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Labcorp Holdings Annual Report, Year Ended Dec 31, 2002

Filing Date
Filed March 28, 2003
Period End
December 31, 2002
Security
LH
In the record · 2016–202610-K1310-Q338-K382

LH filed 13 annual reports (10-K), 33 quarterly reports (10-Q) and 382 current reports (8-K) between 2016 and 2026.

  1. Restructuring8-K · Apr ’17Apr ’17
  2. Leadership change8-K · Jun ’19Jun ’19
  3. Material agreement8-K · May ’21May ’21
  4. Leadership change8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 10-K filed March 28, 2003. Cited figures are marked; the original filing is the authoritative source.

Laboratory Corporation of America Holdings, headquartered in Burlington, North Carolina, reported net sales of $2,507.7 milliona for 2002, up 14.0% from $2,199.8 million in 2001, with net earnings of $254.6 million versus $179.5 million, and diluted earnings per share of $1.77 versus $1.27.

The company describes itself as the second largest independent clinical laboratory company in the United States based on 2002 net revenues, operating 47 primary laboratories and over 1,200 service sites, and it processed an average of approximately 310,000 patient specimens per day in 2002. Growth in 2002 was driven by the July 2002 acquisition of Dynacare Inc. and an emphasis on genomic and advanced testing, including oncology, infectious disease and partnerships with Myriad Genetics, EXACT Sciences, Celera Diagnostics and Correlogic Systems. Subsequent to year end, the company completed the acquisition of DIANON Systems, Inc. on January 17, 2003 for $47.50b per share in cash, or approximately $598.6 million, and issued $350.0 million of 5 1/2% Senior Notes due 2013.

The filing states that 2003 revenues are expected to grow approximately 22% over 2002. Total assets rose to $2,611.8 millionc at December 31, 2002 from $1,929.6 million, and shareholders' equity rose to $1,611.7 million. The company's zero coupon-subordinated notes carry put dates in 2004, 2006 and 2011, and the filing notes that Standard & Poor's lowered the company's rating to BBB from BBB+ in connection with the DIANON financing.

Risks highlighted in the filing include reliance on Medicare and Medicaid, which together accounted for about 16% of net sales, pricing pressure from managed care and capitated contracts, regulatory and anti-fraud exposure, HIPAA compliance costs, and an adverse patent judgment under appeal. The company does not pay dividends and has a $150.0 milliond stock repurchase program authorized in October 2002, under which no shares were bought in 2002.

02—Key points

Key Highlights

  1. Net sales rose to $2,507.7 million in 2002 from $2,199.8 million in 2001, an increase of 14.0%, with testing volume up 10.7% and price per accession up 3.3%.
  2. Net earnings were $254.6 million, or $1.77 per diluted share, compared with $179.5 million, or $1.27 per diluted share, in 2001.
  3. Operating income was $435.0 million in 2002 versus $367.6 million in 2001, after $17.5 million of restructuring and special charges tied to Dynacare.
  4. The Dynacare acquisition closed July 25, 2002 for a combined value of approximately $496.4 million, and the company achieved $4.0 million in synergy savings by year end with expected total savings of $45.0 million by 2004.
  5. The DIANON Systems acquisition closed January 17, 2003 for approximately $598.6 million, funded in part by $350.0 million of 5 1/2% Senior Notes due 2013.
  6. Cash provided by operating activities was $444.9 million in 2002, and days sales outstanding improved to 54 days from 58 days.
  7. Medicare and Medicaid beneficiaries accounted for about 16% of net sales, and the company expects 2003 revenues to grow approximately 22% over 2002.

03—Questions

Frequently Asked Questions

  1. How did Laboratory Corporation of America Holdings perform financially in 2002?

    Net sales increased 14.0% to $2,507.7 million, operating income rose to $435.0 million from $367.6 million, and net earnings reached $254.6 million, or $1.77 per diluted share, up from $1.27 in 2001.

  2. What acquisitions did the company complete around the reporting period?

    The company acquired Dynacare Inc. on July 25, 2002 and DIANON Systems, Inc. on January 17, 2003 for $47.50 per share in cash, approximately $598.6 million. DIANON strengthens the company's oncology testing capabilities.

  3. How is the company financed and what debt obligations does it carry?

    On January 31, 2003 the company sold $350.0 million of 5 1/2% Senior Notes due February 1, 2013. It also has zero coupon-subordinated notes with put dates in 2004, 2006 and 2011, and $300.0 million in senior credit facilities entered into in 2002 and amended in January 2003. Standard & Poor's lowered the company's rating to BBB from BBB+.

  4. What are the main risks to revenue and earnings?

    The filing cites reductions in Medicare and Medicaid reimbursement, managed care pricing pressure and capitated contracts, regulatory and anti-fraud enforcement, HIPAA compliance costs, competition, and an adverse patent judgment in Colorado that the company has appealed.

  5. Does the company pay dividends or repurchase shares?

    The company's policy is not to pay dividends on its common stock. Its Board authorized a stock repurchase program of up to $150.0 million in October 2002, but no shares were purchased during 2002.

04—Continue

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