5 Things Critical To Laboratory Corp's Success

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Laboratory Corp (NYSE: LH) is the second largest laboratory testing company in the U.S. and during the company's second quarter earnings conference call, the company's CEO outlined five goals critical to LabCorp's future. In the following slideshow, you'll learn what these five goals are and how the company is executing to achieve them.

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5 Things Critical To Laboratory Corp's Success

  1. 1. LabCorp’s CEO: 5 Keys To Winning
  2. 2. Laboratory Corp • #2 lab services company. • $5.8 billion in 2013 revenue. • 4,000 tests including blood analyses, genetics, and companion diagnostics • 34,000 employees. • 220,000 customers. • Physicians, hospitals, governments.
  3. 3. Growing alongside an aging America First, let’s consider LabCorp’s revenue. •Q2 Sales of $1.52 billion, up 3.3% from last year. •Total test volume up 5.3%. •Reform: increasing insurance enrollment. •Demographics: 10,000 boomers turn 65 daily. •Mix headwind of 2%. •First half 2014 sales up 1.3%.
  4. 4. Growing alongside an aging America Share prices and revenue have grown in tandem over the past 5 years.
  5. 5. 5 Keys to Winning in the future “To be among the winners, we know that LabCorp must excel in five ways: 1. Improve the quality and reduce the cost of care. 2. Help manage the total cost of care. 3. Serve as a performance management partner to our customers. 4. Serve a broad range of customers in multiple settings. 5. Build scalable platforms with replicable processes that can create value at many points along the continuum of care.” -CEO David King
  6. 6. 5 Keys to Winning in the future 1. Improve the quality and reduce the cost of care. • Build scale through acquisitions. • $60 billion market. • 10% market share. • Increase its managed care portfolio.
  7. 7. 5 Keys to Winning in the future 2. Help manage the total cost of care. • IT infrastructure investment. • Improve service and workflow. • Expense reduction. • Consolidation.
  8. 8. 5 Keys to Winning in the future 3. Serve as a performance management partner to our customers. • Optimize operations. • Efficiency initiatives. • Robotics.
  9. 9. 5 Keys to Winning in the future 4. Build scalable platforms with replicable processes that can create value at many points along the continuum of care. • Develop new tests. • Faster and more accurate. • BRCA testing. • Personalized medicine. • Hepatitis C test for Q80K polymorphism. • Required prior to Olysio.
  10. 10. 5 Keys to Winning in the future 5. Serve a broad range of customers in multiple settings. • Beacon LBS: right test at the right cost. • Enlighten health: physician data and analytic tools.
  11. 11. Impact on earnings •Gross margin of 37.5%, down from 39.3% last year. •Product mix •SG&A is 19.6% of sales, up from 19.1%. •Bad debt reserves, consultants, and merit increases. •$1.64 EPS versus $1.62 a year ago. •Operating cash flow of $207 million, up from $138 million last year.
  12. 12. Forward guidance •Guiding revenue growth of ~2.0% this year. •Guiding for adjusted EPS of $6.50 to $6.75 (versus prior guidance of $6.40 to $6.70), excluding share repurchase activity after June 30, 2014. •Guiding for free cash flow of $575 million to $635 million.
  13. 13. Fool-worthy thoughts •International expansion opportunity in emerging markets. •$160 billion global diagnostics market. •Opportunity to win U.S. market share. •5,700 independent labs with a combined 20% market share.
  14. 14. Six stock picks poised for incredible growthSix stock picks poised for incredible growthSix stock picks poised for incredible growth Leaked: This coming blockbuster will revolutionize healthcare.

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