Laboratory Corp. of America Holdings (NYSE:LH) Q4 2018 Earnings Conference Call Transcript

Feb 16, 2019 • 09:00 am ET

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Laboratory Corp. of America Holdings (NYSE:LH) Q4 2018 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good day, ladies and gentlemen and welcome to the LabCorp Q4 2018 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder, this conference is being recorded.

I would now like to introduce your host for today's conference. Scott Frommer, Vice President of Investor Relations, you may begin.

Executive
Scott Frommer

Good morning and welcome to LabCorp's fourth quarter 2018 conference call. As detailed in today's press release, there will be a replay of this conference call available via telephone and Internet. With me today are Dave King, Chairman and Chief Executive Officer; Glenn Eisenberg, Executive Vice President and Chief Financial Officer; and John Ratliff, CEO of Covance Drug Development.

In addition to our press release, we also furnished Form 8-K this morning that includes additional financial information. Both are available in the Investor Relations section of our website at www.labcorp.com and include a reconciliation of non-GAAP financial measures discussed during today's call to GAAP. Finally, we are making forward-looking statements during today's call. These forward-looking statements include, but are not limited to, statements with respect to 2019 guidance and the related assumptions, the impact of various factors on operating and financial results and the opportunities for future growth.

These statements are based upon current expectations and are subject to change based upon various factors that could affect our financial results. Some of these factors are set forth in detail in our 2017 Form 10-K and subsequent Forms 10-Q and in the company's other filings with the SEC. We have no obligation to provide any updates to these forward-looking statements, even if our expectations change.

Now, I'll turn the call over to Dave King.

Executive
David P. King

Thank you, Scott, and good morning. As we enter our 50th year, we have transformed from a local laboratory operating from a hospital basement to a leading global life sciences company that is deeply integrated in guiding patient care. We are focused on our 3 foundational goals: delivering world-class diagnostics, bringing new medicines to patients faster and using technology to change the way care is delivered. We achieve these goals through the power of the LabCorp enterprise, combining our scale, breadth of services, integration of capabilities and data and patients' interests the need to deliver innovation, quality, efficiency and service.

We closed out 2018 by delivering another year of strong, profitable growth, driven by revenue of over $11 billion and adjusted EPS of over $11 per share, increases of 10% and 20%, respectively. We also generated free cash flow adjusted for a onetime tax payment of over $1 billion, as well as over $650 million in proceeds from business divestitures. We returned $700 million of that amount to shareholders through repurchases and paid down $695 million of debt to bring us within our targeted leverage range of 2.5 times to 3 times EBITDA.

Our quarter was highlighted by another strong performance in our Covance Drug Development business, which