Editor’s note: Barry Teater recently sat down for a 45-minute in-person interview with David King, the top executive at LabCorp, which has grown into an international life science giant under his guidance. King will be the headliner of WRAL TechWire’s Biotech Live event Thursday evening in Durham where he will sit down for a “fireside chat” with WRAL TechWire Editor Rick Smith. In the first of a multi-part profile, Teater brings to life one of North Carolian’s leading business executives.
BURLINGTON – David P. King is beginning his 12th year as CEO of Laboratory Corporation of America Holdings, better known as LabCorp, the Burlington-based healthcare diagnostics and life sciences company.
That’s 50 percent longer than the eight-year average tenure for CEOs of the nation’s largest companies, according to a study by the executive search firm Korn Ferry International.
“You don’t stay that long without being relatively talented,” observes Garheng Kong, a venture capitalist who serves on LabCorp’s board of directors. King “has got to be in the upper decile of public company CEOs when you think about performance and personality,” he says.
During King’s time as CEO, LabCorp has doubled in size, transforming into a life sciences conglomerate that does business in 127 countries. It has also begun providing development services for new drugs, medical devices and diagnostics, in addition to its traditional business of diagnostic testing.
“We’re a much larger and more relevant company on the healthcare spectrum than we were when I came here,” King tells WRAL TechWire in an exclusive interview at LabCorp’s headquarters in downtown Burlington. “I am going to hasten to say that is not due to me. That’s just part of the trajectory that the board and I and the leadership team have gone on. We’re a global company, which is something I think is going to be very important over time.”
‘A TREMENDOUS RUN’
If you’ve ever had a blood test, urinalysis or genetic test, the chances are good that LabCorp performed it. The company offers 4,800 different clinical, anatomic pathology, genetic and genomic tests, and it processes about 2.5 million specimens per week at its 40 primary testing labs and network of smaller labs around the world.
On the drug-development side, LabCorp’s Covance drug services business has been involved with all of the world’ top 50 best-selling drugs.
Altogether, LabCorp’s products and services account for 120 million “patient encounters” per year, and the company serves about 220,000 clients including physician offices, hospitals, managed care organizations, and biotechnology and pharmaceutical companies.
Since King became CEO in January 2007, LabCorp’s annual net revenues have more than doubled, from $4.8 billion to $10.2 billion, as have its adjusted earnings per share (EPS), which vaulted from $4.45 to $9.60.
If he had offered a bet in 2007 that the EPS would grow that dramatically, “it would have been hard to find anybody to take that bet,” King told investors at a recent J.P. Morgan Healthcare Conference. “So we’ve had a tremendous run.”
LabCorp’s global workforce has also more than doubled under King’s leadership, leaping from 25,000 in 2007 to nearly 60,000 today.
“Not one of my finest achievements, doubling the head count,” King says sardonically with a chuckle.
In January LabCorp was named to Fortune magazine’s list of the “World’s Most Admired Companies.” Last year it was named to Forbes’ ranking of the “World’s Most Innovative Companies.”
MERGERS AND ACQUISITIONS FUEL GROWTH AND CHANGE
Much of LabCorp’s growth has been organic, but the majority has come from mergers and acquisitions. In fact, M&As have been a corporate way of life since the founding of LabCorp’s forerunner, Biomedical Laboratories, in 1969 by James Powell and his brothers, Thomas and John, in a hospital basement in Burlington.
King doesn’t keep score of the acquisitions made on his watch but says, “I’m sure we’ve done over a hundred. We do at least 10 a year, some years more.”
None has been bigger than the $6.2 billion purchase of Covance, a contract research organization (CRO), in February 2015. The blockbuster acquisition signaled LabCorp’s serious entry into the drug-development business.
The deal was followed in September 2017 by the $1.2 billion purchase of Chiltern International, a British CRO with North American headquarters in Wilmington.
The two acquisitions, representing more than 20,000 employees worldwide, give LabCorp a global capacity for end-to-end development of new drugs, diagnostics and medical devices.
King led LabCorp into the CRO business when he and the board of directors saw ominous changes coming in healthcare, including industry consolidation and reductions in government reimbursement rates for its diagnostic tests.
“For a variety of reasons, growth was going to be more challenging,” King says. “It was going to be harder and harder to sustain the kind of performance that we wanted by doing one thing, no matter how well we did it.”
King and his colleagues began thinking about areas that would complement LabCorp’s diagnostics business.
“We looked at a whole series of options and came up with drug development as the most likely adjacency for us to pursue,” he recalls. “It was a very logical fit for us.”
The Covance and Chiltern acquisitions “strategically took a lot of guts and took a lot of foresight,” says Kong, who met King several years ago through their mutual involvement with Intersouth Partners, a Durham-based venture capital company. Today Kong is founder and managing partner at HealthQuest Capital of Menlo Park, Calif.
Kong notes that LabCorp was already performing diagnostic tests for many drug clinical trials, and it has a vast proprietary database of more than 30 billion lab test results, representing about half of the U.S. population. With that mountain of diagnostics data at its disposal, LabCorp could tell drug developers where to find patients with a particular illness or condition so they could enroll them in clinical trials.
“So all of a sudden you can be efficient in running clinical trials,” Kong says. With LabCorp’s acquisition of Covance and Chiltern, “now, together, they can do some things they couldn’t do before.”
A CAREER ROOTED IN THE LAW
The man behind LabCorp’s last decade of record growth and change ascended to the company’s chairman and CEO roles through the legal profession. His career path was influenced by his mother, who attended law school later in life after she and her husband, an astronomy professor at the University of Illinois at Urbana-Champaign, raised King and his three siblings.
King earned a bachelor’s degree cum laude in Near Eastern Studies at Princeton University and taught World Civilizations and Middle Eastern History at a high school in Orlando, Florida, for two years “because I didn’t know what I wanted to do.”
He then enrolled in law school at the University of Pennsylvania. After graduating cum laude, he clerked for a federal judge and then worked for law firms in Atlanta and Washington, where he also did legal work on behalf of indigent clients.
In 1987 he became an assistant U.S. attorney at the Department of Justice in Maryland’s lone federal judicial district, based in Baltimore. He prosecuted bank robberies, drug trafficking, bank fraud and other crimes from Western Maryland to the Eastern Shore. “You name it, we pretty much did it,” he recalls.
The legal work helped prepare him for the rigors of working as a CEO.
“Being a prosecutor and being a lawyer generally . . . you have to have good judgment,” King says. “You have to know what to say and when to say it. You have to be prepared to take a lot of criticism from people who aren’t happy with things that you may do. And all of those things absolutely contribute to skills that one needs to have to be a CEO.”
King found the time to work as a basketball referee at high school and small-college games before his travel schedule made that too difficult. Just as making calls in legal court had done, making calls on the basketball court also taught him lessons that he has applied as a CEO.
”If you’re in the right place on the court, and you’re watching not what’s happening, but what’s going to happen, you’ll get the call correct almost every time,” he says. “If you’re in the wrong place on the court or you’re watching the wrong thing, you’re only going to get the call correct by luck. It’s going to be 50-50.”
The lesson in that, says King: “Preparation, judgment, paying attention to the right things, and learning not to pay attention to the wrong things – those are very important to being effective as a CEO.”