Laboratory Corp. of America Holdings (NYSE:LH) posted fourth-quarter sales of $1.17 billion for the three months ended Dec. 31, 2009, up 4.6 percent compared with $1.12 billion during the same period in 2008. Net income rose 20.8 percent to $142.7 million, compared with $118.1 million during Q4 2008:
Laboratory Corporation of America® Holdings
Announces 2009 Fourth Quarter and Full Year Results
Revenue Growth Drives Adjusted EPS of $1.16 and Operating Cash
Flow of $224.7 Million
BURLINGTON, N.C.–(BUSINESS WIRE)–Laboratory Corporation of America® Holdings (LabCorp®)
(NYSE: LH) today announced results for the quarter and year ended
December 31, 2009.
Fourth Quarter Results
Net earnings were $142.7 million, compared to $118.1 million in the
fourth quarter of 2008. Earnings per diluted share (EPS) were $1.33
compared to $1.08 in 2008. Earnings per diluted share, excluding
restructuring and other special charges recorded in both periods
(Adjusted EPS) were $1.16, compared to $1.10 in 2008.
Operating income was $215.8 million. Operating income, excluding
restructuring and other special charges (Adjusted Operating Income) was
$221.9 million, or 19.0% of net sales.
Compared to the fourth quarter of 2008, and excluding a special charge
in the prior year, revenues were $1,165.1 million, an increase of 3.4%.
Testing volume, measured by accessions, decreased 0.9% and revenue per
accession increased 4.3%. Excluding the special charge
and the consolidation of the Company’s Ontario, Canada joint
venture, revenue increased 2.8%. Testing volume decreased by 1.5% and
revenue per accession increased 4.3%. During the quarter, the
termination of two large government contracts reduced volume by 1.5%,
declines in the Company’s drugs of abuse testing business reduced volume
by 0.4% and weather reduced volume by 0.3%. Excluding these items,
volume increased by 0.7% in the quarter.
Operating cash flow for the quarter was $224.7 million, net of $3.9
million in transition payments to UnitedHealthcare. The balance of cash
at the end of the quarter was $148.5 million, and there was $75 million
outstanding under the Company’s $500 million revolving credit facility.
During the quarter, the Company repurchased $108.4 million of stock,
representing approximately 1.5 million shares.
The Company recorded pre-tax restructuring and other special charges of
$3.3 million during the fourth quarter of 2009, primarily relating to
severance payments and the closing of redundant and underutilized
facilities. The Company also adopted amendments to its employee and
executive pension plans, resulting in the recognition of a one-time net
curtailment charge of $2.8 million. In addition, the Company recorded
favorable adjustments of $21.5 million to its fourth quarter tax
provision relating to the resolution of certain state tax issues under
audit, as well as the realization of foreign tax credits.
During the fourth quarter of 2008, the Company recorded total pre-tax
restructuring and other special items of $15.4 million. Included in this
amount were $4.2 million of restructuring and other special charges
primarily related to workforce reductions and the closing of redundant
and underutilized facilities; $3.7 million of accelerated retirement
benefits related to the retirement of the Company’s Executive Vice
President, Corporate Affairs; and the special charge for a $7.5 million
cumulative revenue adjustment relating to certain historic overpayments
made by Medicare for claims submitted by a subsidiary of the Company. In
addition, the Company recorded a $7.1 million favorable adjustment to
its fourth quarter tax provision relating to tax treaty changes adopted
by the United States and Canada.
Full Year Results
Net earnings were $543.3 million, compared to $464.5 million in 2008.
EPS were $4.98 compared to $4.16 in 2008. Adjusted EPS were $4.89
compared to $4.60 in 2008. Operating income was $935.9 million. Adjusted
Operating Income was $954.9 million, or 20.3% of net sales.
Compared to 2008, and excluding a special charge in the prior year,
revenues were $4,694.7 million, an increase of 4.0%. Testing volume,
measured by accessions, increased 1.5% and revenue per accession
increased 2.5%. Excluding the special charge and the consolidation of
the Company’s Ontario, Canada joint venture, revenue increased 4.3%.
Testing volume increased 0.7% and revenue per accession increased 3.6%.
Operating cash flow for 2009 was $862.4 million, net of $28.4 million in
transition payments to UnitedHealthcare, an increase of 10.4% compared
to 2008. During 2009, the company repurchased $273.5 million of stock,
representing approximately 3.9 million shares. As of December 31, 2009,
approximately $71.8 million of repurchase authorization remained
available under the Company’s previously approved repurchase plan.
“We are very pleased with our fourth quarter and 2009 results, given the
challenging economic environment. We remain optimistic about the growth
opportunities that lie ahead for us in 2010, and we are well positioned
to capitalize on them,” said David P. King, Chairman and Chief Executive
Outlook for 2010
The Company expects revenue growth of approximately 2.5% – 4.5%;
Adjusted EPS in the range of $5.35 to $5.55, excluding the impact of any
share repurchase activity after December 31, 2009; operating cash flow
of approximately $870 million, excluding any transition payments to
UnitedHealthcare; and capital expenditures of approximately $135 million.
Share Repurchase Program
The Company announced today that its Board of Directors has authorized a
new stock repurchase program under which LabCorp may purchase up to an
aggregate of an additional $250 million of its Common Stock. Any
purchases under LabCorp’s stock repurchase programs may be made from
time to time in the open market or in privately negotiated transactions
and may be initiated and discontinued at any time.