Covance plans closures – and expansions – as it aims to 'right-size'
In an SEC filing yesterday, the Laboratory Corporation of America Holdings (LabCorp) announced that it is expanding its LaunchPad business process improvement initiative to include its Covance Drug Development segment.
According to the company, the first phase of the initiative focuses on Covance’s near-term outlook.
Per its earnings release, this phase is expected to generate pre-tax savings of approximately $20m in 2017 and approximately $45m annually thereafter.
“In connection with the implementation of the first phase, on April 24, 2017, the Company committed to carry out a reduction in workforce in 2017,” the SEC filing explained.
“In the first phase of this work, there will be a limited number of position reductions across the Covance business,” Pattie Kushner, a spokesperson for LabCorp told Outsourcing-Pharma.com in a statement.
Additionally, Kushner said the company is “right-sizing” its operational footprint as part of phase two – “consolidating some facilities while expanding others,” she said, noting the recent expansion at the company’s UK-based operations.
“These actions align with our integration strategy, the anticipated flow of client work across our locations and areas targeted for growth,” she said.
Related facility closure costs are expected to be approximately $16.0m in 2017.
The second phase focuses on long-term structural changes “designed to create a more efficient business model,” according to the filing.
However, Kushner said it is import to note that the “vast majority” of Covance’s 15,000 employees and clients will not be affected by the restructuring and service delivery “will continue without interruption.”
Those employees who may be impacted have been notified, she said, adding that the actions will be completed by the end of 2017.
More details are expected later in the year.
“In the immediate term, our primary focus is to support employees who are transitioning and to work with clients who may have changes in their project teams to avoid any disruption to service.”