Laboratory Corporation of America Holdings (Labcorp) has unveiled its plans to spin off the company’s wholly-owned clinical development business to Labcorp shareholders via a tax-free transaction.

The planned spin-off, approved by the firm’s board of directors, will result in two independent, publicly traded companies, each poised for strong, sustainable growth:

Labcorp said that the proposed spin-off will form two independent publicly listed firms: Labcorp and The Clinical Development Business.

Labcorp will comprise the company’s routine and esoteric labs, central labs and early development research labs, vast health data and insights, and an extensive, advanced global laboratory network.

The Clinical Development Business will provide Phase I-IV clinical trial management, market access and technology solutions to pharmaceutical and biotechnology organisations.

The spin-off is expected to be completed by the second half of 2023, subjected to meeting certain customary conditions, including final approval by Labcorp’s board of directors and assurances from the Securities and Exchange Commission.

The management team and Board of Labcorp proceeded to consider all options to increase stakeholder value after the Board’s decision to start a dividend and speed up the company’s share repurchase programme last year.

The spin-off is intended to give each firm strategic flexibility and operational focus to explore specific market opportunities and match customer demands.

It will also provide more investment opportunities for various investor bases as well as focused capital structures and capital allocation techniques to promote innovation and growth.

Labcorp chairman and CEO Adam Schechter said: “Spinning off the Clinical Development business will benefit customers and shareholders by creating two standalone businesses that are poised to accelerate growth and focus resources on distinct strategic priorities, customer needs and value creation.

“Our shareholders will be able to participate in the upside potential of two market-leading businesses in the global healthcare sector, each of which will be well-capitalised and positioned to generate sustainable growth with strong free cash flows and attractive returns.”