Laboratory Corporation of America (LH) 15 Feb 242023 Q4 Earnings call transcript

Good day, and welcome to the Laboratory Corporation of America Holdings Fourth Quarter and Full Year 2023 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

I would now like to hand the conference over to your speaker today, Christin O'Donnell, Vice President, Investor Relations. Please go ahead.

Thank you, operator. to Quarter welcome Conference and morning, LabCorp's XXXX Fourth Call. Good

With there in available a Internet. Glenn Adam Eisenberg, today's Chief Officer; detailed President Officer. Chief will Chairman via today and Schechter, press and Executive call As and conference release, be Executive are this replay telephone and Vice me Financial of

our and the website discussed business financial additional posted both we This the morning, www.labcorp.com with a include Investor in which GAAP which call. measures presentation press operations, Relations measures an release reconciliation at information non-GAAP are Relations section of today's both on most of our the financial Investor our during of comparable to

respect pandemic making forward-looking Inc., guidance, statements. These XXXX including on are future the results, are and statements cash savings, the synergies we financial and businesses, initiatives for related not business of completed impact from transactions strategies, acquisitions other and the forward-looking the opportunities conditions; Holdings, the statements and benefits strategic COVID-XX flows [indiscernible] economic to company's spinoff of and partnerships expected operating and and assumptions, LaunchPad financial condition estimated but and market other Additionally, factors with various recently the future from growth. include, the limited to, and and/or global

annual company's our SEC. recent which and in many of XX-Q our Each most with based quarterly other change on control. included the reports filings the forward-looking and statements are subsequent beyond of in Form information to various factors, Form is the upon on subject More XX-K is report

if to updates our provide We expectations have obligation to these forward-looking no statements even change. any

Adam over call Schechter. the turn I'll to Now

with to everyone. Christin XXXX. to pleasure our quarter and for our you and good fourth It's a Thank results XXXX you, today guidance discuss morning, be

to finish transformational company. the strong year a a was for what delivered LabCorp

partnerships, States. We systems successfully priorities. United commercialization reinforcing clinical completed And new systems partner areas lab and services former and our one Ascension, choice of of we laboratory Fortrea executed largest for laboratories. local business. a back, business. the in health strategic tests we our the as position spin-off specialty on in integrated new our of focused innovative Looking We our We the across announced development well the of health operations launched the X regional

begin we laboratories both As services. Biopharma we have XXXX, momentum Diagnostic in and laboratory

by We technology expanding science, partnerships finalizing growth our integrating business, expect and and drive to acquisitions advancing base continued our position innovation. by and in

to lead autoimmune women's will focus and and oncology, in health, disease We continue neurology.

and growing XXXX diagnostics items performance X%, Base LabCorp continuing central was performed share million. fourth X% by revenue operations, increased free of Now turning Enterprise growth Business X% laboratories. Business quarter Adjusted billion. was strong laboratories $XXX in excluding and quarter offsetting flow cash quarter, and X%, $X.XX compared by well totaled both than the with growth in research fourth to to early to fourth per results. driven earnings Biopharma in the strong revenue Diagnostics softness development Biopharma. $X more growing led spin-related from Base revenue In due

the closed to being the from compared impact prior mix hospital flat constrained was margin recently year Business Base Enterprise despite partnerships. by

to forward X.X% revenue X.X%. Looking strong of we enterprise XXXX, to growth expect

an Diagnostics EPS Biopharma, expect to the and margin $XX.XX of of rate and both improvement expect we XX%. $XX.XX, at We across adjusted growth midpoint implied

flow free expect cash We in earnings. to grow also excess of

XXXX provide results and more our will on Glenn guidance. moment, details a In our

assets primarily to LabCorp our momentum are and We quarter, to in to due patients with a in with the Bay science Health. announced now quality operating enterprise Health hospital of systems fourth business health we into assets. and to We relationships. In acquire partnership strategic a strategy. partner choice groups our draw systems select efficiency. demonstrate laboratory regional local province local its completed region Legacy technology, and leadership acquisition to several a agreement throughout and commitment and select and laboratory new Legacy's Massachusetts to partnership strategy. is dedication positive inpatient And Washington acquire to lab from to health continues lab our Western outreach medical State LabCorp our This the stat entered we serving of we and that California. lab ambulatory Turning see state. our and Southwest an patients laboratories, from manages stations continued Oregon from in

integrating the their we partnerships. cost expanding and few first robust within laboratory expanding margins regional is pipeline capital years. of typically over system the accretive just M&A partnerships with our time on during and integration year, in health our and remain a ahead, local Looking focused These and return are they

in technology our Ovia will its science, benefit. fourth will kind innovation. it Labcorp by fertility now to to and is Health a and quarter, and health family-building benefit offer the In plans employers progress that Turning the of of to This availability first biological the allow ATM the their research needs. blood-based building well members to assess markers that support X solutions and LabCorp customizable identify associated disease. with employees Alzheimer's first offer family and an combines test blood changes profile, to announced announced

accelerate a to the the Last and decentralized expected clinical FDA-cleared of and strategic and collaboration new lines. inclusion announced Medical launch Pharma, to decrease trial burden management blood clinical in The clinical test Device severe is Biotech preeclampsia. sponsors. and increase patient month, and LabCorp study collaboration to enrollment site assessment diversity [indiscernible] time capabilities for to of for we risk announced advance

is of a central customers. how specimen This Finally, to introduced the for central each protocol and the users new launched to assigned customers, specimens real-time in that application we allows enhanced The our sample LabCorp their to be sample shopping application lab provide structured. events near central is many lab. customize for of visibility first the journey view laboratory for data will phase within

now Turning the year ahead. to

of choice advancing local Investor for partner that a in Day. health outlined regional drivers focused We September systems to are on continue and We to our be our plan growth laboratories. XXXX

ultimately develop, scale will diagnostics. We to including companion testing, and specialty continue license

will work increases to to leveraging our specialty bring global testing of our our by the other reach world, parts We which scale.

biopsy China And for in we and success our Geneva therapy tests consumerism. enabling we're long-term positioned liquid trials. gene perform and to laboratories with well are cell clinical example, central for For

tremendous new on strong markets than employees their want year and customers, transformative our opportunity LabCorp. our I executed for innovation, technology as for lives. employees to and as on improve to see our at and intend the for We to world. market. focus around thank strategy We to and considerable a to that to further products bringing improve value more closing, XX,XXX pursue enabled and shareholders we continue was mission growth scale our to to and exceptional to momentum we pace. In capitalize XXXX for us customers we work This with enter XXXX our dedication hard health drive our

With that, I'll to Glenn. turn the call over

Thank you, Adam.

a quarter guidance. discussion my results, a followed review in start our with with of by to conclude comments our each performance full of and XXXX year segment fourth Going our

to can reference, X.X% primarily included lower X.X%. the business our growth X.X% year, Base found Business Revenue COVID have last acquisitions, deck COVID that of information currency, constant revenue Business grew the For $X while the year to was supplemental Organically, down in and quarter an to on Base partially Base in be also organic increase Base by Investor we billion, was compared Business compared testing our additional last testing. offset website. Business impact XX%. for from grew due The the Relations

soft we've for was research experienced early our The laboratories million loss of to as development charge due the Operating million business impairment $XXX biotech quarter $XXX an related to markets.

of In addition, million special $XXX to the we spin-off related charges coated had Fortrea. and of acquisitions,

offset these testing. Business operating items adjusted margins income by COVID and $XXX the in and Excluding XX.X% income lower and and to operating amortization, LaunchPad of of line $XXX hospital in year. recently or The last costs year XX% stranded compared margin to was savings adjusted were million the the in completed quarter and higher mix was with of personnel or decrease benefit revenue due million demand Base impact last partnerships. as were

with stranded $XXX this Our cost year. our Launchpad million initiatives of savings per $XXX of target to million long-term $XXX and around million year delivered consistent reduction

The the primarily rate The for benefit credits. last earnings rate the tax and compared quarter adjusted XX.X% adjusted was to of R&D was XX.X% tax mix tax increased to the geographic from due year. lower

$XXX for of $X.XX We quarter, up loss to X% was quarter be adjusted impairment due lower early from due from XX%. ago. COVID last XXXX The year was expect flow approximately operations the tax a rate charge. in Fully a $XXX to year. million in were development the was quarter cash $X.XX flow reduction our cash the million to EPS in for diluted compared to EPS testing. Adjusted Operating the continuing

in the million Capital expenditures quarter. totaled $XXX

to million this acquisitions expenditures For X.X% million. quarter the operations year, from was in flow be X.X% Free the in capital in and paid expect cash XXXX. million were continuing company The revenue, approximately of invested dividends. $XX $XXX out for we $XXX and full

While by quarter. count million completed we repurchases approximately not in X.X use repurchase our share quarter, accelerated cash did we share the during the which for program, any reduced shares the share

end $XXX million year, At share the of of the we repurchase had authorization remaining.

costs, $XXX million full debt. stock $XXX invested from million paid paid million. free operations, on of the and out excluding company $X of spin-related The in down repurchased year, $XXX continuing was cash $XXX million For flow acquisitions, billion dividends, maturing

will supplement acquisition our a have to potential organic continue growth. We robust that pipeline of opportunities

share our program is allocation In important addition, strategy. to we that of an capital repurchase our believe continue part

At $X.X year-end, cash we with billion. had debt $XXX million of in

debt months adjusted X.Xx trailing was to gross leverage XX Our EBITDA.

to year Business Business volume COVID X.X% constrained The last the with Business X.X%. contributed mostly last $X.X was was up X.X% organic grew grew to to as our down the testing. X.X% grew Base Business Laboratories. while year while to due acquisitions year. Now contributing X.X%. that billion, organic was Price/mix increased to Diagnostics acquisitions revenue X.X% which X.X%. organic base the segment acquisition Base quarter Total X.X% Base COVID growth by with by by XX%. last compared an price/mix compared beginning I'll compared volume volume Business compared as increase contributed volume volume business last X.X% year, of increased X.X%, lower organic was X.X% to offset versus Base COVID lower was Base Base year, organic Revenue last testing, performance, last of increased testing organically an while increase review and X.X% year for Business compared the

to expect operating adjusted adjusted million operating acquisitions to income the costs, or COVID was in due reduction COVID million recently costs. in operating testing up to over partially offset the personnel year. in XX.X% demand, testing. was The organic benefit decrease from and $XXX income $XXX Diagnostics LaunchPad improve including to last XX.X% of of revenue a decrease or reduction the Business to quarter which compared due and closed by Base for which higher was in The health impact the due care-related margin hospital partnerships, higher savings, we time. were was mix income

I'll continued The by of in currency was of $XXX Services. Labs, was foreign to quarter review an the compared an revenue was to performance X.X% and growth early Revenue strength translation X% last X% XX% driven higher-than-normal Now X.X% Laboratory in was our Biopharma million, while increase development year Central revenue cancellations. for down increase due due of segment of X.X%. up to organic which

billion and income into billion, $X.X Biopharma with costs. the quarter stranded to to personnel a $X.X ended $XX LaunchPad for quarter million next increased offset million Adjusted XX was higher partially at of and quarter We months. the we Book-to-bill savings, expect due over this XX of operating last convert months and the approximately the to $X.XX was with trailing growth adjusted revenue of organic or for and X.XX. backlog income operating XX.X% backlog revenue XX.X% the or $XXX by year. compared margin

includes as Now for I'll currently which XXXX, full share cash and from The flow anticipated targeted allocation, exchange year effective full XX, dividends. the rates year. guidance, guidance with XXXX enterprise also repurchases acquisitions, free the of capital our for December discuss impact foreign assumes

We expect translation the basis grow of revenue currency to impact points. Enterprise to favorable includes XX from compared foreign XXXX. This X.X% X.X% to

impact The be revenue offset Diagnostics to annualization X.X% of expected were XXXX. to in of compared expect by be testing We lower XXXX. completed is X.X% around COVID from the $XXX acquisitions million that up to to

compared X.X% impact expect guidance to XXX points. the includes of foreign translation basis XXXX. currency positive We biopharma grow This revenue to X.X% from to

and early both to range. grow the guidance expect central labs segment within We development

LaunchPad diagnostics margins in XXXX driven up and to We savings. top in be XXXX growth expect and versus by Biopharma line

Our is an to of guidance growth at $XX.XX midpoint the EPS implied range for rate approximately adjusted with XX%. $XX.XX

that seasonality will not typical quarter. quarterly earnings we to due first in expect do by noting we guide performance, While to weather it's disruption to quarterly will worth $X.XX January in quarter that be below earnings the $X.XX impact

profitable implied midpoint approximately that billion is XX%. through rate while repurchase to for program that also to be cash be we will and supplement the growth, continued our In with share expect returning an strong $X between at growth summary, and $X.XX generation billion, flow cash our used to growth expected Free capital flow of drive shareholders to free acquisitions organic dividends.

will now questions. we Operator, take

Jack comes [Operator Meehan with Research. Instructions] Our question from first Nephron

start I allocation. capital question wanted a with on to

like? size, the what year a look Like bit So for in last lab I a have Ascension could deals it's available there you strong. It the with has system that's doing flow but space. wondering more come was Ascension year the be been know any was cash active feels obviously larger to you bandwidth guys the either spin. does health pretty thought you funnel and integrating little tough I like independent or if something

look strong. you have, pipeline if very for remains M&A, at we So it the

you Ascension them systems, there's a size in As obviously quite become you say, but up, deal when of meaningful. not systems necessarily the that add there's few of health health a

fact, we've that historically, to said guidance, In at inorganic X% means. our X% from longer-term have growth look you if we

now that us. significant We X.X% is it's said for be we believe there reflecting believe that X.X%, going to have to opportunity we

partnerships mentioned local with also We laboratories. regional

because do then sensible to They're some so that quickly. do. to of to first know to of there do that, something allocation dividend. I then could in deals we strategic accretive as additional committed many as well. that look strategic of how albeit at be in we're If is off we're and in return funds do share very good the But at anything general, They as can well. a we one think that really of area. would our which think I priorities, our our look use capital about those, partnerships looking there's But as I to after not to look massive our buybacks, way we hospital is to cost regional we they're believe local, year, laboratory do capital in these them we to first that size. continue us We our

billion new and year, thing redeploy I'd this our earlier that $X.XX to have balance we're Yes, at between XX sheet cash M&A to gross buybacks billion Xx. the add and months flow that strong. adjusted Jack, We your only the also allocation going targeted the to again, assumes also guidance of But for and comment that is of free capital to ended is we'll dividends. generate coming we $X range of X.Xx year a X.X trailing debt that to EBITDA,

addition attractive there opportunities. cash M&A if as on flexibility financial the front, point, your to were pursue So additional share in free also well, those out flow, opportunities repurchases obviously, the have we to to there

expectation quarter? margins inflationary talk And of -- unit diagnostic What like this about in environment. you the reason on realized lot the in your year? in And get the feels was questions I And is can business. for what a is we're the the ask side, price on it what elevated next

you Just opportunities like what use as lever think -- to kind you offset more to do do of a that? price see

So Jack, general. talk just about let first margins, in me

you prior if flat versus the were look margins So year. at XXXX, basically

we in were they COVID than pretty the addition year particular in that you year. hospital that done, to significantly things couple prior sense have an impact the work less was this had the we've although to level ability the integration year, the dilutive significant, If accretive to we had of they're the overcome, first that, do they're deals our at some But as that look the reduce margins. months time. of first like in Because until we that cost over the to in makes fourth on the quarter in

increase but we've expect into in increase, we the just margins Biopharma. said that not So XXXX. fourth I each also from expect an Diagnostics, early Within them some be feel go good laboratories, as the not we increased, And margin in central just as we expect we really development. to our we impact to of accretion but well. about but Biopharma, in that saw quarter also the businesses, also in

to year we $XXX We're committed LaunchPad to initiative. a this by reducing So the $XXX for and for to next each through continue look costs years. million costs million ways reduce to year several

being that, margins Despite hospital the with that expecting as this us net a addition going some we we're to to mix, which With our at see fact me us of neutral sense is our overhang year, deals, growing our see have price the you in significantly. overall when is say on to in see versus and focus In particular price. still price, to is to volume that's us XXXX helping helping growth. accretive growth growth would good underlying in that margins. there. particular, margins to 'XX, is continue the I improve continuing Biopharma, look help we we're In mix and COVID we just the to There benefit

Yes, think expect lot ] the still mix that. Diagnostics the opportunity, said, going frankly, Adam flat lesser is But year, about volume. that Price again, Jack, improvement. with favorable being that than it's the than PAMA and Adam the to relatively when the to underlying the in at help growth drive even deferred and is said, as of Base have And thing one driven. side. you be greater extent too, margin unit within with COVID with Diagnostics seeing at expect, out [ in, would the demand we favorable expectation see is obviously to Business least business a we be thing the to mix that we testing nice margins improvement down. all going of even that's is up to A volume as the be Obviously, be the that the it prices benefit,

from question Kevin Our with UBS. Caliendo next comes

sort just comp the Biopharma, in and of XQ of how much to and I about have that year? of course of mix. is the easy that the and that of improvement actual we versus understand margin an just sort as know you the early sort want I in there development. about talk the improvement you of think On cadence margin Can in expectations for of dynamics

ask Glenn bit, context. Yes, I'll I'll talk additional some a little to provide and

Biopharma. Our Biopharma also improve half continue X.X% as fourth in a we in expect And a to the development. to giving XXXX that expect guidance We're we we for in early growth development the lot very it's to continue in through we same also overall grow continue expect We're be at will look year. both in we laboratory. well laboratory laboratory service in development, leader business of across early to the early improvement remains segments. we're central to leader a expect see of leader Central quarter, segment. we performed X.X% the going to as as early well perform A the year about as ramp-up. to and the the in growth development the amount we go second But

RFPs good The in segment, look is central laboratories. The by RFPs far, larger look Our obviously, the both good. segments.

lot Big us pharma great. to rate win I feel a looks of good. RFPs, is Our send continuing

go that the normal win above look What expect will us and and for And we've good, you as the the normalize at that therefore, and being growth. early cancellations us RFPs us rate XXXX, through providing that, some with good. are development, to win are levels. rate If faced well positive looks we RFPs back get the look we

add expect I the Kevin, point, we would biopharma to Yes, your be look at cadence year-over-year. to margins just when up you that one,

that of margin half, expect year. year-over-year would early in that see constraints still we the driven the softness the go And improvement as expect XXXX Given especially across second, we the our the with experienced Adam particular, of in year even half in as be experienced, up would we margins the that through stronger in quarter development, of supply first that the first both versus of the the we businesses. commented each you the to part improvement of margin but

early both guidance looking to So we central X.X%. range have lab, X.X% revenue development in of within at that growth

top line top good improvement we on and see that leverage savings, LaunchPad growth, good So margin line well. to to expect

you If does and of margin anticipate pricing under does I that the that. pressure hurts sort We've for is marketplace what's to impact? that should about there? we that do supply, a your bit. quick helps heard the or can happening how reliability Like little pricing in follow-up ask How just coming how front? a of -- -- on outlook think the how NHP

Kevin, is supply So right now, [indiscernible]. not

us. as now. much we this seen very We multiple We've down of is have good the which clients. benefit the about NHP the thing supply feel certainly the a a as go is we pricing need. for through and passed we us I future, into good some largely come because as cost suppliers year We have in our for market, pass-through to on

is So impact. might the because cost down, it have shouldn't for coming revenue significant us any come the see down but you

In fact, to little bit when comes us a could margins. it our help you

Our from Erin with next question Morgan Stanley. Wright comes

in trends about the the the the big dynamics, of how impact how throughout utilization just volume also you first excluding mentioned in weather year as COVID XXXX? of would pre-COVID and And is should dynamics How that? an trends think quarter. head So we relative to general we volume and just some you characterize impact

The diagnostics in based business quarter, grew grew came First XXXX of the X.X% in the with quarter. all, into would momentum. significant X% I fourth we say Biopharma fourth

good feel those we're the about guidance that each businesses. providing I for So of

of it's midpoint Diagnostics, X.X% growth. X% to midpoint So X.X% X.X% X.X% to Biopharma X.X% of growth. and for

strong very revenue growth. So

that will improvement weather, be the be the for gave first to it the it fact quarter. the XXXX. those in midpoints, be going saying know I in gave what -- each businesses. to are January. the $X.XX already we And already in in despite and us I numbers and diagnostics it of therefore, to ranges the $X.XX was quarter is first be we expect margin there you just you, of that from impact That's We will comfortable also But hardest an quarter

So January. happened it in already contemplates what

comments Yes, levels north fact the We're now you too the well higher at kind you with up when year-over-year. look the the are kind them that around guide the couple utilization kind still of range of we're CAGR next positive. Erin, to of And kind demand on kind mix is year, for to When that end X% it normal X/X X/X say good as rate compare right to lower frankly, X% nicely. the our volume When compared on of X% that volume price organically diagnostics normal to where to X% within prepandemic within well growth X% of of, indication, growth. call from side. is historical levels, the of X% we're it, speaks would end, but of we again, now. on midpoint a historically, volume, price which at probably XXXX organically of

bit on at a that the historical. rounded higher the margin. incrementally, we little revenue of we're of be million, by in to than you around give drop-down saw XX% January probably normal expected $XX So And that and we would numbers, kind around now, at kind right level a impact our impacted weather the

we to remarks range share So per gave that $X.XX XX-ish of or that $X.XX earnings from in call prepared an it income standpoint. our around operating

at now, out it to pushed point? there? stands are PAMA, just you continues this SALSA, PAMA be as What Perfect. sort And the your thoughts environment it's just LDTs, thoughts whether your think regulatory quick do on of

get Erin, be to to we passed. SALSA, we will support continue and SALSA optimistic that continue

trade that passed. passed, to we'll We have get both working another see get to delay. the there's to if way try aisle is hard it ACLA, of get If doesn't really from support of legislation sides a then organization our and year

that In we will impact our an assume guidance, PAMA. longer-term from be there guidance,

going going forth. next lot not to I'm passed, then following it Until to another be If is will a passed. not year. year, it the work hard legislation take continue the not that of year be will next be to or really could comfort we delay year, year. that say therefore, So so it's SALSA to it's have it We're this

they're of LDTs, we thinking With and to FDA's We that test. regard developed that of taking were FDA very legislation oversight that about kind for was legislation industry industry. give the that's applying the We created it right to path supportive of what currently and support go. would in the of the laboratory think was do terms to device not diagnostic valid

will continue organization see the purpose can we the right the trade there. We is that for to progress diagnostic work for with make fit path we legislation is industry if forward. think But to

comes Davis question next Stephanie Our from Barclays. with

historically I profile. us hoping so was I the some also of side. you about of could but driving walk lower on above-market attribute margin growth I being through your market some EPS diagnostics deal, Because especially the through your what's market thought above growth the extension

I level versus your profitability peer. surprised at this largest of a little guess I'm So bifurcation

Yes.

in is, business. Diagnostics what one, the core our base esoteric So business. from it Stephanie, We And is and momentum momentum testing. we would coming routine both say, number the have I in see

growth And other to And in pipeline disease and good specialty grown to to continue going categories the X% we've to X those no X%. higher health, have X.X% X.X%. on of past. on we a is have focus therapeutic areas, strong in that we're the and areas, focus We the to women's that have neurology. we laboratory said grow those longer-term than help future. go as for us autoimmune that to Historically, enabled the oncology, of that the I At as That's acceleration believe to the partnerships are continue faster there's inorganic we into same why growth news would grow we've valance parts to raised the market us have those future. because we disproportionately to hospital going and of what the doubt the time, has into go continue grow we should those local

think combined give all I diagnostic So of those when to comes volume. things it the us momentum

And announcement? I And follow-up. it. driven much How bit bit little changing the dig was from for more Ovia to the you like? this to sales your gears a investments understand clients a of does and existing inbound versus list market? looking by platform expand the that tech in decision the or mean into the Could in into of forward employer-facing terms employer what investment

Yes.

we've to that of we with look services kind a for care you fertility that and will what if have offered really it it's to if And that we family-building terrific to employers. think So women's throughout focused bringing way we offer offer areas first their We can is and done service concierge benefits us its like. at offers, core family important of they've helps on a journey. building very a we're be digital Ovia, it navigation capability what directly patients health. The therapeutic And individuals they can customers. a to

a help so have bringing us offerings is to [indiscernible] for strong avenue this are services. And marketplace. and But health employer we're in just health focused this another many of to important be to the is We the just laboratory one group, very we women's it, on is that because women's arena. going so because

Patrick from Donnelly Citi. comes question with next Our

us feeling about a are emerging some should little know were How environment we've some little feeling Maybe IPOs up the elevated kind quarter, last this picked quarter. what seen bookings how looks bit biotech that Biopharma just side. given about trickle bit cancellations year? we guys you the about there, the biotech and let flagging just on again, Can book-to-bill the of like you think bookings backdrop? a on volatility now? you from you're of I And maybe side, the last out? How backdrop, know

and individual start as then talk broadly well. about the I'll absolutely. Yes, I'll about business, Biopharma segments our

of improved we said was it quarter be we quarter, the good in had improved. the we which expected fourth and broadly, to quarter obviously, a X.XX, third So

we our that, targeting. If you what XXXX. believe $X.X look typically months, be billion really feel want X.XX. quarter at be dropped we're quarter billion We $X.XX strong there to And of trailing to I the million a it's $X.X about -- year. fourth off get we'll able around through XX in confident to as and go we this is that's you

much a with very businesses and the apart central larger start strong. our are is RFPs business, break I the laboratory which If we business,

strong. very is book-to-bill Our

as seeing the because Our is focused other more larger as of not part on pharma. strong. very it's seeing win rate many the we're in cancellations We're business

there seeing early early comfortable go as we're Although into nearly I there. development. XXXX strong. through some development, because large There cancellations are. In always coming feel we still as very are what as not in us RFPs are It's our

remains good lot here feel of I a about win been good. rate rate is. cancellations. is happened win where our there's What's Our

small other just financially. there's think that going are think I the One through that think got reasons they're decided for some then biotech with pressures not it with smaller I And companies way NHP do line, going was, there that say I to So very that. in biotech is, it X also we're just companies pricing to now.

to today stronger biotech. net-net, early And look I forward. larger feel I that businesses, pharma where or are businesses. business we this kind feel make and good As the seeing from and only to moving get a book-to-bills. book-to-bill think be our a of of the more larger development, middle-sized I at able development, early and year, early about that we But confident even we in I of ranges And pharma with versus we'll we're amount pharma in provided even the both and transition as have actually both large come more

the is side. on thing central just it fourth lab other Yes, was well. through as think one but strong we Patrick, encouraging, a Again, very more still quarter, which had to obviously driven

orders and it. the doing for impacted win RFPs are those rates our it's early that have So the cancellations even well, while and development

cadence you of second year revenue be you to growth. half Biopharma, on weighted the the expect kind as the to When a think So next year. look for about at

that X.X% normal So the businesses, be to its but the of that expect within again, those development of see early cadence each to go. cancellations, than the given stronger both will do second half the X.X% as where improvement growth, on in rate because first, much of app, expect growth central backlog, we we quarter continued strength we

the for out And and during you is? figure the COVID 'XX. that the COVID core year I'm 'XX? and if headwind thinking for ones diagnostics talked trying expansion bit the quickly, then to have little all on of then that about you how just just the versus expense couple Glenn, a headwind maybe the about the expectations interest load a you margins. at just P&L addressing debt talk you're the quick about what Can

points the $X the in expect fourth expense, diagnostics, basis kind will up total be can of get slightly rate up to COVID going to both standpoint. headwind have late to But of a and margins in that ended underlying being do effectively million specifically that the would the that's we diagnostics, business see again still we're to more but run albeit due of initiative. When at point, $XXX headwind offset and a be you your business the we Again, be doing from growth in that that say quarter base XX because we're businesses in look interest are our we that to impact billion the of the well. to and up, LaunchPad by do margin XX COVID annualize then it, around of than due margins Call we overall, where down going in take around kind XXXX. margins we of debt to expect of you

million So December. we're $XXX September, in in another $XXX million in

The X we'll look have So maintain. expect debt we absolute that billion X. at refinance levels that it. we $X billion,$ to to

be what higher refinance just we'll maturing. it than rates will obviously slightly So

have look at is bit we'll to we where And load of So the to of refinancing that refinancings we again, our a debt the if as annualized a that decent we ballpark Xx, stand, to of the number be to would little but you kind reflect XX% top X.X wanted earlier within end targeted the the commented that a still the for in. from on at be year, the end. company of to add range lower leverage the we're that

as billion of above $X capital opportunities year could the other additional to deploy we this little plus cash. use bit generate a that on debt sitting we're see we'll excess leverage, potential we obviously, So potentially additional plus free flow cash

next with Our comes Brian Jefferies. from question Tanquilut

P&L those question, -- cost and lines, the loans in labor the improvement obviously growth the about I factor LaunchPad. sales you Glenn, as we in that and you of about got So margin I QX. seeing are outpaced about How think thinking G&A guess and this it hear both How outpaced revenue my year. -- I

how lines? dollars of in improvement and So how the you margin the driving environment labor think just terms into those like that curious in actual growth and factors about

well, is company, Brian, were to we and tight within pre-pandemic, one, improving. some still to view we across attrition -- a varies it a improved. From be biopharma we segments our a obviously, that's pressure additional side, than But market, still standpoint, been, we're continue market we've higher as but the normally continues labor an back improvement. because where but actually we the that and again, diagnostics see to see

that really is place premise the can that for market to you X%, inflationary always range. help We've general initiative X% around inflation offset Our was labor that to commented our within but in labor is that say X%, LaunchPad pressure.

to again, in And us, would a that a $XXX we our little target $XXX or give labor, million. increase particular, merit For million it, take, year. bit in over million be $XXX call

and the the initiative again, part LaunchPad off, we that costs. are think leveling to those So improvement offset be if inflationary of will, you help will things margin

activities much much maybe Understand, into share share may baked I housekeeping But are -- just how how buybacks, just the buyback guidance? missed this.

do for we used and that the we what will dividends. generation flow have free is share repo, to be guide cash M&A So that

will see. be components, that how opportunities it be in it you is based would vary expectation. the We across the about we our will, much because board don't the if may each of So comment upon acquisition

commented wanted that sheet is will, opportunities. that if And guidance the well guidance, but have capital for again, X to balance that M&A -- So it allocation some strength we reflected or if we earnings across. buybacks. in of use will as we gave But additional additional we those be with the blended you all

from comes next Bank. Our question Deutsche Pito with Chickering

split and just versus improvements? the SG&A can 'XX on how on or acquisitions improving improvement guidance, next and Back quantify from Diagnostics year? much you the the any pure gross coming is And organic margin between business, the margin details

So on. add let me I'll -- Glenn ask context, some give to I'll and

if at look if you strong X%. about say So you look fourth business. you Diagnostic first a I'd saw thing growth, revenue the at quarter, very the is,

we increased drove so points. prior costs basis care look and If there at primarily year, slightly, health But down versus some it was was was it year. we you What margin those end first that like about the last they're XX although of that forth. typically hospital were things did minor the And that by the they're year, deals did primarily deals of months, accretive the first driven in dilutive. in several several that, at

One year, confident obviously, As several we come margin this in into PAMA been has for we're reasons. the accretion delayed. is,

that So We that would that have XXXX. headwind been not a this real pushed year. facing we're off into

look is be The at our strong. us. going you increases, going If volume to to help volume that's

several years. at we us year-over-year. a Each said deals, the look you improvement over would continue better as bit to the deals margin go next we If expansion of hospital some get give the hospital

improve. $XXX million. diagnostics reduce in deals to is amount a the significant So XXX hospital also continuing looking the of of to enterprise, the We're we'll be because from across get cost going size to some to improvement but

And when inflation in a you together things about expecting we're it's rate years. been be X%, typical look those at with prior all is than which more to a than

and if that inflation put So costs you be X%, of forth, kind our in off of around for people so should X.X%.

all to and able business. of some be about that's $XXX Diagnostics why but margin from get those improvement together, the have put significant headwind we'll million, still we're COVID, You that's even a we in confident, though fairly

to, look becomes [indiscernible] in the year, we right. Pito, it that kind impacted. little do this being And still that's a late you constrained bit lab by us acquisitions COVID year of the for typical is but more less the include the tend to when margin did think component. partnerships. offset acquisition that hospital of the we M&A impact, a an be in-hospital point, as your I frankly, when hospital agreements, would the It's management labs that to weighted management

disproportionately was but also one called we've tied the of about, out its in-hospital to because Ascension, size, as sheer talked lab. we

a bit done headwind a an an of of of little less So impact, less impact.

process initiatives help to really the cost of controls, across business top drive is improvement our really launch going what's line it's So growth, both margins businesses. pad

early-stage that fourth the single on for on saw quarter you -- that the should all a why customer? that XXXX? think why of customers And color there the normalize is any was spike that cancellations. Is then back sort sort so in of Or and -- you

we their would. higher move turn, fourth they the what to getting year. although for, in look the forward there know that would that when had there NHP costs time. By going they well in what, not were you was to And run time trial, an throughout we We typically not were of an people it their They either trials, NHP quarter, And it and reprioritized than reasons. issue, last increase quarter. we supply to several advance line that say, pipeline. budgeted it think they at to we're what in do NHP was decided specific was decided fourth saw just were One, wasn't the there

The second has been more smaller in difficult. funding thing is biotech the

they go as forward. forward, as that we RFPs win look good our well their in But choosing we're trials the very rates as look move they're carefully good. the seeing So compounds

business of the the starting midsized we they cancellations normalize. So to pharma less those have have believe, cancellations, shift the as smaller more than our in a some towards going cancellations to smaller larger biotechs are to typically We're also had bit ones. a see

So we think we improvement why to see that's through year. we're go as going this

comes Our Evercore from with question next Elizabeth ISI. Anderson

just question. up follow on I to that want So last

shorter pharma more up your of I cancellation that a thought like of the larger really seeing Because solely is function prior you're was over a moving shift to that in term? maybe seems of also the there. one towards So that development, shift market early it maybe the mid- dynamic comments, strategic that

really already secondarily, we like from continued would understand be we color then spin this other there improvement cost on cost improvements there And is as of of the largely the helpful. opportunity? additional opportunities an those move saying away sort the further cost about sort you've as And So BLS, in or Are done I just about should improvements any think revenue what them? you're any there. organic

Sure.

that development larger clear, we've biotech I a we're cancellations I as on business, a to see the It's also a And in be something to part shift is for the would than size. it working back smaller -- to towards the like mid But often been multiple of for is progress. been been companies. years biotech are quite that it size. some to it's that larger still want in mid it's came time So to now, some occurring and to more more seeing smaller significant not we I've more saying

larger we I there. midsize mix direction. see able to more to little But do So to is we're still would pharma. There work move to over have were moving towards in reason like purposely faster, that we move that a that a time, bit but

which million a the to we there the on And also amount in $XXX the to biopharma cost Elizabeth, did in are about for out. continuing $XXX million to that having environment. have of business million run take getting LaunchPad We year. had talked $XX cost rate in overall still stranded. the savings were each that but out only quarter, post-spin that talk initiative kind savings affect the a take we our We cost as meaningful costs our we're of fourth of of achieved. growth, it's opportunities wrapped We not that's stranded obviously, side costs BLS,

a So development business. our get capacity of that opportunities side little going the early within of excess benefit have forward, the still of bit to We but consolidate. still we'll there's

managing So but top ample to room that capacity the though, it's some leaving take to that to that growth cost because still start growth, well. going obviously we're not and in see out. as we're the costs business good only expectation But opportunities of line

you Anything can tax rate? expected on XXXX And the maybe follow-up. just one comment quick

Yes.

rate interesting, higher had business. our a that jurisdictions think if the when we've clinical reasonable actually spin, about what's that have a kind we adjusted today rate for you did the generated think are now tax tax earnings post in is we we of we LabCorp And lower So company. guided XX% percentage of than

In of percentage addition, higher we have R&D. a

clinicals. percentage we higher did benefit R&D a of we when So had than

So historically the years, have overall, last rate, gives while few rate year-to-year we've sustainable minus company rate a our confidence that forward. of over the is decline us plus going the XX% seen trended now and profile the tax or

Next Coldwell from with question comes Eric Baird.

couple businesses might quarter addition Can here, the self-proclaimed in of R&D going us been in R&D upside? minutes or dive regulatory credit. credit. that the comments tell all appears revenue about asked to have be questions what my last the now to one you just legal but fourth course, into specifically tax Of thoughts on happened of higher with associated good additional mix drive would changes what that get the have I'm an on of here and some Glenn's And geographic proportion tax to to last in

I'm how just tax for on much curious of long-term impact rate? this a be sustainable might favorable

So than that when with Eric, areas the as we've of obviously, focus of oncology. are was. the company, of acquired R&D is other target LabCorp in historically driven well think more And about the you PGX areas seek to one key on

are investment years. now, year, more laws the kind to of to a Obviously, we're benefit standpoint, there. continue come we're increased cash of And that out it. that. number of deductibility Right From tax going that that each tax some over So with still more we there's investments, amortize prefunding opportunities. make pending a

we'll get any don't that obviously us minimum the our to going we as that impact look we'll earnings at we more. given change again, get There's generate much, -- will that impact. have geographically, So taxes affect hopefully, potentially really not global of and where, meaningful really

that grow minus more well. plus forward. the gives maybe opportunity to a we XX% us change internationally or more the is bit sustainability more a little grow, favorably we think as we But an obviously, reasonable go a from that standpoint, rate to So structurally rate

with LDTs, but that advanced things Glenn, or well, CRO seeing internal sort? your and investments it maybe tax BLS side And education Or on of R&D mostly diagnostics you as behalf, are on my segment? in credits is the entirely associated the

board. mean across I Yes. it's the

We that company. have entire the investments span

driving the oncology that increase the amount spans on the has think seeing we've that more been been been has our I frankly, driven favorable But enterprise. diagnostics the more side.

it, that say we work work to the on and who's it is everything across we weighted where on working enterprise, on again, we but So would more diagnostics. and

the if in what one on side. total handful out? us remind commentary, And of over you're phase at could stranded these And happens terms quarters then to into could be start I'm what IT in and as more they XXXX just what how stranded get end cost you I those thinks their TSAs? come of face here. were, sharing end to the the costs, impact the when completing going And they're what LabCorp costs what to TSA is The biggest 'XX next at the they Fortrea but the happens of you -- particularly transitions, just out? of

Eric. Sure,

of that run million $XX had we've was $XX which costs stranded from target around year, again, this So and costs, initial commented that the out million we that to our stranded rate a we at achieved. take

So there's come. to more

stranded fourth the costs in margins. that to million headwind So around quarter, $X had that obviously we impact it, due a call

and so that forward paying we on right? the TSA on because, the we're We're related labor sustainable providing a to other the service frankly, pass-through, costs contract own would the what Fortrea, go costs fully support, As side. with TSAs they're away, service. our doing IT most go for that's areas, us support IT they're and the their go Once are away of effectively

costs are stranded as the done, tackle But we other well. costs So is when the overall. those gone job continue to

completed to was So see TSAs very can tell you, X possible. and look it, soon to see I goal transition all and motivated LabCorp Fortrea as to that you when are have both at incentivized as years. the the happen within

good focused making The good We're progress. news on both is that are it.

will very or we progress, would making see we what the had that. those least go for. hopefully to is earlier planned TSAs at expect what we than planned cost But Fortrea with again, and expire had good

with comes Lisa question Our next JPMorgan. from Gill

for start range what pretty I with understand Glenn, first just question. us managed care help low a would and understand, And I range. it's gets What's of the and can you the be upper want guidance first you end pricing my the then range the to the to wide range. of end to XXXX. contracting secondly, wanted

and that anything You as you when mix, contracts pricing are with that's have for managed renewal? just volume about care do but to we about talked think different curious entities? up many Is there contracting

Yes.

but is we So to there's second one confident this put feel our expiration. which no in the I'll take year, a place that few first, major had contracts year, we in last

looks what's So we this the and midpoint. through about revenue Obviously, mean, I'll to expecting we're good not the bit bit -- where the back us is much are, start a great, that range. But [indiscernible] certain to into that go year to and feel we of I of The with weather taking guidance the in as a there's volume obviously, with and continue. [indiscernible], the diagnostic little range risk we ranges the end to things regard go upper that next.

integrate in is the will rate year volume past years and us, weather this the very, very to record has track strong. So just have the $X.XX news as with doing very be a of deals volatility hospital in impact, But help that. which not to there been we in much The COVID. the $X.XX the as but good we is good continues

feel it And last that year the volatility. means good that is would the narrowed been So range. in I what the fact, versus before because there we've range, year or about have EPS

thing great. that we're in I'd cancellations, the are And normal. services the to come development I the in strength is particular say momentum business, the The say start Biopharma have carefully more to watching when that then would we early back in in

that development out and on variability, comment now has at clinical will. think spun some taken that the you LabCorp Adam's business, the I of when the volatility of if you it look Lisa, And we've profile

more down across starting time we're a the we end or have to Obviously, we through businesses So the than the the left realizing, midpoint, But what and our the go demand guidance do. we'll the are needless guidance enterprise we softer on less tighter below. bit best obviously, that actually with just year. the continue promote ranges as in would our obviously, normally tighten upper to is year, out the higher ranges really little expectation year, say, demand the

question next Our Instructions] [Operator Derik Bank comes Bruin from America. De with of

Derik. is came on This John for

in to like the growth esoteric in about laid growth you've fourth on testing but I you the esoteric a in the rest good high forward, think going quarter. can But it expect been continue routine? I would the pretty the single-digit, seems double-digit had wanted made to key had be X low a have your then ask esoteric questions answered, lot up of or versus of therapeutic we out areas I that routine reaffirmed and and focus it

Yes.

them than grow grew that the fourth the And full and and So and stronger did, faster look at in testing therapeutic higher esoteric to a we the grow But strongly, we the about. year a little would if continue slightly of maybe expect volume in volume esoteric both expect bit the higher the continue at fact, significant note volume obviously them a we a slightly testing the dollars, dollars. that volume, to is faster in both both in have grew rate we you X we on see strongly, at to to focus but so quarter areas that talked routine.

to coming what's margins pushed biopharma diagnostics, between that terms diagnostics been be then margin to compared in full the to in slight a -- major a expecting fourth dynamic biopharma quarter. good you're pretty X fourth renewals point the for be the you for And contract and a There diagnostics. has look out. expansion the And But quarter off -- going year in between no and What XXXX. the flat the pricing, at you XXXX. is margins? the we I biopharma there's that going pricing strong mostly PAMA of mentioned in Can the jumping up obviously if had are mentioned

for wouldn't quarter margins. I the any use one

accretive to in And although several both across and biopharma. some the dilutive We ones. across that the to improve Diagnostics that the the was the diagnostics doing, couple in the of fourth there integrations were actually new first they're degree margins they months. expect in hospital quarter business, impacted were by year, we're first

go to into that year. as expect improve We we next

there's diagnostics that As improvement $XXX we go we still to or that, margin But the expect slight overcome next year, a business in to million that. get so. overhang and with COVID in some business, probably about even

their joining end they focus everything sharing we and to to and best want and in to dedication all forward So thank to serve today. I the closing, with here improve for team thank just of the at that its everybody hour. I for to trying go we I through our want lives, know more LabCorp us Thank patients can are we to the the as you. improve year. and to look you health we the do do that

conclude participation conference. the This your in for you program. Thank does today's

disconnect. now may You