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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
JULY 23, 2001
- ------------------
(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 July 23, 2001.
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
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Bradford T. Smith
Executive Vice President,
General Counsel, Secretary
and Compliance Officer
Date: July 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. Actual
results could differ materially from those suggested by these forward-
looking statements. 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.
Profile of LabCorp
- Nationwide network of 24 primary testing locations and 900
patient service centers
- Conducts tests on 275,000 specimens daily
- Offers more than 4,000 test procedures
- Serves over 200,000 physicians and other health care
providers
- More than 19,000 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
Genomic Strategy Firsts
- HIV PCR and viral load
- HIV genotyping and phenotyping
- Hepatitis C PCR testing (CMBP;NGI)
- Pharmacogenomic clinical trials testing
- (Her-2 neu/Herceptin)
- HIV GenoSure-trademark- in-house
genotyping assay
Genomic Strategy
UTILIZE DNA TESTING LEADERSHIP TO EXECUTE GENOMIC
LEADERSHIP STRATEGY
- Internal development of new technologies (e.g., oncology)
- Partnerships/Licensing (e.g., Virco, ViroLogic, EXACT Sciences)
- Acquisitions (NGI, Viro-Med)
- Clinical trials opportunities (Genentech/Her-2 neu)
FUTURE OPPORTUNITIES
- Melanoma
- Colorectal Cancer
- - Breast Cancer
Financial Performance
Price & Volumes: Trends by Payor Type
YTD JUN
1999 2000 2001
PPA Accessions PPA Accessions PPA Accessions
$ millions $ millions $ millions
----------------- ---------------- -----------------
Client (Physicians)* 21.67 27.0 22.70 27.1 23.74 13.9
Patient 92.56 2.3 102.87 2.2 108.43 1.3
Third Party 27.75 11.7 29.80 10.3 32.43 5.8
(MC/MD/Insurance)
Managed Care*
- Capitated 9.37 8.4 8.89 10.6 8.85 5.9
- Fee for service 39.28 12.7 42.32 16.0 43.16 8.4
------ ---- ----- ---- ----- ----
Total 27.41 21.1 28.97 26.6 29.04 14.3
------ ---- ----- ---- ----- ----
LabCorp Total $27.35 62.1 $28.98 66.2 $30.45 35.3
====== ==== ===== ==== ====== ====
* Includes reclass of revenue from capitated to client
Financial Performance
Revenue Analysis by Business Area
YTD JUN 2000
Revenue Accns %Accns PPA
$Million 000 to total $
--------- ------ -------- ------
Esoteric:
Genomic
(CMBP/NGI) 60.6 553.8 1.7% 109.49
Other Esoteric
(Powell CET) 89.4 1,936.9 5.8% 46.15
Core: 795.1 30,738.7 92.5% 25.87
----- -------- ----- -----
Total: 945.1 33,229.4 100.0% 28.44
===== ======== ====== =====
Financial Performance
Revenue Analysis by Business Area
YTD JUN 2001 00 vs 01
PPA
Revenue Accns %Accns PPA Incr/
$Million 000 to total $ (Decr)
--------- ----- -------- ----- ---------
Esoteric:
Genomic
(CMBP/NGI) 81.5 676.6 1.9% 120.42 10.0%
Other Esoteric
(Powell CET) 98.1 2,272.0 6.4% 43.16 (6.5)%
Core: 895.6 32,359.3 91.7% 27.68 7.0%
----- -------- ----- ----- ----
Total: 1,075.2 35,307.9 100.0% 30.45 7.1%
===== ======== ====== ===== ====
Second Quarter Operating Results
06/30/00 06/30/01
Revenue 482.4 549.7
Operating Expense 411.1 447.1
----- -----
Operating Income 71.3 102.6
===== =====
Margin 14.8% 18.7%
EBITDA 93.1 128.1
===== =====
Margin 19.3% 23.3%
Bad Debt % to revenue 10.2% 9.4%
DSO 70 64
2001 Second Quarter Financial Achievements
- Increased revenues 14% (price 7%; volume 7%)
- Increased EBITDA 38%
- All time high EBITDA margin of 23.3% of sales
- Increased diluted EPS 57%
- Acquired Path Lab in New England
- Acquired Viro-Med in Minneapolis
- Completed two-for-one stock split
- - Successful offering of 12.0 million Roche-
owned shares
- - New managed care agreement with MAMSI
- - Entered strategic partnership with EXACT
Sciences
Six Month Operating Results
YTD 6/00 YTD 6/01
Revenue 945.1 1,075.2
Operating Expense 816.4 885.3
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Operating Income 128.7 189.9
===== =====
Margin 13.6% 17.7%
EBITDA 171.4 238.4
===== =====
Margin 18.1% 22.2%
Bad Debt % to revenue 10.2% 9.5%
DSO 70 64
2001 Six Month Financial Achievements
- Increased revenues 13.8% (price 7.3%; volume 6.5%)
- Increased EBITDA 28.1%
- Increased diluted EPS 60%
- DSO decline of 4 days from December 2000
Financial Goals for 2001
- Increase overall revenues by approximately 12.5% compared to 2000
- EBITDA margins of approximately 21% of sales
- EPS growth of approximately 50% compared to 2000
- Reduce debt by approximately $132 million
- Lower DSO to the mid 60's range
Financial Goals for 2002
- Increase overall revenues at a rate in the low
- double-digit range
- EPS growth of approximately 30% compared to 2001
- More specific guidance will be provided later in the year 2001
Opportunity for Investors
- A proven strategy for growth
- LabCorp is a pioneer in identifying and commercializing
innovative technologies-the first to fully embrace molecular
diagnostics
- LabCorp's national infrastructure connects large scale
proficiency with wide scale technological expertise
- New advances in scientific research will generate growth and
demand for molecular testing
Other Financial Information
Quarter Ended June 30, 2001
($ in millions,except per share amounts)
1st Q 2nd Q YTD
Depreciation $13.8 $14.6 $ 28.4
Amortization $ 9.2 $10.9 $ 20.1
Goodwill amortization $ 6.0 $ 7.8 $ 13.8
Diluted EPS before goodwill amortization $ 0.70 $ 0.84 $ 1.54
Capital expenditures $12.7 $20.9 $ 33.6
Cash flows from operations $64.5 $74.2 $138.7
Bad debt as a percentage of sales 9.70% 9.40% 9.55%
Effective interest rate on term loan* 5.77% 5.67% N/A
Days sales outstanding* 67 64 N/A
* At end of period