Until the deal to spin off its CRO business is completed, the unit will continue to be owned and operated by Labcorp.
Labcorp has its sights set on spinning off its CRO segment by midyear, and, now, the independently traded company’s name has been revealed as Fortrea.
The spinoff, first announced last July, will operate as an independent, publicly traded CRO with over 19,000 employees and offer drug and medical device development services, including phase 1 through 4 clinical trial management and commercialization solutions.
Labcorp plans to offer up the spinoff to Labcorp shareholders through a transaction intended to be tax-free for U.S. federal income tax purposes, the company said in a Feb. 6 press release. The spinoff will create two independent, publicly traded companies. In the meantime, the clinical development business will continue to be owned and operated by Labcorp.
“Today marks a significant milestone as we progress toward becoming an independent company and capturing the enormous opportunity ahead,” said Tom Pike, president and CEO of Labcorp’s clinical development business and future CEO and board chairman of Fortrea. “The announcement of Fortrea signals to the world what we are building: a leading, pure-play CRO positioned to serve customers, deliver life-changing medicines faster and create lasting value for all our stakeholders.”
In its original announcement, Labcorp officials said they expect the standalone CRO company to be self-sufficient. For the year ending June 30, 2022, the clinical research arm notched $3 billion in revenue and is expected to produce high single-digit revenue growth going forward.
As separate entities, the diagnostics business and the new CRO company will still share “health and clinical data,” Labcorp said in the release. About 15% to 20% of Labcorp’s central lab business came from the CRO wing. With the split, the company projects that the central lab wing will have greater flexibility to work with more clients.