Labcorp announces 2022 first quarter results
Company Raises Full-Year Revenue and EPS Guidance
- Revenue: Q1 of
$3.9 billion versus$4.2 billion last year - Diluted EPS: Q1 of
$5.23 versus$7.82 last year - Adjusted EPS: Q1 of
$6.11 versus$8.79 last year - Free Cash Flow: Q1 of
$239 million versus$1.1 billion last year - Announced initiation of quarterly dividend, with
$0.72 per share for the second quarter - Entered into several new strategic health system collaborations
- Full-Year 2022 Guidance: Adjusted EPS improved to
$18.25 to$21.00 and Free Cash Flow unchanged at$1.7 billion to$1.9 billion
“Labcorp continues to advance our strategy through science, innovation and technology,” said
During the quarter,
The company announced a quarterly dividend of
Consolidated Results
First Quarter Results
Revenue for the quarter was
Operating income for the quarter was
Net earnings for the quarter were
Operating cash flow for the quarter was
At the end of the quarter, the company’s cash balance and total debt were
First Quarter Segment Results
The following segment results exclude amortization, restructuring charges, special items, and unallocated corporate expenses.
Diagnostics
Revenue for the quarter was
Total volume (measured by requisitions) decreased by (5.0%) as organic volume decreased by (5.3%) and acquisition volume contributed 0.3%. Organic volume was impacted by a (8.5%) decrease in COVID-19 Testing, partially offset by a 3.1% increase in Base Business. Price/mix decreased by (6.0%) due to a decrease in COVID-19 Testing of (6.3%), partially offset by acquisitions of 0.2% and organic Base Business growth of 0.1%. Base Business volume was up 4.4% compared to the Base Business last year, while price/mix was up 1.2%.
Adjusted operating income for the quarter was
Drug Development
Revenue for the quarter was
Adjusted operating income for the quarter was
Net orders and net book-to-bill during the trailing twelve months were
Outlook for 2022
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(Dollars in billions, except per share data) |
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Previous |
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Updated |
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Results |
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2022 Guidance |
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2022 Guidance |
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2021 |
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Low |
High |
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Low |
High |
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Revenue |
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Total Labcorp Enterprise (1)(2) |
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(6.5%) |
(1.5%) |
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(5.5%) |
(1.5%) |
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Base Business (2) |
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7.5% |
10.0% |
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8.0% |
10.0% |
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COVID-19 Testing (2) |
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(75.0%) |
(60.0%) |
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(70.0%) |
(60.0%) |
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(17.5%) |
(11.5%) |
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(15.5%) |
(11.5%) |
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Base Business |
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3.5% |
6.0% |
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4.0% |
6.0% |
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COVID-19 Testing |
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(75.0%) |
(60.0%) |
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(70.0%) |
(60.0%) |
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7.0% |
9.5% |
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6.0% |
8.5% |
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Base Business |
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7.5% |
10.0% |
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6.5% |
9.0% |
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Adjusted EPS |
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Free Cash Flow (5) |
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(1) 2022 Updated Guidance includes an impact from foreign currency translation of (0.4%), previous 2022 Guidance was (0.2%) |
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(2) Enterprise level revenue is presented net of intersegment transaction eliminations, including Drug Development COVID-19 Testing revenue |
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(3) 2022 Updated Guidance includes an impact from foreign currency translation of 0.0%, previous 2022 Guidance was (0.1%) |
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(4) 2022 Updated Guidance includes an impact from foreign currency translation of (1.1%), previous 2022 Guidance was (0.4%) |
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(5) Free Cash Flow consists of operating cash flow less capital expenditures |
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Use of Adjusted Measures
The company has provided in this press release and accompanying tables “adjusted” financial information that has not been prepared in accordance with GAAP, including adjusted net income, adjusted EPS (or adjusted net income per share), adjusted operating income, adjusted operating margin, free cash flow, and certain segment information. The company believes these adjusted measures are useful to investors as a supplement to, but not as a substitute for, GAAP measures, in evaluating the company’s operational performance. The company further believes that the use of these non-GAAP financial measures provides an additional tool for investors in evaluating operating results and trends, and growth and shareholder returns, as well as in comparing the company’s financial results with the financial results of other companies. However, the company notes that these adjusted measures may be different from and not directly comparable to the measures presented by other companies. Reconciliations of these non-GAAP measures to the most comparable GAAP measures and an identification of the components that comprise "special items" used for certain adjusted financial information are included in the tables accompanying this press release.
The company today is providing an investor relations presentation with additional information on its business and operations, which is available in the investor relations section of the company's website at http://www.labcorp.com. Analysts and investors are directed to the website to review this supplemental information.
A conference call discussing
About
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking statements, including, but not limited to, statements with respect to (i) the estimated 2022 guidance and related assumptions, (ii) the impact of various factors on operating and financial results, including the projected impact of the COVID-19 pandemic on the company’s businesses, operating results, cash flows and/or financial condition, as well as general economic and market conditions, (iii) the company's responses to the COVID-19 pandemic, (iv) future business strategies, (v) expected savings and synergies (including from the LaunchPad initiative and from acquisitions), and (vi) opportunities for future growth.
Each of the forward-looking statements is subject to change based on various important factors, many of which are beyond the company’s control, including without limitation, the trading price of the company’s stock, competitive actions and other unforeseen changes and general uncertainties in the marketplace, changes in government regulations, including healthcare reform, customer purchasing decisions, including changes in payer regulations or policies, other adverse actions of governmental and third-party payers, changes in testing guidelines or recommendations, federal, state, and local government responses to the COVID-19 pandemic, the impact of global geopolitical events, the effect of public opinion on the company’s reputation, adverse results in material litigation matters, the impact of changes in tax laws and regulations, failure to maintain or develop customer relationships, the company's ability to develop or acquire new products and adapt to technological changes, failure in information technology, systems or data security, the impact of potential losses under repurchase agreements, adverse weather conditions, the number of revenue days in a financial period, employee relations, personnel costs, inflation, and the effect of exchange rate fluctuations. These factors, in some cases, have affected and in the future (together with other factors) could affect the company’s ability to implement the company’s business strategy and actual results could differ materially from those suggested by these forward-looking statements. As a result, readers are cautioned not to place undue reliance on any of the forward-looking statements.
The company has no obligation to provide any updates to these forward-looking statements even if its expectations change. All forward-looking statements are expressly qualified in their entirety by this cautionary statement. Further information on potential factors, risks and uncertainties that could affect operating and financial results is included in the company’s most recent Annual Report on Form 10-K and subsequent Forms 10-Q, including in each case under the heading RISK FACTORS, and in the company’s other filings with the
- End of Text -
- Tables to Follow -
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LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Millions, except per share data) |
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Three Months Ended |
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2022 |
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2021 |
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Revenues |
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$ |
3,899.6 |
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$ |
4,161.5 |
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Cost of revenues |
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2,666.7 |
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2,562.5 |
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Gross profit |
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1,232.9 |
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1,599.0 |
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Selling, general and administrative expenses |
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464.1 |
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429.8 |
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Amortization of intangibles and other assets |
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67.1 |
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92.1 |
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1.2 |
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— |
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Restructuring and other charges |
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12.6 |
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19.2 |
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Operating income |
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687.9 |
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1,057.9 |
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Other income (expense): |
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Interest expense |
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(42.2 |
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(48.5 |
) |
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Equity method income, net |
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3.4 |
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4.5 |
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Investment income |
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1.1 |
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2.4 |
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Other, net |
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(10.1 |
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5.5 |
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Earnings before income taxes |
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640.1 |
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1,021.8 |
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Provision for income taxes |
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148.0 |
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251.7 |
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Net earnings |
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492.1 |
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770.1 |
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Less: Net earnings attributable to the noncontrolling interest |
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(0.5 |
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(0.5 |
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Net earnings attributable to |
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$ |
491.6 |
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$ |
769.6 |
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Basic earnings per common share |
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$ |
5.27 |
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$ |
7.88 |
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Diluted earnings per common share |
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$ |
5.23 |
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$ |
7.82 |
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Weighted average basic shares outstanding |
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93.2 |
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97.6 |
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Weighted average diluted shares outstanding |
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94.0 |
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98.5 |
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LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Millions) |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
$ |
1,233.5 |
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$ |
1,472.7 |
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Accounts receivable |
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2,239.6 |
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2,261.5 |
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Unbilled services |
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800.0 |
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716.8 |
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Supplies inventory |
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440.7 |
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401.4 |
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Prepaid expenses and other |
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515.7 |
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478.1 |
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Total current assets |
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5,229.5 |
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5,330.5 |
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Property, plant and equipment, net |
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2,807.6 |
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2,815.4 |
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8,165.8 |
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7,958.9 |
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Intangible assets, net |
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3,972.5 |
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3,735.5 |
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Joint venture partnerships and equity method investments |
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62.2 |
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60.9 |
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Deferred income taxes |
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28.2 |
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21.6 |
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Other assets, net |
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462.6 |
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462.6 |
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Total assets |
$ |
20,728.4 |
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$ |
20,385.4 |
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LIABILITIES AND SHAREHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
$ |
623.6 |
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$ |
621.3 |
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Accrued expenses and other |
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1,260.4 |
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1,404.1 |
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Unearned revenue |
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556.0 |
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558.5 |
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Short-term operating lease liabilities |
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189.5 |
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187.0 |
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Short-term finance lease liabilities |
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10.4 |
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10.5 |
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Short-term borrowings and current portion of long-term debt |
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1.6 |
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1.5 |
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Total current liabilities |
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2,641.5 |
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2,782.9 |
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Long-term debt, less current portion |
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5,383.3 |
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5,416.5 |
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Operating lease liabilities |
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623.7 |
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642.5 |
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Financing lease liabilities |
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83.2 |
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84.6 |
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Deferred income taxes and other tax liabilities |
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765.2 |
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762.9 |
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Other liabilities |
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489.8 |
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402.0 |
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Total liabilities |
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9,986.7 |
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10,091.4 |
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Commitments and contingent liabilities |
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Noncontrolling interest |
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20.6 |
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20.6 |
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Shareholders’ equity: |
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Common stock, 92.9 and 93.1 shares outstanding at |
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8.5 |
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8.5 |
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Additional paid-in capital |
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29.1 |
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— |
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Retained earnings |
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10,948.4 |
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10,456.8 |
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Accumulated other comprehensive loss |
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(264.9 |
) |
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(191.9 |
) |
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Total shareholders’ equity |
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10,721.1 |
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10,273.4 |
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Total liabilities and shareholders’ equity |
$ |
20,728.4 |
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$ |
20,385.4 |
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LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Millions) |
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Three Months Ended |
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2022 |
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2021 |
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CASH FLOWS FROM OPERATING ACTIVITIES: |
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Net earnings |
$ |
492.1 |
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$ |
770.1 |
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Adjustments to reconcile net earnings to net cash provided by operating activities: |
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Depreciation and amortization |
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161.5 |
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183.9 |
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Stock compensation |
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38.2 |
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28.7 |
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Operating lease right-of-use asset expense |
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48.9 |
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48.3 |
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1.2 |
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— |
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Deferred income taxes |
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(19.0 |
) |
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(27.8 |
) |
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Other |
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(3.6 |
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(3.2 |
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Change in assets and liabilities (net of effects of acquisitions and divestitures): |
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Decrease in accounts receivable |
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20.4 |
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146.7 |
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Increase in unbilled services |
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(84.5 |
) |
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(42.5 |
) |
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Increase in supplies inventory |
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(37.4 |
) |
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(4.7 |
) |
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Increase in prepaid expenses and other |
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(41.1 |
) |
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(51.9 |
) |
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Decrease in accounts payable |
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(5.5 |
) |
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(16.9 |
) |
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Increase (decrease) in unearned revenue |
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(2.9 |
) |
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31.8 |
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Increase (decrease) in accrued expenses and other |
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(212.3 |
) |
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95.1 |
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Net cash provided by operating activities |
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356.0 |
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1,157.6 |
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CASH FLOWS FROM INVESTING ACTIVITIES: |
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Capital expenditures |
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(117.2 |
) |
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(95.4 |
) |
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Proceeds from sale of assets |
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1.0 |
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2.6 |
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Proceeds from sale or distribution of investments |
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0.4 |
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— |
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Investments in equity affiliates |
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(2.2 |
) |
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(5.5 |
) |
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Acquisition of businesses, net of cash acquired |
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(455.1 |
) |
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(34.1 |
) |
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Net cash used for investing activities |
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(573.1 |
) |
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(132.4 |
) |
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CASH FLOWS FROM FINANCING ACTIVITIES: |
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Payments on term loan |
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— |
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(375.0 |
) |
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Net share settlement tax payments from issuance of stock to employees |
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(27.3 |
) |
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(28.1 |
) |
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Net proceeds from issuance of stock to employees |
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18.2 |
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24.7 |
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Purchase of common stock |
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— |
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(68.5 |
) |
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Other |
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(8.6 |
) |
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(3.2 |
) |
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Net cash used for financing activities |
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(17.7 |
) |
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(450.1 |
) |
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Effect of exchange rate changes on cash and cash equivalents |
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(4.4 |
) |
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(5.1 |
) |
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Net increase (decrease) in cash and cash equivalents |
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(239.2 |
) |
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570.0 |
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Cash and cash equivalents at beginning of period |
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1,472.7 |
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1,320.8 |
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Cash and cash equivalents at end of period |
$ |
1,233.5 |
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$ |
1,890.8 |
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Condensed Combined Non-GAAP Segment Information (Dollars in Millions) |
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Three Months Ended |
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2022 |
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2021 |
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Diagnostics |
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Revenues |
$ |
2,454.1 |
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$ |
2,757.8 |
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Adjusted Operating Income |
$ |
683.1 |
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$ |
991.6 |
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Adjusted Operating Margin |
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27.8 |
% |
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36.0 |
% |
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Drug Development |
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Revenues |
$ |
1,459.3 |
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$ |
1,438.2 |
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Adjusted Operating Income |
$ |
168.6 |
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$ |
234.1 |
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Adjusted Operating Margin |
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11.6 |
% |
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16.3 |
% |
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Consolidated |
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Revenues |
$ |
3,899.6 |
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$ |
4,161.5 |
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Adjusted Segment Operating Income |
$ |
851.7 |
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$ |
1,225.7 |
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Unallocated corporate expense |
$ |
(57.7 |
) |
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$ |
(43.8 |
) |
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Consolidated Adjusted Operating Income |
$ |
794.0 |
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$ |
1,181.9 |
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Adjusted Operating Margin |
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20.4 |
% |
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28.4 |
% |
The consolidated revenue and adjusted segment operating income are presented net of intersegment transaction eliminations and other amounts not used in determining segment performance. Adjusted operating income and adjusted operating margin are non-GAAP measures. See the subsequent reconciliation of non-GAAP financial measures.
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Reconciliation of Non-GAAP Measures (Dollars in millions, except per share data) |
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Three Months Ended |
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2022 |
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2021 |
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Adjusted Operating Income |
|
|
|
|
||||
|
Operating Income |
|
$ |
687.9 |
|
|
$ |
1,057.9 |
|
|
Amortization of intangibles and other assets (a) |
|
|
67.1 |
|
|
|
92.1 |
|
|
Restructuring and other charges (b) |
|
|
12.6 |
|
|
|
19.2 |
|
|
Acquisition and disposition-related costs (c) |
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|
11.4 |
|
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|
5.7 |
|
|
COVID-19 related costs (d) |
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|
9.2 |
|
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|
5.9 |
|
|
|
|
|
1.2 |
|
|
|
— |
|
|
Retention bonuses (f) |
|
|
0.9 |
|
|
|
— |
|
|
Other (g) |
|
|
3.7 |
|
|
|
1.1 |
|
|
Adjusted operating income |
|
$ |
794.0 |
|
|
$ |
1,181.9 |
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
||||
|
Adjusted Net Income |
|
|
|
|
||||
|
Net Income |
|
$ |
491.6 |
|
|
$ |
769.6 |
|
|
Impact of adjustments to operating income |
|
|
106.1 |
|
|
|
124.0 |
|
|
Losses on venture fund investments, net (h) |
|
|
3.1 |
|
|
|
— |
|
|
Other |
|
|
— |
|
|
|
0.5 |
|
|
Income tax impact of adjustments (i) |
|
|
(27.1 |
) |
|
|
(29.0 |
) |
|
Adjusted net income |
|
$ |
573.7 |
|
|
$ |
865.1 |
|
|
|
|
|
|
|
||||
|
Weighted average diluted shares outstanding |
|
|
94.0 |
|
|
|
98.5 |
|
|
|
|
|
|
|
||||
|
Adjusted net income per share |
|
$ |
6.11 |
|
|
$ |
8.79 |
|
|
(a) |
Amortization of intangible assets acquired as part of business acquisitions. In the fourth quarter of 2020, the company announced a rebranding resulting in an acceleration of the amortization of acquired trade names impacting amortization for the three months ended |
|
(b) |
Restructuring and other charges represent amounts incurred in connection with the elimination of redundant positions within the organization in connection with our LaunchPad initiatives and acquisitions or dispositions of businesses by the company. |
|
(c) |
Acquisition and disposition-related costs include due-diligence legal and advisory fees, retention bonuses and other integration or disposition related activities. |
|
(d) |
Costs related to incremental operating expenses and receivables reserves incurred as a result of the COVID-19 pandemic. |
|
(e) |
During the first quarter of 2021, the company incurred incremental employee costs and determined that certain receivables and long-lived assets related to its |
|
(f) |
Due to the current tight labor markets, the company implemented a targeted retention program within the Drug Development segment for a select group of positions experiencing higher than normal turnover. |
|
(g) |
Represents various non-operational items including rebranding, strategic review, litigation, data breach costs, insurance reimbursements, LaunchPad system implementation costs, and acquisition purchase accounting adjustments. |
|
(h) |
The company makes venture fund investments in companies or investment funds developing promising technology related to its operations. The company recorded net gains and losses related to several distributions from venture funds, increases in the market value of investments, and impairments of other investments due to the underlying performance of the investments. |
|
(i) |
Income tax impact of adjustments calculated based on the tax rate applicable to each item. |
# # #
View source version on businesswire.com: https://www.businesswire.com/news/home/20220427006220/en/
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