Good day, ladies and gentlemen, and welcome to the third quarter 2018 LabCorp's earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. As a reminder, this conference call is being recorded. I would now like to turn the conference over to Scott Frommer, Vice President of Investor Relations. You may begin.

Good morning and welcome to LabCorp's third quarter 2018 conference call. As detailed in today's press release, there will be a replay of this conference call available via telephone and Internet. With me today are Dave King, Chairman and Chief Executive Officer; Glenn Eisenberg, Executive Vice President and Chief Financial Officer; and John Ratliff, CEO of Covance Drug Development. In addition to our press release, we also furnished Form 8-K this morning that includes additional financial information. Both are available in the Investor Relations section of our website at www.labcorp.com and include a reconciliation of non-GAAP financial measures discussed during today's call to GAAP. Finally, we are making forward-looking statements during today's call. These forward-looking statements include, but are not limited to, statements with respect to 2018 guidance and the related assumptions, the impact of various factors on operating and financial results, and the opportunities for future growth. These statements are based upon current expectations and are subject to change based upon various factors that could affect our financial results. Some of these factors are set forth in detail in our 2017 Form 10-K and subsequent Forms 10-Q, and in the company's other filings with the SEC. We have no obligation to provide any updates to these forward-looking statements even if our expectations change. Now, I'll turn the call over to Dave King.

Thank you, Scott, and good morning. LabCorp's results in the quarter were highlighted by year-over-year revenue growth of 8% and adjusted EPS growth of 16%. Our performance was driven by strong results of our Covance business this quarter with increased net orders, a 1.41 book-to-bill, organic revenue growth of over 7% and 130 basis points of margin expansion. These are clear indications that our investments in the business, our differentiated offering and our Covance LaunchPad process improvement initiative are combining to deliver results in the market. In Diagnostics, excluding the impact of a ransomware attack in July and Hurricane Florence, we delivered 1.4% organic revenue and 1.9% organic volume growth. Nonetheless, this outcome was below our expectations with margin performance particularly disappointing and we are taking strong action as a result. First, we are making organizational changes to strengthen our leadership and operational performance. Second, we are launching the next phase of Diagnostics LaunchPad which will result in multiyear cost savings of a similar magnitude to LaunchPad Phase I. Applying the same principles as before, process reengineering, automation, integration of new tools and technology and facility optimization, this phase of LaunchPad will build on our prior work and lead to an even more streamlined and efficient Diagnostics business. We will provide additional detail about the size and scope of LaunchPad Phase II on our next earnings call. During the quarter, we continued to be good stewards of capital. We sharpened our life sciences focus by divesting our Food Solutions business at a very attractive valuation. As a result of the business divestiture, we exited the quarter in a strong cash position. We continued to develop our acquisition pipeline and increased share repurchases to $150 million. We are committed to supporting near and long term value creation for capital deployment, including…

Thank you, Dave. I'm going to start my comments with a review of our third quarter results followed by a discussion of our performance in each segment and include my commentary on our full year outlook. As a reminder, on January 1, 2018, we adopted ASC 606 using the full retrospective method, meaning that we restated our 2017 financial results to better enable the valuation of our 2018 performance and guidance. In the press release, our prepared remarks and the Q&A session to follow, all references to our 2017 results are to the restated numbers unless we specifically note otherwise. During the quarter there were two usual events, the ransomware attack in July and Hurricane Florence in September. First, the ransomware attack impacted revenue by approximately $10 million and operating income by approximately $23 million. Of the $23 million total impact to operating income, $13 million has been classified as discrete expenses related to recovery efforts, including directly identifiable, overtime, consultant and contractor expenses. These discrete expenses have been excluded from the company's adjusted operating income. The remaining $11 million reduced the company's adjusted operating income, primarily due to lower volume caused by our decision to temporarily take certain systems offline to contain and remediate the ransomware attack, as well as higher labor expense incurred to expedite processing of the built-up backlog. These metrics do not include any benefit from insurance recovery which we are pursuing. Second, Hurricane Florence impacted revenue by approximately $4 million and adjusted operating income by approximately $3 million also due to lower volume. Together, these two unusual events negatively impacted adjusted EPS by $0.10. For the remainder of my remarks, I will refer to these two events together as business disruptions. Revenue for the quarter was $2.8 billion, an increase of 8% over last year,…

Our first question comes from Ross Muken of Evercore. Your line is now open.

Good morning, gentlemen. So maybe let's start on Covance. I think relative to the prior quarter, across-the-board, the results were materially better and obviously, the bookings piece was probably the highlight and core growth was good as well. Maybe just give us a feel for kind of coming off of that sort of disappointment last quarter, what you saw change, how much of the stuff that sort of impacted you last Q is kind of temporal and you saw relief on it. And then on the margin side, also felt like as well, you got some of that drop-through on the better revenue, but also you're getting some momentum on the cost side.

Sure. Thank you, Ross. This is John. In terms of the stronger book-to-bill, that was across all of our areas, early development, labs, clinical. It's driven by, yes, healthy market fundamentals, in terms of the funding environment, the approvals, the FDA, the high interest in the drug development innovation from ourselves. We do have strong pipeline of opportunities across the board in terms of proposals and continued success with our differentiation, whether that's with the data or the stronger FSP offerings or the solutions in terms of companion diagnostics or biomarkers. But clearly, strength across the units. Yeah, second quarter, temporal. And I think you see why we lean toward more of a last 12 months versus, clearly, a quarter-by-quarter basis. And on the margin side, that's going to be a heavy lift in terms of on both the LaunchPad initiatives, as well as the revenue, but you're seeing that leverage come through and you're seeing that sequential leverage show up. In terms of the margin side – we see continued upside in terms of the margins. We know we need to get superior level margins and work to do in terms of the early development in clinical and know that both on the revenue and margin side, we're looking for continued progress there.

Thanks, John. And maybe, Dave, just sort of philosophically here, obviously, a lot of moving parts in the lab business and I'm sure you're not thrilled with some of the near-term pieces, albeit obviously a lot of it's out of your control. As you think about all the capital you have now, plus the Food divestiture and some of the activity picking up in the market and also having opportunity to deploy on the CRO set, I guess how are you thinking about it to next year? I know you talked about a pretty good return on capital in the fourth quarter, it seems like you also have plenty of firepower on the M&A side that continue to supplement, how are you thinking about the opportunity set that's out there?

As we've said, we think about every opportunity that's presented to us individually and collectively. So individually, does it meet our strategic objectives? Does it meet our financial objectives? And what is the value to the total enterprise? And then collectively, how do we want to deploy our capital for growth? And so what I would say is there's no predisposition toward deploying capital toward one business or another when it comes to acquisitions. We're going to look at every one individually. I will say that assuming that the second round of PAMA is implemented as planned, I think there will be acquisition opportunities on the lab side. I think there'll be collaboration opportunities on the health system side, as you seen in our broadened relationship with Baptist. And so we have, in my mind, done a very good job of reducing our leverage and returning capital to shareholders and we're going to continue to tighten up that target leverage and, at the same time, maintain the flexibility of the balance sheet so that we can do the best deals that come along.

Thanks so much.

Thank you. Our next question comes from Lisa Gill of JPMorgan. Your line is now open.

Great, thanks. Good morning. First, congratulations on the great numbers on the Covance side. Dave, I'm going to ask about the Diagnostics side. So as I think about your expectations on the quarter versus what was delivered, you talked about organic being lower than expected. Your chief competitor reported yesterday, talked about patient concessions as well as some reimbursement issues. Can you just walk us through, are you seeing similar things or are there different things that you're seeing for LabCorp versus Quest? Just want to understand the expectation versus what you delivered in the quarter and then also understand if there is a bad debt issue here?

Sure. Good morning, Lisa. Thanks for the nice comments about Covance. We're very pleased with that performance. Our bad debt year-over-year is basically flat as a percentage. Now to be clear, as revenue grows, obviously, if you apply the same percentage, the dollars of bad debt get higher. But as a percentage of revenue – and I realize we account for it differently, but let's talk about the way we used to talk about in the old days – as a percentage of revenue, bad debt is basically flat. And in fact, in the year, from 1Q to 3Q, bad debt has sequentially declined each quarter. So we're not experiencing that headwind. And I think – just make a comment that we do this internally, our revenue cycle management team has done a fantastic job. We do see higher patient responsibility across the board in the business, but our team has done a fantastic job; addressing and managing that through a lot of innovative tools, including front-end collections in the patient service center and our pricing transparency tool. So bad debt has not been a headwind. On the specific callouts in terms of individual tests and payment denials, medical drug monitoring continues to grow although the growth rate is trending down. Some of that has been fewer scripts being written because of constraints on opioid prescriptions. Some of it is physicians insourcing the lab work because they can bill for it directly and get paid as opposed to sending it out to labs. And some of it has been denial policies. Now again, I want to come back to it grew, it just didn't grow at the rate that it has grown over prior quarters. The hepatitis C and vitamin D, there's nothing materially different from what we've seen historically – what we have seen in prior quarters there. The one thing I would call out in terms of slowing the incremental growth is 23andMe was slower this quarter than it was in 2Q. And so that's where you saw some of the decline in organic growth, because as we've said, that is a contributor to our organic growth. We expect that to increase sequentially in the fourth quarter. And so, that would probably be the one thing I would point out as a detractor in terms of organic growth rate. That said, the fact that 23andMe's volume growth rate slowed is part of the reason that you see our price – because again it's mix, it's not unit price but are price improvements because, as we've said, our profitability on 23andMe is fine but it is a lower per encounter price than our average requisition.

And you wouldn't say there's any changes on anything else from a managed care perspective or contracting when we think about the sequential Diagnostic business?

No, not at all.

Okay, great. Thank you.

Thank you. Our next question comes from Patrick Donnelly of Goldman Sachs. Your line is now open. Patrick Donnelly - Goldman Sachs & Co. LLC: Great, thanks, guys. Maybe just on the retail strategy with the Walgreens expansion, can you just kind of talk through what made you comfortable expanding that so significantly? I guess, what encouraged you about the initial locations? How should we be thinking about the economics of that versus some standalone patient centers?

Sure. It's Dave. Start with the economics. So, the economics that we have worked out with Walgreens, we're pleased with in that they're essentially comparable to the economics of our standalone patient service centers. And the reason that we like the retail strategy is it's very difficult to identify are you getting incremental volume. But in the patient feedback that we're – the real-time patient feedback we're getting from those stores, we see a fairly significant number of patients who say either that they are new to LabCorp or that they haven't been to LabCorp in more than a year. And so we think it is increasing patient float versus the standalone patient service centers. The other thing that's very attractive about it is the opportunity to provide broader health services to the patient. So whether it's biometric screening, whether it's drug monitoring and management through the collaboration of the pharmacists, whether it's presenting the patient with the opportunity to share their drug information, their pharmacy information and combine it with their lab information, or whether it's the clinical trials piece, we get a much more in-depth and robust engagement with the consumer in the Walgreens centers. And so that's why strategically we think it's very important as part of the consumer platform and increasing our ability to capitalize on the power of our data. Patrick Donnelly - Goldman Sachs & Co. LLC: That's helpful, thanks. And then maybe just looking forward, I know you're not going to guide for 2019 by any means, but I think increasingly focus is shifting there, and I think the headwinds on profitability are pretty well understood at this point. But maybe just help us think about some levers to offset some of those headwinds. Whether fundamental underlying trends, pull-through on new LaunchPad initiatives, it would be helpful just to hear your perspective on 2019.

Let me just say – I said in the prepared remarks the headwinds in 2019 will be the stiffest, and they will, but let's do two things. Number one, in the near term, obviously we'll get some savings on both sides of the business from LaunchPad. Number two, the growth in Covance and the opportunity in Covance will significantly offset the impact for us of what's going to happen with PAMA, for example, in the Diagnostics business. Number three, we have a significant amount of capital that we can deploy toward growth in the business, whether through share repurchase or through acquisitions. But I also want to just take a step further back and say from a broader perspective, we need to reemphasize to the community and to our investors, when you think about healthcare and think about what are the key elements of healthcare, you're seeing all sorts of innovation around, whether it's digital and bricks-and-mortar, whether it's providers who are not physicians, whether it's emergency rooms that aren't part of hospitals. But one thing that is fundamental about healthcare is that the front line of diagnosis is in the laboratory. And it's inconceivable that there's going to be any healthcare system ever without the clinical laboratory. So as we think about where we are, we have capital to deploy. We're a scale business. The market trends are moving in our direction, whether it's sales of assets, whether it's hospitals, hospital collaborations, whether it's hospital outsourcing. And also think about the demographics of 10,000 people a day turning 65 and becoming eligible for Medicare and increasing coverage under whatever structure we're going to have for the insurance markets. So for the long term, our perspective is we're in a great business. The scale is there. The leverage is there. It generates a ton of cash flow. And I look at 2019 as a year in which yes, there are going be some challenges, but in the long term, we're building for a significant opportunity to grow the business on the Covance side, on the lab side in the out years, and we feel very optimistic about where we are. Patrick Donnelly - Goldman Sachs & Co. LLC: Understood, thank you very much.

Thank you. Our next question comes from Jack Meehan of Barclays. Your line is now open.

Thanks, good morning. Dave, I wanted to continue on that line, and I really appreciate all the commentary on 2019. I think PAMA and LaunchPad are pretty quantifiable. But is there any additional visibility you can provide on the impact of the national payer changes, whether it be on both the volume impact and on the pricing side? That would be helpful.

Good morning, Jack. The volume side is very difficult to estimate or quantify, and so I'm not going to try and do that. On the pricing side, with United, we said that our position in the negotiations was that if they were going to open the contract that we felt we were entitled to an increase in price – unit price. And we said at the time that the contract negotiation concluded that we were very pleased with the outcome. So I think you can draw your conclusion there in terms of what the pricing is going to be. With Aetna, all in, we view the pricing that we receive as relatively flat. And so I don't see significant price-downs in the transition of the managed care from going out of network with Aetna to going in or from the United contract change. Now at the risk of being accused of talking down the year, which I'm not, but I'm just doing simple math for you, I will say, as I said on the last call, the math tells you that with United having the larger membership and Aetna having the smaller membership that the contract transition will be a net headwind for us. But it's not going to be a net headwind because of price-downs. In my view, it's going to be a net headwind just because the mat says if each national lab loses the same percentage of customers that they had in the prior exclusive arrangement, we will lose more than our competitor.

That's fair. Glenn or Dave, I had one follow-up on the operating income in the Diagnostics segment for the quarter. So it was down a little over $40 million year over year. The business impact, you quantified that as $13 million. I'm estimating PAMA is about $17 million. You also had the Eurofins sale. Is there anything else to call out in terms of the segment earnings of this quarter, whether it be a positive or negative just year over year?

The positives obviously would be the organic volume that we did have as well as acquisitions. To your point, we gave up some of that with the divestitures. And the other is really just we talked about the personnel cost or costs that while volumes were up, they were down a little bit from where we had expected it. Our cost structure was supporting the higher levels. And part of LaunchPad and part of what we expect to be an improvement as we go into the fourth quarter will be taking down those costs to more right-size with the current level of demand.

Great. Thanks, Glenn.

Thank you. Our next question comes from Kevin Ellich of Craig-Hallum. Your line is now open.

Hey, guys. Thanks for taking the questions. I guess, Dave, I wanted to go back to your prepared remarks. I think you made comments about organizational changes. Were there any more details you can provide, or was that already covered?

Good morning, Kevin. We will provide more details of it, but basically, the organizational changes are just to, as we said, streamline organizational leadership and improve our focus. The volume growth, when you take out all the puts and takes, we were satisfied within the quarter. But the margin and, as Glenn said, the level of expense was a frustration, and we're going to manage that better, and that's basically what the structural changes are designed to do.

Got it, okay. And then just going back to your comments on the national payer change transition even with United having more members than Aetna, are you just taking a more conservative stance here? Or because – I guess we thought that more of the volume shift between the two largest labs would come from some of the smaller labs versus each other. I guess, can you help us understand that dynamic?

My sense from the market, Kevin, is that our competitor has been aggressively targeting our accounts where we have United business. And so certainly there'll be some volume shifting from regional labs, but it's no secret that we're the two largest and so if you're looking to gain volume with a contract change, where are you going to go? You're going to go to the largest target. And we have the largest share of United business. So it certainly seems natural to me that our competitors is targeting our accounts. So I agree with you there'll be some shifting from the regionals, but if you just think about who had the largest single share of the United business, that would be us. Where's the greatest opportunity for Quest to gain share? That would be from us, and that's why we expect that there'll be some – there'll be volume loss for us and volume gain for them.

Got it, okay. Thanks, Dave.

Thank you. And our next question comes from Ralph Giacobbe of Citi. Your line is now open.

Thanks, good morning. I just want to go back to 2019. And again, I know you don't want to explicitly guide, but hoping, Dave, you can give a little more on your definition of modest growth. Is that low single, mid-single, high single? Is that EPS including share repo or just operating earnings? And any further details you may be willing to give on margin – just overall margin expectation structure? Thanks.

We'll give our guidance when we do the 4Q call, Ralph. So modest means modest, and until we put a number on it, modest is going to be what it is. Modest EPS growth includes capital deployment, so it includes share repurchase, acquisitions, all of the components. And we're not going to say anything about margins other than, as a result of the Covance LaunchPad process, as John said, we expect to see margin improvement there. Diagnostics margins, because of the impact of PAMA, will likely be flat to down. But again, we don't guide, generally, to margins. So that's probably about all that I can say.

Okay, all right, fair enough. And then I did want to go to the organic volume. It was positive but, again, it did slow, and I know you mentioned some of the business disruption impact. But anything you're seeing from the UNH book of business, specifically in terms of maybe early share shift away from you that you can comment on? Thanks.

No, we're not seeing anything significant in terms of early share shift. And remember, to that end, that we are still the sole exclusive national provider for United up through the end of the year. So any early share shift would mean moving from an in-network provider, if they're going to our competitor, to an out-of-network provider, and that's not something that is good for patients. It's not good for the system. So we're not seeing much. And my expectation is we're not going to see much until the first of the year.

Okay, thank you.

Thank you. Our next question comes from Erin Wright of Credit Suisse. Your line is now open. Erin Wilson Wright - Credit Suisse Securities (USA) LLC: Hey, thanks. It was a nice book-to-bill trend in the CRO business and were there any outside business wins on the CRO side? Or I guess how broad-based was it? And I'm curious if you could comment on your win rates overall when leveraging the combined data assets across both the Covance and LabCorp side of the business? Thanks.

Great. Erin, this is John. And there was no outsized wins. There was nothing above 10% of bookings, the $1.5 billion. So it's pretty broad-based. Nice wins in terms of aggregate on the early development, the lab side and clinical. And then your second question was again? Sorry, I apologize.

The data rate and...

Oh, the win rate.

Win rate. Erin Wilson Wright - Credit Suisse Securities (USA) LLC: Yeah, leveraging the data assets.

Clearly, that is our differentiation. We're seeing clearly a vast majority of our trials and proposals using the data. We're up to around two-thirds and moving to three-quarters of the use of the data in all of our wins and all of our proposals, and looking to move that then to 100% of the trials. So we are using it in accordance with the high interest from our drug development partners and clearly making us stronger in terms of our pipeline of opportunities. Erin Wilson Wright - Credit Suisse Securities (USA) LLC: Okay, great. A quick follow-up on the Walgreens relationship here. I guess, can you comment a little bit more on timing, magnitude, when this sort of will really materialize here, and how you're kind of balancing that with your needs for your own patient service centers? And I know you commented on that before, but I guess, do your thoughts embed some sort of way to productively rationalize some of the footprint here in a capital-efficient manner? Thanks.

Erin, it's Dave. You're going to see a pretty substantial acceleration through the balance of this year into next year in terms of the opening of new stores. Obviously, there's a buildout in many of the stores required and that's sort of the gating factor. When we originally started the project, we did not anticipate that we would be relocating patient service centers, we viewed this as another channel. But what we've seen is really nice traffic coming from existing patient service centers into Walgreens. So we'll be looking at the existing patient service center structure to determine whether there are opportunities to essentially move them to Walgreens or combine them with the Walgreens capabilities. Erin Wilson Wright - Credit Suisse Securities (USA) LLC: Okay, great. Thank you.

Thank you. Our next question comes from Ricky Goldwasser of Morgan Stanley. Your line is now open. Ricky R. Goldwasser - Morgan Stanley & Co. LLC: Good morning. So first of all, just following up on this last comment, so when we think about 2019, you're saying you're building out Walgreens facilities but you haven't made a decision yet on how to rationalize existing infrastructure. Should we assume in our models some duplicate cost structure?

No, Ricky, no. It's Dave. Sorry, I didn't understand the key word there. No you should not assume duplicate cost structure. Whatever we do with Walgreens will be sequenced with the patient service center infrastructure. Ricky R. Goldwasser - Morgan Stanley & Co. LLC: Okay. Great. And then, Dave, in your prepared remarks when you talked about 2019, you also highlighted that 2020, you're going to see return to growth. So just to clarify, we're going to see another PAMA step-down in 2020, so are you basically saying that taking into account that PAMA step-down, you can return the top line growth in 2020?

Yes, I think we can, Ricky. And by the way, I'm not going to say we won't have top line growth in 2019. I still think there'll be top line growth because we're expecting, obviously, growth in Covance. But once we annualize the impact of the managed care contract changes, which will be at the end of 2019, then in my view, absolutely, 2020, yes, we have incremental PAMA impact, assuming that we don't get any relief on that, and we're proceeding under that assumption but still working very hard to get relief. But assuming we don't get a relief, we still will have the opportunity to return to top line and stronger earnings growth. Ricky R. Goldwasser - Morgan Stanley & Co. LLC: Thank you.

Thank you. Our next question comes from Derik De Bruin of Bank of America. Your line is now open.

Hi. Good morning. A couple of questions on the Covance business, could you just give any color in terms of what the growth rates were and split was between your early and late-stage businesses? And then as a follow-up on that, if my memory serves, Covance was a strategic partner for Bayer and I know they've discussed increasing some of their outsourcing potentially going forward. I'm just curious in terms of is that a chance of gaining some incremental business from Bayer. Are you still tight with them?

This is John. Derik. And so we don't really break out the actual segments, all I will do in terms of color was the early development versus labs versus the clinical side. All areas grew. And in terms of the revenue growth, early development led the parade, so nice growth from that segment, but growth across the board. And then on Bayer, very specifically, we don't really talk customer specifics. They've been a great partner to us and continue to be so.

Okay. And I'll do one lab follow-up. Are you still expecting, when you're modeling the contract changes, for the bulk of that to be in the first half of next year?

Yes.

Okay, that's it. Thanks.

Thank you. Our next question comes from Brian Tanquilut of Jefferies. Your line is now open.

Hey, good morning, guys. Just a quick question, Dave. In your prepared remarks, you talked about physicians doing more in-office testing. Is that a structural trend that we should be worried about? And then just broadly speaking, as you think about overall demand, am I right in interpreting your comments that you don't have any worries, it's just that you have these one-off situations this past Q3?

Yeah. Good morning, Brian. I don't think in my prepared remarks that I said there was more physician in-office testing. I think what I said was that, in terms of the Covance business and the new platform that we're launching, that we thought we had the opportunity to provide self-collection outside the physician office that could be relevant to trial. So maybe I wasn't as clear on that as I should have been.

Hey, Dave, sorry. I meant on the prescription drug monitoring business, I think.

Oh yeah, that's really specifically an issue in prescription drug monitoring at the moment. And historically, what happens is when there's an area of testing that is growing rapidly, you may remember, if you covered the space years ago, there was all the insourcing of pathology and there were all these shell labs set up to do pathology testing. And there's typically a pretty strong regulatory response when physicians start doing significant insourcing, simply because it leads to significant increases in utilization which are not necessarily, again, either in the best interest of the patient or the system. So, I see this as a near-term trend in one specific area of the business. I wouldn't characterize it as a long-term trend. And in-office physician testing as a total percentage of the lab market has basically been in the low single-digits throughout – certainly throughout my career in the industry. So, no, don't see that as a particularly alarming trend, more as a temporal issue. In terms of third quarter incidents being one-offs, obviously, the weather is a constant. It's just an unpredictable constant. The ransomware, we certainly hope is a one-off. But let's be realistic, I mean every business today, and certainly healthcare businesses among them, is constantly being attacked. And so I think our team did a phenomenal job responding. I think our security is high, and we continue to increase our investment in IT security. But you can never – it certainly isn't going to be a continuing issue. We're not seeing continuing implications of it. So I would say these are singular events and not things that we need to be thinking are going to persist in the long run.

No, I appreciate it, and just one quick follow-up for John. As I think about Covance with LaunchPad and Chiltern synergies coming in, where do you think we can take margins to? 18% to 20%, is that a reasonable number to be thinking about over time?

I know we'll do on the next call our 2019 guidance, so we'll talk more tactically about that. But we're looking at peer-level margins, and so you can look at the industry and then know that we have work to do in terms of the clinical and then on the early development, so we see opportunity there. But we'll give more details on the next quarterly call.

I appreciate it. Thanks, guys.

Thank you. Our next question comes from Bill Quirk of Piper Jaffray. Your line is now open. William R. Quirk - Piper Jaffray & Co.: Great, thank you and good morning, everyone, two questions. I guess first off, I want to go back to one of the earlier Walgreens questions. Dave, you referenced additional services that you could provide, which presumably over time would lead to higher volumes. It is this something that you're seeing now in the pilot program, or should we be thinking about this as a future opportunity to help drive, call it, same-store sales or higher volume growth in that segment? And then secondly, John, any comment on pricing? You obviously referenced the healthy market on several occasions, so curious about your thoughts there and then just overall industry capacity. Thanks.

Good morning, Bill. It's Dave. On Walgreens, what we've done in the initial 17 service centers is basically set up the capability of providing the draws in the lab services. In many of our patient service centers now, we do have additional capabilities to do things like biometric screening for employers or indeed for our own employees, and we'll be migrating those into the Walgreens stores. The other thing to think about is in the prototype of these Walgreens stores is, there are other health-related activities there. There's a pharmacy. There might be audiology. There might be vision. There might be an urgent care. So all of these things will combine to give a broader opportunity for the patient to have a comprehensive healthcare experience, in some of these cases, even almost a quasi-primary care experience and for us to capitalize on a more robust engagement with the consumer around the data, around the biometrics, around information that would be really helpful for us to have that, in many cases, because we don't see the patient in person, we don't collect. Now I'll ask John on the Covance pricing question that you asked.

Early development, capacities are tight. Pricing is good. The labs, pricing will always be under pressure but thus the need to be more efficient and effective and best-in-class margins there. And then on clinical, the FSP model pricing is a lot of pressure. But again, that forces you though into the automation technology, tools, process work that we're doing in order to better those margins. And on the programmatic side, from the standpoint of pricing, a normal environment, we're moving a lot more to milestone pricing and saying deal in terms of looking for margin upside in that environment to offset even the pressure on the pricing. William R. Quirk - Piper Jaffray & Co.: Great, thank you.

Thank you. Our next question comes from Mark Massaro of Canaccord Genuity. Your line is now open.

Hey, thank you. Dave, it seems like the market is pricing and certainly PAMA here to stay, and you're managing the business for Phase 2 of PAMA to be implemented on January 1. But can you just speak to any actions that ACLA is making now in terms of legal options and lobbying Congress? And can you give us any sense of substance or timing as it relates to any further actions?

Sure. Good morning, Mark. I'll start with the legal actions. So the district court decision was disappointing. Putting on my long-abandoned lawyer hat, I can say that the judge decided the case on very narrow procedural grounds. And although she noted that there were significant questions presented on the merits, she didn't reach them. She didn't reach one of the key arguments that ACLA made, which was that the regulations were beyond CMS's authority because they were directly contradictory to the statue. So ACLA, after a board discussion and I think correctly has decided to appeal and file the Notice of Appeal. We'll ask for an expedited schedule, but the reality is the likelihood of getting a decision before the middle to end of 2019 is pretty low from the Court of Appeals. So we'll continue to press on the legal front, but the process now will play itself out. On the regulatory and legislative front, we are very active with Congress. There is, if I can characterize it, a general sense within the key committees and staff and among members that this was not what was intended, that it was not expected that 70% to 80% of the data points were going to come from LabCorp and Quest, and this was going to be a cherry-picked "market analysis" that would just pick the lowest price for everything. And so they were looking at potential fixes. ACLA has submitted some language that has been sent for scoring that would provide a near-term fix. So there's a considerable amount of activity on the Congressional front. And then we continue to meet and discuss with CMS what administrative options there may be as well. As you saw in the physician fee schedule proposed rule, CMS asked about ways in which they could include more hospital data, and we've been meeting with them recently and have made a number of proposals. One of the initial objections from hospitals was the amount of resources that would be required to report the data. And so we've provided some proposals to CMS around things like aggregate data reporting as statistically significant surveys that would allow them to look at that market without the enormous burden of reporting. So there is a lot of activity on every front, and I'm still optimistic that common sense is going to prevail here in terms of what PAMA was meant to do and how it's going to be implemented. But as you say, we're planning as though PAMA is going to be fully implemented, and we're running the business that way.

Great. And historically, you've called out areas like women's health and NIPT as strong growth areas. Is that still the case? And then in terms of next-gen sequencing-based tools like liquid biopsies, can you comment on the degree of importance that is both in your Diagnostics and your CRO business? And are there ways that you can advance those offerings?

Women's health and NIPT continue to be strong areas of growth for us. Next-gen sequencing is a part of the lab business in both LabCorp and Covance, mostly in terms of moving existing genetic testing or genomic testing onto that platform as opposed to SNP arrays or other prior methodologies. And innovations like liquid biopsy and other technologies are certainly things that we're considering. In both businesses, we actually have a pilot program running within Covance on liquid biopsies. So these are going to be things – the technology and the tools continue to change and we're going to continue to adopt them as they make sense, as they provide improved patient care and obviously as we see reimbursement trends.

Thank you.

Thank you. And this does conclude our question-and-answer session. I would now like to turn the call back over to Dave King for any closing remarks.

Thank you. Well, thank you for joining us this morning. I hope we've given you not only clear insight into the third quarter but also into the long-term view that we have of the business and the success of our strategic execution. We look forward to speaking to you on the fourth quarter call and wish you a great day.

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day.