LabCorp reports financial results for quarter and year ended December 31, 2009

Laboratory Corporation of America^® Holdings (LabCorp^®) (NYSE: LH) today announced results for the quarter and year ended December 31, 2009.

“We are very pleased with our fourth quarter and 2009 results, given the challenging economic environment. We remain optimistic about the growth opportunities that lie ahead for us in 2010, and we are well positioned to capitalize on them”

Fourth Quarter Results

Net earnings were $142.7 million, compared to $118.1 million in the fourth quarter of 2008. Earnings per diluted share (EPS) were $1.33 compared to $1.08 in 2008. Earnings per diluted share, excluding restructuring and other special charges recorded in both periods (Adjusted EPS) were $1.16, compared to $1.10 in 2008.

Operating income was $215.8 million. Operating income, excluding restructuring and other special charges (Adjusted Operating Income) was $221.9 million, or 19.0% of net sales.

Compared to the fourth quarter of 2008, and excluding a special charge in the prior year, revenues were $1,165.1 million, an increase of 3.4%. Testing volume, measured by accessions, decreased 0.9% and revenue per accession increased 4.3%. Excluding the special charge and the consolidation of the Company’s Ontario, Canada joint venture, revenue increased 2.8%. Testing volume decreased by 1.5% and revenue per accession increased 4.3%. During the quarter, the termination of two large government contracts reduced volume by 1.5%, declines in the Company’s drugs of abuse testing business reduced volume by 0.4% and weather reduced volume by 0.3%. Excluding these items, volume increased by 0.7% in the quarter.

Operating cash flow for the quarter was $224.7 million, net of $3.9 million in transition payments to UnitedHealthcare. The balance of cash at the end of the quarter was $148.5 million, and there was $75 million outstanding under the Company’s $500 million revolving credit facility. During the quarter, the Company repurchased $108.4 million of stock, representing approximately 1.5 million shares.

The Company recorded pre-tax restructuring and other special charges of $3.3 million during the fourth quarter of 2009, primarily relating to severance payments and the closing of redundant and underutilized facilities. The Company also adopted amendments to its employee and executive pension plans, resulting in the recognition of a one-time net curtailment charge of $2.8 million. In addition, the Company recorded favorable adjustments of $21.5 million to its fourth quarter tax provision relating to the resolution of certain state tax issues under audit, as well as the realization of foreign tax credits.

During the fourth quarter of 2008, the Company recorded total pre-tax restructuring and other special items of $15.4 million. Included in this amount were $4.2 million of restructuring and other special charges primarily related to workforce reductions and the closing of redundant and underutilized facilities; $3.7 million of accelerated retirement benefits related to the retirement of the Company’s Executive Vice President, Corporate Affairs; and the special charge for a $7.5 million cumulative revenue adjustment relating to certain historic overpayments made by Medicare for claims submitted by a subsidiary of the Company. In addition, the Company recorded a $7.1 million favorable adjustment to its fourth quarter tax provision relating to tax treaty changes adopted by the United States and Canada.

Full Year Results

Net earnings were $543.3 million, compared to $464.5 million in 2008. EPS were $4.98 compared to $4.16 in 2008. Adjusted EPS were $4.89 compared to $4.60 in 2008. Operating income was $935.9 million. Adjusted Operating Income was $954.9 million, or 20.3% of net sales.

Compared to 2008, and excluding a special charge in the prior year, revenues were $4,694.7 million, an increase of 4.0%. Testing volume, measured by accessions, increased 1.5% and revenue per accession increased 2.5%. Excluding the special charge and the consolidation of the Company’s Ontario, Canada joint venture, revenue increased 4.3%. Testing volume increased 0.7% and revenue per accession increased 3.6%.

Operating cash flow for 2009 was $862.4 million, net of $28.4 million in transition payments to UnitedHealthcare, an increase of 10.4% compared to 2008. During 2009, the company repurchased $273.5 million of stock, representing approximately 3.9 million shares. As of December 31, 2009, approximately $71.8 million of repurchase authorization remained available under the Company’s previously approved repurchase plan.

"We are very pleased with our fourth quarter and 2009 results, given the challenging economic environment. We remain optimistic about the growth opportunities that lie ahead for us in 2010, and we are well positioned to capitalize on them,” said David P. King, Chairman and Chief Executive Officer.

Outlook for 2010

The Company expects revenue growth of approximately 2.5% – 4.5%; Adjusted EPS in the range of $5.35 to $5.55, excluding the impact of any share repurchase activity after December 31, 2009; operating cash flow of approximately $870 million, excluding any transition payments to UnitedHealthcare; and capital expenditures of approximately $135 million.

Share Repurchase Program

The Company announced today that its Board of Directors has authorized a new stock repurchase program under which LabCorp may purchase up to an aggregate of an additional $250 million of its Common Stock. Any purchases under LabCorp's stock repurchase programs may be made from time to time in the open market or in privately negotiated transactions and may be initiated and discontinued at any time.

Use of Adjusted Measures

The Company has provided in this press release “adjusted” financial information that has not been prepared in accordance with GAAP. The Company believes these adjusted measures are useful to investors, as a supplement to, but not as a substitute for, GAAP measures, in evaluating the Company’s operational performance, and that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating operating results and trends, and in comparing the Company’s financial results with other companies. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the tables accompanying this press release.

The Company today is filing an 8-K that will include additional information on its business and operations. This information will also be available on the Company's Web site. Analysts and investors are directed to this 8-K and the Web site to review this supplemental information.