Laboratory Corporation Of America Holdings (LH) Earnings...
Transcript of Laboratory Corporation Of America Holdings (LH) Earnings...
CompanyName:LaboratoryCorpofAmericaHldgsCompanyTicker:LHSector:HealthCare
Industry:HealthServicesEventDescription:Q4 2014 EarningsCall
©2014TheStreet,Inc.AllRightsReserved Page1of 23
LaboratoryCorporationOfAmericaHoldings(LH)EarningsReport:Q42014ConferenceCallTranscriptThefollowingLaboratoryCorporationofAmericaHoldingsconferencecalltookplaceonFebruary20,2015,09:00AMET.Thisisatranscriptofthatearningscall:
CompanyPart icipants
StephenAnderson;LaboratoryCorporationofAmericaHoldings;VP-IRDaveKing;LaboratoryCorporationofAmericaHoldings;Chairman,CEOGlennEisenberg;LaboratoryCorporationofAmericaHoldings;EVP,CFOJoeHerring;Covance;CEO
OtherPart icipants
LisaGill;JPMorgan;AnalystRobertWilloughby;BofAMerrillLynch;AnalystBillBonello;Craig-HallumCapitalGroup;AnalystGaryLieberman;WellsFargo;AnalystMichaelCherny;EvercoreISI;AnalystNicholasJohnson;RaymondJames&Associates;AnalystWhitMayo;RobertBaird;AnalystGlennSantangelo;CreditSuisse;AnalystRickyGoldwasser;MorganStanley;AnalystA.J.Rice;UBS;AnalystDavidClair;PiperJaffray;AnalystIsaacRo;GoldmanSachs;AnalystDarrenLehrich;DeutscheBank;AnalystBryanBrokmeier;MaximGroup;AnalystGaryTaylor;Citi;AnalystBrianTanquilut;Jefferies&Company;AnalystAmandaMurphy;WilliamBlair;Analyst
MANAGEMENTDISCUSSIONSECTION
Operator:
Goodday,ladiesandgentlemen,andwelcometothefourthquarter2014LaboratoryCorporationofAmericaHoldingsearningsconferencecall.MynameisKatina,andIwillbeyourcoordinatorfortoday.
(OperatorInstructions)
Asareminder,thisconferenceisbeingrecordedforreplaypurposes.
Iwouldnowliketoturnthepresentationovertoyourhostfortoday'scall,Mr.StephenAnderson,VicePresidentofInvestorRelations.Pleaseproceed.
StephenAnderson(VP-IR):
Goodmorning,andwelcometoLabCorp'sfourth-quarterandfull-year2014conferencecall.
CompanyName:LaboratoryCorpofAmericaHldgsCompanyTicker:LHSector:HealthCare
Industry:HealthServicesEventDescription:Q4 2014 EarningsCall
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WithmetodayareDaveKing,ChairmanandChiefExecutiveOfficer;GlennEisenberg,ExecutiveVicePresidentandChiefFinancialOfficer;JayBoyle,ChiefExecutiveOfficerofLabCorpDiagnostics;JoeHerring,ChiefExecutiveOfficerofCovanceDrugDevelopment;andPaulSurdez,VicePresidentofInvestorRelations.
Thismorning,wewillrecapour2014performance,discussour2015priorities,provideanupdateonourCovanceacquisition,introduceProjectLaunchPad,ourenterprise-widebusinessprocessimprovementinitiative,andissueour2015guidance.Beforewegetstarted,IwouldliketopointoutthattherewillbeareplayofthisconferencecallavailableviatelephoneandInternet.Pleaserefertotoday'spressreleaseforreplayinformation.
Thismorning,theCompanyfiledaForm8-Kthatincludedadditionalinformationonourbusinessandoperations.Thisinformationisalsoavailableonourwebsite.Analystsandinvestorsaredirectedtothis8-Kandourwebsitetoreviewthissupplementalinformation.
Additionally,wereferyoutotoday'spressrelease,whichisavailableonourwebsiteforareconciliationofnon-GAAPfinancialmeasuresdiscussedduringtoday'scalltoGAAP.Thesenon-GAAPmeasuresincludeadjustedEPS,freecashflow,andadjustedoperatingincome.
Iwouldalsoliketopointoutthatwearemakingforward-lookingstatementsduringthisconferencecall.Theseforward-lookingstatementsinclude,amongothers,statementsaboutourexpectedfinancialresults,theimplementationofourbusinessstrategy,andtheongoingbenefitsfromacquisitions.Thesestatementsarebaseduponcurrentexpectations,andaresubjecttochangebaseduponvariousfactorsthatcouldaffecttheCompany'sfinancialresults.
Someofthesefactorsaresetforthindetailinour201310-KandinoursubsequentfilingswiththeSEC,andwillbeincludedinour201410-KandsubsequentfilingswiththeSEC.Thecompanyhasnoobligationtoprovideanyupdatestotheseforward-lookingstatements,evenifourexpectationschange.
Now,I' llturnthecallovertoDaveKing.
DaveKing(Chairman,CEO):
Thankyou,Steve.
I' llstartbyrecapping2014.Wedeliveredastrongoperatingperformance,exceeding$6billioninrevenueandgeneratingtotalvolumegrowth,includingacquisitions,of5.3%.Afterachallengingfirstquarterduetoextraordinaryweather,ourperformanceimprovedsequentiallythroughouttheyear.Inthefourthquarter,revenueincreasedby5.3%overthefourthquarterof2013,andwepostedyear-over-yearimprovementinadjustedoperatingincome,adjustedoperatingincomemargin,andadjustedEPS.
Wealsoachievedstrongorganicgrowthinthefourthquarterandfortheyear.We'reverypleasedwithour2014performance.
Latelastyear,wemadeaveryimportantstrategicmovewiththeCovanceacquisition.ThistransactionistheculminationofyearsofthinkingabouthowtobestpositionourCompanyforthefuture,andI'mveryproudofourteamforitsdedicationandtenacityincompletingtheacquisition.WehavemadeatransformationalmoveforourCompany,andovertime,thecombinedCompanywillenhancedrugdevelopment,laboratorydiagnostics,andhealthcaredelivery.
ThismergercreatesuniquecombinationofcapabilitiesthatpositionsthenewLabCorptobringinnovativeandhighervaluesolutionstoclientsofbothpredecessorcompanies.WeclosedtheCovanceacquisitionyesterday,andwe'reofftoastrongstartontheintegrationofthebusinesses.
Goingforward,wewilloperateintwosegmentsLabCorpDiagnosticsandCovanceDrugDevelopment,which
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Industry:HealthServicesEventDescription:Q4 2014 EarningsCall
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weexpecttobecloselyalignedinfurtheringourcoremissionofimprovingpatients'livesbyprovidingworldclassdiagnosticsandknowledgeservices.JayBoyle,who'sbeenanexceptionalChiefOperatingOfficerofLabCorpoverthelastfiveyears,isnowChiefExecutiveOfficerofLabCorpDiagnostics.JoeHerring,whohassuccessfullyledCovanceforoveradecadeandhasbeenagreatpartnersinceweannouncedthetransaction,isnowChiefExecutiveOfficerofCovanceDrugDevelopment.JoeandJaywillreporttome.
AlthoughtheflawlessintegrationofCovanceisofutmostimportance,Iwanttoemphasizethatitwillnotcauseustolosefocusonthe2015prioritiesforLabCorpDiagnostics,whichincludethesethreeclearinitiatives.
First,wewillcontinuetofocusonopportunitiestogrowinbothcoreandesoterictesting.Wewillbuildonourstrong2014performanceinorganicgrowth,managedcarecontracting,newtestintroductions,andstrategicacquisitions.Weremainoptimisticaboutthelong-termprospectsofthelabindustryandourlabindustrybusiness.
Second,wewillcontinuetomakeprogresswithourinnovativeproductsandservices.TheBeaconLBSteamispushingtowarditsgoaloffullimplementation.EnlightenHealthcontinuestoexpand,havinglaunchedExomeRevealagenomewideinterpretationservice,andrecentlyintroducedaninnovativepatientfriendlydiabetesreportthatgraphicallydisplaysresults.
Third,tocomplementourfocusontoplinegrowth,wehavesystematicallyreviewedourbusinessandoperatingmodeltoseewherewecanimproveourperformance.
ProjectLaunchPadistheCompany'senterprise-widebusinessprocessimprovementinitiative.ItconsistsofprojectsdesignedtoreengineertheCompany'ssystemsandprocesses,leveragetechnologicaladvancements,andmakesustainablereductionsinourcostbase.
LaunchPadisnotashort-termcost-cuttingmeasure.Itisalong-termstructuralchangeinhowwedeliverourservices.WearepursuingprojectsthatwillfundamentallyimprovetheexperienceofeveryoneinvolvedintheLabCorpDiagnosticsvaluechain,fromprovidertocustomertopayertoourvaluedemployees.
Weexpectthisinitiativetodrivenetsavingsinexcessof$150millionoverthenextthreeyears.GlennwillprovideadditionaldetailsonLaunchPadinafewminutes.
Now,letmeupdateyouontheCovanceacquisition,whichwilldelivernewservicestothepharmaceuticalindustry,drivesharegainsinboththediagnosticsanddrugdevelopmentbusinesses,andbenefithealthcarestakeholdersandourshareholders.Ournewcombinedcompanyhasastrongmanagementteam,relationshipswithnearlyeverymajorplayerinthehealthcareindustry,aglobalfootprint,andauniquewealthofdata.Withtheseassets,weexpecttowinagreatershareofclinicaltrials,enhanceandgrowourmarket-leadingcentrallabbusiness,deliveranexpandedrangeofdiagnosticofferings,andaccelerateprofitablegrowthintheyearsahead.
Iwillnowdiscussthreeimmediategrowthopportunities.First,wewilluseouruniquecombinationofassetsanddatatodeliverfasterclinicaltrialenrollment.Patientrecruitmentisaninefficientprocess.
CombiningLabCorp'sdatabaseofmorethan70millionuniquepatientrecordswithCovance'sinvestigatordatabaseandanalyticcapabilitiespositionsustodeliverfaster,higher-qualityclinicaltrials,significantlyreduceclinicaltrialcycletime,eliminatenonviablesiteswhichcansignificantlydelayrecruitment,reducecosts,andultimatelyenableourBiopharmaclientstoreachpeakrevenuefortheirnewproductsfaster.
Second,wewillbecomethepartnerofchoicetodevelopandcommercializecompaniondiagnostics.Thereover100companiondiagnosticsonthemarkettoday,versus13in2006.Morethan20%of2014drugapprovalswerepersonalizedmedicines,andtherearedozensofdrugsinphase3developmentthatwill
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Industry:HealthServicesEventDescription:Q4 2014 EarningsCall
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requirecompaniondiagnostics.
CombiningCovance'sstrengthincentrallabandearlydevelopmentwithLabCorp'sstrengthinassaydevelopmentandtestcommercializationwillcreatetheonlycompanyintheworldthatcanoffercomprehensiveend-to-endsupportforcompaniondiagnosticsdevelopment.
Third,wewillenhancethephasefourtrialexperienceandpostmarketsurveillance.Approximately30%ofphasefourpatientsdropoutduetoinconvenienttrialproceduresandalimitednumberoftrialsites.LabCorp's750patientservicecenters,approximately5000phlebotomistandphysicianoffices,andconvenientpatientwebportalforschedulingcanimprovethephasefourpatientexperience.
LabCorp'sinfrastructurewillserveanotherimportantfunction:allowingtheorganizationtocollectpost-approvalsafetydataonnewdrugs.Morethan25approveddrugshavebeenwithdrawnfromthemarketinrecentyears,thevastmajorityduetotoxicity.Ourcombinedanalyticscapabilitieswillgiveusthepotentialtoidentifyearlysafetysignals,avoidextensiverecalls,andfindgenotypiccharacteristicsofpatientswhoexperienceadversedrugreactionssothatthedrugcanbegiventopatientsforwhomitissafe.
HowourorganizationswillalsobeabletousethesecapabilitiestoassistBiopharmacompaniesthroughpost-marketstudiesinunderstandinghowdrugsarebeingusedbyphysiciansandidentifynewlocations--newindicationswherethosedrugsshowefficacy.Weexpectthesethreeopportunitiestogenerateover$300millioninincrementalrevenueby2018.
Inaddition,weseeexcitingopportunitiestoexpandourfoodsafetyandnutritionalchemistryservices,andlonger-term,togrowthroughinternationalexpansionandpredictiveanalyticsforprovidersandpayers.We'reofftoastrongstart,asevidencedbyabiotechclientthatrecentlyawardedasizableclinicalstudytoCovance.
ThisawardwasbasedinpartonthepotentialofdeployingLabCorptestingdatatoidentifypatientswithraregeneticmutations,speedingenrollmentintheclinicaltrialforitspersonalizedoncologydrug.ThereanumberofnewopportunitieswhereLabCorptestingdataisbeingusedtosupportaCovancebid,andweexpectourpatientdataandconnectivitytocontinuetoenhanceandfurtherdifferentiateCovance'sdrugdevelopmentcapabilities.
BeforeIturnthecallovertoGlenn,IwanttoexpressmyappreciationtoLabCorp's36,000employeesfordeliveringanoutstandingyearin2014despitedifficultcircumstances.Ourseniorleadershipteam,includingouroperationalleadership,oursalesandserviceteam,ourphlebotomist,ourcouriers,andourtechnicalstaffarethebestinourindustryanditisaprivilegetoleadthem.Ithankeachofyouforyourhardwork,yourdedicationtopatientcare,andyourperformancein2014andeveryyear.
IalsowanttowelcomeCovance's12,500talentedemployeestoourcompany,asIknowtheywilljoinwiththeLabCorpteaminmakingimportantcontributionstoourfuturesuccesses.
ThisisanexcitingtimetobeatLabCorp,andIamconfidentthatourteamwillenhancedrugdevelopment,diagnosticservices,andthedeliveryofhealthcaretobetteraddresstheneedtoimprovepatientoutcomesatlowercosts.
Now,I' llturnthecallovertoGlenn.
GlennEisenberg(EVP,CFO):
Thankyou,Dave.
I'mgoingtostartmycommentswithareviewofourfourth-quarterresultsand2015guidance,followedbyanupdateonourCovanceacquisitionandProjectLaunchPadinitiative.
CompanyName:LaboratoryCorpofAmericaHldgsCompanyTicker:LHSector:HealthCare
Industry:HealthServicesEventDescription:Q4 2014 EarningsCall
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Salesforthequarterwereapproximately$1.5billion,anincreaseof5.3%overlastyear.Theincreaseinsaleswastheresultofvolumemeasuredbyrequisitionsandacquisitions,partiallyoffsetbypricemixandcurrency.Thegrowthinsaleswasduetoorganicvolumeof5.3%,partiallyoffsetbyadeclineinrevenueforrequisitionsof1.1%andnegativeimpactofcurrencyof0.5%.Inadditionacquisitionsadded1.6%tosales.
Totalvolume,includingacquisitions,increased6.4%.Thedeclineinrevenueperrequisitionwasprimarilyduetocoretestinggrowthoutpacingesoterictestinggrowth,andlessrevenuegeneratedfromuninsuredpatients.
Grossprofitforthequarterwas$546million,or36.1%ofsales.Thiscomparestogrossprofitof$526million,or36.6%ofsales,lastyear.Theincreaseingrossprofitdollarswasduetovolume,productivity,andacquisitions,partiallyoffsetbypricemix,costinflation,anddepreciation.ThedeclineingrossmarginwasprimarilyduetothechangesintestandpayermixthatImentionedearlier.
SG&Aforthequarterwas$310million,or20.5%ofsales,comparedto$286million,or19.9%,lastyear.Duringthequarter,weincurred$13millionofspecialchargesinSG&ArelatingtoProjectLaunchPadandtheCompany'sacquisitionofCovance.Theremainderoftheincreasewasprimarilyduetopersonnelcosts,acquisitions,andanincreaseinbaddebtexpense.Whilebaddebtincreasedduetosalesgrowth,therateimproved10basispointsoverthefourthquarterof2013.Weexpectthisratetobelowerin2015.
Duringthequarter,wehad$2millionofrestructuringandspecialitems,comparedto$4millionlastyear.Thedecreasewasprimarilyduetoreducedseverancecosts,partiallyoffsetbyanincreaseinfacilityrelatedcosts.Operatingincomeforthequarterwas$219million,or14.5%ofsales,comparedto$215million,or15%ofsales,lastyear.Excludingrestructuringandspecialitemsof$16million,adjustedoperatingincomewas$235million,or15.5%ofsales,comparedto$219million,or15.2%ofsales,lastyear.
Interestexpenseforthequarterwas$32million,comparedto$24millionlastyear.TheincreasewasprimarilydrivenbyCovancerelatedfinancingcostsofapproximately$6million.
Thetaxrateforthequarterwas36.1%,comparedto34.8%lastyear.Theincreaseinthetaxrateoverlastyearwastheresultofbenefitsrelatedtodiscreteitemsrealizedinthefourthquarterof2013.Asaresult,netearningsforthequarterwere$120million,or$1.39perdilutedshare,comparedto$126million,or$1.43perdilutedshare,lastyear.Excludingamortization,restructuring,andotherspecialitems,adjustedEPSwas$1.65inthefourthquarter,upfrom$1.61inthefourthquarterof2013.
Duringthequarter,operatingcashflowwas$214million,comparedto$249millionlastyear,asweuseworkingcapitaltosupportstrongtoplinegrowthandincurredcashcostsrelatingtoProjectLaunchPadandtheCovanceacquisition.Capitalexpenditurestotaled$46million,comparedto$60millionlastyear.Asaresult,freecashflow,oroperatingcashflowaftercapitalexpenditures,was$167millioncomparedto$189millionlastyear.
Duringthefourthquarter,werepurchased$39millionofourstock,bringingour2014totalsharerepurchasesto$269million.WiththeNovember3rdannouncementoftheCovanceacquisition,wesuspendedoursharerepurchaseprogramuntilwereachourtargetedleverage.
NowI' llcoverourguidancefor2015.Totalrevenueisexpectedtogrow40%to44%,inclusiveofCovanceasofFebruary19thandafteradjustingforapproximately160basispointsofnegativecurrencyimpact,aswe'veassumedthatforeignexchangeratesstayatJanuary31,2015levels.
OurLabCorpDiagnosticbusinessisexpectedtogrow3%to5%.Covance'srevenueisexpectedtoincreaseapproximately4%to6%versusfull-year2014afteradjustingforapproximately330basispointsofnegativecurrencyimpact.
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Givenourexpectedtoplinegrowth,ProjectLaunchPadinitiative,andtheacquisitionofCovance,our2015adjustedEPSguidanceand$7.35to$7.70,anincreaseof8%to13%versustheprioryear.IncludedinthisestimateisexpectedaccretionfromCovanceofapproximately$0.35to$0.40.Weexpecttohaveapproximately102millionweightedaveragesharesoutstandingin2015afterissuing15.3millionsharesfortheCovanceacquisition.
In2015,weexpecttheCompany'sinterestandamortizationexpensetobeapproximately$220millionand$165million,respectively.Inaddition,weexpecttheCompany'staxratetobeapproximately35%.
2015operatingcashflowisexpectedtobebetween$1.075billionand$1.1billion,withcapitalexpendituresbetween$325millionand$350million.Asaresult,freecashflowisexpectedtobebetween$725millionand$775million,upfrom$536millionin2014.Theincreasedfreecashflowreflectshigherearnings,theCovanceacquisition,andimprovedworkingcapital.
Inaddition,freecashflowisburdenedbyapproximately$90millionofnetnonrecurringitemsrelatingtotheCovanceacquisition.Theseitemsincludeadvisoryfees,themake-wholepaymentonCovance'snoteandchangingcontrolpayments,partiallyoffsetbypayingonlyoneofthesemiannualinterestpaymentsontheacquisitiondebtin2015.
Now,I' lltalkabouttheCovanceacquisition.ThetransactionallowsustobringdecadesofexperienceinlaboperationsandefficiencytoCovance'sglobalcentrallaboratorynetwork,whileunlockinggreatereconomicvaluefromourpatientdatabase,customerrelationships,andcommercialinfrastructure.
Thecombinationalsocreatesnewsourcesofrevenueandearnings,andexpandsourcustomerbaseandinternationalpresence.Thisacquisitionprovidesuswithbothnear-termandlong-termstrategicandfinancialbenefits.Atclosing,wepaidapproximately$5.7billionforCovancenetofcashacquired.Tofinancetheacquisition,weraised$3.9billioninlong-termdebtandissued15.3millionsharesofLabCorpcommonstocktoCovanceshareholders.
Werecentlyissuedthe$3.9billionofacquisitionrelateddebtatablendedinterestrateofapproximately3.2%,withaweightedaveragematurityofapproximately12years.TheseattractivetermsreflectstrongdemandforLabCorpcreditaswellasafavorableinterestrateenvironment.
Weremaincommittedtomaintaininganinvestmentgradebalancesheet.BothS&PandMoody'shaveratedourdebtasinvestmentgradeatBBBandBAA2,respectively.Wehavetemporarilysuspendedoursharerepurchaseprogramuntilwereachourtargetedleverageof2.5timesdebttoEBITDA,andexpecttoallocateourfreecashflowtowardsthepaydownofdebtandtuck-inacquisitions.
TheintegrationofCovanceisalsowellunderway.Wecreatednumerousfunctionalandbusinessunitteamstofostercrosscompanycommunication,andtofacilitateasmoothintegrationprocess.
Weexpecttoachievenetcostsynergiesinexcessof$100millionwithinthreeyears,primarilythroughcentrallabconsolidation,eliminationofredundantpubliccompanycosts,andprocurementsavings.Withassociatedone-timecosttoachievethesynergiesofapproximately$50million.Netcostsynergiesin2015areexpectedtobeapproximately$35million,withassociatedone-timecostsofapproximately$20million.
I'mgoingtoendmycommentsonourProjectLaunchPadinitiative.AsDavediscussed,LaunchPadisdesignedtoreengineeroursystemsandprocesses,improveproductivity,anddeliversustainedmarginimprovementovertime.ProjectLaunchPadsavingswillfavorablyimpactbothgrossprofitandSG&Athroughimprovedcustomertocashprocesses,baddebtreduction,outsourcing,procurementsavings,andlaborefficiency.
Weexpectthisinitiativetodrivenetsavingsinexcessof$150millionoverthenextthreeyears,with
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Industry:HealthServicesEventDescription:Q4 2014 EarningsCall
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associatedone-timecostsofapproximately$30million.In2015,weexpectnetsavingsofapproximately$50million,withassociatedone-timecostsofapproximately$15million.
Thisendsourformalremarks,andnowI' llturnthecallbackovertoDave.
DaveKing(Chairman,CEO):
Thankyou,Glenn.
IwanttoannouncethatafterfiveyearsofbleedingLabCorpinvestorrelations,SteveAndersonwilltransitionafterthiscalltoanoperationalroleinourfoodsafetybusiness,oneoftheareaswhereweseegreatopportunity.StevehasbeenaterrificIRleader,andhasworkedtirelesslytomeettheneedsofouranalystsandshareholders.Iwillmisshimgreatlyinthisrole,butIknowheismovingintoanareaforwhichhehasgreatandenduringpassion.
PaulSurdez,whohasledCovance'sinvestorrelationsprogramsince2002willserveasVicePresidentofInvestorRelationsforLabCorp.IgreatlylookforwardtoworkingwithPaul,whoisalreadyrecognizedasoneofthetopIRleadersinhealthcareservices.
Now,wearereadytotakequestions.
QUESTIONS&ANSWERS
Operator:
(OperatorInstructions)
RobertWilloughby,MerrillLynch
Robert Willoughby(Analyst-BofAMerrillLynch):
Hi,Dave.IguessSteveAndersonandfoodsafetydoesn'treallyjivewithhisbiscuitbillfocus,butIdefertoyouonthatdecision.
YoumentionedsubstantialsavingsfromtheProjectLaunchPadinitiatives.Canyouspeaktoany--thereseemedtobeareferencetobaddebtcomingdown,butwhataretheworkingcapitalopportunities?Canweseereceivablebalancesshrinkmeaningfullythere?AndanykindofCapExsavingswemightexpectoverthenextfewyearstoaddtowhateveryouaredoing,fromanincomestatementperspective?
DaveKing(Chairman,CEO):
Yes,Rob.Goodmorning.
FromaCapExperspective,thefocusoftheLaunchPadinitiativeswilllargelybearoundimprovingoursystemsandoperationsthroughtechnologicalinvestments.So,althoughIwouldn'texpecttoseeextraordinaryCapExinvestments,IwouldexpecttoseetransitioningsomeofourongoinginfrastructureCapExintomorestreamlinedandefficientprocessesandsystemsovertime,andsomeofthatwillalsobereflected,asImentioned,inlaborefficiency.
IwillletGlenntaketheworkingcapitalpartofthequestion.
GlennEisenberg(EVP,CFO):
Sure.Toyourpoint,workingcapitalhasbeen,callitauseofcashforus,butprimarilyduetothestronggrowththatwe'veexperiencedintheCompany.Whenyoureferenceourreceivablesontheabsolutelevel,weactuallyfeelwebeenmanagingitquitewell.It'sstayedatroughly49daysoverall.
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Havingsaidthat,abigpartofLaunchPadinitiativeisourworkingcapitalimprovement,inclusiveofbaddebt.But,effectivelywe'relookingatreallyaredesign.So,we'regoingtostepbackandlookatwhatprocessescanweputinplacethatwouldbepreferred?Andthen,asDavesaid,toputsystemstoenablethattohappen,asopposedtojustamarginalimprovementinthat.
Fromourperspective,weexpecttoseeimproveworkingcapitalmanagement,weexpecttoseealsoareductioninourbaddebtexpense,andparticularlyourbaddebtrate,whichwesawsomefavorablemovementalready,butweexpecttoseemuchgreaterimprovementaswegothroughtherestof2015.
Robert Willoughby(Analyst-BofAMerrillLynch):
Glenn,youquantifiedthesavings,though.Fromtheincomestatement,canyouquantifyanypotentialfreecashflowrunratethatwemightbenefitfrom,orjusttooearlytoputanumberaroundtheCapExandworkingcapitalopportunity?
GlennEisenberg(EVP,CFO):
Well,again,wewouldn'tnecessarilydoitaspartofthoseprograms,aspartofitisembeddedintheoverallguidancethatwehavegiven.So,whenyoulookatourcashflownumberfor2015,whenyoutakethemidpoint(inaudible),we'relookingasacombinedcompanyof$750million,andwetalkedaboutthefactthatthat'salreadybeingburdenedbyaround$90millionofone-timecosts.
So,youcanseethestrongimprovementinourfreecashflowisinpartduetothesynergiesoftheacquisition,inpartduetotheimprovementinworkingcapitalbecauseofLaunchPad,andbecauseoftheimprovedreductioninbaddebtexpenserelatingtothatLaunchPadinitiative,aswell.So,that'sallencompassedinthatnumber
DaveKing(Chairman,CEO):
AndBob,thisisDave.Iwouldjustalsosay,overtime,whatwewouldliketoseeistheinvestmentsthatwemakeinsystemsnowallowingustoreduceCapExintheoutyears.So,IdoexpectsomepositivebenefittotheoveralllevelofCapExasaresultofLaunchPad.
Robert Willoughby(Analyst-BofAMerrillLynch):
Right.Okay,thankyou.
Operator:
BillBonello,Craig-Hallum.
BillBonello (Analyst-Craig-HallumCapitalGroup):
Twoquickquestions.One'sjustasimplenumbersquestion.Youtalkedaboutcurrencyreducingrevenuebyabout160basispointsin2015.HowshouldwethinkaboutthehittoEPS?
DaveKing(Chairman,CEO):
Obviously,reflectedintheguidancethatwehaveaswell.Thebiggestcurrencyheadwinds,ifyouwill,obviouslywithCovancehavingoverhalfoftheirbusinessoverseas.That'swhereweseeit.WhenweprovidedtheguidancerangeofCovanceyear-over-yearasifwewould'vehadthemforbothyears,youcanseeitwasaround3.3points.Sothatwouldcallitinthemid-$70millions,ifyouwill,ofheadwindonsales.
Historically,Covancehasleveragedatarounda20%[degridential]totheirearnings.Soagain,aspartofLabCorp,thattranslatestoaround,callit,1.5%headwindonthetopline.Andagain,ifyouusethatroughly
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20%margindegradation,youcouldprobablygetagoodproxyfortheearningsimpact,whichagainisreflectedintheguidancethatweprovided.
BillBonello (Analyst-Craig-HallumCapitalGroup):
Okay,perfect.Great.Andthenontherecentcontractthatyoutalkedaboutbeingawarded,andCovancetalkedaboutthisaswell.Dave,I'mwonderingifyoucouldjustgiveusalittlebitmorecolorabouttheprocess?
So,youmentionedthatyou'regoingtouselabdatatoidentifypatientsbut,maybeyoucouldjustelaboratealittlebitonhowdoesthatactuallyplayoutandhowbeneficialthatcanbe?BecauseIthinkit'sanareawherethere'sstillsomeskepticismabouthowthatreallycandriveimprovementinpatientrecruitment?
DaveKing(Chairman,CEO):
Okay,soI' llstartandIwillaskJoetocommentaswell.InthespecificcasetheBiopharmaclientwaslookingforaveryspecificsetofpatientswithaveryspecificcharacteristictotestapersonalizedoncologydrugintheirtrial.
WewentintoourdataofthetestingthatwehavedoneIbelieveoverthelastcoupleofyearsandlookatthenumberofpatientsthatwehadseenthatmetthoseveryspecificcriteriaandweshowedtheclientthatthisisabuiltinrecruitmentsetwhereweknowwhothesepatientsareandweknowwheretheyareandIwanttobeclearBillthatwaspartoftheclient'sdecisiontheCovanceteamhadpositionustobeingreatshapeatthefinalstages.Ithinkitwasdownto2CROstheywereconsideringsothiswaspartofthecalculation.Thiswasnotalast-minuteHailMarypassintotheendzonethatbroughtusbackfromthebrinkofnotbeinginvolved.
Wewereverywell-positionedthiswasincrementallysomethingthatwasconsideredtobeofvalue.Howwewouldthenexecutethisisforthosepatientswhowehaveadirectrelationshipwithwhohaveconsentedtoberecontactedforwhateverreasonwewouldbeabletorecontactthem.
Forthosepatientswhohavenotconsentedtoberecontactedorwhowedon'thaveadirectrelationshipwithwewouldgotothephysician-IndicatetothephysiciantheyhaveXnumberofpatientstheyaretreatingwereeligibleforthisveryimportantstudyandleaveittothephysiciantorecruitthepatientsarestatethepatientswhetherthepatientsareinterestedinbeingrecruited.Sothat'skindofhowitworksinpractice.Joefurthercomments?
JoeHerring(CEO):
IthinkDavehasdoneaprettygoodjobdescribingthat.IwasactuallymetwiththeCEOofthisclientduringtheJPMorganconferenceandasDavesaidthisisahighlyspecializedpersonalizedmedicinedruginnon-smallcelllungcancerandtheCEOwasveryconcernedaboutfindingpatientsforthisstudy.
AndwehadtalkedaboutthehistoricsortofCovanceapproachtothisandheedseemreadycomfortablebutacompetitorhadanequallycompellingsortofofferbutwhenweunderstoodthegeneticmarkerhewaslookingforwesaidletusseeifwecanlookintotheLabCorpdatabaseandgiveyouanideahowtofindthepatientsforthisstudyandtheywerelookingforalittleover100patients.
Andhesaidthistrialhastoberecruited.Hesaidwe'regoingtomakeadecisionnextweekandI'dbehappytohearwhatyouhavetosayabouttheLabCorpdata.Ihadourchiefmedicalofficerwithus.HeworkedwithLabCorpand12hourslaterweassuredtheclientandsaidthereareover1,000patientintheLabCorpdatabasethatfittheinclusionexclusionandgeneticmarkerforthisstudy.
Andtheycalledthenextdayandawardeda$45millionstudy.Iwouldsaytherewasroughly50-50percentchanceweweregoingtowinitaweeklatertogetitbackthenextmorningwasprettyawesomeandwehave
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aboutfiveotherclientsrightnowthatweareworkingwithonasimilarbasis.SoIguessasoftodayweareoneforoneutilizingthecombinationofLabCorpdataandCovanceclinicaltalents.
BillBonello (Analyst-Craig-HallumCapitalGroup):
ThatwasasgoodasanexplanationasIcouldhavepossiblyhopefor.Thankyou.
Operator:
LisaGill,JPMorgan
LisaGill(Analyst-JPMorgan):
GoodmorningSteveIreallyenjoyedworkingwithyouandIappreciateallyourhelpoverthelastfewyears.SomyquestionreallyisfirstDavewhenyoutalkedabouttheseuniqueopportunitiesinthe$300millionrevenueopportunityby2018andclearlyJoetalkedaboutthismostrecentoneat$45millioncanyoumaybegiveusanindicationuponyouexpectthe$300millionoverthenextseveralyearsareyouexpectinganythingin2015?
Unident if iedCompanyRepresentat ive :
WellLisagoodmorningandthanksforthenicecommentsaboutSteveandobviouslyIknowmanyanalystsandshareholdershaveenjoyedworkingwithhimI'veenjoyedworkingwiththemintheteamhasaswell.
HeisnotdisappearingisjustgoingovertofoodsafetyandwearethrilledtohavePaultostepinandIthinkyouwillreallyenjoyworkingwithPaul.Sowiththatsaidwhatweanticipatefor2015isbuiltintotheguidanceandasyouknowwedon'tbreaktheguidanceoutintospecificpartsandpieces.
IwouldexpectthistobeasJoesaidweareoneforoneweregoingtohavetoprovethecasethatnotonlycanwemarshalthedatabutthatitactuallyincreasesthespeedofpatientrecruitment.SoIwouldexpectjusttostartrelativelyslowlyandthenifwearerightwewouldexpectittobuildin2016and2017andcomeoutof2018aswe'veidentified$300millionasthetargetforallthreeoftheinitiative'scombinedbutIthinkthattheopportunitythereisrealandifweprovethecaseit'ssignificant.
LisaGill(Analyst-JPMorgan):
Andthenmysecondquestionisreallyaroundyourcorelabbusinessandtheguidancethatyougavefornextyeartalkingaboutthisyeartheoffsetswithpricemixcurrency,etc.Butaswethinkabout2015canyoumaybejusttalkaboutwhatyouareseeingrightnowfromourreimbursementenvironment,especiallyinthecommercialmarket.
Doyouhaveanythingthatwasupforrenewalandgenerallyspeaking?Whatareyouseeingfromareimbursementperspective?
DaveKing(Chairman,CEO):
IwouldsayLisaintermsofyear-over-yearreimbursementwhatweareassumingintheguidanceistheMoPathremainsaboutthesame,thatwehavesomeincrementalopportunitywithBRCAparticularly.
IthinkeverybodyknowsthattheuncertaintynowisaroundreimbursementfortheclinicaltoxicologysothePalmettolimitedcoveragedecisionwhichhasbeendelayeduntilAprilbutisstillit'sfairtosaybeingvigorouslydebatedbetweenthelabindustryandthepayercommunity.Andthenhowthatwillripplethroughwithmanagedcarecombinedwiththeimpactofnewtoxicologycodesmanyofwhichhavestillnotbeenloadedinthepayersystem.
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Sogenerallythereimbursementenvironmentlooksbetterthanithasthelastcoupleofyearsbutasalwaysweareinarapidlychangingregulatoryandreimbursementenvironmentandweneedtotakethatintoaccountinhowwethinkaboutthebusiness.
LisaGill(Analyst-JPMorgan):
AndjustsoIunderstandthatshouldweassumethatwithintheguidancerangetherearevaryingassumptionsastohowthesethingswillplayoutin2015?
DaveKing(Chairman,CEO):
Yestheguidancecontemplatesawiderangeofoutcomesandwe'veattemptedtoincorporatethesevariouspotentialoutcomesintotherangewehavegiven.
Operator:
GaryLieberman,WellsFargo.
GaryLieberman(Analyst-WellsFargo):
Goodmorningthanksfortakingthequestion.Steve,thankyouforallthehelpovertheyears.It'sbeengreatworkingwithyou.IguessmyfirstquestionisaroundLaunchPadandthe$150millioninsavingsthatequalsabout175basispointsofmarginexpansionsowouldyouexpecttoseethatmarginexpansionorshouldweconsiderthattheremightcontinuetobesomeheadwindsthatwouldoffsetatleastpartofthat?
GlennEisenberg(EVP,CFO):
ThisisGlennletmetakethefirstandDavemaywanttochimeinaswellwhenwetalkabouttheinitiativewetalkaboutitonanetsavingsbasisandwhenwesaytheyareone-timecostsifyoubackthatoutwelookattheinitiativewelookedatwhatitwouldtaketoeffectivelytakethatkindofcostoutofthecompanynetofthecostthatweneedtosupportitsoifyoulookatitinisolationobviouslythat'sabenefitthatwillaccruetothecompany.
SoaswegoforwardthoughourgoalistocontinuetodriveourtoplinetocontinuetomanagethebusinesstodriveoperatingimprovementaswegoforwardandLaunchPadiscurrentlyoneoftheinitiativesthatwehavethatwillhelptodrivethatincomeandmarginimprovement.
DaveKing(Chairman,CEO):
Garyit'sDavetheonlythingIwouldaddtothatiswe'reveryfocusedonmarginimprovementandLaunchPadisasignificantopportunityforustoimprovemarginsovertime.ThethingthatobviouslywecannotpredictisgoingbacktoLisa'squestionwhatisthereimbursementenvironmenttwoyearsoutthreeyearsout.
Andsoyes,allofthethingsbeingequalyesIwouldexpectLaunchPadtotranslatetomarginimprovementbutwecan'tguidetowherewearegoingtobebasedonfactorsthatwedon'tknowaboutyet.
GaryLieberman(Analyst-WellsFargo):
Okaythat'shelpfulandthenmaybejustupdateusonthereceptionofthedealandtheclosingofthedealbytheCovanceemployees.Youcharacterizeditpreviouslyasortofbeingalmosttransparenttothemanddoyoustillviewitthatway?
DaveKing(Chairman,CEO):
YesIhavespentalotoftimewithboththeCovanceexecutiveteamandwiththeemployeesattownhallsand
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inmeetingsandgettingtoknowthemandmyperceptionisthereceptionhasbeenterrific.Peopleareveryenthusiastictheyseetheopportunityheretheyseethelong-termpotentialforbothourcombinedcompanytoExcelandIwouldsaymysenseisthatisexactlythesamereceptiononthelabcoreside.PeopleareveryenthusiasticaboutthisdealJoeanyfurthercolor?
JoeHerring(CEO):
YesIwouldcharacterizeitasoverwhelminglyforCovanceemployeesit'sbusinessasusual.Certainlyintheshort-term.Butwithveryexcitingstrategicprospects.
TheLabCorpassetsmakebrandsastrongerandmoreresourcefulcompetitorwhichmakesusabettercompanysoifyouthinkaboutourcentrallabnowallofasuddenwehavemorethan$100millioninnewrevenuefromLabCorpandlargelyesotericteststhatmakeourbusinessstrongerandthecombinationmakesusthemostresourceful,mostcapablecompaniondiagnosticscompanyinthehealthcareindustry.
Andouremployeeswhowanttoimprovepatientcareseethatasaniceopportunity.Forclinicalthere'snooverlapwithLabCorpsoit'sbusinessasusualexceptnowyouhaveaccesstolongitudinaldatabaseof$70millionofpatientsandwealreadytalkedaboutthat.
AndCovancemarketassesswherenumberoneissueishowtokeeppatientsandpostmarketingstudiesonstudytoachievetheresultsthe1700centersintheUSforLabCorpwillmakeitmucheasierforthosepatientstocompletetheirtherapyandcompletethestudy.
Forfoodservicethisisgoingtobeadisruptiveofferingandjustincrediblyexcitingandyouwillhearmoreaboutthatinthefuture.Andtheninearlydevelopmentwepickupaverynicebioanalyticalbusinessintermsoftandemandmakesusamuchstrongerbiomarkerdevelopmentcompany.
Sothere'snotalotofoverlapsothisisnotterriblydisruptivebutwherethereisoverlapthereisexcitingstrategicadvantage.IguesswhatIwouldclosewithisjustacommentsaboutDave.DaveandIhavetraveledaroundtheworldofCovancehavebeeninfrontofthousandsofemployeesinmultiplesitesaswellassmallworkinggroupsandIthinkIcanrepresenttheCovanceemployeessayingthattheylovetoseeDave'spassionaroundimprovingpatientcareandhealthcare.
TheyareexcitedtoseehowcomfortableheisinalabenvironmentandfinallyIthinkhisinterpersonalapproachhasbeenverywellreceivedbyCovanceemployeesaroundtheworld.IpersonallyheldatownhallmeetingyesterdayinPrincetonwithabout1000employeesandIcantellyoutheatmospherewaselectric
GaryLieberman(Analyst-WellsFargo):
Great.Finalquickquestion.IntheexampleyougaveforyousaidyoucouldgotothephysicianandsaytheyhadXnumberofpatientsthatmetthecriteria.Canyouactuallygivethephysicianthenameofthespecificpatients?
DaveKing(Chairman,CEO):
Iwilldeferthattolegalconsideration.IbelievethatyeswecanbecauseIbelieveitfitswithintheHIPAAexceptionforhealthcaretreatmentbutobviouslybeforewewoulddothat--andbythewaythishasbeendoneinsituationsinthepastbeforewewoulddothatwewouldmakesurewehadlegalapprovaltoactuallyprovidethepatientnames.
JoeHerring(CEO):
IwasgoingtosaythegoodnewsinthisasIwalkedawayfromthisexcitingwinIkeepscratchingmyheadthinkingwhatotherorganizationontheplanetcanbringtheseresources?It'shardtocomeupwithone.Ilike
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ourchances.
Operator:
MichaelCherny,EvercoreISI.
MichaelCherny(Analyst-EvercoreISI):
Goodmorningeveryone.Steve,firstofallgoodluckinthenewroleandPaullookforwardtocontinuetoworktogether,sohappytoseethattransition.IntermsofthinkingaboutthecombinationIknowthisisstillearlydaysgivenitwasjustdisclosedyesterdaybutmaybeaquestionforJoe.Youtalkedabouttheemployeereactionyoutalkedaboutthenewdealyouwonwhichisgreattosee.Howhasbeentherestofthecustomerreactiontothisdeal?
Intermsofhaveyouspenttimeswiththemoverthelastfewmonthsasyougonethroughtherenewalorsaleprocesses.ObviouslyCovancedeliveredstrongQ4resultsingoodbook-to-bill.CanyouqualitativelywhatthePharmasponsorshavebeentellingyoutothepowerofthedealoutsidetheonecustomerthatyoudidwin?
JoeHerring(CEO):
Iguesstwowordscometomind.Thefirstisintrigue.Thisisacombinationthatveryfewpeoplehavethoughtof,andinitiallyit'swheredidthiscomefrom,butwhentheythinkaboutthecombinationtheystartaskingusquestionscanyouhelpuswithadherenceprograms?Canyouhelpuswithcompaniondiagnostics?
Itseemslikeyouguyshaveveryuniqueassets.IthinkintriguedandIthinkthesecondpointiscomforted.Becausewhatwecansayisthereisnotalotofoverlapheresoyouhavethesameprojectmanageryouaregoingtohavethesamestudydirectorit'sgoingtobethesamebillit'sstillgoingtosayCovancesothere'snodisruptionhere.
Ifacompetitortriestoshowupandsaythisisgoingtobereallydisruptivewehavepre-trainedourclientstosaywhatyoumeandisruptordietthesamestudyrecordthesamesalespersonthesameeverythingandfranklytheyhavesomeprettyexcitingnewthingstotalkabout.Ilikeourchances.
MichaelCherny(Analyst-EvercoreISI):
ThanksJoeandthenonequickquestionIguessforGlennandmaybeDaveaswellwhenyoufirstannouncedthedealIthinkyoutalkedaboutthecapitalappointmentobviouslyyouhadadebtpaydownbutthatwouldn'tstopyouorprecludeyouinanywayfromdoinganysmalltalkandyoumaycomeacrossthatareanicefittoeithersideofthebusiness.Isthatcorrect?IwanttomakesureIunderstandthecapitalplanpriority
DaveKing(Chairman,CEO):
Michaelit'sDaveIthinkweindicatedacoupleplacesinourpreparedremarksweintendtodeployourcapitaltowardpaydownofdebtandacquisitionseeyouareexactlyright
MichaelCherny(Analyst-EvercoreISI):
Perfect.Imissedthetuck-inthingsothankyou.
Operator:
(OperatorInstructions).GaryTaylor,Citi.
GaryTaylor(Analyst-Citi):
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IjustwanttowalkthroughtheguidanceandgetyourresponsetosomethingjusttoseeifIamthinkingaboutitcorrectly.Sobasicallythecashearningsguidance$735millionto$770million.Covanceaccretionis$0.35to$0.40.Thatgetsyoukindof$7.00orto$7.30.LaunchPadissupposedtobe$50million.That'sabout$0.30.
SoIwouldputthecorelabbusinessatkindofa$6.70to$7versus$6.80thisyear.Obviouslythere'snosharerepurchaseincludedinthatandthere'ssoitfeelsrelativelyflattishforthecorelabbusinessbutobviouslyvolumesorganicvolumeandrevenuehaspickedup.AndasyousaidyouwerelappingsomeofthelargestMedicarereimbursementcuts.SoamIthinkingaboutthatcorrectlyandifsowhysuchaconservativetakeonthecoreearningspowerinthelabbusiness?
GlennEisenberg(EVP,CFO):
ThisisGlennletmeatleaststartofftoyourpointwhenyoubackoutthemidpointsoftheaccretionthatweexpecttogetfromCovanceyoukindofgettothat$7.15-ishnumberforwhatwould'vebeenourbasementascomparedto$6.80sogrowingataround5%consistentwithwhatwesaidthetoplinegrowth.
Fromourperspective,aswegointo2015withourbasebusinesswearelookingatgoodtoplinegrowthorganicallywe'relookingandanimprovementinoperatingincomewe'relookingatanimprovementinouroperatingmargins.
Andagaintoyourpointweredrivingthat15%or5%EPSgrowthwhichagainisfastergrowthandjustthetoplinewithoutanycapitalredeploymentsothesignificantamountoffreecashflowthatwehavethatwouldnormallyhavegoneintooursharerepurchasesobviouslygoneintotheacquisitionofCovancethat'saddingthatcallat35%to40%ofaccretion.
SofromourperspectiveLaunchPadinanintegralpartoftheongoingcontinuousinitiativeimprovementofourbusiness,butitshouldbeviewedaspartofourbasebusiness.Andwethinkactuallytheimprovementinourprofitabilityaswellastheimprovementinourcashflowin2015onthebasebusinessisquitestrong.
GaryTaylor(Analyst-Citi):
That'sfair.Iunderstandit'spartofthebasebusiness,butitisnewandfairlymaterialandhighlightedinaverymaterialportionofthegrowthinthelabbusinessyear-over-year
DaveKing(Chairman,CEO):
Garyit'sDave.IthinktheotherthingtomentionandIjustwanttobeclearwearenotgoingtobreakdowneverybitandpieceoftheguidancebecausetherearemany,manymovingpieceswetalkedaboutcurrencyearlierbutalsorememberwithinthe$6.80wehadan$0.11one-timegainfromthesharesaleofsomesharesofacompanyweowned.
Therearemany,manythingsthatareincorporatedintothenumberthatweturningandtheguidanceweproduceandIwanttobecautiousabouttryingtobackouteverypieceofitandfigureoutwhat'supwhat'sdownandwhat'snotchanging.
GaryTaylor(Analyst-Citi):
That'sfair.Justkindofbigpicturingwhatyourthinkinglab.MyonefollowupwouldbewhenyouannouncetheCovancedealyousuggested$100millionincostsynergiesoverthreeyears.Iknowyoudidn'tcarvethatouttodaybutwouldyoubewillingtosaywhat'sembeddedfor2015intermsofcostsynergies?
GlennEisenberg(EVP,CFO):
GarythisisGlennweactuallydidbreakitout.Wetalkedaboutinexcessof$100millionofsynergysavingsoverthethreeyearperiodsoconsistentwithwhatwesaidwhenweannouncedthetransaction.
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Whatwe'veaddedfurtherisweexpectthatthe2015pieceofitwouldgeneratearound$35millionofnetsavingswhileincurringaroundone-timecostofaround$20million.Andthemaincomponentsagainconsistentwithwhatwewould'vesharedatthetimeoftheannouncementwasacombinationofsynergiesthroughthelabconsolidationthroughtakingouttheredundantpubliccompanycostsaswellasleveragingthepurchasingpowerofthecombinedcompany.
GaryTaylor(Analyst-Citi):
OkayI'msorryImissedthatthankyou.
Operator:
AmandaMurphy,WilliamBlair.
AmandaMurphy(Analyst-WilliamBlair):
Hi.Thanks.Goodmorningguys.Justasafollow-uptoLisa'squestionontherevenuesynergynumbersthatyouguysputtogether.JustcuriousifyoucangivealittlemoredetailaroundIknowit'searlybutthemethodologywentthroughtogettothosenumbersjusttryingtothinkthroughwhattheriskmightbethereotherthanobviouslytheramp.
Andthenalsonottogetgreedybutwherewemightpotentiallyseesomeupsidetothosenumbersgiventhegreaterthansignthatyouincludedthere.
DaveKing(Chairman,CEO):
Amanda,it'sDave.Themethodologywasthatwewentthroughthethreeopportunitieswelookedatwhatwethoughtbasedonhistoricaltrendsandhowwesizetheopportunitieswasanappropriatebreakdownandthenwesaidwethinknumberoneisalargest.Wethinknumbertwoisinthemiddleandwethinknumberthreeisthesmallestandthenumberisapproximatelyaroundthatare150,100,and50youhadthosetogetherandtheyare300.
Obviouslywewouldnotputthegreatersignupwedidn'tfeeltherewasupsidetothe300butwe'vegivenanumberthat'sveryrealistic.Wegivenabreakdownofhowwethinkthoserevenueopportunitieswouldmaterializeandwherewethinkthegreateropportunitiesare.WediditallwithfinancialanalysisofpastresultsofourcompanyandCovanceandmarketsizeandmarketshareandopportunitiesforgain.Ireallydon'tknowhowtobreakitdowninmuchmoredetailthanthatbutIhopethatanswersthequestion.
AmandaMurphy(Analyst-WilliamBlair):
Yesthankyouandjustonemorehere.It'salittlemorespecificIguess.ObviouslyLabCorphashadanincreasedgrowthandopportunityinNextGendoing-basedtestetc.JustcuriousIknowthere'ssomeeffortstosetsomereimbursementthereviaMedicare.Haveyouguysthoughtthroughtheirwhattheriskmightbegivensomeoftheissueswith[MoPasCo]ayearagoorso.IstherearisktothereimbursementforNextGen?Iknowit'searlytheinfrastructurenowbutjustcuriousyourthoughtsthere?
JoeHerring(CEO):
Ithinkit'sveryearlytocommentonthat.TherearealotofdiscussionsgoingonwithMedicarewithPalmettospecificallyaboutNextGensequencinganappropriatereimbursementforNextGensequencingandwe'reverymuchengagedinthosediscussionsasourbythewayalotofothercompaniesthathaveasignificantinterestinhowNextGensequencingwillbereimbursed.
NextGen'ssequencingprovidesrevolutionaryopportunitiestodelivergreaterknowledgetophysiciansandpatientsandtoimprovepatientcareanditwouldbeashameifweshortsightedlysetreimbursementinsuch
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awaythatwediscouragepatientsandphysiciansfromusingthebesttoolsavailabletodeliveroptimaloutcome.
Operator:
(OperatorInstructions).NicholasJohnson,RaymondJames&Associates.
NicholasJohnson(Analyst-RaymondJames&Associates):
Heyguysnicequarterandgoodguidance.Justwantedtogetyourthoughtsontheregulatoryoutlook.Wehaven'theardanythingmuchonthetimingofthe2017regscomingoutalsowithLDTregulationandwiththeDocFixupcomingjustwanttogetyourbroaderthoughtsonthemacrofromaMedicareperspective.
DaveKing(Chairman,CEO):
BackinmylegaldaysIwould'veobjectedtothatasathree-partquestionwithinonequestionbutIwillanswerit.GoodmorningNicholashowareyoudoingit'sDave.[Tamma]stillverymuchengagedwithCMSonhowthesurveyswillbedone.Ithinkwemadesomeconstructiveprogresswiththemonthinkingabouthowthesurveyswouldbedonetheinclusionofhospitalsinthesurveydata.
Don'thaveanyupdateonthetimingofwhenwemightexpectthattocomeout.IthinktotheircreditCMShasrecognizedthecomplexityofthetaskandisworkingveryhardtodeviseafairprocess.Labdevelopedtestswecontinuetohavethesameviewthatwehavepreviouslyarticulated.
ThatwedonotbelieveFDAhaslegalauthoritytoregulateLDTsasmedicaldeviceswedon'tbelievetheyaremedicaldeviceswethinktheyareextremelyimportanttothepracticeofmedicineandtomeetingpatientneedsandwethinkwithFDAhasproposewouldbecontrarynotonlytothepublicinterestandthelanguagesofthestatutebuttosoundpublicpolicy.
FDAhashadalisteningmeetingIthinktherewerearideFridayofviewsexpressedabouttheLDTguidanceanditcontinuestobeanareaofhighinterestinhighfocusfortheclinicallabindustry.AnditcontinuestobesomethingthatweatLabCorpfeelvery,verystronglyabout.SothosearethetwomajorregulatoryissuesthatIthinkwehaveonthetableinfrontofusandIhopethatresponseofficiallytoyourquestion.
Operator:
WhitMayo,RobertBaird.
Whit Mayo (Analyst-RobertBaird):
IjustwantedtogobacktothesynergytopicforasecondandlookingatCovancefilingsitlookliketheyhavehistoricallyhadNorthof$40millionaloneandjuststockcompexpensebeforethinkingaboutotherpubliccompanycostandyouareguidingtoonly$35millionandIknowthatnotallofthestockcompgoesawayayoulockeddownsomeofthekeyCovanceemployeessothere'snotabucketwhereeverythinggoestozero.
Butnonetheless$35millionsoundsalittlebitontheconservativesidewhenwelookatsomeoftheopportunitiesouttheresocouldyoumaybegiveusasenseofwherethemajorityofthe$35millioncomesfromthisyear?
GlennEisenberg(EVP,CFO):
SurewitthisisGlenn.AndIthinkthekeypointthatyousaidthisyear.We'relookingatsynergysavingsonthecostsideinexcessof$100millionaswegothroughtheprocessandthatdoesn'tincludeanyoftherevenuesynergiesthatDaveandJoehadalreadyspoketo.
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Whenyoulookwegavethefirstyearpieceofitsofranklyitwillprobablytrendtobecallitroughlyaroundathirdyearaswegetoverthat$100millionnumberbutinthecurrentyearifyouwouldimaginethebiggestpieceofthosecostsavingswillcomefromtheredundantpubliccompanycostswehadbecausewecantakethatoutrightaway.
Willgetsomebenefitfromleveragingofthepurchasingpowerofourcombinedcompanyaswellaswiththelabconsolidationwillgetsomethatthelattertothepurchasingthelabconsolidationandbenefitsthatwillaccrueandtakealittlebitlongertoachieveoverthenextcoupleofyears.Weviewthatoverallthesynergiesofthecombinationaregoodonthecostsidetherevenuesideletalonetheexpectedgrowthinbothofourbusinesses
DaveKing(Chairman,CEO):
AndWhitit'sDavetofollow-uponthat.Ithinkyouarerightthatthestockcompexpenseisanareawecontinuetolookat.Obviouslyallthestockcompisnotgoingtogoawaybuttherearelikelytobesomechangesinstockcompissuanceforthisyear.Ijustwanttoremindeverybodythatisanon-cashsavingssoitdoesn'ttranslateintocashflowanditdoesn'ttransposecashflowguidancebutit'sstillasavingsintermsofoverallexpensenonetheless.
Whit Mayo (Analyst-RobertBaird):
Isthereanumbertothinkaboutforwhatthenewstockcompexpenseshouldbefortheentirecompany?
DaveKing(Chairman,CEO):
Wedon'tguidestockcompexpenseandsonothereisnonumbertothinkabouttheir
Operator:
GlennSantangelo,CreditSuisse.
GlennSantangelo (Analyst-CreditSuisse):
GlennIwanttofollow-uponsomeofthecommentsyoumadeearlieraboutFXcauseifwelookatthetoplineguidanceforCovanceyouobviouslycalledoutspecificallyhowbigthatwas,butsortofgiventhemanymovingpartsandgeographiclocationswereCovancecanyouhelpusthinkabouttheoperatingprofitgrowthparticularlyasitrelatestoanyFXheadwindsortailwindswithinthatnumber.
Andobviouslythere'sapieceoftheSantaFedealthat'sgoingawaylateinthefourthquartersoinjusttryingtodirectionallythinkingaboutthatoperatingprofitgrowthrelativetotherelativenumberyouprovided.
GlennEisenberg(EVP,CFO):
AndagainIthinkwemayhavealreadyaddressedthatinanearlierquestionwedidgiveyouthetoplineimpactfromthecurrencyheadwind.
AndCovancehasthreeprincipalareasofcurrencyexposureobviouslythereand60countriesbutbetweentheEurozonetheSwissandtheUKifyouwillisprimarilywherethatexposurecomesin.Sowetalkedaboutitroughlycallit330basispointsofnegativeimpactgiveortakethat'sinthemid-70sifyouwillattherevenuelinenegativelyimpactingwhatwebelieveCovancewillseeinsalesisatthecurrentsealevelstayatbasicallythecurrentlevelstoday.
AndwetalkedabouttheimpactonoperatingincomeatleasthistoricallyforthemwouldbeplusorminusaroundGPoralittlebitlowerthatsowesay20%isprobablyagoodproxywhereyou'dwanttomodelthat.
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Operator:
RickyGoldwasser,MorganStanley.
RickyGoldwasser(Analyst-MorganStanley):
HigoodmorningandStevecongratulationsonnewroleit'sreallywelldeservedandPaulcongratulationstoyouaswell.IhaveaquestionandIhaveafollow-upaswell.DavecanyoujusttalktousalittlebitaboutwhenyouthinkaboutthetoplineguidanceforLabCorpstandalone.
Howdoyouthinkabouttheutilizationenvironmentin2015andkindeffectedpricetovolumemixthatisembeddedintheguidance?
Unident if iedCompanyRepresentat ive :
Ithinktheutilizationenvironmentjustbasedonthenumbersthatwesawsequentiallyin2014Rickyhasimproved.Obviouslyverypleasedwith5%plustoplineheadlinegrowthinthefourthquarter.Howdowethinkaboutpricevolumenextyear?Ithinkwethinkaboutrelativelysimilarvolumenumbers.
Maybetoberealisticweobviouslyhadaverystrongyear-over-yearperformance.Sowhilewedon'tguidespecificallytopriceandvolumeIwouldthinkareasonableassumptionisvolumegrowthstaysaboutwhereitisandpricingisrelativelyflatmaybedownalittlebitjustdependingonthefactorsthatwe'veidentifiedwhicharefortestinginthefourthquarteroutpacingesotericandmovementfromuninsuredpatientsbucketintoinshortorexchangebuckets.
Idon'tthinknextyearwouldlookalotdifferentfromthisyearinsummaryalthoughtheremaybealittlebitofkindinup-and-downbetweenvolumeandprice.
RickyGoldwasser(Analyst-MorganStanley):
OkayandIwillusemyfollow-upquestionwithaquestiontoJoe.Joewhenyouthinkaboutthepatientrecruitmenttimelineinthenewcontractthatyousignedhowlongwillittakebeforeyoucancomebacktoyourclientsandbacktouswithsomeproofofconceptdatapointsthatwillshowhowmuchtimeyousavedyourclientsintheenrollmentprocess?
JoeHerring(CEO):
Rickykeepinmindwejustclosedyesterdayandwehavetobecarefulandhavebeenverycarefulofnotjumpingandgettingaheadofourselves.Butasyouknowclinicaltrials,fromthetimeyouwinituntilitstartstorampuptorevenue,is6to9to12toasmuchas18months.
Wewillbetalkingaboutthisinthefutureandgivingyouanideaofhowwe'redoing.Rightnowit'slargelymanualagain.Sowedon'twanttogettoofaraheadofourselves,butultimatelywewanttomakethisindustrial-strengthbringthisassortofanunparalleledofferinginadifferentiatorforourbusiness.Again,weareoneforonerightnow.
Operator:
A.J.Rice,UBS.
A.J.Rice (Analyst-UBS):
HelloeverybodymaybeIwilljustfocusinonthisyear'slayoutofnumbers.Iknowyoudon'tguidetothequartersbutaswethinkthenormalseasonalpattern,canyougiveusanythingweshouldkeepinmindaswelayitoutwhetherit'sweatherinthefirstquarterortheprogressionofsynergiesoverthecourseoftheyear
CompanyName:LaboratoryCorpofAmericaHldgsCompanyTicker:LHSector:HealthCare
Industry:HealthServicesEventDescription:Q4 2014 EarningsCall
©2014TheStreet,Inc.AllRightsReserved Page19of 23
anythingalongthoselines?
DaveKing(Chairman,CEO):
AJit'sDaveyesweatherinthefirstquarter.ObviouslythefirstquarterfromtheLabCorpdiagnosticperspectivetendstobealowerquarterthesecondandthirdquartersbeingstrongerbutwedon'tguidequarterbyquarterandthebestwayyoucangaininsightintothatislookatprioryearsandseehowthequartershaveshapedup.
A.J.Rice (Analyst-UBS):
OkayIjustwasthinkingintermsbecauseit'sacorporatesynergy,forexample,doyouthinkthat$35millionlaysoutprettyevenlyacrosstheyearyou'vegotthatprettymuchupfrontisthereanyhelponthenontraditionalseasonalthingsthatyouwouldgiveus?
GlennEisenberg(EVP,CFO):
ThisisGlenn,AJ.AndIalmostechoDave'scomment.Asyoulookatbothcompaniesorthebutcombinedcompanywearetodayyouwouldexpecttoseearamp-upinthesavingsovertime.Soit'snotnecessarily[firrab],butwhenyoulookatthetotalityofourrevenuewhenyoulookatthetotalityofourearningsyouseethesamepatternifyouwill,whichagainisthestrengthmoreorlessinthesecondandthirdbeingstrongerthanthefirstandthefourth.
Butevensoit'snotmaterialbutifyouwanttomodelthatcloselyobviouslyyouwouldgolighterinthefirstandthefourthandalittleheavierinthesecondandthethirdtofollowhistoricalpatternspartiallyoffsetmaybebyaramp-upinthecostcominginbutagainit'snotgoingtodrivethenumbersthatmuchfromamagnitudestandpoint
DaveKing(Chairman,CEO):
Clearlythesynergieswillaccelerateaswegothroughtheyearwearenotgoingtohaveatonondayonebuttheywillaccelerateaswegetintolaterquarters
GlennEisenberg(EVP,CFO):
RealquickontheCovancesidethefirstquarterdoeshavesomeseasonalityinearlydevelopmentbusinesssojustmakeanoteofthat.
Operator:
DavidClair,PiperJaffray.
DavidClair(Analyst-PiperJaffray):
Higoodmorningeverybodythanksforlettingmeinthequeuehere.JustcuriousDaveyoumentionedthatcoretestingactuallygrewfasterthanesotericjustkindofcuriouswhythathappenedinthequarter?
DaveKing(Chairman,CEO):
Wellit'salittlebitofatoughquestionwhyithappened
DavidClair(Analyst-PiperJaffray):
WhatsloweddowninesotericIguess.
DaveKing(Chairman,CEO):
CompanyName:LaboratoryCorpofAmericaHldgsCompanyTicker:LHSector:HealthCare
Industry:HealthServicesEventDescription:Q4 2014 EarningsCall
©2014TheStreet,Inc.AllRightsReserved Page20of 23
Nothinghassloweddowninesoteric.Coretestingoutpacedesotericiswhatwesaid.Soesotericgrewconsistentwiththeoverallgrowthofthebusinesscoretestinggrewfasterthanthegrowthofthebusinessandthereareprobablymanyaboutwhythathappened.
Butwehavepeoplecominginthroughtheexchanges.WehavepeoplecominginthroughMedicaid.Wehavepatientswhohavepreviouslybeenuninsuredhavingcoveragethelikelihoodisthattheirinitialencounterswithpositionsandwouldbeingcoveredlivethattheyaregoingtoruna[highpanic]panel,alipidprofile,thingsthatwecharacterizeasbeinginthecoreasopposedtobeinginesoteric
Sothatwouldbemybestassessmentofwhythecoregrewfaster.ButagainIdon'twanttoleavetheimplicationthattheesotericdidn'tgrow.Theesotericgrewnicelythecorejustoutgrewit
DavidClair(Analyst-PiperJaffray):
Okaythanksandjustarealquickfollow-upintermsofCovanceitsoundslikethefeedbackfromtheexistingcustomersisprettysolidtherewhatisthereanythingbakedintheguidanceintermsofcustomerattrition?
DaveKing(Chairman,CEO):
Theguidanceincorporatesawiderangeofoutcomesandsoyoucanassumewethoughtaboutthatandincorporatedintoourthinking.
Operator:
IsaacRo,GoldmanSachs.
IsaacRo (Analyst-GoldmanSachs):
Goodmorningguysthanks.SoontheguidanceforCovanceIthinkyoucalledfor4%to6%growthandIwanttodealwithwetalkedaboutlonger-termgrowthandthat7%to8%range.AndjustIwanttogetasensewhatyouguysthinkitwilltakeforthatsortofaccelerationtohappen.Isthereatimeframehereyouthinkoverseveralyearsorcoulditbesomethingthat'ssortofhockeysticksintotheER2yearthreepostedthedeal?Justtryingtogetasensehowyoulookatacceleratingthegrowth.
DaveKing(Chairman,CEO):
Isaacit'sDave.Forto6burdenby330basispointsofnegativecurrency,whichifIhad3.3to4Iget7.3to9.3.Soit'sexactlywhatwesaidatthetimewedidthedealintermsofthegrowthperspectiveandwethinkthatopportunitiesisthereforthelong-term.
IsaacRo (Analyst-GoldmanSachs):
Okayandintermsofpricingforthisyearacrossthecompanycanyoumaybegiveusasensegivenyourcontextonthecorebusinessforlabthetotal?
DaveKing(Chairman,CEO):
No.Aswesaidbeforeweguidetorevenuewedon'tguidetovolumeorprice
Operator:
DarrenLehrich,DeutscheBank.
DarrenLehrich(Analyst-DeutscheBank):
ThanksgoodmorningeverybodyandcongratstoSteve.Imayactuallygobacktoeatingchickennow.My
CompanyName:LaboratoryCorpofAmericaHldgsCompanyTicker:LHSector:HealthCare
Industry:HealthServicesEventDescription:Q4 2014 EarningsCall
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questionnowisforDaveandadjustrelatestoACAandjustwantedtogetaquickthoughtfromyouDaveabouthowyouthinkreformimpacted2014.Andthenasyouthinkaboutthe2015outlookisreformatailwind?Isitaneutral?Canyoujustgiveusanupdatedthoughtortwothere?
DaveKing(Chairman,CEO):
IthinktheimpactDarrenfor2014wasithelpedvolumeandifIthinkbacktowhatwesaidwhenweinitiallygaveguidanceithelpedvolumeprobablybymorethanwethoughtitwasgoingto.ItwasadragonpricebothbecauseofthethingsthatwementionedthecoretestinggrowingfasterthantheesotericpatientsmovingfromuninsuredintocoveredcategoriesandexchangesandthegrowthwhichisonthefirsthalfofmanagedMedicaid.Sonetpositiveforvolumeslightlynegativeforprice.2015Isawthesestatisticsthatthere'sbeensomegrowthinenrollmentandreenrollmentforhealthplansIdon'tthinkthere'sanythingthat'sgoingtobematerialintheir.
TheresomestatesthataretalkingaboutMedicaidexpansionbuthadn'texpandedMedicaidpreviouslythatwouldlikelybenetpositivetovolumeand-2priceforthereasonsthatwehavespokenabout.There'sobviouslysomeoverhangwiththeSupremeCourttakingtheKingversusBurwellcase.Ifthatweredecidedadverselytothegovernment'sposition,therewouldbesignificantimpactonpatientsreceivingsubsidiesandwewouldhopetherewouldbeaconstructivepoliticalresponsetothatasopposedtosortofchaosforpeoplewhohadinsuranceonedayanddon'thaveitthenext.ThatatahighlevelisprobablyhowwethinkabouttheACAfor2014and2015.
DarrenLehrich(Analyst-DeutscheBank):
OkaybutjusttobeclearIcanhearwhatyou'resayingvolumeandpricewasitmoreorlessapushonEBIT?Isthatwhatyouaretryingtosay?
DaveKing(Chairman,CEO):
Ithinkitwasprobablyslightlypositive.
Operator:
BryanBrokmeier,MaximGroup.
BryanBrokmeier(Analyst-MaximGroup):
Tofollow-uponGary'squestionfromquiteawhileagoonthecorebusiness.YougenerallydriveefficiencyimprovementsandtakecostsoutofthelabCorp.businessandthat'snormallyincludedinyourguidance.
ArethereothermarginexpansionopportunitiesincludedwithintheguidanceorshouldwethinkofthoseisbeinglumpedinwiththeLaunchPadthoughamuchsmallerpiecethanthat$0.30?
GlennEisenberg(EVP,CFO):
TomakesureIunderstandthequestion.Firstofall,wewouldagreethatthenormalcourseofoperationsiswehavecontinuousimprovements.Sowe'realwayslookingatleveragingandmanagingourcoststructure.
WhenwetalkaboutLaunchPadyouhavetothinkaboutitalittlemorethanthatit'snottheannualimprovementtodrivecostsoutandtheleveragebuthowcanwereengineerprocessesanddeploysystemstoenablethattohappenwhereyoucan'tdothatonthemargin
Soaswethinkabouttakingoutaround$150millionplusofcostoverthenextthreeyearsyeswehavetheimpactof$50millionarguablywouldbegreaterthanwhatwouldhavebeenthenormalreductionsinourcostfocusinaparticularoneyearperiod.Sowearegettingtheadditionalbenefitofit,butpartofwhatwe'redoing
CompanyName:LaboratoryCorpofAmericaHldgsCompanyTicker:LHSector:HealthCare
Industry:HealthServicesEventDescription:Q4 2014 EarningsCall
©2014TheStreet,Inc.AllRightsReserved Page22of 23
isalsoconsideredthenormalcoursethemorestructuralchangesinwhatwedo.
Obviouslywe'llaccrueaswegototheoutyearsbutwe'relookingattakingcostsout.Wearelookingatimprovingbaddebtexperience,collections,gettingpaidforteststhatwe'reperformingthatwemightnothavebeeninthepastandthenthemoretraditionalthingssuchasoutsourcinglaborefficiencysoit'sallpackedintotherebutthat'swhyyouseeprobablyagreaterimpactin2015thaninthenormalordinarycourseofjustourcontinuousimprovement
DaveKing(Chairman,CEO):
IfIunderstoodthequestionitwasarethereothermarginopportunitiesthatareoutsidemarginimprovementsthatareoutsidetheguidance.Theguidancecontemplatestheoperationofthebusinesssimilartothewaythebusinessoperatedlastyear.
Wehadsignificantgrowthinesotericoverandabovethegrowthincoreobviouslythat'samarginimprovementopportunity.Sothat'swhywegivearangeofguidanceisthattherearemanythingsembeddedinitthatcanmoveonewayoranother.
BryanBrokmeier(Analyst-MaximGroup):
RightmyquestionwasjustwhenthequestionwasaboutthecorebusinessbeingflatIwaslookingatmorenotflatthosewasmarginexpansionopportunitiesthatnormallyweseeeveryyeararenotincludedinthat$0.30.
JoeHerring(CEO):
Actually,again,aswethinkthroughthe$50millionofsavingthefirstyearthat'scorrect.We'relookingatthetotalprogram.Someinitiativeswould'vebeendonewithoutcallingitLaunchPadbutthatispartofwhatwe'recallingLaunchPadaspartofourcallitimprovementinitiative.Butthebiggerpartofitisthatasyouthinkthroughthethree-yeartotalyoustarttoseemoreofthestructuralchangesbutit'sallinclusive.
DaveKing(Chairman,CEO):
Andwedon'tagreethatthecorebusinessesflatIdon'tthinkthat'sanaccurate.characterization.
Operator:
BrianTanquilut,Jeffries.
BrianTanquilut (Analyst-Jefferies&Company):
SoDavegoodvolumeperformance5%organic.Soifyoudon'tmindjustgivingusyourviewsrightnowonthemarketsharedynamicsandhowthehospitalmarketshareshiftisplayingoutandwhatyourstrategyisandwhatyouguysaredoingforthatasyoulookouttothenext3to5years?
DaveKing(Chairman,CEO):
Idon'tspendalotoftimetalkingaboutmarketshare.Ithinkit'sahardthingtocharacterize.Ouroperationalteamhasperformedexceptionallywellintermsofgeneratingorganicvolumegrowthwhetherthat'sthroughcontractwinds,whetherthat'sthroughsales,whetherthat'strueserviceimprovements.
Youknow,everydayIgetemailsfromcustomers,lettersfromcustomersabouthowLabCorppeoplegoaboveandbeyondtodothethingsthatneedtobedonetoservethecustomersandforpatientcare.That'swhatwearegoingtocontinuetofocuson.That'spartofwhatLaunchPadisaboutiswedoagreatjobtodaybuttherearethingswecandobetterforthepatients,forthephysicians,forthepayerssolookIthinkwe'redoinga
CompanyName:LaboratoryCorpofAmericaHldgsCompanyTicker:LHSector:HealthCare
Industry:HealthServicesEventDescription:Q4 2014 EarningsCall
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greatjoboperationally.Iamveryproudofwhatwe'vedoneoperationally,andwe'regoingtocontinuetoexecuteontheoperationalopportunitiesthatareaheadofus.
Operator:
TherearenofurtherquestionsatthistimeIwouldnowliketoturnthecallbacktoDaveKingforanyclosingremarks
DaveKing(Chairman,CEO):
Thankyou.Inclosingandliketosayweappreciateyourtimeandyourquestionsthismorningandyourinterest.Andjustwouldsumupbysaying,aswehavesaidmanytimes,thehealthcaresystemisdemandingbetteroutcomesatlowercostsandwe'renowtheworld'sleadinghealthcarediagnosticscompanyandwehaveunmatchedcapabilitiestoserveeverystakeholderinthehealthcaresystem.
Wehaveauniqueandcompletesetoftoolstodeliverwhatthesystemneeds.It'sanexcitingtimeforLabCorpandwelookforwardtoupdatingyouonourprogressaswecarryoutourkey2015priorities.Thankyouandgoodday.
Operator:
Thankyou.Ladiesandgentlementhankyouforyourparticipationintoday'sconference.Thisconcludesthepresentation.
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