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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
OCTOBER 27, 1998
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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 of File Number) Identification
incorporation) Number)
358 SOUTH MAIN STREET, BURLINGTON, NORTH CAROLINA 27215
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(Address of principal executive offices)
336-229-1127
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(Registrant's telephone number, including area code)
ITEM 5. OTHER EVENTS
On October 27, 1998, the Company issued a press release
announcing operating results of the Company for the quarter
and nine months ended September 30, 1998. 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 Company dated
October 27, 1998.
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: November 23, 1998
Laboratory Corporation of America-Registered Trademark- Holdings
358 South Main Street
Burlington, NC 27215
Telephone: 336-584-5171
FOR IMMEDIATE RELEASE Contact: Pamela Sherry
336-584-5171, Ext. 4855
Shareholder Direct: 800-LAB-0401
www.labcorp.com
LABORATORY CORPORATION OF AMERICA-REGISTERED TRADEMARK- REPORTS
THIRD QUARTER AND NINE MONTH RESULTS
BURLINGTON, NC, OCTOBER 27, 1998 - Laboratory Corporation of America-
Registered Trademark- Holdings (LabCorp-Registered Trademark-) (NYSE:
LH) today announced results for the quarter and nine months ended
September 30, 1998.
THIRD QUARTER RESULTS
_____________________
Net sales for the third quarter were $398.3 million, operating income
$34.3 million, and net income $11.4 million. This compares with net
sales of $376.5 million, operating income of $26.7 million, and net
income of $5.4 million for the same period in 1997. After deducting
preferred stock dividends, the basic and diluted earnings per common
share were $0.00 in the third quarter of 1998 compared to a loss of
$0.05 for the same period in 1997.
The revenue increase of 5.8% is the result of a 4.4% increase in
price and a 1.4% increase in volume, and is directly related to the
Company's ongoing program to improve price and implement its
Strategic Plan to build and maintain profitable business. This
represents the first quarter in three years that revenues have
increased compared to the corresponding quarter in the previous year.
LabCorp's key performance measure, earnings before interest, taxes,
depreciation, and amortization (EBITDA), was $54.1 million for the
third quarter of 1998, or 13.6% of net sales, versus $47.4 million,
or 12.6% of net sales, for the comparable period in 1997. Furthering
LabCorp's trend in operating expense reduction, third quarter
operating expenses as a percentage of sales decreased by 1.6%,
compared to the same period in 1997. Operating cash flow for the
quarter was $24.4 million, from which LabCorp internally funded the
August acquisition of Universal Standard Healthcare, Inc.'s Michigan
laboratory to maintain a zero ending balance on the Company's
revolving line of credit.
NINE MONTH RESULTS
__________________
Net sales for the nine-month period ended September 30, 1998 were
$1,157.4 million, operating income $101.0 million, and net income
$33.5 million. For the same period in 1997, net sales were $1,157.6
million, operating income was $85.3 million, and net income $11.8
million. After deducting preferred stock dividends, the basic and
diluted earnings per common share were $0.00 in 1998 compared to a
loss of $0.01 in 1997. The stabilization of revenue is attributable
to a 2.6% decrease in volume offset by a 2.6% increase in price.
EBITDA for the first nine months of 1998 was $162.7 million, or 14.1%
of net sales, versus $148.9 million, or 12.9% of net sales, for the
comparable period in 1997. Operating expenses in the first nine
months of 1998 declined by 1.5% as a percentage of sales, or $15.9
million, compared to the same period in 1997. Operating cash flow
was $89.9 million.
In addition, since the interest rate that the Company pays on its
debt is linked to the Company's quarterly financial performance, the
third quarter results will entitle the Company to a reduction in its
interest rate from LIBOR plus 1.0% to LIBOR plus 0.5%.
"These solid results confirm that our initiatives to improve
LabCorp's financial performance by implementing the Strategic Plan
have been effective," said Thomas P. Mac Mahon, President and Chief
Executive Officer. "We had expected to incur additional expenses to
implement strategic growth initiatives such as HIV resistance testing
and new managed-care programs in Florida, as well as transitional
costs of recent acquisitions. However, we were still able to lower
our expenses as a percentage of sales compared to the same periods in
1997 and continue to gain momentum in building revenue generated from
profitable business, overcoming a historical trend of revenue decline
in the third quarter."
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, 1997.
Laboratory Corporation of America-Registered Trademark- Holdings
(LabCorp-Registered Trademark-) is a national clinical laboratory
organization with annual revenues of $1.5 billion in 1997. The
Company operates primary testing facilities nationally, offering more
than 1,700 different clinical assays, from routine blood analyses 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
SUMMARIZED FINANCIAL INFORMATION
(Dollars in millions, except per share data)
(Unaudited) (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
__________________ ____________________
1998 1997 1998 1997
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Net sales $ 398.3 $ 376.5 $ 1,157.4 $ 1,157.6
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Operating income 34.3 26.7 101.0 85.3
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Earnings before income taxes 22.3 13.4 66.6 29.5
Provision for income taxes 10.9 8.0 33.1 17.7
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Net earnings 11.4 5.4 33.5 11.8
Less preferred stock dividends
and accretion of manditorily
redeemable preferred stock 11.3 12.2 34.0 13.4
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Net gain (loss) attributable
to common shareholders $ 0.1 $ (6.8) $ (0.5) $ (1.6)
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Basic and diluted earnings
(loss) per share (1) $ 0.00 $ (0.05) $ (0.00) $ (0.01)
======= ======== ========= =========
(1) Earnings (loss) per common share are based on the weighted
average number of shares outstanding during the three- and nine-
month periods ended September 30, 1998 of 125,199,880 shares and
124,704,341 shares, respectively, and the weighted average
number of shares outstanding during the three- and nine-month
periods ended September 30, 1997 of 123,541,076 shares and
123,139,298 shares, respectively.
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