LABCORP HOLDINGS INC

Previous wording

a failure in the Company’s information technology systems, including with respect to testing turnaround time and billing processes, the failure of the Company or its third-party suppliers and vendors to maintain the security of business information or systems or to protect against cybersecurity incidents such as denial of service attacks, malware, ransomware, and computer viruses, delays or failures in the development and implementation of the Company’s automation platforms, or adverse effects from the use of or regulation of artificial intelligence and machine learning tools, any of which could result in a negative effect on the Company’s performance of services, a loss of business or increased costs, damages to the Company’s reputation, significant litigation exposure, an inability to meet required financial reporting deadlines, or the failure to meet future regulatory or customer information technology, data security and connectivity requirements;

Current wording

a failure in the Company’s information technology systems, including with respect to testing turnaround time and billing processes, the failure of the Company or its third-party suppliers and vendors to maintain the security of business information or systems or to protect against cybersecurity incidents such as denial of service attacks, malware, ransomware, and computer viruses, delays or failures in the development and implementation of the Company’s automation platforms, or adverse effects from the use of or regulation of artificial intelligence and machine learning tools, any of which could result in a negative effect on the Company’s performance of services, a loss of business or increased costs, delays in cash collections, damages to the Company’s reputation, significant litigation exposure, an inability to meet required financial reporting deadlines, or the failure to meet future regulatory or customer information technology, data security and connectivity requirements;

Previous wording

risks associated with the impacts and expected benefits and costs of the recently completed spin-off of Fortrea, including but not limited to factors that could adversely affect the Company’s ability to realize the expected benefits of the spin-off, the failure of the spin-off to qualify as a tax-free transaction for U.S. federal income tax purposes, and potential exposure to unexpected claims, liabilities, or costs under the Company’s agreements with Fortrea and/or otherwise in connection with the spin-off; and

Current wording

risks associated with the impacts and expected benefits and costs of the completed spin-off of Fortrea, including but not limited to factors that could adversely affect the Company’s ability to realize the expected benefits of the spin-off, the failure of the spin-off to qualify as a tax-free transaction for U.S. federal income tax purposes, and potential exposure to unexpected claims, liabilities, or costs under the Company’s agreements with Fortrea and/or otherwise in connection with the spin-off; and

Previous wording

risks and uncertainties as to the completion, timing, and expected benefits of the planned holding company reorganization (Reorganization), including, but not limited to the effect of the announcement of the Reorganization on the company's business generally, market reaction to the announcement, and unexpected issues that may arise in the continued planning for the Reorganization.

Current wording

risks and uncertainties as to the expected benefits of the Reorganization, including, but not limited to the effect of the Reorganization on the Company's business generally, and unexpected issues that may arise as a result of the Reorganization.

Previous wording

All historical operating results of Fortrea are presented as Discontinued Operations, net of tax, in the consolidated statement of operations. The spin-off is expected to be treated as tax-free for the Company and its shareholders for U.S. federal income tax purposes.

Current wording

All historical operating results of Fortrea are presented as Discontinued Operations, net of tax, in the Condensed Consolidated Statements of operations. The spin-off is expected to be treated as tax-free for the Company and its shareholders for U.S. federal income tax purposes.

Previous wording

Revenues for the three months ended March 31, 2024, were $3,176.6, an increase of 4.6% from $3,037.8 during the three months ended March 31, 2023. The increase was due to organic revenue of 2.3%, acquisitions, net of divestitures, of 1.8%, and favorable foreign currency translation of 0.5%. The 2.3% increase in organic revenue was driven by a 4.2% increase in the company's organic Base Business, partially offset by a 1.9% decrease in COVID-19 PCR testing (COVID-19 Testing). Base Business includes Labcorp's operations except for COVID-19 Testing.

Current wording

Revenues for the six months ended June 30, 2024, were $6,397.5, an increase of 5.4% from $6,071.5 during the six months ended June 30, 2023. The increase was due to organic revenue of 3.0%, acquisitions, net of divestitures, of 2.1%, and favorable foreign currency translation of 0.2%. The 3.0% increase in organic revenue was driven by a 4.3% increase in the company's organic Base Business, partially offset by a 1.3% decrease in COVID-19 PCR testing (COVID-19 Testing). Compared to the Base Business last year, Base Business revenue grew 6.8%. Base Business includes Labcorp's operations except for COVID-19 Testing.

Previous wording

Total revenues for the three months ended March 31, 2024, were $3,176.6, an increase of 4.6% over $3,037.8 in the first quarter of 2023. The increase was due to organic revenue of 2.3%, acquisitions, net of divestitures, of 1.8%, and favorable foreign currency translation of 0.5%. The 2.3% increase in organic revenue was driven by a 4.2% increase in the company's organic Base Business, partially offset by a 1.9% decrease in COVID-19 Testing. Base Business includes Labcorp's operations except for COVID-19 Testing.

Current wording

Total revenues for the three months ended June 30, 2024, were $3,220.9, an increase of 6.2% over $3,033.7 in the second quarter of 2023. The increase was due to organic revenue of 3.8%, acquisitions, net of divestitures, of 2.5%, partially offset by unfavorable foreign currency translation of 0.1%. The 3.8% increase in organic revenue was driven by a 4.5% increase in the company's organic Base Business, partially offset by a 0.7% decrease in COVID-19 Testing. Compared to Base Business last year, Base Business revenue grew 6.9%. Base Business includes Labcorp's operations except for COVID-19 Testing.

Previous wording

Dx revenues for the three months ended March 31, 2024, were $2,479.7, an increase of 4.1% over $2,382.8 in the first quarter of 2023. The increase was due to organic revenue of 1.8% and acquisitions, net of divestitures, of 2.2%. The 1.8% increase in organic growth was due to a 4.3% increase in the Base Business, partially offset by a 2.5% decrease in COVID-19 Testing. Total Base Business growth compared to the Base Business in the prior year was 6.8%.

Current wording

Dx revenues for the three months ended June 30, 2024, were $2,524.9, an increase of 7.9% over $2,340.8 in the second quarter of 2023. The increase was due to organic revenue of 4.7% and acquisitions, net of divestitures, of 3.2%, partially offset by unfavorable foreign currency translation of 0.1%. The 4.7% increase in organic growth was due to a 5.6% increase in the Base Business, partially offset by a 0.9% decrease in COVID-19 Testing. Total Base Business growth compared to the Base Business in the prior year was 8.9%.

Previous wording

Dx total volume (measured by requisitions) for the three months ended March 31, 2024, increased by 3.4% as acquisition volume, net of divestitures, contributed 2.2%, while organic volume increased by 1.2%. Organic volume was up due to a 2.6% increase in the Base Business, including the negative impact from adverse weather of 1%. This was partially offset by a 1.4% decrease in COVID-19 Testing. Price/mix increased by 0.6% due to organic Base Business growth of 1.7%, partially offset by a decrease in COVID-19 Testing of 1.1%. Base Business volume increased 4.9% compared to the Base Business last year. Price/mix was up 1.9% in the Base Business compared to the Base Business last year.

Current wording

Dx organic volume increased by 2.9% for the three months ended June 30, 2024, while total volume (measured by requisitions) increased by 5.7% as acquisition volume, net of divestitures, contributed 2.8%. Organic volume was up due to a 3.4% increase in the Base Business, partially offset by a 0.5% decrease in COVID-19 Testing. Price/mix increased by 2.1% due to organic Base Business growth of 2.2% and acquisitions of 0.4%, partially offset by a decrease in COVID-19 Testing of 0.4%. Base Business volume increased 6.3% compared to the Base Business last year. Price/mix was up 2.5% in the Base Business compared to the Base Business last year.

Previous wording

BLS revenues for the three months ended March 31, 2024, were $710.9, an increase of 7.5% over $661.3 in the first quarter of 2023. The increase was due to organic growth of 5.1% and favorable foreign currency translation of 2.4%.

Current wording

BLS revenues for the three months ended June 30, 2024, were $707.0, an increase of 1.1% over $699.0 in the second quarter of 2023. The increase was due to organic growth of 1.2%, partially offset by unfavorable foreign currency translation of 0.1%.

Previous wording

During the three months ended March 31, 2024, the Company recorded net restructuring and other charges of $5.0. The charges were comprised of $5.8 related to severance and other personnel costs. The charges were adjusted by the reversal of a previously established liability of $0.8 in unused facility-related costs.

Current wording

During the three months ended June 30, 2024, the Company recorded net restructuring and other charges of $11.6. The charges were comprised of $9.2 related to severance and other personnel cost and $2.7 in facility-related costs. The charges were adjusted by the reversal of a previously established liability of $0.3 in unused facility-related costs.

Previous wording

During the three months ended March 31, 2023, the Company recorded net restructuring and other charges of $7.5. The charges were comprised of $4.0 related to severance and other personnel costs and $4.3 in facility closures, lease terminations, and general integration activities. The charges were adjusted by the reversal of a previously established liability of $0.5 in unused severance liabilities and the increase of a previously established liability of $0.3 in facility-related costs.

Current wording

During the three months ended June 30, 2023, the Company recorded net restructuring and other charges of $15.8. The charges were comprised of $5.2 related to severance and other personnel costs and $8.9 in facility closures, lease terminations, and general integration activities. The charges were adjusted by the reversal of a previously established liability of $0.6 in unused severance liabilities and the increase of a previously established liability of $2.3 in facility-related costs.

Previous wording

Equity method income represents the Company's ownership share in joint venture partnerships along with equity investments in other companies in the health care industry. The increase in income for the three months ended March 31, 2024, as compared with the corresponding period in 2023, was partially due to the sale of the Company's interest in one joint venture and the acquisition of the remaining interest in another joint venture during 2023.

Current wording

Equity method income (expense) represents the Company's ownership share in joint venture partnerships along with equity investments in other companies in the health care industry. The decrease in income for the three months ended June 30, 2024, as compared with the corresponding period in 2023, was partially due to the sale of the Company's interest in one joint venture and the acquisition of the remaining interest in another joint venture during 2023.

Previous wording

BLS operating income was $99.9 for the three months ended March 31, 2024, an increase of $26.3 over operating income of $73.6 in the corresponding period of 2023. The increase was due to organic growth and LaunchPad savings, partially offset by higher personnel expense.

Current wording

BLS operating income was $107.4 for the three months ended June 30, 2024, an increase of $2.8 over operating income of $104.6 in the corresponding period of 2023. The increase was due to organic growth and LaunchPad savings, partially offset by higher personnel costs.

Previous wording

The Company remains on track to deliver approximately $350.0 of net savings from its three-year LaunchPad initiative by the end of 2024 and approximately $100.0 to $125.0 of savings in fiscal 2024.

Current wording

The Company remains on track to deliver approximately $100.0 to $125.0 of Launchpad savings in fiscal 2024.

Previous wording

Cost of revenues increased 4.2% during the three months ended March 31, 2024, as compared with the corresponding period in 2023. Cost of revenues as a percentage of revenues during the three months ended March 31, 2024, decreased to 71.8% as compared to 72.0% in the corresponding period in 2023. This decrease in cost of revenues as a percent of revenues was primarily due to LaunchPad savings and CDCS costs during the first quarter of 2023 that do not qualify as discontinued operations, largely offset by higher personnel costs and lower COVID-19 Testing.

Current wording

Cost of revenues increased 4.4% during the six months ended June 30, 2024, as compared with the corresponding period in 2023. Cost of revenues as a percentage of revenues during the six months ended June 30, 2024, decreased to 71.5% as compared to 72.1% in the corresponding period in 2023. This decrease in cost of revenues as a percent of revenues was primarily due to LaunchPad saving, demand, and CDCS costs in 2023 that do not qualify as discontinued operations, largely offset by higher personnel costs and lower COVID-19 Testing.

Previous wording

Selling, general and administrative expenses as a percentage of revenues was 16.0% and 15.1% during the three months ended March 31, 2024, and 2023, respectively. The increase is primarily due to higher personnel costs and a reduction in COVID-19 Testing revenues.

Current wording

Selling, general and administrative expenses as a percentage of revenues were 16.7% and 15.9% during the six months ended June 30, 2024, and 2023, respectively. The increase is primarily due to higher personnel costs and a reduction in COVID-19 Testing revenues, partially offset by LaunchPad savings and demand.

Previous wording

The Company recorded impairment charges of $2.5 during the three months ended March 31, 2024 related to a decommissioned robotic asset. The Company recorded impairment charges of $2.2 in capitalized software costs during the three months ended March 31, 2023.

Current wording

The Company recorded impairment charges of $2.5 related to a decommissioned robotic asset during the six months ended June 30, 2024. The Company recorded impairment charges of $5.0 in capitalized software costs and other intangible assets six months ended June 30, 2023.

Previous wording

The decrease in interest expense for the three months ended March 31, 2024, as compared with the corresponding period in 2023, is primarily due to decreased borrowings under the Company's revolving credit facility, repayment of the November 2023 $300.0 senior notes, and partially offset by a higher interest rate on variable rate debt.

Current wording

The decrease in interest expense for the six months ended June 30, 2024, as compared with the corresponding period in 2023, is primarily due to decreased borrowings under the Company's revolving credit facility, repayment of the November 2023 $300.0 senior notes, and partially offset by a higher interest rate on variable rate debt.

Previous wording

The change in Other, net for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, is primarily due to $22.4 of 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. In addition, the Company recorded investment losses of $4.2 for the three months ended March 31, 2024 compared to investment losses of $1.5 for the corresponding period of 2023. Foreign currency transaction losses of $3.3 were recognized for the three months ended March 31, 2024, as compared to gains of $3.6 for the corresponding period of 2023. The Company also recorded a $4.9 gain on the sale of the assets of its Beacon Laboratory Benefit Solutions, Inc. business in 2024.

Current wording

The change in Other, net for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, is primarily due to $45.3 of 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. In addition, the Company recorded investment losses of $5.7 for the six months ended June 30, 2024 compared to investment losses of $5.6 for the corresponding period of 2023. Foreign currency transaction losses of $5.2 were recognized for the six months ended June 30, 2024, as compared to losses of $18.0 for the corresponding period of 2023. The Company also recorded a $4.9 gain on the sale of the assets of its Beacon Laboratory Benefit Solutions, Inc. business in 2024.

Previous wording

Dx operating income was $417.9 for the three months ended March 31, 2024, a decrease of $23.6 over operating income of $441.5 in the corresponding period of 2023, and Dx operating margin decreased 170 basis points year-over-year. The decrease in adjusted operating income margin was due to a reduction in COVID-19 Testing, adverse weather and the mix impact from lab management agreements, which is expected to improve over time.

Current wording

Dx operating income was $859.4 for the six months ended June 30, 2024, an increase of $8.2 over operating income of $851.2 in the corresponding period of 2023, and Dx operating margin decreased 80 basis points year-over-year. The decrease was due to a reduction in COVID-19 Testing and higher personnel costs, partially offset by a recovery in the Base Business.

Previous wording

General corporate and unallocated expenses are comprised primarily of administrative services such as executive management, human resources, legal, finance, corporate affairs, and information technology. General corporate and unallocated expenses were $128.9 for the three months ended March 31, 2024, an increase of $6.7 over corporate expenses of $122.2 in the corresponding period of 2023, primarily due to costs related to the spin-off of Fortrea, personnel costs, and research and development costs.

Current wording

General corporate expenses are comprised primarily of administrative services such as executive management, human resources, legal, finance, corporate affairs, and information technology. Corporate expenses were $309.2 for the six months ended June 30, 2024, a increase of $9.1 over corporate expenses of $300.1 in the corresponding period of 2023, primarily due to costs related to the spin-off of Fortrea, and personnel costs.

Previous wording

In summary, the Company's cash flows from continuing operations were as follows for the three months ended March 31, 2024, and 2023, respectively:

Current wording

In summary, the Company's cash flows from continuing operations were as follows for the six months ended June 30, 2024, and 2023, respectively:

Previous wording

Cash and cash equivalents at March 31, 2024, and 2023, totaled $99.3 and $294.8, respectively. Cash and cash equivalents consist of highly liquid instruments, such as time deposits, commercial paper, and other money market investments, which have original maturities of three months or less.

Current wording

Cash and cash equivalents at June 30, 2024, and 2023, totaled $265.1 and $1,930.6, respectively. Cash and cash equivalents consist of highly liquid instruments, such as time deposits, commercial paper, and other money market investments, which have original maturities of three months or less.

Previous wording

During the three months ended March 31, 2024, the Company's continuing operations used $29.8 of cash as compared to providing $185.7 during the same period in 2023. The $215.5 decrease in cash provided from operations in 2024 as compared with the corresponding 2023 period is primarily due to lower cash earnings and the timing of working capital requirements.

Current wording

During the six months ended June 30, 2024, the Company's continuing operations used $531.3 of cash as compared to providing $347.2 during the same period in 2023. The $184.1 increase in cash provided from operations in 2024 as compared with the corresponding 2023 period is primarily due to higher cash earnings.

Previous wording

Net cash used for investing activities from continuing operations for the three months ended March 31, 2024, was $393.1 as compared to $84.0 for the three months ended March 31, 2023. The change in cash used for investing activities was primarily due to an increase in business acquisitions and higher capital expenditures during the three months ended March 31, 2024. Capital expenditures were $133.8 and $78.2 for the three months ended March 31, 2024, and 2023, respectively.

Current wording

Net cash used for investing activities from continuing operations for the six months ended June 30, 2024, was $578.1 as compared to $328.6 for the six months ended June 30, 2023. The change in cash used for investing activities was primarily due to an increase in business acquisitions and higher capital expenditures during the six months ended June 30, 2024. Capital expenditures were $262.0 and $181.5 for the six months ended June 30, 2024, and 2023, respectively.

Previous wording

Net cash used by financing activities from continuing operations for the three months ended March 31, 2024, was $11.7 as compared to $60.6 for the three months ended March 31, 2023. The change in cash flows from financing activities from continuing operations for the three months ended March 31, 2024, as compared to the three months ended March 31, 2023, was primarily due to net proceeds from revolving credit facilities of $42.4 in 2024.

Current wording

Net cash used by financing activities from continuing operations for the six months ended June 30, 2024, was $221.7 as compared to $124.7 for the six months ended June 30, 2023. The change in cash flows from financing activities from continuing operations for the six months ended June 30, 2024, as compared to the six months ended June 30, 2023, was primarily due to share repurchases of $100.0 in 2024.

Previous wording

At March 31, 2024, the Company had $99.3 of cash and $957.6 of available borrowings under its revolving credit facility, which does not mature until 2026. Under the Company's revolving credit facility and indentures relating to the Company's senior notes, the Company is subject to negative covenants limiting subsidiary indebtedness and certain other covenants typical for investment grade-rated borrowers , and with respect to the revolving credit facility, the Company is required to maintain certain leverage ratios. The Company was in compliance with all covenants under the revolving credit facility and the indentures related to the Company's outstanding senior notes at March 31, 2024. The Company expects that it will remain in compliance with all covenants associated with its existing debt obligations for the next twelve months.

Current wording

At June 30, 2024, the Company had $265.1 of cash and $980.0 of available borrowings under its revolving credit facility, which does not mature until 2026. Under the Company's revolving credit facility and indentures relating to the Company's senior notes, the Company is subject to negative covenants limiting subsidiary indebtedness and certain other covenants typical for investment grade-rated borrowers , and with respect to the revolving credit facility, the Company is required to maintain certain leverage ratios. The Company was in compliance with all covenants under the revolving credit facility and the indentures related to the Company's outstanding senior notes at June 30, 2024. The Company expects that it will remain in compliance with all covenants associated with its existing debt obligations for the next twelve months.

Previous wording

As of March 31, 2024, the Company had outstanding authorization from the board of directors to purchase up to $531.5 of the Company's common stock.

Current wording

As of June 30, 2024, the Company had outstanding authorization from the board of directors to purchase up to $430.4 of the Company's common stock. On July 24, 2024, the Board adopted a new share repurchase plan authorizing up to $1,000.0 of the Company's shares in addition to the remaining amount outstanding under the previous plan. In aggregate, the share repurchase authorization is $1,430.4.

Previous wording

For the three months ended March 31, 2024, the Company paid $62.1 in common stock dividends. On April 11, 2024, the Company announced a cash dividend of $0.72 per share of common stock for the second quarter, or approximately $61.4 in the aggregate. The dividend will be payable on June 12, 2024, to stockholders of record of all issued and outstanding shares of common stock as of the close of business on May 28, 2024. The declaration and payment of any future dividends will be at the discretion of the Company’s board of directors.

Current wording

For the six months ended June 30, 2024, the Company paid $122.5 in common stock dividends. On July 25, 2024, the Company announced a cash dividend of $0.72 per share of common stock for the second quarter, or approximately $61.2 in the aggregate. The dividend will be payable on September 13, 2024, to stockholders of record of all issued and outstanding shares of common stock as of the close of business on August 29, 2024. The declaration and payment of any future dividends will be at the discretion of the Company’s board of directors.