Labcorp Announces 2024 Third Quarter Results
Updates Full-Year Guidance
- Results from Continuing Operations for third quarter 2024 versus last year:
- Revenue:
$3.28 billion versus$3.06 billion - Diluted EPS:
$2.00 versus$2.11 - Adjusted EPS:
$3.50 versus$3.38 - Free Cash Flow:
$162 million versus$171 million
- Revenue:
- Updated Full-Year 2024 Guidance:
- Revenue range of 6.6% to 7.3%; midpoint unchanged
- Adjusted EPS range of
$14.30 to$14.70 ; midpoint down$0.10 , due to the negative impact from weather of approximately$0.15 - Free Cash Flow of
$850 million to$980 million
- Announced three new acquisitions/lab management agreements, and closed two acquisitions during the quarter that support growth initiatives
"
- Announced an agreement to acquire select operating assets of
Ballad Health's outreach lab services, expanding the company's laboratory and testing capabilities to rural communities inTennessee ,Virginia ,North Carolina andKentucky . - Entered into a strategic collaboration with
Naples Comprehensive Healthcare inSouthwest Florida to manage the daily operations of its inpatient lab operations. - Signed a new agreement to acquire select assets of Lab Works, an independent clinical laboratory located in
Alabama . - Closed the previously announced acquisition of select assets of
BioReference Health's laboratory testing business. - Completed the acquisition of select assets of Invitae ("Invitae"), extending
Labcorp's leadership in specialty testing and ability to utilize genetic data to improve clinical trials and treatment regimens in oncology and select rare diseases.
The company continues to make strides in science, technology, and innovation:
- Announced an expanded collaboration with Ultima Genomics to utilize its UG 100TM sequencing solution and ppmSeqTM technology to explore new whole genome sequencing clinical applications, including MRD in patients with early-stage solid tumor cancers.
- Received De Novo marketing authorization from the FDA for PGDx elio plasma focus Dx, the industry's only kitted, pan-solid tumor liquid biopsy test.
- Expanded Labcorp OnDemand offerings with additional consumer-initiated tests, including Syphilis and Luteinizing Hormone tests.
- Introduced a new Order Tracker Experience for Diagnostics customers, offering the majority of providers real-time visibility of test order status.
- Announced the expansion of its women's health solutions to include a personalized, comprehensive Postpartum Experience, through
Ovia Health byLabcorp . - Subsequent to the quarter, announced an exclusive agreement with NowDiagnostics (NOWDx) to distribute the first over-the-counter, point-of-care Syphilis blood test granted marketing authorization by the FDA.
On
LABCORP HOLDINGS INC. CONSOLIDATED RESULTS | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
2024 | 2023 | Delta | 2024 | 2023 | Delta | |||||||
Revenue Summary (Dollars in billions) | ||||||||||||
Total Revenue | 7.4 % | $ 9.68 | $ 9.13 | 6.0 % | ||||||||
Organic | 4.2 % | 3.4 % | ||||||||||
Base Business (1) | 4.8 % | 4.5 % | ||||||||||
COVID 19 Testing (2) | (0.6 %) | (1.1 %) | ||||||||||
Acquisitions net of Divestitures | 3.1 % | 2.4 % | ||||||||||
Foreign Exchange | 0.1 % | 0.2 % | ||||||||||
(1) Base Business includes | ||||||||||||
(2) COVID-19 Testing represents COVID-19 PCR Testing. | ||||||||||||
Earnings Summary (Dollars in millions, except per share data) | ||||||||||||
Operating Income ("OI") | $ 254.1 | $ 252.3 | ||||||||||
OI as % of Revenue | 7.7 % | 8.3 % | (50) bps | 9.0 % | 9.3 % | (30) bps | ||||||
Adjustments (3) | $ 187.0 | $ 171.6 | ||||||||||
Adjusted Operating Income ("AOI") (4) | $ 441.1 | (5) | $ 423.9 | $ 1,373.8 | $ 1,320.0 | |||||||
AOI as % of Revenue | 13.4 % | 13.9 % | (40) bps | (6) | 14.2 % | 14.5 % | (30) bps | |||||
Net Earnings from Cont. Ops | $ 169.6 | $ 183.6 | ||||||||||
Diluted EPS from Cont. Ops | $ 7.13 | $ 6.19 | ||||||||||
Adjusted EPS (4) | ||||||||||||
(3) Adjustments include amortization, impairment charges, restructuring charges, and special items. | ||||||||||||
(4) Non-GAAP financial measure[s]. See "Reconciliation of Non-GAAP Measures" for additional information. | ||||||||||||
(5) The increase in adjusted operating income was primarily due to organic demand and LaunchPad savings, | ||||||||||||
(6) The decrease in adjusted operating margin was due to Invitae. |
LABCORP HOLDINGS INC. CONSOLIDATED RESULTS | ||||||||||||
Three Months Ended | Nine Months Ended | |||||||||||
2024 | 2023 | 2024 | 2023 | |||||||||
Cash Flow Summary (Dollars in millions) | ||||||||||||
Operating Cash Flow from Cont. Ops | $ 277.3 | (7) | $ 275.5 | $ 808.6 | $ 622.7 | |||||||
Capital Expenditures | 115.8 | 104.9 | $ 377.8 | $ 286.4 | ||||||||
Free Cash Flow from Cont. Ops | $ 161.5 | $ 170.6 | $ 430.8 | $ 336.3 | ||||||||
(7) Includes a use of cash from Invitae. |
Capital Allocation Summary
- At the end of the quarter,
Labcorp's cash balance was$1.52 billion and total debt was$6.75 billion . The higher balances are due toLabcorp's financing activities to pre-fund maturing debt, over the next four months. - During the quarter, the company invested
$458.1 million on acquisitions, paid out$60.5 million in dividends, and used$75.0 million for share repurchases.
LABCORP HOLDINGS INC. Diagnostics Laboratories Segment Summary | ||||||
Three Months Ended | ||||||
2024 | 2023 | Delta | ||||
Revenue Summary (Dollars in billions) | ||||||
Total Revenue | $ 2.55 | $ 2.34 | 8.9 % | |||
Organic | 5.0 % | |||||
Base Business | 5.7 % | |||||
COVID 19 Testing | (0.7 %) | |||||
Acquisitions net of Divestitures | 4.0 % | |||||
Foreign Exchange | (0.1 %) | |||||
Earnings Summary (1) (Dollars in millions) | ||||||
Adjusted Operating Income ("AOI") (2) | $ 387.4 | $ 386.3 | ||||
AOI as % of Revenue | 15.2 % | 16.5 % | (130) bps | (3) | ||
(1) Non-GAAP financial measure[s]. See "Reconciliation of Non-GAAP Measures" for additional information. | ||||||
(2) Excludes amortization, restructuring charges, special items, and unallocated corporate expenses. | ||||||
(3) Adjusted operating margin was down due to Invitae, the impact from days and weather. |
Three Months Ended | |||
2024 | |||
Requisition | Price/Mix | ||
Delta (4) | |||
Metrics Summary (1) | |||
Total | 5.1 % | 3.8 % | |
Organic (5) | 2.2 % | 2.7 % | |
Base Business | 2.7 % | (6) | 3.0 % |
COVID 19 Testing | (0.5) % | (0.3) % | |
Acquisitions net of Divestitures | 2.8 % | 1.2 % | |
Foreign Exchange | — % | (0.1) % | |
(4) Column shows changes versus the three months ended | |||
(5) Organic price/mix includes lab management agreements. | |||
(6) Includes the negative impact from adverse weather of approximately 40 bps. |
LABCORP HOLDINGS INC. Biopharma Laboratory Services Segment Summary | ||||||
Three Months Ended | ||||||
2024 | 2023 | Delta | ||||
Revenue Summary (Dollars in millions) | ||||||
Total Revenue | $ 737.7 | $ 719.1 | 2.6 % | (1) | ||
Organic | 2.0 % | |||||
Acquisitions net of Divestitures | — % | |||||
Foreign Exchange | 0.6 % | |||||
(1) | ||||||
Earnings Summary (2) (Dollars in millions) | ||||||
Adjusted Operating Income ("AOI") (3) | $ 120.9 | (4) | $ 109.0 | |||
AOI as % of Revenue | 16.4 % | 15.2 % | 120 bps | (4) | ||
(2) Non-GAAP financial measure[s]. See "Reconciliation of Non-GAAP Measures" for additional information. | ||||||
(3) Excludes amortization, restructuring charges, special items, and unallocated corporate expenses. | ||||||
(4) Adjusted operating income and margin increased due to organic demand and LaunchPad savings, |
As of Sep, 30, | |||
2024 | |||
Metrics Summary (2) (Orders and backlog in billions) | |||
TTM Net Orders | $ 2.90 | ||
TTM BTB | 1.02 | ||
Backlog | $ 8.14 | (5) | |
Forecast Backlog Conversion | $ 2.59 | ||
(5) Backlog increased 4.6% compared to last year. |
Outlook for 2024
(Dollars in billions, except per share data) | |||||||
Previous | Updated | ||||||
Results | 2024 Guidance | 2024 Guidance | |||||
2023 | Low | High | Low | High | |||
Revenue | |||||||
Labcorp Enterprise (1)(2) | 6.4 % | 7.5 % | 6.6 % | 7.3 % | |||
6.9 % | 7.9 % | 7.2 % | 7.8 % | ||||
Biopharma Laboratory Services (3) | 3.7 % | 5.0 % | 4.7 % | 5.6 % | |||
Adjusted EPS | |||||||
Free Cash Flow from Cont. Ops(4) | |||||||
(1) 2024 Guidance includes an impact from foreign currency translation of 0.3%. | |||||||
(2) Enterprise level revenue is presented net of intersegment transaction eliminations. | |||||||
(3) 2024 Guidance includes an impact from foreign currency translation of 1.5%. | |||||||
(4) 2023 Free Cash Flow from continuing operations excluding spin-related items. | |||||||
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 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 2024 guidance and related assumptions, (ii) the spin-off of the company's Clinical Development and Commercialization Services business, now Fortrea Holdings Inc., (iii) 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 global economic and market conditions, (iv) future business strategies, (v) expected savings, synergies and other benefits to the Company, customers or patients from acquisitions and other transactions and partnerships, 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: (i) the effect of recently completed holding company reorganization on the company's business generally; (ii) the failure to receive tax-free treatment with respect to the spin-off for
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
LABCORP HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS (Dollars in Millions, except per share data) | ||||||||
Three Months Ended | Nine Months Ended | |||||||
2024 | 2023 | 2024 | 2023 | |||||
Revenues | $ 3,282.0 | $ 3,056.8 | $ 9,679.5 | $ 9,128.3 | ||||
Cost of revenues | 2,377.6 | 2,205.6 | 6,951.4 | 6,584.8 | ||||
Gross profit | 904.4 | 851.2 | 2,728.1 | 2,543.5 | ||||
Selling, general and administrative expenses | 568.6 | 525.5 | 1,634.8 | 1,488.5 | ||||
Amortization of intangibles and other assets | 63.7 | 55.7 | 186.0 | 160.6 | ||||
— | 10.2 | 2.5 | 15.2 | |||||
Restructuring and other charges | 18.0 | 7.5 | 34.6 | 30.8 | ||||
Operating income | 254.1 | 252.3 | 870.2 | 848.4 | ||||
Other income (expense): | ||||||||
Interest expense | (50.4) | (50.3) | (144.9) | (150.8) | ||||
Investment income | 3.1 | 15.9 | 7.3 | 22.6 | ||||
Equity method income (expense), net | (0.5) | (0.3) | (0.7) | (1.5) | ||||
Other, net | 4.3 | 21.1 | 43.8 | (2.7) | ||||
Earnings from continuing operations before income taxes | 210.6 | 238.7 | 775.7 | 716.0 | ||||
Provision for income taxes | 41.0 | 55.1 | 172.2 | 168.8 | ||||
Earnings from continuing operations | 169.6 | 183.6 | 603.5 | 547.2 | ||||
Earnings from discontinued operations, net of tax | — | — | — | 38.8 | ||||
Net earnings | 169.6 | 183.6 | 603.5 | 586.0 | ||||
Less: Net earnings attributable to the noncontrolling interest | (0.3) | (0.3) | (0.9) | (0.9) | ||||
Net earnings attributable to | $ 169.3 | $ 183.3 | $ 602.6 | $ 585.1 | ||||
Basic earnings per common share: | ||||||||
Basic earnings per common share continuing operations | $ 2.02 | $ 2.12 | $ 7.17 | $ 6.22 | ||||
Basic earnings per common share discontinued operations | $ — | $ — | $ — | $ 0.44 | ||||
Basic earnings per common share | $ 2.02 | $ 2.12 | $ 7.17 | $ 6.66 | ||||
Diluted earnings per common share: | ||||||||
Diluted earnings per common share continuing operations | $ 2.00 | $ 2.11 | $ 7.13 | $ 6.19 | ||||
Diluted earnings per common share discontinued operations | $ — | $ — | $ — | $ 0.44 | ||||
Diluted earnings per common share | $ 2.00 | $ 2.11 | $ 7.13 | $ 6.63 | ||||
Weighted average basic shares outstanding | 84.0 | 86.6 | 84.0 | 87.9 | ||||
Weighted average diluted shares outstanding | 84.4 | 87.0 | 84.5 | 88.3 |
LABCORP HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (Dollars in Millions) | |||
ASSETS | |||
Current assets: | |||
Cash and cash equivalents | $ 1,517.3 | $ 536.8 | |
Accounts receivable, net | 2,058.5 | 1,913.3 | |
Unbilled services | 166.3 | 185.4 | |
Supplies inventory | 483.1 | 474.6 | |
Prepaid expenses and other | 684.7 | 655.3 | |
Total current assets | 4,909.9 | 3,765.4 | |
Property, plant and equipment, net | 3,050.0 | 2,911.8 | |
6,482.4 | 6,142.5 | ||
Intangible assets, net | 3,540.7 | 3,342.0 | |
Joint venture partnerships and equity method investments | 16.9 | 26.9 | |
Other assets, net | 612.6 | 536.5 | |
Total assets | $ 18,612.5 | $ 16,725.1 | |
LIABILITIES AND SHAREHOLDERS' EQUITY | |||
Current liabilities: | |||
Accounts payable | $ 660.9 | $ 827.5 | |
Accrued expenses and other | 757.5 | 804.0 | |
Unearned revenue | 403.1 | 421.7 | |
Short-term operating lease liabilities | 184.3 | 165.8 | |
Short-term finance lease liabilities | 6.3 | 6.4 | |
Short-term borrowings and current portion of long-term debt | 1,399.9 | 999.8 | |
Total current liabilities | 3,412.0 | 3,225.2 | |
Long-term debt, less current portion | 5,352.1 | 4,054.7 | |
Operating lease liabilities | 701.3 | 648.9 | |
Financing lease liabilities | 75.2 | 78.6 | |
Deferred income taxes and other tax liabilities | 358.3 | 417.9 | |
Other liabilities | 528.2 | 409.3 | |
Total liabilities | 10,427.1 | 8,834.6 | |
Commitments and contingent liabilities | |||
Noncontrolling interest | 15.2 | 15.5 | |
Shareholders' equity: | |||
Common stock, 83.8 and 83.9 shares outstanding at | 7.6 | 7.7 | |
Additional paid-in capital | — | 38.4 | |
Retained earnings | 8,275.8 | 7,888.2 | |
Accumulated other comprehensive loss | (113.2) | (59.3) | |
Total shareholders' equity | 8,170.2 | 7,875.0 | |
Total liabilities and shareholders' equity | $ 18,612.5 | $ 16,725.1 |
LABCORP HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in Millions) | |||||||
Three Months Ended | Nine Months Ended | ||||||
2024 | 2023 | 2024 | 2023 | ||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net earnings | $ 169.6 | $ 183.6 | $ 603.5 | $ 586.0 | |||
Earnings from discontinued operations, net of tax | — | — | — | (38.8) | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 161.5 | 145.9 | 472.9 | 430.9 | |||
Stock compensation | 27.0 | 34.4 | 89.4 | 101.7 | |||
Operating lease right-of-use asset expense | 48.1 | 43.4 | 136.7 | 128.5 | |||
— | 10.2 | 2.5 | 15.2 | ||||
Deferred income taxes | (19.5) | (34.4) | (58.6) | (18.2) | |||
Other | 9.4 | 0.8 | 46.0 | 3.9 | |||
Change in assets and liabilities (net of effects of acquisitions and divestitures): | |||||||
(Increase) decrease in accounts receivable | 49.0 | (66.0) | (143.2) | (173.6) | |||
(Increase) decrease in unbilled services | (4.0) | 29.3 | 22.8 | 103.4 | |||
(Increase) decrease in supplies inventory | (25.7) | 25.8 | 2.0 | 9.7 | |||
(Increase) decrease in prepaid expenses and other | (61.4) | (44.7) | (39.8) | (74.9) | |||
Increase (decrease) in accounts payable | (86.5) | (28.3) | (138.2) | (188.6) | |||
Increase (decrease) in unearned revenue | 2.9 | 15.9 | (27.9) | 50.7 | |||
Increase (decrease) in accrued expenses and other | 6.9 | (40.4) | (159.5) | (313.2) | |||
Net cash provided by continuing operating activities | 277.3 | 275.5 | 808.6 | 622.7 | |||
Net cash provided by discontinued operating activities | — | — | — | 125.4 | |||
Net cash provided by operating activities | 277.3 | 275.5 | 808.6 | 748.1 | |||
CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
Capital expenditures | (115.8) | (104.9) | (377.8) | (286.4) | |||
Proceeds from sale of assets | 0.4 | 0.1 | 0.6 | 0.3 | |||
Proceeds from sale or distribution of investments | — | 6.7 | — | 6.7 | |||
Proceeds from sale of business | — | — | 13.5 | — | |||
Investments in equity affiliates | (5.6) | (9.7) | (42.3) | (20.1) | |||
Acquisition of businesses, net of cash acquired | (458.1) | (379.8) | (751.2) | (516.7) | |||
Net cash used in continuing investing activities | (579.1) | (487.6) | (1,157.2) | (816.2) | |||
Net cash used in discontinued investing activities | — | — | — | (24.7) | |||
Net cash used for investing activities | (579.1) | (487.6) | (1,157.2) | (840.9) | |||
CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
Proceeds from revolving credit facilities | 1,511.8 | 547.6 | 2,463.7 | 1,968.5 | |||
Payments on revolving credit facilities | (1,531.6) | (458.0) | (2,463.7) | (1,878.9) | |||
Proceeds from accounts receivable securitization | 300.0 | — | 300.0 | — | |||
Proceeds from issuance of senior notes | 2,000.0 | — | 2,000.0 | — | |||
Payments on senior notes | (600.0) | — | (600.0) | — | |||
Net share settlement tax payments from issuance of stock to employees | (0.9) | (0.9) | (38.7) | (39.6) | |||
Net proceeds from issuance of stock to employees | 26.3 | — | 53.0 | 54.4 | |||
Dividends paid | (60.5) | (63.9) | (183.0) | (192.9) | |||
Purchase of common stock | (75.0) | (1,009.0) | (175.0) | (1,009.0) | |||
Other | (21.8) | (3.6) | (29.7) | (15.0) | |||
Net cash provided by (used for) continuing financing activities | 1,548.3 | (987.8) | 1,326.6 | (1,112.5) | |||
Net cash provided by discontinued financing activities | — | — | — | 1,499.7 | |||
Net cash provided by (used for) financing activities | 1,548.3 | (987.8) | 1,326.6 | 387.2 | |||
Effect of exchange rate changes on cash and cash equivalents | 5.7 | (2.8) | 2.5 | 3.5 | |||
Net increase (decrease) in cash and cash equivalents | 1,252.2 | (1,202.7) | 980.5 | 297.9 | |||
Cash and cash equivalents at beginning of period | 265.1 | 1,930.6 | 536.8 | 430.0 | |||
Cash and cash equivalents at end of period | $ 727.9 | $ 727.9 |
LABCORP HOLDINGS INC. Condensed Combined Non-GAAP Segment Information (Dollars in Millions) | |||||||
Three Months Ended | Nine Months Ended | ||||||
2024 | 2023 | 2024 | 2023 | ||||
Revenues | $ 2,553.5 | $ 2,344.7 | $ 7,558.1 | $ 7,068.3 | |||
Adjusted Operating Income | $ 387.4 | $ 386.3 | $ 1,246.8 | $ 1,237.5 | |||
Adjusted Operating Margin | 15.2 % | 16.5 % | 16.5 % | 17.5 % | |||
Biopharma Laboratory Services | |||||||
Revenues | $ 737.7 | $ 719.1 | $ 2,155.6 | $ 2,079.4 | |||
Adjusted Operating Income | $ 120.9 | $ 109.0 | $ 328.2 | $ 287.2 | |||
Adjusted Operating Margin | 16.4 % | 15.2 % | 15.2 % | 13.8 % | |||
Consolidated | |||||||
Revenues | $ 3,282.0 | $ 3,056.8 | $ 9,679.5 | $ 9,128.3 | |||
Adjusted Segment Operating Income | $ 508.3 | $ 495.3 | $ 1,575.0 | $ 1,524.7 | |||
Unallocated corporate expense | $ (67.2) | $ (71.4) | $ (201.2) | $ (204.7) | |||
Consolidated Adjusted Operating Income | $ 441.1 | $ 423.9 | $ 1,373.8 | $ 1,320.0 | |||
Adjusted Operating Margin | 13.4 % | 13.9 % | 14.2 % | 14.5 % |
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.
LABCORP HOLDINGS INC. Reconciliation of Non-GAAP Measures (Dollars in millions, except per share data) | ||||||||
Three Months Ended | Nine Months Ended | |||||||
2024 | 2023 | 2024 | 2023 | |||||
Adjusted Operating Income | ||||||||
Operating Income | $ 254.1 | $ 252.3 | $ 870.2 | $ 848.4 | ||||
Amortization of intangibles and other assets (a) | 63.7 | 55.7 | 186.0 | 160.6 | ||||
Restructuring and other charges (b) | 18.0 | 7.5 | 34.6 | 30.8 | ||||
Acquisition and disposition-related costs (c) | 49.1 | 10.8 | 95.1 | 39.5 | ||||
Launchpad Costs (d) | 18.3 | — | 58.7 | — | ||||
Spin off transaction costs (e) | — | 19.8 | — | 71.5 | ||||
Asset impairments (f) | — | 10.2 | 2.5 | 15.2 | ||||
Other | 19.5 | 44.9 | 63.0 | 61.8 | ||||
TSA Reimbursement (g) | 18.4 | 22.7 | 63.7 | 22.7 | ||||
CDCS not included in discontinued operations (h) | — | — | — | 69.5 | ||||
Adjusted operating income | $ 441.1 | $ 423.9 | $ 1,373.8 | $ 1,320.0 | ||||
Adjusted Net Income | ||||||||
Net Income | $ 169.3 | $ 183.3 | $ 602.6 | $ 585.1 | ||||
Impact of adjustments to operating income | 187.0 | 171.6 | 503.6 | 402.1 | ||||
(Gains) / losses on venture fund investments, net (i) | 1.6 | (2.5) | 7.3 | 1.4 | ||||
(Gain) / loss on sale of business (j) | — | — | (4.9) | — | ||||
Pension settlement (k) | 2.3 | 2.9 | 2.3 | 10.8 | ||||
TSA Reimbursement (g) | (18.4) | (22.7) | (63.7) | (22.7) | ||||
Other | — | (1.0) | 0.3 | 0.5 | ||||
Income tax impact of adjustments (l) | (46.1) | (37.9) | (107.6) | (107.2) | ||||
Earnings from discontinued operations, net of tax (h) | — | — | — | (38.8) | ||||
CDCS not included in discontinued operations (h) | — | — | — | 74.4 | ||||
Adjusted net income | $ 295.7 | $ 293.7 | $ 939.9 | $ 905.6 | ||||
Weighted average diluted shares outstanding | 84.4 | 87.0 | 84.5 | 88.3 | ||||
Adjusted net income per share | $ 3.50 | $ 3.38 | $ 11.12 | $ 10.26 |
(a) | Amortization of intangible assets acquired as part of business acquisitions. |
(b) | Restructuring and other charges represent amounts incurred in connection with the elimination of redundant positions and facilities within the organization in connection with our LaunchPad initiatives, the spin-off of Fortrea Holdings Inc. (Fortrea), and acquisitions or dispositions of businesses by the company. |
(c) | Acquisition and disposition-related costs include due-diligence legal and advisory fees, retention bonuses, impact of delayed contract or license transfers and other integration or disposition related activities. |
(d) | LaunchPad costs include non-capitalized costs associated with the implementation of systems, consolidation of processes, and consulting costs incurred as part of various business process improvement initiatives. |
(e) | The company incurred various costs to prepare for the spin-off of Fortrea and reorganization of the remaining |
(f) | The company impaired certain fixed assets and capitalized software costs which are no longer realizable by the business. |
(g) | Represents transition services fees charged to Fortrea related to administrative and IT systems support. The costs to provide these services are included in operating income but the service fees are included in other income. |
(h) | These adjustments remove the impact of the Clinical Development and Commercialization Services business pursuant to the spin-off of Fortrea. |
(i) | The company makes 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. |
(j) | The company recorded a gain on the disposition of the Beacon Laboratory Benefits Solutions business. |
(k) | The company incurred a charge related to the US pension plan due to settlement of certain obligations to retired employees. |
(l) | Income tax impact of adjustments calculated based on the tax rate applicable to each item. |
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SOURCE
Christin O'Donnell (investors), [email protected]; Kimbrel Arculeo (media), [email protected]