Good morning and welcome to LabCorp's first quarter 2019 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. This morning, in the Investor Relations section of our website at www.labcorp.com. we posted both our press release and an investor relations presentation with additional information on our business and operations, which includes a reconciliation of the non-GAAP financial measures to the GAAP financial measures discussed during today's call. Historically in connection with our earnings call, we have also furnished our Investor Relations slide deck on Form 8-K. Going forward, it is our expectation that we will only be posting these presentations on our website and not furnishing them on Form 8-K. We encourage investors to monitor and regularly check the Investor Relations portion of our website for business and financial information about the Company. 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 estimated 2019 guidance and the related assumptions, the impact of various factors on operating and financial results, expected savings and synergies and the opportunity for future growth. Each of the forward-looking statements is based upon current expectations and is subject to change based upon various factors that could affect our financial results. Some of these factors are set forth in detail in our 2018 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, Clarissa, and good morning. I'll begin by discussing financial highlights of the first quarter. We are off to a very strong start in 2019 with first quarter revenue of $2.8 billion and adjusted EPS of $2.62. Our results were driven by strong underlying performance and organic revenue growth across both businesses and with the result of solid execution of our three foundational strategies; delivering world-class diagnostics, bringing new medicines to patients faster, and using technology to change the way care is delivered. Our Diagnostics business grew organically during the quarter in both revenue and volume despite additional price reductions due to PAMA and the loss of exclusivity in two of our largest managed care contracts.

Thank you, Dave. My comments today will focus on the Company's first quarter results, as well as provide an update on our 2019 guidance. I'll conclude with additional commentary on our recently announced transaction with Envigo. Revenue for the quarter was $2.8 billion, a decrease of 2% compared to last year. This decline was due to the impact from divestitures of 1.8% and unfavorable foreign currency translation of 0.9%. Acquisitions added 0.5% of growth, while the organic revenue grew at 0.2%. Excluding the negative impact from PAMA of 90 basis points, organic revenue grew 1.1%. Operating income for the quarter was $318 million or 11.4% of revenue compared to $305 million or 10.7% last year. During the quarter, we had $36 million of restructuring charges and special items primarily related to LaunchPad initiatives and acquisition integration. Adjusted operating income, which excludes amortization of $57 million, as well as restructuring charges and special items, was $411 million or 14.7% of revenue compared to $436 million or 15.3% last year. The decline in adjusted operating income and margin was primarily due to lower pricing as a result of PAMA and higher personnel costs, partially offset by demand and LaunchPad savings. The tax rate for the quarter was 27% compared to 28.6% last year. The adjusted tax rate, excluding special charges and amortization, was 26.3% compared to 22.9% last year. The higher adjusted tax rate was primarily due to the tax impact from stock-based compensation. We continue to expect the Company's adjusted tax rate for the full year to be between 25% and 26%. Net earnings for the quarter were $186 million or $1.86 per diluted share. Adjusted EPS, which exclude amortization, restructuring charges and other special items, were $2.62 in the quarter, down 6% compared to last year. Operating cash flow was…

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

Good morning. Thank you. I plan -- can we just start with Envigo. Is there anything included if you expect it to close mid year -- Is there anything included in the updated guidance for the transaction?

Yes, Lisa. We have in May, obviously the enterprise, but obviously also in Covance's guidance range of total revenue growth of 5% to 9% includes what we expect to be roughly half year's worth of the Envigo's revenues and similarly in the earnings -- EPS guidance range, if you will. The benefits of the accretion is there. As you know, as we've talked about earlier when we first established our guidance that we expected to use the $1 billion at the midpoint of our expected free cash flow guidance to be used for a combination of share repurchases and acquisitions, with no debt looking to be paid down under that scenario. So we have factored in M&A, obviously, in the case of Envigo, we have been working on it well in advance of providing our guidance for the full year when we gave it initially, so the benefit of that was reflected as is our other capital allocation, which included the share repurchases and tuck-ins that we did in the first quarter, as well as still an additional, call it, $350 million plus of additional capital allocation still to be realized through the remainder of the year.

Great. And then just as a follow-up. Dave, I didn't hear you talk a lot about PAMA being a big driver to drive consolidation and your closest competitor talked about that on the earnings call last week. Are you seeing that where we're starting to see that play out here in 2019? And as we think about allocating capital, how do you think about potential acquisitions now that PAMA is really being felt by those hospital outreach and other smaller labs?

Yes. Obviously, the impact of PAMA is significant and it's more significant on smaller lab providers than on us. But -- and there is a very robust pipeline, Lisa, of potential acquisitions that we continue to look at. We evaluate every acquisition based on strategic fit and our stated financial criteria. And so, as you saw in the quarter, we mentioned MNG, we mentioned RCRI, we mentioned the investment in OmniSeq, we mentioned Envigo. So we allocate capital where the best strategic fit is and where we see that the best opportunity to meet our stated financial criteria. The only other comment I would make on PAMA, which I think it's important to underline is, PAMA is -- regardless of how you feel about consolidation, PAMA overall is not a good thing for the lab industry or for patients. We know that the largest nursing home lab provider filed for bankruptcy. That's now going to be an unserved population and the impact on smaller labs and even on us in terms of continued cuts, access points and services is not going to be a positive for Medicare beneficiaries. So even as we talk about the potential positives, we also have to remember that there are significant negatives to PAMA beyond just reductions in our price.

I appreciate that. Thank you.

Thank you. Our next question comes from the line of Kevin Caliendo with UBS. Your line is now open.

Great, thank you very much and thanks for the call. On Envigo, just kind of get some details around sort of the cross-sell opportunities there and also any overlap that might exist with existing customers. And if you can also maybe talk a little bit about Envigo's historical growth or expected growth profile and also their margin profile especially compared to Covance's.

Sure, this is John. And I'll take that. They overlap is minimal in terms of the customer side. They're much more concentrated on the biotech and even though my early development area has great percentage of that as well. If you look at the customer side, not a lot of overlap. We actually look at that as a positive in the sense that they have a level of capacity and we are tight on capacity. So we look at more of the revenue upside. I know you mentioned cross-sell, but at the same time there's cross-selling opportunities, there is also capacity upticks. Their margin is higher than the Covance margins and higher than the early development, because of the way that we did the deal, we did not take on any of the corporate overheads, quote unquote. And so profitability wise, it will be a profitable area for the early development, and Glenn gave you in terms of the revenues for the full year. So obviously gives you a feel for the guidance for our half-year.

Got it, got it. Great. And just one question, just thinking about the organic growth numbers that you provided on the Diagnostics side. If I backing into it correctly, it looks like about 1.5%. I was little bit surprised that the headwinds from the managed care contracts was only around 70 basis points. If we back into that number, it's smaller than what we had anticipated. Is that how should we think about it between United and Aetna? I guess if we -- I guess my main point here is, if we look at sort of what Quest talked about and sort of what you talked about in terms of this managed care contracts, it would imply that there is some share that's being taken from, not from each other, but from other smaller existing and network Labs. Is that a fair assessment?

Yes. I don't know what Quest talked about and then what we talked about. I agree with you, I think, Glenn gave you the number was a net impact of 70 basis points. We were very pleased with the retention of the United business and our team, as I mentioned in my prepared remarks, did an absolutely outstanding job in getting in front of our customers and continuing to demonstrate the value that LabCorp brings to retain that business. We are very pleased with the retention of the Horizon business and our team particularly in the Northeast division again an outstanding job from top to bottom everybody in that division in retaining the business. And the Aetna growth was strong and actually has continued to increase throughout the quarter. So it's hard for me to hypothesize about where the volumes are coming from. But I would say, we are very pleased with where we are and particularly with the fact that we exited the quarter with a situation stable and with the overall broad-based organic growth in areas like women's health, infectious disease, genetics, oncology. So from our perspective, in Diagnostics, just a very strong quarter in terms of demand, which we're pleased about.

Great. Thanks so much.

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

Thanks, good morning. Dave, you mentioned the promise of the preferred lab network. Bit curious, what do you think happens on July 1st versus January 1st and how strong do you think some of the economic incentives are going to be for physicians and patients to choose the preferred lab?

Well, the preferred lab network is initiating obviously in the middle of the year and so the likelihood that there'll be any significant impact in year I think is minimal and we haven't built anything into volumes or guidance that would anticipate a significant impact there. I think as we go through with the managed care selling cycle, this summer and fall and as we see the implementation on January 1st, Jack, lot of it's going to depend on how the preferred lab network is tied into benefit design, what are the out-of-network benefits, what are the benefits for employers of pushing their employees in the preferred lab network, but if benefit design and the preferred lab network are well tied together, in the long-term, it's a significant opportunity for us.

Great. And then on the Covance side, just nitpick a little bit. The bookings were a little lighter than what we were looking for. Can you talk about the health of the funding environment, was there anything that maybe got pushed out a little bit and anything notable on the cancellation front?

This is John, Jack. And so the health of the funding environment still strong, health of biotech environment still strong, no measurable difference in the cancellations, and if you look, I know we ticked down a bit in terms of the 1.26, the 1.24, I said to look at things 80% have full, we do lose a strong comparative last year when you're looking at the last 12 months. In terms of certain bookings did rotate out of the quarter in terms of into the second but that's kind of a normal phenomenon. We look to win more and booking is still very healthy environment and healthy across all of our areas, early development, our labs and the clinical. So still positive about the environment.

Great. Thanks, John.

Thank you. Our next question comes from the line of Ross Muken with Evercore ISI. Your line is now open.

Good morning, guys. So, just getting back to the Covance business, obviously, both in 4Q and this quarter, you had great margin progression, seems like LaunchPad sort of really building its momentum. I guess, as you think about sort of in this quarter, obviously, a little hard to tease out some of the benefit that probably came from the lower pass-through, but the underlying still feels very good. Where are we in sort of that progress in terms of ramping LaunchPad and then as you think about layering on the infrastructure Envigo where historically these type of transactions in early phase have led to pretty good synergy capture at least being able to leverage the new facility? How are you thinking about that is kind of outside just a mix kind of margin enhancement and how it fits into kind of the LaunchPad plan?

Yes. I think in terms of the LaunchPad, we have an objective of $150 million over the three years. We're well on our way into that. We don't break that out by year, but obviously our margins are off. I know in terms of you mentioned on the lower pass-throughs, I invite you to do the math, even if you had $30 million more in revenue, you'd still be up 250 basis points. If you had $60 million more in revenue, you'd be up 220 basis points, but our mind is that margins are up, we expect margins to be up for the full year; Envigo will wait us up and in terms of profitability and then finally, long term, we're looking to be at peer level margins.

Helpful. And then just on the lab side, probably for the better, but there really wasn't any comment on sort of DTC genomics or at least anything of consequence. I guess, any updated thoughts there obviously that market has been pretty volatile and we've seen a bit of instability there, but obviously you had forecasted for a decline just in terms of how that fits into sort of where your full year expectation is?

Yes, Ross, it's Dave. There was a slight benefit in the quarter from the direct-to-consumer genomics business. We continue to forecast for the full year, it will be flat to slightly down and so we don't anticipate that there will be a significant benefit to organic growth throughout the year.

Great, that's helpful. Thanks, Dave.

Thank you. Our next question comes from the line of Dan Leonard with Deutsche Bank. Your line is now open.

Thank you. Just a couple of clarifications. First off on Covance; Glenn, you mentioned that the total revenue guide is 5% to 9% -- the organic revenue guide is 5$ to 9%, which would suggest M&A is about 100 bps. I would have thought Envigo be a little bit more than that by itself, and you did some other deals as well. So can you help bridge that for me?

Sure. Dan, you're right. You just took the expected or half a year's worth of the Covance 2018 pro forma, Envigo I guess around $80 million of revenues rounded, which would be around 1.9% growth. So the issue that you're having is we're providing a range, so we're going to be benefiting from the M&A that we have done in Covance including Envigo, we're going to benefit in the underlying organic growth of our business and then the headwind, if you will, you have currency as well as some of the pass-through that occurred in the first quarter, but still strong underlying organic growth in the business added by acquisitions and then the headwinds that we talked about.

Okay, thank you. And then my follow-up. I'm trying to bridge to the $0.05 increase in EPS guide after you beat by $0.09. Did you pull anything back out of future periods in terms of pacing of share repurchase or anything like that?

No. I think it's, Dan, that, as Dave commented in his remarks, we performed well across both businesses. We did better frankly on the managed care side than we expected in the original guidance early that we had. So the reflection of the improvement in our earnings guidance range is really a reflection of that we did well in the first quarter and that our outlook for the remainder of the year remains unchanged.

Okay, thank you.

Thank you. Our next question comes from the line of Erin Wright with Credit Suisse. Your line is now open.

Great. On the Covance side, what was the quarterly book to bill trend on an ASC 606 basis and how would you characterize RFP flow and demand trends across both large and small biopharma and just the broader nature of new business wins in the quarter? Thanks.

The RFP flow was good in all the segments and in terms of kind of a nice record levels in terms of early development, but upticks in clinical, nice strong on RFP flow on the lab side. We're not publishing the quarterly, but if you look 1.26 on the last 12 months, 1.24 in terms of this quarter, you can see that that's in line and that strength was across the different business segments.

Okay, great. And then on the lab side, how should we be thinking about the quarterly progression of the underlying organic volume trends here, particularly as it relates to United in the roll-off in the 70 basis point impact that you were speaking to as well? Is this more -- it seems to be a more measured rate than your initial internal expectations, if that's correct, and then also, is it -- should we be assuming here that the United preferred lab network and pricing thereon was all contemplated in your previous guidance. Thanks?

Erin, it's Dave. There was no price adjustment in terms of the United preferred lab networks. So the price that we have at United and has negotiated as part of the contract renewal remain the same. There is no further price adjustment. In terms of the progression of organic volume, I don't expect there to be any significant change in that progression. I think that as we said, we came out of the quarter in terms of United and Horizon stable. We actually started again to see some growth at the end of the quarter and Aetna and so I think what you've seen in the first quarter is probably pretty representative of what you'll see during the year.

Okay. Great. Thank you.

Thank you. Our next question comes from the line of Ricky Goldwasser with Morgan Stanley. Your line is now open.

Yes. Hi, good morning. So Dave, just going back to the trends in the lab side in the quarter, I noted in the past you said that you expect most of the managed care share movement to happen earlier in the year. Your comments on the call suggested that the retention or the share shifts that you're seeing are even more muted than you expected. On the other hand, your competitors said last week on the call today that they anticipate to share move to pick up in the second half. So what gives you kind of that confidence? What are you seeing in the marketplace that would suggest it, we've seen kind of like the most of it or that the changes aren't going to be normalized versus accelerating later in the year?

Yes, good morning, Ricky. As, I said I don't know what our competitors said. I just know what the numbers tell me and what the numbers tell me is we monitor the United, Horizon, Aetna makes sessions every single day all across the country and we see the progression based on where we were last year on a normalized basis to account for seasonality and holidays. What we saw exactly is we projected was that the major drop-off in the contracts that we're opening came in January -- in early January, and then by the time we came out of January to February and March, we were at a very stable run rate. In terms Aetna, we probably started a little more slowly than I would have liked, but that volume progressed over the quarter and we saw a nice increasing trend throughout. So I'm just looking at numbers and trends and that's what gives me confidence for where we are and where I think will be for the balance of the year.

Okay. And then just follow-up question on the relationship with Walgreens. I think you said you can be at 125 sites by the end of the year. As you open these sites, are you in conjunction going to close standalone LabCorp drawing centers, and if that's the case, should we think about it as part of the LaunchPad savings or is this kind of like is separate cost saving opportunity that we should think about for later in the year, but also through 2022?

Yes. So we don't think about closing patient service centers as part of opening the Walgreens locations. Again, we look at our patient service center network based on demand, so how many people are showing up based on wait times, based on staffing and I would say that there may be some patient service centers that closed in some areas based on part of our Walgreens strategy is looking at an isolated geographic area and saying you know do we do better when we move volume for standalone PSCs into Walgreens. But as a general proposition, think about this as 125 more access points rather than swapping them out. In terms of cost savings, even if we close all the -- even if the close 125 standalones and move them to Walgreens, there's no cost savings there, it is basically just the cost swap. So that you shouldn't consider cost savings to be part of the equation on either side.

Understood. Thank you.

Thank you. Our next question comes from the line of Stephen Baxter with Wolfe Research. Your line is now open.

Hi. Thanks for the question. I was hoping to get little more detail on the Envigo transaction. Can you help us understand how the multiple compares to what you paid for Chiltern? We estimated it was pretty comparable and then maybe quantify the accretion expectations and what type of financing assumptions embedded in the commentary. The split between cash and debt would be helpful. And we are estimated the multiple is similar to Chiltern would have probably added at least $0.05 of the guidance. So trying to square the moving parts in the Covance side. Thanks.

Hi, Stephen, this is Glenn. Let me take the first cut. Couple of things, one, the market multiple is comparable to deals in the drug development space. Obviously, we provided revenues and we provided obviously the net purchase price on the combined transaction, but John also noted that the business has very strong margins, stronger than or higher than what we have in our early development or our total segment basis from a even earnings multiple standpoint, you would see that came up very much in line. The accretion we would agree as well. We talked about that. This deal meets our financial criteria. So it will be accretive to our earnings this year. It is reflected in the guidance as is all the $1 billion that we said that we would deploy our free cash flow at the midpoint, we expect all that $1 billion to be accretive. So that was obviously already into the guidance that we had already. And the financing of it, I think was the last part of your question, was at this stage, we will use cash on hand and bank debt as we generate obviously the bulk of our free cash flow later in the year. So obviously will have the cash that would enable us to pay down any of the debt that we would use to finance the transaction. In total, the net transaction is $595 million, that will be cash. So $595 million arguably of the free cash flow in addition to, call it, $150-ish million that we did in the first quarter, still leaves some additional free cash flow for the rest of the year for continued capital deployment.

Great, thank you.

Thank you. Our next question comes from the line of Patrick Donnelly with Goldman Sachs. Your line is now open.

Great. Thanks. Dave, maybe one for you, just on the hospital referral trends. Obviously, a little bit of noise there late last year, it seemed transitory in nature, but can you just give us an update how 1Q trended on that front and visibility going forward?

Yes. Patrick, I agree with you. I think it was a transitory event that we saw in kind of October, November last year. We actually saw a pickup in December and continued stability throughout the quarter.

Okay, great. And then maybe just an update on the commercial pricing environment outside of PAMA and the commercial contract shifts. It seems stable just by looking at the margins, but can you just update us on some of the conversations you've had recently on the commercial side outside of those external factors?

Sure. Obviously, the big commercial deals are essentially completed. And I would say, yes, the pricing environment on commercial contracts is generally stable. Again, as we remind our commercial partners demand for reduced pricing are a double-edged sword because although there are price reductions for them, then that's going to roll through into the next data collection for PAMA, which obviously we're in the process of trying to delay, but this is going to roll through into the next data collection. And in the long run, as I mentioned before, more price cuts across the board lead you reduced access for patients and Medicare beneficiaries. So I think we're -- I think the price -- the commercial pricing environment is stable and we're very comfortable with where we are coming out in the contract discussions.

Great. Appreciate it.

Thank you. Our next question comes from the line of Bill Quirk with Piper Jaffray. Your line is now open.

Great, thanks. Good morning, everyone. First off, I guess David or John, would you mind elaborating on Dave, you had some comments about the potential next-gen CRO that you mentioned with your Walgreens comments. Just some additional details timing, things like that.

Sure, Bill. This is obviously a topic that we're discussing with Walgreens. I don't want to spend a lot of time on it because it's in the genesis, but the idea is the ability of our two companies to combine prescription data, laboratory data, global data, mobile site locations, particularly their significant overseas network all to facilitate the things that we've talked about in terms of improving trial performance, which is speed, quality and reduce costs. So, conceptionally, this is something that we think that there is substantial opportunity on given our combined global size and scale, but it's early stages in terms of the discussions.

Understood. And then just as a follow-up. Your comments about the recent build-out of the medical device capabilities at Covance, what are you seeing at this point to look at capturing some additional share within that net segment of the CRO space? Thanks.

We think we're in good shape based on that. If you look at the end-to-end capability of what we've now put together PMI has preclinical. The Chiltern capabilities has the core of the later stage, you want to call it, device CRO. We added to that RCRI with respect to the regulatory consulting side as well as that core device capability, and then finally, we had an Covance, the legacy Covance, strong therapeutic expertise; cardiovascular, is an example; putting that all together really strengthened our hand and now has that end-to-end capability that is unmatched in the industry.

Got it. Thank you.

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

All my questions were answered . Thank you.

Thank you.

Our next question comes from the line of Matt Larew with William Blair. Your line is now open.

Hi, good morning guys. This is on for Matt Larew. Thanks for taking my questions. I wanted to ask you guys about your in-home strategy in Pixel. What are the key targets that you guys have in mind for this year and how are you measuring success there? Thanks.

Morning, Matt -- Dan, this is Dave . So Pixel is a screening and a wellness tool, and over time, our goal is to expand the test menu and to have the potential with collaborators to reach patients in the home. I think in the long run, it's going to be an important tool especially when you think about, for example, our hospital partners that are at risk, an increase in their houses departments that are taking risk for some sort of the patient population -- some set of the patient population or our health plan partners that have their own managed care plans. And as a result, we are going to be acutely aware of the needs and the conditions of home-bound patients. So again, we're playing the long game with Pixel and with how we reach basis in the home, but we think a very important part of our strategy, which we refer to the opening comments about meeting the patients where they want and where they need to be served.

Great, thank you.

Thank you. Our next question comes from the line of Donald Hooker with KeyBanc. Your line is now open.

Hi. Great. Good morning. I guess most of my questions have been answered, but just may be...

Hi, Donald ...

Hello?

I think you have to dial back in, there is a lot of static on the line, we'll take your question, but you may want to try just disconnecting and dial back in.

All right. I will try again. Can you hear me now?

No.

All right. I am sorry. I will drop off.

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

Hi, Dave. Can you hear me, it's Kevin.

Yes. Good morning, Kevin.

Thanks. I know the call is long here...

Yes. I want to comment, we are at the top of the hour. We have four -- three people in the queue plus in fairness, we have let Don back if he dials back, so if your question has been answer, please try and keep it short.

So PAMA and again I hopped on late, sorry for that, but could you talk about any indirect impact on Medicaid or floating-rate contracts that seeing from PAMA?

Yes. We said last quarter when we gave the guidance, our estimate for PAMA is all in and it includes the impact of the fee-for-service and managed Medicaid plans as well as whatever impact there is on from Medicare Advantage. So the impact that we have identified in the call out is the all-in impact both in terms of impact on revenue and those -- and the dollar amount.

Okay, thanks.

Thank you. Our next question comes from the line of Ralph Giacobbe with Citi. Your line is now open.

Thanks, good morning. I think there's some questions around ability to pay commission for sales reps kind of going forward. I know there's been some debate on whether or not that will actually sort of take hold or there being repercussions about that, but they would love just to hear sort of thoughts on that and sort of your comfort level there. Thanks.

Yes. So the changes that were made in the SUPPORT Act last year, we continue to believe were misguided and unintentional on Covance's part as I understand that there were some floor language that was adopted that was aimed at what was perceived to be abusive tactics by some testing related to toxicology and pain management. We have been working with the legislative leadership in the Department of Justice. There has been legislative amendment language submitted to the congressional committees of jurisdiction and is being evaluated by the Department of Justice to make sure that the fix that would address the over-inclusiveness of the language that was at would be acceptable to DOJ as well as to legislator's part. So we continue to be optimistic that we're going to get this resolve, Ralph, and we don't have a good estimate on the timing.

Okay. Thank you.

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

Hi, this is for Derrick today. Just a couple of quick ones. Thank you for taking the question. So I just want to confirm if last year's organic revenue growth on the CRO side included the pass-through that we talked about? Is that's -- if the growth from CRO benefited from pass-through last year? Just want to get some clarity on what the CRO revenue growth guide looks like including the pass-through. So basically just trying to see if the growth is apples-to-apples in terms of Covance. And then just as a follow-up, I wanted to see if you can give -- provide any color on the EBITDA -- incremental EBITDA from Envigo? Thank you.

This is Glenn. I'll take the first cut. The impact of the pass-throughs were included in last year's numbers when we adopted the new accounting, standards ASC 606, we put full retrospective method so that we have it in prior periods for comparative purposes, so they are included. With regard to the EBITDA of Envigo, the only thing we would share with you at this time is that, again, we expect to close kind of mid-year in that the adjusted operating income and margins but would also claim the EBITDA will be greater than the margins of the segment. So to give you some perspective the are pretty attractive margins and obviously upon closure, you'll start to see the benefit of that margin as John alluded to earlier reflected in the segment margins.

Sorry. And then just one follow-up

No, no, no, no, no. You asked one. I'm sorry, but we're past the time.

All right. Great, thank you.

Thank you.

Thank you. We have no further questions in the queue at this time. I would now like to turn the call back to Dave King for any further remarks.

Thank you very much. We appreciate your joining us for the call this morning. I want to reemphasize how proud I am of the effort on both of our businesses this quarter, and in a challenging environment. I'm pleased and extremely proud of the performance of our 61,000 people around the world. So thank you very much and have a great day.

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