Labcorp Holdings Inc.

Good day and thank you for standing by. Welcome to the Q4 and full year 2022 LabCorp 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 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Chas Cook, head of investor relations. You may begin.

Thank you, operator. Good morning and welcome to LabCorp's fourth quarter 2022 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 are making forward-looking statements. These forward-looking statements include, but are not limited to, statements with respect to the estimated 2023 guidance and the related assumptions, the proposed spinoff of the clinical development business, the 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, future business strategies, expected savings and synergies, including from the Launchpad initiative, acquisitions and other transactions, and opportunities for future growth. Each of the four looking statements is subject to change based upon various factors, many of which are beyond our control. More information is included 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.

Thank you, Chas. Good morning, everyone. It's a pleasure to be here with you today to discuss our fourth quarter results, as well as the progress that we've made towards our strategy. 2022 ended strong for LabCorp, with accelerated revenue growth in diagnostics and continued strong underlying fundamentals in drug development. Drug development continued to have a tough year-over-year comparison, mostly due to less COVID-related work. In 2022, we took decisive actions to navigate a challenging operating environment. We advanced our strategy with the announcement of the planned spin of our clinical development business, and we closed several important hospital laboratory partnerships. I'll now discuss our fourth quarter performance. In the quarter, Revenue totaled $3.7 billion, adjusted earnings per share was $4.14, and free cash flow was $536 million. The base business remained strong. On a constant currency basis, excluding COVID testing revenue, enterprise-based business revenue grew 6% in the fourth quarter versus prior year. Growth in diagnostics-based business revenue in the fourth quarter was strong, due to both routine and esoteric testing and revenue from the Ascension Partnership. COVID PCR testing volumes declined during the quarter as expected, totaling 1.4 million tests performed and averaging 16,000 per day. Looking forward, our diagnostic business will accelerate with 10.5 to 12.5% base business growth, benefiting by around five percentage points with a full year of our extension partnership. For drug development, fourth quarter base business revenue in constant currency declined 1% versus prior year. Early development and clinical development both grew, but were offset by lower central laboratory revenue due mostly to COVID-related work. Drug development ended the quarter with a strong trailing 12-month book to bill of 1.27. Looking forward, We expect the momentum to continue in drug development orders, and we expect that site enrollment and kids' return will continue to increase throughout the year. We also anticipate the drug development business to return to 5% to 7% growth, with a stronger second half than first half due to early development and the annualization of an FSP contract loss. Finally, in the quarter, The Board authorized a $1 billion increase to the company's share repurchase program, bringing our remaining total share repurchase authorization to $1.5 billion. Glenn will provide more detail on our quarterly results and will review full year 2023 guidance in just a moment. Moving now to an update on the planned spin of our clinical development business. We have been pleased with the positive response and we remain on track to complete the SPIN in mid-2023, subject to satisfying certain customary conditions. Recently, we unveiled Fortria as the name of the clinical development business post-SPIN. You can learn more by visiting fortria.com. Also in January, Tom Pike joined LabCorp as President and CEO of our clinical development business. Tom will serve as Chief Executive Officer and Chairman of the Board of Fortria upon completion of the spend. Tom brings significant CRO experience, including serving as CEO of a public CRO. He has worked with many of our customers and he knows the business well. We welcome Tom and look forward to working with him as we continue making progress towards the completion of the spend. Upon completion through a tax-free transaction, we will have two strong independent companies LabCorp, and Fortria, which will emerge from the transaction with the ability to better meet customer needs, to drive sustainable and profitable growth, and deliver attractive shareholder returns. In the coming months, we plan to announce the board of directors of Fortria, including the lead independent director and other members of the executive leadership team. We also intend to host an analyst day in advance of the spin, and I look forward to working with Tom on timing. I'll now move to our enterprise strategy. We made significant advances on our strategy in 2022. We accelerated and closed several hospital and health system partnerships and acquisitions during the year. Most recently, we completed the integration of certain Ascension assets and operations. LabCorp now provides laboratory management services for nearly 100 hospitals across the Ascension hospital system. We are pleased with the smooth transition and we want to thank our partners at Ascension for enabling our teams to help deliver the best patient care possible. In addition to Ascension, we entered strategic relationships with RWJBarnabas Health, Atlantic Care, Prisma Health, and St. Dominic's during the year. The pipeline for hospital and local laboratory acquisition and investment is robust and will be a key area of opportunity for growth in 2023 and beyond. We also made progress in using digital technology and data to deliver better outcomes for patients. By significantly improving our web, mobile, and digital channels, we've made it easier for customers to access critical data and health information. Using digital technology and artificial intelligence, we are reimagining our result reports to provide deeper insights, scientific expertise, and clinical information to guide patient care. Additionally, we're encouraged by increased customer adaption of Lobcorp's Diagnostic Assistant, a tool that equips physicians with the information they need to improve care. Also, our investment in call center automation is improving the customer experience by enabling patients and providers to get answers faster through self-service features. Turning to oncology, we continue to expand our oncology capabilities to serve clinicians and drug development customers. In the fourth quarter, we launched a liquid biopsy test called LabCorp Plasma Focus. This test is used to match cancer patients with FDA-approved therapies using the patient's circulating tumor DNA taken from a blood draw. This is the first new product stemming from LabCorp's acquisition of personal genome diagnostics in 2022. Today, LabCorp offers customers and patients access to the most comprehensive oncology portfolio in the market. Our teams are evaluating and executing on growth opportunities in areas such as neurodegenerative, autoimmune, and liver disease, as well as cell and gene therapy and more. In 2022, our team supported over 5,000 clinical trials, worked with over 90% of new FDA approvals, and launched over 130 new tests. In the area of neurodegenerative disease, for example, we launched new tests to assist in diagnosis and treatment of Alzheimer's multiple sclerosis, and Parkinson's disease. We anticipate more innovative launches in 2023. Finally, we made progress in our direct-to-consumer business. In 2022, we introduced LabCorp OnDemand, a platform aimed at providing consumers with easy and convenient access to our leading diagnostic tests. We now offer over 45 tests that cover over 100 biomarkers to help consumers monitor health, stay current with wellness screening, plan for families, and manage a broad range of chronic health conditions. The progress we made this year is a direct result of the commitment of our employees who fuel our confidence in the outlook for 2023. We are recognized by Forbes on its list of the world's best large employers in 2022, and we also earned a top score in the 2022 Disability Equality Index. Attracting and retaining the best talent is key to our success, and we remain focused on being an employer of choice and destination for talent. As I look to 2023, I am optimistic about the growth and strategic opportunities before us. Our business fundamentals remain strong, and we are well positioned for the future. With that, I'll turn the call over to Glenn.