Board of Directors Approves Plans to Initiate
Quarterly Cash Dividend and Authorizes $2.5 Billion Share
Repurchase Program
Capital Allocation Plan Enables Continued
Investments in Key Growth Areas, Science and Innovation
Labcorp (NYSE: LH) (the Company), a leading global life sciences
company, today announced actions that its Board of Directors (the
Board) and management team have taken to enhance shareholder
returns. This includes:
- Initiating a dividend in the second quarter of 2022. The Board
is targeting a dividend payout ratio of between 15-20% of adjusted
earnings;
- Authorizing a $2.5 billion share repurchase program. As part of
this program, $1 billion will be repurchased under an accelerated
share repurchase plan;
- Implementing a new LaunchPad business process improvement
initiative, targeting savings of $350 million over the next three
years;
- Providing a longer-term outlook in connection with the
announcement of Labcorp’s 2021 year-end results in addition to the
Company’s annual guidance;
- Providing additional business insights through enhanced
disclosures beginning with Labcorp’s first quarter 2022 results;
and
- Continuing a commitment to profitable growth through
investments in science, innovation and new technologies.
The above actions follow the conclusion of Labcorp’s thorough
review of its structure and capital allocation strategy, as
announced in March 2021. As part of the comprehensive review,
extensive discussions were held with third parties and the Board
considered a wide range of options, including significant
acquisitions, divestitures, spinning off businesses, as well as
spinning and merging those businesses with strategic partners. The
Board unanimously concluded that the Company’s existing structure
is in the best interest of all stakeholders at this time and
represents compelling opportunities to grow and create significant
shareholder value. Management and the Board are committed to
continuing to evaluate all avenues for enhancing shareholder
value.
Labcorp’s updated capital allocation plan:
- Enables the Company to continue to invest in key growth areas
such as oncology, Alzheimer’s, autoimmune and women’s health;
- Fuels growth through innovation by using Labcorp’s unparalleled
data and insights to bring scientific advancements—both
Labcorp-developed, as well as those of other scientists—to market
at scale;
- Reflects the Board’s confidence in Labcorp’s strong balance
sheet and cash flow generation profile; and
- Demonstrates the Board’s commitment to deploying capital to
enhance value for shareholders, patients, providers and
pharmaceutical customers worldwide who rely on Labcorp to help make
health care decisions that lead to better outcomes.
“We are positioning Labcorp to play an important role in the
future of global health care through science and innovation, while
delivering strong returns for our shareholders,” said Adam
Schechter, chairman and CEO of Labcorp. “Our work since early 2020
through the pandemic is just one example of how our unique
capabilities lead to innovation, growth and game-changing
solutions. We are well positioned to accelerate our growth in
additional areas such as oncology, Alzheimer’s, autoimmune and
women’s health, while also investing in other areas, including cell
and gene therapy and liquid biopsy.”
“The initiation of a dividend and new share repurchase program
will enable us to enhance returns to shareholders while maintaining
financial flexibility to continue investing in key higher-growth
opportunities,” said Glenn Eisenberg, executive vice president and
chief financial officer. “With a strong, balance sheet, liquidity
and a commitment to maintaining investment grade ratings, Labcorp
will continue to capitalize on our unique platform to drive
profitable growth and enhanced value for shareholders.”
The new share repurchase program approved by the Board
authorizes the Company to repurchase an additional $2.5 billion of
common stock, which includes the repurchase of $1 billion of common
stock on an accelerated schedule. The Board will regularly review
this capital return policy in connection with a balanced capital
allocation strategy.
Advisors
Goldman Sachs & Co. LLC and Barclays served as Labcorp’s
financial advisors and Jones Day served as legal counsel.
About Labcorp
Labcorp is a leading global life sciences company that provides
vital information to help doctors, hospitals, pharmaceutical
companies, researchers, and patients make clear and confident
decisions. Through our unparalleled diagnostics and drug
development capabilities, we provide insights and accelerate
innovations to improve health and improve lives. With more than
70,000 employees, we serve clients in more than 100 countries.
Labcorp (NYSE: LH) reported revenue of $14 billion in FY 2020.
Learn more about Labcorp at www.Labcorp.com, or follow us on
LinkedIn and Twitter @Labcorp.
Cautionary Statement Regarding Forward-Looking
Statements
This press release contains forward-looking statements,
including, but not limited to, statements with respect to (i) the
Company’s plan to initiate a dividend, (ii) the Company’s
expectations to repurchase its stock and to enter into an
accelerated repurchase program, (iii) the Company’s operations,
performance and financial condition, including cash flow
generation, balance sheet and investment-grade rating, (iv) the
Company’s strategic objectives, including expectations for future
investment, growth and deployment of capital and (v) the return to
shareholders.
Each of the forward-looking statements is subject to change
based on various important factors, many of which are beyond the
company’s control, including without limitation, that the timing of
share repurchases and the number of shares of common stock that are
repurchased depend on market conditions, other developments and any
decision by the Company to suspend repurchase activities in the
future, the trading price of the Company’s stock, competitive
actions and other unforeseen changes and general uncertainties in
the marketplace, and the Company’s ability (or inability) to
execute on its plans to respond to the outcome of its review of the
Company’s structure and changes in capital allocation strategy,
changes in government regulations, including healthcare reform,
customer purchasing decisions, including changes in payer
regulations or policies, other adverse actions of governmental and
third-party payers, changes in testing guidelines or
recommendations, federal, state, and local government responses to
the COVID-19 pandemic, the effect of public opinion on the
company’s reputation, adverse results in material litigation
matters, the impact of changes in tax laws and regulations, failure
to maintain or develop customer relationships, the ability to
develop or acquire new products and adapt to technological changes,
failure in information technology, systems or data security, the
impact of potential losses under repurchase agreements, adverse
weather conditions, the number of revenue days in a financial
period, employee relations, personnel costs, and the effect of
exchange rate fluctuations. These factors, in some cases, have
affected and in the future (together with other factors) could
affect the Company’s ability to implement its business strategy,
and actual results could differ materially from those suggested by
these forward-looking statements. As a result, readers are
cautioned not to place undue reliance on any of these
forward-looking statements.
The Company has no obligation to provide any updates to these
forward-looking statements even if its expectations change. All
forward-looking statements are expressly qualified in their
entirety by this cautionary statement. Further information on
potential factors, risks and uncertainties that could affect
operating and financial results is included in the Company’s most
recent Annual Report on Form 10-K and subsequent Forms 10-Q,
including in each case under the heading RISK FACTORS, and in the
Company’s other filings with the SEC. The information in this press
release should be read in conjunction with a review of the
Company’s filings with the SEC including the information in the
company’s most recent Annual Report on Form 10-K, and subsequent
Forms 10-Q.
###
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version on businesswire.com: https://www.businesswire.com/news/home/20211209005533/en/
Investors: Chas Cook –
336-436-5076 Investor@Labcorp.com
Media: Christopher
Allman-Bradshaw – 336-436-8263 Media@Labcorp.com
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