LabCorp 2014 Annual Report Download - page 40

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• the Company’s ability to realize synergies and the timeline for doing so;
• acquisition costs, including restructuring charges and transaction costs;
• the Company’s ability to develop, maintain and deepen relationships with Covance Drug Development's customers;
and
• other financial and strategic risks of the acquisition.
If one or more of these assumptions are incorrect, it could have a material adverse effect on the Company’s business and
operating results, and the expected benefits from the acquisition may not be realized.
The Company incurred significant transaction and acquisition-related costs in connection with the Acquisition.
The Company has incurred and expects to continue to incur a number of non-recurring costs associated with the Acquisition.
These costs and expenses include fees paid to financial, legal and accounting advisors, facilities and systems consolidation costs,
severance and other potential employment-related costs, including payments that may be made to certain Covance business'
executives, filing fees, printing expenses and other related charges. There are also a large number of processes, policies, procedures,
operations, technologies and systems that the Company intends to integrate in connection with the Acquisition and the integration
of the two companies’ businesses. While the Company has assumed that a certain level of expenses will be incurred in connection
with the Acquisition and the other transactions contemplated by the Merger Agreement, there are many factors beyond its control
that could affect the total cost or the timing of the integration and implementation expenses.
There may also be additional and significant unanticipated costs in connection with the Acquisition that the Company may not
be able to recoup. These costs and expenses could reduce the realization of efficiencies, strategic benefits and additional income
the Company expects to achieve from the Acquisition. Although the Company believes that these expected benefits will offset the
transaction expenses and implementation costs over time, a net benefit may not be achieved in the near term or at all.
The Acquisition may not be accretive, and may be dilutive, to the Company's earnings per share, which may negatively
affect the market price of the Company's common stock.
Because shares of the Company's common stock were issued in the Acquisition, it is possible that the Acquisition will be dilutive
to the Company's earnings per share, which could negatively affect the market price of shares of the Company's common stock.
In addition, future events and conditions could increase the dilution of the Company's earnings as determined under generally
accepted accounting principles ("GAAP") that is currently projected, including adverse changes in market conditions, additional
transaction and integration-related costs and other factors such as the failure to realize some or all of the benefits anticipated in
the Acquisition. Any dilution of, or delay of any accretion to, the Company's earnings per share, should cause the price of shares
of the Company's common stock to decline or grow at a reduced rate.
Covance Drug Development is subject to uncertainties related to the acquisition that could adversely affect its financial
results and ability to retain key employees.
Uncertainty about the effect of the acquisition on Covance Drug Development's customers, employees or suppliers may have
an adverse effect on Covance. Although Covance Drug Development has taken steps to reduce any adverse effects, these
uncertainties may impair its ability to attract, retain and motivate key personnel until the acquisition is completed and for a period
of time thereafter, and could cause disruptions in its relationships with customers, suppliers and other parties with which it deals.
In particular, the Company considers Covance Drug Development's strong management team an attractive aspect of Covance.
The loss of members of Covance Drug Development's senior management team could have an adverse effect on the Company’s
ability to operate Covance Drug Development and integrate it into the Company’s consolidated operations. Retention of these
key members may be particularly challenging prior to and even for a period after the completion of the acquisition, as employees
may experience uncertainty about their future roles. If, despite retention and recruiting efforts, key employees depart because of
issues relating to the uncertainty and difficulty of integration or a desire not to remain with Covance Drug Development, its
business operations and financial results could be adversely affected.
The Company also expects that matters relating to the acquisition and integration-related issues will place a significant burden
on the Company's and Covance Drug Development's management, employees and internal resources, which could otherwise
have been devoted to other business opportunities and improvements.