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
May 14, 2013
(Date of earliest event reported)
LABORATORY CORPORATION OF
AMERICA HOLDINGS
(Exact Name of Registrant as Specified in its Charter)
Delaware | 1-11353 | 13-3757370 | ||
(State or other jurisdiction of Incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
358 South Main Street, | ||||
Burlington, North Carolina | 27215 | 336-229-1127 | ||
(Address of principal executive offices) | (Zip Code) | (Registrant’s telephone number including area code) | ||
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
[ ] | Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
[ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
[ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
[ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 7.01 | Regulation FD Disclosure |
Summary information of the Company dated May 14, 2013.
SIGNATURES
Pursuant to the requirements of the Securities 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/ F. SAMUEL EBERTS III | |
F. Samuel Eberts III | ||
Chief Legal Officer and Secretary | ||
May 14, 2013
BANK OF AMERICA MERRILL LYNCH 2013 HEALTHCARE CONFERENCE MAY 14, 2013 | LAS VEGAS
This slide presentation 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, 2012, and subsequent SEC filings. FORWARD LOOKING STATEMENT 2
3 LABCORP A PREMIER HEALTHCARE SERVICES COMPANY A Premier Healthcare Services Company Strong Financial Fundamentals Attractive Market Superior Execution Five Pillar Strategy Clear Mission
Valuable Service • Small component of total cost influences large percentage of clinical decisions • Screening, early detection, and monitoring reduce downstream costs • Decision support tools guide providers to better patient outcomes ATTRACTIVE MARKET 4
0 2 4 6 8 10 12 14 Under 18 years 18-44 years 45-54 years 55-64 years 65-74 years 75 years + Re lat ive Nu m be r o f L ab Te sts Pe r Y ea r Patient Age 2008 1997 Growth Drivers • Aging population • Industry consolidation • Advances in genomics • Pharmacogenomics/ companion diagnostics • 2014 coverage expansion • Key managed care partnerships • Cost pressures will reward more efficient labs Source: CDC National Ambulatory Medical Care Survey and Company Estimates ATTRACTIVE MARKET 5
55% 12% 10% 4% 19% Hospital Affiliated Quest LabCorp Physician Office Other Independent Source: Washington G-2 Reports and Company estimates $60 Billion US Lab Market Opportunity to Take Share • Approximately 5,000 independent labs • Less efficient, higher cost competitors • Full service, “one stop shop” ATTRACTIVE MARKET 6
Diversified Payor Mix No customer > 10% of revenue LabCorp U.S. Payor Mix % of Revenue, 2012 ATTRACTIVE MARKET 7 18.7% 3.1% 42.4% 29.8% 6.0% Medicare and Medicaid Managed Care Capitated Managed Care Fee-For- Service Client (Physicians, Hospitals, Companies, etc) Patient
Diversified Test Mix LabCorp U.S. Test Mix % of Revenue, 2012 ATTRACTIVE MARKET 8 13.3% 60.8% 21.2% 4.7% Other Esoteric Core All Genomic Histology
We Will Be a Trusted Knowledge Partner for Stakeholders, Leading to Growth in Our Business and Continued Creation of Shareholder Value We Will Achieve This Mission by Continuing to Execute Our Five Pillar Strategy MISSION STATEMENT 9
Deploy Capital to Investments That Enhance Our Business and Return Capital to Shareholders FIVE PILLAR STRATEGY PILLAR ONE 10
Cash Flow Trends Note: 2011 Free Cash Flow calculation above does not include the $49.5 million Hunter Labs settlement Free Cash Flow is a non-GAAP metric (see reconciliation of non-GAAP Financial Measures included herein) Free Cash Flow CAGR calculation uses 2001 data (2001 Free Cash Flow was $228 million) 10.3% FCF CAGR from 2001-2012 Weighted Average Diluted Shares (millions) 154.2 154.7 150.7 144.9 134.7 121.3 111.8 109.1 105.4 101.8 97.4 FIVE PILLAR STRATEGY PILLAR ONE CAPITAL DEPLOYMENT 11
*GENZYME GENETICSSM and its logo are trademarks of Genzyme Corporation and used by Esoterix Genetic Laboratories, LLC, a wholly-owned subsidiary of LabCorp, under license. Esoterix Genetic Laboratories and LabCorp are operated independently from Genzyme Corporation. Five-Year Capital Snapshot • Acquisitions: Genzyme Genetics*, Orchid Cellmark, MEDTOX Scientific • Approximately $2.1 billion of share repurchase since 2008 • Approximate 50/50 split between acquisitions and share repurchase since 2008 FIVE PILLAR STRATEGY PILLAR ONE CAPITAL DEPLOYMENT 12 LabCorp Capital Deployment Quest Diagnostics 2008 2009 2010 2011 2012 Total Cash from Operating Activities 780.9$ 862.4$ 883.6$ 855.6$ 841.4$ 4,223.9$ Total Capital Deployed 839.2$ 603.6$ 1,650.0$ 927.9$ 1,025.4$ 5,046.1$ Capital Expenditures 156.7$ 114.7$ 126.1$ 145.7$ 173.8$ 717.0$ % Total Capital Deployed 19% 19% 8% 16% 17% 14% Cash Us d for Acquisitions 348.9$ 215.9$ 1,185.8$ 138.3$ 335.1$ 2,224.0$ % Total Capital Deployed 42% 36% 72% 15% 33% 44% Cash Used for Share Repurchase 333.6$ 273.0$ 338.1$ 643.9$ 516.5$ 2,105.1$ % Total Capital Deployed 40% 45% 20% 69% 50% 42% Source: SEC Fil ings
Future Capital Deployment Strategy • Target Leverage Ratio of approximately 2.5 to 1 (Debt/EBITDA) over time • Acquisitions • Share Repurchase 13 FIVE PILLAR STRATEGY PILLAR ONE CAPITAL DEPLOYMENT
Enhance IT Capabilities To Improve Physician and Patient Experience FIVE PILLAR STRATEGY PILLAR TWO 14
LabCorp Beacon™ Platform • Rich web portal and mobility framework o Physician, Patient and Payor portals o Mobility solutions • Enhanced Efficiency and Service o Online appointment scheduling o Express Orders o AccuDraw™ o Integrated results, enhanced reports • Lab Analytics o One-click trending of patient, test and population o View lab history • Services Oriented Architecture o Rules based engines o Content aggregation o Plug in model for seamless integration with practice workflow o Scalable, big data model 15 FIVE PILLAR STRATEGY PILLAR TWO ENHANCE IT CAPABILITIES
Population Health Analytics • Comprehensive platform Healthcare business intelligence across hospital, physician practice and ACO market • Robust rules engine and 600+ clinical quality measures 100% compliance to Meaningful Use requirements (EP & EH) 100% compliance to ACO, JCAHO and PQRS reporting requirements • Real time clinical alerts Gaps in care alerts for patient populations and at the individual patient level Gaps-in-Care Analytics Views 16 FIVE PILLAR STRATEGY PILLAR TWO ENHANCE IT CAPABILITIES
Patient Portal • Receive lab results as easily as checking email • Share lab results securely and privately • Receive notifications and alerts automatically • Manage health care information for the entire family • Provide education tools for patients 17 FIVE PILLAR STRATEGY PILLAR TWO ENHANCE IT CAPABILITIES
Continue to Improve Efficiency to Offer the Most Compelling Value in Laboratory Services FIVE PILLAR STRATEGY PILLAR THREE 18
Our Focus on Efficiency • Constant focus on cost structure • Standardization o Lab platforms, instruments and processes o Billing system • Supply chain optimization • Automation of pre-analytics • Facility rationalization • Propel splitting and sorting robotics 19 FIVE PILLAR STRATEGY PILLAR THREE IMPROVE EFFICIENCY
Scientific Innovation At Appropriate Pricing FIVE PILLAR STRATEGY PILLAR FOUR 20
Companion diagnostics and personalized medicine • IL-28B • BRAF V600E metastatic melanoma (Zelboraf) • Vysis ALK Break Apart FISH probe (XALKORI) • K-RAS • HLA-B* 5701 • EGFR Mutation Analysis • HCV GenoSure® NS3/4A • PhenoSense®, PhenoSense GT® • HERmark® • SNP Microarray-Oncology • CYP 450 2C19 Women’s health • ROMA • Nuswab STD testing on a single swab • Expanded Vaginosis and Candida testing • Expanded options for HPV DNA testing • Age-based guideline testing initiative for HPV • Non-Invasive Prenatal Screening Our core competencies in science, IT and personalized medicine make LabCorp an attractive partner for drug development 21 FIVE PILLAR STRATEGY PILLAR FOUR SCIENTIFIC INNOVATION AT APPROPRIATE PRICING
Development of Knowledge Services FIVE PILLAR STRATEGY PILLAR FIVE 22
23 Key Elements • Data to actionable intelligence • Knowledge solutions • Moving closer to patient as organizer of care FIVE PILLAR STRATEGY PILLAR FIVE THE LABCORP OF THE FUTURE
24 • Meaningful information for patient and population health management o Understand quality of care delivered o Understand costs o Measure impact of treatment on patient outcomes • Improve quality and cost of care • Facilitate analysis of comparative effectiveness • Aggregate quality reporting measures • Identify unmet needs and associated market opportunities FIVE PILLAR STRATEGY PILLAR FIVE TRANSFORMING DATA INTO ACTIONABLE INTELLIGENCE
25 FIVE PILLAR STRATEGY PILLAR FIVE SAMPLE DATA FLOW
UNIFIED DECISION SUPPORT PLATFORM AT ORDER ENTRY INTEGRATION OF DECISION SUPPORT CAPABILITIES AND CLINICAL INPUTS 26 AT RESULT DELIVERY FUTURE STATE FIVE PILLAR STRATEGY PILLAR FIVE PROVIDING COMPREHENSIVE CARE MANAGEMENT TOOLS
27 FIVE PILLAR STRATEGY PILLAR FIVE MOVING CLOSER TO THE PATIENT AS AN ORGANIZER OF CARE
Better Outcomes Higher Quality Lower Cost Core Competencies • “End to End” Total Lab Solution Partnership • Population health management tools • Clinical decision support programs • Expanded patient counseling (PCMH) • Integrative clinical reports • Patient centric data solutions • IT capabilities/support (LIS, portal, mobile) • Complementary AP services • Scientific Expertise • Quality / Standardization • Operating expense savings • Infrastructure • Economies of Scale • Access to capital 28 LabCorp Capabilities Meet Every Requirement of New Care Models FIVE PILLAR STRATEGY PILLAR FIVE LABCORP VALUE PROPOSITION
29 CLEAR MISSION THE LABCORP OF THE FUTURE A Trusted Partner to Healthcare Stakeholders, Providing Knowledge to Optimize Decision Making, Improve Health Outcomes and Reduce Treatment Costs ACQUISITIONS IT CAPABILITIES SCIENCE OTHER INPUTS BEACONLBS LITHOLINK/CDS INTERPRETATION EDUCATIONAL TOOLS
1. Excluding the $0.25 per diluted share impact of restructuring and other special charges and the $0.27 per diluted share impact from amortization in 2007; excluding the $0.44 per diluted share impact of restructuring and other special charges and the $0.31 per diluted share impact from amortization in 2008; excluding the ($0.09) per diluted share impact of restructuring and other special charges and the $0.35 per diluted share impact from amortization in 2009; excluding the $0.26 per diluted share impact of restructuring and other special charges and the $0.43 per diluted share impact from amortization in 2010; excluding the $0.72 per diluted share impact of restructuring and other special charges, the $0.03 per diluted share impact from a loss on the divestiture of assets and the $0.51 per diluted share impact from amortization in 2011; excluding the $0.29 per diluted share impact of restructuring and other special charges and the $0.54 per diluted share impact from amortization in 2012 2. EPS, as presented represents adjusted, non-GAAP financial measures. Diluted EPS, as reported in the Company’s Annual Report were: $3.93 in 2007; $4.16 in 2008; $4.98 in 2009; $5.29 in 2010; $5.11 in 2011; and $5.99 in 2012 3. 2008 revenue includes a $7.5 million adjustment relating to certain historic overpayments made by Medicare for claims submitted by a subsidiary of the Company Revenue and Adjusted EPS Excluding Amortization Growth: 2007 – 2012 1,2,3 EXCELLENT PERFORMANCE 30 $4.068 $4.513 $4.695 $5.004 $5.542 $5.671 2007 2008 2009 2010 2011 2012 $4.45 $4.91 $5.24 $5.98 $6.37 $6.82 2007 2008 2009 2010 2011 2012 Adjusted EPS Excluding Amortization Revenue ($Billions)
Reconciliation of Free Cash Flow (1) 2011 cash flows from operations excludes the $49.5 million Hunter Labs settlement payment (2) Free cash flow represents cash flows from operations less capital expenditures 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 Cash flows from operations1 841.4$ 905.1$ 883.6$ 862.4$ 780.9$ 709.7$ 632.3$ 574.2$ 538.1$ 564.3$ 444.9$ Capital expenditures (173.8) (145.7) (126.1) (114.7) (156.7) (142.6) (115.9) (93.6) (95.0) (83.6) (74.3) Free cash flow2 667.6 759.4 757.5 747.7 624.2 567.1 516.4 480.6 443.1 480.7 370.6 Weighted average diluted shares outstanding 97.4 101.8 105.4 109.1 111.8 121.3 134.7 144.9 150.7 144.8 144.2 Reconciliation of non-GAAP Financial Measures (In millions, except per share data)RECONCILIATION FREE CASH FLOW 31
