Laboratory Corporation of America® Holdings Announces 2012 Fourth Quarter and Full Year Results

  Laboratory Corporation of America® Holdings Announces 2012 Fourth Quarter
  and Full Year Results

  *Q4 Diluted EPS of $1.26
  *Q4 Adjusted EPS Excluding Amortization of $1.54, Reduced by a $0.09 Impact
    from Inclement Weather
  *2012 Diluted EPS of $5.99
  *2012 Adjusted EPS Excluding Amortization of $6.82, an Increase of 7.1%
  *Board Authorizes New $1 Billion Share Repurchase Program

Business Wire

BURLINGTON, N.C. -- February 8, 2013

Laboratory Corporation of America^® Holdings (LabCorp^®) (NYSE: LH) today
announced results for the quarter ended December 31, 2012.

Fourth Quarter Results

Net earnings were $120.2 million and earnings per diluted share (EPS) were
$1.26 in the fourth quarter of 2012. Non-GAAP earnings per diluted share,
excluding amortization, restructuring and other special charges recorded in
the fourth quarter of 2012 (Adjusted EPS Excluding Amortization) were $1.54.
Inclement weather reduced Adjusted EPS Excluding Amortization by approximately
$0.09.

Operating income for the quarter was $215.3 million. Non-GAAP operating income
excluding restructuring and other special charges recorded in the quarter
(Adjusted Operating Income) was $242.2 million, or 17.2% of revenue. Inclement
weather reduced Adjusted Operating Income margin by approximately 0.8%.

Revenues for the quarter were $1,405.3 million, an increase of2.9% over the
fourth quarter of 2011. Testing volume, measured by requisitions, increased
2.8% and revenue per requisition increased0.1%. Inclement weather reduced
volume growth by approximately 1%.

Operating cash flow for the quarter was $254.2 million. The balance of cash at
the end of the quarter was $466.8 million, and there were no borrowings
outstanding under the Company’s $1 billion revolving credit facility. During
the quarter, the Company repurchased $136.0 million of stock, representing 1.6
million shares. As of December 31, 2012, $68.0 million of repurchase
authorization remained under the Company’s previously approved share
repurchase plan.

The Company announced that its Board authorized a new $1 billion share
repurchase program. This authorization reflects the Company’s continued
commitment to return capital to and create value for shareholders.

The Company recorded restructuring and other special charges of $20.7 million
during the fourth quarter of 2012. In addition, during the quarter the Company
recorded $6.2 million in accelerated amortization relating to the termination
of a licensing agreement.

Full Year Results

Net earnings were $583.1 million and earnings per diluted share were $5.99 in
2012. Adjusted EPS Excluding Amortization in 2012 and 2011 were $6.82 and
$6.37, respectively. During 2012, the impact of inclement weather reduced EPS
by approximately $0.09.

Operating income was $1,023.5 million in 2012. Adjusted Operating Income was
$1,064.9 million.

Revenues were $5,671.4 million, an increase of 2.3% compared to the same
period in 2011. Compared to 2011, testing volume, measured by requisitions,
increased 1.7% and revenue per requisition increased 0.6%.

Operating cash flow for 2012 was $841.4 million. During 2012, the Company
repurchased $516.4 million of stock, representing 5.9 million shares.

“We had a good year, despite operating through a challenging environment, and
achieved meaningful progress on our 5-pillar strategy,” said David P. King,
Chairman and Chief Executive Officer. “We achieved solid earnings growth,
strengthened our balance sheet by refinancing $1 billion of debt at
historically low rates and continued to return capital to shareholders through
our disciplined share repurchase program.”

Outlook for 2013

The Company expects revenue growth in the range of approximately 2.0% to 3.0%;
Adjusted EPS Excluding Amortization of $6.85 to $7.15, which includes a
negative impact of approximately $0.35 due to Medicare payment reductions and
which excludes the impact of any share repurchase activity after December 31,
2012; operating cash flow of approximately $870 million to $900 million; and
capital expenditures of approximately $200 million to $220 million. The
Company’s capital expenditure guidance is higher than historical levels due to
near-term investments in facility consolidation and replacement of a major
testing platform.

Use of Adjusted Measures

The Company has provided in this press release “adjusted” financial
information that has not been prepared in accordance with GAAP, including
Adjusted EPS, Adjusted EPS Excluding Amortization, Adjusted Operating Income,
and Free Cash Flow. 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 in comparing the
Company’s financial results with other companies. Reconciliations of these
non-GAAP measures to the most comparable GAAP measures are included in the
tables accompanying this press release.

The Company today is filing an 8-K that will include additional information on
its business and operations. This information will also be available on the
Company's Web site. Analysts and investors are directed to this 8-K and the
Web site to review this supplemental information.

A conference call discussing LabCorp's quarterly results will be held today at
9:00 a.m. Eastern Time and is available by dialing 866-272-9941 (617-213-8895
for international callers). The access code is 20958126. A telephone replay of
the call will be available through February 15, 2013 and can be heard by
dialing 888-286-8010 (617-801-6888 for international callers). The access code
for the replay is 38000350. A live online broadcast of LabCorp’s quarterly
conference call on February 8, 2013 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 March 8, 2013.

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 $5.7 billion in 2012, over
34,000 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, and will be
available in the Company’s Form 10-K for the year ended December 31, 2012,
when filed.


LABORATORY CORPORATION OF AMERICA HOLDINGS
Consolidated Statements of Operations
(in millions, except per share data)
                                                              
                         Three Months Ended          Year Ended
                         December 31,                December 31,
                         2012          2011          2012          2011
                                                                   
Net sales                $ 1,405.3     $ 1,366.1     $ 5,671.4     $ 5,542.3
Cost of sales              867.3         816.5         3,421.7       3,267.6
Selling, general and       278.8         270.4         1,114.6       1,159.6
administrative
Amortization of
intangibles and other      23.2          21.2          86.3          85.8
assets
Restructuring and         20.7        10.6        25.3        80.9    
other special charges
                                                                   
Operating income          215.3       247.4       1,023.5     948.4   
                                                                   
Other income (expense)     (0.5    )     (3.8    )     (7.2    )     (5.6    )
Investment income          0.3           0.5           1.0           1.3
Interest expense           (27.6   )     (22.1   )     (94.5   )     (87.5   )
Equity method income,     4.0         2.9         21.4        9.5     
net
Earnings before income     191.5         224.9         944.2         866.1
taxes
Provision for income      70.9        86.8        359.4       333.0   
taxes
Net earnings               120.6         138.1         584.8         533.1
Less net earnings
attributable to           (0.4    )    (2.7    )    (1.7    )    (13.4   )
noncontrolling
interest
Net earnings
attributable to          $ 120.2      $ 135.4      $ 583.1      $ 519.7   
Laboratory Corporation
of America Holdings
                                                                   
Adjusted Operating
Income
Operating Income         $ 215.3       $ 247.4       $ 1,023.5     $ 948.4
Restructuring and          20.7          10.6          25.3          116.5
other special charges
Termination of             6.2           -             6.2           -
licensing agreement
Acquisition fees and      -           -           9.9         -       
expenses
Adjusted operating       $ 242.2      $ 258.0      $ 1,064.9    $ 1,064.9 
income
                                                                   
Adjusted EPS Excluding
Amortization
Diluted earnings per     $ 1.26        $ 1.34        $ 5.99        $ 5.11
common share
Impact of
restructuring and          0.13          0.06          0.29          0.72
other special charges
Loss on divestiture of     -             0.03          -             0.03
assets
Amortization expense      0.15        0.13        0.54        0.51    
Adjusted EPS Excluding   $ 1.54       $ 1.56       $ 6.82       $ 6.37    
Amortization
                                                                   
Weighted average          95.3        101.0       97.4        101.8   
shares outstanding
                                                                   


LABORATORY CORPORATION OF AMERICA HOLDINGS
Consolidated Balance Sheets
(in millions, except per share data)
                                                               
                                                   December 31,   December 31,
                                                   2012           2011
                                                                  
Cash and short term investments                    $  466.8       $  159.3
Accounts receivable, net                              718.5          699.8
Property, plant and equipment                         630.8          578.3
Intangible assets and goodwill, net                   4,569.4        4,302.5
Investments in joint venture partnerships             78.1           76.8
Other assets                                         346.1        309.6   
                                                   $  6,809.7    $  6,126.3 
                                                                  
Zero-coupon subordinated notes                     $  130.0       $  135.5
Senior notes                                          2,525.0        1,525.5
Credit facility                                       -              560.0
Other liabilities                                     1,416.6        1,381.6
Noncontrolling interest                               20.7           20.2
Shareholders' equity                                 2,717.4      2,503.5 
                                                   $  6,809.7    $  6,126.3 
                                                                  
                                                                  
Consolidated Statement of Cash Flow Data
(in millions, except per share data)
                                                                  
                                                   For the Years Ended
                                                   December 31,   December 31,
                                                   2012           2011
                                                                  
Net cash provided by operating activities          $  841.4       $  855.6
Net cash used for investing activities                (534.2  )      (280.3  )
Net cash provided by (used for) financing             (0.8    )      (645.0  )
activities
Effect of exchange rates on cash                     1.1          (1.7    )
Net (decrease) increase in cash                       307.5          (71.4   )
Cash at beginning of period                          159.3        230.7   
Cash at end of period                              $  466.8      $  159.3   
                                                                  
Free Cash Flow:
Net cash provided by operating activities          $  841.4       $  855.6
Less: Capital expenditures                           (173.8  )     (145.7  )
Free cash flow                                     $  667.6      $  709.9   
                                                                  

Notes to Financial Tables

1) During the fourth quarter of 2012, the Company recorded net restructuring
and other special charges of $20.7 million. The charges consisted of $4.8
million in severance- related liabilities and $17.1 million in net
facility-related costs associated with ongoing consolidation of recent
acquisitions and other operations. These charges were partially offset by the
reversal of previously established reserves of $1.2 million in unused
severance. The after tax impact of these net charges decreased net earnings
for the three months ended December 31, 2012 by $12.8 million and diluted
earnings per share by $0.13 ($12.8 million divided by 95.3 million shares).

During the first three quarters of 2012, the Company recorded net
restructuring and other special charges of $4.6 million. The charges consisted
of $11.4 million in severance-related liabilities and $2.5 million in net
facility-related costs primarily associated with ongoing consolidation of
recent acquisitions and other operations and the termination of an executive
vice president. These charges were partially offset by the reversal of
previously established reserves of $5.7 million in unused severance and $3.6
million in unused facility-related costs.The Company also recorded $9.9
million in fees associated with the successful completion of its acquisition
of MEDTOX Scientific, Inc. (“MEDTOX”) on July 31, 2012. As part of the
Clearstone integration, the Company recorded a $6.9 million loss in other
income (expense) relating to the disposal of one of its European subsidiaries.
In addition, in conjunction with the liquidation of one of its joint ventures,
the Company recorded a one-time increase of $2.9 million in equity method
income.

For the year ended December 31, 2012, the after tax impact of these combined
net charges decreased net earnings by $27.9 million and diluted earnings per
share by $0.29 ($27.9 million divided by 97.4 million shares).

The Company also recorded accelerated amortization of $6.2 million related to
its termination of a licensing agreement in November 2012. The after tax
impact of this accelerated amortization decreased net earnings for the three
months and year ended December 31, 2012 by $3.8 million and diluted earnings
per share by $0.04 and $0.04, respectively ($3.8 million divided by 95.3 and
97.4 million shares, respectively).

2) During the fourth quarter of 2011, the Company recorded net restructuring
and other special charges of $10.6 million, consisting of $6.3 million in
severance-related liabilities and $1.7 million in net facility-related costs
primarily associated with integration of the Orchid Cellmark and Genzyme
Genetics acquisitions as well as internal cost reduction initiatives. The
charges also include a $2.6 million write-off of an uncollectible receivable
from a past installment sale of one of the Company’s lab operations. The after
tax impact of these charges decreased net earnings for the three months ended
December 31, 2011, by $6.5 million and diluted earnings per share by $0.06
($6.5 million divided by 101.0 million shares).

During the first three quarters of 2011, the Company recorded restructuring
and other special charges of $105.9 million ($66.3 million after tax). The
restructuring charges included $18.8 million in net severance and other
personnel costs along with $36.7 million in net facility-related costs
primarily associated with the ongoing integration of the Clearstone, Genzyme
Genetics and Westcliff acquisitions. The special charges also included $34.5
million ($49.5 million, net of previously recorded reserves of $15.0 million)
relating to the settlement of the Hunter Labs litigation in California, along
with $1.1 million for legal costs associated with the planned acquisition of
Orchid Cellmark incurred during the second quarter of 2011, both of which were
recorded in Selling, General and Administrative Expenses in the Company’s
Consolidated Statements of Operations. The charges also included a $14.8
million write-off of an investment made in a prior year.

For the year ended December 31, 2011, the after tax impact of these combined
charges of $116.5 million decreased net earnings by $73.3 million and diluted
earnings per share by $0.72 ($73.3 million divided by 101.8 million shares).

3) Following the closing of its acquisition of Orchid Cellmark Inc. (“Orchid”)
in mid-December, the Company recorded a net $2.8 million loss on its
divestiture of certain assets of Orchid’s U.S. government paternity business,
under the terms of the agreement reached with the U.S. Federal Trade
Commission. This non-deductible loss on disposal was recorded in Other Income
and Expense in the Company’s Consolidated Statements of Operations and
decreased net earnings for the three and twelve months ended December 31,
2011, by $2.8 million and diluted earnings per share by $0.03 ($2.8 million
divided by 101.0 million shares and $2.8 million divided by 101.8 million
shares, respectively).

4) The Company continues to grow its business through acquisitions and uses
Adjusted EPS Excluding Amortization as a measure of operational performance,
growth and shareholder returns. The Company believes adjusting EPS for
amortization provides investors with better insight into the operating
performance of the business. For the three months ended December 31, 2012 and
2011, intangible amortization was $23.2 million and $21.2 million,
respectively ($14.3 million and $12.9 million net of tax, respectively) and
decreased EPS by $0.15 ($14.3 million divided by 95.3 million shares) and
$0.13 ($12.9 million divided by 101.0 million shares), respectively. For the
years ended December 31, 2012 and 2011, intangible amortization was $86.3
million and $85.8 million respectively ($53.2 million and $52.4 million net of
tax, respectively) and decreased EPS by $0.54 ($53.2 million divided by 97.4
million shares) and $0.51 ($52.4 million divided by 101.8 million shares),
respectively.

Contact:

Laboratory Corporation of America^® Holdings
Stephen Anderson, 336-436-5076
Investor@labcorp.com
 
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