Labcorp Holdings Inc. · NYSE:LH
Labcorp — Laboratory Corp of America Holdings — J.P. Morgan Healthcare Conference 2015
25 slides from Labcorp's conference presentation, Jan 13, 2015
Slide 1: J.P. Morgan Healthcare Conference January 13, 2015
J.P. MORGAN HEALTHCARE CONFERENCE JANUARY 13, 2015 | SAN FRANCISCO, CA
Slide 2: Forward Looking Statement
1 FORWARD LOOKING STATEMENT Cautionary Statement Regarding Forward Looking Statements This presentation contains “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the Private Securities Litigation Reform Act of 1995, known as the P
Slide 3: Forward Looking Statement: Additional Information and Where to Find It
2 FORWARD LOOKING STATEMENT Additional Information and Where to Find It This presentation does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval in any jurisdiction, nor shall there be any sale, issuance, exchange or trans
Slide 4: Introduction to LabCorp
3 INTRODUCTION TO LABCORP • ~$6B in revenue last year • $60B US Clinical Laboratory market • 34,000+ employees worldwide • National network of 37 primary laboratories and 1,750 patient service centers • Offers broad range of 4,500+ clinical, anatomic pathology, genetic and genomic tests • Processes
Slide 5: Core Business Strength
4 CORE BUSINESS STRENGTH Enhance IT capabilities to improve physician and patient experience Development of knowledge services Scientific innovation at appropriate pricing IT innovation Continue to improve efficiency to offer the most compelling value in laboratory services Business process re-engin
Slide 6: Today's Discussion: Creating the World's Leading Healthcare Diagnostics Company
5 TODAY'S DISCUSSION: CREATING THE WORLD'S LEADING HEALTHCARE DIAGNOSTICS COMPANY Growth: New value for pharma, payers, providers, and consumers Announced Agreement to Acquire Covance Today's discussion focuses on how this merger creates value and delivers sustained profitable growth • Consideration
Slide 7: Introduction to Covance
6 • ~$2.5B in revenue last year • Serves $140 billion global pharmaceutical R&D market • Only provider of full spectrum of drug development services • Involved in the development of all of the top 50 drugs on the market • #1 in central laboratory / preclinical services • ~$900M revenue in Phase I-IV
Slide 8: Transformative Combination: Creating the World's Leading Healthcare Diagnostics Company
7 TRANSFORMATIVE COMBINATION: CREATING THE WORLD'S LEADING HEALTHCARE DIAGNOSTICS COMPANY Powerful combination of personnel, assets, and capabilities Strong management teams Commercial infrastructure and global footprint Physician and consumer access and connectivity Scientific, bioinformatics and a
Slide 9: Combination Creates the Best End-to-End Partner for Pharmaceutical and Biotech Development
8 COMBINATION CREATES THE BEST END-TO-END PARTNER FOR PHARMACEUTICAL AND BIOTECH DEVELOPMENT New/small position Leading position Strong position Diagnostic development Biomarker discovery & validation Pre- clinical Phase IV On-market care delivery • Post-mkt drug surveillance • Lab services • Monito
Slide 10: LabCorp Will Be the Partner of Choice for Biopharma and Improve the Lives of Patients
9 LABCORP WILL BE THE PARTNER OF CHOICE FOR BIOPHARMA AND IMPROVE THE LIVES OF PATIENTS • Faster, higher quality clinical trials at lower cost • Increased sales during patent lifetime • Expedited commercialization of companion diagnostics • Data analytics reduce safety recalls • More personalized me
Slide 11: 2015 and 2016 Priorities
10 2015 AND 2016 PRIORITIES Deliver synergies ($100M annual cost reduction by 2017) Fully deploy top three value creation opportunities Continue core business initiatives (Business process re-engineering, BeaconLBS, Enlighten Health) Capitalize on the enhanced capabilities of our combined lab organi
Slide 12: Combination Provides Significant New Growth Avenues
11 COMBINATION PROVIDES SIGNIFICANT NEW GROWTH AVENUES Prioritized top 3 opportunities based on materiality, feasibility, and strategic fit Deliver faster clinical trial enrollment 1 Partner of choice to develop and commercialize companion diagnostics 2 Enhance Phase IV trial experience and post-mar
Slide 13: Detail on the Top Three Opportunities
12 DETAIL ON THE TOP THREE OPPORTUNITIES Enhance Phase IV trial experience and post-market surveillance 3 Deliver faster clinical trial enrollment 1 Partner of choice to develop and commercialize companion diagnostics 2 >$150M >$100M >$50M Incremental 2018 Revenue
Slide 14: Top Three Value Creators to Bring to Market in 2016
13 TOP THREE VALUE CREATORS TO BRING TO MARKET IN 2016 Enhance Phase IV trial experience and post-market surveillance 3 Deliver faster clinical trial enrollment 1 Partner of choice to develop and commercialize companion diagnostics 2
Slide 15: Acquisition Allows Us to Identify and Target Patient Populations with Specific Disease Conditions
14 ACQUISITION ALLOWS US TO IDENTIFY AND TARGET PATIENT POPULATIONS WITH SPECIFIC DISEASE CONDITIONS Before: Direct outreach to cancer center in search for patients Now: Leveraging LabCorp database for (1) patient locations & (2) viable sites Example: Non-small cell lung cancer with EGFR+ mutation 1
Slide 16: Combined Company Has the Opportunity to Benefit from CRO Market Expansion and an Increase in Share
15 COMBINED COMPANY HAS THE OPPORTUNITY TO BENEFIT FROM CRO MARKET EXPANSION AND AN INCREASE IN SHARE 2014 2016 2018 Biopharma spend on Phase II-III trials1 $30B $32B $34B CRO served Phase II-III trial spend (% served by CROs)1 $12B (40%) $13B (42%) $15B (44%) Combined company revenue for Phase II-I
Slide 17: Top Three Value Creators to Bring to Market in 2016
16 TOP THREE VALUE CREATORS TO BRING TO MARKET IN 2016 Enhance Phase IV trial experience and post-market surveillance 3 Deliver faster clinical trial enrollment 1 Partner of choice to develop and commercialize companion diagnostics 2
Slide 18: Combined Company Will Drive CRO Share Gain for Drug Trials Requiring CDx Programs
17 COMBINED COMPANY WILL DRIVE CRO SHARE GAIN FOR DRUG TRIALS REQUIRING CDX PROGRAMS 2 Capabilities Capabilities CDx development enabled by biomarker discovery and validation Market-leading biomarker and early stage trial support Execution on lab-based CDx for clinical validation in trials Late stag
Slide 19: Companion Diagnostics Capabilities Add >$100M Revenue by 2018
18 COMPANION DIAGNOSTICS CAPABILITIES ADD >$100M REVENUE BY 2018 1. Based on estimated biomarker testing revenue of $200K per compound and total historical downstream testing revenue equal to 8.6x biomarker testing revenue 2. Covance estimates for currently obtainable projects with CDx development p
Slide 20: Top Three Value Creators to Bring to Market in 2016
19 TOP THREE VALUE CREATORS TO BRING TO MARKET IN 2016 Enhance Phase IV trial experience and post-market surveillance 3 Deliver faster clinical trial enrollment 1 Partner of choice to develop and commercialize companion diagnostics 2
Slide 21: Unmet Needs Addressed by Combined Company's Enhanced Phase IV Patient Experience and Post-Market Surveillance
20 UNMET NEEDS ADDRESSED BY COMBINED COMPANY'S ENHANCED PHASE IV PATIENT EXPERIENCE AND POST-MARKET SURVEILLANCE LabCorp patient web portal eliminates scheduling hassle 1,750 LabCorp patient service centers and ~5,000 phlebotomists in physician offices make testing more convenient Combined company p
Slide 22: Combined Company Has Opportunity to Grow Share in Phase IV Trials and Post-Market Surveillance
21 COMBINED COMPANY HAS OPPORTUNITY TO GROW SHARE IN PHASE IV TRIALS AND POST-MARKET SURVEILLANCE Biopharma Phase IV and post-market spend1 $12B $13B $14B CRO served Phase IV / post-market spend (% served by CROs) 1 $5B (38%) $5B (39%) $6B (40%) Combined company revenue for Phase IV / post-market (%
Slide 23: Combined Company Retains Financial Strength
22 COMBINED COMPANY RETAINS FINANCIAL STRENGTH Financial review and closing comments
Slide 24: Combined Company Retains Financial Strength: No Fundamental Shift in Long-Term Capital Allocation Strategy
23 COMBINED COMPANY RETAINS FINANCIAL STRENGTH: NO FUNDAMENTAL SHIFT IN LONG-TERM CAPITAL ALLOCATION STRATEGY (1) LabCorp EBITDA adjusted to exclude restructuring and other special charges of $29.6 million (2) Covance EBITDA adjusted to exclude restructuring and asset impairment charges of $71.2 mil
Slide 25: Combination Creates the World's Leading Healthcare Diagnostics Company
24 COMBINATION CREATES THE WORLD'S LEADING HEALTHCARE DIAGNOSTICS COMPANY LabCorp • Improve people's health • Drive profitable growth • Create shareholder value • Faster, higher quality clinical trials at lower cost • Increased sales during patent lifetime • Expedited commercialization of companion
Laboratory Corp of America Holdings — J.P. Morgan Healthcare Conference 2015 on 6ix