Testing laboratories firm Labcorp to spin off clinical development business

Labcorp, an American testing laboratories company, said that its board of directors has authorized it to undertake a spin-off of its fully-owned clinical development business to its shareholders via a tax-free deal.

The proposed spin-off will result in a couple of standalone, publicly traded firms, which will be Labcorp, a global laboratory business, and the clinical development business, which will operate as a global contract research organization (CRO).

The separated clinical development business will offer management services for phase I-IV clinical trials, market access, and technology solutions to pharma and biotech organizations.

Labcorp said that the intended spin-off is likely to give both the companies with increased strategic flexibility and operational focus to carry out definite market opportunities and better meet the requirements of customers.

It will also give focused capital structures and strategies of capital allocation to fuel innovation and growth and an opportunity for more targeted investment in various investor bases.

Adam Schechter — Labcorp chairman and CEO said: “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.

“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.”

Labcorp is targeting to close the planned spin-off of the clinical development business in the second half of next year. The spin-off will be subject to the fulfillment of some customary conditions.