Labcorp Holdings Inc.

Good day and welcome to the Laboratory Corporation of America Holdings' fourth quarter and full year 2023 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, 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, Kristin O'Donnell, Vice President Investor Relations. Please go ahead.

Thank you, operator. Good morning and welcome to LabCorp's fourth quarter 2023 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 operations, which include a reconciliation of the non-GAAP financial measures to the most comparable GAAP financial measures, both of which are 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 2024 guidance and the related assumptions, the recently completed spinoff of Fortria Holdings Inc., the impact of various factors on the company's businesses, operating at financial results, cash flows, and or financial conditions, including the COVID-19 pandemic and global economic and market conditions, future business strategies, expected savings, benefits, and synergies from the Launchpad initiative and from other acquisitions, and other strategic transactions and partnerships, and opportunities for future growth. Each of the forward-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 Schechter.

Thank you, Kristen. Good morning, everyone. It's a pleasure to be with you today to discuss our fourth quarter 2023 results and our guidance for 2024. LabCorp delivered a strong finish to what was a transformational year for the company. Looking back, we executed well on our strategic priorities. We successfully integrated the lab operations of Ascension, one of the largest health systems in the United States. We completed the spin of Fortria, our former clinical development and commercialization services business. We announced six new laboratory partnerships, reinforcing our position as a partner of choice for health systems and regional local laboratories. And we launched new innovative tests in our focus specialty areas across the business. As we begin 2024, we have momentum in both diagnostic laboratories and biopharma laboratory services. We expect to drive continued growth by expanding our base business, finalizing and integrating acquisitions and partnerships, by advancing our position in science, technology, and innovation. We will continue to focus and lead in oncology, women's health, autoimmune disease, and neurology. Now turning to the fourth quarter results. LabCorp performed well driven by strong base business revenue growth in both diagnostics and biopharma. In the fourth quarter, revenue totaled $3 billion. Adjusted earnings per share was $3.30. And free cash flow from continuing operations excluding spin-related items was $422 million. Enterprise revenue increased 4% compared to fourth quarter of 2022, with diagnostics growing 3%, led by base business growth of 8%, and biopharma growing 7% due to strong performance in central laboratories more than offsetting softness in early development research laboratories. Enterprise base business margin was flat compared to the prior year, despite being constrained by the mixed impact from recently closed hospital partnerships. Looking forward to 2024, We expect strong enterprise revenue growth of 4.7% to 6.5%. We expect margin improvement across both diagnostics and biopharma. And we expect adjusted EPS of $14.30 to $15.40. An implied growth rate at the midpoint of 10%. We also expect free cash flow to grow in excess of earnings. In a moment, Len will provide more details on our results and our 2024 guidance. Turning to our enterprise strategy, in the fourth quarter, we continue to see positive momentum from our health systems and regional local lab partnership strategy. LabCorp continues to demonstrate that we are a partner of choice with several new health systems and regional local laboratory relationships. This is primarily due to our leadership in science and technology, our dedication to patients, and our commitment to quality and efficiency. We announced a strategic partnership with Baystate Health in Western Massachusetts to acquire its outreach laboratory business and select operating assets. We completed the acquisition of select assets from Legacy Health. LabCorp now manages Legacy's inpatient hospital laboratories, serving patients throughout Oregon and Southwest Washington State. and we entered into an agreement to acquire ambulatory lab draw stations and a stat lab from Providence Medical Groups in California. Looking ahead, our M&A pipeline is robust, and we remain focused on integrating and expanding our health system and regional local laboratory partnerships. These partnerships are typically accretive in the first year, with margins expanding over time during integration, and they return their cost of capital within just a few years. Turning now to our progress in science, technology, and innovation. In the fourth quarter, Over Your Health by LabCorp announced it will offer a fertility and family building benefit. This benefit is the first of its kind that will allow employers and health plans to offer customizable solutions to employees and members to support their family building needs. LabCorp announced the availability of an ATM profile the first blood-based test that combines three well-researched blood markers to identify and assess biological changes associated with Alzheimer's disease. Last month, we announced the launch of the new FDA-cleared blood test for risk assessment and clinical management of severe preeclampsia. LabCorp and Hoftone, in fact, announced a strategic collaboration to advance decentralized clinical trial capabilities for pharma, biotech, and medical device sponsors. The collaboration is expected to increase patient diversity and inclusion, to decrease site burden, and to accelerate enrollment in clinical study timelines. Finally, for our central laboratory customers, we introduced a new sample trapping application to provide enhanced near real-time visibility of specimens within the central lab. This phase is the first of many that will be launched for LabCorp customers. The application allows users to view events in the central lab specimen sample journey for each assigned protocol and to customize how their data is structured. Turning now to the year ahead, we are focused on advancing our growth drivers that outline in our September 2023 Investor Day. We plan to continue to be a partner of choice for health systems and regional local laboratories. We will continue to develop, license, and ultimately scale specialty testing, including companion diagnostics. We will work to bring our specialty testing to other parts of the world, which increases our global reach by leveraging our scale. For example, we're enabling our central laboratories in China and Geneva to perform liquid biopsy tests for clinical trials. And we are well positioned for long-term success in cell and gene therapy and consumerism. We see tremendous opportunity for growth as we continue to focus on bringing new innovation, technology, and products to market. In closing, 2023 was a strong and transformative year for Lapwork. We executed our strategy at exceptional scale and pace. I want to thank our more than 60,000 employees for the hard work and dedication to customers around the world. This enabled us to enter 2024 with considerable momentum that we intend to capitalize on to drive further value for our customers, our shareholders, and our employees as we pursue our mission to improve health and to improve lives. With that, I'll throw the call over to Glenn.