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Labcorp Holdings Annual Report, Year Ended Mar 11, 2004

Filing Date
Filed March 11, 2004
Period End
March 11, 2004
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 11, 2004. Cited figures are marked; the original filing is the authoritative source.

Laboratory Corporation of America Holdings, headquartered in Burlington, North Carolina, describes itself as the second largest independent clinical laboratory company in the United States based on 2003 net revenues, operating 31 primary laboratories and over 1,200 service sites with approximately 23,000 employees.

Net sales for 2003 were $2,939.4 milliona, up 17.2% from $2,507.7 million in 2002, with testing volume (accessions) up approximately 11.7% and price per accession up approximately 5.5%. Net earnings rose to $321.0 million ($2.22 diluted EPS) from $254.6 million ($1.77 diluted EPS), supported by the acquisitions of DIANON Systems (January 2003, about $596.0 million including fees) and Dynacare (July 2002). Growth in 2003 was driven partly by acquisitions, and cost of sales and interest expense increased, with interest expense reaching $40.9 million from $19.2 million.

The balance sheet expanded substantially, with total assets of $3,414.9 millionb at year-end 2003 versus $2,580.4 million a year earlier, and goodwill rising to $1,285.9 million. The company issued $350.0 million of 5 1/2% Senior Notes due 2013 to fund the DIANON deal, and it repurchased about $154.9 million of stock during 2003 under programs that were authorized in 2002 and December 2003 (the latter for up to $250.0 million). Operating cash flow was $564.3 million.

Key risks disclosed include the $744.0 millionc principal-at-maturity zero coupon convertible notes that holders may put to the company in September 2004, 2006 and 2011, a patent judgment under appeal, a Chiron lawsuit, a securities class action filed in June 2003, and ongoing Medicare and Medicaid reimbursement pressures. The company has not historically paid dividends on its common stock, and it intends to fund future share repurchases from operating cash flow. Management's strategy centers on genomic and advanced testing in infectious disease and oncology, supported by licensing arrangements with partners such as EXACT Sciences, Myriad Genetics, Celera, Atherotech and BioPredictive.

02—Key points

Key Highlights

  1. Net sales rose 17.2% to $2,939.4 million in 2003 from $2,507.7 million in 2002, with testing volume up approximately 11.7%.
  2. Net earnings increased to $321.0 million, or $2.22 per diluted share, compared with $254.6 million, or $1.77 per diluted share, in 2002.
  3. Acquired DIANON Systems on January 17, 2003 for $47.50 per share in cash, approximately $596.0 million including fees, which significantly expanded oncology testing capabilities.
  4. Total assets grew to $3,414.9 million from $2,580.4 million, with goodwill rising to $1,285.9 million and total shareholders' equity at $1,895.9 million.
  5. Operating cash flow was $564.3 million in 2003, versus $444.9 million in 2002, and days sales outstanding improved to 53 days from 54 days.
  6. Repurchased $154.9 million of common stock in 2003 and authorized a new program of up to $250.0 million on December 17, 2003.
  7. Zero coupon-subordinated notes of $744.0 million principal at maturity may be put to the company in September 2004, 2006 and 2011 at prices from $712.97 to $819.54 per note.

03—Questions

Frequently Asked Questions

  1. How much revenue and earnings did the company generate in 2003?

    Net sales were $2,939.4 million in 2003, up 17.2% from $2,507.7 million in 2002. Net earnings were $321.0 million, or $2.22 per diluted share, compared with $254.6 million, or $1.77 per diluted share, the prior year.

  2. What acquisitions drove the growth in 2003?

    The company completed the acquisition of DIANON Systems on January 17, 2003 for approximately $596.0 million including transaction fees and expenses, and it finished integrating Dynacare, which it acquired on July 25, 2002 in a combined cash and stock transaction valued at approximately $496.4 million. The company also bought certain Northern California assets from Quest Diagnostics for $4.5 million.

  3. Does the company pay dividends, and how is it returning capital to shareholders?

    The company has not historically paid dividends on its common stock and could consider them in the future. In 2003 it repurchased $154.9 million of its common stock, and its December 17, 2003 authorization permits purchases of up to $250.0 million, which it intends to fund with cash flow from operations.

  4. What are the main risks flagged in the filing?

    The filing highlights changes in Medicare and Medicaid reimbursement, potential impairment of capitalized licensing costs if new tests do not gain acceptance, a patent judgment the company is appealing, two Chiron lawsuits, a securities class action filed June 24, 2003, and possible holder put obligations on the zero coupon-subordinated notes in September 2004, 2006 and 2011.

  5. How is the company positioned in the market?

    The company describes itself as the second largest independent clinical laboratory company in the United States based on 2003 net revenues, with more than 4,400 tests, 31 primary laboratories, over 1,200 service sites and approximately 23,000 employees. Its strategy focuses on genomic and advanced testing for infectious disease and oncology.

04—Continue

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