LabCorp 2007 Annual Report Download - page 6

4 Laboratory Corporation of America® Holdings 2007
had projected. I am proud of the role our
dedicated employees played in the execution
of this important contract, and we all owe
them a great debt of gratitude for their efforts.
The contract extension with Cigna
Healthcare is also noteworthy. Previously, we
were only allowed to market our in-network
status with Cigna to approximately 40 percent
of their membership. We were prohibited
from marketing in most major markets.
The new contract, which went into effect
January 2008, no longer contains this
restriction, creating new opportunities for
us in many key markets.
We also are excited about the opportunity
to expand our relationship with Wellpoint and
build on our national strategic partnership
agreement. Although we are Wellpoint's
partner of choice in Georgia, Colorado and
Nevada, we continue to work hard to expand
our relationship in other key geographic
markets, as well as to implement a number
of strategic initiatives that will improve patient
outcomes and reduce health care costs.
Scientifi c Leadership
I am proud that LabCorp delivers access
to the most advanced scientifi c testing
capabilities to doctors, patients and payors.
The remarkable insights gained from genomic
and esoteric testing are largely responsible
for elevating laboratory testing to the enhanced
role that it is playing in health care today. From
a business perspective, these are high-
margin services that improve our revenue
mix and operating margins. Accordingly,
we remain committed to continual expan-
sion of our esoteric testing menu.
During 2007, we introduced over 40 new
tests in disciplines such as oncology, infectious
disease, immunology, genetics, coagulation
and women’s health. In most cases, we
collaborate with partners through licenses
or strategic research agreements. Though
our esoteric testing expansion is broad-based,
nearly all new tests share two common
themes. First, we target areas where there
is a clear need that the market is not meeting
and, second, new testing technologies
are increasingly oriented toward our goal
of becoming the leading laboratory in
personalized medicine.
This rapidly evolving field presents
opportunities for improving patient care
and growing revenue. Our recent acquisition
of Tandem Labs, a leading bioanalytical
and immunoanalytical laboratory that
supports pharmaceutical and biotechnology
companies with discovery, preclinical and
clinical drug development programs is a
further sign of our commitment to lead in
the personalization of care. Tandem will be
instrumental in helping to grow our clinical
trials business and enhance our leadership
position in companion diagnostics. We intend
to partner with pharmaceutical companies
in developing diagnostics that will help
patients receive the drugs that, for each
of them, are safe, effective and correctly
dosed. We view personalized medicine as
an increasingly important segment of health
care, and our initiatives in this area are an
important component of our long-term
plan for growth.
Customer Service
LabCorp begins 2008 with a much more
robust geographic footprint than that of a
year ago. To fully serve new providers and
patients, we have increased our presence
in major markets such as metropolitan
New York, Chicago and St. Louis. Yet
despite the challenges of rapid growth,
our customer surveys show that overall
satisfaction actually increased in 2007.
Again, we owe credit to our hardworking
front-line employees who so admirably
represent LabCorp to doctors and patients
around the country. We signifi cantly improved
our IT and connectivity capabilities in 2007,
and we will continue to improve the customer
experience in 2008 and the years ahead.
During 2007, I sent quarterly letters to
each of our more than 220,000 accounts,
asking about their LabCorp experience.
I appreciated all client feedback, and I
personally made sure that a member of
senior management responded to every
comment. This attention to detail and
ability to learn from our customers is an
important way in which we enhance our
customer-focused culture.
We continue to expand into key markets
to better serve doctors and patients. The
acquisition of DSI Laboratories added 21
new patient service centers for us in south-
west Florida, a heavily populated and fast-
growing area. Similarly, the acquisition of
PA Laboratories in Muncie, Indiana, a suburb
of Indianapolis, has provided us with an anchor
in the nation’s 12th-largest metropolitan area.
Both acquisitions were signifi cant
because they involved collaboration with
a hospital to purchase an outreach testing
program while, at the same time, enabling
them to keep their core hospital lab intact.
Hospitals still represent over 50 percent of
the clinical laboratory testing market, and
we believe that two-thirds of that market
is business for which we can effectively
Letter to Shareholders continued