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
September 13, 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 the presentation at the Morgan Stanley Global Healthcare Conference on September 13, 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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September 13, 2010
September 13, 2010
New York, NY
Morgan Stanley Global
Healthcare Conference
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 Accomplishments
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Our Results
• Profitable revenue growth
• Empire contract
• Esoteric growth
• Acquisitions
• Improved IT and client connectivity
• LabCorp Beacon
• Enhanced experience
for physicians and patients
• Continued scientific leadership
• Clearstone collaboration
• IL-28B
• New Monogram assays
• Maintained price
• Managed care stability
• Strong 1H 2010 results
• Controlled costs
• Gross margin expansion
• Sysmex project
2010 Accomplishments
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Profitable Revenue Growth
• Empire contract
• In network status as of Aug 1, 2010
• New York’s largest insurer by membership
• Esoteric revenue growth
• 5.1% growth in first half of 2010
• Expansion of Monogram offerings
• Acquisitions
• Westcliff
• DCL
• 3.7% total revenue growth in first half of 2010
• Challenging economic environment
• Positive volume growth, after
adjusting for lost contracts
2010 Accomplishments
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Improved IT and Client
Connectivity
Connectivity
• LabCorp Beacon: A superior physician
experience
• Intuitive Orders and Results
• Unread reports in bold while
abnormal values are displayed in red
abnormal values are displayed in red
• Share results via Email, Fax and Print
• Group patients according to a client’s
needs
needs
• Add notes to any report to share
critical insights
critical insights
2010 Accomplishments
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• Powerful Analytics
•Graphical views of a patient over
time
time
•Generate trends and averages for
large populations
large populations
2010 Accomplishments
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“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.
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.
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.
the 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.”
Selzentry… 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
Continued Scientific
Leadership
• Clearstone collaboration
• Global clinical trials capability
• Presence in China
• Enhanced offerings in companion
diagnostics and personalized medicine
• IL-28B
• K-RAS
• HLA-B* 5701
• BRAF Gene Mutation Detection
• EGFR Mutation Analysis
• CYP 450 2C19
• Trofile (CCR5 Trophism)
• PhenoSense, PhenoSense GT
• HerMark
• Grew Outcome Improvement Programs
• Relaunch of CKD program
• Litholink kidney stone program
2010 Accomplishments
Maintained Price
• Managed care stability
• Pricing discipline has offset
1.9% Medicare rate decrease
• Promoted high-value tests
• Other recent benefits
• Monogram
• Canadian exchange rate
• Impact from lost government
contracts
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Controlled Costs
• Y/Y gross margin improvement for
three consecutive quarters
• Sysmex contract
• Fully automated hematology
operations
• One of largest lab automation
projects ever undertaken
• Bad debt reduction of 50bp in
the first half of 2010
• Continued to optimize supply chain
• Used efficiency gains to improve
physician and patient experiences
2010 Accomplishments
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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