Labcorp Holdings Inc.

Thank you for standing by and welcome to the LabCorp Q1 2021 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, Chas Cook. Thank you. Please go ahead, sir.

Thank you, Operator. Good morning, and welcome to LabCorp's first quarter 2021 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 Schefter, Chairman and Chief Executive Officer, and Glenn Isenberg, Executive Vice President and Chief Financial Officer. This morning, in the investor relations section of our website at www.labcorp.com, We posted both our press release and an investor relations presentation with additional information on our business and operations, which include 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 our estimated 2021 guidance 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 condition, 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 our 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, Chas. Good morning, everyone. Thanks for joining us today. Our focus continues to be on bringing innovations to market that help improve people's health and lives. As you'll see from our first quarter results, doing so can generate strong growth and returns for our shareholders. I'm going to begin by covering our overall performance in the first quarter, which is very strong across all of our businesses. Revenue increased 47% versus the same period in 2020. While a good amount of growth can be attributed to COVID testing, we also delivered 15% year over year growth in our base business. In diagnostics and drug development, base business revenue increased 8 percent and 24 percent respectively from the prior year. Our drug development book-to-bill remains very strong and reached 1.47 for the trailing 12 months. Our adjusted EPS of $8.79 represents significant growth from last year. And we generated $1.1 billion of free cash flow in the quarter. That's up from $97 million in the first quarter of 2020. Our first quarter results and our improved outlook for the year enabled us to increase our full year guidance. We're also encouraged to see that patients continue to return to the pre-pandemic healthcare routines, as well as our pharmaceutical and biotechnology customers resuming their important research and development work. Our first quarter results demonstrate LabCorp's strong position in both diagnostics and drug development. We continue to play a central role in helping healthcare professionals assess a patient's health and deciding appropriate treatment options. We're also aiding in the development of treatments and cures that are critically important for the future. Now I'm going to turn to our response to COVID. As you know, LabCorp's capabilities in testing and drug development have been critical to the pandemic response. Our fight against this virus is not over, but we are thankfully seeing a reduction in cases from pandemic highs especially in the United States. And with that, our COVID testing volume has declined. While we can't fully predict how the pandemic will evolve as the year goes on, we are confident in our ability to leverage the considerable experience and expertise that we've gained over the last year to continue to build on our leading COVID testing and treatment capabilities. Our scientists are developing new testing solutions We have sufficient capacity to serve our customers, and our teams continue to support important COVID science and trials. We're also proud to be a part of getting people back to work, to school, and to life. Our employer services team offers testing and vaccination services to support workplace and community safety. Our recently announced offering for small businesses can help employers, including restaurants, reopen. Since the onset of the pandemic, we've been focused on serving all communities, including underserved populations. This quarter, we furthered that commitment in a partnership with the state of North Carolina to provide Pixel COVID Home Kits at no cost to underserved communities. Additionally, our Walgreens partnership expanded to include new integrated digital experiences available to all Walgreens customers and access to our Pixel Home Kit in over 6,000 locations. We're also helping patients securely access their results through their personal devices and apps like Common Health and Common Pass. Finally, we're continuing our important work for the CDC to genetically sequence approximately 5,000 virus samples every week in order to identify variants. Now I'll provide several updates to our strategy. In the quarter, as we delivered growth in our base business and we responded to the needs of our customers in a pandemic, we also made progress in advancing our strategy. In our central laboratory business, which supports trials across many therapeutic areas, we continue to automate our processes using robotics and proprietary analytics. Our investments in our central lab business will enable us to increase our productivity, create resiliency in our supply chain, and better meet the needs of our customers. We recently opened a new automated clinical trial kit production facility in Belgium. We expect that to eventually double our capacity. The facility will offer faster kit delivery, more flexible ordering, and reduced transportation costs for biopharma clients and clinical trial investigator sites across Europe, Middle East, and Africa. We're also advancing our position in oncology by strengthening our leadership team and investing in this important area where novel diagnostic testing and better treatments are needed around the world. Our science and technology continue to be critical to LabCorp's success and future growth. We make continuing strides during the first quarter in developing future tests for cancer, Alzheimer's disease, autoimmune, and liver disease. We also increase access to testing and trials through telemedicine, pharmacies, employers, home kits, and our decentralized clinical trial capabilities. In fact, our continued scientific and technology advancements were recognized by Fast Company, which named us one of the world's most innovative companies for 2021. This actually is great recognition for LabCorp's talented teams who are resilient, fast, and agile. It's a testament to our company's ability to adapt and thrive in a rapidly changing environment. In closing, As announced in March, the board and leadership team are undertaking a review of the company's structure and capital allocation strategy. The goal is to ensure we are best positioned to unlock shareholder value while continuing to support the patients and the customers who rely upon us around the world. This process will take time, and there will be no updates until a conclusion is reached. Our team is focused. We're focused on delivering on our mission of improving health and improving lives, which we believe drive strong shareholder returns. I want to thank our more than 70,000 employees around the world who continue to rise to the occasion. We look forward to brighter days ahead as vaccines continue to roll out, and I remain very confident in our strength across our businesses as we move forward. With that, I'll turn it over to Glenn.