On July 25, 2018 LabCorp (or the Company) (NYSE: LH) reported results for the second quarter ended June 30, 2018, and updated 2018 guidance (Press release, LabCorp, JUL 25, 2018, View Source;p=RssLanding&cat=news&id=2359858 [SID1234527857]).

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"We delivered another quarter of strong growth and disciplined capital deployment across our integrated enterprise, with double-digit increases in revenue and adjusted EPS over last year," said David P. King, chairman and CEO. "The Drug Development business drove continued organic revenue growth and strong margin improvement, while winning and expanding strategic partnerships that will contribute to future study awards. The Diagnostics business expanded opportunities with key partners, and achieved solid results despite the negative impact from the implementation of PAMA. As a global leader in the expanding life sciences industry, our differentiated offering strengthens our ability to overcome segment-specific challenges, and create significant value for stakeholders now and for years to come."

Effective January 1, 2018, the Company adopted the FASB-issued converged standard on revenue recognition (ASC 606), using the full retrospective method. Unless otherwise indicated, all financial results in 2017 and comparisons to financial results in 2017 have been restated in this press release as if the Company had adopted ASC 606 on January 1, 2017.

Consolidated Results

Second Quarter Results

Revenue for the quarter was $2.87 billion, an increase of 13.4% compared to $2.53 billion in the second quarter of 2017. The increase in revenue was due to growth from acquisitions of 10.5%, organic growth of 2.1%, and the benefit from foreign currency translation of approximately 80 basis points.

Operating income for the quarter was $369.2 million, or 12.9% of revenue, compared to $329.8 million, or 13.0%, in the second quarter of 2017. The increase in operating income was primarily due to acquisitions, organic revenue growth, and the Company’s LaunchPad business process improvement initiative, partially offset by lower Medicare pricing as a result of the implementation of PAMA and personnel costs. The Company recorded restructuring charges, special items, and amortization which together totaled $94.3 million in the quarter, compared to $101.3 million during the same period in 2017. Adjusted operating income (excluding amortization, restructuring charges, and special items) for the quarter was $463.5 million, or 16.2% of revenue, compared to $431.1 million, or 17.1%, in the second quarter of 2017. The decline in adjusted operating margin was due to the implementation of PAMA, and the mix impact from the acquisition of Chiltern.

Net earnings in the quarter were $233.8 million, compared to $184.8 million in the second quarter of 2017. Diluted EPS were $2.27 in the quarter, an increase of 28.0% compared to $1.78 in the same period in 2017. Adjusted EPS (excluding amortization, restructuring charges and special items) were $2.98 in the quarter, an increase of 22.6% compared to $2.43 in the second quarter of 2017.

Operating cash flow for the quarter was $367.2 million, compared to $310.5 million in the second quarter of 2017, due to higher cash earnings and favorable working capital. Capital expenditures totaled $87.2 million, compared to $69.3 million a year ago. As a result, free cash flow (operating cash flow less capital expenditures) was $280.0 million, compared to $241.2 million in the second quarter of 2017.

At the end of the quarter, the Company’s cash balance and total debt were $221.4 million and $6.5 billion, respectively. During the quarter, the Company invested $79.1 million in acquisitions, paid down a net of $310.0 million of debt, and repurchased $75.0 million of stock representing approximately 0.5 million shares. The Company had $993.5 million of authorization remaining under its share repurchase program at the end of the quarter.

Year-To-Date Results

Revenue was $5.71 billion, an increase of 15.6% over last year’s $4.94 billion. The increase in revenue was due to growth from acquisitions of 11.9%, organic growth of 2.6%, and the benefit from foreign currency translation of approximately 110 basis points.

Operating income was $674.6 million, or 11.8% of revenue, compared to $647.9 million, or 13.1%, in the first half of 2017. The increase in operating income was primarily due to acquisitions, organic revenue growth, and the Company’s LaunchPad initiative, partially offset by the implementation of PAMA and personnel costs. The Company recorded restructuring charges, special items, and amortization which together totaled $224.7 million in the first half of the year, compared to $159.9 million during the same period in 2017. This increase was primarily due to higher amortization expense, and the payment of a one-time bonus to non-bonus-eligible employees following the implementation of the Tax Cuts and Jobs Act of 2017 (TCJA). Adjusted operating income (excluding amortization, restructuring charges, and special items) was $899.3 million, or 15.7% of revenue, compared to $807.8 million, or 16.3%, in the first half of 2017. The decline in adjusted operating margin was due to the impact from the implementation of PAMA, and the mix impact from the acquisition of Chiltern.

Net earnings in the first half of 2018 were $407.0 million, or $3.94 per diluted share, compared to $367.8 million, or $3.54 per diluted share, last year. Adjusted EPS (excluding amortization, restructuring and special items) were $5.75, an increase of 25.8% compared to $4.57 in the first half of 2017.

Operating cash flow was $522.0 million, compared to $536.4 million in the first half of 2017. The reduction in operating cash flow was due to the one-time bonus payment related to the TCJA and higher working capital to support growth, partially offset by higher cash earnings. Capital expenditures totaled $159.7 million, compared to $141.5 million during the same period in 2017. As a result, free cash flow (operating cash flow less capital expenditures) was $362.3 million, compared to $394.9 million in the first half of 2017.

***

The following segment results reflect the Company’s retrospective adoption of ASC 606 on January 1, 2017, and exclude amortization, restructuring charges, special items and unallocated corporate expenses.

Second Quarter Segment Results

LabCorp Diagnostics

Revenue for the quarter was $1.81 billion, an increase of 5.4% over $1.72 billion in the second quarter of 2017. The increase in revenue was primarily driven by acquisitions, organic volume (measured by requisitions), and the benefit from foreign currency translation of approximately 30 basis points, partially offset by the impact from the implementation of PAMA. Total volume (measured by requisitions) increased by 5.8%, of which organic volume was 2.8% and acquisition volume was 3.0%. Revenue per requisition decreased by 0.7%.

Adjusted operating income (excluding amortization, restructuring charges and special items) for the quarter was $376.0 million, or 20.7% of revenue, compared to $375.5 million, or 21.8%, in the second quarter of 2017. Operating income benefited from organic volume growth and acquisitions, which were essentially offset by the negative impact from PAMA and personnel costs. The decline in operating margin was primarily due to the negative impact from PAMA.

Covance Drug Development

Revenue for the quarter was $1.05 billion, an increase of 30.5% over $808 million in the second quarter of 2017. The increase was primarily due to acquisitions, as well as organic growth and the benefit from foreign currency translation of approximately 180 basis points.

Adjusted operating income (excluding amortization, restructuring charges and special items) for the quarter was $123.4 million, or 11.7% of revenue, compared to $88.5 million, or 11.0%, in the second quarter of 2017. The increase in operating income and margin were primarily due to organic demand, LaunchPad savings and acquisitions, partially offset by personnel costs. The Company expects to deliver $150 million of net savings from LaunchPad by the end of 2020, and $30 million of cost synergies from the integration of Chiltern by the end of 2019.

Net orders and net book-to-bill during the trailing twelve months were $4.87 billion and 1.22, respectively. Backlog at the end of the quarter was $8.97 billion, and the Company expects approximately $3.7 billion of this backlog to convert into revenue in the next twelve months.

Outlook for 2018

In the following guidance, all financial results in 2017 and comparisons to financial results in 2017 have been restated in this press release as if the Company had adopted ASC 606 on January 1, 2017. The guidance assumes foreign exchange rates effective as of June 30, 2018 for the remainder of the year, and includes capital allocation.

Revenue growth of 10.5% to 11.5% over 2017 revenue of $10.31 billion, which includes the benefit of approximately 50 basis points of foreign currency translation. This is in-line with the prior guidance of 10.0% to 12.0%, as the increased revenue guidance in Covance Drug Development is offset by the previously-announced divestiture of the Food Solutions business.
Revenue growth in LabCorp Diagnostics of 3.0% to 4.5% over 2017 revenue of $6.86 billion, which includes the negative impact of PAMA as well as the benefit of approximately 20 basis points of foreign currency translation. This is lower than the prior guidance of 3.5% to 5.5% due to the previously-announced divestiture of the Food Solutions business.
Revenue growth in Covance Drug Development of 23.0% to 26.0% over 2017 revenue of $3.45 billion, which includes the benefit of approximately 110 basis points of foreign currency translation. This is an increase over the prior guidance of 21.0% to 25.0% due to higher investigator and other pass-through revenues, partially offset by the change in foreign currency translation.
Adjusted EPS of $11.35 to $11.65, which is an increase of approximately 22.7% to 25.9% over 2017 adjusted EPS of $9.25, and a narrowing of the range compared to prior guidance of $11.30 to $11.70.
Free cash flow (operating cash flow less capital expenditures) of $1.1 billion to $1.2 billion, compared to $1.1 billion in 2017, unchanged from prior guidance.
Use of Adjusted Measures

The Company has provided in this press release and accompanying tables "adjusted" financial information that has not been prepared in accordance with GAAP, including adjusted EPS, adjusted operating income, free cash flow, and certain segment information. The Company believes these adjusted measures are useful to investors as a supplement to, but not as a substitute for, GAAP measures, in evaluating the Company’s operational performance. The Company further believes that the use of these non-GAAP financial measures provides an additional tool for investors in evaluating operating results and trends, and growth and shareholder returns, as well as in comparing the Company’s financial results with the financial results of other companies. However, the Company notes that these adjusted measures may be different from and not directly comparable to the measures presented by other companies. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the tables accompanying this press release.

The Company today is furnishing a Current Report on Form 8-K that will include additional information on its business and operations. This information will also be available in the investor relations section of the Company’s website at www.labcorp.com. Analysts and investors are directed to the Current Report on Form 8-K and the website to review this supplemental information.

A conference call discussing LabCorp’s quarterly results will be held today at 9:00 a.m. Eastern Time and is available by dialing 844-634-1444 (615-247-0253 for international callers). The access code is 8281087. A telephone replay of the call will be available through August 8, 2018 and can be heard by dialing 855-859-2056 (404-537-3406 for international callers). The access code for the replay is 8281087. A live online broadcast of LabCorp’s quarterly conference call on July 25, 2018, will be available at View Source or at View Source beginning at 9:00 a.m. Eastern Time. This webcast will be archived and accessible through July 18, 2019

On July 25, 2018 Blueprint Medicines Corporation (NASDAQ: BPMC), a leader in discovering and developing targeted kinase medicines for patients with genomically defined diseases, reported that it will host a live conference call and webcast at 8:30 a.m. ET on Wednesday, August 1, 2018 to report its second quarter 2018 financial results and provide a corporate update (Press release, Blueprint Medicines, JUL 25, 2018, View Source;p=RssLanding&cat=news&id=2359898 [SID1234527860]).

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To access the live conference call, please dial 1-855-728-4793 (domestic) or 1-503-343-6666 (international), and refer to conference ID 5597837. A webcast of the call will also be available under "Events and Presentations" in the Investors section of Blueprint Medicines’ website at View Source The archived webcast will be available on Blueprint Medicines’ website approximately two hours after the conference call and will be available for 30 days following the call.

On July 25, 2018 Conatus Pharmaceuticals Inc. (Nasdaq:CNAT) reported that it will report financial results for the second quarter ended June 30, 2018, after the market close on Wednesday, August 1, 2018 (Press release, Conatus Pharmaceuticals, JUL 25, 2018, View Source [SID1234527861]). Conatus will host a conference call and audio webcast at 4:30 p.m. Eastern Time on Wednesday, August 1, 2018, to discuss the financial results and provide a corporate update.

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Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

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To access the conference call, please dial 877-312-5857 (domestic) or 970-315-0455 (international) at least five minutes prior to the start time and refer to conference ID 9853049. A live and archived audio webcast of the call will also be available in the Investors section of the Conatus website at www.conatuspharma.com.

On July 25, 2018 GlaxoSmithKline and 23andMe reported an exclusive four-year collaboration that will focus on research and development of innovative new medicines and potential cures, using human genetics as the basis for discovery (Press release, GlaxoSmithKline, JUL 25, 2018, View Source [SID1234640964]). The collaboration will combine 23andMe’s large-scale genetic resources and advanced data science skills, with the scientific and medical knowledge and commercialisation expertise of GSK. The goal of the collaboration is to gather insights and discover novel drug targets driving disease progression and develop therapies for serious unmet medical needs based on those discoveries.

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Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

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With over 5 million customers, 23andMe offers those with an interest in genetics the opportunity to learn more about their personal genetic profile. 23andMe customers can also choose to participate in research and contribute their information to a unique and dynamic database, which is now the world’s largest genetic and phenotypic resource.

GSK brings extensive drug discovery and development capabilities across a broad range of diseases and modalities, including small molecule, biopharmaceuticals and cell and gene therapies. It will apply its world-class technologies, including access to additional data sources, in-house target validation and genetics expertise, and utilise its manufacturing, commercial operations and scale to support partner activities across research and development.

Dr. Hal Barron, Chief Scientific Officer and President R&D, GSK, said; "We are excited about this unique collaboration as we know that drug targets with genetic validation have a significantly higher chance of ultimately demonstrating benefit for patients and becoming medicines. Partnering with 23andMe, an organisation whose vision and capabilities are transforming the understanding of how genes influence health, will help to shift our research and development organisation to be ‘driven by genetics’, and increase the impact GSK can have on patients."

Anne Wojcicki, CEO and Co-Founder of 23andMe, said; "This collaboration will enable us to deliver on what many customers have been asking for — cures or treatments for diseases. By leveraging the genetic and phenotypic information provided by consenting 23andMe customers and combining it with GSK’s incredible expertise and resources in drug discovery, we believe we can more quickly make treating and curing diseases a reality."

Together, GSK and 23andMe will focus on translating genetic and phenotypic data into R&D activities that will:

Improve target selection to allow safer, more effective ‘precision’ medicines to be discovered. Genetic data can significantly improve our understanding of diseases, their pathways and mechanisms, supporting the design and development of more targeted medicines. Use of genetic data in selecting drug targets can increase both the probability of success in a particular indication and avoid unwanted safety risks.
Support identification of patient subgroups that are more likely to respond to targeted treatments. Scale is critical for the detection of genetic effects in smaller subsets of diseases and patients. With over 80% of 23andMe’s customer base consenting to participate in research, their aggregate and de-identified data could help enable the discovery of a significant number of novel associations from a diverse range of people, which would not otherwise be possible.
Allow more effective identification and recruitment of patients for clinical studies. The ability to identify and invite patients with a particular disease, and in some case specific genetic subgroups, to participate in studies that are relevant to them could significantly shorten recruitment and reduce clinical development timelines, allowing medicines to be delivered to patients more efficiently.
Deal Terms
Under the terms of the deal, GSK and 23andMe have entered into a four-year collaboration with the option to extend for a fifth year under which GSK will become 23andMe’s exclusive collaborator for drug target discovery programmes. During this time, the companies will use 23andMe’s rich database and proprietary statistical analytics to fuel drug target discovery, with the goal of jointly discovering novel targets that can progress into development. A joint GSK-23andMe drug discovery team will use their combined resources to identify new targets and prioritise based on strength of the biological hypothesis, possibility to find a medicine, and clinical opportunity.

To allow work to commence immediately, the deal enables both companies to bring existing early stage programmes within the collaboration. 23andMe currently has a portfolio of early stage therapeutic research programmes across a wide range of disease indications, which will be assessed for inclusion. GSK will contribute its LRRK2 inhibitor, which is currently in preclinical development as a potential treatment for Parkinson’s disease. This programme is expected to significantly progress by leveraging 23andMe’s large base of consented customers who are aware of their LRRK2 variant status as a result of 23andMe’s FDA-authorised genetic health reports. Together, GSK and 23andMe are expected to more effectively target and rapidly recruit patients with defined LRRK2 mutations in order to reach clinical proof of concept.

All activities within the collaboration will initially be co-funded (50%/50%), with either company having certain rights to reduce its funding share for any collaboration programme. It is expected that this collaboration will jointly progress a number of targets per year, with either company able to independently progress additional targets identified within the collaboration. GSK will also have the right to work with 23andMe to analyse 23andMe’s database for validation of GSK’s existing therapeutic portfolio as well as leverage 23andMe’s capabilities for clinical trial recruitment. Both GSK and 23andMe will share in the proceeds from new treatments and medicines arising from the collaboration.

Additionally, GSK has made a $300M equity investment in 23andMe.

Protecting what’s important
23andMe customers are in control of their data. Participating in 23andMe’s research is always voluntary and requires customers to affirmatively consent to participate. For those who do consent, their information will be de-identified, so no individual will be identifiable to GSK.

The continued protection of customers’ data and privacy is the highest priority for both GSK and 23andMe. Both companies have stringent security protections in place when it comes to collecting, storing and transferring information about research participants. 23andMe employs software, hardware and physical security measures to protect the computers where data is stored and information will only be transferred using encryption to offer maximum security.

Scientific engagement
To ensure broader, ongoing engagement within the scientific community, GSK and 23andMe intend to publish results of research conducted within this collaboration, to allow these learnings to be used to guide future research. 23andMe will also continue to provide data and analyses to academics and researchers in areas outside of target discovery.

On July 25, 2018 Endocyte, Inc. (Nasdaq:ECYT), a biopharmaceutical company developing targeted therapeutics for personalized cancer treatment, reported that the company will host a conference call on Tuesday, July 31st, at 8:30 a.m. EDT to discuss its second quarter financial results and provide an operational update (Press release, Endocyte, JUL 25, 2018, View Source [SID1234527862]).

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Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

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Investors and the general public are invited to listen to a live webcast of the call, which can be accessed in the Investors & News section of the Company’s website at www.endocyte.com or by dialing (877) 845-0711 (U.S./Canada) or (760) 298-5081 (International).

The webcast will be recorded and available on the Company’s website for 90 days following the call.

Website Information

Endocyte routinely posts important information for investors on its website, www.endocyte.com, in the "Investors & News" section. Endocyte uses this website as a means of disclosing material information in compliance with its disclosure obligations under Regulation FD. Accordingly, investors should monitor the "Investors & News" section of Endocyte’s website, in addition to following its press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, Endocyte’s website is not incorporated by reference into, and is not a part of, this document.