LabCorp 2009 Annual Report Download - page 12

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We Deliver Highly Valued
Results For
These are results that work for LabCorp year in and year out and
continue to make our Company one of the most compelling values
in the health care sector.
10 LABORATORY CORPORATION OF AMERICA
To Our Shareholders:
For all of LabCorp’s stakeholders – patients, physicians
and investors – results matter. The preceding pages of this
report describe how LabCorp’s commitment to innovation,
scientifi c leadership and operational excellence delivers
results for the physicians we serve and the patients they
treat. Over the past decade, this disciplined approach has
consistently generated strong fi nancial performance and
value for our shareholders as well.
What makes LabCorp’s vision of the future so compelling?
First, our business has a strong set of positives. Lab testing
is the most cost-effective spending in health care, with our
average transaction price at approximately $40. We account
for some 3 percent of health care spending, yet lab results
infl uence 70 to 80 percent of health care decisions. If your
last visit to the doctor was like mine, it ended with the
physician saying “I think I know what we need to do, but
let’s see what the labs say to be sure.” This, in my view,
is compelling evidence of our value.
LabCorp brings unique attributes to this consistent and
sustainable business. Our size and scale allow us to deliver
one of the broadest arrays of tests and services across the
country. We have been and remain the industry leader in
clinical and scientifi c innovation. We have an exceptional
management team focused on advancing our vision of the
future. Our franchise and our culture of execution and
innovation combine to generate capital that has benefi ted,
and will continue to benefi t, our shareholders over time.
Our fi nancial metrics refl ect the strength of our business
model. Year in and year out, LabCorp’s performance has
been characterized by fi nancial stability, as evidenced by
our solid balance sheet, consistent revenue growth,
excellent cash fl ow generation and high degree of operating
leverage that maximizes the productivity of our assets.
Over the past fi ve years, we have grown earnings and
free cash fl ow at a 15 and 11 percent compound annual
growth rate, respectively. During this period, our EBIT
(Earnings Before Interest and Taxes) margins have
consistently led the industry. Additionally, we have
reinvested a signifi cant portion of our earnings in
LabCorp stock, repurchasing approximately $2 billion
of our shares since 2006.
In 2009, we recorded another strong fi nancial performance.
We grew revenue by four percent despite the challenging
economic environment. We continued to set the standard
for the industry by growing esoteric volume by nine percent.