Laboratory Corporation of America Holdings (NYSE:LH) Q4 2022 Earnings Call Transcript

Tim Daley: Great. On the first one, I’m not trying to step on Tom’s toes or anything here but just isolating the drug development assets that will stay part of RemainCo. Could you just give us some color directionally as live magnitude, anything here on the EBITDA margins for early development in central lab, just how they looked at ’22, not trying to ask for stranded cost adjustments or anything like that?

Glenn Eisenberg: Tim, this is Glenn. As you know, we break out the 2 segments and then with that, revenue, OI and margins. So for drug development, we provide that. We haven’t broken out the pieces, if you will, because, again, of all the interrelationships and shared services and so forth. So part of the issue of doing the spin, obviously is now we’re standing an independent company with where we have a lot of direct costs but then we also have a lot of indirect costs. And we’re working through, obviously, all those costs and including transition services that we would be providing for a period of time. So we’re currently in the process of getting all the numbers done once we’re complete with that, we’ll obviously be sharing kind of the spinco view, both on the top line and the bottom line at the appropriate time, including in an anticipated investor Analyst Day, if you will, prior to the spin.

And obviously, to the extent we have those financials done prior to that, we can also share them. But at this point, we’ve talked in the past about here’s the segment average and that the businesses are for the plus or minus in line before you get to those independent standup costs.

Tim Daley: All right. Appreciate it. I thought I’d give it a shot. And then secondly, on the — just sitting here on the early development business, so if we were to exclude the $80 million to $100 million NHP headwind you guys are baking into the guidance would be growing in FY ’23? And what’s the price assumption embedded in there for the year?

Adam Schechter: So the short answer is yes, it would be growing for the year with the $80 million to $100 million in there, growing nicely. And what was your second question, the…

Tim Daley: The pricing assumption embedded in the EB business for ’23?

Adam Schechter: In terms of the pricing — so first thing I’d say is that we expect the priming pricing to go up significantly because of the supply issues. And I think, therefore, there you would expect to have better pricing overall. Yes. And just to be clear, that pricing, especially primary that does get passed on to customers — so it doesn’t impact our margins and — it affects the margins because we don’t get a margin on that but the pricing can be passed on to the customers.

Operator: And our next question will come from Patrick Donnelly of Citi.

Patrick Donnelly: Maybe one on the NHP side. Certainly, it was expecting a headwind, maybe a little bit higher than we were thinking. Can you just remind us, I guess, kind of your full exposure there? Just thinking about that $80 million to $100 million, what the supply disruption looks like currently? And then again, I guess, visibility into that normalizing? I’m just trying to figure out, I guess, that $80 million to $100 million, is that kind of fully grappling it? Is that a conservative number? Maybe just kind of walk us through your thought process and again, maybe what the sizing was and what that looks like. I appreciate it.