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Laboratory Corp of America Holdings · 10-Q · For 3/31/95

Filed On 5/15/95 · SEC File 1-11353 · Accession Number 920148-95-11

  As Of               Filer                 Filing     On/For/As Docs:Pgs

 5/15/95  Laboratory Corp of Amer..Holdings 10-Q        3/31/95    2:21

Quarterly Report · Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      20     86K 
 2: EX-27       Financial Data Schedule                                1      7K

10-Q · Quarterly Report
Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Changes in Securities Changes in Securities - Continued Exhibits and Reports on Form 8-K Exhibits and Reports on Form 8-K - Continued Laboratory Corporation of America Holdings Legal Proceedings Submission of Matters to a Vote of Security Holders
1	1st Page
16	Item 1. Legal Proceedings
"	Item 2. Changes in Securities
17	Item 2. Changes in Securities - Continued
"	Item 4. Submission of Matters to a Vote of Security Holders
18	Item 6. Exhibits and Reports on Form 8-K
19	Item 6. Exhibits and Reports on Form 8-K - Continued
20	Laboratory Corporation of America Holdings

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      UNITED STATES SECURITIES AND EXCHANGE COMMISSION
      WASHINGTON, D.C. 20549
     FORM 10-Q

(Mark One)                                                  
     [X]  QUARTERLY  REPORT PURSUANT  TO SECTION  13  OR 15(d)  OF THE
SECURITIES EXCHANGE ACT OF 1934                   

For the quarterly period ended           MARCH 31, 1995     
                                   -----------------------------------
      OR
     [ ]  TRANSITION REPORT  PURSUANT TO  SECTION 13  OR 15(d)  OF THE
SECURITIES EXCHANGE ACT OF 1934                   

For the transition period from                to            
                                   ---------------     ---------------
Commission file number                  1-11353             
                            ------------------------------------------
      LABORATORY CORPORATION OF AMERICA HOLDINGS
     -----------------------------------------------------------------
      (Exact name of registrant as specified in its charter)

                DELAWARE                          13-3757370
     -----------------------------------------------------------------
      (State or other jurisdiction of         (I.R.S. Employer
         incorporation or organization)          Identification No.)

     358 SOUTH MAIN STREET, BURLINGTON, NORTH CAROLINA 27215
     -----------------------------------------------------------------
      (Address of principal executive offices)          (Zip code)

      800-222-7566
     -----------------------------------------------------------------
      (Registrant's telephone number, including area code)

      NATIONAL HEALTH LABORATORIES HOLDINGS INC.
      4225 EXECUTIVE SQUARE, SUITE 805, LA JOLLA, CALIFORNIA 92037
     -----------------------------------------------------------------
     (Former name or former address, if changed since last report)

     Indicate by check mark  whether the registrant (1) has  filed all
     reports  required to  be  filed by  Section 13  or  15(d) of  the
     Securities Exchange Act  of 1934 during  the preceding 12  months
     (or for such shorter  period that the registrant was  required to
     file  such reports)  and  (2) has  been  subject to  such  filing
requirements for the past 90 days.  Yes  X   No             

     The  number of shares outstanding of the issuer's common stock is
     122,908,701  shares  as  of May  12,  1995,  of which  61,329,256
     sharesare  held by  indirect wholly-owned  subsidiaries of  Roche
Holding Ltd.                                                

     The  number of  warrants outstanding  to purchase  shares of  the
     issuer's common stock is 22,151,670 as of  May 12, 1995, of which
     8,325,000  are held  by  an indirect  wholly-owned subsidiary  of
Roche Holding Ltd.                                          

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   LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES     
              CONSOLIDATED CONDENSED BALANCE SHEETS                
           (Dollars in Millions, except per share data)            

                                          March 31,    December 31,
                                            1995           1994    
                                        -----------    ------------
                                        (Unaudited)                
                                                                   
                ASSETS                                             
Current assets:                                                    
  Cash and cash equivalents             $   21.1        $   26.8   
  Accounts receivable, net                 217.4           205.4   
  Inventories                               20.1            20.1   
  Prepaid expenses and other                24.0             8.3   
  Deferred income taxes                     29.2            29.4   
  Income taxes receivable                     --             3.0   
                                        --------        --------   
      Total current assets                 311.8           293.0   

Property, plant and equipment, net         138.6           140.1   
Intangible assets, net                     549.2           551.9   
Other assets, net                           27.6            27.7   
                                        --------        --------   
                                        $1,027.2        $1,012.7   
                                        ========        ========   
  LIABILITIES AND STOCKHOLDERS' EQUITY                             

Current liabilities:                                               
  Accounts payable                      $   38.5        $   44.3   
  Accrued expenses and other                89.8            92.8   
  Current portion of long-term debt         41.4            39.0   
  Accrued settlement expenses                7.4            26.7   
                                        --------        --------   
    Total current liabilities              177.1           202.8   

Revolving credit facility                  255.0           213.0   
Long-term debt, less current portion       328.9           341.0   
Capital lease obligation                     9.8             9.8   
Deferred income taxes                       21.2            20.6   
Other liabilities                           56.2            59.5   
Stockholders' equity:                                              
  Preferred stock, $0.10 par value;                                
    10,000,000 shares authorized;                                  
    none issued                               --             --    
  Common stock, $0.01 par value;                                   
    220,000,000 shares authorized;                                 
    84,782,359 shares and 84,761,817                               
    shares issued at March 31, 1995                                
    and December 31, 1994, respectively      0.8             0.8   
Additional paid-in capital                 153.7           153.5   
Retained earnings                           24.5            11.7   
                                        --------        --------   
  Total stockholders' equity               179.0           166.0   
                                        --------        --------   
                                        $1,027.2        $1,012.7   
                                        ========        ========   
<FN>                                                                   
See notes to unaudited consolidated condensed financial statements.

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   LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES       
          CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS              
           (Dollars in Millions, except per share data)              
                           (Unaudited)                               

                                              Three Months Ended     
                                                  March 31,          
                                            --------------------     
                                              1995         1994      
                                            -------      -------     
                                                                     
Net sales                                   $ 243.8      $ 185.0     

Cost of sales                                 164.3        132.3     
                                            -------      -------     
Gross profit                                   79.5         52.7     

Selling, general and                                                 
  administrative expenses                      38.0         31.0     

Amortization of intangibles                                          
  and other assets                              4.8          3.1     
                                            -------      -------     
Operating income                               36.7         18.6     
                                            -------      -------     
Other income (expenses):                                             
  Investment income                             0.4          0.2     
  Interest expense                            (13.7)        (4.5)    
                                            -------      -------     
Earnings before income taxes                   23.4         14.3     

Provision for income taxes                     10.6          6.2     
                                            -------      -------     
Net earnings                                $  12.8      $   8.1     
                                            =======      =======     

Earnings per common share                   $  0.15      $  0.10     

Dividends per common share                  $    --      $  0.08     

<FN>                                                                     
  See notes to unaudited consolidated condensed financial statements.

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    LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES  
          CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS        
                       (Dollars in Millions)                     
                            (Unaudited)                          

                                              Three Months Ended 
                                                  March 31,      
                                            -------------------- 
                                              1995         1994  
                                            -------      ------- 
                                                                 
CASH FLOWS FROM OPERATING ACTIVITIES:                            
  Net earnings                              $  12.8      $   8.1 

  Adjustments to reconcile net earnings                          
    to net cash provided by (used for)                           
    operating activities:                                        
      Depreciation and amortization            14.2          9.4 
      Provision for doubtful accounts,                           
        net                                    (0.8)        (0.9)
      Change in assets and liabilities,                          
        net of effects of acquisitions:                          
        Increase in accounts receivable       (11.1)       (19.5)
        Increase (decrease) in inventories      0.3         (1.6)
        Increase in prepaid expenses                             
          and other                           (16.0)        (3.2)
        Decrease in deferred income                              
          taxes, net                            1.0          3.3 
        Decrease in income taxes                                 
          receivable                            7.8          7.8 
        (Decrease) increase in accounts                          
          payable, accrued expenses and                          
          other                               (14.0)         3.8 
        Payments for settlement and                              
          related expenses                    (19.3)        (8.9)
        Other, net                             (0.7)         4.1 
                                             -------     ------- 
  Net cash provided by operating                                 
    activities                                (25.8)         2.4 
                                             -------     ------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                            
  Capital expenditures                         (7.1)       (10.3)
  Acquisitions of businesses                   (1.8)       (13.5)
                                             -------     ------- 
  Net cash used for investing                                    
    activities                                 (8.9)       (23.8)
                                             -------     ------- 

                              (continued)                        

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    LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES    
     CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS, CONTINUED    
                       (Dollars in Millions)                       
                            (Unaudited)                            

                                              Three Months Ended   
                                                  March 31,        
                                            --------------------   
                                              1995         1994    
                                            -------      -------   
                                                                   
CASH FLOWS FROM FINANCING ACTIVITIES:                              
  Proceeds from revolving credit                                   
    facility                                $  42.0      $  46.0   
  Payments on long-term debt                   (9.7)          --   
  Deferred payments on acquisitions            (3.4)        (0.7)  
  Dividends paid on common stock                 --         (6.8)  
  Other                                         0.1           --   
                                            -------      -------   
  Net cash provided by (used for)                                  
    financing activities                       29.0         38.5   
                                            -------      -------   
  Net increase in cash and cash                                    
    equivalents                                (5.7)        17.1   
  Cash and cash equivalents at                                     
    beginning of year                          26.8         12.3   
                                            -------      -------   
  Cash and cash equivalents at                                     
    end of period                           $  21.1      $  29.4   
                                            =======      =======   
Supplemental schedule of cash                                      
  flow information:                                                
    Cash paid during the period for:                               
      Interest                              $  13.7      $   3.6   
      Income taxes                             (0.3)         0.2   

Disclosure of non-cash financing                                   
  and investing activities:                                        
    Dividends declared and unpaid                                  
      on common stock                       $    --      $   6.8   

In connection with business                                        
  acquisitions, liabilities were                                   
  assumed as follows:                                              
    Fair value of assets acquired           $   2.7      $  15.0   
    Cash paid                                  (1.8)       (13.5)  
                                            -------      -------   
    Liabilities assumed                     $   0.9      $   1.5   
                                            =======      =======   

<FN>                                                                   
See notes to unaudited consolidated condensed financial statements.

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     LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
      NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
      (Dollars in Millions, except per share data)

1.   BASIS OF FINANCIAL STATEMENT PRESENTATION              

          During the three  months ended March 31, 1995, the Company's
     name was National Health Laboratories  Holdings Inc. ("NHL").  On
     April  28, 1995, following approval  at a special  meeting of the
     stockholders  of the Company, the name of the Company was changed
to Laboratory Corporation of America Holdings.              

          The consolidated financial  statements include the  accounts
     of  Laboratory Corporation  of America  Holdings and  its wholly-
     owned  subsidiaries  (the  "Company") after  elimination  of  all
     material  intercompany accounts  and  transactions and  prior  to
     giving effect  to the merger with  Roche Biomedical Laboratories,
Inc. described in Footnote 3 herein.                        

          The accompanying consolidated condensed financial statements
     of  the Company  and  its subsidiaries  are  unaudited.   In  the
     opinion of management, all adjustments (which include only normal
     recurring accruals) necessary for a fair statement of the results
of operations have been made.                               

2.   EARNINGS PER SHARE                                     

          Earnings  per  share are  based  upon  the weighted  average
     number of  shares outstanding during the three months ended March
     31, 1995  and 1994  of 84,766,768  shares and  84,750,692 shares,
respectively.                                               

     3.   SUBSEQUENT   EVENT   -    MERGER   WITH   ROCHE   BIOMEDICAL
LABORATORIES, INC.                                

          On April  28, 1995,  the Company  completed the  merger with
     Roche  Biomedical  Laboratories,  Inc.  ("RBL")  pursuant  to  an
     Agreement and Plan of Merger (the "Merger Agreement") dated as of
     December 13, 1994 (the  "Merger").  The Merger will  be accounted
for under the purchase method of accounting.                

          Pursuant to the Merger  Agreement, each outstanding share of
     common stock, par value  $0.01 per share of the  Company ("Common
     Stock") (other  than as  provided in  the Merger Agreement),  was
     converted  (the "Share Conversion") into  (i) 0.72 of  a share of
     Common  Stock of the  Company and (ii)  $5.60 in cash  per share,
     without  interest.   Based upon  the number  of shares  of Common
     Stock outstanding  immediately prior to the  Merger and converted
     pursuant  to the Share Conversion  in the Merger,  as provided in
     the Merger  Agreement, the  Company estimates that  the aggregate
     number  of  shares issued  and  outstanding  following the  Share
     Conversion  was 61,041,138.  Also, an aggregate of 538,307 shares
     of  Common Stock were issued  in connection with the cancellation
of certain employee stock options.                          

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       LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
      NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
      (Dollars in Millions, except per share data)

     3.   SUBSEQUENT   EVENT   -    MERGER   WITH   ROCHE   BIOMEDICAL
LABORATORIES, INC. - Continued                    

          In addition, pursuant to  the Merger Agreement, an aggregate
     of  61,329,256 shares of Common Stock were issued to HLR Holdings
     Inc. ("HLR") and  its designee, Roche Holdings,  Inc. in exchange
     for  all shares of common stock, no par value, of RBL outstanding
     immediately prior to the effective date of the Merger (other than
     treasury  shares, which  were canceled).    The issuance  of such
     shares  of Common Stock was based upon the Company's estimate, as
     of immediately after the Merger,  of the total outstanding shares
     immediately  after  the  Share  Conversion  and,  based  on  such
     estimate,  equals  approximately 49.9%  of the  total outstanding
shares of Common Stock.                                     

          The  Company   also  made   a  distribution   (the  "Warrant
     Distribution")  to holders  of record  as of  April 21,  1995, of
     0.16308  of a warrant per outstanding share of Common Stock, each
     such warrant representing  the right to purchase one newly issued
     share of Common Stock for $22.00 (subject to adjustment) on April
     28,  2000  (each  such  warrant,  a  "Warrant").    Approximately
     13,826,670 Warrants have been  issued to stockholders entitled to
     receive   Warrants  in   the  Warrant   Distribution,  (including
     fractional  Warrants,  which  were  not  distributed,  but   were
     liquidated  in sales  on  the New  York  Stock Exchange  and  the
     proceeds thereof distributed to such stockholders).  In addition,
     pursuant  to the Merger Agreement  on April 28,  1995 the Company
     issued to Hoffmann-La  Roche Inc. ("Roche"), for a purchase price
     of  approximately  $51.0,  of  8,325,000  Warrants   (the   Roche
     Warrants )  to purchase  shares of  Common Stock,  which Warrants
will have the terms described above.                        

          The aggregate  cash  consideration of  approximately  $474.8
     paid  to stockholders of the  Company in the  Merger was financed
     from  three sources:    a cash  contribution  (the "Company  Cash
     Contribution")  of approximately  $288.1 out  of the  proceeds of
     borrowings  under the Bank Facility  (as described below), a cash
     contribution  made by  HLR  to  the  Company  in  the  amount  of
     approximately $135.7 and the proceeds from the  sale and issuance
of the Roche Warrants.                                      

          The Company also entered into a credit agreement dated as of
     April 28, 1995  (the "Credit  Agreement"), with  the banks  named
     therein (the  "Banks") and Credit  Suisse (New  York Branch),  as
     administrative agent (the "Bank  Agent"), which made available to
     the Company a senior term loan facility of $800.0 (the "Term Loan
Facility") and a revolving credit facility of $450.0 (the   

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     LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
      NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
   (Dollars in Millions)

     3.   SUBSEQUENT   EVENT   -   MERGER   WITH    ROCHE   BIOMEDICAL
LABORATORIES, INC. - Continued                    

     "Revolving  Credit Facility"  and,  together with  the Term  Loan
     Facility,  the  "Bank Facility").    The  Bank Facility  provided
     funds for the Company  Cash Contribution  for the  refinancing of
     certain existing  debt of  the Company  and its  subsidiaries and
     RBL,  to pay  related fees  and expenses  of  the Merger  and for
     general corporate  purposes of the Company  and its subsidiaries,
     in each case subject to the terms and conditions set forth in the
Credit Agreement.                                           

          In connection  with the  Credit Agreement, the  Company paid
     the  Banks and  Bank  Agent customary  underwriting, closing  and
    participation fees, respectively.  In addition, the Company will
     pay a facility fee  based on the total Revolving  Credit Facility
     commitment   (regardless  of   usage)   of   0.125%  per   annum.
     Availability  of funds under the Bank  Facility is conditioned on
     certain customary  conditions, and the Credit  Agreement contains
     customary  representations, warranties,  covenants and  events of
default.                                                    

          The Revolving Credit  Facility matures in  April 2000.   The
     Term Loan Facility matures  in December 2001, with repayments  in
     each quarter prior to maturity  based on a specified amortization
     schedule.   For as long  as HLR  and its affiliates  ownership of
     Company common stock (the  HLR Group Interest ) remains  at least
     25%,  the Revolving Credit Facility bears interest, at the option
     of the Company,  at (i) Credit Suisse s Base  Rate (as defined in
     the  Credit Agreement) or (ii) the Eurodollar Rate (as defined in
     the Credit Agreement) plus  a margin of 0.25%  and the Term  Loan
     Facility bears interest,  at the  option of the  Company, at  (i)
     Credit Suisse s Base Rate (as defined in the Credit Agreement) or
     (ii) the  Eurodollar Rate  (as defined  in the  Credit Agreement)
     plus a margin of  0.375%.  In the  event there is a reduction  in
     the HLR Group Interest to below 25%, applicable  interest margins
     will not  be determined as set  forth above, but instead  will be
     determined  based upon  the  Company s  financial performance  as
described in the Credit Agreement.                          

          The  Bank  Facility   is  unconditionally  and   irrevocably
guaranteed by certain of the Company s subsidiaries.        

          On April 28,  1995, the  Company borrowed  $800.0 under  the
     Term Loan Facility and $184.0 under the Revolving Credit Facility
     to  (i) pay the Company Cash Contribution; (ii) repay in full the
     existing  revolving credit and term  loan facilities of a wholly-
     owned subsidiary of the Company of approximately $640.0 including
  interest and fees; (iii) repay approximately $50.0 of existing

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     LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
      NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
     (Dollars in Millions)

     3.   SUBSEQUENT    EVENT   -   MERGER   WITH   ROCHE   BIOMEDICAL
LABORATORIES, INC. - Continued                    

     indebtedness  of RBL; and (iv) for other costs in connection with
     the Merger and for working capital and general corporate purposes
of the Company and its subsidiaries.                        

          Restructuring costs of approximately $76.0 were  recorded by
     the Company upon consummation of the Merger.  Also, in connection
     with the  repayment of  existing revolving  credit and term  loan
     facilities,  the  Company  recorded   an  extraordinary  loss  of
     approximately $14.0 ($7.7 net of  tax), consisting of the  write-
     off   of  deferred   financing  costs,   related  to   the  early
     extinguishment  of debt.    The restructuring  costs reflect  the
     Company's  estimate, at the time  of the Merger,  of reserves for
     severance  and benefit  costs,  costs for  office and  laboratory
     facilities expected to be closed, including asset write-downs and
     lease  costs, and  other  restructuring expenses  of the  Company
associated with the Merger.                                 

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     LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
     FINANCIAL CONDITION AND RESULTS OF OPERATIONS
     (Dollars in Millions)

RESULTS OF OPERATIONS                                       
---------------------                                       

          Net sales for  the three  months ended March  31, 1995  were
     $243.8,  an  increase  of  31.8%  from  $185.0  reported  in  the
     comparable 1994 period.   Net sales from the inclusion  of Allied
     Clinical Laboratories,  Inc. ("Allied"),  which  was acquired  on
     June  23, 1994,  increased net  sales by  approximately $40.7  or
     22.0%.  Growth in new accounts and acquisitions of small clinical
     laboratory  companies increased net  sales by approximately 10.0%
     and 6.4%, respectively.   A price increase, effective  on January
     1,  1995, increased net sales by approximately 2.5% for the three
     months  ended March 31, 1995.   However, a  reduction in Medicare
     fee  schedules from 84% to 80% of the national limitation amounts
     on  January 1,  1995, plus changes  in reimbursement  policies of
     various third  party payors,  reduced net sales  by approximately
     1.4%.   Other factors, including lower  utilization of laboratory
     testing and price erosion  in the industry as a  whole, comprised
the remaining reduction in net sales.                       

          Cost of  sales,  which  primarily  includes  laboratory  and
     distribution  costs, increased  to  $164.3 for  the three  months
     ended  March  31,  1995  from $132.3  in  the  corresponding 1994
     period.   Cost of sales  increased by approximately  $32.2 due to
     the inclusion of the cost of  sales of Allied.  This increase was
     partially offset  by reductions in  various cost categories  as a
     result of the Company's on-going cost-reduction program.  Cost of
     sales as  a percent of net  sales was 67.4% for  the three months
     ended  March 31, 1995 and 71.5% in the corresponding 1994 period.
     The  decrease in the cost  of sales percentage primarily resulted
     from the Company's cost reduction efforts and from an increase in
     net sales in the  three months ended March  31, 1995 compared  to
     the corresponding period  in 1994.   This decrease was  partially
     offset by a reduction in net sales due to a reduction in Medicare
     fee schedules, pricing  pressures and utilization  declines, each
of which provided little corresponding reduction in costs.  

          Selling,  general and  administrative expenses  increased to
     $38.0 for the three months ended March 31, 1995 from $31.0 in the
     same period in 1994.  Approximately $5.5 of the  increase was due
     to  the  inclusion of  the  selling,  general and  administrative
     expenses  of Allied.  The remaining increase was primarily due to
     expansion of the data  processing and billing departments due  to
     increased  volume  and  to  improve   customer  service.    As  a
     percentage of  net  sales, selling,  general  and  administrative
     expenses was 15.6% and 16.8% for the three months ended March 31,
     1995  and  1994, respectively.    The  decrease  in the  selling,
     general and administrative percentage  primarily resulted from an
increase in net sales as discussed above.                   

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     LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
     FINANCIAL CONDITION AND RESULTS OF OPERATIONS
     (Dollars in Millions)

RESULTS OF OPERATIONS - Continued                           
---------------------                                       

          Management  expects net  sales to  continue to  grow through
     strategic acquisitions and the addition of new accounts, although
     there can be no  assurance that the Company will  experience such
     growth.  Reductions  in Medicare fee  schedules, pursuant to  the
     Omnibus Budget Reconciliation Act of 1993 ("OBRA '93"), to 76% of
     the  median fee amounts, effective January 1, 1996 is expected to
     negatively impact net sales, cost of sales as a percentage of net
     sales  and  selling, general  and  administrative  expenses as  a
     percentage of net sales in the future.  Management cannot predict
     if price  erosion or utilization declines will  continue to occur
     or the ultimate  effect of such declines on net  sales or results
     of  operations.  It is  the objective of  management to partially
     offset the  increases in cost  of sales  as a  percentage of  net
     sales  and  selling, general  and  administrative  expenses as  a
     percentage  of net  sales  through  comprehensive cost  reduction
     programs at each of the Company's regional laboratories, although
there can be no assurance of the success of such programs.  

          The increase in amortization of intangibles and other assets
     to $4.8  for the three months  ended March 31, 1995  from $3.1 in
     the  corresponding period  in  1994 primarily  resulted from  the
     acquisition of Allied  in June  1994 and  other small  laboratory
companies during both 1995 and 1994.                        

          Interest expense was  $13.7 for the three months ended March
     31, 1995  compared with $4.5  for the same  period in 1994.   The
     change  resulted  primarily  from increased  borrowings  used  to
     finance  the acquisition of Allied  in June 1994  and other small
     laboratory companies during both  1995 and 1994.  Higher  average
     interest  rates  also contributed  to  the  increase in  interest
expense.                                                    

          The provision for  income taxes as a percentage  of earnings
     before  income taxes  was 45.3%  and 43.4%  for the  three months
     ended  March 31,  1995 and  1994, respectively.   The  change was
     mainly due to a  higher effective tax  rate for both federal  and
state income taxes.                                         

          The health care industry is undergoing significant change as
     third party payers, such  as Medicare and Medicaid  and insurers,
     increase  their  efforts to  control  the  cost, utilization  and
     delivery of health care  services.  In an effort  to address this
     problem  of increasing  health care  costs, legislation  has been
     proposed  or  enacted at  both the  Federal  and state  levels to
     regulate   health  care   delivery   in  general   and   clinical
     laboratories  in  particular.    Some of  the  proposals  include
managed competition,                                        

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     LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
     FINANCIAL CONDITION AND RESULTS OF OPERATIONS
      (Dollars in Millions, except per share data)

RESULTS OF OPERATIONS - Continued                           
---------------------                                       

     global  budgeting  and  price  controls.   Although  the  Clinton
     Administration's health  care reform proposal was  not enacted by
     the 103rd  Congress,  such proposal  or  other proposals  may  be
     considered in the  future.  In  particular, the Company  believes
     that  reductions  in  reimbursement for  Medicare  services  will
     continue  to be implemented from time to time.  Reductions in the
     reimbursement rates  of other  third  party payers  may occur  as
     well.   The Company cannot predict the effect health care reform,
     if  enacted,  would have  on its  business, and  there can  be no
     assurance  that  such  reforms,  if  enacted, would  not  have  a
     material adverse effect on the Company's business and operations.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES        
----------------------------------------------------        

          For the three months ended March 31, 1995 and 1994, net cash
     (used  in) provided  by  operating activities  (after payment  of
     settlement and related  expenses of  $19.3 and $8.9  in 1995  and
     1994,  respectively) was  ($25.8) and  $2.4, respectively.   Cash
     used  for capital expenditures was  $7.1 and $10.3  for the three
     months  ended March 31, 1995 and 1994, respectively.  The Company
     expects capital expenditures to be approximately $100.0 to $125.0
     in  1995 to integrate the Company, RBL and Allied, to accommodate
     expected growth,  to  further automate  laboratory processes  and
improve efficiency.                                         

          The Company acquired one small laboratory company during the
     three months ended March 31, 1995 for an aggregate amount of $1.8
     in cash and the  recognition of $0.9 of liabilities.   During the
     corresponding  period   in  1994,   the  Company  acquired   four
     laboratory  companies  for  a total  of  $13.5  in  cash and  the
recognition of $1.5 of liabilities.                         

          On  April 28, 1995,  the Company  completed the  merger with
     Roche  Biomedical  Laboratories,  Inc.  ("RBL")  pursuant  to  an
     Agreement and Plan of Merger (the "Merger Agreement") dated as of
     December 13, 1994 (the  "Merger").  The Merger will  be accounted
for under the purchase method of accounting.                

          Pursuant to the Merger  Agreement, each outstanding share of
     common stock, par value  $0.01 per share of the  Company ("Common
     Stock")  (other than  as provided in  the Merger  Agreement), was
     converted  (the "Share Conversion") into  (i) 0.72 of  a share of
     Common Stock of  the Company  and (ii) $5.60  in cash per  share,
     without interest. Based upon the number of shares of Common Stock
      outstanding immediately prior to the Merger and converted pursuant

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             LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
     FINANCIAL CONDITION AND RESULTS OF OPERATIONS
      (Dollars in Millions, except per share data)

    FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES - Continued
----------------------------------------------------        

     to the  Share Conversion in the Merger, as provided in the Merger
     Agreement,  the Company  estimates that  the aggregate  number of
     shares issued and outstanding  following the Share Conversion was
     61,041,138.  Also, an aggregate of 538,307 shares of Common Stock
     were  issued  in  connection  with the  cancellation  of  certain
employee stock options.                                     

          In addition, pursuant to  the Merger Agreement, an aggregate
     of  61,329,256 shares of Common Stock were issued to HLR Holdings
     Inc. ("HLR") and its  designee, Roche Holdings, Inc.  in exchange
     for  all shares of common stock, no par value, of RBL outstanding
     immediately prior to the effective date of the Merger (other than
     treasury  shares, which  were canceled).   The  issuance  of such
     shares  of Common Stock was based upon the Company's estimate, as
     of immediately after the Merger, of the  total outstanding shares
     immediately  after  the  Share  Conversion  and,  based  on  such
     estimate,  equals approximately  49.9% of  the total  outstanding
shares of Common Stock.                                     

          The   Company  also   made  a  distribution   (the  "Warrant
     Distribution")  to holders  of record  as of  April 21,  1995, of
     0.16308  of a warrant per outstanding share of Common Stock, each
     such warrant representing the right  to purchase one newly issued
     share of Common Stock for $22.00 (subject to adjustment) on April
     28,  2000  (each  such  warrant,  a  "Warrant").    Approximately
     13,826,670 Warrants have been  issued to stockholders entitled to
     receive   Warrants  in   the  Warrant   Distribution,  (including
     fractional  Warrants,  which  were  not   distributed,  but  were
     liquidated  in sales  on  the New  York  Stock Exchange  and  the
     proceeds thereof distributed to such stockholders).  In addition,
     pursuant  to the Merger Agreement  on April 28,  1995 the Company
     issued to Hoffmann-La Roche Inc.  ("Roche"), for a purchase price
     of  approximately  $51.0,  of   8,325,000  Warrants  (the   Roche
     Warrants )  to purchase  shares of  Common Stock,  which Warrants
will have the terms described above.                        

          The  aggregate  cash consideration  of  approximately $474.8
     paid  to stockholders of the  Company in the  Merger was financed
     from three  sources:   a  cash  contribution (the  "Company  Cash
     Contribution")  of approximately  $288.1 out  of the  proceeds of
     borrowings under  the Bank Facility (as described  below), a cash
     contribution  made by  HLR  to  the  Company  in  the  amount  of
     approximately $135.7 and the proceeds  from the sale and issuance
of the Roche Warrants.                                      

          The Company also entered into a credit agreement dated as of

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     LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
     FINANCIAL CONDITION AND RESULTS OF OPERATIONS
     (Dollars in Millions)

    FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES - Continued
----------------------------------------------------        

     April 28,  1995 (the  "Credit Agreement"), with  the banks  named
     therein (the  "Banks") and  Credit Suisse  (New York Branch),  as
     administrative agent (the "Bank  Agent"), which made available to
     the Company a senior term loan facility of $800.0 (the "Term Loan
     Facility")  and  a  revolving  credit  facility  of  $450.0  (the
     "Revolving  Credit Facility"  and,  together with  the Term  Loan
     Facility, the "Bank Facility").  The Bank Facility provided funds
     for the Company Cash Contribution for  the refinancing of certain
     existing debt of the Company and its subsidiaries and RBL, to pay
     related fees and expenses of the Merger and for general corporate
     purposes of  the  Company  and its  subsidiaries,  in  each  case
     subject  to  the terms  and conditions  set  forth in  the Credit
Agreement.                                                  

          In connection  with the  Credit Agreement, the  Company paid
     the  Banks and  Bank  Agent customary  underwriting, closing  and
    participation fees, respectively.  In addition, the Company will
     pay a facility fee  based on the total Revolving  Credit Facility
     commitment   (regardless   of  usage)   of   0.125%   per  annum.
     Availability  of funds under the  Bank Facility is conditioned on
     certain  customary conditions, and  the Credit Agreement contains
     customary  representations, warranties,  covenants and  events of
default.                                                    

          The Revolving  Credit Facility matures  in April 2000.   The
     Term Loan Facility matures  in December 2001, with  repayments in
     each quarter prior to maturity based on a  specified amortization
     schedule.   For as long  as HLR  and its affiliates  ownership of
     Company common stock  (the  HLR Group Interest ) remains at least
     25%, the Revolving Credit Facility  bears interest, at the option
     of the Company,  at (i) Credit Suisse s Base  Rate (as defined in
     the  Credit Agreement) or (ii) the Eurodollar Rate (as defined in
     the Credit Agreement) plus  a margin of 0.25%  and the Term  Loan
     Facility bears interest,  at the  option of the  Company, at  (i)
     Credit Suisse s Base Rate (as defined in the Credit Agreement) or
     (ii) the  Eurodollar Rate (as  defined in  the Credit  Agreement)
     plus a margin  of 0.375%.  In  the event there is  a reduction in
     the HLR Group  Interest to below 25%, applicable interest margins
     will not be determined  as set forth  above, but instead will  be
     determined  based upon  the  Company s financial  performance  as
described in the Credit Agreement.                          

          The  Bank   Facility  is  unconditionally   and  irrevocably
guaranteed by certain of the Company s subsidiaries.        

            On April  28, 1995, the Company borrowed $800.0 under the Term
       Loan Facility and $184.0 under the Revolving Credit Facility to (i)

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     LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
     FINANCIAL CONDITION AND RESULTS OF OPERATIONS
     (Dollars in Millions)

    FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES - Continued
----------------------------------------------------        

     pay  the  Company  Cash  Contribution; (ii)  repay  in  full  the
     existing revolving credit and term  loan facilities of a  wholly-
     owned subsidiary of the Company of approximately $640.0 including
     interest and  fees; (iii)  repay approximately $50.0  of existing
     indebtedness  of RBL; and (iv) for other costs in connection with
     the Merger and for working capital and general corporate purposes
of the Company and its subsidiaries.                        

          Restructuring  costs of approximately $76.0 were recorded by
     the Company upon consummation of the Merger.  Also, in connection
     with  the repayment of  existing revolving  credit and  term loan
     facilities,  the  Company  recorded  an  extraordinary   loss  of
     approximately $14.0 ($7.7 net  of tax), consisting of the  write-
     off   of  deferred   financing  costs,   related  to   the  early
     extinguishment  of debt.    The restructuring  costs reflect  the
     Company's  estimate, at the time  of the Merger,  of reserves for
     severance  and benefit  costs,  costs for  office and  laboratory
     facilities expected to be closed, including asset write-downs and
     lease  costs, and  other  restructuring expenses  of the  Company
associated with the Merger.                                 

          The Company expects that its cash needs for working capital,
     capital expenditures and the cash  costs of the restructuring and
     operations of  the Company after  the Merger will  be met by  its
     cash  flow from  operations  and borrowings  under the  Revolving
Credit Facility.                                            

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     LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

     PART II - OTHER INFORMATION

Item 1.   Legal Proceedings                                 

               As  discussed in Part I,  Item 3 "Legal Proceedings" of
               the Company's  December 31, 1994 Annual  Report on Form
               10-K,  Allied  Clinical Laboratories,  Inc. ("Allied"),
               which  was  purchased  by  the Company  in  June  1994,
               received in  April 1994 a  subpoena from the  Office of
               Inspector General ("OIG")  of the Department of  Health
               and  Human  Services ("HHS")  requesting  documents and
               certain  information  regarding  the  Medicare  billing
               practices  of its Cincinnati,  Ohio clinical laboratory
               with  respect to  certain cancer  screening tests.   In
               March 1995,  Allied resolved  the issues raised  by the
               April  1994  subpoena  and  a related  qui  tam  action
               commenced  in  a  Cincinnati,  Ohio  Federal  court  by
               entering into agreements with,  among others, HHS,  the
               United States Department of Justice and the relators in
               the qui tam action  pursuant to which it agreed  to pay
               $4.9 million to settle all pending claims and inquiries
               regarding  these billing practices  and certain others.
               The  Company had  previously established  reserves that
               were  adequate to  cover such  settlement payment.   In
               connection with the settlement, Allied agreed with HHS,
               among other things, to implement a  corporate integrity
               program to  ensure that Allied and  its representatives
               remain  in   compliance   with  applicable   laws   and
               regulations   and  to   provide  certain   reports  and
              information  to HHS regarding such compliance efforts.

Item 2.   Changes in Securities                             

               (a)  In connection  with the Merger, the  Company, HLR,
                    Roche  and  Roche   Holdings,  Inc.   ("Holdings")
                    entered into a  stockholder agreement dated as  of
                    April 28, 1995 (the "Stockholder Agreement") which
                    sets forth, among other things, certain agreements
                    and understandings regarding the governance of the
                    Company  following the  Merger, including  but not
                    limited  to  the  composition   of  the  Board  of
                    Directors.  The Stockholder Agreement was filed as
                    an  exhibit to  the Company's  report on  Form 8-K
                    dated April  28, 1995 which  was filed on  May 12,
                    1995   in  connection  with   the  merger  and  is
   incorporated herein by reference.

                    In connection with the  Merger, the Company made a
                    distribution to stockholders  of record of  shares
                    of Common Stock as of April 21, 1995 consisting of

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     LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

     PART II - OTHER INFORMATION

Item 2.   Changes in Securities - Continued                 

                    0.16308  of a  warrant  per  outstanding share  of
                   Common  Stock, each such warrant representing the
                    right to purchase one newly issued share of Common
                    Stock  for $22.00 (subject to adjustment) pursuant
                    to a  warrant  agreement between  the Company  and
                    American  Stock  Transfer  &  Trust  Company  (the
                    "Warrant Agreement")  dated as of  April 10,  1995
                    which sets forth  the terms of the  warrants.  The
                    Warrant Agremeent  was filed as an  exhibit to the
                    Company's report on Form  8-K dated April 28, 1995
                    which was filed on May 12, 1995 in connection with
                    the  Merger   and   is  incorporated   herein   by
reference.                    

(b)  Not applicable                     

 Item 4.   Submission of Matters to a Vote of Security Holders

               (a)  A Special Meeting of  the Shareholders was held on
April 28, 1995.               

(b)  Not applicable.                    

               (c)  The  matters voted  upon  were  the  approval  and
                    adoption of the Merger Agreement and  the approval
                    of  a  proposed  amendment  to Article  I  of  the
                    Certificate  of  Incorporation of  the  Company to
                    change  the name  of  the  Company to  "Laboratory
                    Corporation  of America Holdings."  The results of
the vote were as follows:     

                                   Votes      Votes    Votes
               Topic                  For      Against Abstained
      ------------------------    ----------  -------- ---------
Approval and adoption                               
     of the Merger Agreement:    66,972,092    50,182   38,702

     Approval of name change:    66,962,170    57,404   41,402

(d)  Not applicable.            

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   LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

     PART II - OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K                  

(a)  Exhibits                           

                    3.1   Certificate of Incorporation of  the Company
                          (amended pursuant to a Certificate of Merger
       filed on April 28, 1995)*
                    3.2   Amended   and   Restated   By-Laws  of   the
Company*          
                    4.1   Warrant Agreement  dated  as  of  April  10,
                          1995 between the Company  and American Stock
       Transfer & Trust Company*
                    4.2   Specimen    of   the    Company's    Warrant
                          Certificate (included in the  exhibit to the
                          Warrant   Agreement  included   therein   as
  Exhibit 4.1 hereto)*
                    4.3   Specimen  of  the  Company's   Common  Stock
Certificate*      
                    10.1  Stockholder Agreement dated as  of April 28,
                          1995  among the Company,  HLR Holdings Inc.,
                          Hoffmann-La  Roche Inc.  and Roche Holdings,
Inc.*             
                    10.2  Exchange  Agent Agreement dated  as of April
                          28, 1995  between the  Company and  American
             Stock Transfer & Trust Company*
                    10.3  Credit  Agreement  dated  as  of  April  28,
                          1995,  among  the Company,  the  banks named
                          therein,   and   Credit  Suisse   (New  York
               Branch), as Administrative Agent*
                    10.4  Amendment dated as of April  28, 1995 to the
                          Employment Agreement dated as  of January 1,
                          1991, as amended  on April 1, 1991,  June 6,
                          1991,  January 1,  1993 and  April 1,  1994,
                          between   La   Jolla  Management   Corp.,  a
                       Delaware corporation and David C. Flaugh*
    21    Subsidiaries of the Company*
                    22    Press Release  dated April 28,  1995 by  the
Company*          
                    27    Financial   Data  Schedule   (electronically
  filed version only).

(b)  Reports on Form 8-K                

                      A report  on Form 8-K  dated April  28, 1995
                      was  filed on  May  12,  1995 in  connection
                      with the Merger.  The Form  8-K incorporated
                      by  reference  the   Consolidated  Financial
                      Statements   of   RBL   and   the   proforma
                          financial information with respect to the Merger

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     LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

     PART II - OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K - Continued      

                          included on  the proxy  statement/prospectus
                          dated  March  31,  1995  and  filed  by  the
                          Company with  the  Commission as  part of  a
                          Registration  Statement in  Forms S-4/S-3 on
March 31, 1995.   

     *    Incorporated by reference herein to  the report on Form  8-K
          dated April 28, 1995, filed with the Securities and Exchange
       Commission on May 12, 1995 in connection with the Merger.

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     S I G N A T U R E

          Pursuant to the requirements  of the Securities Exchange Act
     of 1934, the registrant has duly caused this  report to be signed
on its behalf by the undersigned thereunto duly authorized. 

      LABORATORY CORPORATION OF AMERICA HOLDINGS
      Registrant

     By:/s/    DAVID C. FLAUGH
        ----------------------
               David C. Flaugh
                                  Executive Vice President and Chief
                 Operating Officer

         By:/s/    WESLEY R. ELINGBURG
            --------------------------
                   Wesley R. Elingburg
                              Senior Vice President, Finance
                              (Principal Accounting Officer)

Date:     May 15, 1995

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Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This 10-Q Filing	Date	First	Last	Other Filings

	1/1/93	18
	3/31/94	6	12
	4/1/94	18
	6/23/94	10		8-K
	12/13/94	6	12	8-K
	12/31/94	2	16	10-K405
	1/1/95	10
For The Period Ended	3/31/95	1	19	S-4/A
	4/10/95	17	18
	4/21/95	7	16
	4/28/95	6	19	8-K
	5/12/95	1	19	8-K
Filed On / Filed As Of	5/15/95	20
Corrected On	5/18/95
	1/1/96	11
	4/28/0	7	13

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Laboratory Corp of America Holdings · 10-Q · For 3/31/95

Filed On 5/15/95 · SEC File 1-11353 · Accession Number 920148-95-11

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