LabCorp first quarter revenues increase 14.6% to $1,368.4 million

Laboratory Corporation of America^® Holdings (LabCorp^®) (NYSE: LH) today announced results for the quarter ended March 31, 2011. These results include the operations of Genzyme Genetics, which the Company acquired in the fourth quarter of 2010.

“We delivered strong revenue, earnings and free cash flow, despite severe weather throughout the country. The core business performed extremely well and we are especially pleased with the performance of Genzyme Genetics; both of these will be important components of our future growth”

First Quarter Results

Net earnings were $127.1 million compared to $132.7 million in the first quarter of 2010. Earnings per diluted share (EPS) were $1.23 compared to $1.25 in 2010. Earnings per diluted share, excluding amortization, restructuring and other special charges recorded in the first quarter of 2011 and 2010 (Adjusted EPS Excluding Amortization) were $1.52 and $1.40, respectively. During the quarter inclement weather had a significant impact on the Company's results, reducing EPS by approximately eight cents.

Operating income for the first quarter was $235.8 million compared to $234.2 million in the first quarter of 2010. Operating income, excluding restructuring and other special charges recorded in the first quarter of 2011 and 2010 (Adjusted Operating Income) was $263.7 million and $243.5 million, an increase of 8.3%.

Revenues for the quarter were $1,368.4 million, an increase of 14.6% over the first quarter of 2010. Testing volume, measured by requisitions, increased 5.9% and revenue per requisition increased 8.2%.

Operating cash flow for the quarter was $215.3 million. The balance of cash at the end of the quarter was $195.4 million, and there was $40 million outstanding under the Company's $500.0 million revolving credit facility. During the quarter, the Company repurchased approximately $265.0 million of stock, representing approximately 2.9 million shares. As of March 31, 2011, approximately $469.0 million of repurchase authorization remained under the Company's approved share repurchase plan.

The Company recorded restructuring and other special charges of $27.9 million during the first quarter of 2011. The charges included $4.0 million in severance and other personnel costs along with $9.8 million in facility-related costs associated with the integration of Genzyme Genetics. The charges also included a $14.8 million write-off of an investment made in a prior year. These charges were offset by a restructuring credit of $0.7 million resulting from the reversal of unused severance and facility closure liabilities.

"We delivered strong revenue, earnings and free cash flow, despite severe weather throughout the country. The core business performed extremely well and we are especially pleased with the performance of Genzyme Genetics; both of these will be important components of our future growth," said David P. King, Chairman and Chief Executive Officer.

Outlook for 2011

The Company is reaffirming its 2011 revenue guidance, expecting revenue growth of approximately 9.5% - 11.5%. The Company is raising its 2011 Adjusted EPS Excluding Amortization guidance to a range of $6.17 to $6.32, excluding the impact of any share repurchase activity after March 31, 2011. The Company is reaffirming its 2011 operating cash flow guidance of approximately $900 million and capital expenditures in the range of $140 million to $150 million.

As previously mentioned, the Company has modified its Adjusted EPS to exclude intangible amortization associated with acquisitions (Adjusted EPS Excluding Amortization). As the Company continues to grow the business through acquisitions, it will use Adjusted Earnings Excluding Amortization as a measure of operational performance, growth and shareholder returns. The Company believes adjusting EPS for amortization will provide investors with better insight into the operating performance of the business.

If the Company had made this adjustment for the first quarter of 2010, Adjusted EPS Excluding Amortization would have been $1.40. As reflected in the chart below, Adjusted EPS Excluding Amortization would have been $5.98 for the full year 2010. For the full year 2011, the amortization adjustment has a positive impact of approximately $0.50.

As previously announced, this Adjusted EPS Excluding Amortization will be the measure the Company requests First Call to use in compiling 2011 consensus EPS estimates. As such, to ensure comparability, the Company continues to request research analysts to also provide estimates on this basis. The Company will provide reconciliation tables in future earnings releases so that investors can clearly see these adjustments.