Lab Corp's Healthy Prognosis: Fool by Numbers

On Tuesday, Oct. 24, lab-testing firm Lab Corp (NYSE: LH  ) released fiscal third-quarter 2006 earnings for the period ended Sept. 30, 2006. Here are the quick and dirty details for the quarter.

• Sales grew 6.7% to $909.9 million for the quarter, of which 3.2% was attributed to increased testing volume and 3.5% to increased pricing.
• Net earnings grew 15.7% to $110 million, yet diluted earnings per share advanced 22.7% as the company repurchased its shares. Management reported a couple of other figures that excluded certain restructuring and special charges, but however you cut it, bottom-line expansion was strong.
• Free cash flow generation was also strong, up 15% from last year's third quarter and also above reported net income.
• For full year 2006, management expects diluted earnings in the range of $3.28-$3.33, while for 2007, it's projecting sales growth of 11%-13% and diluted earnings of $3.68-$3.83.

(Figures in millions, except per-share data)

Income Statement Highlights

	Avg. Est.	Q3 2006	Q3 2005	Change
Sales	$902	$910	$853	6.7%
Net Profit	--	$110	$95	15.7%
EPS	$0.72	$0.81	$0.66	22.7%
Diluted Shares		137	146	(6.2%)

*13 weeks ended Sept. 30, 2006 and 2005.

Get back to basics with a look at the income statement.

Margin Checkup

	Q3 2006	Q3 2005	Change*
Gross Margin	42.30%	41.58%	0.72
Operating Margin	19.34%	17.77%	1.57
Net Margin	12.05%	11.10%	0.95

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets	Q3 2006	Q3 2005	Change
Cash + ST Invest.	$321	$53	510.9%
Accounts Rec.	$568	$520	9.3%
Inventory	N/A	$54	N/A

Liabilities	Q3 2006	Q3 2005	Change
Accounts Payable	N/A	$103	N/A
Long-Term Debt	$603	$355	69.7%

*Lab Corp's press release offered limited consolidated balance sheet info. Fools will have to wait until the 10-Q is filed for further details.

Learn the ways of the balance sheet.

Cash Flow Highlights*

	Q3 2006	Q3 2005	Change
Cash From Ops.	$462	$413	$49
Capital Expenditures	$68	$71	($4)
Free Cash Flow	$394	$342	$53

*For the nine months ended Sept. 30, 2006 and 2005.

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Related Chemical Companies:

• Quest Diagnostics (NYSE: DGX  )
• Bio-Reference Labs (Nasdaq: BRLI  )
• MEDTOX Scientific (Nasdaq: MTOX  )
• Alliance Imaging (NYSE: AIQ  )
• Psychemedics Corp (NYSE: PMD  )
• Radiologix (NYSE: RGX  )

Related Foolishness:

• Foolish Fundamentals: Margins
• Foolish Fundamentals: Free Cash Flow
• Foolish Fundamentals: Return on Invested Capital
• Foolish Fundamentals: The Cash Flow Statement

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Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

Fool contributor Ryan Fuhrmann has no financial interest in any company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.