LabCorp 2012 Annual Report Download - page 3

LabCorp delivered a solid
fi nancial performance in 2012
– a notable achievement in
the face of persistent economic headwinds and a health
care landscape undergoing fundamental transformation.
Compared to the prior year, we grew revenue 2.3 percent to
$5.7 billion and Adjusted Earnings Per Share Excluding
Amortization 7.1 percent to $6.82. We extended our long
record of generating strong Operating and Free Cash Flow,
which we invested in our businesses and returned to
shareholders through share repurchase.1 Moreover, through
rigorous expense management, we reduced our Selling,
General and Administrative Expenses as a percentage of
revenue by 1.2 percentage points in 2012. Finally, we enhanced
our strong balance sheet by refi nancing $1.0 billion of debt at
historically low interest rates.
As we achieved these impressive fi nancial results, we also
made signifi cant strides in our information technology (IT)
and scientifi c capabilities, and completed a number of
effi ciency projects to streamline our operations. In short,
we are pleased with another year of strong execution of
our fi ve-pillar strategy.
The achievements of 2012 are particularly important because
they lay the groundwork for LabCorp’s role in the implemen-
tation of health care reform. We often note that laboratory
testing represents approximately 3 percent of total U.S.
health care expenditures but infl uences up to 80 percent of
decisions made by physicians. Our mission in 2013 and the
years ahead is to continue to provide the highest-quality,
most effi cient services in the clinical laboratory industry. Yet,
we must recognize that these capabilities alone may not
guarantee success in the new order, so we will build on
our foundational strengths to become a trusted knowledge
partner for our customers. To that end, we are developing and
implementing a suite of data-driven knowledge services
that optimize decision-making, improve health outcomes
and reduce treatment costs.
The LabCorp we are building for the future will go beyond
collecting specimens, conducting tests and reporting results.
We will offer a robust set of analytical and decision support
tools that will provide context and insight, delivering value to
all stakeholders – physicians, patients and payers. Our vision
is that LabCorp will be a leader in tomorrow’s health care
paradigm – one that puts an increased emphasis on preven-
tion, early detection, effective monitoring and treatment and
pay-for-performance metrics to deliver high-quality care and
better patient outcomes at lower cost.
Disciplined Execution of the Five-Pillar Strategy
We are pleased to report that LabCorp made meaningful
progress on each pillar of our strategy in 2012.
Our fi rst strategic pillar is to deploy capital to investments
that enhance our business and return capital to shareholders.
The 2012 acquisition of MEDTOX Scientifi c adds to our
record of successful acquisitions and integrations. MEDTOX
is a premier forensic and clinical laboratory with a diverse
test menu and industry-leading expertise in toxicology testing.
Its acquisition provides LabCorp with an excellent platform
for meaningful growth in specialized toxicology testing.
During 2012, we also made signifi cant progress on our
integrations of Genzyme Genetics,2 Orchid Cellmark and
Clearstone Central Laboratories. These recent acquisitions
have strengthened our business by enhancing our specialty
testing capabilities and expanding our geographic reach.
We continued to return value to shareholders through
share repurchase during 2012. For the year, we bought
back 5.9 million shares of LabCorp stock for $516 million.
Since 2003, we have repurchased approximately $4.6 billion
worth of stock at an average price of approximately $64
per share.
TO OUR
SHAREHOLDERS
We will build on our foundational strengths to
become a trusted knowledge partner for our
customers. To that end, we are developing and
implementing a suite of data-driven knowledge
services that optimize decision-making, improve
health outcomes and reduce treatment costs.
Dave King
Chairman and Chief Executive Offi cer
1 Adjusted Earnings Per Share Excluding Amortization is calculated by excluding the effects of the impact of
restructuring and other special charges and amortization expense from GAAP diluted earnings per share.
Free cash fl ow represents cash fl ows from operations less capital expenditures. For a reconciliation of
non-GAAP fi nancial measures, please refer to slides 7-9 of the Company’s 8K fi led on February 8, 2013.
2 We now provide reproductive genetic testing services under the name Integrated Genetics and oncology genetic
testing services under the name Integrated Oncology.
1