UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
JULY 21, 1998
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(Date of earliest event reported)
LABORATORY CORPORATION OF AMERICA HOLDINGS
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(Exact name of registrant as specified in its charter)
DELAWARE 1-11353 13-3757370
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
358 SOUTH MAIN STEET, BURLINGTON, NORTH CAROLINA 27215
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(Address of principal executive offices)
336-229-1127
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(Registrant's telephone number, including area code)
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ITEM 5. OTHER EVENTS
On July 21, 1998, Laboratory Corporation of America Holdings
(the "Company") issued a press release announcing operating
results of the Company for the quarter and six months ended
June 30, 1998. The press release is attached as an exhibit
hereto and the text thereof is incorporated in its entirety
herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(c) Exhibit
20 Press release of the Company dated July 21, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to
be signed on its behalf by the undersigned hereunto duly
authorized.
LABORATORY CORPORATION OF AMERICA HOLDINGS
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(Registrant)
By:/s/BRADFORD T. SMITH
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Bradford T. Smith
Executive Vice President,
General Counsel, Secretary
and Compliance Officer
Date: August 17, 1998
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Laboratory Corporation of America-Registered Trademark-Holdings
358 South Main Street
Burlington, NC 27215
Telephone: 336-584-5171
FOR IMMEDIATE RELEASE CONTACT: PAMELA SHERRY
336-584-5171, Ext. 4855
SHAREHOLDER DIRECT: 800-LAB-0401
WWW.LABCORP.COM
LABORATORY CORPORATION OF AMERICA-REGISTERED TRADEMARK- REPORTS
SECOND QUARTER AND SIX MONTH RESULTS
BURLINGTON, NC, JULY 21, 1998 - Laboratory Corporation of America-Registered
Trademark- Holdings (LabCorp-Registered Trademark-) (NYSE: LH) today announced
results for the quarter and six months ended June 30, 1998.
SECOND QUARTER RESULTS
Net sales for the second quarter were $386.1 million, operating income $37.3
million, and net income $12.8 million. This compares with net sales of $389.6
million, operating income of $30.9 million, and net income of $4.1 million for
the same period in 1997. After deducting preferred stock dividends, basic and
diluted earnings per common share were $0.01 in the second quarter of 1998
compared to $0.02 for the same period in 1997.
The revenue decline of approximately 1% is the result of a 4.3% reduction in
volume offset by a 3.5% increase in price. The progress in maintaining revenues,
slowing the decline in accessions, and improving price during the second quarter
is directly related to steps taken to implement the Company's Strategic Plan.
Earnings before interest, taxes, depreciation, and amortization (EBITDA),
considered by LabCorp to be the best measurement of its performance, was $58.3
million for the second quarter of 1998, or 15.1% of net sales, versus $52.3
million, or 13.4% of net sales, for the comparable period in 1997. Furthering
LabCorp's trend in operating expense reduction, second quarter operating
expenses declined by 2.8%, or $10.0 million, compared to the same period in
1997.
"We are pleased with our results for the second quarter," said Thomas P. Mac
Mahon, President and Chief Executive Officer. "They reflect our strategy to
improve price and strengthen revenues. We also continue to see the benefits of
our cost containment initiatives, operational reviews, and our enhanced customer
satisfaction and account retention programs. Our days sales outstanding (DSO)
remained constant with the DSO reported for the first quarter of 1998. Operating
cash flow for the quarter was $37.6 million. As a result, we were able to pay-
down $10.0 million in debt during the quarter, reducing to zero the balance on
our revolving line of credit."
SIX MONTH RESULTS
Net sales for the six month period ended June 30, 1998 were $759.1 million,
operating income $66.7 million, and net income $22.1 million. For the same
period in 1997, net sales were $781.1 million, operating income was $58.6
million, and net income $6.4 million. After deducting preferred stock
dividends, the basic and diluted loss per common share was $0.00 in 1998
compared to basic and diluted earnings per common share of $0.04 in 1997. The
revenue decline of approximately 3% consists of a 4.5% decrease in volume
partially offset by a 1.8% increase in price. EBITDA for the first six months
of 1998 was $108.6 million, or 14.3% of net sales, versus $101.5 million, or
13.0% of net sales, for the comparable period in 1997. Operating expenses in
the first six months of 1998 declined by 4.2%, or $30.1 million, compared to the
same period in 1997. Operating cash flow was $65.5 million.
"We continue to focus on returning LabCorp to revenue growth by adding
profitable new business and implementing customer retention programs," said Mr.
Mac Mahon. "Additionally, emphasis on appropriate pricing, effective cost
management, and implementation of our Strategic Plan has begun to yield
benefits. Examples include two major managed-care agreements in Florida which
cover 1.5 million persons. Acquisitions of Medlab, Inc. in Delaware, and
Universal Standard Healthcare, Inc.'s laboratory in Detroit, when completed, are
consistent with our strategy to add volume in key geographic markets."
We also continue to emphasize our leadership position in HIV testing and are
encouraged by the number of inquiries generated in connection with two new
diagnostic testing procedures offered exclusively through LabCorp in partnership
with Virco. The new tests, which we began offering July 20, provide physicians
with data to evaluate resistance of HIV to antiretroviral drugs. We also
believe these new tests represent important advances in optimizing treatment
choices in the fight against HIV/AIDS."
The Company noted that each of the above forward-looking statements was 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. Further information on potential factors that could
affect the Company's financial results is included in the Company's Form 10-K
for the year ended December 31, 1997.
Laboratory Corporation of America-Registered Trademark- Holdings (LabCorp-
Registered Trademark-) is a national clinical laboratory organization with
annual revenues of $1.5 billion in 1997. The Company operates primary testing
facilities nationally, offering more than 1,700 different clinical assays, from
routine blood analyses to more sophisticated technologies. LabCorp performs
diagnostic tests for physicians, managed-care organizations, hospitals, clinics,
long-term care facilities, industrial companies and other clinical laboratories.
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LABORATORY CORPORATION OF AMERICA HOLDINGS
SUMMARIZED FINANCIAL INFORMATION
(Dollars in millions, except per share data)
(Unaudited) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
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1998 1997 1998 1997
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<S> <C> <C> <C> <C>
Net sales $ 386.1 $ 389.6 $ 759.1 $ 781.1
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Operating income 37.3 30.9 66.7 58.6
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Earnings before income taxes 25.4 10.1 44.2 16.0
Provision for income taxes 12.6 6.0 22.1 9.6
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Net earnings 12.8 4.1 22.1 6.4
Less preferred stock dividends
and accretion of manditorily
redeemable preferred stock 11.5 1.2 22.7 1.2
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Net gain (loss) attributable to
common shareholders $ 1.3 $ 2.9 $ (0.6) $ 5.2
Basic and diluted earnings
(loss) per share (1) $ 0.01 $ 0.02 $ 0.00 $ 0.04
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<FN>
(1) Earnings (loss) per common share are based on the weighted
average number of shares outstanding during the three- and six-month
periods ended June 30, 1998 of 124,506,673 shares and 124,452,465
shares, respectively, and the weighted average number of shares
outstanding during the three-and six-month periods ended June 30, 1997
of 122,920,200 shares and 122,935,080 shares, respectively.
</FN>
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