Labcorp Holdings Inc.

Ladies and gentlemen, thank you for standing by and welcome to the Last Course of America Q2 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Clarissa Willis. Vice President of Investor Relations. Thank you. Please go ahead, ma'am.

Thank you, operator. Good morning, and welcome to LabCorp's second quarter 2020 conference call. As detailed in today's press release, there will be a replay of this conference call available via telephone and Internet. With me today are Adam Schechter, Chairman and Chief Executive Officer, and Glenn Eisenberg, Executive Vice President and Chief Financial Officer. This morning, in the investor relations section of our website at labcorp.com, we posted both our press release and an investor relations presentation with additional information on our business and operations, which includes a reconciliation of the non-GAAP financial measures to the GAAP financial measures discussed during today's call. Additionally, we are making forward-looking statements. These forward-looking statements include, but are not limited to, statements with respect to expectations for 2020 and the related assumptions, including the projected impact of the COVID-19 pandemic on the company's businesses, operating results, cash flows, and or financial conditions, our responses to and the expected future impacts of the COVID-19 pandemic on our business more generally as well as on general economic, business, and market conditions. Each of the forward-looking statements is based upon current expectations and is subject to change based upon various factors, many of which are beyond our control that could affect our financial results. Some of these factors are set forth in detail in our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q and in the company's other filings with the SEC. We have no obligation to provide any updates to these forward-looking statements, even if our expectations change. Now, I'll turn the call over to Adam Schechter.

Thank you, Clarissa. Good morning, everyone. Thanks for joining us today. For more than 50 years, LabCorp has led through science, innovation, and technology. During the current pandemic, that leadership has been front and center when the world has needed us most. I continue to be impressed with how quickly our teams have rallied to confront each and every challenge put before them. And I want to thank our 65,000 employees, as their efforts have been heroic during this difficult time. During the second quarter, we delivered solid performance across the company, despite the impact of the pandemic. We delivered revenue of $2.8 billion, adjusted EPS of $2.57, and free cash flow of $272 million. We were encouraged to see steady recovery in our base business during the quarter for both diagnostics and drug development as people are starting to return to their doctors for testing and clinical trials activity is resuming, including those that are for COVID-19 related research. More specifically, although diagnostics revenue declined 3.9% compared to a year ago, in the month of June, Volumes were up year over year. COVID-19 related testing more than offset the decline in the base business. Our drug development business delivered a solid trailing 12 months book to bill of 1.32, and our backlog grew to $11.8 billion compared to $11.3 billion last quarter. We remain committed to bringing the full power of our combined diagnostics and drug development capabilities against this virus. We'll apply our scientific expertise and ingenuity across all aspects of testing, treatment, and vaccines. From the outset, our testing approach has been guided by three steadfast principles. First, build as much capacity as possible, as fast as possible, across as many platforms as we can. Just move. Second, no one should be advantaged or disadvantaged based upon ability to pay. We would not charge patients upfront out-of-pocket costs, and we will use the Medicare price for the PCR test for everyone. And finally, no one should be prioritized over anyone else. Tests will be performed as they are received. The only exception has been in response to the guidance to prioritize hospitalized patients. We will continue to work with the HHS or the CDC if additional priorities are identified with them in the future. These principles have guided all of our decisions and have kept us focused. Since being the first commercial lab to launch a PCR test in March, we have rapidly expanded both capacity and accessibility for testing at an astonishing pace. We have performed more than 8.5 million molecular tests with current capacity of tests per day and growing. Molecular testing is now processed in 16 labs, including our Covance Drug Development Central Lab in Indianapolis, a great example of the power of our combined business. We have significantly expanded accessibility of PCR testing to reach as many people as possible, including those in underserved communities. Our PCR tests are available through doctors, through hospitals, other healthcare providers, retail pharmacy chains, drive-thru testing sites, and through our website. We were the first lab authorized for at-home sample collection through our Pixel by LabCorp platform, and recently the first to offer a seamless digital service to help doctors electronically order a COVID-19 at-home sample collection for patients as appropriate. With the rising spread of COVID-19 in the U.S., building further capacity as fast as possible remains a priority and a challenge. In recent weeks, the rapid acceleration sample volumes had outpaced our capacity and increased time to deliver results to just over four days on average. We are now back to a two- to three-day turnaround time on average, with hospital inpatients even faster. We have aggressive efforts underway, despite continued constraints with supplies and equipment, to continue to grow testing capacity across multiple platforms as fast as we can. To help achieve that volume, we received an EUA for pool testing just last week. In addition to our PCR testing options, we also offer antibody testing. We began offering antibody testing in April and have performed more than 2 million for 300,000 tests per day. To make it easier for employers and large groups to be tested, we launched a finger-stick blood test that detects antibodies to the virus. As the economy reopens, we are also helping to guide return-to decisions. We launched LabCorp Employer Services, which provides customized solutions to guide strategies for returning to workplaces and to universities and we are connected with hundreds of employers. Beyond greater testing capacity and access, new treatments and ultimately a vaccine are critical, and LabCorp is playing an important role there too. Our enterprise-wide early response team continues to field significant volume of client requests to assist in the development of new COVID-19 treatments and vaccines. We are actively working with many clients supporting a significant number of opportunities across all business segments and phases of development, with most in early stages. We launched a neutralizing antibody test to assess the capability of the capacity of antibodies in patient plasma, which may help to accelerate the evaluation of vaccines. These achievements clearly demonstrate the depth of scientific delivery and technological innovations that are hallmarks of LabCorp, coming from both our diagnostics and drug development businesses. In addition to our critical work in the fight against COVID-19, we continue to advance our strategic priorities, which include the following. Leveraging the power of our combined capabilities. Leading an ecology. Integrating data, analytics, AI, and visualization across our business. putting customers at the center of all we do, and maximizing high growth opportunities. Many of the innovations I've just shared with you have helped to advance these priorities in meaningful ways. Importantly, oncology continues to be an area of focus. During the quarter, we launched a liquid biopsy test for patients with non-small cell lung cancer. It's available exclusively through LabCorp, This blood test is designed to detect actionable mutations in non-small cell lung cancer genes to help guide patient care decisions. We're also collaborating with Health EC on the development of an oncology care module that will help oncologists improve patient outcomes and achieve cost savings by making it easier for clinicians to assess and compare key data points and performance metrics. Also to support our priorities, We have been in several business development activities. We expanded our capabilities in hybrid and virtual trials by completing the acquisition of GlobalPair Clinical Trials. They are a recognized industry leader that provides decentralized and traditional clinical trial study services in more than 65 countries. Their therapeutic and operational expertise complements our clinical capabilities and will expand our ability to provide decentralized trial services. We also acquired RDL Reference Laboratory in June, a pioneer and leader for more than 40 years in rheumatologic and autoimmune testing, strengthening LabCorp's full range of testing services for complex autoimmune syndromes, which is important for rheumatologists, hospitals, health systems, and biopharma companies. And lastly, we acquired the ambulatory testing business and entered into a comprehensive laboratory services relationship with Franciscan Missionaries of Our Lady Health System, one of the largest health systems serving Louisiana and Mississippi. Though we cannot fully predict the future, we have confidence in our base business and in our ability to continue to aggressively scale COVID-19 testing. I am optimistic about the future, and I want to reaffirm that we are well positioned to continue to have a very significant impact to serve our customers and to drive long-term shareholder value. We will continue to do all that we can to win the fight against COVID-19. A holistic approach, inclusive of society's adoption of wearing masks, social distancing, and good hygiene practices is crucial. Testing and effective tracking and tracing are very important, and we need new treatments until a vaccine is widely and globally available. I'm absolutely confident that it can be done and that science will lead the way. Now I'll turn the call over to Glenn to give more specifics on our financial performance.