Labcorp Holdings Inc.

Ladies and gentlemen, thank you for standing by and welcome to the LabCorp second quarter 2021 earnings conference call. At this time, all participant lines 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 then one on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then zero. I would now like to hand the conference over to your host today, Chas Cook, Vice President, Investor Relations. Please go ahead.

Thank you, Operator. Good morning and welcome to LabCorp's second 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 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 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're making forward-looking statements. These forward-looking statements include, but are not limited to, statements with respect to the 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 our 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 four 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 four looking statements, even if our expectations change. Now, I'll turn the call over to Adam Schechter.

Thank you, Chas, and good morning, everyone. It's a pleasure to be with you this morning. We remain committed to using our extensive diagnostics and drug development capabilities to advance our mission of improving health and improving lives around the world. Innovation, technology, and science remain at the forefront of all we do to benefit patients, providers, and shareholders. To that end, the second quarter of 2021 was very strong across both diagnostics and drug development. Revenue totaled $3.8 billion, a 39% increase from the same period in 2020. Much of this growth was driven by the continued strength in our base businesses. Adjusted EPS reached $6.13 versus $2.50 from the prior year. Pre-cash flow was $390 million in the quarter versus $272 million in 2020. The strong performance in the quarter and the improved outlook for the year result in us raising full-year guidance for revenue, EPS, and cash flow. Glenn will review the new guidance with you in a moment. Our base business continued to recover and grew 51 and 32 percent for diagnostics and drug development, respectively. The drug development trailing 12-month book-to-bill remained strong at 1.41. This performance was driven by patients and providers returning to routine healthcare checkups and pharmaceutical clients resuming their important research activities at an even faster pace than expected. I'll now turn to the company's continued response to the pandemic. Our organization's collective strength and scale have allowed us to play a substantial role in the fight against COVID. Although much progress has been made, it is clear that there's still a lot of work to do in the US and around the world. LabCorp remains vigilant and stands ready to help wherever and however we can, as we have since the earliest days of the pandemic. To date, LabCorp has performed over 50 million COVID tests. In the quarter, a steady decline in positive cases drove an overall decrease in COVID testing, with an average of 54,000 PCR tests per day. The month of June was lower than the quarter average. However, testing started to increase again in recent weeks. We continue to monitor developments in the United States and around the world, and are watching the Delta variant closely. To support the CDC in tracking and monitoring the Delta and other variants, this quarter we announced an extension to our contract to provide genetic sequencing from positive PCR test samples. It is difficult to predict exactly what COVID testing demand will look like for the remainder of the year as variants continue to spread and we enter the flu season. Therefore, we will maintain our ability to scale testing capacity quickly and expand access for communities and individuals in need. At the same time, our drug development teams continue to be involved in many studies on potential vaccines and treatment for COVID around the world. Our new automated clinical trial kit production facility in Belgium is up and running, which will double our automated kit production capacity over time. This will allow us to better serve our pharmaceutical clients and study investigators in Europe, the Middle East, and Africa. Other COVID-related actions this quarter include the collaboration with the U.S. Department of Health and Human Services to raise awareness of monoclonal antibody therapies. And at state and local levels, we expanded notable partnerships in places like Massachusetts and North Carolina to facilitate mass vaccination programs and expand access to at-home test collections for underserved populations. In addition, we continued our collaboration with Walgreens. Pixel by LabCorp test kits are now available in 6,000 Walgreens stores and through on-demand delivery services like DoorDash and Instacart. Importantly, our scientists use data available through our robust testing infrastructure to contribute to essential research. In the quarter, we released the results of one of the largest COVID-related studies of its kind, which analyzed the tests of more than 39,000 patients. This offered useful detail on the body's reaction to natural infection as we worked to learn more about the nature of the immunoresponse. We are also building upon our portfolio of serology testing, including semi-quantitative analysis and T cell memory. We remain proud of our significant contributions towards stemming the spread of COVID and in the development of treatments and vaccines, all of which are intended to assist people to safely go back to work and normal life activities. Now I'll provide updates to our strategy. We are focused on leveraging our industry-leading positions to drive growth, enhance customer and patient experiences, and advance science and healthcare. We seek to intensify customer focus and integrate data and digitalization across our business. As part of that objective, we announced plans to add a state-of-the-art bioanalytical laboratory in Singapore, expanding our global drug development offering and elevating our clients' experience through faster turnaround times in Asia. In the United States, we continue to improve our patients' experience in our service centers, focusing our efforts to create a seamless digital journey from appointment scheduling to result delivery. With an average of 3 million patients served in a given week, we are striving to enhance their experience using our digital channels. In the first half of the year, users of our website totaled 22 million, a 20% increase over last year. And adoption of our patient application is growing, approximately 300,000 users per month. I'll now turn to oncology. we made significant strides in oncology, led by a highly trained, multidisciplinary team. We launched several new oncology tests, including OmniSick Insight, a pan-cancer tissue-based sequencing test for patients with advanced solid tumor cancers. The test, specific to an individual's molecular and immune profile, provides clinical decision support that helps medical professionals identify the most appropriate treatment options for a patient as well as to identify potential eligibility for clinical trials. We also launched a companion diagnostic test to identify patients with non-small cell lung cancer who are eligible for a new treatment option developed by Amgen. This important test helps physicians identify patients who may benefit from the treatment, promoting personalized precision medicine. Our work in oncology has created meaningful business relationships across the healthcare ecosystem that we will continue to enhance and grow. An important opportunity presented itself with OmniSeq, a longtime oncology partner and a pioneer in solid tumor profiling. As announced today, we recently exercised our option to acquire the remaining stake in the company. Adding OmniSeq enhances our integrated oncology platform, expanding LabCorp's extensive oncology diagnostics testing portfolio, and opening the door for more patient participation in clinical trials. We continue to concentrate on identifying and engaging in high growth opportunities. We announced we're acquiring an autoimmune business unit from Myriad Genetics, including Vectra, rheumatoid arthritis assay. This will strengthen our position in RA, which the CDC predicts will impact roughly 25% of adults in the United States by 2040. Additionally, we agreed this week to acquire the outreach laboratory business of Minnesota-based North Memorial Health and will provide management services to its inpatient lab. Our pipeline of acquisition and investment targets is robust, and we believe there are meaningful business development opportunities this year to enhance growth and our strategy moving forward. Finally, I want to touch briefly on the board and management team's ongoing review of Labcorp's structure and capital allocation strategy that we announced in March of this year. Working closely with our advisors, we are making progress to identify the best path forward to position Labcorp to unlock shareholder value while continuing to support our patients and customers around the world. Though we won't have further updates today, We look forward to sharing our conclusions once our review is complete. We expect to do so in the fourth quarter. In conclusion, the quarter was strong across both diagnostic and drug development businesses. Significant progress was achieved on our strategy and our mission to improve health and improve lives of people around the world. And we will continue to support efforts to stem COVID however we can. I am very optimistic about the future growth opportunities before us and our continued success. I want to thank all of our colleagues around the world for their tireless efforts to help center COVID while also maintaining focus on our strategy and our underlying business. Now I'll turn the call over to Glenn to review more details of our second quarter performance.