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As Of Filer Filing For·On·As Docs:Size 8/08/19 Lab Corp of America Holdings 10-Q 6/30/19 74:11M |
Document/Exhibit Description Pages Size
1: 10-Q Quarterly Report HTML 1.44M
2: EX-10.1 Material Contract HTML 109K
3: EX-31.1 Certification -- §302 - SOA'02 HTML 27K
4: EX-31.2 Certification -- §302 - SOA'02 HTML 27K
5: EX-32.1 Certification -- §906 - SOA'02 HTML 26K
12: R1 Cover Page HTML 74K
13: R2 Condensed Consolidated Balance Sheets (Unaudited) HTML 121K
14: R3 Condensed Consolidated Balance Sheets (Unaudited) HTML 23K
(Parentheticals)
15: R4 Condensed Consolidated Statements of Operations HTML 85K
(Unaudited)
16: R5 Condensed Consolidated Statements of Comprehensive HTML 59K
Earnings (Unaudited)
17: R6 Condensed Consolidated Statements of Changes in HTML 78K
Shareholders' Equity (Unaudited)
18: R7 Condensed Consolidated Statements of Cash Flows HTML 134K
(Unaudited)
19: R8 Basis of Financial Statement Presentation HTML 43K
20: R9 Earnings Per Share HTML 71K
21: R10 Restructuring and Other Special Charges HTML 66K
22: R11 Goodwill and Intangible Assets HTML 75K
23: R12 Debt HTML 78K
24: R13 Preferred Stock and Common Shareholders' Equity HTML 88K
25: R14 Income Taxes HTML 28K
26: R15 Commitments and Contingencies HTML 77K
27: R16 Pension and Postretirement Plans HTML 108K
28: R17 Fair Value Measurements HTML 89K
29: R18 Derivative Instruments and Hedging Activities HTML 143K
30: R19 Supplemental Cash Flow Information HTML 55K
31: R20 Business Acquisitions HTML 55K
32: R21 BUSINESS SEGMENT INFORMATION Business Segment HTML 71K
information (Notes)
33: R22 Leases (Notes) HTML 87K
34: R23 Earnings Per Share (Tables) HTML 73K
35: R24 RESTRUCTURING AND OTHER SPECIAL CHARGES HTML 63K
Restructuring and Other Special Charges Detail
(Tables)
36: R25 Goodwill and Intangible Assets (Tables) HTML 75K
37: R26 Fair Value Measurements (Tables) HTML 86K
38: R27 Supplemental Cash Flow Information (Tables) HTML 55K
39: R28 BUSINESS ACQUISITIONS Business Acquisitions Tables HTML 31K
(Tables)
40: R29 Business Segment Information (Tables) HTML 70K
41: R30 Revenue (Tables) HTML 500K
42: R31 Leases (Tables) HTML 107K
43: R32 Basis of Financial Statement Presentation HTML 123K
(Details)
44: R33 Earnings Per Share (Reconciliation of Basic HTML 53K
Earnings Per Share to Diluted Earnings Per Share)
(Details)
45: R34 Earnings Per Share (Potential common shares not HTML 24K
included in computation of diluted earnings per
share) (Details)
46: R35 Restructuring and Other Special Charges (Details) HTML 84K
47: R36 Restructuring Reserves (Details) HTML 60K
48: R37 Goodwill and Intangible Assets (Changes in HTML 78K
Carrying Amount of Goodwill) (Details)
49: R38 Goodwill and Intangible Assets (Components of HTML 45K
identifiable intangible assets) (Details)
50: R39 Goodwill and Intangible Assets (Details) HTML 50K
51: R40 Debt (Short-term borrowings and current portion of HTML 50K
long-term debt) (Table) (Details)
52: R41 Debt (Long-term debt) (Details) HTML 110K
53: R42 Debt (Senior Notes) (Details) HTML 79K
54: R43 Debt (Convertible Subordinated Notes) (Details) HTML 38K
55: R44 Debt (Credit Facilities) (Details) HTML 98K
56: R45 Preferred Stock and Common Shareholders' Equity HTML 103K
(Details)
57: R46 Preferred Stock and Common Shareholders' Equity HTML 73K
PREFERRED STOCK AND COMMON SHAREHOLDERS' EQUITY -
Accumulated Other Comprehensive Earnings (Details)
58: R47 Income Taxes (Details) HTML 29K
59: R48 Commitments and Contingencies (Details) HTML 22K
60: R49 Pension and Postretirement Plans (Details) HTML 244K
61: R50 Pension and Postretirement Plans Defined HTML 36K
Contribution Plans (Details)
62: R51 Fair Value Measurements (Details) HTML 63K
63: R52 Derivative Instruments and Hedging Activities HTML 86K
(Details)
64: R53 Supplemental Cash Flow Information (Details) HTML 43K
65: R54 Business Acquisitions (Details) HTML 121K
66: R55 Business Acquisitions Business Acquisitions in the HTML 40K
Aggregate (Details)
67: R56 Business Acquisitions Dispositions (Details) HTML 67K
68: R57 BUSINESS SEGMENT INFORMATION Business Segment HTML 65K
Information (Details)
69: R58 REVENUE Disaggregated Revenue Table (Details) HTML 136K
70: R59 Leases (Details) HTML 130K
72: XML IDEA XML File -- Filing Summary XML 133K
11: XML XBRL Instance -- lh201910-qq2_htm XML 3.23M
71: EXCEL IDEA Workbook of Financial Reports XLSX 95K
7: EX-101.CAL XBRL Calculations -- lh-20190630_cal XML 189K
8: EX-101.DEF XBRL Definitions -- lh-20190630_def XML 1.03M
9: EX-101.LAB XBRL Labels -- lh-20190630_lab XML 1.91M
10: EX-101.PRE XBRL Presentations -- lh-20190630_pre XML 1.38M
6: EX-101.SCH XBRL Schema -- lh-20190630 XSD 175K
73: JSON XBRL Instance as JSON Data -- MetaLinks 380± 584K
74: ZIP XBRL Zipped Folder -- 0000920148-19-000076-xbrl Zip 342K
| Document |
i Delaware | i 13-3757370 | |
(State
or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |
i 358 South Main Street | |||
i Burlington, | i North
Carolina | i 27215 | |
(Address of principal executive offices) | (Zip Code) | ||
i Large
accelerated filer | ☒ | Accelerated filer | ☐ |
Non-accelerated filer | ☐ | Smaller reporting company | i ☐ |
Emerging
growth company | i ☐ | ||
Item
1. | ||
Three and six months ended June 30, 2019
and 2018 | ||
Three and six months ended June 30, 2019 and 2018 | ||
Three and six months ended June 30, 2019 and 2018 | ||
Six months ended June 30, 2019 and 2018 | ||
Item
2. | ||
Item 3. | ||
Item
4. | ||
Item 1. | ||
Item
1A. | ||
Item 2. | ||
Item
5. | ||
Item 6. | ||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | i 265.4 | $ | i 426.8 | |||
Accounts
receivable | i 1,576.1 | i 1,467.9 | |||||
Unbilled
services | i 488.8 | i 394.4 | |||||
Supplies
inventories | i 219.7 | i 237.3 | |||||
Prepaid
expenses and other | i 298.6 | i 309.0 | |||||
Total
current assets | i 2,848.6 | i 2,835.4 | |||||
Property,
plant and equipment, net | i 2,544.2 | i 1,740.3 | |||||
Goodwill,
net | i 7,843.7 | i 7,360.3 | |||||
Intangible
assets, net | i 4,015.9 | i 3,911.1 | |||||
Joint
venture partnerships and equity method investments | i 86.7 | i 60.5 | |||||
Deferred
income tax assets | i 1.7 | i 1.7 | |||||
Other
assets, net | i 403.6 | i 276.0 | |||||
Total
assets | $ | i 17,744.4 | $ | i 16,185.3 | |||
LIABILITIES
AND SHAREHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | i 531.6 | $ | i 634.6 | |||
Accrued
expenses and other | i 820.3 | i 870.0 | |||||
Unearned
revenue | i 404.2 | i 356.4 | |||||
Short-term
operating lease liabilities | i 229.2 | i — | |||||
Short-term
finance lease liabilities | i 8.2 | i 7.9 | |||||
Short-term
borrowings and current portion of long-term debt | i 502.3 | i 10.0 | |||||
Total
current liabilities | i 2,495.8 | i 1,878.9 | |||||
Long-term
debt, less current portion | i 6,135.0 | i 5,990.9 | |||||
Operating
lease liabilities | i 586.1 | i — | |||||
Financing
lease liabilities | i 46.2 | i 51.0 | |||||
Deferred
income taxes and other tax liabilities | i 948.3 | i 940.0 | |||||
Other
liabilities | i 368.6 | i 334.0 | |||||
Total
liabilities | i 10,580.0 | i 9,194.8 | |||||
Commitments
and contingent liabilities | |||||||
Noncontrolling interest | i 20.0 | i 19.1 | |||||
Shareholders’
equity: | |||||||
Common stock, 97.8 and 98.9 shares outstanding at June 30, 2019 and December 31, 2018, respectively | i 9.1 | i 11.7 | |||||
Additional
paid-in capital | i 91.4 | i 1,451.1 | |||||
Retained
earnings | i 7,455.8 | i 7,079.8 | |||||
Less
common stock held in treasury | i — | ( i 1,108.1 | ) | ||||
Accumulated
other comprehensive loss | ( i 411.9 | ) | ( i 463.1 | ) | |||
Total
shareholders’ equity | i 7,144.4 | i 6,971.4 | |||||
Total
liabilities and shareholders’ equity | $ | i 17,744.4 | $ | i 16,185.3 | |||
Three
Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenues | $ | i 2,881.7 | $ | i 2,866.3 | $ | i 5,672.9 | $ | i 5,714.6 | |||||||
Cost
of revenues | i 2,056.9 | i 2,031.2 | i 4,058.4 | i 4,100.5 | |||||||||||
Gross
profit | i 824.8 | i 835.1 | i 1,614.5 | i 1,614.1 | |||||||||||
Selling,
general and administrative expenses | i 415.3 | i 395.2 | i 809.1 | i 792.2 | |||||||||||
Amortization
of intangibles and other assets | i 60.2 | i 58.5 | i 117.3 | i 120.8 | |||||||||||
Restructuring
and other special charges | i 13.6 | i 12.2 | i 34.2 | i 26.5 | |||||||||||
Operating
income | i 335.7 | i 369.2 | i 653.9 | i 674.6 | |||||||||||
Other
income (expenses): | |||||||||||||||
Interest expense | ( i 59.1 | ) | ( i 63.1 | ) | ( i 115.8 | ) | ( i 126.6 | ) | |||||||
Equity
method income, net | i 2.5 | i 3.0 | i 5.5 | i 5.5 | |||||||||||
Investment
income | i 1.4 | i 0.8 | i 2.0 | i 1.4 | |||||||||||
Other,
net | ( i 10.5 | ) | i 2.8 | ( i 20.9 | ) | ( i 0.7 | ) | ||||||||
Earnings
before income taxes | i 270.0 | i 312.7 | i 524.7 | i 554.2 | |||||||||||
Provision
for income taxes | i 79.3 | i 78.6 | i 148.1 | i 147.6 | |||||||||||
Net
earnings | i 190.7 | i 234.1 | i 376.6 | i 406.6 | |||||||||||
Less:
Net (earnings) loss attributable to the noncontrolling interest | ( i 0.3 | ) | ( i 0.3 | ) | ( i 0.6 | ) | i 0.4 | ||||||||
Net
earnings attributable to Laboratory Corporation of America Holdings | $ | i 190.4 | $ | i 233.8 | $ | i 376.0 | $ | i 407.0 | |||||||
Basic
earnings per common share | $ | i 1.94 | $ | i 2.29 | $ | i 3.82 | $ | i 3.99 | |||||||
Diluted
earnings per common share | $ | i 1.93 | $ | i 2.27 | $ | i 3.79 | $ | i 3.94 | |||||||
Three
Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net earnings | $ | i 190.7 | $ | i 234.1 | $ | i 376.6 | $ | i 406.6 | |||||||
Foreign
currency translation adjustments | i 25.6 | ( i 121.9 | ) | i 47.2 | ( i 82.6 | ) | |||||||||
Net
benefit plan adjustments | i 2.8 | i 3.3 | i 5.5 | i 6.2 | |||||||||||
Other
comprehensive earnings (loss) before tax | i 28.4 | ( i 118.6 | ) | i 52.7 | ( i 76.4 | ) | |||||||||
(Provision)
benefit for income tax related to items of other comprehensive earnings | ( i 0.8 | ) | ( i 7.2 | ) | ( i 1.5 | ) | i 3.1 | ||||||||
Other
comprehensive earnings, net of tax | i 27.6 | ( i 125.8 | ) | i 51.2 | ( i 73.3 | ) | |||||||||
Comprehensive
earnings | i 218.3 | i 108.3 | i 427.8 | i 333.3 | |||||||||||
Less:
Net (earnings) loss attributable to the noncontrolling interest | ( i 0.3 | ) | ( i 0.3 | ) | ( i 0.6 | ) | i 0.4 | ||||||||
Comprehensive
earnings attributable to Laboratory Corporation of America Holdings | $ | i 218.0 | $ | i 108.0 | $ | i 427.2 | $ | i 333.7 | |||||||
Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | Accumulated Other Comprehensive Loss | Total Shareholders’ Equity | ||||||||||||||||||
BALANCE
AT DECEMBER 31, 2017 | $ | i 12.0 | $ | i 1,989.8 | $ | i 6,196.1 | $ | ( i 1,060.1 | ) | $ | ( i 333.7 | ) | $ | i 6,804.1 | |||||||||
Net
earnings attributable to Laboratory Corporation of America Holdings | — | — | i 173.2 | — | — | i 173.2 | |||||||||||||||||
Other
comprehensive earnings, net of tax | — | — | — | — | i 52.5 | i 52.5 | |||||||||||||||||
Issuance
of common stock under employee stock plans | i — | i 28.4 | — | — | — | i 28.4 | |||||||||||||||||
Net
share settlement tax payments from issuance of stock to employees | — | — | — | ( i 25.0 | ) | — | ( i 25.0 | ) | |||||||||||||||
Stock
compensation | — | i 25.8 | — | — | — | i 25.8 | |||||||||||||||||
Purchase
of common stock | i — | ( i 75.0 | ) | — | — | — | ( i 75.0 | ) | |||||||||||||||
BALANCE
AT MARCH 31, 2018 | $ | i 12.0 | $ | i 1,969.0 | $ | i 6,369.3 | $ | ( i 1,085.1 | ) | $ | ( i 281.2 | ) | $ | i 6,984.0 | |||||||||
Net
earnings attributable to Laboratory Corporation of America Holdings | — | — | i 233.8 | — | — | i 233.8 | |||||||||||||||||
Other
comprehensive loss, net of tax | — | — | — | — | ( i 125.8 | ) | ( i 125.8 | ) | |||||||||||||||
Issuance
of common stock under employee stock plans | — | i 14.6 | — | — | — | i 14.6 | |||||||||||||||||
Net
share settlement tax payments from issuance of stock to employees | — | — | — | ( i 20.1 | ) | — | ( i 20.1 | ) | |||||||||||||||
Stock
compensation | — | i 26.2 | — | — | — | i 26.2 | |||||||||||||||||
Purchase
of common stock | — | ( i 75.0 | ) | — | — | — | ( i 75.0 | ) | |||||||||||||||
BALANCE
AT JUNE 30, 2018 | $ | i 12.0 | $ | i 1,934.8 | $ | i 6,603.1 | $ | ( i 1,105.2 | ) | $ | ( i 407.0 | ) | $ | i 7,037.7 | |||||||||
BALANCE
AT DECEMBER 31, 2018 | $ | i 11.7 | $ | i 1,451.1 | $ | i 7,079.8 | $ | ( i 1,108.1 | ) | $ | ( i 463.1 | ) | $ | i 6,971.4 | |||||||||
Net
earnings attributable to Laboratory Corporation of America Holdings | — | — | i 185.6 | — | — | i 185.6 | |||||||||||||||||
Other
comprehensive earnings, net of tax | — | — | i — | — | i 23.6 | i 23.6 | |||||||||||||||||
Issuance
of common stock under employee stock plans | i — | i 24.7 | — | — | — | i 24.7 | |||||||||||||||||
Net
share settlement tax payments from issuance of stock to employees | — | — | — | ( i 19.4 | ) | — | ( i 19.4 | ) | |||||||||||||||
Stock
compensation | — | i 25.5 | — | — | — | i 25.5 | |||||||||||||||||
Purchase
of common stock | ( i 0.1 | ) | ( i 100.0 | ) | — | — | — | ( i 100.1 | ) | ||||||||||||||
BALANCE
AT MARCH 31, 2019 | $ | i 11.6 | $ | i 1,401.3 | $ | i 7,265.4 | $ | ( i 1,127.5 | ) | $ | ( i 439.5 | ) | $ | i 7,111.3 | |||||||||
Net
earnings attributable to Laboratory Corporation of America Holdings | — | — | i 190.4 | — | — | i 190.4 | |||||||||||||||||
Other
comprehensive earnings, net of tax | — | — | i — | — | i 27.6 | i 27.6 | |||||||||||||||||
Issuance
of common stock under employee stock plans | i — | i 9.2 | — | — | — | i 9.2 | |||||||||||||||||
Net
share settlement tax payments from issuance of stock to employees | — | — | — | ( i 20.7 | ) | — | ( i 20.7 | ) | |||||||||||||||
Stock
compensation | — | i 26.5 | — | — | — | i 26.5 | |||||||||||||||||
Retirement
of treasury stock | ( i 2.4 | ) | ( i 1,145.8 | ) | — | i 1,148.2 | — | i — | |||||||||||||||
Purchase
of common stock | ( i 0.1 | ) | ( i 199.8 | ) | — | — | — | ( i 199.9 | ) | ||||||||||||||
BALANCE
AT JUNE 30, 2019 | $ | i 9.1 | $ | i 91.4 | $ | i 7,455.8 | $ | i — | $ | ( i 411.9 | ) | $ | i 7,144.4 | ||||||||||
Six
Months Ended June 30, | |||||||
2019 | 2018 | ||||||
CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
Net earnings | $ | i 376.6 | $ | i 406.6 | |||
Adjustments
to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | i 277.1 | i 281.3 | |||||
Stock
compensation | i 52.0 | i 52.0 | |||||
Loss
(gain) on sale of assets | i 4.5 | ( i 0.3 | ) | ||||
Loss
on sale of business | i 8.8 | i — | |||||
Accreted
interest on zero-coupon subordinated notes | i — | i 0.1 | |||||
Operating
lease right-of-use asset expense | i 94.0 | i — | |||||
Earnings
less distributions (excess)/deficit from equity method investments | i 8.0 | ( i 1.3 | ) | ||||
Asset
impairment | i — | i 2.3 | |||||
Deferred
income taxes | i 15.2 | i 36.0 | |||||
Change
in assets and liabilities (net of effects of acquisitions): | |||||||
(Increase) decrease in accounts receivable | ( i 91.1 | ) | i 13.2 | ||||
Increase
in unbilled services | ( i 67.4 | ) | ( i 36.5 | ) | |||
Increase
in inventories | ( i 1.7 | ) | ( i 4.7 | ) | |||
Decrease
(increase) in prepaid expenses and other | i 16.1 | ( i 27.2 | ) | ||||
Decrease
in accounts payable | ( i 109.0 | ) | ( i 91.3 | ) | |||
(Decrease)
increase in unearned revenue | ( i 5.0 | ) | i 8.3 | ||||
Decrease
in accrued expenses and other | ( i 158.8 | ) | ( i 71.4 | ) | |||
Net
cash provided by operating activities | i 419.3 | i 567.1 | |||||
CASH
FLOWS FROM INVESTING ACTIVITIES: | |||||||
Capital expenditures | ( i 179.4 | ) | ( i 159.7 | ) | |||
Proceeds
from sale of assets | i 4.2 | i 0.7 | |||||
Proceeds
from sale of investment | i 3.4 | i — | |||||
Net
proceeds from sale of held for sale assets | i — | i 49.1 | |||||
Investments
in equity affiliates | ( i 15.8 | ) | ( i 7.3 | ) | |||
Acquisition
of businesses, net of cash acquired | ( i 703.7 | ) | ( i 79.1 | ) | |||
Net
cash used for investing activities | ( i 891.3 | ) | ( i 196.3 | ) | |||
CASH
FLOWS FROM FINANCING ACTIVITIES: | |||||||
Proceeds from term loan | i 850.0 | i — | |||||
Payments
on term loan | ( i 250.0 | ) | ( i 295.0 | ) | |||
Proceeds
from revolving credit facilities | i 419.5 | i 394.7 | |||||
Payments
on revolving credit facilities | ( i 384.5 | ) | ( i 394.7 | ) | |||
Payments
on zero-coupon subordinated notes | ( i 5.2 | ) | i — | ||||
Noncontrolling
interest distributions | ( i 0.5 | ) | ( i 5.9 | ) | |||
Deferred
payments on acquisitions | ( i 4.7 | ) | i — | ||||
Payments
on other long-term obligations | ( i 6.7 | ) | ( i 5.1 | ) | |||
Net
share settlement tax payments from issuance of stock to employees | ( i 40.1 | ) | ( i 45.1 | ) | |||
Net
proceeds from issuance of stock to employees | i 33.9 | i 43.0 | |||||
Purchase
of common stock | ( i 300.0 | ) | ( i 150.0 | ) | |||
Net
cash provided by (used for) financing activities | i 311.7 | ( i 458.1 | ) | ||||
Effect
of exchange rate changes on cash and cash equivalents | ( i 1.1 | ) | ( i 7.9 | ) | |||
Net
decrease in cash and cash equivalents | ( i 161.4 | ) | ( i 95.2 | ) | |||
Cash
and cash equivalents at beginning of period | i 426.8 | i 316.6 | |||||
Cash
and cash equivalents at end of period | $ | i 265.4 | $ | i 221.4 | |||
1. | i BASIS
OF FINANCIAL STATEMENT PRESENTATION |
2. | i REVENUES |
For the Three Months Ended June
30, 2019 | ||||||||||||||||||||
U.S. | Canada | U.K. | Switzerland | Other Europe | Other | Total | ||||||||||||||
Payer/Customer | ||||||||||||||||||||
LCD | ||||||||||||||||||||
Clients | i 16 | % | i 1 | % | i — | % | i — | % | i — | % | i — | % | i 17 | % | ||||||
Patients | i 8 | % | i — | % | i — | % | i — | % | i — | % | i — | % | i 8 | % | ||||||
Medicare
and Medicaid | i 8 | % | i — | % | i — | % | i — | % | i — | % | i — | % | i 8 | % | ||||||
Third-party | i 26 | % | i 2 | % | i — | % | i — | % | i — | % | i — | % | i 28 | % | ||||||
Total
LCD revenues by payer | i 58 | % | i 3 | % | i — | % | i — | % | i — | % | i — | % | i 61 | % | ||||||
CDD | ||||||||||||||||||||
Biopharmaceutical
and medical device companies | i 20 | % | i — | % | i 4 | % | i 5 | % | i 3 | % | i 7 | % | i 39 | % | ||||||
Total
revenues | i 78 | % | i 3 | % | i 4 | % | i 5 | % | i 3 | % | i 7 | % | i 100 | % | ||||||
For
the Three Months Ended June 30, 2018 | ||||||||||||||||||||
U.S. | Canada | U.K. | Switzerland | Other Europe | Other | Total | ||||||||||||||
Payer/Customer | ||||||||||||||||||||
LCD | ||||||||||||||||||||
Clients | i 18 | % | i 1 | % | i — | % | i — | % | i — | % | i — | % | i 19 | % | ||||||
Patients | i 7 | % | i — | % | i — | % | i — | % | i — | % | i — | % | i 7 | % | ||||||
Medicare
and Medicaid | i 10 | % | i — | % | i — | % | i — | % | i — | % | i — | % | i 10 | % | ||||||
Third-party | i 25 | % | i 2 | % | i — | % | i — | % | i — | % | i — | % | i 27 | % | ||||||
Total
LCD revenues by payer | i 60 | % | i 3 | % | i — | % | i — | % | i — | % | i — | % | i 63 | % | ||||||
CDD | ||||||||||||||||||||
Biopharmaceutical
and medical device companies | i 20 | % | i — | % | i 2 | % | i 5 | % | i 3 | % | i 7 | % | i 37 | % | ||||||
Total
revenues | i 80 | % | i 3 | % | i 2 | % | i 5 | % | i 3 | % | i 7 | % | i 100 | % | ||||||
For
the Six Months Ended June 30, 2019 | ||||||||||||||||||||
U.S. | Canada | U.K. | Switzerland | Other Europe | Other | Total | ||||||||||||||
Payer/Customer | ||||||||||||||||||||
LCD | ||||||||||||||||||||
Clients | i 16 | % | i 1 | % | i — | % | i — | % | i — | % | i — | % | i 17 | % | ||||||
Patients | i 8 | % | i — | % | i — | % | i — | % | i — | % | i — | % | i 8 | % | ||||||
Medicare
and Medicaid | i 8 | % | i — | % | i — | % | i — | % | i — | % | i — | % | i 8 | % | ||||||
Third-party | i 26 | % | i 2 | % | i — | % | i — | % | i — | % | i — | % | i 28 | % | ||||||
Total
LCD revenues by payer | i 58 | % | i 3 | % | i — | % | i — | % | i — | % | i — | % | i 61 | % | ||||||
CDD | ||||||||||||||||||||
Biopharmaceutical
and medical device companies | i 20 | % | i — | % | i 4 | % | i 5 | % | i 3 | % | i 7 | % | i 39 | % | ||||||
Total
revenues | i 78 | % | i 3 | % | i 4 | % | i 5 | % | i 3 | % | i 7 | % | i 100 | % | ||||||
For
the Six Months Ended June 30, 2018 | ||||||||||||||||||||
U.S. | Canada | U.K. | Switzerland | Other Europe | Other | Total | ||||||||||||||
Payer/Customer | ||||||||||||||||||||
LCD | ||||||||||||||||||||
Clients | i 18 | % | i 1 | % | i — | % | i — | % | i — | % | i — | % | i 19 | % | ||||||
Patients | i 7 | % | i — | % | i — | % | i — | % | i — | % | i — | % | i 7 | % | ||||||
Medicare
and Medicaid | i 9 | % | i — | % | i — | % | i — | % | i — | % | i — | % | i 9 | % | ||||||
Third-party | i 25 | % | i 2 | % | i — | % | i — | % | i — | % | i — | % | i 27 | % | ||||||
Total
LCD revenues by payer | i 59 | % | i 3 | % | i — | % | i — | % | i — | % | i — | % | i 62 | % | ||||||
CDD | ||||||||||||||||||||
Biopharmaceutical
and medical device companies | i 20 | % | i — | % | i 2 | % | i 5 | % | i 4 | % | i 7 | % | i 38 | % | ||||||
Total
revenues | i 79 | % | i 3 | % | i 2 | % | i 5 | % | i 4 | % | i 7 | % | i 100 | % | ||||||
Sales commission assets | $ | i 27.4 | $ | i 24.2 | |||
Deferred
contract fulfillment costs | i 14.2 | i 12.9 | |||||
Total | $ | i 41.6 | $ | i 37.1 | |||
Receivables, which are included in Accounts Receivable, net | $ | i 735.4 | $ | i 693.6 | |||
Unbilled
services | i 491.5 | i 396.9 | |||||
Unearned
revenue | i 402.2 | i 354.1 | |||||
3. | i BUSINESS
ACQUISITIONS AND DISPOSITIONS |
Consideration Transferred | ||||
Cash consideration | $ | i 601.0 | ||
Fair
value of CRP | i 110.0 | |||
Total | $ | i 711.0 | ||
Preliminary | ||||
Net
Assets Acquired | ||||
Cash and cash equivalents | $ | i 15.1 | ||
Accounts
receivable | i 16.5 | |||
Unbilled services | i 26.5 | |||
Inventories | i 4.5 | |||
Prepaid
expenses and other | i 3.5 | |||
Property, plant and equipment (including ROU operating
lease assets) | i 99.1 | |||
Deferred tax asset | i 25.5 | |||
Goodwill | i 432.2 | |||
Customer
relationships | i 125.8 | |||
Trade name and trademarks | i 0.6 | |||
Other
assets | i 9.9 | |||
Total assets acquired | i 759.2 | |||
Accounts
payable | i 15.4 | |||
Accrued expenses and other | i 11.6 | |||
Unearned
revenue | i 49.9 | |||
Operating lease liabilities | i 15.0 | |||
Other
liabilities | i 66.3 | |||
Total liabilities acquired | i 158.2 | |||
Net
Envigo assets acquired | i 601.0 | |||
Floating rate secured note receivable due 2022 | i 110.0 | |||
Total | $ | i 711.0 | ||
4. | i EARNINGS PER SHARE |
Three
Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||||||||||||||||||||||||||||||
Earnings | Shares | Per Share Amount | Earnings | Shares | Per Share Amount | Earnings | Shares | Per Share Amount | Earnings | Shares | Per Share Amount | ||||||||||||||||||||||||||||||||
Basic
earnings per share: | |||||||||||||||||||||||||||||||||||||||||||
Net
earnings | $ | i 190.4 | i 98.1 | $ | i 1.94 | $ | i 233.8 | i 101.9 | $ | i 2.29 | $ | i 376.0 | i 98.4 | $ | i 3.82 | $ | i 407.0 | i 101.9 | $ | i 3.99 | |||||||||||||||||||||||
Dilutive
effect of employee stock options and awards | — | i 0.7 | — | i 1.0 | — | i 0.7 | — | i 1.3 | |||||||||||||||||||||||||||||||||||
Net
earnings including impact of dilutive adjustments | $ | i 190.4 | i 98.8 | $ | i 1.93 | $ | i 233.8 | i 103.0 | $ | i 2.27 | $ | i 376.0 | i 99.1 | $ | i 3.79 | $ | i 407.0 | i 103.3 | $ | i 3.94 | |||||||||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Stock
options | i 0.2 | i 0.1 | i 0.2 | i 0.1 | |||||||
5. | i RESTRUCTURING
AND OTHER SPECIAL CHARGES |
LCD | CDD | ||||||||||||||||||
Severance
and Other Employee Costs | Facility Costs | Severance and Other Employee Costs | Facility Costs | Total | |||||||||||||||
Balance as of December 31, 2018 | $ | i 2.1 | $ | i 7.4 | $ | i 6.5 | $ | i 27.6 | $ | i 43.6 | |||||||||
Reclassification
for ASC 842 adoption | i — | ( i 5.7 | ) | i — | ( i 27.1 | ) | ( i 32.8 | ) | |||||||||||
Restructuring
charges | i 11.9 | i 1.0 | i 8.4 | i 1.7 | i 23.0 | ||||||||||||||
Adjustments
to prior restructuring accruals | ( i 0.1 | ) | i — | i 0.5 | i — | i 0.4 | |||||||||||||
Impairment
of operating lease right-of-use asset | i — | i 3.3 | i — | i 7.5 | i 10.8 | ||||||||||||||
Cash
payments and other adjustments | ( i 13.6 | ) | ( i 3.1 | ) | ( i 8.5 | ) | ( i 7.2 | ) | ( i 32.4 | ) | |||||||||
Balance
as of June 30, 2019 | $ | i 0.3 | $ | i 2.9 | $ | i 6.9 | $ | i 2.5 | $ | i 12.6 | |||||||||
Current | $ | i 10.4 | |||||||||||||||||
Non-current | i 2.2 | ||||||||||||||||||
$ | i 12.6 | ||||||||||||||||||
6. | i GOODWILL
AND INTANGIBLE ASSETS |
LCD | CDD | Total | |||||||||
Balance
as of January 1, 2019 | $ | i 3,638.8 | $ | i 3,721.5 | $ | i 7,360.3 | |||||
Goodwill
acquired during the period | i 22.3 | i 468.2 | i 490.5 | ||||||||
Dispositions | i — | ( i 12.6 | ) | ( i 12.6 | ) | ||||||
Adjustments
to goodwill | i 1.9 | i 3.6 | i 5.5 | ||||||||
Balance
at June 30, 2019 | $ | i 3,663.0 | $ | i 4,180.7 | $ | i 7,843.7 | |||||
Gross Carrying Amount | Accumulated Amortization | Net | Gross Carrying Amount | Accumulated Amortization | Net | ||||||||||||||||||
Customer
relationships | $ | i 4,307.9 | $ | ( i 1,233.0 | ) | $ | i 3,074.9 | $ | i 4,119.4 | $ | ( i 1,146.7 | ) | $ | i 2,972.7 | |||||||||
Patents,
licenses and technology | i 452.3 | ( i 224.1 | ) | i 228.2 | i 447.3 | ( i 211.2 | ) | i 236.1 | |||||||||||||||
Non-compete
agreements | i 82.5 | ( i 57.2 | ) | i 25.3 | i 76.8 | ( i 53.7 | ) | i 23.1 | |||||||||||||||
Trade
names | i 407.7 | ( i 202.9 | ) | i 204.8 | i 404.0 | ( i 189.1 | ) | i 214.9 | |||||||||||||||
Land
use right | i 11.1 | ( i 4.9 | ) | i 6.2 | i 10.8 | ( i 4.1 | ) | i 6.7 | |||||||||||||||
Canadian
licenses | i 476.5 | i — | i 476.5 | i 457.6 | i — | i 457.6 | |||||||||||||||||
$ | i 5,738.0 | $ | ( i 1,722.1 | ) | $ | i 4,015.9 | $ | i 5,515.9 | $ | ( i 1,604.8 | ) | $ | i 3,911.1 | ||||||||||
Three
Months Ended June 30, 2019 | Six Months Ended June 30, 2019 | ||||||
Operating lease cost | $ | i 59.9 | $ | i 110.8 | |||
Finance
lease cost: | |||||||
Amortization of ROU assets | $ | i 1.5 | $ | i 2.9 | |||
Interest
on lease liabilities | i 0.4 | i 1.2 | |||||
Total
finance lease cost | $ | i 1.9 | $ | i 4.1 | |||
Six Months Ended June 30, 2019 | |||
Cash paid for amounts included in the measurement of lease liabilities: | |||
Operating cash flows from operating leases | $ | ( i 115.2 | ) |
Operating
cash flows from finance leases | ( i 0.9 | ) | |
Financing cash flows from finance leases | ( i 4.8 | ) | |
ROU
assets obtained in exchange for lease obligations: | |||
Operating leases | $ | i 43.7 | |
Finance leases | i 0.2 | ||
Operating Leases | |||
Operating lease ROU assets (included in Property, plant and equipment, net) | $ | i 770.3 | |
Short-term
operating lease liabilities | i 229.2 | ||
Operating lease liabilities | i 586.1 | ||
Total
operating lease liabilities | $ | i 815.3 | |
Finance Leases | |||
Finance lease ROU assets (included in Other assets) | $ | i 85.4 | |
Short-term
finance lease liabilities | $ | i 8.2 | |
Finance lease liabilities | i 46.2 | ||
Total
finance lease liabilities | $ | i 54.4 | |
Weighted Average Remaining Lease Term | |||
Operating
leases | i 5.8 | ||
Finance leases | i 6.5 | ||
Weighted
Average Discount Rate | |||
Operating leases | i 4.2 | % | |
Finance leases | i 4.8 | % | |
Six
Months Ended June 30, 2019 | Operating Leases | Finance Leases | |||||
2019 | $ | i 254.1 | $ | i 7.1 | |||
2020 | i 274.7 | i 13.8 | |||||
2021 | i 174.6 | i 12.0 | |||||
2022 | i 69.3 | i 10.8 | |||||
2023 | i 45.1 | i 10.7 | |||||
Thereafter | i 153.1 | i 34.5 | |||||
Total
lease payments | i 970.9 | i 88.9 | |||||
Less
imputed interest | ( i 155.6 | ) | ( i 34.5 | ) | |||
Total | $ | i 815.3 | $ | i 54.4 | |||
Year
Ended December 31, | Operating Leases | Finance Leases | |||||
2019 | $ | i 191.1 | $ | i 8.6 | |||
2020 | i 145.4 | i 8.0 | |||||
2021 | i 107.0 | i 6.7 | |||||
2022 | i 80.9 | i 6.0 | |||||
2023 | i 61.5 | i 6.5 | |||||
Thereafter | i 155.6 | i 23.1 | |||||
8. | i DEBT |
Zero-coupon convertible subordinated notes | $ | i 1.4 | $ | i 8.7 | |||
2.625%
senior notes due 2020 | i 500.0 | i — | |||||
Debt
issuance costs | ( i 1.0 | ) | ( i 0.5 | ) | |||
Current
portion of note payable | i 1.9 | i 1.8 | |||||
Total
short-term borrowings and current portion of long-term debt | $ | i 502.3 | $ | i 10.0 | |||
2.625% senior notes due 2020 | $ | i — | $ | i 500.0 | |||
4.625%
senior notes due 2020 | i 603.7 | i 596.9 | |||||
3.20%
senior notes due 2022 | i 500.0 | i 500.0 | |||||
3.75%
senior notes due 2022 | i 500.0 | i 500.0 | |||||
4.00%
senior notes due 2023 | i 300.0 | i 300.0 | |||||
3.25%
senior notes due 2024 | i 600.0 | i 600.0 | |||||
3.60%
senior notes due 2025 | i 1,000.0 | i 1,000.0 | |||||
3.60%
senior notes due 2027 | i 600.0 | i 600.0 | |||||
4.70%
senior notes due 2045 | i 900.0 | i 900.0 | |||||
Revolving
credit facility | i 35.0 | i — | |||||
2019
Term loan | i 850.0 | i — | |||||
2017
Term loan | i 277.0 | i 527.0 | |||||
Debt
issuance costs | ( i 37.1 | ) | ( i 40.2 | ) | |||
Note
payable | i 6.4 | i 7.2 | |||||
Total
long-term debt | $ | i 6,135.0 | $ | i 5,990.9 | |||
Issued | Held
in Treasury | Outstanding | ||||||
Common shares at December 31, 2018 | i 122.4 | ( i 23.5 | ) | i 98.9 | ||||
Common
stock issued under employee stock plans | i 1.0 | i — | i 1.0 | |||||
Surrender
of restricted stock and performance share awards | i — | ( i 0.1 | ) | ( i 0.1 | ) | |||
Retirement
of common stock | ( i 2.0 | ) | i — | ( i 2.0 | ) | |||
Retirement
of treasury stock | ( i 23.6 | ) | i 23.6 | i — | ||||
Common
shares at June 30, 2019 | i 97.8 | i — | i 97.8 | |||||
Foreign
Currency Translation Adjustments | Net Benefit Plan Adjustments | Accumulated Other Comprehensive Earnings (Loss) | |||||||||
Balance at December 31, 2018 | $ | ( i 389.8 | ) | $ | ( i 73.3 | ) | $ | ( i 463.1 | ) | ||
Other
comprehensive earnings before reclassifications | i 47.2 | i 5.5 | i 52.7 | ||||||||
Tax
effect of adjustments | i — | ( i 1.5 | ) | ( i 1.5 | ) | ||||||
Balance
at June 30, 2019 | $ | ( i 342.6 | ) | $ | ( i 69.3 | ) | $ | ( i 411.9 | ) | ||
10.
| i INCOME TAXES |
11.
| i COMMITMENTS AND CONTINGENCIES |
12. i PENSION
AND POST-RETIREMENT PLANS |
Three
Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Service cost for administrative expenses | $ | i 1.0 | $ | i 1.2 | $ | i 2.0 | $ | i 2.6 | |||||||
Interest
cost on benefit obligation | i 3.5 | i 3.2 | i 7.0 | i 6.5 | |||||||||||
Expected
return on plan assets | ( i 3.8 | ) | ( i 4.1 | ) | ( i 7.6 | ) | ( i 8.2 | ) | |||||||
Net
amortization and deferral | i 2.6 | i 3.1 | i 5.2 | i 5.9 | |||||||||||
Defined
benefit plan costs | $ | i 3.3 | $ | i 3.4 | $ | i 6.6 | $ | i 6.8 | |||||||
U.K.
Plans | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Service
cost for administrative expenses | $ | i 0.8 | $ | i 0.9 | $ | i 1.6 | $ | i 1.8 | |||||||
Interest
cost on benefit obligation | i 1.9 | i 1.9 | i 3.8 | i 3.8 | |||||||||||
Expected
return on plan assets | ( i 2.8 | ) | ( i 3.2 | ) | ( i 5.7 | ) | ( i 6.5 | ) | |||||||
Defined
benefit plan costs | $ | ( i 0.1 | ) | $ | ( i 0.4 | ) | $ | ( i 0.3 | ) | $ | ( i 0.9 | ) | |||
U.K.
Plans | |||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||
Assumptions
used to determine defined benefit plan cost | |||||||||||
Discount rate | i 2.9 | % | i 2.5 | % | i 2.9 | % | i 2.5 | % | |||
Expected
return on assets | i 4.5 | % | i 4.5 | % | i 4.5 | % | i 4.5 | % | |||
Salary
increases | i 3.6 | % | i 3.6 | % | i 3.6 | % | i 3.6 | % | |||
German
Plan | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Service
cost for administrative expenses | $ | i 0.3 | $ | i 0.3 | $ | i 0.6 | $ | i 0.6 | |||||||
Interest
cost on benefit obligation | i 0.2 | i 0.2 | i 0.3 | i 0.3 | |||||||||||
Defined
benefit plan costs | $ | i 0.5 | $ | i 0.5 | $ | i 0.9 | $ | i 0.9 | |||||||
Assumptions
used to determine defined benefit plan cost | |||||||||||||||
Discount rate | i 1.9 | % | i 1.7 | % | i 1.9 | % | i 1.7 | % | |||||||
Expected
return on assets | N/A | N/A | N/A | N/A | |||||||||||
Salary increases | i 2.0 | % | i 2.0 | % | i 2.0 | % | i 2.0 | % | |||||||
13. | i FAIR
VALUE MEASUREMENTS |
Fair
Value Measurements as of | |||||||||||||||||
Fair Value as of | |||||||||||||||||
Balance Sheet | Using Fair Value Hierarchy | ||||||||||||||||
Classification | Level 1 | Level 2 | Level 3 | ||||||||||||||
Noncontrolling interest put | Noncontrolling interest | $ | i 15.7 | $ | i — | $ | i 15.7 | $ | i — | ||||||||
Cross
currency swap asset | Other assets, net | i 1.2 | i — | i 1.2 | i — | ||||||||||||
Interest
rate swap | Other assets, net | i 3.7 | i — | i 3.7 | i — | ||||||||||||
Cash
surrender value of life insurance policies | Other assets, net | i 75.3 | i — | i 75.3 | i — | ||||||||||||
Deferred
compensation liability | Other liabilities | i 74.3 | i — | i 74.3 | i — | ||||||||||||
Contingent
consideration | Other liabilities | i 20.1 | i — | i — | i 20.1 | ||||||||||||
Investment
in equity securities | Prepaid expenses and other | i 29.8 | i 29.8 | i — | i — | ||||||||||||
Fair
Value Measurements as of | |||||||||||||||||
Fair Value as of | |||||||||||||||||
Balance Sheet | Using Fair Value Hierarchy | ||||||||||||||||
Classification | Level 1 | Level 2 | Level 3 | ||||||||||||||
Noncontrolling interest put | Noncontrolling interest | $ | i 15.0 | $ | i — | $ | i 15.0 | $ | i — | ||||||||
Cross
currency swap liability | Other liabilities | i 2.8 | i — | i 2.8 | i — | ||||||||||||
Interest
rate swap | Other liabilities | i 3.1 | i — | i 3.1 | i — | ||||||||||||
Cash
surrender value of life insurance policies | Other assets, net | i 63.5 | i — | i 63.5 | i — | ||||||||||||
Deferred
compensation liability | Other liabilities | i 64.2 | i — | i 64.2 | i — | ||||||||||||
Contingent
consideration | Other liabilities | i 18.6 | i — | i — | i 18.6 | ||||||||||||
Fair
Value Measurement of Level 3 Assets | Contingent Consideration | |||
Balance at December 31, 2018 | i 18.6 | |||
Addition | i 1.5 | |||
Balance
at June 30, 2019 | $ | i 20.1 | ||
14. | i DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES |
Carrying
amount of hedged liabilities as of | Cumulative Amount of Fair Value Hedging Adjustment Included in the Carrying Amount of the Hedged Liabilities as of | |||||||||||||||
Balance Sheet Line Item in which Hedged Items are Included | ||||||||||||||||
Long-term debt, less current portion | $ | i 603.7 | $ | i 597.0 | $ | i 3.7 | $ | ( i 3.1 | ) | |||||||
Fair Value of Derivative | Fair Value of Derivative | ||||||||||||||||||||||||
Balance Sheet Caption | Asset | Liability | U.S.
Dollar Notional | Asset | Liability | U.S. Dollar Notional | |||||||||||||||||||
Derivatives Designated as Hedging Instruments | |||||||||||||||||||||||||
Interest rate swap | Other
assets, net or Other liabilities | $ | i 3.7 | $ | — | $ | i 600.0 | $ | — | $ | ( i 3.1 | ) | $ | i 600.0 | |||||||||||
Cross
currency swaps | Other assets, net or Other liabilities | $ | i 1.2 | $ | — | $ | i 600.0 | $ | — | $ | ( i 2.8 | ) | $ | i 600.0 | |||||||||||
Amount
of pre-tax gain/(loss) included in other comprehensive income | Amounts reclassified to the Statement of Operations | Amount of pre-tax gain/(loss) included in other comprehensive income | Amounts reclassified to the Statement of Operations | |||||||||||||||||||||||||||||
Three Months Ended June 30, | Three
Months Ended June 30, | Six Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||
2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | |||||||||||||||||||||||||
Interest
rate swap contracts | $ | i 4.3 | $ | ( i 10.0 | ) | $ | i — | $ | i — | $ | i 6.8 | $ | ( i 9.7 | ) | $ | i — | $ | i — | ||||||||||||||
Cross
currency swaps | $ | ( i 7.8 | ) | $ | ( i 24.3 | ) | $ | i — | $ | i — | $ | i 4.0 | $ | ( i 24.2 | ) | $ | i — | $ | i — | |||||||||||||
1) | The Company will pay contingent cash interest on the zero-coupon subordinated notes after September 11, 2006, if the average market price of the notes equals
i 120% or more of the sum of the issue price, accrued original issue discount and contingent additional principal, if any, for a specified measurement period. |
2) | Holders may surrender zero-coupon subordinated notes
for conversion during any period in which the rating assigned to the zero-coupon subordinated notes by Standard & Poor’s Ratings Services is BB- or lower. |
15. | SUPPLEMENTAL CASH FLOW INFORMATION |
Six
Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Supplemental schedule of cash flow information: | |||||||
Cash paid during period for: | |||||||
Interest | $ | i 123.8 | $ | i 188.2 | |||
Income
taxes, net of refunds | i 119.6 | i 148.6 | |||||
Disclosure
of non-cash financing and investing activities: | |||||||
Conversion of zero-coupon convertible debt | i 7.2 | i — | |||||
Change
in accrued property, plant and equipment | ( i 12.5 | ) | i 4.8 | ||||
Floating
rate secured note receivable due 2022 from the sale of CRP | i 110.0 | i — | |||||
16.
| i BUSINESS SEGMENT INFORMATION |
Three Months Ended | Six Months Ended | ||||||||||||||
June
30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Revenues: | |||||||||||||||
LCD | $ | i 1,760.9 | $ | i 1,814.0 | $ | i 3,482.9 | $ | i 3,584.2 | |||||||
CDD | i 1,126.3 | i 1,054.2 | i 2,201.0 | i 2,132.6 | |||||||||||
Intercompany
eliminations | ( i 5.5 | ) | ( i 1.9 | ) | ( i 11.0 | ) | ( i 2.2 | ) | |||||||
Revenues | i 2,881.7 | i 2,866.3 | i 5,672.9 | i 5,714.6 | |||||||||||
Operating
earnings: | |||||||||||||||
LCD | i 312.5 | i 336.3 | i 580.8 | i 639.8 | |||||||||||
CDD | i 65.8 | i 68.8 | i 153.8 | i 107.3 | |||||||||||
Unallocated
corporate expenses | ( i 42.6 | ) | ( i 35.9 | ) | ( i 80.7 | ) | ( i 72.5 | ) | |||||||
Total
operating income | i 335.7 | i 369.2 | i 653.9 | i 674.6 | |||||||||||
Other
income (expense), net | ( i 65.7 | ) | ( i 56.5 | ) | ( i 129.2 | ) | ( i 120.4 | ) | |||||||
Earnings
before income taxes | i 270.0 | i 312.7 | i 524.7 | i 554.2 | |||||||||||
Provision
for income taxes | i 79.3 | i 78.6 | i 148.1 | i 147.6 | |||||||||||
Net
earnings | i 190.7 | i 234.1 | i 376.6 | i 406.6 | |||||||||||
Less
(earnings) loss attributable to noncontrolling interests | ( i 0.3 | ) | ( i 0.3 | ) | ( i 0.6 | ) | i 0.4 | ||||||||
Net
income attributable to Laboratory Corporation of America Holdings | $ | i 190.4 | $ | i 233.8 | $ | i 376.0 | $ | i 407.0 | |||||||
1. | changes in government and third-party payer regulations, reimbursement, or coverage policies or other future reforms in the healthcare system (or in the interpretation of current regulations), new insurance or payment systems, including state, regional or private insurance cooperatives (e.g., health insurance exchanges) affecting governmental and third-party coverage or reimbursement for commercial laboratory testing, including the impact of the Protecting Access to Medicare Act of 2014 (PAMA); |
2. | significant
monetary damages, fines, penalties, assessments, refunds, repayments, damage to the Company’s reputation, unanticipated compliance expenditures, and/or exclusion or debarment from or ineligibility to participate in government programs, among other adverse consequences, arising from enforcement of anti-fraud and abuse laws and other laws applicable to the Company in jurisdictions in which the Company conducts business; |
3. | significant fines, penalties, costs, unanticipated compliance expenditures
and/or damage to the Company’s reputation arising from the failure to comply with applicable privacy and security laws and regulations, including the Health Insurance Portability and Accountability Act of 1996, the Health Information Technology for Economic and Clinical Health Act, the European Union's General Data Protection Regulation and similar laws and regulations in jurisdictions in which the Company conducts business; |
4. | loss or suspension of a license or imposition of a fine or penalties under, or future changes in, or interpretations of applicable licensing laws or regulations
regarding the operation of clinical laboratories and the delivery of clinical laboratory test results, including, but not limited to, the U.S. Clinical Laboratory Improvement Act of 1967 and the Clinical Laboratory Improvement Amendments of 1988 and similar laws and regulations in jurisdictions in which the Company conducts business; |
5. | penalties or loss of license arising from the failure to comply with applicable occupational and workplace safety laws and regulations, including the U.S. Occupational Safety and Health Administration requirements and the U.S. Needlestick Safety and Prevention Act and similar laws and regulations in jurisdictions in which the
Company conducts business; |
6. | fines, unanticipated compliance expenditures, suspension of manufacturing, enforcement actions, damage to the Company’s reputation, injunctions, or criminal prosecution arising from failure to maintain compliance with current good manufacturing practice regulations and similar requirements of various regulatory agencies in jurisdictions in which the Company conducts business; |
7. | sanctions
or other remedies, including fines, unanticipated compliance expenditures, enforcement actions, injunctions or criminal prosecution arising from failure to comply with the Animal Welfare Act or applicable national, state and local laws and regulations in jurisdictions in which the Company conducts business; |
8. | changes in testing guidelines or recommendations by government agencies, medical specialty societies and other authoritative bodies affecting the utilization of laboratory tests; |
9. | changes
in applicable government regulations or policies affecting the approval, availability of, and the selling and marketing of diagnostic tests, drug development, or the conduct of drug development and medical device and diagnostic studies and trials, including regulations and policies of the U.S. Food and Drug Administration, the U.S. Department of Agriculture, the Medicine and Healthcare products Regulatory Agency in the United Kingdom (U.K.), the State Drug Administration in China (formerly the China Food and Drug Administration), the Pharmaceutical and Medical Devices Agency in Japan, the European Medicines Agency and similar regulations and policies of agencies in jurisdictions in which the Company conducts business; |
10. | changes
in government regulations or reimbursement pertaining to the biopharmaceutical and medical device and diagnostic industries, changes in reimbursement of biopharmaceutical products or reduced spending on research and development by biopharmaceutical customers; |
11. | liabilities that result from the failure to comply with corporate governance requirements; |
12. | increased competition, including price competition, potential reduction in rates in response to price transparency and consumerism, competitive bidding and/or changes
or reductions to fee schedules and competition from companies that do not comply with existing laws or regulations or otherwise disregard compliance standards in the industry; |
13. | changes in payer mix or payment structure, including insurance carrier participation in health insurance exchanges, an increase in capitated reimbursement mechanisms, the impact of a shift to consumer-driven health plans or plans carrying an increased level of member cost-sharing, and adverse changes in payer reimbursement or payer coverage policies (implemented directly or through a third-party utilization management organization) related to specific diagnostic tests, categories of testing or testing methodologies; |
14. | failure
to retain or attract managed care organization (MCO) business as a result of changes in business models, including new risk-based or network approaches, out-sourced Laboratory Network Management or Utilization Management companies, or other changes in strategy or business models by MCOs; |
15. | failure to obtain and retain new customers, an unfavorable change in the mix of testing services ordered, or a reduction in tests ordered, specimens submitted or services requested by existing customers; |
16. | difficulty in maintaining
relationships with customers or retaining key employees as a result of uncertainty surrounding the integration of acquisitions and the resulting negative effects on the business of the Company; |
17. | consolidation and convergence of MCOs, biopharmaceutical companies, health systems, large physician organizations and other customers, potentially causing material shifts in insourcing, utilization, pricing and reimbursement, including full and partial risk-based models; |
18. | failure
to effectively develop and deploy new systems, system modifications or enhancements required in response to evolving market and business needs; |
19. | customers choosing to insource services that are or could be purchased from the Company; |
20. | failure to identify, successfully close and effectively integrate and/or manage acquisitions of new businesses; |
21. | inability
to achieve the expected benefits and synergies of newly-acquired businesses, including due to items not discovered in the due-diligence process, and the impact on the Company's cash position, levels of indebtedness and stock price; |
22. |
23. | liability
arising from errors or omissions in the performance of testing services, contract research services or other contractual arrangements; |
24. | changes or disruption in the provision or transportation of services or supplies provided by third parties, or their termination for failure to follow the Company's performance standards and requirements; |
25. | damage
or disruption to the Company's facilities; |
26. | damage to the Company's reputation, loss of business, or other harm from acts of animal rights activists or potential harm and/or liability arising from animal research activities; |
27. | adverse results in litigation matters; |
28.
| inability to attract and retain experienced and qualified personnel; |
29. | failure to develop or acquire licenses for new or improved technologies, such as point-of-care testing, mobile health technologies, and digital pathology, or potential use of new technologies by customers and/or consumers to perform their own tests; |
30. | substantial costs arising from the inability to commercialize newly licensed tests or technologies or to obtain appropriate coverage
or reimbursement for such tests; |
31. | failure to obtain, maintain and enforce intellectual property rights for protection of the Company's products and services and defend against challenges to those rights; |
32. | scope, validity and enforceability of patents and other proprietary rights held by third parties that may impact the Company's ability to develop,
perform, or market the Company's products or services or operate its business; |
33. | business interruption or other impact on the business due to adverse weather, fires and/or other natural disasters, acts of war, terrorism or other criminal acts, and/or widespread outbreak of influenza or other pandemic illness; |
34. | discontinuation
or recalls of existing testing products; |
35. | a failure in the Company's information technology systems, including with respect to testing turnaround time and billing processes, or the failure of the Company or its third-party suppliers and vendors to maintain the security of business information or systems or to protect against cybersecurity attacks such as denial of service attacks, malware, ransomware and computer viruses, or delays or failures in the development and implementation of the Company’s
automation platforms, any of which could result in a negative effect on the Company’s performance of services, a loss of business or increased costs, damages to the Company’s reputation, significant litigation exposure, an inability to meet required financial reporting deadlines, or the failure to meet future regulatory or customer information technology, data security and connectivity requirements; |
36. | business interruption, increased costs, and other adverse effects on the Company's operations
due to the unionization of employees, union strikes, work stoppages, general labor unrest or failure to comply with labor or employment laws; |
37. | failure to maintain the Company's days sales outstanding levels, cash collections (in light of increasing levels of patient responsibility), profitability and/or reimbursement arising from unfavorable changes in third-party payer policies, payment delays introduced by third party benefit management organizations and increasing levels of patient payment responsibility; |
38. | impact
on the Company's revenues, cash collections and the availability of credit for general liquidity or other financing needs arising from a significant deterioration in the economy or financial markets or in the Company's credit ratings by Standard &Poor's and/or Moody's; |
39. | failure to maintain the expected capital structure for the Company, including failure to maintain the Company's investment grade
rating; |
40. | changes in reimbursement by foreign governments and foreign currency fluctuations; |
41. | inability to obtain certain billing information from physicians, resulting in increased costs and complexity, a temporary disruption in receipts and ongoing reductions in reimbursements and net revenues; |
42. | expenses
and risks associated with international operations, including, but not limited to, compliance with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, other applicable anti-corruption laws and regulations, trade sanction laws and regulations, and economic, political, legal and other operational risks associated with foreign jurisdictions; |
43. | failure to achieve expected efficiencies and savings in connection with the Company's business process improvement initiatives; |
44. | changes
in tax laws and regulations or changes in their interpretation, including the Tax Cuts and Jobs Act (TCJA); and |
45. | global economic conditions and government and regulatory changes, including, but not limited to the U.K.'s announced intention to exit from the European Union. |
Three
Months Ended June 30, | ||||||||||
2019 | 2018 | Change | ||||||||
LCD | $ | 1,760.9 | $ | 1,814.0 | (2.9 | )% | ||||
CDD | 1,126.3 | 1,054.2 | 6.8 | % | ||||||
Intercompany
eliminations | (5.5 | ) | (1.9 | ) | 189.5 | % | ||||
Total | $ | 2,881.7 | $ | 2,866.3 | 0.5 | % | ||||
Three
Months Ended June 30, | ||||||||||
2019 | 2018 | Change | ||||||||
Cost of revenues | $ | 2,056.9 | $ | 2,031.2 | 1.3 | % | ||||
Cost
of revenues as a % of revenues | 71.4 | % | 70.9 | % | ||||||
Three
Months Ended June 30, | ||||||||||
2019 | 2018 | Change | ||||||||
Selling, general and administrative expenses | $ | 415.3 | $ | 395.2 | 5.1 | % | ||||
Selling,
general and administrative expenses as a % of revenues | 14.4 | % | 13.8 | % | ||||||
Three
Months Ended June 30, | ||||||||||
2019 | 2018 | Change | ||||||||
LCD | $ | 25.6 | $ | 26.2 | (2.3 | )% | ||||
CDD | 34.6 | 32.3 | 7.1 | % | ||||||
Total
amortization of intangibles and other assets | $ | 60.2 | $ | 58.5 | 2.9 | % | ||||
Three
Months Ended June 30, | ||||||||||
2019 | 2018 | Change | ||||||||
Restructuring and other special charges | $ | 13.6 | $ | 12.2 | 11.5 | % | ||||
Three
Months Ended June 30, | |||||||||
2019 | 2018 | Change | |||||||
Interest expense | $ | (59.1 | ) | (63.1 | ) | (6.3 | )% | ||
Three
Months Ended June 30, | ||||||||||
2019 | 2018 | Change | ||||||||
Equity method income | $ | 2.5 | $ | 3.0 | (16.7 | )% | ||||
Three
Months Ended June 30, | ||||||||||
2019 | 2018 | Change | ||||||||
Other, net | $ | (10.5 | ) | $ | 2.8 | (475.0 | )% | |||
Three
Months Ended June 30, | ||||||||||
2019 | 2018 | Change | ||||||||
Income tax expense | $ | 79.3 | $ | 78.6 | 0.9 | % | ||||
Income
tax expense as a % of earnings before income taxes | 29.4 | % | 25.1 | % | ||||||
Three Months Ended June 30, | ||||||||||
2019 | 2018 | Change | ||||||||
LCD
operating income | $ | 312.5 | $ | 336.3 | (7.1 | )% | ||||
LCD operating margin | 17.7 | % | 18.3 | % | (0.6 | )% | ||||
CDD
operating income | 65.8 | 68.8 | (4.4 | )% | ||||||
CDD operating margin | 5.9 | % | 6.5 | % | (0.6 | )% | ||||
General
corporate expenses | (42.6 | ) | (35.9 | ) | 18.7 | % | ||||
Total operating income | $ | 335.7 | $ | 369.2 | (9.1 | )% | ||||
Six
Months Ended June 30, | ||||||||||
2019 | 2018 | Change | ||||||||
LCD | $ | 3,482.9 | $ | 3,584.2 | (2.8 | )% | ||||
CDD | 2,201.0 | 2,132.6 | 3.2 | % | ||||||
Intercompany
eliminations | (11.0 | ) | (2.2 | ) | 400.0 | % | ||||
Total | $ | 5,672.9 | $ | 5,714.6 | (0.7 | )% | ||||
Six
Months Ended June 30, | ||||||||||
2019 | 2018 | Change | ||||||||
Cost of revenues | $ | 4,058.4 | $ | 4,100.5 | (1.0 | )% | ||||
Cost
of revenues as a % of revenues | 71.5 | % | 71.8 | % | ||||||
Six Months Ended June 30, | ||||||||||
2019 | 2018 | Change | ||||||||
Selling,
general and administrative expenses | $ | 809.1 | $ | 792.2 | 2.1 | % | ||||
Selling, general and administrative expenses as a % of revenues | 14.3 | % | 13.9 | % | ||||||
Six Months Ended June 30, | ||||||||||
2019 | 2018 | Change | ||||||||
LCD | $ | 50.3 | $ | 56.4 | (10.8 | )% | ||||
CDD | 67.0 | 64.4 | 4.0 | % | ||||||
Total
amortization of intangibles and other assets | $ | 117.3 | $ | 120.8 | (2.9 | )% | ||||
Six Months Ended June 30, | ||||||||||
2019 | 2018 | Change | ||||||||
Restructuring
and other special charges | $ | 34.2 | $ | 26.5 | 29.1 | % | ||||
Six
Months Ended June 30, | |||||||||
2019 | 2018 | Change | |||||||
Interest expense | $ | (115.8 | ) | (126.6 | ) | (8.5 | )% | ||
Six
Months Ended June 30, | ||||||||||
2019 | 2018 | Change | ||||||||
Equity method income | $ | 5.5 | $ | 5.5 | — | % | ||||
Six Months Ended June 30, | ||||||||||
2019 | 2018 | Change | ||||||||
Other,
net | $ | (20.9 | ) | $ | (0.7 | ) | 2,885.7 | % | ||
Six
Months Ended June 30, | ||||||||||
2019 | 2018 | Change | ||||||||
Income tax expense | $ | 148.1 | $ | 147.6 | 0.3 | % | ||||
Income
tax expense as a % of earnings before income taxes | 28.2 | % | 26.6 | % | ||||||
Six Months Ended June 30, | ||||||||||
2019 | 2018 | Change | ||||||||
LCD
operating income | $ | 580.8 | $ | 639.8 | (9.2 | )% | ||||
LCD operating margin | 16.7 | % | 17.9 | % | (1.2 | )% | ||||
CDD
operating income | 153.8 | 107.3 | 43.3 | % | ||||||
CDD operating margin | 7.0 | % | 5.0 | % | 2.0 | % | ||||
General
corporate expenses | (80.7 | ) | (72.5 | ) | 11.3 | % | ||||
Total operating income | $ | 653.9 | $ | 674.6 | (3.1 | )% | ||||
Six Months Ended June 30, | |||||||
2019 | 2018 | ||||||
Net cash
provided by operating activities | $ | 419.3 | $ | 567.1 | |||
Net cash used for investing activities | (891.3 | ) | (196.3 | ) | |||
Net
cash provided by (used for) financing activities | 311.7 | (458.1 | ) | ||||
Effect of exchange rate on changes in cash and cash equivalents | (1.1 | ) | (7.9 | ) | |||
Net change
in cash and cash equivalents | $ | (161.4 | ) | $ | (95.2 | ) | |
1) | The
Company will pay contingent cash interest on the zero-coupon subordinated notes after September 11, 2006, if the average market price of the notes equals 120% or more of the sum of the issue price, accrued original issue discount and contingent additional principal, if any, for a specified measurement period. |
2) | Holders may surrender zero-coupon subordinated notes for conversion during any period in which the rating assigned to the zero-coupon subordinated notes by Standard & Poor’s Ratings Services is BB- or lower. |
Total
Number of Shares Repurchased | Average Price Paid Per Share | Total Number of Shares Repurchased as Part of Publicly Announced Program | Maximum Dollar Value of Shares that May Yet Be Repurchased Under the Program | ||||||||||
April 1 - April 30 | 0.7 | $ | 154.49 | 0.7 | $ | 1,151.0 | |||||||
May
1 - May 31 | 0.6 | 163.95 | 0.6 | 1,050.0 | |||||||||
June 1 - June 30 | — | — | — | 1,050.0 | |||||||||
1.3 | $ | 159.13 | 1.3 | $ | 1,050.0 | ||||||||
(a) | Exhibits |
10.1* | |
10..2 | Executive Employment Agreement, dated June 4, 2019, by and between Laboratory Corporation of America Holdings and Adam H. Schechter (incorporated by reference
to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on June 5, 2019) |
10.3 | Term Loan Credit Agreement, dated June 3, 2019, by and among Laboratory Corporation of America Holdings, Bank of America, N.A., as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on
June 3, 2019). |
31.1* | |
31.2* | |
32** | |
101.INS* | Inline XBRL Instance Document |
101.SCH* | Inline XBRL Taxonomy Extension Schema |
101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase |
101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase |
101.LAB* | Inline
XBRL Taxonomy Extension Label Linkbase |
101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase |
* | ||
** | furnished herewith | |
By: | /s/ DAVID P. KING | |
Chairman of the Board, President | ||
and Chief Executive Officer | ||
By: | ||
Executive Vice President and | ||
Chief Financial Officer | ||
| This ‘10-Q’ Filing | Date | Other Filings | ||
|---|---|---|---|---|
 | ||||
| 9/15/22 | ||||
| 6/3/21 | ||||
| 1/1/21 | ||||
| 12/31/20 | ||||
| 1/1/20 | 4 | |||
| 12/31/19 | 10-K, 10-K/A, SD | |||
| 11/1/19 | 3, 4, 8-K | |||
| 9/30/19 | 10-Q | |||
| 9/10/19 | ||||
| 8/27/19 | ||||
| Filed on: | 8/8/19 | |||
| 8/6/19 | ||||
| 7/1/19 | 8-K | |||
| For Period end: | 6/30/19 | |||
| 6/26/19 | ||||
| 6/10/19 | ||||
| 6/5/19 | 8-K | |||
| 6/4/19 | 8-K | |||
| 6/3/19 | 8-K | |||
| 5/28/19 | ||||
| 5/14/19 | ||||
| 4/23/19 | ||||
| 4/22/19 | ||||
| 4/4/19 | ||||
| 4/1/19 | 3, 4, 8-K | |||
| 3/31/19 | 10-Q | |||
| 3/30/19 | ||||
| 3/28/19 | 8-K | |||
| 3/13/19 | ||||
| 3/11/19 | 8-K | |||
| 2/6/19 | 8-K, SC 13G/A | |||
| 1/16/19 | 8-K | |||
| 1/1/19 | ||||
| 12/31/18 | 10-K, SD | |||
| 12/20/18 | 8-K | |||
| 10/5/18 | ||||
| 9/21/18 | ||||
| 9/10/18 | ||||
| 8/10/18 | ||||
| 8/1/18 | ||||
| 7/16/18 | 8-K | |||
| 6/30/18 | 10-Q | |||
| 4/4/18 | 4 | |||
| 3/31/18 | 10-Q | |||
| 1/22/18 | ||||
| 1/1/18 | ||||
| 12/31/17 | 10-K, 5, SD | |||
| 10/10/17 | ||||
| 9/15/17 | 8-K | |||
| 9/7/17 | 4 | |||
| 7/24/17 | ||||
| 6/7/17 | ||||
| 5/3/17 | 8-K, CORRESP | |||
| 3/10/17 | ||||
| 11/11/16 | ||||
| 10/13/16 | 8-K | |||
| 9/6/16 | 8-K | |||
| 8/30/16 | SC TO-T/A | |||
| 8/24/16 | ||||
| 8/15/16 | ||||
| 8/3/16 | ||||
| 7/13/16 | ||||
| 1/11/16 | ||||
| 8/31/15 | ||||
| 12/19/14 | 8-K, UPLOAD | |||
| 4/1/14 | 3, 4, 8-K | |||
| 3/14/14 | ||||
| 5/2/13 | 8-K, CORRESP | |||
| 8/13/12 | ||||
| 12/21/11 | 8-K | |||
| 8/17/11 | ||||
| 1/1/10 | ||||
| 12/31/09 | 10-K, 4, 5, 8-K, ARS | |||
| 10/24/06 | 8-K, 8-K/A, SC TO-I/A | |||
| 9/11/06 | ||||
| List all Filings | ||||
As Of Filer Filing For·On·As Docs:Size Issuer Filing Agent 5/14/21 Lab Corp. of America Holdings 424B5 5/13/21 1:643K Donnelley … Solutions/FA 5/12/21 Lab Corp. of America Holdings 424B5 1:631K Donnelley … Solutions/FA |