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
FEBRUARY 14, 2001
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(Date of earliest event reported)
LABORATORY CORPORATION OF AMERICA HOLDINGS
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(Exact name of registrant as specified in its charter)
DELAWARE 1-11353 13-3757370
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
358 SOUTH MAIN STREET, BURLINGTON, NORTH CAROLINA 27215
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(Address of principal executive offices)
336-229-1127
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(Registrant's telephone number, including area code)
ITEM 9. Regulation FD Disclosure.
Summary information of the Company dated
February 14, 2001.
This information 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.
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, 1999 and subsequent filings,
and will be available in the Form 10-K for the year ended
December 31, 2000, when filed.
Overview of LabCorp
- Nationwide network of 24 primary testing facilities and 900
patient service centers
- Conducts tests on 260,000 specimens daily
- Offers more than 4,000 test procedures
- Serves over 200,000 physicians and other health care
providers
- More than 18,000 employees nationwide
The Clinical Laboratory Testing Market
US market is approximately $30-32 billion
CLINICAL LABORATORY TESTING INDEPENDENT CLINICAL LABORATORIES
Hospitals 49% All others 86%
Physician Offices 13% LabCorp($1.699b) 14%
Independent Clinical Labs 39%
Source: Lab Industry Reports 2/99 & 1999 YE revenue
for LabCorp
Strategic Goals
- Strengthen standing as a national laboratory that provides a
full range of laboratory services
- Leverage broad-reaching infrastructure to expand leadership
position in esoteric and genomic testing
2000 Strategic Approach
- Maintain national coverage for all key customers
- Expand upon leading position in genomic testing
- Evaluate appropriate acquisition candidates
- Continue to move to single billing system
- Develop strategy to tap full potential of LabCorp's extensive
database
Genomic Strategy
UTILIZE DNA TESTING LEADERSHIP TO EXECUTE GENOMIC LEADERSHIP
STRATEGY
- First to offer HIV PCR
- First to offer HIV viral load
- First to offer HIV phenotyping and genotyping
(Virco/ViroLogic)
- Leader in hepatitis C PCR testing (CMBP;NGI)
- Leader in pharmacogenomic clinical trials testing
(Her-2 neu/Herceptin)
- Partner with specialized test companies
- Acquire specialized test companies
- Use clinical trials to identify diagnostic opportunities first
- License/co-develop new technologies (NGI-oncology markers)
- Provide bridge from "Classic Genomic" companies to first
patient applications diagnostic testing
Financial Performance
Price & Volumes: Trends by Payor Type
*Pro-Forma
1998 1999 2000
PPA Accessions PPA Accessions PPA Accessions
$ millions $ millions $ millions
---------------- ---------------- -----------------
Client (Physicians) 22.21 25.9 21.46 27.0 22.42 27.1
Patient 79.62 2.2 92.56 2.3 102.87 2.2
Third Party 29.13 12.2 27.75 11.7 29.80 10.3
(MC/MD/Insurance)
Managed Care
- Capitated 9.88 9.1 10.06 8.4 9.61 10.6
- Fee for service 40.43 10.3 39.28 12.7 42.32 16.0
Total 26.09 19.4 27.68 21.1 29.25 26.6
LabCorp Total $27.01 59.7 $27.35 62.1 $28.98 66.2
*(1) Adjusted accessions for Client
(2) Reported PPA for Client was $22.36 with 25.9 accessions
(3) Reported PPA for Company was $27.84 with 61.0 accessions
Financial Performance
Revenue Analysis by Business Area
YTD DEC 1999 YTD DEC 2000
REVENUE ACCN %ACCNS PPA REVENUE ACCNS %ACCNS PPA
$Millions 000 to total $ $Millions 000 to total $
--------- ----- -------- ----- --------- ----- -------- ----
CMBP 102.8 1,011.3 1.7% 101.61 132.4 1,170.9 1.8% 113.08
Powell
Esoteric 156.9 3,555.3 5.8% 44.15 179.3 4,026.7 6.1% 44.54
Core 1,439.0 56,451.5 92.5% 25.49 1,607.6 61,028.9 92.1% 26.34
Total 1,698.7 61,018.1 100.0% 27.84 1,919.3 66,226.5 100.0% 28.98
Financial Performance
Revenue Analysis by Business Area
99 VS 00
PPA
Incr/
(Decr)
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CMBP 11.3%
Powell
Esoteric 0.9%
Core 3.3%
Total 4.1%
Year-End Financials
12-31-98 12-31-99 12-31-00*
Revenue 1,612.6 1,698.7 1,919.3
Operating Expense 1,485.0 1,549.0 1,669.2
Operating Income 127.6 149.7 250.1
Margin 7.9% 8.8% 13.0%
EBITDA 210.4 233.4 339.7
Margin 13.0% 13.7% 17.7%
Bad Debt % to revenue 10.2% 11.3% 10.2%
DSO 83 74 68
*2000 actuals excludes restructuring charge of $4.5. If this
charge is included, operating income would be $245.6 and EBITDA
would be $335.2.
Fourth Quarter Operating Results
12/30/99 12/30/00*
Revenue 422.7 486.1
Operating Expense 389.6 434.0
Operating Income 33.1 52.1
Margin 7.8% 10.7%
EBITDA 54.5 76.2
Margin 12.9% 15.7%
Bad Debt % to revenue 10.2% 10.2%
DSO 74 68
*2000 actuals excludes restructuring charge of $4.5. If this
charge is included, operating income would be $47.6 and EBITDA
would be $71.7
..
2000 Fourth Quarter Financial Achievements
- Increased revenues 15.0% (volume 8.0%; price 7.0%)
- Increased EBITDA 40%
- Increased diluted EPS ten-fold
2000 Financial Achievements
- Increased revenues 13.0% (volume 9.0%; price 4.0%)
- Increased EBITDA 46%
- Increased diluted EPS 186%*
- Increased operating cash flow 37.0%
- DSO reduced 6 days from year end 1999 to 68 days
- Reduced interest rate to LIBOR plus 37.5 basis points
*Does not include effects of a $4.5 million restructuring charge.
If this charge is included, diluted EPS increased 178.0%
2000 Accomplishments
- Six acquisitions, including National Genetics Institute in
Los Angeles
- 1 for 10 Reverse Stock Split completed
- Preferred Stock called for redemption
- Contracts with Cigna, Aetna U.S. Healthcare, UnitedHealthcare,
Health Trust and AmeriNet
- Successful placement of 6.5 million shares formerly held by
Roche
- S & P rating increased to investment grade
- Introduced HIV GENOSURE -TRADEMARK-, new in-house
genotyping assay
Financial Goals for 2001
- Increase overall revenues 10-11%
- Increase EBITDA margins to approximately
20.5% - 21.0% of sales
- EPS growth of approximately 45% - 50% compared to 2000
- Reduce debt by approximately $132 million
- Lower DSO to the mid 60's range
Opportunity for Investors
- A proven strategy for growth
- LabCorp is a pioneer in identifying and commercializing
innovative technologies-first to fully embrace molecular
diagnostics
- LabCorp's national infrastructure connects large scale
proficiency with wide scale technological expertise
- New advances in scientific research will generate growth and
demand for molecular testing
IOM STUDY
- Requested by Congress - Balanced Budget Act of 1997
- "Clinical lab tests are an essential component of health
care. and are likely to play an even greater role in the
detection, treatment and monitoring of disease in the 21st
Century"
- Includes 12 positive recommendations for Medicare payment
system
- Recognizes need to take action to ensure future access of
beneficiaries to important new diagnostic testing
technologies
SIGNATURES
Pursuant to the requirements of the Securities and 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
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(Registrant)
By:/s/ BRADFORD T. SMITH
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Bradford T. Smith
Executive Vice President,
and Secretary
Date: March 6, 2002