LabCorp Diagnostics (Burlington, NC, USA) has announced that its board of directors has authorized the company to pursue a spin-off of its wholly owned Clinical Development business to shareholders through a tax-free transaction.
The planned spin-off will result in two independent, publicly traded companies, each poised for strong, sustainable growth:
- Labcorp: A leading global laboratory business comprising the Company’s routine and esoteric labs, central labs and early development research labs, all of which are leaders with deep scientific expertise, vast health data and insights, and an extensive, advanced global laboratory network.
- The Clinical Development Business: A leading, global Contract Research Organization (CRO) providing Phase I-IV clinical trial management, market access and technology solutions to pharmaceutical and biotechnology organizations.
The planned spin-off is expected to provide each company with:
- Strengthened strategic flexibility and operational focus to pursue specific market opportunities and better meet customer needs.
- Focused capital structures and capital allocation strategies to drive innovation and growth.
- A more targeted investment opportunity for different investor bases.
Labcorp will remain a global leader advancing healthcare through science, innovation and technology with deep scientific expertise, vast health data and insights, and an extensive, advanced global laboratory network. Together, its lab-based businesses will create a cohesive, global provider of laboratory-focused services with complementary resources operating at scale and a diverse customer base. Following the planned spin-off, the business will be positioned to:
- Invest in R&D and innovation to develop and launch diagnostic advancements globally in key areas including oncology, Alzheimer's, autoimmune and liver disease through organic and inorganic opportunities.
- Bring together its global health and patient data and provide insights to enable customers to advance innovation.
- Utilize its worldwide laboratory network to serve a broad, growing and global customer base including pharmaceutical and biotechnology companies, physicians, health systems, consumers, and other start-ups and labs who require lab services or diagnostic testing.
- Launch innovative tests globally, providing patients, physicians, health systems and pharmaceutical companies with access to Labcorp’s advanced science, technology and diagnostic capabilities.
The Clinical Development business will continue to be a leading global provider of Phase I-IV clinical trial, market access and technology solutions to both large and emerging pharmaceutical and biotechnology organizations. Following the planned spin-off, the business will be positioned to:
- Capitalize on growth opportunities across Phases I-IV clinical trials and extend its leadership in oncology, cell and gene therapy, rare disease, and other emerging therapeutic areas.
- Increase agility with large pharmaceutical and biotechnology clients to better serve customers and advance life-saving therapies.
- Retain access to Labcorp’s vast health and clinical data set through an arrangement which will enable it to provide enhanced trial execution and a differentiated value proposition.
- Continue to invest in capabilities, technologies, diverse talent and innovation to enhance trial execution and better serve all of its customers.
- Implement a capital structure that is tailored to support its growth strategy and enhance stakeholder value.
“Spinning off the Clinical Development business will benefit customers and shareholders by creating two standalone businesses that are poised to accelerate growth and focus resources on distinct strategic priorities, customer needs and value creation," said Adam Schechter, chairman and CEO of Labcorp. “Our shareholders will be able to participate in the upside potential of two market-leading businesses in the global healthcare sector, each of which will be well-capitalized and positioned to generate sustainable growth with strong free cash flows and attractive returns. Our customers will continue to have access to our full range of capabilities with the same quality and seamless delivery of services they have come to expect from our teams. Today is a testament to our long history of growth through innovation and track record of delivering on our mission to improve health and improve lives.”
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