Labcorp Holdings Inc.

Good day, and thank you for standing by. Welcome to the Laboratory Corporation of America Holdings' first quarter 2024 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Kristen O'Donnell, Vice President, Investor Relations. Please go ahead.

Thank you, Operator. Good morning and welcome to LabCorp's first quarter 2024 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 investor relations presentation with additional information on our business and 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 and financial results, cash flows and or financial condition, 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 acquisitions and other strategic transactions and partnerships, the planned holding company reorganization 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 SEC. We have no obligation to provide any update to these forward-looking statements, even if our expectations change. Now, I'll turn the call over to Adam Schechter.

All right. Thank you, Kristen. Good morning, everyone. It's a pleasure to be here with you today. We look forward to sharing our first quarter 2024 results and progress on our strategy. But before I do that, I want to address the recent announcement that LabCorp was selected as a winning bidder for select assets of Invitae. This transaction will advance our strategy to launch and scale specialty testing in areas such as oncology and rare diseases. These are strong assets in important disease areas, and they fit strategically with our focus on specialty testing. Invitae has strong science, a great MGS platform, and strong talent. Upon completion of the transaction, LabCorp expects approximately $275 to $300 million in annual revenue with the vast majority in specialty areas such as oncology and rare diseases. The purchase price for the transaction is $239 million. We expect the transaction to be dilutive to adjusted earnings by approximately 2 to 3 percent in the first full year. We expect the transaction to be accretive in year two and to exceed our cost of capital in year three. Now I'll move to the quarter. LabCorp delivered strong top line performance in the first quarter, driven by growth in both of our businesses, diagnostic laboratories and biopharma laboratory services. We continue to execute well on our strategic priorities through being a partner of choice for health systems, and regional local laboratories through launching key new tests in important therapeutic areas and by harnessing science, technology, and innovation to bring new tests, services, and capabilities to our customers around the world. Let's turn now to our first quarter financial results. In the first quarter, revenue totaled $3.2 billion and adjusted earnings per share was $3.68. Enterprise revenue for the quarter increased 5% compared to the first quarter of 2023, with diagnostics revenue up 4% and biopharma revenue up 8%. Biopharma's growth was driven by strength in central laboratories, partially offset by early development research laboratories. Enterprise-based business margins are up compared to the prior year. Higher margins in biopharma were partially offset by diagnostics margins. We expect margins in both businesses to be up for the full year. The overall strength in our business enabled us to narrow the range and raise the midpoint of our EPS full year guidance to $14.90, despite a negative impact from currency. Glenn will provide more details on our results and 2024 outlook in just a moment. In the first quarter, LabCorp advanced key growth initiatives that support our strategy. We began 2024 with positive momentum, reinforcing our position as a partner of choice for health systems and regional local laboratories. We continue to be active on the acquisition front. We closed three transactions in March, including health system agreements with Baystate Health in Massachusetts and Providence in California, and a regional lab acquisition in California. In March, we also entered into an agreement to acquire select assets of bioreference health diagnostic business. This transaction will increase access to LabCorp's high-quality clinical laboratory services. These new assets are focused on clinical diagnostics and reproductive and women's health. Our business development pipeline remains strong. Building on the success of our acquisitions and strategic partnerships, we continue to incorporate the power of science, technology, and innovation across the organization. This commitment is demonstrated by how we've expanded our test menu this quarter. We advanced our leadership in neurodegenerative disease with the launch of our PTAL 217 blood-based biomarker test that aids in the diagnosis of Alzheimer's disease, and the monitoring of patients undergoing treatment with new therapies. It's also available to be used in clinical trials. In addition, earlier this month, we announced the launch of a GPAT blood biomarker test for the early detection of neurodegenerative diseases and neurological injuries. Following the launch of our ATN profile last fall, these two significant advances in the company's testing portfolio extend our leadership in a rapidly accelerating field of blood-based biomarkers for neurodegenerative diseases. We continue to accelerate our leadership in oncology. We launched LabCorp Plasma Detect, the first clinically validated whole genome sequencing MRD solution for early stage colon cancer to identify patients at increased risk of reoccurrence after surgery or adjuvant chemotherapy. LabCorp Plasma Detect, developed by our PGDX laboratory, is a significant achievement that enhances our liquid biopsy portfolio and strengthens our position at the forefront of driving better patient outcomes in oncology. We introduced a weight loss management test portfolio in the quarter, a suite of tests that supports individuals and physicians with accessible and convenient testing options to guide weight loss management decisions and treatment, including lifestyle modifications, GLP-1 medications, or bariatric surgery. LabCorp OnDemand introduced a magnesium test and a micronutrient test to measure key vitamin and mineral levels to support individual wellness. We also announced an STI test for Mgen. Mgen can be as widespread as chlamydia, and gonorrhea. This test includes a reflex to identify resistance to macrolide, a commonly used treatment addressing high antibiotic resistance and treatment failures associated with the infection. In April, we received emergency use authorization from the FDA for our Mpox PCR test, a home collection kit. The test is the first at-home collection kit authorized by the FDA to aid in the diagnosis of infection with Mpax. Physicians can order for patients 18 years of age or older who are suspected of Mpax infection. In addition, we launched our electronic requisition digital capability to help biopharma customers and investigator sites improve protocol compliance by reducing errors, queries, holds, and data revisions. Earlier this month, we released our latest corporate responsibility report, which highlights the significant progress that we're making as we pursue our mission to improve health and to improve lives in a sustainable way. We invite you to take some time to review the report that can be found on our investor relations website. As part of our earnings release this morning, we also announced our intention to create a new holding company named LabCorp Holdings Incorporated. To more closely align with our brand, and better position us as a global organization. I'd like to thank our team of more than 67,000 employees around the world. Their ongoing commitment has once again earned us recognition on Fortune's World's Most Admired Companies list. We're extremely proud of this recognition. In summary, we continue to make progress against our strategy and to achieving both near-term and longer-term goals. We remain focused on our position as leaders in science, technology, and innovation, and driving further value for our customers, our shareholders, and our employees. With that, I'll turn the call over to Glenn.