Laboratory Corporation of America® Holdings Announces 2013 Second Quarter Results

  Laboratory Corporation of America® Holdings Announces 2013 Second Quarter
  Results

  *Revenue of $1.47 billion, up 3.1%
  *Organic volume growth of 1.4%
  *Diluted EPS of $1.62
  *Non-GAAP Adjusted EPS Excluding Amortization of $1.80
  *Repurchased $362 million of stock, representing 3.7 million shares
  *2013 Guidance updated for revenue growth of 2% - 3% and Adjusted EPS
    Excluding Amortization of $6.90 - $7.10

Business Wire

BURLINGTON, N.C. -- July 19, 2013

Laboratory Corporation of America^® Holdings (LabCorp^®) (NYSE: LH) today
announced results for the quarter ended June 30, 2013.

Second Quarter Results

Net earnings were $151.9 million and earnings per diluted share (EPS) were
$1.62 in the second quarter of 2013. Non-GAAP earnings per diluted share,
excluding amortization, restructuring and other special charges recorded in
the second quarter of 2013 and 2012 (Adjusted EPS Excluding Amortization) were
$1.80 and $1.77, respectively.

Revenues for the quarter were $1,468.2 million, an increase of3.1% over the
second quarter of 2012. Testing volume, measured by requisitions, increased
5.0% and revenue per requisition decreased1.8%. Managed care pricing remained
stable, but revenue per requisition decreased year over year due to
previously-discussed Medicare payment reductions, delays and denials of
coverage for existing tests by some payers after implementation of
recently-adopted molecular pathology codes, the implementation of
sequestration on April 1, 2013, and strong growth in the Company’s drugs of
abuse testing.

Operating income for the quarter was $269.3 million. Non-GAAP operating income
excluding restructuring and other special charges recorded in the quarter
(Adjusted Operating Income) was $275.9 million, or 18.8% of revenue. Margins
were negatively affected by the factors noted above.

Operating cash flow for the quarter was $137.6 million. The balance of cash at
the end of the quarter was $111.3 million, and there were $225.0 million of
borrowings outstanding under the Company’s $1 billion revolving credit
facility. During the quarter, the Company repurchased $362.0 million of stock,
representing 3.7 million shares. As of June 30, 2013, $592.1 million of
repurchase authorization remained under the Company’s previously approved
share repurchase plan.

The Company recorded restructuring and other special charges of $6.6 million
during the second quarter of 2013.

Year-To-Date Results

Net earnings were $299.2 million and earnings per diluted share were $3.18 in
the first half of 2013. Adjusted EPS Excluding Amortization in the first half
of 2013 and 2012 were $3.53 and $3.51, respectively.

Revenues were $2,909.1 million, an increase of 2.2% compared to the same
period in 2012. Compared to the first half of 2012, testing volume, measured
by requisitions, increased 3.0%, and revenue per requisition decreased 0.8%.

Operating income was $531.3 million in the first half of 2013. Adjusted
Operating Income was $545.4 million, compared to $563.8 million in 2012.

Operating cash flow for the first six months of 2013 was $335.8 million.
During the first six months of 2013, the Company repurchased $475.9 million of
stock, representing 4.9 million shares.

“We are pleased with our second quarter and year-to-date results, especially
our revenue and volume growth,” said David P. King, Chairman and Chief
Executive Officer. “We are proud that we continued to manage the business well
in a difficult operating environment, and continued our commitments both to
growing the business and returning capital to our shareholders through
increased share repurchase.”

Outlook for 2013

The Company is updating its 2013 guidance, expecting revenue growth in the
range of approximately 2.0% to 3.0%; Adjusted EPS Excluding Amortization of
$6.90 to $7.10, which includes a negative impact of approximately $0.35 due to
Medicare payment reductions and excludes the impact of any share repurchase
activity after June 30, 2013; operating cash flow of approximately $825
million to $850 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 the replacement of a major testing platform.

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 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 877-415-3177 (857-244-7320
for international callers). The access code is 78502467. A telephone replay of
the call will be available through July 26, 2013 and can be heard by dialing
888-286-8010 (617-801-6888 for international callers). The access code for the
replay is 78141420. A live online broadcast of LabCorp’s quarterly conference
call on July 19, 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 August 16, 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 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, Cellmark Forensics, MedTox,
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 company, 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, 2012, and subsequent SEC filings.


LABORATORY CORPORATION OF AMERICA HOLDINGS
Consolidated Statements of Operations
(in millions, except per share data)
                                                              
                     Three Months Ended                  Six Months Ended
                     June 30,                            June 30,
                     2013              2012              2013              2012
                                                                                       
Net sales            $ 1,468.2         $ 1,423.4         $ 2,909.1         $ 2,846.7
Cost of sales          890.9             843.9             1,759.6           1,691.1
Selling,
general and            280.9             279.5             564.1             550.7
administrative
Amortization
of intangibles         20.5              20.6              40.0              42.0
and other
assets
Restructuring
and other             6.6             3.4             14.1            (0.2    )
special
charges
                                                                                       
Operating             269.3           276.0           531.3           563.1   
income
                                                                                       
Other income           (0.8    )         (6.7    )         (1.4    )         (7.2    )
(expense)
Investment             0.2               0.2               0.4               0.4
income
Interest               (23.1   )         (21.3   )         (47.6   )         (42.8   )
expense
Equity method         4.4             8.0             8.7             12.3    
income, net
Earnings
before income          250.0             256.2             491.4             525.8
taxes
Provision for         97.7            102.4           191.4           210.0   
income taxes
Net earnings           152.3             153.8             300.0             315.8
Less net
earnings
attributable          (0.4    )        (0.5    )        (0.8    )        (0.9    )
to
noncontrolling
interest
Net earnings
attributable
to Laboratory        $ 151.9          $ 153.3          $ 299.2          $ 314.9   
Corporation of
America
Holdings
                                                                                       
Adjusted
Operating
Income
Operating            $ 269.3           $ 276.0           $ 531.3           $ 563.1
Income
Restructuring
and other              6.6               3.4               14.1              (0.2    )
special
charges
Acquisition
fees and              -               0.9             -               0.9     
expenses
Adjusted
operating            $ 275.9          $ 280.3          $ 545.4          $ 563.8   
income
                                                                                       
Adjusted EPS
Excluding
Amortization
Diluted
earnings per         $ 1.62            $ 1.56            $ 3.18            $ 3.19
common share
Impact of
restructuring
and other              0.04              0.08              0.09              0.06
special
charges
Amortization          0.14            0.13            0.26            0.26    
expense
Adjusted EPS
Excluding            $ 1.80           $ 1.77           $ 3.53           $ 3.51    
Amortization
                                                                                       
Weighted
average shares        93.7            98.0            94.1            98.6    
outstanding


LABORATORY CORPORATION OF AMERICA HOLDINGS
Consolidated Balance Sheets
(in millions, except per share data)
                                                         
                                              June 30,          December 31,
                                              2013              2012
                                                                             
Cash and short term investments               $ 111.3           $  466.8
Accounts receivable, net                        815.7              718.5
Property, plant and equipment                   646.9              630.8
Intangible assets and goodwill, net             4,592.9            4,569.4
Investments in joint venture                    87.5               78.1
partnerships
Other assets                                   337.6            331.4   
                                              $ 6,591.9        $  6,795.0 
                                                                             
Zero-coupon subordinated notes                $ 109.9           $  130.0
Senior notes                                    2,175.0            2,525.0
Credit facility                                 225.0              -
Other liabilities                               1,398.2            1,401.9
Noncontrolling interest                         20.4               20.7
Shareholders' equity                           2,663.4          2,717.4 
                                              $ 6,591.9        $  6,795.0 
                                                                             
                                                                             
Consolidated Statement of Cash Flow Data
(in millions, except per share data)
                                                                             
                                              For the Six Months Ended
                                              June 30,          June 30,
                                              2013              2012
                                                                             
Net cash provided by operating                $ 335.8           $  383.4
activities
Net cash used for investing activities          (199.6  )          (101.6  )
Net cash used for financing activities          (486.9  )          (316.7  )
Effect of exchange rates on cash               (4.8    )         -       
Net decrease in cash                            (355.5  )          (34.9   )
Cash at beginning of period                    466.8            159.3   
Cash at end of period                         $ 111.3          $  124.4   
                                                                             
Free Cash Flow:
Net cash provided by operating                $ 335.8           $  383.4
activities
Less: Capital expenditures                     (90.5   )         (68.3   )
Free cash flow                                $ 245.3          $  315.1   

Notes to Financial Tables

1) During the second quarter of 2013, the Company recorded net restructuring
and other special charges of $6.6 million. The charges included $2.5 million
in severance and other personnel costs along with $4.5 million in
facility-related costs associated with facility closures and general
integration initiatives. The Company reversed previously established reserves
of $0.4 million in unused facility-related costs. The after tax impact of
these charges decreased net earnings for the quarter ended June 30, 2013, by
$4.0 million and diluted earnings per share by $0.04 ($4.0 million divided by
93.7 million shares).

During the first quarter of 2013, the Company recorded net restructuring and
other special charges of $7.5 million. The charges included $7.6 million in
severance and other personnel costs along with $1.8 million in
facility-related costs associated with facility closures and general
integration initiatives. The Company reversed previously established reserves
of $0.6 million in unused severance and $1.3 million in unused
facility-related costs.

The after tax impact of these combined charges decreased net earnings for the
six months ended June 30, 2013, by $8.7 million and diluted earnings per share
by $0.09 ($8.7 million divided by 94.1 million shares).

2) During the second quarter of 2012, the Company recorded of $3.4 million in
restructuring and other special charges. The restructuring charges included
$4.5 million in net severance and other personnel costs along with $0.4
million in net facility-related costs primarily associated with the ongoing
integration of the Clearstone Central Laboratories acquisition along with the
termination of employment of an executive vice president. These charges were
partially offset by the reversal of previously established restructuring
reserves of $1.4 million. The Company recorded $0.9 million in acquisition
fees and expenses relating to its acquisition of MEDTOX Scientific, Inc. As
part of the Clearstone integration, the Company also recorded a $6.9 million
loss on 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. The
after tax impact of these net charges decreased net earnings for the quarter
ended June 30, 2012 by $7.8 million and diluted earnings per share by $0.08
($7.8 million divided by 98.0 million shares).

During the first quarter of 2012, the Company recorded a net credit of $3.6
million in restructuring and other special charges. The Company reversed
previously established reserves of $3.8 million in unused severance and $2.4
million in unused facility-related costs. This net credit also includes
charges of $1.7 million in severance and other personnel costs along with $0.9
million in facility-related costs primarily related to ongoing integration
activities for Orchid and Genzyme Genetics.

The after tax impact of the combined net charges decreased net earnings for
the six months ended June 30, 2012, by $5.6 million and diluted earnings per
share by $0.06 ($5.6 million divided by 98.6 million shares).

3) The Company continues to grow the 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 quarters ended June 30, 2013 and 2012,
intangible amortization was $20.5 million and $20.6 million, respectively
($12.6 million and $12.5 million net of tax, respectively) and decreased EPS
by $0.14 ($12.6 million divided by 93.7 million shares) and $0.13 ($12.5
million divided by 98.0 million shares), respectively. For the six months
ended June 30, 2013 and 2012, intangible amortization was $40.1 million and
$42.0 million, respectively ($24.7 million and $25.7 million net of tax,
respectively) and decreased EPS by $0.26 ($24.7 million divided by 94.1
million shares) and $0.26 ($25.7 million divided by 98.6 million shares),
respectively.

Contact:

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