred Stock called for redemption
- Contracts with Cigna, Aetna U.S. Healthcare, UnitedHealthcare,
Health Trust and AmeriNet
- Successful placement of 6.5 million shares formerly held by
Roche
- S & P rating increased to investment grade
- Introduced HIV GENOSURE -TRADEMARK-, new in-house
genotyping assay
Financial Goals for 2001
- Increase overall revenues by approximately 11%
- Increase EBITDA margins to approximately 21% of sales
- EPS growth of approximately 50% compared to 2000
- Reduce debt by approximately $132 million
- Lower DSO to the mid 60's range
Financial Goals for 2002
- Increase overall revenues in approximately the same range as
for 2001
- EPS growth of approximately 30% compared to 2001
- More specific guidance will be provided later in the year 2001
Opportunity for Investors
- A proven strategy for growth
- LabCorp is a pioneer in identifying and commercializing
innovative technologies-the first to fully embrace molecular
diagnostics
- LabCorp's national infrastructure connects large scale
proficiency with wide scale technological expertise
- New advances in scientific research will generate growth and
demand for molecular testing
IOM STUDY
- Requested by Congress - Balanced Budget Act of 1997
- "Clinical lab tests are an essential component of health
care... and are likely to play an even greater role in the
detection, treatment and monitoring of disease in the 21st
Century"
- Includes 12 positive recommendations for Medicare payment
system
- Recognizes need to take action to ensure future access of
beneficiaries to important new diagnostic testing
technologies
Other Financial Information
Quarter Ended March 31, 2001
($ in millions,except per share amounts)
Depreciation $13.8
Amortization $ 9.2
Goodwill amortization $ 6.0
Diluted EPS before goodwill amortization $ 1.40
Capital expenditures $12.7
Cash flows from operations $64.5
Bad debt as a percentage of sales 9.7%
Effective interest rate on term loan 5.77%
Days sales outstanding 67
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: April 23, 2001