LabCorp 2015 Annual Report Download - page 97

Index
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adjustments and certain classifications of expenses, including items associated with the allocation of stock compensation, from cost of revenue to selling,
general and administrative expenses.
The Acquisition contributed $2,209.7 and $167.2 of revenue and operating income, respectively, during the year ended December 31, 2015.
Unaudited Pro Forma Information
The Company completed the Acquisition on February 19, 2015. Had the Acquisition been completed as of the beginning of 2014, the Company's pro forma
results for 2015 and 2014 would have been as follows:
Year Ended December 31,
2015
2014
Total revenues
$ 9,033.3
$ 8,711.2
Operating income
1,123.3
907.7
Net income attributable to Laboratory Corporation of America Holdings
546.8
423.0
Earnings per share:
Basic
$ 5.04
$ 4.22
Diluted
$ 5.02
$ 4.16
The unaudited pro forma results reflect certain adjustments related to past operating performance, acquisition costs and acquisition accounting
adjustments, such as increased amortization expense and decreased depreciation expense based on the estimated fair value of assets acquired, the impact of
the Company’s new financing arrangements, and the related tax effects. The pro forma results include costs directly attributable to the Acquisition which are
not expected to have a continuing impact on the combined company, such as transaction costs of $207.6; comprised of change in control, retention and
severance arrangements of $26.8; acceleration of stock based compensation of $43.2 and related employer taxes of $9.4; legal, advisor and success fees of
$75.6; write-off of bridge and other deferred financing fees of $15.2; and make-whole payments of $37.4 made in connection with the prepayment of
Covance's existing private placement debt, all of which are included in the pro forma results of operations for the year ended December 31, 2014. The pro
forma results do not include any anticipated synergies which may be achievable subsequent to the Acquisition. To produce the unaudited pro forma financial
information, the Company adjusted Covance’s assets and liabilities to their estimated fair value based on a valuation as of the Acquisition Date. These pro
forma results of operations have been prepared for comparative purposes only, and they do not purport to be indicative of the results of operations that
actually would have resulted had the Acquisition occurred on the date indicated or that may result in the future.
During the year ended December 31, 2015, the Company also acquired various laboratories and related assets for approximately $128.6 in cash (net of
cash acquired). The purchase consideration for these acquisitions has been allocated to the estimated fair market value of the net assets acquired, including
approximately $17.4 in identifiable intangible assets (primarily customer relationships) and a residual amount of goodwill of approximately $68.4. These
acquisitions were made primarily to extend the Company's geographic reach in important market areas and/or enhance the Company's scientific
differentiation and esoteric testing capabilities. The Company's results would not have been materially different from its pro forma results had the Company's
other 2015 acquisitions occurred at the beginning of 2014.
On November 20, 2014, the Company completed its acquisition of LipoScience, Inc. (LipoScience), a provider of specialized cardiovascular diagnostic
laboratory tests based on nuclear magnetic resonance (NMR) technology, for a purchase price of $5.25 per share or a transaction value of $67.9 (net of cash
acquired).
The LipoScience purchase consideration has been allocated to the estimated fair market value of the net assets acquired, including approximately $27.2
in identifiable intangible assets (primarily non-tax deductible customer relationships, technology and trade names and trademarks) with weighted-average
useful lives of approximately 19.5 years; $9.4 in deferred tax liabilities (relating to identifiable intangible assets); and a residual amount of non-tax
deductible goodwill of approximately $17.4.
During the year ended December 31, 2014, the Company also acquired various other laboratories and related assets for approximately $91.5 in cash (net
of cash acquired). These acquisitions were made primarily to extend the Company's geographic reach in important market areas and/or enhance the
Company's scientific differentiation and esoteric testing capabilities. The purchase consideration for these acquisitions has been allocated to the estimated
fair market value of the net assets acquired, including approximately $22.0 in identifiable intangible assets (primarily customer relationships and non-
compete agreements) and a residual amount of goodwill of approximately $63.4.
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