Labcorp(LH) - 2024 Q3 - Quarterly Report

Revenue Performance - Revenues for the nine months ended September 30, 2024, were $9,679.5 million, an increase of 6.0% from$ 9,128.3 million during the same period in 2023[89]. - Total revenues for the three months ended September 30, 2024, were $3,282.0 million, an increase of 7.4% over$ 3,056.8 million in the third quarter of 2023[90]. - Dx revenues for the three months ended September 30, 2024, were $2,553.5 million, an increase of 8.9% over$ 2,344.7 million in the third quarter of 2023[91]. - BLS revenues for the three months ended September 30, 2024, were $737.7 million, an increase of 2.6% over$ 719.1 million in the third quarter of 2023[91]. - Revenues for the nine months ended September 30, 2024, increased by 6.0% to $9,679.5 million, driven by organic revenue growth of 3.4% and acquisitions net of divestitures contributing 2.4%[104]. - Dx segment revenues for the nine months ended September 30, 2024, were$ 7,558.1 million, reflecting a 6.9% increase from $7,068.3 million in the same period of 2023[104]. Organic Growth - The increase in organic revenue for the three months ended September 30, 2024, was 4.2%, driven by a 4.8% increase in the Company's organic Base Business[90]. - The organic growth for the nine months ended September 30, 2024, was defined as an increase in revenue excluding the impact of acquisitions, divestitures, and currency[89]. - The 4.5% increase in the Company's organic Base Business was partially offset by a 1.1% decrease in COVID-19 PCR testing[89]. - The Company experienced a 5.0% increase in organic revenue for Dx, driven by a 5.7% increase in the Base Business[91]. - The Company reported a 2.2% increase in organic volume for Dx for the three months ended September 30, 2024[91]. Costs and Expenses - Cost of revenues increased by 7.8% to$ 2,377.6 million for the three months ended September 30, 2024, compared to $2,205.6 million in the same period of 2023, with cost of revenues as a percentage of revenues rising to 72.4% from 72.2%[92][93]. - Selling, general and administrative expenses rose by 8.2% to$ 568.6 million for the three months ended September 30, 2024, compared to $525.5 million in the same period of 2023, with expenses as a percentage of revenues increasing to 17.3% from 17.2%[94]. - Cost of revenues for the nine months ended September 30, 2024, increased by 5.6% to$ 6,951.4 million, with cost of revenues as a percentage of revenues decreasing to 71.8% from 72.1%[106]. - Selling, general and administrative expenses increased to $1,634.8 million for the nine months ended September 30, 2024, from$ 1,488.5 million in 2023, reflecting a change of 9.8%[107]. - Amortization of intangibles and other assets rose by 15.8% to $186.0 million for the nine months ended September 30, 2024, compared to$ 160.6 million in 2023[107]. - Restructuring and other charges increased by 138.9% to $18.0 million for the three months ended September 30, 2024, compared to$ 7.5 million in the same period of 2023[96]. - Restructuring and other charges increased by 12.3% to $34.6 million for the nine months ended September 30, 2024, from$ 30.8 million in 2023[110]. Operating Income - Total operating income for the three months ended September 30, 2024, was $254.1 million, a slight increase of 0.7% from$ 252.3 million in the same period of 2023[102]. - Operating income for the Dx segment was $1,246.8 million, a slight increase of 0.7% from$ 1,237.5 million in the same period of 2023[121]. - BLS segment operating income increased by 14.2% to $328.2 million for the nine months ended September 30, 2024, compared to$ 287.2 million in 2023[121]. Cash Flow and Financing - Net cash provided by operating activities from continuing operations was $808.6 million for the nine months ended September 30, 2024, up from$ 622.7 million in 2023[122]. - Net cash used for investing activities increased to $1,157.2 million in 2024 from$ 816.2 million in 2023, primarily due to increased business acquisitions[125]. - Net cash provided by financing activities was $1,326.6 million for the nine months ended September 30, 2024, compared to net cash used of$ 1,112.5 million in 2023[126]. - On September 23, 2024, the Company issued $2,000.0 million in Senior Notes with interest rates of 4.35%, 4.55%, and 4.80%, maturing in 2030, 2032, and 2034 respectively[127]. - As of September 30, 2024, the Company had$ 1,517.3 million in cash and $1,000.0 million available under its revolving credit facility, which matures in 2026[128]. - The Company authorized a new share repurchase plan for up to$ 1,000.0 million, with a total outstanding authorization of $1,355.4 million as of September 30, 2024[129]. - For the nine months ended September 30, 2024, the Company paid$ 183.0 million in common stock dividends and announced a cash dividend of $0.72 per share for Q4 2024, totaling approximately$ 61.0 million[129]. Foreign Exchange and Interest Rate Management - Approximately 13.6% of the Company's revenues for the nine months ended September 30, 2024, were denominated in foreign currencies, impacting financial results due to exchange rate fluctuations[133]. - A hypothetical 10% change in average exchange rates would have impacted income before income taxes by approximately $20.8 million for the nine months ended September 30, 2024[134]. - The Company had 9 open foreign exchange forward contracts with a total notional value of approximately$ 382.0 million as of September 30, 2024[135]. - The Company entered into fixed-to-variable interest rate swap agreements for $500.0 million of 2.70% senior notes due 2031 to hedge against interest rate fluctuations[136]. - The Company expects to remain in compliance with all covenants associated with its existing debt obligations for the next twelve months[128]. Acquisitions and Investments - The Company plans to acquire a 15% minority interest in SYNLAB for approximately$ 155.9 million, expected to close in early 2025[125]. - The AR Facility with PNC Bank allows for purchases of accounts receivable up to $300.0 million, potentially increasing to$ 700.0 million, with $300.0 million received under this facility during Q3 2024[127].