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Laboratory Corporation Of America® Holdings Announces 2012 Third Quarter Results

A conference call discussing LabCorp's quarterly results will be held today at 9:00 a.m. Eastern Time and is available by dialing 866-831-6243 (617-213-8855 for international callers). The access code is 14296203. A telephone replay of the call will be available through October 25, 2012 and can be heard by dialing 888-286-8010 (617-801-6888 for international callers). The access code for the replay is 29546776. A live online broadcast of LabCorp’s quarterly conference call on October 18, 2012 will be available at http://www.labcorp.com/ or at http://www.streetevents.com/ beginning at 9:00 a.m. Eastern Time. This webcast will be archived and accessible continuing through November 18, 2012.

About LabCorp ®

Laboratory Corporation of America ® Holdings, an S&P 500 company, is a pioneer in commercializing new diagnostic technologies and the first in its industry to embrace genomic testing. With annual revenues of $5.5 billion in 2011, over 31,000 employees worldwide, and more than 220,000 clients, LabCorp offers more than 4,000 tests ranging from routine blood analyses to reproductive genetics to companion diagnostics. LabCorp furthers its scientific expertise and innovative clinical testing technology through its LabCorp Specialty Testing Group: The Center for Molecular Biology and Pathology, National Genetics Institute, ViroMed Laboratories, Inc., The Center for Esoteric Testing, Litholink Corporation, Integrated Genetics, Integrated Oncology, DIANON Systems, Inc., Monogram Biosciences, Inc., Colorado Coagulation, and Endocrine Sciences. LabCorp conducts clinical trials testing through its LabCorp Clinical Trials division. LabCorp clients include physicians, government agencies, managed care organizations, hospitals, clinical labs, and pharmaceutical companies. To learn more about our organization, visit our Web site at: www.labcorp.com.

This press release contains forward-looking statements. Each of the forward-looking statements is 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 LabCorp’s financial results is included in the Company’s Form 10-K for the year ended December 31, 2011, and subsequent SEC filings.

LABORATORY CORPORATION OF AMERICA HOLDINGS

Consolidated Statements of Operations
(in millions, except per share data)
           
Three Months Ended Nine Months Ended
September 30, September 30,
2012 2011 2012 2011
 
Net sales $ 1,419.4 $ 1,404.5 $   4,266.1 $   4,176.2
Cost of sales 863.3 836.0 2,554.4 2,451.1
Selling, general and administrative 285.1 283.8 835.8 889.3
Amortization of intangibles and other assets 21.1 21.2 63.1 64.6
Restructuring and other special charges   4.8     24.1       4.6       70.3  
 
Operating income   245.1     239.4       808.2       700.9  
 
Other income (expense) 0.5 (1.7 ) (6.7 ) (1.8 )
Investment income 0.3 0.2 0.7 0.7
Interest expense (24.1 ) (20.3 ) (66.9 ) (65.3 )
Equity method income, net   5.1     2.5       17.4       6.6  
Earnings before income taxes 226.9 220.1 752.7 641.1
Provision for income taxes   78.5     82.5       288.5       246.2  
Net earnings 148.4 137.6 464.2 394.9
Less net earnings attributable to noncontrolling interest   (0.4 )   (3.3 )     (1.3 )     (10.6 )
Net earnings attributable to Laboratory Corporation of America Holdings $ 148.0   $ 134.3   $   462.9   $   384.3  
 

Adjusted Operating Income

Operating Income $ 245.1 $ 239.4 $ 808.2 $ 700.9
Restructuring and other special charges 4.8 24.1 4.6 105.9
Acquisition fees and expenses   9.0     -       9.9       -  
Adjusted operating income $ 258.9   $ 263.5   $   822.7   $   806.8  
 

Adjusted EPS Excluding Amortization

Diluted earnings per common share $ 1.53 $ 1.31 $ 4.72 $ 3.76
Impact of restructuring and other special charges 0.10 0.17 0.15 0.65
Amortization expense   0.13     0.13       0.40       0.39  
Adjusted EPS Excluding Amortization $ 1.76   $ 1.61   $   5.27   $   4.80  
 
Weighted average shares outstanding   96.8     102.2       98.1       102.3  
LABORATORY CORPORATION OF AMERICA HOLDINGS
Consolidated Balance Sheets
(in millions, except per share data)
       
September 30, December 31,
2012 2011
 
Cash and short term investments $ 466.0 $ 159.3
Accounts receivable, net 768.9 699.8
Property, plant and equipment 612.2 578.3
Intangible assets and goodwill, net 4,549.9 4,302.5
Investments in joint venture partnerships 80.7 76.8
Other assets   336.6     319.9  
$ 6,814.3   $ 6,136.6  
 
Zero-coupon subordinated notes $ 135.0 $ 135.5
Senior notes 2,525.1 1,525.5
Credit facility - 560.0
Other liabilities 1,416.6 1,391.9
Noncontrolling interest 20.9 20.2
Shareholders' equity   2,716.7     2,503.5  
$ 6,814.3   $ 6,136.6  
 
 
Consolidated Statement of Cash Flow Data
(in millions, except per share data)
 

For the Nine Months Ended

September 30, September 30,
2012 2011
 
Net cash provided by operating activities $ 587.2 $ 577.0
Net cash used for investing activities (412.3 ) (159.0 )
Net cash provided by (used for) financing activities 129.9 (561.6 )
Effect of exchange rates on cash   1.9     (1.3 )
Net (decrease) increase in cash 306.7 (144.9 )
Cash at beginning of period   159.3     230.7  
Cash at end of period $ 466.0   $ 85.8  
 

Free Cash Flow:

Net cash provided by operating activities $ 587.2 $ 577.0
Less: Capital expenditures   (112.4 )   (115.6 )
Free cash flow $ 474.8   $ 461.4  

Notes to Financial Tables

1) During the third quarter of 2012, the Company recorded net restructuring and other special charges of $4.8 million. The charges consisted of $5.2 million in severance related liabilities and $1.2 million in net facility-related costs primarily associated with ongoing consolidation of recent acquisitions and other operations; partially offset by the reversal of previously established reserves of $0.9 million in unused severance and $0.7 million in unused facility-related costs. The Company also recorded $9.0 million in fees associated with the successful completion of its acquisition of MEDTOX Scientific, Inc. (“MEDTOX”) on July 31, 2012. The after tax impact of these charges decreased net earnings for the three months ended September 30, 2012, by $9.5 million and diluted earnings per share by $0.10 ($9.5 million divided by 96.8 million shares).

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