LabCorp 2006 Annual Report Download - page 12

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Dear Shareholders:
2006 was another year of strong, profitable
growth for LabCorp, continuing our record of
increasing revenues and profits and substan-
tially enhancing shareholder value. The year’s
accomplishments underscore the defining
characteristics of LabCorp – setting ambitious
goals and consistently attaining them.
More than a decade ago, we recognized
that organic industry trends would make
managed care providers increasingly important
in the health care marketplace. Because of
the large patient populations these organiza-
tions bring to physician offices, expanding
our relationships with managed care partners
affords the best opportunity to drive sustained
growth. With that in mind, we set our sights
on becoming the laboratory of choice for
managed care companies.
We took an important step towards
that goal, and achieved a highly significant
milestone in the evolution of LabCorp in
October. We concluded an historic, 10-year
agreement with UnitedHealthcare that
designates LabCorp as its exclusive national
laboratory, offering a comprehensive suite of
services to their members across the country.
Ramping up our infrastructure to take
on significantly increased testing volumes
was a formidable and challenging task. But
intense effort by LabCorp personnel produced
extraordinary results, and, by year’s end,
we opened more than 400 new patient access
points and hired 1,200 new team members
to ensure the highest level of service for
our patients and physicians as we bring
UnitedHealthcare on board.
This agreement is expected to result in
incremental revenue of at least $3 billion from
UnitedHealthcare and associated businesses,
at EBITDA margins at least equal to our
current, industry-leading levels. This is truly
a landmark contract. In fact, we believe there
is no other relationship in the lab industry of
such scope, scale, or timeframe.
The UnitedHealthcare agreement, while
clearly the largest, is but one of a series of
expanded relationships that we have secured
in recent years with managed care providers
such as WellPoint, Cigna and Humana. LabCorp
has emerged as the laboratory of choice for
managed care companies as a result of three
core strengths:
Quality
LabCorp’s commitment to quality is deeply
ingrained in the way we do business every
day. It begins with a focus on scientific
excellence, and an extensive record of
developing and bringing to market highly
advanced esoteric and genomic assays that
have helped revolutionize disease diagnosis
and patient care.
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LABCORP
SHAREHOLDERS’
LETTER
This agreement, which extends for
a period of ten years, is expected
to result in incremental revenue
of at least $3 billion from
UnitedHealthcare and associated
businesses, at EBITDA margins
at least equal to our current,
industry-leading levels.
10 Laboratory Corporation of America® Holdings 2006