This information contains forward-looking statements which
are 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, 1999 and subsequent filings.
Overview of LabCorp
- Nationwide network of 25 primary testing facilities and
900
patient service centers
- Conducts tests on 260,000 specimens daily
- Offers more than 2,000 test procedures
- Serves over 100,000 physicians and other health care
providers
- 8,000 employees nationwide
The Clinical Laboratory Testing Market
US market is approximately $30-32 billion
CLINICAL LABORATORY TESTING INDEPENDENT CLINICAL LABORATORIES
Hospitals 49% All others 86%
Physician Offices 13% LabCorp($1.699b) 14%
Independent Clinical Labs 39%
Source: Lab Industry Reports 2/99 & 1999 YE revenue
for LabCorp
Strategic Goals
1. Strengthen standing as a national laboratory that
provides a full range of laboratory services
2. Leverage broad-reaching infrastructure to expand
leadership position in esoteric testing
2000 Strategic Approach
- Maintain national coverage for all key customers
- Expand upon leading position in Genomic testing
- Evaluate appropriate acquisition candidates
- Continue to move to single billing system
- Expand relationships with key health care /
- e-commerce providers
- Develop strategy to tap full potential of LabCorp's
extensive database
<PAGE>
<TABLE>
Financial Performance
Price & Volumes: Trends by Payor Type
<CAPTION>
*Pro-Forma 9/30/00
1998 1999 YTD ACTUAL
PPA Accessions PPA Accessions PPA Accessions
$ millions $ millions $ millions
---------------- ------------------ ---------------
<S> <C> <C> <C> <C> <C> <C>
Client (Physicians) 22.21 25.9 21.46 27.0 22.29 20.4
Patient 79.62 2.2 92.56 2.3 102.23 1.6
Third Party 29.13 12.2 27.75 11.7 29.26 8.3
(MC/MD/Insurance)
Managed Care
- Capitated 9.88 9.1 10.06 8.4 9.30 7.7
- Fee for service 40.43 10.3 39.28 12.7 41.41 12.0
------ ----- ------ ---- ------ ----
Total 26.09 19.4 27.68 21.1 28.93 19.7
------ ----- ------ ---- ------ ----
LabCorp Total $27.01 59.7 $27.35 62.1 $28.64 50.0
</TABLE>
*(1) Adjusted accessions for Client
(2) Reported PPA for Client was $22.36 with 25.9
accessions
(3) Reported PPA for Company was $27.84 with 61.0
accessions
<TABLE>
Financial Performance
Revenue Analysis by Business Area
<CAPTION>
YTD SEPT 1999 YTD SEPT 2000
REVENUE ACCN %ACCNS PPA REVENUE ACCNS %ACCNS PPA
$Millions 000 to total $ $Millions 000 to total $
--------- ----- -------- ---- --------- ---- -------- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CMBP 77.3 761.1 1.7% 101.57 94.6 858.5 1.7% 110.25
Powell
Esoteric 117.1 2,610.6 5.7% 44.85 135.0 2,964.4 5.9% 45.52
Core 1,081.6 42,649.0 92.7% 25.36 1,203.7 46,218.3 92.4% 26.04
------- -------- ----- ----- ------- -------- ----- -----
Total 1,276.0 46,020.7 100.0% 27.73 1,433.3 50,041.2 100.0% 28.64
======= ======== ====== ===== ======= ======== ===== =====
99 VS 00
PPA
Incr/(Decr)
-----------
CMBP 8.5%
Powell
Esoteric 1.5%
Core 2.7%
---
Total 3.3%
===
</TABLE>
Year-End Financials
12-31-97 12-31-98 12-31-99
-------- -------- --------
Revenue 1,579.9 1,612.6 1,698.7
Operating Expense 1,473.8 1,485.0 1,549.0
------- ------- -------
Operating Income 106.1 127.6 149.7
------- ------- -------
Margin 6.7% 7.9% 8.8%
EBITDA 191.2 210.4 233.4
======= ======= ======
Margin 12.1% 13.0% 13.7%
------- ------- ------
Bad Debt % to revenue 9.6% 10.2% 11.3%
------- ------- ------
DSO 79 83 74
------- ------- ------
<PAGE>
THIRD QUARTER OPERATING RESULTS
9/30/99 9/30/00
------- -------
Revenue 428.6 488.1
Operating Expense 388.5 418.8
----- -----
Operating Income 40.1 69.3
----- -----
Margin 9.4% 14.2%
EBITDA 60.3 92.1
==== ====
Margin 14.1% 18.9%
---- ----
Bad Debt % to revenue 11.4% 10.2%
---- ----
DSO 76 70
2000 THIRD QUARTER ACHIEVEMENTS
- Increased revenues 13.9% (volume 9.4%; price 4.5%)
- Increased EBITDA 53%
- Increased diluted EPS 194%
- Completed acquisition of National Genetics Institute
7/31/00.
NINE MONTH OPERATING RESULTS
YTD 9/99 YTD 9/00
-------- --------
Revenue 1,276.0 1,433.3
Operating Expense 1,159.4 1,235.3
------- -------
Operating Income 116.6 198.0
------- -------
Margin 9.1% 13.8%
EBITDA 178.9 263.5
====== =======
Margin 14.0% 18.4%
------ -------
Bad Debt % to revenue 11.6% 10.2%
------ -------
DSO 76 70
2000 Nine Months YTD Achievements
- Increased revenues 12.3% (volume 8.9%; price 3.4%)
- Increased EBITDA 47%
- Increased diluted EPS 142%
- Increased operating cash flow 38%
- DSO reduced 4 days from year end 1999 to 70 days
- Reduced interest rate to LIBOR plus 37.5 basis points
Financial Goals for 2000
- Increase overall revenues by approximately 12%
- Increase EBITDA margins to approximately 17.5% of
revenue
- Increase diluted EPS to approximately $3.20 per share
- Reduce debt by approximately $90 million
- Lower DSO to approximately 69 days
Financial Goals for 2001
- Increase overall revenues 10-12%
- Increase EBITDA margins to approximately
20-21% of sales
- EPS growth of approximately 50% compared to 2000
- Reduce debt by approximately $132 million
- Lower DSO to the mid 60's range
Opportunity for Investors
- A proven strategy for growth
- LabCorp is a pioneer in identifying and commercializing
innovative technologies the first to fully embrace
molecular diagnostics
- LabCorp's national infrastructure connects large scale
proficiency with wide scale technological expertise
- New advances in scientific research will generate growth
and demand for molecular testing
