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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
JULY 29, 1997
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(Date of earliest event reported)
LABORATORY CORPORATION OF AMERICA HOLDINGS
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(Exact name of registrant as specified in its charter)
DELAWARE 1-11353 13-3757370
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(State or other (Commission (IRS Employer
jurisdiction or File Number) Identification
organization) Number)
358 SOUTH MAIN STREET, BURLINGTON, NORTH CAROLINA 27215
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(Address of principal executive offices)
910-229-1127
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(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS
On July 29, 1997, the Registrant issued a press release dated as of such
date announcing operating results of the Registrant for the three and six
month periods ended June 30, 1997, as well as certain other information.
The press release is attached as an exhibit hereto and the text thereof is
incorporated in its entirety herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL
INFORMATION AND EXHIBITS
(c) Exhibit
20 Press release of the Registrant dated July 29, 1997.
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
LABORATORY CORPORATION OF AMERICA HOLDINGS
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(Registrant)
By: /s/ BRADFORD T. SMITH
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Bradford T. Smith
Executive Vice President,
General Counsel, Secretary
and Compliance Officer
Date: July 30, 1997
FOR IMMEDIATE RELEASE
CONTACT: PAMELA SHERRY
TELEPHONE: 910-584-5171, EXT.4855
LABORATORY CORPORATION OF AMERICA -TM- REPORTS
SECOND QUARTER AND SIX MONTH RESULTS
$500 MILLION CONVERTIBLE PREFERRED STOCK OFFERING SUCCESSFULLY COMPLETED
STRENGTHENED FINANCIAL POSITION PERMITS FOCUS ON GROWTH
BURLINGTON, NC, JULY 29, 1997 - Laboratory Corporation of America -TM- Holdings
(LabCorp -TM-) (NYSE: LH) today announced results for the quarter and six
month period ended June 30, 1997.
SECOND QUARTER RESULTS
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Net sales for the quarter were $389.6 million, operating income was $30.9
million, and net income $4.1 million. Primary and fully diluted earnings per
share were $0.02. This compares with net sales of $410.0 million, operating
income of $30.1 million, net income of $5.9 million, and earnings per share of
$0.05 for the same period in 1996, before a special pretax charge of $23.0
million related to restructuring and other non-recurring charges and a $10.0
million increase to the allowance for doubtful accounts. After the 1996
special charge and allowance increase, the Company posted an operating loss of
$2.9 million, a net loss of $14.2 million, and a net loss per share of $0.12.
The change in second quarter 1997 net sales compared to the prior year's same
quarter is the result of lower volumes offset by a 2% price increase and is
chiefly related to LabCorp's program of actively eliminating accounts not
meeting profitability criteria.
LabCorp considers earnings before interest, taxes, depreciation, and
amortization (EBITDA) to be the best measurement of its performance. EBITDA
for the second quarter of 1997 was $52.3 million, or 13.4% of net sales, versus
$51.7 million before the special charges, or 12.6% of net sales, for the
comparable period in 1996. Second quarter 1997 operating expenses declined by
5.6%, or $21.1 million, compared to the same period in 1996.
"LabCorp's second quarter performance demonstrates the benefits of our
intensive cost reduction program and our efforts to appropriately increase
price," said Thomas P. Mac Mahon, President and Chief Executive Officer. "These
results underscore our ongoing ability to reduce expenses concurrent with
enhancing our pricing while recognizing volume declines. We will maintain this
short-term strategy while we implement programs to provide long-term revenue
growth opportunities."
SIX MONTH RESULTS
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Net sales for the six month period ended June 30, 1997 were $781.1 million,
operating income was $58.6 million, and net income $6.5 million. Primary and
fully diluted earnings per share were $0.04. For the same period in 1996, net
sales were $813.9 million, operating income was $57.9 million, net income $11.8
million, and earnings per share were $0.10 before the special charge and
allowance increase. After the charges, the Company posted operating income of
$24.9 million, a net loss of $8.3 million, and a net loss per share of $0.07.
EBITDA for the first six months of 1997 was $101.5 million, or 13.0% of net
sales, versus $100.1 million, before the charges, or 12.3% of net sales, for
the comparable period in 1996. Operating expenses in the first six months of
1997 declined by 4.4%, or $33.5 million, compared to the same period in 1996.
"Looking forward, we will continue to emphasize account profitability,
improvement in our billing systems, aggressive price management, targeted
opportunities for growth, and further cost reductions," commented Mr. Mac
Mahon. "As part of this plan, we recently initiated the final stage in our
process of closing the full service laboratory in Winston-Salem, North
Carolina, which is expected to be completed by the fourth quarter of this year.
Testing from this facility will be absorbed by other laboratories within our
system."
RECAPITALIZATION PLAN SUCCESSFULLY COMPLETED
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In June, the Company successfully completed a rights offering to raise $500
million through the sale of convertible preferred stock. Including basic and
oversubscriptions, offering subscriptions for approximately $700 million were
received. "We are pleased that the offering generated such high interest from
both existing and new shareholders," noted Mr. Mac Mahon. The proceeds from the
offering, less expenses, were used to repay and reduce debt of the Company.
Upon completion of the recapitalization, the Company also entered into an
amended credit agreement which is expected to provide added flexibility to
pursue new growth opportunities. "Having strengthened our financial position,
we are now able to fully focus our attention on important operating and growth
issues," said Mr. Mac Mahon. As of June 30, 1997 LabCorp had $75 million
outstanding under its revolving credit line and additional availability of $375
million.
The Company noted that each of the above forward-looking statements was subject
to change based on various important factors, including without limitation,
competitive actions in the marketplace and adverse actions of governmental and
other third-party payors. Further information on potential factors that could
affect the Company's financial results is included in the Company's Form 10-K
for the year ended December 31, 1996.
Laboratory Corporation of America -TM- Holdings (LabCorp -TM-) is a national
clinical laboratory organization with annualized revenues of $1.6 billion in
1996. The Company operates primary testing facilities nationally, offering
more than 1,700 different clinical assays, from routine blood analysis to more
sophisticated technologies. LabCorp performs diagnostic tests for physicians,
managed care organizations, hospitals, clinics, long-term care facilities,
industrial companies and other clinical laboratories.
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LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
SUMMARIZED FINANCIAL INFORMATION
(DOLLARS IN MILLIONS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
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(1) (1) (1) (1)
Before After Before After
Charges Charges Charges Charges
1997 1996 1996 1997 1996 1996
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Net Sales $ 389.6 $ 410.0 $ 410.0 $ 781.1 $ 813.9 $ 813.9
======= ======= ======= ======= ======= =======
EBITDA $ 52.3 $ 51.7 $ 18.7 $ 101.5 $ 100.1 $ 67.1
======= ======= ======= ======= ======= =======
Operating income (loss) $ 30.9 $ 30.1 $ (2.9) $ 58.6 $ 57.9 $ 24.9
======= ======= ======= ======= ======= =======
Earnings before income taxes $ 10.1 $ 13.3 $ (19.7) $ 16.1 $ 25.1 $ (7.9)
Provision for income taxes (6.0) (7.4) 5.5 (9.6) (13.3) (0.4)
------- ------- ------- ------- ------- -------
Net earnings (loss) $ 4.1 $ 5.9 $ (14.2) $ 6.5 $ 11.8 $ (8.3)
Less preferred dividends
and accretion of manditorily
redeemable preferred stock (1.2) -- -- (1.2) -- --
------- ------- ------- ------- ------- -------
Net income attributable
to common shares $ 2.9 $ 5.9 $ (14.2) $ 5.3 $ 11.8 $ (8.3)
======= ======= ======= ======= ======= =======
Earnings (loss) per share:
Primary earnings per
share (2) $ 0.02 $ 0.05 $ (0.12) $ 0.04 $ 0.10 $ (0.07)
======= ======= ======= ======= ======= =======
Fully diluted earnings
per share (3) $ 0.02 $ 0.05 $ (0.12) $ 0.04 $ 0.10 $ (0.07)
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(1) Charges in 1996 include $23.0 million for restructuring and other non-recurring items and $10.0
million to increase the provision for doubtful accounts.
(2) Primary earnings per common share are based on the weighted average number of shares outstanding
during the three-and six-month periods ended June 30, 1997 of 122,935,080 shares and the weighted
average number of shares outstanding during the three- and six-months ended June 30, 1996 of
122,920,200 shares and 122,914,474 shares, respectively.
(3) Fully diluted earnings per share are based on the weighted average number of shares outstanding
during the three- and six-month periods ended June 30, 1997 of 142,915,080 shares and 132,980,273
shares, respectively and the weighted average number of shares outstanding during the three-
and six-month periods ended June 30, 1996 of 122,920,200 shares and 122,914,474 shares, respectively.