Labcorp Holdings Inc.

Good day and thank you for standing by. Welcome to LabCorp's fourth 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 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, today's conference is being recorded. I would now like to hand the conference over to your speaker today. Kristen O'Donnell, please go ahead.

Thank you, Operator. Good morning and welcome to LabCorp's fourth 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 Julia Wang, 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 most comparable GAAP financial measures, both of which are discussed during today's call. Please see the use of adjusted measures section in our press release and investor relations presentation for more information regarding our use of non-GAAP financial measures. Additionally, we are making forward-looking statements. These forward-looking statements include, but are not limited to, statements with respect to the estimated 2025 guidance and the related assumptions, the spin-off of Fortria Holdings Inc., the projected impact of various factors on the company's businesses, operating and financial results, cash flows and or financial condition, including global economic and market conditions, future business strategies, expected savings, benefits, and synergies from the Launchpad Initiative, and from acquisitions and from 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 SEC. We have no obligation to provide any updates to these forward looking statements, even if our expectations change. Now we'll turn the call over to Adam Schechter.

Thank you, Kristen. Good morning, everyone. We appreciate you joining us as we review our 2024 performance and share our outlook for 2025. Today, I'm also joined by Julia Webb. Julia joined us as Executive Vice President CFO this past December. As you know, Julia succeeded Glenn Eisenberg following his retirement announcement. Julia and I have hit the ground running, and Julia's experience in both diagnostics and pharmaceuticals, combined with her strong financial expertise, have already been very valuable to LabCorp. In 2024, our market-leading diagnostics and biopharma laboratory services businesses made meaningful advances in our strategy through organic growth, transformative acquisitions, and through continued commitment to science, innovation, and technology. Looking back in 2024, we executed well on our strategic priorities. We furthered our role as a trusted partner to hospitals and health systems and to regional local laboratories by closing or signing 10 transactions. We advanced our position in key high-growth markets including oncology, woman's health, neurology, and autoimmune disease. And we introduced new important diagnostic tests to meet significant unmet medical needs. We expanded our leadership in genetic testing solutions through our acquisition of select assets of Invitae. Our clients now have access to Invitae's cutting edge science and genetic testing solutions to guide personalized treatment recommendations for oncology, and rare disease patients. We advanced the development of Plasma Detect, an assay that uses whole genome sequencing and a proprietary machine learning analysis to detect MRD. Plasma Detect is in 12 global trials across several tumor types. We expect to move into clinical use in 2025 in the US with an early experience program for academic medical centers beginning with colorectal cancer. We launched LabCorp Global Trial Connect, a suite of central laboratory solutions aimed at increasing the speed of clinical trials at investigator sites. Turning now to our fourth quarter financial results, we performed very well across diagnostic laboratories and biopharma laboratory services, driven by strong underlying demand and advancements in science and technology solutions to better serve the needs of our customers. Revenue in the quarter was $3.3 billion, an increase of 10% compared to the fourth quarter of 2023. Diagnostics and biopharma revenue each grew by approximately 10% in the quarter. Enterprise margins were down 40 basis points due to the expected impact of Invitae, which we referenced in our previous earnings call. Adjusted EPS of $3.45 was up 5 percent year-over-year. Free cash flow from continuing operations was $665 million. As we look ahead to 2025, we expect enterprise revenue growth of 6.7 to 8 percent and improving margins across both diagnostics and biopharma. We also expect an adjusted EPS range of $15.60 to $16.40. which represents an implied midpoint growth rate of 10%. Additionally, we expect free cash flow to grow in line with our earnings. In just a moment, Julie will provide more details on our results and our 2025 guidance. Turning to highlights of our enterprise strategy in the quarter. First, we advanced our leadership position as a partner of choice for hospitals and health systems and regional local laboratories. In November, we completed the acquisition of the select assets and molecular testing location of LabWorks, enabling broader access to comprehensive testing and laboratory services in Alabama. In December, we completed the acquisition of select outreach laboratory services for valid health in the Appalachian region. In January, subsequent to quarter end, We announced a strategic collaboration with New Jersey-based Inspira Health to manage the operations of the health system's hospital laboratories and to serve as the primary lab for Inspira's physician network. As we look ahead to 2025, our pipeline remains strong, and we look forward to supporting more health systems and to expanding access to LabCorp's world-class diagnostic solutions. We also made several advancements in science, innovation, and technology in the quarter. As part of our focus on autoimmune disease, we launched a multiple sclerosis monitoring profile, used to monitor neurofilament light-chain serum and GFAP values in multiple sclerosis patients. Working with the CDC, we announced the commercial availability of an H5 BERT flu molecular test, and we announced the availability of the first companion diagnostic assay to identify gastric cancer patients eligible for targeted treatment for people with advanced cancer of the stomach. In addition, we continue to help consumers manage their health and well-being through LabCorp OnDemand. We launched several consumer-initiated tests in the quarter, including homocysteine for heart health, vitamin A, vitamin C, and vitamin E. We announced several enhancements to Global Trial Connect, including sample tracking with earlier visibility into samples' chain of custody and electronic requisition, a fully digital solution that improves workflows, efficiency, and document management. We also experienced continued adoption of LabCorp Diagnostic Assistant by health system clients and their physicians. LabCorp Diagnostic Assistant brings together lab result data, clinical guidelines, and EHR data to inform clinical decisions at the point of care. New capabilities like Smart Trends combine information from the client's EHR with all of the patient's lab results available through LabCorp, regardless of ordering provider, and it brings it into a single, integrated view. LabCorp Diagnostic Assistant and Global Trial Connect are just two examples of how we're harnessing our innovative testing capabilities, our vast data assets, and technology to support clinical trials and patient care. In closing, 2024 was a strong year for LabCorp as we continued to execute against our enterprise strategy, and we are well positioned for continued growth in 2025. I want to thank our 70,000 employees for the hard work and dedication as we pursue our mission to improve health and improve lives. In fact, we were just named to Fortune Magazine's World's Most Admired Companies list for 2025, a testament to the efforts of our team and their dedication to our mission. Finally, I want to personally thank Glenn for his contributions to the company during his 10-year successful run as CFO. Glenn and I have worked side by side since I joined as CEO, and I've truly enjoyed having him serve as a key member of our executive committee. Glenn is a remarkable CFO and a remarkable executive. He remains as a special advisor to me through the end of April to ensure a smooth, collaborative transition that positions LabCorp to further accelerate our strategy in 2025. Please join me in wishing Glenn and his family all of the best in his retirement. With that, I'll turn the call over to Julia.