LabCorp 2006 Annual Report Download - page 14

physicians and their staffs with the functional-
ity they want.
Fundamental Drivers of
Financial Success
Joined together, these three core strengths
fueled our strong financial results in 2006.
For the year, revenues grew to $3,590.8 million,
an increase of 7.9 percent over the previous
year, comprised of 4.2 percent increase
in price and 3.7 percent gain in volume.
Earnings before interest, taxes, depreciation
and amortization (EBITDA) represented 26.1
percent of net sales – a margin that again
led the industry. We achieved success in
continuing to expand our margins by leverag-
ing our infrastructure, improving automation,
reducing our bad debt rate and realizing
synergy opportunities.
Earnings per diluted share in 2006
increased 17. 9 percent to $3.30, compared to
$2.80 in 2005, excluding the impact of restruc-
turing and other special charges recorded in
both years. And, our operations generated
$632.3 million in operating cash flow, which
enabled us to return considerable value to our
shareholders by repurchasing $435.1 million of
our stock, representing 6.7 million shares.
Core Strengths Key to
Sustaining Strong Results
As we look ahead to 2007 and beyond, we
are excited about the prospects to continue
to grow revenues, earnings and shareholder
value. The expanded infrastructure and
capabilities we now have in place, especially
in the Northeast, improve our ability to
strengthen relationships with other managed
care providers and afford physicians and
patients increased access to medical testing.
Our proven ability to partner with managed
care organizations to make service delivery
more efficient, constrain leakage and reduce
their overall lab spending will continue to pay
significant dividends and win additional busi-
ness going forward. We believe this approach
helps our customers appropriately manage our
segment of health care costs in the U.S.
LabCorp’s commitment to scientific
leadership and innovation remains central to
our organization’s success. Recent advances,
like the development of a novel assay for
patients with chronic lymphocytic leukemia
and the commercialization of ARCA Discovery’s
companion diagnostic for the first personal-
ized cardiovascular medicine, bucindolol,
promise not only to contribute to growth going
forward but also to appreciably improve health
and outcomes for thousands of patients.
As we formulate plans to extend LabCorp’s
successful record of growth, we never lose
sight of the significant impact scientific
advances, testing accuracy and commitment
to quality have on millions of patients and
their families. The American Cancer Society
recently reported that, after 13 years of
falling cancer death rates, the number of
U.S. cancer deaths dropped for the second
consecutive year – the first time deaths have
declined two years in a row since researchers
began compiling national data more than
70 years ago. Advances in diagnostic and
prognostic testing have made essential con-
tributions to achieving this exciting progress,
and you may be certain that the work of
LabCorp scientists will continue to be at the
forefront of improvements in the diagnosis,
monitoring and treatment of disease.
At the 2007 Annual Meeting, Andrew G.
Wallace, M.D. will conclude his tenure as
a member of LabCorp’s Board of Directors.
During the ten years he has served on the
Board, he has provided valuable insight and
advice, particularly in the area of science, as
LabCorp gained momentum and success.
We appreciate all of Andy’s contributions and
will miss his guidance.
It is fitting that we conclude this letter
by thanking the 25,000 dedicated LabCorp
personnel at every level of our organization
who have made our successes possible.
We could not have achieved the many
accomplishments listed in this letter without
their efforts and their “can do” attitude. In
2007 and in the years ahead, we will continue
to rely on their talent, skill and commitment to
achieve even more for our customers and our
shareholders. It is an honor to lead and we
thank them, and you, for your support.
Very truly yours,
Tom Mac Mahon
Chairman of the Board
Dave King
President and Chief Executive Officer
12 Laboratory Corporation of America® Holdings 2006
..................................... .....................................