By Stephanie Murg, Managing Director of Conferences, G2 Intelligence
LabCorp (Burlington, N.C.) has become the nation’s largest provider of health care diagnostic services with its acquisition of contract research organization Covance (Princeton, N.J.). Announced in November, the deal closed last Thursday with a purchase consideration valued at $107.19 per Covance share ($75.76 in cash and 0.2686 LabCorp shares for each Covance share), for an equity value of approximately $6.2 billion and an enterprise value of approximately $5.7 billion.
Known as a clinical trials powerhouse, Covance bills itself as the world’s most comprehensive drug development company and a leader in nutritional analysis. LabCorp sees in its complementary yet distinct offerings the opportunity to create “the leading provider of medical testing as well as the premier full-service drug development organization, partnering with customers across a broad continuum from biopharmaceutical research to drug and diagnostic development to commercialization.”
Revenue of the combined companies will be derived from managed care (32%), pharmaceutical and biotech companies (29%), commercial customers (22%), Medicare/Medicaid (12%), and private patients (5%).
LabCorp chairman and CEO David P. King and LabCorp chief financial officer Glenn A. Eisenberg are slated to keep their leadership roles in the combined company, which is headquartered in Burlington, N.C. Covance chairman and CEO Joe Herring will lead LabCorp’s Covance division and report directly to King. Covance Drug Development will continue to operate under the Covance name, with its headquarters in Princeton.