LabCorp 2006 Annual Report Download - page 19

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contents
Five-Year Selected Financial Data 18 Management’s Discussion and Analysis of Financial Condition and Results of Operations 20
Management’s Report on Internal Control Over Financial Reporting 28 Report of Independent Registered Public Accounting Firm 29 Consolidated
Balance Sheets 30 Consolidated Statements of Operations 31 Consolidated Statements of Changes in Shareholders’ Equity 32 Consolidated Statements
of Cash Flows 33 Notes to Consolidated Financial Statements 34 Shareholder and Company Information 52
Laboratory Corporation of America® Holdings 2006 17
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LabCorp’s strategy is to lead the industry in achieving
long-term growth and profitability by growing our
business and becoming more efficient. This strategy
rests on a solid business model with excellent
financial fundamentals.
Growth in our business comes from overall industry
growth drivers such as the aging population and continued
adoption of esoteric testing. We expect to derive additional
revenue growth from our focus on managed care, and
from growth in our cancer diagnostics and cardiovascular
disease testing areas. In addition to revenue growth, we
expect to achieve growth in our EBITDA margins through
improvements in operational efficiency, by increasing
our higher-growth, higher-value esoteric and genomic
businesses, by improving our accounts receivable
collections experience, and by increasing the volume
of testing through our existing laboratory facilities.
We use the cash flow generated through our
increasing revenue base and expanding EBITDA margins
to return value to our shareholders by both reinvesting
in our business and through share repurchase. During
2006, we utilized $435.1 million of free cash flow to
repurchase approximately 6.7 million shares of LabCorp
common stock.
We believe that LabCorp’s quality- and service-
driven culture results in sound financial performance,
and we look forward to delivering continued strong
results to LabCorp shareholders.
.– Brad Hayes
LETTER FROM
BRAD HAYES
CHIEF FINANCIAL OFFICER
EBITDA
in millions
See page 51 for reconciliation of EBITDA, a non-GAAP
measure, to earnings before income taxes, the most
comparable measure under GAAP.
$3,600
$3,300
$3,000
$2,700
$2,400
$1,000
$ 850
$ 700
$ 550
$ 400
$650
$575
$500
$425
$350
NET SALES
in millions
02 03 04 05 06
02 03 04 05 06
02 03 04 05 06
OPERATING
CASH FLOWS
in millions