Labcorp(US:LH)2023-02-28 19:06Financial Performance - The Company's revenues for the year ended December 31, 2022, were $14.9 billion, a decrease of 7.7% from $16.1 billion in 2021, primarily due to a 7.5% decrease in organic revenue and a 1.0% unfavorable foreign currency translation [330]. - Organic revenue decreased by 7.5%, driven by a 10.0% decline in COVID-19 Testing, partially offset by a 2.5% increase in the Company's organic Base Business [330]. - Total operating income for the company was $1,773.9 million in 2022, down 45.6% from $3,259.5 million in 2021 [359]. - Dx segment operating income decreased by 36.8% to $2,025.5 million in 2022 from $3,205.6 million in 2021, with an operating margin decline of 890 basis points to 22.0% [359]. - DD segment operating income fell by 9.7% to $801.1 million in 2022 from $887.1 million in 2021, primarily due to reduced COVID-19 testing and inflationary costs [360]. - Net cash provided by operating activities was $1,955.9 million in 2022, a decrease of $1,153.7 million from $3,109.6 million in 2021, mainly due to lower cash earnings from decreased COVID-19 revenues [364]. - Income tax expense for 2022 was $302.0 million, a decrease from $747.1 million in 2021, with an effective tax rate of 19.1% compared to 23.9% in the prior year [357]. Shareholder Returns - The Company initiated a dividend program in Q2 2022, with total dividend payments for 2022 amounting to $195.2 million, and authorized a $2.50 billion share repurchase program, repurchasing $1.1 billion in 2022 [332]. - The company repurchased 5.6 million shares at an average price of $233.48 for a total cost of $1,100.0 million in 2022 [373]. - The company paid $195.2 million in common stock dividends for the year ended December 31, 2022 [374]. Business Strategy and Operations - The planned spin-off of the Clinical Development and Commercialization Services (CDCS) business is targeted for mid-2023, creating two independent companies focused on sustainable growth [335][336]. - The Company is committed to investing in R&D and innovation to develop diagnostic advancements in key clinical areas, including oncology and autoimmune diseases [339]. - Total volume measured by requisitions decreased by 7.5%, with organic volume down 8.4% and a 0.8% contribution from acquisitions [345]. - The Company expects continued decline in demand for COVID-19 Testing in 2023, not predicted to match 2022 levels [341]. Impairments and Expenses - The Company recorded goodwill and other asset impairments of $271.5 million in 2022, primarily due to a $260.0 million goodwill impairment in the early development reporting unit [350]. - Selling, general and administrative expenses increased to 13.4% of revenues in 2022, up from 12.1% in 2021, primarily due to lower margin COVID-19 Testing and higher personnel costs [349]. Cash Flow and Investments - Net cash used for investing activities increased to $1,652.2 million in 2022 from $884.6 million in 2021, driven by a $667.1 million increase in cash paid for acquisitions [365]. - Capital expenditures were $481.9 million in 2022, representing 3.2% of revenues, with expectations to increase to approximately 3.5% in 2023 [365]. - Cash and cash equivalents decreased to $430.0 million at December 31, 2022, down from $1,472.7 million at the end of 2021 [363]. Risk Management - The Company utilizes a controlled risk management program to address exposure to market risks, including foreign currency exchange and interest rates [409]. - The Company manages interest rate risk through a mix of fixed and variable rate debt, including interest rate swaps [413]. - The Company entered into fixed-to-variable interest rate swap agreements for the 2.70% senior notes due 2031 with an aggregate notional value of $500.0 million [414]. Foreign Currency Exposure - Approximately 14.7% of the Company's revenues for the year ended December 31, 2022, were denominated in currencies other than the U.S. dollar [410]. - A hypothetical change of 10% in average exchange rates would have impacted income before income taxes for 2022 by approximately $26.9 million [410]. - The Company had 27 open foreign exchange forward contracts with a notional value totaling approximately $629.5 million as of December 31, 2022 [411]. - The Company is party to USD to Swiss Franc cross-currency swap agreements with a notional amount of $600.0 million, maturing in 2024 and 2025 [412].