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Labcorp Board Initiates Quarterly Dividend, Approves $2.5B Share Repurchase Program

NEW YORK – Laboratory Corporation of America announced on Thursday that its board of directors and management team will take measures, including initiating a quarterly dividend and repurchasing shares of its stock, to improve shareholder returns.

The Burlington, North Carolina-based company plans to initiate the quarterly cash dividend in the second quarter of 2022, with the board targeting a payout ratio of between 15 percent and 20 percent of adjusted earnings, the firm said in a statement.

The board also authorized a $2.5 billion share repurchase program, in which $1 billion of common stock will be repurchased on an accelerated schedule.

Other actions taken by the board include the implementation of a business process improvement initiative, which is intended to save $350 million over the next three years; providing enhanced disclosures, starting with Labcorp's Q1 2022 earnings results; and offering a longer-term outlook with its full year 2021 financial results, in addition to its usual annual guidance.

Labcorp also said it will be "continuing a commitment to profitable growth through investments in science, innovation, and new technologies."

The actions are the result of the company's review of its structure and capital allocation strategy that started in March. The review included discussions with third parties and considerations of acquisitions, divestitures, spinning off businesses, and spinning or merging the businesses with strategic partners. However, the board determined that the firm'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," it said.

"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," Adam Schechter, Labcorp's CEO and chairman, said in a statement.

"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,” added Glenn Eisenberg, executive VP and CFO.