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 26, 2010
(Date of earliest event reported)
LABORATORY CORPORATION OF
AMERICA HOLDINGS
(Exact Name of Registrant as Specified in its Charter)
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Delaware
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1-11353
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13-3757370
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(State or other jurisdiction of Incorporation)
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(Commission File Number)
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(I.R.S. Employer Identification No.)
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358 South Main Street,
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Burlington, North Carolina
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27215
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336-229-1127
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(Address of principal executive offices)
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(Zip Code)
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(Registrant’s telephone number including area code)
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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:
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Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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Item 7.01
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Regulation FD Disclosure
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Summary information of the Company in connection with non-deal related meetings with RBC Capital Markets on July 27-29, 2010.
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
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By:
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/s/ F. SAMUEL EBERTS III
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F. Samuel Eberts III
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Chief Legal Officer and Secretary
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July 26, 2010
July 27-29, 2010
RBC Capital Markets
NDR
2
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.
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, 2009, and
subsequent SEC filings.
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, 2009, and
subsequent SEC filings.
Forward Looking Statement
Introduction
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Leading National
Lab Provider
• Fastest growing national lab
• $55 billion market
• Clinical, Anatomic and Genomic Testing
• Serving clients in all 50 states and Canada
• Foremost clinical trials testing business
Introduction
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Valuable Service
• Small component of total cost
influences large percentage
of clinical decisions
• Screening, early detection,
and monitoring reduce
downstream costs
• Companion diagnostics
improve drug efficacy and
reduce adverse drug effects
Attractive Market
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Attractive Market
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Growth Drivers
• Aging population
• Industry consolidation
• Advances in genomics
• Pharmacogenomics /
companion diagnostics
• Cost pressures
Source: CDC National Ambulatory Medical Care Survey and Company Estimates
Attractive Market
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Opportunity to
Take Share
• Approximately 5,000
independent labs
• High cost competitors
Source: Washington G-2 Reports and company estimates
$55 Billion US Lab Market
55%
14%
9%
4%
19%
Hospital Affiliated
Quest
LabCorp
Physician Office
Other Independent
Attractive Market
Diversified Payor Mix
• No customer > 9% of revenue
• Limited government exposure
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Attractive Market
Diversified Test Mix
• Esoteric 36% of revenue
• Goal of 40% in 3 - 5 years
• Higher priced business
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Competitive Position
Scale and Scope
• National infrastructure
• Broad test offering
• Managed care contracts
• Economies of scale
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Primary LabCorp Testing Locations*
Esoteric Lab Locations
(CET, CMBP, Dianon, Esoterix, Monogram Biosciences, NGI, OTS, US Labs, Viromed)
Patient Service Centers*
Competitive Position
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Managed Care Relationships
• Exclusive national laboratory for UnitedHealthcare
• Sole national strategic partner for WellPoint
• Significant national plans recently renewed or
extended on a multi-year basis, including
WellPoint, Cigna and Humana
• Contracted with numerous local and
regional anchor plans
Scientific
Leadership
• Introduction of new tests
• Acquisitions and licensing
• Collaborations with leading
companies and academic
institutions
Competitive Position
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Competitive Position
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Standardized and
Efficient Processes
• Standardized lab and billing
IT systems
• Automation of pre-analytics
• Capacity rationalization
• Logistics optimization
2010 Priorities
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Our Focus
• Profitable revenue growth
• IT and client connectivity
• Continue scientific
leadership
• Maintain price
• Control costs
2010 Priorities
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Profitable Revenue Growth
• Target specialty physicians with
breadth of menu and services
• Educate payers and physicians on
value of LabCorp testing
• Leverage assets from Monogram
acquisition
• Continue to improve patient experience
2010 Priorities
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IT and Client
Connectivity
Connectivity
• Enhance online services and
analytic tools
• LabCorp Inside the Box for
superior connectivity
• Improve Patient Experience
through:
• Automated PSC workflow
• Patient access via PHRs,
online appointments
• Enterprise services
including VoIP
• Continue “open platform” strategy
to maximize options for users
Continue Scientific
Leadership
• Increase esoteric testing
• Grow and enhance offerings in
personalized medicine:
• Expand outcome improvement
programs
• Develop and commercialize
companion diagnostics
2010 Priorities
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Increase
Esoteric Testing
• Introduction of new tests
• Acquisitions and licensing
• Collaborations with academic
institutions
Continue Scientific Leadership
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New Tests Include:
Collaborations Include:
BRAF Gene Mutation Detection
EGFR Mutation Analysis for Nonsmall-Cell Lung Cancer
Warfarin (P450 2C9 and VKORC1)
Clopidogrel CYP2C19 Genotyping
Duke University
National Jewish Health
Integrase - HIV Genotyping (GenoSure) and HIV Phenotyping (PhenoSense)
HERmark for Breast Cancer
Yale University
Enhanced Trofile
H1N1 - Flu Testing
Expand Outcomes
Improvement
• Litholink kidney stone
• CKD
• Continual development of
valuable programs
Continue Scientific Leadership
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Continue Scientific Leadership
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Develop and
Commercialize
Commercialize
Companion Diagnostics
• Invest in clinical trials
• Relationships with biotech and
pharma companies
• Promote key tests
• K-RAS
• HLA-B* 5701
• BRAF Gene Mutation Detection
• EGFR Mutation Analysis
• CYP 450 2C19
• Monogram Biosciences
• Trofile
• PhenoSense, PhenoSense GT
• HERmark
“K-RAS testing should be routinely conducted in
all colorectal cancer patients immediately after
diagnosis to ensure the best treatment strategies
for the individual Patient”
all colorectal cancer patients immediately after
diagnosis to ensure the best treatment strategies
for the individual Patient”
- Dr. Eric Van Cutsem, presenter at the June 2008 American
Society of Clinical Oncology meeting
FDA recommends genetic screening prior to
treatment with Abacavir
treatment with Abacavir
ROCKVILLE, Md -- July 24, 2008 -- The US Food and Drug Administration (FDA) has issued
an alert regarding serious, and sometimes fatal, hypersensitivity reactions (HSRs) caused by
abacavir (Ziagen) therapy in patients with a particular human leukocyte antigen (HLA) allele,
HLA-B* 5701.
an alert regarding serious, and sometimes fatal, hypersensitivity reactions (HSRs) caused by
abacavir (Ziagen) therapy in patients with a particular human leukocyte antigen (HLA) allele,
HLA-B* 5701.
Genetic tests for HLA-B*5701 are already available, and all patients should be screened for the
HLA-B*5701 allele before starting or restarting treatment with abacavir or abacavir-containing
medications.
HLA-B*5701 allele before starting or restarting treatment with abacavir or abacavir-containing
medications.
“FDA has approved the expanded use of Selzentry…
to include adult patients with CCR5-tropic HIV-1
virus who are starting treatment for the first time.”
to include adult patients with CCR5-tropic HIV-1
virus who are starting treatment for the first time.”
- ViiV Healthcare Press Release, November 20th, 2009
2010 Priorities
Maintain Price
• Managed care stability; offsets
1.9% Medicare rate decrease
• Focus on high-value tests
• Promote outcome improvement
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Control Costs
• Continue focus on collections
and bad debt reduction
• Optimize supply chain
• Use efficiency gains to
improve patient experience
2010 Priorities
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$3,085
$3,328
$3,591
$4,068
$4,513
$4,695
$2.45
$2.80
$3.30
$4.18
$4.60
$4.89
2004
2005
2006
2007
2008
2009
Revenue ($mil)
EPS
Excellent Performance
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Revenue and
EPS Growth
• 9% Revenue CAGR
• 15% EPS CAGR
(1) Excluding the $0.09 per diluted share impact in 2005 of restructuring and other special
charges, and a non-recurring investment loss; excluding the $0.06 per diluted share
impact in 2006 of restructuring and other special charges; excluding the $0.25 per
diluted share impact in 2007 of restructuring and other special charges; excluding the
(2) EPS, as presented, represents adjusted, non-GAAP financial measures. Diluted EPS,
as reported in the Company’s Annual Report were: $2.45 in 2004; $2.71 in 2005;
$3.24 in 2006; $3.93 in 2007; $4.16 in 2008; and $4.98 in 2009.
$0.44 per diluted share impact in 2008 of restructuring and other special charges; excluding
the ($0.09) per diluted share impact in 2009 of restructuring and other special charges.
Revenue and EPS Growth: 2004 - 2009 (1) (2)
Excellent Performance
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Leading Returns
• Leading returns
• Leading EBIT margin
18.2%
20.5%
21.8%
27.6%
27.5%
25.8%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
2004
2005
2006
2007
2008
2009
LabCorp ROE 2004
-
2009
Excellent Performance
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Cash Flow
• 11% FCF CAGR
• $2.0 B+ share repurchase
over last three years
Note: $ in Millions
Second Quarter and YTD 2010 Results
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Three Months Ended Jun 30,
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Six Months Ended Jun 30,
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2010
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2009
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+/(-)
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2010
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2009
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+/(-)
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Revenue (1)
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$ 1,238.4
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$ 1,188.8
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4.2%
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$ 2,432.0
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$ 2,344.5
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3.7%
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Adjusted Operating Income
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$ 270.5
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$ 254.9
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6.1%
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$ 514.0
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$ 495.4
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3.8%
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Adjusted Operating Income Margin
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21.8%
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21.4%
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40
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bp
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21.1%
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21.1%
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-
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bp
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Adjusted EPS (1)
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$ 1.46
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$ 1.30
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12.3%
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$ 2.76
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$ 2.51
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10.0%
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Operating Cash Flow
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$ 216.2
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$ 182.4
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18.5%
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$ 448.2
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$ 391.3
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14.5%
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Less: Capital Expenditures
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$ (34.5)
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$ (23.7)
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45.6%
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$ (59.0)
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$ (54.4)
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8.5%
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Free Cash Flow
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$ 181.7
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$ 158.7
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14.5%
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$ 389.2
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$ 336.9
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15.5%
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(1) During the first quarter inclement weather reduced revenue by an estimated $23 million and EPS by approximately eight cents
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Reconciliation of Non-GAAP Financial Measures
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Reconciliation of non-GAAP Financial Measures
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(In millions, except per share data)
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Three Months Ended June 30,
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Six Months Ended June 30,
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2010
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2009
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2010
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2009
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Adjusted Operating Income
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Operating income
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$ 270.5
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$ 244.7
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$ 504.7
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$ 485.2
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Restructuring and other special charges
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$ -
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$ 10.2
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$ 9.3
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$ 10.2
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Adjusted operating income
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$ 270.5
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$ 254.9
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$ 514.0
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$ 495.4
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Adjusted EPS
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Diluted earnings per common share
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$ 1.46
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$ 1.24
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$ 2.70
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$ 2.46
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Impact of restructuring and other special charges (1) (2)
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$ -
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$ 0.06
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$ 0.06
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$ 0.05
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Adjusted EPS
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$ 1.46
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$ 1.30
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$ 2.76
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$ 2.51
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(1) After tax impact of restructuring and other special charges for the three months and six months ended June 30, 2010 ($- million divided by
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105.4 million shares and $5.7 million divided by 105.9 million shares, respectively)
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(2) After tax impact of restructuring and other special charges for the three months and six months ended June 30, 2009 ($6.0 million divided by
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109.5 and 109.4 million shares, respectively)
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Supplemental Financial Information
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Laboratory Corporation of America
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Other Financial Information
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FY 2009 and Q1/Q2 2010
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($ in millions)
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Q1 09
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Q2 09
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Q3 09
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Q4 09
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Q1 10
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Q2 10
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Bad debt as a percentage of sales
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5.30%
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5.30%
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5.30%
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5.30%
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5.05%
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4.80%
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Days sales outstanding
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52
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50
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48
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44
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46
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45
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A/R coverage (Allow. for Doubtful Accts. / A/R)
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19.5%
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20.6%
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21.9%
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23.2%
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21.7%
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20.7%
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Key Points
• Critical position in health care delivery system
• Attractive market
• Strong competitive position - well positioned to gain share
• Leadership in personalized medicine
• Excellent cash flow
• Strong balance sheet
Conclusion
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©2010 LabCorp. All rights reserved. 8026-0210