Labcorp Holdings Inc.

Welcome to the LabCorp Holdings, Inc. second 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 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 of Investor Relations. Please go ahead.

Kristin O'Donnell Thank you, operator. Good morning and welcome to LabCorp's second quarter 2024 conference call. As detailed in today's press release, there will be a replay of this conference call available 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 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 completed 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 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 Schechter.

Thank you, Kristen, and good morning, everyone. It's really a pleasure to be here with you today. We look forward to sharing our strong results for the quarter, our updated 2024 outlook, and progress on our strategy. Let's turn now to our financial results. In the second quarter, revenue totaled $3.2 billion. Adjusted earnings per share was $3.94. And free cash flow from continuing operations was $433 million. Enterprise revenue increased 6% compared to the second quarter of 2023. Diagnostics revenue was up 8% driven by strong organic growth and acquisitions. Central laboratories growth was strong at 9 percent, partially offset by decline in early development of 15 percent, resulting in biofarmer laboratory services up 1 percent. The book-to-bill for early development was strong, with higher orders and lower cancellations, and we expect the business to be back to growth towards the end of the year. Adjusted EPS were up 15%, and enterprise margins were up slightly. Margins in biopharma increased, while margins in diagnostics were flat, which reflects the impact of a cyber event that affected a large partner. We continued to execute well on our strategic priorities through the following. Being a partner of choice for health systems and regional and local laboratories, harnessing science and innovation to develop and launch new tests in important therapeutic areas, and by utilizing data and technology to bring important services and capabilities to our customers. We are confident in the success of LabCorp in the months and quarters ahead, with strong growth in diagnostics and biopharma laboratory services. Glenn will provide more details on our results in 2024 outlook in just a moment. The 2024 outlook reflects the anticipated close of Invitae next week. In the second quarter, LabCorp continued to advance in our strategic growth areas. First, we continued to maintain a leadership position as a partner of choice for health systems and regional local laboratories. Following the quarter end, LabCorp entered into a comprehensive strategic collaboration with Naples Comprehensive Healthcare, located in Florida, to manage its inpatient lab operations and to serve as a primary lab later this summer. We're also on track to close the previously announced acquisition of select assets of bioreference health diagnostics business by the end of the third quarter. We continue to have a very strong business development pipeline, and we look forward to sharing more of those details in the future. We also announced the acquisition of select assets of Invitae, a leading medical genetics company. We're excited about Invitae's complimentary cutting-edge science, genetic testing solutions, and technology, which aligns strategically with our focus on specialty testing and oncology. Together, we will work with our customers to utilize genetic insights to develop new treatments and to deliver personalized care in oncology and in select rare diseases. Upon closing the transaction, we anticipate the first 12 months will provide revenue of $275 to $300 million. And the first year will be diluted by approximately 3%. We've included $120 million of revenue in 2024 and the vast majority of dilution in 2024. We expect it to be a credo for 2025 with top-line growth of more than 10% per year. We have a very strong integration team in place with members from both LabCorp and Invitae. We will move quickly and thoughtfully to reduce costs without impacting the great science and a great customer experience that Invitae provides today. Also, we anticipate Invitae will benefit from the full scale and breadth of Labcorp's platform as a global leader in laboratory services. We have great respect for Invitae's capabilities and team, and we look forward to welcoming our new colleagues to Labcorp. As we advance our growth strategy, we continue to make great strides in expanding our testing solutions. In April, LabCorp received FDA approval as a humanitarian use device for its companion diagnostic to determine patient eligibility for treatment with Pfizer's gene therapy for hemophilia B. This is expected to expand LabCorp's leadership in precision medicine and in gene therapy. We introduced a first trimester screening test to assess preeclampsia risk during pregnancy. It is the only test of its kind available in the United States, available for order by physicians for their patients, including those with a low to average risk for preeclampsia or first-time pregnancies. Roughly one in 25 pregnancies in the United States is affected by the condition. And with this test, LabCorp is the only lab that can detect preeclampsia risk across all trimesters of pregnancy. We announced several new strategic service offerings with our precision oncology portfolio, extending our leadership in oncology. Our comprehensive genomic profiling service, LabCorp Tissue Complete, is now available through our laboratory network centers in Geneva and Shanghai to support global clinical trials. We've also added OmniSeq Insight circulating tumor DNA to our portfolio of comprehensive genomic profiling services. Together, these solutions support customers as they advance their therapeutic development programs. Lastly, we continue to expand LabCorp OnDemand, our consumer-initiated testing offering, with the launch of several new tests in May and June, including standard drug, complete drug, comprehensive testosterone, HIV, and complete heart health. We also continue to focus on creating easy-to-use digital technology solutions for our customers. In the quarter, we launched a suite of solutions referred to as Global Trial Connect, aimed at increasing the speed and efficiency of clinical trials. The solution differentiates LabCorp in the market and has been well received by our customers. In closing, I'd like to thank our team of more than 65,000 employees around the world. Together, we are focused on our customers, achieving our financial commitments, and making meaningful progress on our strategy. We have strong momentum and significant growth opportunities ahead of us. With that, I'll turn the call over to Glenn.