LabCorp

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Laboratory Corporation of America Holdings
Type Public (NYSE: LH)
Founded 1978
Headquarters Burlington, North Carolina
Key people Dave King (CEO)
Services Clinical laboratory
Website www.labcorp.com

Laboratory Corporation of America Holdings (NYSE: LH), more commonly known as LabCorp, is an S&P 500 company in Burlington, North Carolina, and one of the largest clinical laboratory networks in the world, with a United States network of 36 primary laboratories. Before a name change and merger in 1995, it had been National Health Laboratories Holdings Inc. (formerly NYSE: NH).[1] LabCorp performs its largest volume of specialty testing at its Center for Esoteric Testing in Burlington, North Carolina, where the company is headquartered.[2][3]

LabCorp was an early pioneer of genomic testing using polymerase chain reaction (PCR) technology, at its Center for Molecular Biology and Pathology in Research Triangle Park, North Carolina, where it also performs other molecular diagnostics. It also does oncology testing, human immunodeficiency virus (HIV) genotyping and phenotyping.[2][3]

LabCorp also operates the National Genetics Institute, Inc. (NGI) in Los Angeles, California which develops PCR testing methods.[2][3]

LabCorp's Viro-Med facility in Minneapolis, Minnesota performs real-time PCR molecular microbial testing using tests developed at the NGI.[2][3]

Outside of the United States, LabCorp provides testing in Puerto Rico and in three Canadian provinces.[2]

Contents

[edit] History

[edit] Revlon

National Health Laboratories Incorporated began in 1978.[4] The company was a national blood and pathology laboratory owned by the Revlon Health Care Group, and managed by Michael E. Lillig for seven years. Lillig had earlier been with Becton, Dickinson and Company (NYSE: BDX). At National Health Laboratories, Inc. he grew annual sales of the company each year by 43%, with revenue reaching $12 million by the end of his tenure. Lillig then left to found several health-care companies, including Syscor, Inc., Intelysis, Inc., Asterion, LLC and MetaCyte's 3DR in Louisville, Kentucky.[5]

[edit] National Health Laboratories, Inc.

In 1988, National Health Laboratories became publicly-traded on the NASDAQ exchange. Revlon retained 24% ownership of the common shares, for the next six years.[6] Revlon had been a publicly-traded company since the 1950's, as it was during most of its ownership of National Health Laboratories. But in 1985, Revlon (now NYSE: REV) had been taken over by Ronald Perelman.

Through early 1995, the National Health Laboratories principal executive offices were located at 4225 Executive Square, Suite 805 in La Jolla, California.[7]

In 1989, the company generated revenue of about US$400 million, with about US$70 million in earnings.[8]

In 1990, the company's revenues reached US$500 million, with over US$70 million in earnings.[8] That year, the company began paying a cash dividend to shareholders.[6]

In 1991, National Health Laboratories moved from the NASDAQ OTC exchange to the New York Stock Exchange, where it began to trade under the new ticker symbol NH.[8] Up until that time the company had performed very well, including through the 1990-1991 recession. Its earnings peaked that year at almost US$90 million, and its stock price had risen from its low within the prior few years by several-fold.[6]

However, beginning in 1991 the company became embroiled in Operation "Labscam," a nationwide crackdown on fraud in the health-care system, initiated by the U.S. Attorney's Office in San Diego, California. The charges were that the company and others routinely submitted false claims to the government health-care agencies Medicare and Medicaid for unnecessary tests which physicians had never ordered. In 1992, National Health Laboratories became the first of the companies to be prosecuted in the government operation.[9]

In 1992, the company reported revenues of over US$720 million, however with earnings of only US$40 million. The small gain that year reflected a fourth quarter charge of US$80 million, which the company paid in a settlement agreement with state and federal governments related to the LABSCAM investigation.[10] The total payments made by National Health Laboratories in the settlement came to US$111 million that year,[11] and ultimately reached US$173 million.[9]

In 1993, revenues were up to US$761 million, with new peak earnings of nearly US$113 million.[10] By that time the company had 22 major laboratories.[12] The stock price reached a new all-time high in 1993, which became the peak for the next couple of years, and the company was added to the S&P MidCap 400 list.[6]

[edit] National Health Laboratories Holdings

On March 8, 1994 National Health Laboratories Inc. reorganized as a holding company, National Health Laboratories Holdings Inc. [7]

By 1994, MacAndrews & Forbes Holdings Inc. then owned the Revlon Holdings Group's former 24 percent of National Health Laboratories Holdings.[12] That company was a distributor of licorice extract and chocolate, which had previously been taken over, along with Revlon, by Ronald Perelman in the 1980s.5[11]

On May 4, 1994, National Health Laboratories announced that it would acquire Allied Clinical Laboratories, Inc. (formerly NASDAQ: ACLB) of Nashville, Tennessee.[11] In 1993, Allied generated revenues of US$163 million. The former President and CEO of Allied Clinical, Haywood D. Cochrane, Jr., then became Vice Chairman of National Health Laboratories. In order to complete the cash transaction, the company discontinued paying its dividend at that time.[13]

By the end of 1994, the company had run into financial difficulty again, as it struggled through the economic soft landing that year. Its earnings dropped by over two-thirds, to only US$30 million. The stock never traded that year at more than half of its 1993 peak, and at its 1994 low, it was down by nearly two-thirds from the all-time high.[6]

[edit] Laboratory Corporation of America Holdings

On April 28, 1995 National Health Laboratories Holdings Inc. merged with Roche Biomedical Laboratories, Inc. and changed its name to Laboratory Corporation of America Holdings. It began trading under its new ticker symbol LH.[1] Shareholders of National Health Laboratories received 0.72 shares of the new company, plus $5.60 in cash, for a 50.1 percent interest in the new company. At the time, James R. Maher was President and Chief Executive Officer of National Health Laboratories. Following the merger, Maher relinquished those positions, and instead became Chairman of the new company, succeeding the financier Ronald O. Perelman in that position. Perelman received about US$100 million from the deal, which made the new company the largest blood-testing company in the United States.[11] [12]

The merged company created revenues of US$1.7 billion.[12] National Health Laboratories already held long-term debt of US$351 million.[6] Together with the Roche debt, the combined companies owed US$590 million prior to the merger. Another US$288 million was added to help finance the payout to shareholders.[11] By year-end 1995, the new company's total debt reached US$959 million.[6]

Roche Biomedical Laboratories had been created by and was a wholly-owned subsidiary of Hoffmann-La Roche, Inc., the American arm of the Swiss medical conglomerate, Roche Holding, Limited. Before 1982, the core of Roche Biomedical Laboratories had been Biomedical Reference Laboratories, which dated from the late 1960s, and was located in Burlington, North Carolina. That core company had become publicly-traded in 1979. Hoffman-La Roche acquired it for US$163.5 million in 1982 and then merged it with all of its laboratories, and incorporated the merged company that year as Roche Biomedical Laboratories, Inc. in Burlington. By the early 1990s, Roche Biomedical had become one of the largest clinical laboratory networks in the United States, with US$600 million in sales.[14]

By 1993 Roche Biomedical Laboratories had revenues of US$712 million, with 17 major laboratories. Dr. James Powell was President of Roche Biomedical, and after the merger with National Health Laboratories he became President and CEO of the new company, Laboratory Corporation of America Holdings, which then relocated from La Jolla, California to the Roche Biomedical headquarters in Burlington, North Carolina. Hoffmann-La Roche also contributed US$186.7 million in cash to the deal, and retained 49.9 interest in the new merged company.[12]

By year-end 1995, the new Laboratory Corporation of America Holdings suffered a marginal loss of a few million dollars. The stock price dropped by almost half again through the year, to within 10% of its all-time low since going public a half dozen years earlier. By early the next year, it broke marginally below that level, and set a new all-time low.[6]

In 2000, LabCorp generated revenues of US$1.9 billion with over 18,000 employees.[3]

In December 2001, LabCorp became the exclusive marketer for genomics and proteomics predictive cancer test products made by Myriad Genetics, Inc. (NASDAQ: MYGN)[3]

In November 2006, LabCorp acquired Litholink Corporation, a kidney stone analysis laboratory.[2]

[edit] References

  1. ^ a b Laboratory Corp of America Holdings · 10-Q · For 3/31/95, SECInfo.com, Filed On 5/15/95, SEC File 1-11353, Accession Number 920148-95-11
  2. ^ a b c d e f Full Description, Laboratory Corporation of America Hldg LH (NYSE), reuters.com
  3. ^ a b c d e f Laboratory Corp of America Holdings · 8-K, SECInfo.com, Filed On 12/4/01, SEC File 1-11353, Accession Number 920148-1-500043
  4. ^ Name NATIONAL HEALTH LABORATORIES INCORPORATED, Organization Number 0111772, Kentucky Secretary of State, Business Services, File Date 9/5/1978
  5. ^ Michael E. Lillig, Managing Director, Co-Founder & Board Member, 3DR, 2003
  6. ^ a b c d e f g h Standard & Poors's Stock Guide, various issues
  7. ^ a b NATIONAL HEALTH LABORATORIES HOLDINGS INC., SEC FORM 8-B, Shareholder.com, March 8, 1994
  8. ^ a b c National Health Laboratories Inc. reports earnings for Qtr to June 30, New York Times Archives, Published: July 17, 1990
  9. ^ a b OPERATION LABSCAM, LabCorp of America, SmithKline Beecham and Corning, Inc (now Quest Diagnostics), compiled by Michael Wynne, August 2003
  10. ^ a b National Health Laboratories Inc. reports earnings for Qtr to Dec 31, New York Times Archives, Published: February 8, 1994
  11. ^ a b c d e COMPANY NEWS; Blood-Testing Concerns Plan $1.79 Billion Merger, New York Times, By MILT FREUDENHEIM, Published: December 15, 1994
  12. ^ a b c d e National Health Laboratories Holdings Inc., SEC FORM 8-K, Shareholder.com, December 13, 1994
  13. ^ National Health Laboratories Inc · 10-Q · For 3/31/94, SECInfo.com, Filed On 5/10/94, SEC File 1-10740, Accession Number 832427-94-14
  14. ^ Roche Biomedical Laboratories, Inc., FundingUniverse.com

[edit] External links

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