Laboratory Corporation Of America® Announces 2006 Second Quarter Results
Burlington, NC, July 25, 2006 — Laboratory Corporation of America® Holdings (LabCorp®) (NYSE: LH) today announced results for the quarter and six-months ended June 30, 2006.
Second Quarter Results
Net earnings increased 6.7% to $116.4 million, compared to second quarter 2005 net earnings of $109.1 million, excluding the impact of a $3.1 million non-recurring investment loss recorded in the second quarter of 2005. Earnings per diluted share (EPS) increased 14.5% to $0.87, compared to $0.76 per diluted share in the second quarter of 2005, excluding a $0.02 per diluted share impact of the investment loss recorded in the second quarter of 2005. Earnings before interest, taxes, depreciation and amortization (EBITDA) were $247.1 million for the quarter, or 27.3% of net sales. Excluding the impact of the required change in accounting for stock based compensation, net earnings increased 9.7% to $119.7 million, EPS increased 17.1% to $0.89 per diluted share, and EBITDA was $252.5 million, or 27.9% of net sales, compared to 26.4% of net sales in the second quarter of 2005.
Revenues for the quarter were $903.7 million, an increase of 5.9% compared to the same period in 2005. Compared to the second quarter of 2005, testing volume, measured by accessions, increased 1.8%, and price increased 4.1%.
Operating cash flow for the quarter was $128.5 million, compared to $86.5 million in the same period in 2005. The balance of cash and short-term investments at the end of the quarter was $202.3 million.
Net earnings for the period increased to $218.3, compared to 2005 six-month net earnings of $205.7 million, excluding the impact of a $3.1 million non-recurring investment loss recorded in the second quarter of 2005. Earnings per diluted share (EPS) increased 13.3% to $1.62 for the first six months of 2006, compared to EPS of $1.43 in the first six months of 2005, excluding a $0.02 per diluted share impact of the investment loss recorded in 2005. EBITDA was $470.9 million, or 26.4% of net sales. Excluding the required change in accounting for stock based compensation, net earnings increased 9.4% to $225.0 million, EPS increased 16.8% to $1.67 per diluted share, and EBITDA was $482.2 million, or 27.1% of net sales, compared to 26.2% of net sales in the first six months of 2005.
Revenues for the period were $1,782.2 million, an increase of 7.9% compared to the same period in 2005. Compared to the same period in 2005, testing volume, measured by accessions, increased 3.2 percent, and price increased 4.7 percent.
During the first half of the year, the Company generated operating cash flow of $307.1 million, compared to $241 million in the same period in 2005.
“Our strategy of emphasizing the relationship between core and esoteric testing again delivered outstanding financial results, particularly in growth in EPS, operating cash flow, and our industry leading EBITDA margin,” said Thomas P. Mac Mahon, Chairman and Chief Executive Officer. “We remain committed to this strategy and to our focus on growth through developing our managed care relationships. We continue to feel that we are well positioned to take advantage of the many growth opportunities available in our industry.”
Outlook For 2006
The Company updated guidance for 2006, originally issued on February 16, 2006. Excluding the impact of the required change in accounting for share based compensation, any share repurchase activity after June 30, 2006, and any accounting impact related to the previously announced retirement of the Chief Executive Officer of the Company effective December 31, 2006, the Company expects revenue growth of 6.5% to 7.2%, EBITDA margins of approximately 26.5% to 27.0%, diluted earnings per share of between $3.28 and $3.33, operating cash flow of approximately $610 million to $630 million, capital expenditures of approximately $95 million to $110 million, net interest of approximately $43 million to $45 million, and a bad debt rate of approximately 4.8% of sales for the remainder of the year. The Company estimates that the implementation of the required change in accounting for stock based compensation will have an EBITDA impact of approximately $22 million to $23 million and an EPS impact of approximately $0.10 per diluted share.
The Company today is filing an 8-K that will include additional information on its business and operations, including updated financial guidance for 2006. 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 in a listen-only mode by dialing 212-231-6034. A telephone replay of the call will be available through August 1, 2006 and can be heard by dialing 800-633-8284 (402-977-9140 for international callers). The access code for the replay is 212-96-815. A live online broadcast of LabCorp’s quarterly conference call on July 25, 2006 will be available at www.labcorp.com or at www.streetevents.com beginning at 9:00 a.m. Eastern Time. This webcast will be archived and accessible continuing through August 25, 2006.
Laboratory Corporation of America® Holdings, a 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 $3.3 billion in 2005, approximately 24,000 employees nationwide, and more than 220,000 clients, LabCorp offers clinical assays ranging from routine blood analyses to HIV and genomic testing. LabCorp combines its expertise in innovative clinical testing technology with its Centers of Excellence: The Center for Molecular Biology and Pathology, in Research Triangle Park, NC; National Genetics Institute, Inc. in Los Angeles, CA; ViroMed Laboratories, Inc. based in Minneapolis, MN; The Center for Esoteric Testing in Burlington, NC; DIANON Systems, Inc. based in Stratford, CT; US LABS based in Irvine, CA; and Esoterix and its Colorado Coagulation, Endocrine Sciences, and Cytometry Associates laboratories. LabCorp clients include physicians, government agencies, managed care organizations, hospitals, clinical labs, and pharmaceutical companies. To learn more about our growing organization, visit our Web site at: www.LabCorp.com.
Each of the above 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, 2005, and subsequent SEC filings.
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- Scott Fleming
- Laboratory Corporation of America® Holdings
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