Labcorp Holdings Inc.

Good day and welcome to LabCorp's Q3 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 then 1 on your telephone. We ask that you please limit yourself to one question. If anyone should require assistance during the conference, please press star then 0 to reach an operator. As a reminder, this call is being recorded. I would now like to turn the call over to Chas Cook, VP, Investor Relations. Please begin.

Thank you, Operator. Good morning, and welcome to LabCorp's third 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 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 the estimated 2021 guidance and the related assumptions, the projected impact of various factors on the company's businesses, operating and financial results, cash flows, and or financial condition, including the COVID-19 pandemic and general economic and market conditions, our responses to the COVID-19 pandemic, future business strategies, expected savings and synergies, and opportunities for future growth. 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 FCC. 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.

Thank you, Chas. Good morning, everyone. Thanks for joining us today. At LabCorp, we continue to leverage innovation, science, and technology to accelerate our strategy as we work to improve health and improve lives around the world. We serve as a trusted source of health information that helps customers advance healthcare and guide medical decisions. At the same time, we've remained focused on helping the world through the pandemic. In the third quarter, we delivered strong results. Revenue totaled $4.1 billion, adjusted EPS reached $6.82, and free cash flow was $650 million. As a result of our strong performance and our improved outlook, we're raising full-year guidance for revenue, adjusted EPS, and free cash flow. Glenn will cover those in more detail in a few minutes. The base business for both diagnostics and drug development performed well, with 10 and 22 percent growth respectively. We saw consistent recovery across both businesses. In diagnostics, we experienced broad geographic recovery in our base business and across our testing portfolio. Esoteric and routine testing demonstrated solid year-over-year growth for the quarter. The trailing 12-month net book-to-bill for drug development remains strong at 1.34. Drug development continues to recover with nearly 85% of sites now open. The business also saw decentralized trials increasing by more than 50% versus prior year. Now I'd like to turn our ongoing role in a pandemic response. LabCorp continues to support the fight against the pandemic in every way possible through both our diagnostic and our drug development capabilities. We experienced greater than anticipated COVID testing volumes in the quarter, although levels were below the same period last year. Time to results for COVID tests remained an average of one to two days, with results typically available within one day. PCR testing volume averaged 85,000 per day in the quarter, up from 54,000 per day in the second quarter. We averaged 114,000 tests per day in September, with volumes declining week over week since that time. We will continue to break out COVID testing from base business revenue and volume as it remains difficult to forecast. We will also continue to maintain high capacity levels to be prepared for potential future scenarios. We also had another successful quarter bringing new innovations to market. Notably, we recently received emergency youth authorization for a combined COVID and flu at home collection kit. With flu season upon us, the kit offers a convenient way to test for both viruses. This new offering will be available for adults and children ages two and over at no upfront cost for those who meet clinical guidelines. In addition, We collaborated with AstraZeneca on both a COVID prevention and treatment trial of its new long-acting antibody combination. In the trials, the investigational antibody combination demonstrated statistically significant benefit in preventing symptomatic COVID and in reducing severe COVID or death in outpatients with mild to moderate COVID, promising milestones in the development of new treatments. Also earlier this month, Merck filed for FDA emergency use authorization for its investigational oral antiviral medicine for the treatment of mild to moderate COVID in at-risk adults, a treatment that we supported through phase one, phase two, and phase three clinical trials. I'll now discuss progress on our strategy, and I'll start with oncology. The OmniSeq integration is going as planned, and their leading pan-cancer diagnostic capabilities extend our portfolio of solutions in this area. Additionally, we launched ClonoC, the first and only FDA-cleared test for monitoring residual blood cancer. As part of our efforts to address health equity issues, we recently partnered with the Community Clinical Oncology Research Network to assess social and economic impacts of cancer care disparities. And we also recently began work with Pillar Biosciences to enhance our next generation sequencing and plan to offer a specialty oncology assay. During the quarter, we advanced our commitment to intensifying our customer focus and embedding technology and data throughout our business. We acquired Ovia Health, a leading digital platform trusted by millions of women for family planning, pregnancy, and parenting support. Ovia Health extends our position as a go-to source for women's health insights through our deep expertise in diagnostic, genetic, and specialty testing. Additionally, we are working with several organizations to begin deploying LabCorp Diagnostic Assistant, which delivers comprehensive lab results and clinical insights directly to the point of care. We're also using technology to improve health for low-income individuals and families. We partnered with Medical Home Network to incorporate lab testing results into the records of Medicaid Safety Net patients. And lastly, through a collaboration with MediData, we're utilizing digital biomarkers with drug, vaccine, and device trials to enhance our decentralized clinical trialing offers. Pursuing opportunities with long-term high growth potential remains a focus. Our recent acquisitions, including OmniSeq, Myriad's Vector Test for Rheumatoid Arthritis, and Ovia Health, advance our position in key growth markets. We're making progress on our integrations, and we welcome new team members who join LabCorp. Our M&A pipeline remains robust. We expect continued activity on this front for the balance of fourth quarter and into the first quarter of 2022. Importantly, LabCorp continues to be recognized for the significant work we do. Just this month, we were named by Forbes as one of the world's best employers in 2021. In addition, Informa Pharma Intelligence selected LabCorp as a finalist for best contract research organization of the year. These recognitions are only possible thanks to our diverse and talented workforce, which is at the core of our ability to innovate. Lastly, I'd like to provide a brief update on the board and management team's ongoing assessment of the company's structure and capital allocation strategy. We remain committed to ensuring LabCorp is best positioned to unlock shareholder value while offering patients and customers the support that they've come to expect. Working closely with our advisors, we have made significant progress on assessing both our capital allocation and our structure, and as previously shared, we expect to update you on our conclusions in this quarter. To summarize, Our base business in both diagnostic and drug development had a strong third quarter and is well positioned for continued success. We remain dedicated to the fight against COVID, all while delivering on our strategy and carrying out our mission. I'm excited by the progress we've made and for what lies ahead. With that, Len will take you through the details of our third quarter results.