All right. Good morning.
Good morning. Morning. Good morning. My name's Scott Fromer. Welcome to Labcorp's 2018 Investor and Analyst Day. Thank you for coming. It's great to be with you this morning, and we appreciate those who are on the webcast as well. Before we begin, just a few housekeeping items. First, please silence your phones, your watches, any other device out of courtesy to the presenters. Second, the material presented today will be published on the Investor Relations portion of our website at the end of the day. Finally, we will be making forward-looking statements. Please note that we're under no obligation to update those forward-looking statements, even if our expectations may change. With that, I'll now invite Dave King, Labcorp's Chairman and Chief Executive Officer, to the stage.
Thank you, Scott. Good morning, everyone. Welcome to Investor Day. We're delighted to have everybody here and appreciate you joining us. Also, there's people joining us on the webcast. Just want to give you a brief overview of what we're going to do here today, and then I will be talking about our enterprise strategy overview. We have four goals today in presenting this Investor Day program. First is to show you that we have two very powerful businesses with strong track records of performance and opportunities for growth, and that's the diagnostics business and the drug development business. Second is to show you the power of the enterprise, the differentiated power of the enterprise that the combination of those businesses brings. You'll see demonstrations around capabilities, around data, around companion diagnostics that demonstrate convincingly how our differentiated enterprise puts us in a position of competitive strength.
Third, we want to talk about our 2018 priorities in our businesses and our focus on execution, as well as our longer-term strategic focus that will allow us to continue to create shareholder value. Fourth, we will demonstrate to you that Labcorp is in an excellent position for long-term future growth, and we'll talk about why. Now, you'll notice that in the program today, Glenn and I actually have relatively minor roles, which is by design, because our fifth goal is we want you to meet our team. We have an outstanding leadership team below the people who you are used to engaging with, and we want you to meet them today and get a sense of our future bench and the long-term strength of Labcorp.
I'm going to start by briefly talking about enterprise strategy, and then John Ratliff and John Cook are going to talk about the Covance business, 2018 focus and long-term strategy. Gary Huff will talk about the diagnostics business, 2018 focus, long-term growth strategy and opportunities. Dr. Brian Cavaney, our Chief Medical Officer for the enterprise, and Bryan Vaughn, who is in charge of our health system strategy, will talk about value-based care, and they will explain to you why Labcorp is in an exceptionally strong position to assist customers into the transition into a value-based care payment environment. Dr. Marcia Eisenberg and Dr. Steve Anderson will talk about how we are extending our leadership in companion diagnostics and how important that is to our long-term strategy. Lance Berberian, our Chief Information Officer, and Gabby Feldberg from the Covance business will show you data in action.
I think this is part of the premise of the acquisition that you will see now today coming to fruition. You will see, and particularly in the breakout session later, where Gabby and Chris Ghosh will show you some of the very unique data tools, you will see the power of the data to support the growth of both businesses. Tom Kaminski, our Head of Strategy, and Mark Wright from our IT will talk about innovation on our consumer platform and what we are doing in that very important area. Glenn will wrap up with a brief presentation about our financial strength, which will largely be familiar to you. We will grab lunch, and we will have a Q&A and afterward the breakout sessions, which I really encourage you here in person to spend some time in the breakout sessions.
In the breakout sessions, we will show you specific examples of how we use the data to win business, and we'll show you specific examples of how we are making the consumer experience comfortable and seamless and creating that greater intimacy and engagement with consumers that we think is so critical for the long term for our business. With that, I'm going to talk briefly about our strategic enterprise overview, and some of these slides will be quite familiar to you. Who are we? We're a leading global life sciences company. Increasingly, we are deeply integrated not only into delivering numbers but into delivering care, whether that's through our decision support programs, whether it's through companion diagnostics, through many of the innovations that you'll see us talk about today.
Our mission, we have almost 60,000 people now around the globe dedicated to our mission of improving health and improving lives, and we do that through three strategic objectives: delivering world-class diagnostics, bringing innovative medicines to patients faster, and using technology to improve the delivery of care. When we acquired Covance in 2014, we premised our acquisition on three foundational ideas. One, we created a powerful global life sciences enterprise that more than doubled our addressable market opportunity. Two, we expanded the growth opportunities for each of the individual businesses as well as creating the powerful global enterprise. Three, we capitalized on our strengths to create a differentiated offering.
Again, I want to emphasize, as you see the presentations today, think about not only the strength of the diagnostics business, particularly the 2017 performance, the strength of the Covance business in the 2018 projected growth, but the differentiated enterprise position that puts us in a place where none of our peer competitors have the assets that we have. When we were Labcorp Diagnostics alone, we were a participant in an $80 billion US clinical lab market opportunity. When we added Covance, we added opportunity in two new areas: the global addressable outsourced R&D spend of about $35 billion, and because we now have laboratory facilities in China, in Japan, in Singapore, in Geneva, we also are in a position when we are ready to expand into the ex-US clinical testing market.
We have gone from an $80 billion addressable market growing relatively slowly to a $200 billion global addressable market growing more rapidly. As a result, when we think about the overall growth of our enterprise on the top line over the long term, we think about a mid-single-digit growth across the enterprise. Covance is growing faster because of the faster growth in the outsourced drug development market. Diagnostics is growing more slowly, but mid-single-digit growth across the whole enterprise. You will hear a lot today about diagnostics and about drug development, but again, I want to focus on the strengths of the enterprise. As I said, a global footprint, doing business in 120-plus countries, 60,000 employees, unmatched real-world data and patient intelligence. The lab data that we have is superior to any other data. We know the patient's name. We know where they live. We know the demographics.
We know the physician. We know the diagnosis code. We know the trend and the history if the patient has come to see us before. Nobody else, no matter what they say about their data, has those attributes and has them essentially in real time. We have unmatched real-world data and patient intelligence. We have deep scientific and therapeutic expertise with over 600 MDs and PhDs in every therapeutic area with every conceivable expertise. We are the industry leader in companion diagnostics, and as we have demonstrated, and as you'll hear today from Lance and from John, we are the leaders in technology-enabled solutions to streamline processes for all of our customers, whether they be pharma companies or whether they be the consumer. Our 2018 priorities, we've talked about these, and I won't spend a lot of time on them. Number one, drive profitable growth.
Number two, integrate our key acquisitions: PAMO, Mount Sinai, and Chiltern. Number three, optimize our enterprise margins and, as much as possible, overcome the headwind from PAMA by using the Covance launchpad process and our cost discipline to offset, as much as possible, not entirely, the impact of PAMA on the diagnostics business. We have our three strategic initiatives that we'll talk about to capitalize on the long-term market opportunities, and we'll discuss those today. Value-based care, as I mentioned, the enhancement of the drug development process, streamlining it, making it faster, better, and cheaper for our pharmaceutical customers, and embracing the role of the consumer and building a world-class consumer platform. As we've talked about earlier this year and continue to highlight, our differentiated solutions are resonating with customers.
Our value-based care solutions were the leading edge of three marquee transactions in 2017 with Mount Sinai, with PAMA, and with Novant Health. Not only did we offer the traditional range of laboratory services, but the ability to enroll them as trial sites, to recruit patients from within their patient population, to bring cutting-edge clinical trials to the community for a lot of the community-based physicians. These were very important considerations for these health systems in signing up for long-term deals with Labcorp. Streamlining clinical studies at the time of the acquisition, we talked about $150 million in revenue.
We're over $500 million in bookings based on specific instances where the pharma sponsor has told us, "Yes, your data, your Labcorp data is one of the critical factors that helped us to choose you as opposed to a competitor." That will translate into $150 million in top-line revenue growth in 2018 and beyond. Our consumer platform, we took our time choosing the right partner for our retail partnership. We always said we wanted it to be in a healthcare environment. We are a healthcare company. We believe it's very important that we deliver our services in a healthcare environment. As you can see, 28% of the patients who we are seeing at the five Walgreens sites in Denver are new patients for Labcorp, patients who we've never seen before. We've opened a new channel to meet the consumer where the consumer wants to be met.
When Tom and Mark speak, they'll also speak about our initiative to reach consumers in the home. We think that taking diagnostics and taking healthcare to the home is going to be the next big leg of innovation around the consumer. Again, we need to meet the customer where the customer wants to be met. I would be remiss if I didn't spend a moment on our 2017 results with the team here. We had an outstanding year and very proud of the team and of what we delivered. Record revenue at over $10 billion, record earnings at $9.60, over $1.1 billion in free cash flow, far and away a record for our company in the course of a 24% increase in our share price. As you can see, our long-term revenue CAGR of 10%, significant escalation in growth post-Covance.
In 2018, we were named not only to Fortune's most admired companies but to the 2017 Forbes list of the world's most innovative companies, which is something that we all are very proud of. We are exceptionally well-positioned for future growth, and that is the sum total of what I have talked about and what I think you will see here today. Number one, we start with the foundation of quality and service. Although quality and service seem to be assumed in our industry, they are not to be taken for granted. We have an enormous focus at Labcorp and at Covance on delivery of quality and service, and that will continue to be a focus and it continues to differentiate us and expand our market leadership. We participate in a stable business and a global business.
is a business that grows steadily and consistently and, as you can see, generates continued growth opportunities for us and for our shareholders. We have exceptional financial strength and balance sheet flexibility to deploy our capital to support the growth of the business both internally and externally and to return capital to shareholders. We have, as I pointed out earlier, multiple avenues for future growth, and we have foundationally—and it is one of the things I really hope you come away with realizing today—we have foundationally a great platform for innovation and a great team of innovators. For these five reasons, we are exceptionally well-positioned to grow not only to execute on 2018 but to grow in the years ahead.
With that, I want to thank you again for attending our Investor Day, and I will turn the podium over to John Ratliff and John Cook, who are going to give you an overview of Covance's drug development strategically and 2018 priorities. Thank you.
It's a privilege to be with you today, and let's get right into it. The opportunity is there. When you look at the drug development business, if you look at different aspects of it, clearly it is a positive industry environment. If you look at the regulatory area, it's favorable. The NDA is filed clearly up to the historical highs. If you look on the innovation side, the number of molecules that the industry is producing is up about 20% over the last couple of years. If you look at where Covance is positioned against that in terms of the actual oncology area, it is around 36% of the pipeline. That's exactly where Covance's backlog is. If you look in the central labs, you look in the clinical business, you look in the early development, we're all in that 35%-40% range.
If you look at where that innovation is occurring, primarily that's in the emerging space, so the biotech space. A little bit over three-quarters of the molecules produced are in that area. Now, with the Chiltern acquisition, we feel very, very well-positioned to take advantage of that. What's fueling that is the venture funding is now up near the historical highs. A positive environment. All three of our businesses, whether you look at the early development area, whether you look at the central labs, when you look at then the late-stage, early-stage clinical business, all of those markets are growing. It's a nice environment to be in. At the same time, we're ambitious. We want to grow faster than that industry growth. Now let's talk about how Covance is postured for that growth. Clearly, 2017 was a transformative year.
Anytime you get into this business, you have to lay the right foundation. First off, we have actually increased our executive bench, added about 27 new executives, primarily in the clinical business, both operationally and commercially, but we knew we needed to add that girth to our business. Second, we have added around 2,500 folks internationally, yes, primarily due to the Chiltern acquisition, but at the same time, knowing that we had to get better in terms of our global footprint and expansions in our global business, we have increased that capability in terms of our footprint and how we go to market. Second, in terms of launchpad, we know we have capabilities in terms of margin expansion. We know we have areas that we need to be more effective and efficient.
Clearly, on the launchpad, we started with restructurings, but now we're moving into those process improvement areas. Whether that's software automation, whether that's on the contract-to-account management side, whether that's in the organizational side, we know that we have capabilities of being more effective and efficient. We also know we have capabilities in terms of our technology suite, and we'll display those either through my presentation or Lance's and Gabby's, etc. Clearly, our tools and technology are a way of doing that. Now, we're going to talk a lot about data and patient recruitment in terms of those tools and technology.
At the same time, we have capabilities, and whether that's Pharma Equity on the protocol optimization side, whether that's our capabilities in terms of IVR with our Pulse Endpoint software suite, or whether that's our capabilities in terms of Global Specimen Solutions on the software that does specimen tracking, we feel like we have a best-in-class technology suite. We also know that we need to take advantage of that combined strength of Covance and Labcorp. You are seeing the solutions bloom. We will take you through Steve Anderson, Marcia, and John to a certain extent our strength in one of the examples, companion diagnostics. We should take advantage of that. Our backlog has quadrupled. We have almost $245 million of orders in terms of last year. Clearly, a hypergrowth area that we need to take advantage of.
Those same areas exist, whether that's in biomarkers or the biotech segments. We know we can penetrate and grow faster than the market. Chiltern, when you look at a strategy, you also have to look at portfolio management, and we saw a way of accelerating our strategy in certain areas by four or five years. In that strategy, we knew we needed strength operationally, commercially in the small and medium business, and Chiltern gives us that. Secondly, we saw strength in the FSP area, the functional service provider area, as well as strength in the biometric area from Chiltern. Clearly, one of the advantages of now putting that with an enterprise offering of our strength on the areas of monitoring. We also saw strength upon strength.
Chiltern was about 38% of their backlog was in oncology, but they also brought to the fore capabilities that we did not have: medical devices. They had ophthalmology, women's health. Strength in other therapeutic areas that added to the strength of legacy Covance. Finally, we did win. We won in the business. We had a 1.36 book-to-bill over the last 12 months. The nice thing about that book-to-bill was it was consistent across the business areas. We had strength in early development, which is perceivably a quicker-burn business that actually drags your book-to-bill down. We had strength within clinical. We had strength within the central labs. Also, when you looked at the areas and the segments, we had strength in our small, medium, and large pharma areas. The nicer thing was we were consistent. We actually grew that book-to-bill.
If you look back from a 1.11 to a 1.15 to a 1.23 to a 1.33 to now a 1.36 over the last 12 months, Covance is postured for growth. Next, what you have to do is you have to develop a strategy that takes advantage of that. We are aligned around growth. What we are going to talk to you about a little bit today is all about, A, that combined strength of a Labcorp and a Covance, B, utilizing the market-leading assets that we have in our portfolio, C, demonstrating that clinical leadership, and then finally, a little bit more on those tools and technology. Our North Star, as Dave said, is clearly improving health and improving lives. We are the only CRO that goes cradle to grave. We go from that preclinical all the way to post-marketing.
We focus our strategy on our four stakeholders: our employees, our patients, our investors, and our customers. I could probably spend the next four hours on this chart, but I'll try to shorten it up and then let the speakers actually go into some level of depth. We focus our strategies on the next 12 months. For 2018, we have to execute as Covance. We then focus on the next 24 months, so 2018, 2019, in terms of what's needed. Finally, in terms of what's next. What's needed is actually 24 months plus, which is the future of the business. When you look at what's happening in 2018, what are we fueling? It's broadening that scientific leadership.
Whether it is in companion diagnostics or whether it is in biomarkers or whether it is in our market-leading business in terms of the BioA areas, whether it is in our therapeutic expertise, bringing on a new head of actual nephrology or in rare endorphin, in addition to bringing on new segments from Chiltern in terms of med devices or on the ophthalmology area, we knew and we are doing the fueling of our scientific leadership. We also know that we have to fuel our core business. Whether that is from sampling all the way to market access, or whether that is within our core clinical business in terms of our segments, or whether that is in our central labs, John will get into a little bit of that. That business of fueling our core and then getting into hypergrowth in certain segments is what we are doing.
Now, we're going to talk a lot today about evolving our patient recruitment site selection based on our data. We know we're world-class. Dave talked to you about the differentiation that we have. We're going to take you into a little bit more of that patient's intelligence and how, with our scientific collaboration, we can accelerate recruitment, that we can identify sites better than anyone else, and that's why we're winning at the end of the day. We can't take our eye off of the future. We do know that clinical trials will virtualize. We know that we need to be a leader in terms of whether it's wearables, sensors, point-of-care testing, embracing the new alliances that are coming out of the diagnostics area.
I want to utilize, just as I am trying to utilize our patient service centers, just as I am utilizing our patient service centers, Walgreens. We do want to use those as avenues for patient recruitment for our trials. We're the only one where research goes all the way to care. We see that as an avenue to bring in that patient recruitment, those opt-in patients, those patients that want to be in trials today, and then bring that along the patient journey into our investigators and our sites. Clearly, we have an eye on the future to be a leader. We are postured for growth. Now I'm going to introduce John, who is the head of clinical, and he's one of the finest executives I know. He will take you into, A, that combined strength, how we utilize our market-leading assets and demonstrating that clinical leadership.
Thank you, John. Good morning, everybody. As we continue to engage our clients about the value that our combined organization can bring, those conversations typically and quickly center down into three or four different areas. First, it is engaging them, utilizing our unique position, spanning both drug development and healthcare and healthcare delivery, to give patients a more positive, rewarding experience as they engage in healthcare and development services. Second, it is engaging them in a way that helps them increase the probability of success for their drug development programs through the application of very insightful and actionable information. Third, it is interacting with them much earlier and far more often with the scientific and the medical expertise we have as a Covance and Labcorp organization to help differentiate their drug development strategies against products that are on the market or those that are in development.
Last, but certainly not least, it's utilizing our proprietary tools, our technologies, our processes to reduce cycle time both within a phase, across phases, and overall to reduce the cost of drug development. How do we do that? How do we give patients a more rewarding, potentially life-changing experience on trial? How do we reduce cycle times? How do we reduce cost of drug development all in? There are a lot of people in the industry that would say in the era of precision medicine, it's really easy. You find the right patient for the right trial at the right time. That's very easy to say, but it's something our industry has been struggling with for a number of years. Fortunately, we as an organization have assets that are perfectly fit for that purpose as an organization.
We have data that spans the organization that can be used to identify very specific patients and identify investigators who have a track record of performance in delivering quality and services. Oh, by the way, we can find those two parties in very close proximity to one another. We can even take that last step as an organization and introduce the physician to the patient or patient to the physician. As a Covance organization, I can say that's something we clearly did not have as a company prior to becoming part of Labcorp. We may have had a portion of that data that we needed, a portion of the information. It was insightful, and it was powerful in certain ways, but we didn't have a complete field of view of the data that was needed, and we didn't have the relationship with the investigators, the physicians.
We couldn't stand out in a sea of parties vying for their time and attention in a very thriving and busy environment. Labcorp brought that to us. Frankly, that all hinges upon data, having the right data, the right information, and extremely high volumes of it. That's what we have as an organization, as Labcorp and Covance. We have millions and millions of direct-to-patient data. You're going to hear a lot more about that later on. In fact, before coming together, we knew there would be great value derived from the data that we have, but it wasn't until we became one organization that we really realized the power and the breadth of the information that we had. The question became, how do you utilize all of that information?
How do you aggregate information related to patients, physicians, investigators, and wrap around that dozens of different parameters related to clinical trials? That is what we did. We created an information network across the Covance and Labcorp organization, and we overlaid on top of that an information and a technology toolset that allows our team members across the globe to utilize that information efficiently and very effectively for our clients. Those were the data sources that we had, and then we just brought those together. There is another source that we have generated since becoming one organization, and that comes to us from the patient customers of Labcorp, who have said that they are very interested and willing to learn more about clinical trials and clinical research that could be very relevant to their condition.
We've been able to tap into that population, which is well over 200,000 strong now, and identify patients for very specific clinical trials for our clients' work. We've also been able to interrogate that population or survey them to find out things that are very insightful about optimizing strategies for outreach, recruitment, retention, and overall creating designs that are more efficient and more effective, achieving those cycle times and those cost benefits, but also are much more friendly to patients participating in that research. It's very, very powerful. We are going to talk a lot more about data and information later today between Lance and Gabby and Chris and others. I'm going to stop there and shift to another area that our clients said that they were very willing and they want Covance to engage them earlier and far more often with our scientific and medical expertise.
Perhaps the best example of us doing that as an organization and quickly after becoming one is in the area of companion diagnostics. As many of you know, companion diagnostics are laboratory tests that are utilized to identify patients who are going to respond most favorably to a particular therapy. At the same time, they can be utilized to identify patients that may be at an elevated risk for a serious side effect or an adverse event. You develop your companion diagnostic in parallel or in conjunction with the underlying therapy or the complementary therapy with the hopes of developing in such a way that they're approved around the same time and available for physicians to utilize as they care for their patients. Covance and Labcorp, in particular Labcorp, were leaders in companion diagnostics prior to becoming one organization.
We've been able to build upon that strength in a number of ways, and we are the partner of choice. We're the leader in companion diagnostics for our customers. Last year, we took that commitment even further. We opened a dedicated companion diagnostics facility, a state-of-the-art purpose-built facility for companion diagnostics support from the very earliest juncture of identifying a potential companion diagnostics to helping develop it through the clinical trials process onto regulatory submission and approval. We're a full-service provider for our clients in that regard. You pair our scientists with state-of-the-art technologies, and frankly, we are the go-to partner. That is proven out by the fact that we've supported over 70% of the companion diagnostics on the market today. A clear victory for our organization, our clients, and various stakeholders in companion diagnostics, but there are many other examples.
One included in that set would be our central laboratory services organization. That team helped found the industry basically 30 years ago as it partnered with pharmaceutical partners to meet a need in the industry to ensure that results were consistent across geographies and across trials. That team has been a leader in the space ever since. What we do in terms of our automated kit production, our logistics capabilities, we distribute those kits all around the world to well over 100 countries and then collect the specimens back and return them to our laboratories. The vast testing menu we're able to apply on those specimens and deliver results and wrapping around that, a whole host of specimen management, storage, and technologies that we employ each and every day.
We do all those things on a scale to a level of service and quality that is well beyond our competition in this space, and we are the clear leader in this area. Being the head of that group several years ago, the one area I wished we were stronger was in specialty and esoteric testing. As I look around the space, the competitor I was envious of was Labcorp, a leader in esoteric and specialty testing. As we became one organization, we became a leader in every regard. Again, a great asset for our customers and greatly enhanced by becoming one organization. We take that even further when we pair with our laboratory services, our clinical capabilities. More and more customers are looking to us for both and integrating those together, especially our smaller client community.
That is probably a good segue into the biggest news for our clinical organization last year. It was the acquisition, of course, of Chiltern. In one significant step, our organization met a number of our strategic growth and development objectives for that business. First of all, we gained an immediate presence within the emerging pharma community, the emerging biotech community. We had a presence there. Chiltern had a very substantial presence. Combined, we have a great standing with those clients. Secondly, from a therapeutic perspective, Chiltern had a great oncology offering, especially in early oncology, that pairs well with our existing oncology and the indications that we have that complement one another. We also acquired various other strengths therapeutically in women's health, ophthalmology, and medical device development and support, which not only benefited Covance, but it also benefited the Labcorp organization.
Covance had offered services and functional service provider capabilities, which are basically standalone services that you can offer versus full service. Some clients want full service. Some want functional service provider capabilities. Covance had a relatively narrow set in clinical monitoring. Chiltern brought to us data management, programming, stats, and safety-based services to provide a full complement. Not only do we have a full portfolio, we have it on scale with several thousand team members providing those capabilities each and every day. Last but not least, as John mentioned, we're building a very impressive technology suite, and we're able to add Chiltern's Endpoint interactive response technologies to that to have a full complement for our clients.
If I think about all those benefits that our organization derived and our clients derived from the Chiltern acquisition, the one that stands out in our minds and our clients most often is the fact that we have this unique position with small and emerging clients. It's a nice complement to our work and our portfolio historically. For those clients, they get the best of both worlds. They get a high-touch, very customized experience through the Chiltern brand and our designed around you methodology for delivery within the Chiltern organization. Then they have the global scale and infrastructure of the Covance team and a breadth of services we're able to give them access to that they didn't really have historically and certainly not in an integrated and as robust way, whether it be central labs, biomarkers, companion diagnostics, or otherwise.
We do have a great offering for those clients. A number of benefits. A lot of what I've talked about has been really the things we've been able to deliver for our organization to our clients. We have a number of internal benefits we've been afforded by becoming part of Labcorp as well. John's going to talk about one of those, and that's borrowing the Labcorp platform for business transformation.
Launchpad, I talked about laying the foundation. We know we have capabilities for margin expansion. Through the Labcorp Covance synergies, we have already implemented about $100 million in terms of those synergies already today.
In addition to that, we announced in the earnings announcement in terms of a couple of weeks ago that we would now increment that by $150 million, $20 million, which has already occurred in 2017, and then the additional $130 million in 2018, 2019, 2020. How are you going to do that? First, you do have to take a look at your resource levels versus the revenue that you have. You have to look at your organization. You have to look at the actual infrastructure that you have, and you have to look at your global delivery system. Secondly, really what you need to do is where you have manual processes in your system today and whether that is on the delivery side or whether that is on your individual processes functionally and then go attack those from an effective and efficiency standpoint.
Third is you do have to look at your client processes and whether that's contracts all the way to account management. That's where we have now approached with 70 different projects to now come forward with this margin capability and that commitment to actually increase our effectiveness through re-engineering, through our tools and technology, through our capabilities as an organization. We understand that, and we're committed to doing that. On that tools and technologies roadmap, I discussed this a little bit, and Lance and team will be going through this in more detail. We do believe we have a best-in-class technology suite. We have capabilities now with PharmaQuity in the protocol optimization. We have capabilities now within Endpoint from the Chiltern acquisition of having a best-in-class IVR system.
As we talked about with data and with our patient capabilities, we now feel like we have a best-in-class patient recruitment site selection engine that no one has, and we differentiate on that. We have within Accelerate that base system that actually gives us that data management capabilities, but also the risk-based monitoring capabilities for the future of clinical trials. Clearly, we see our capabilities on the software technology side all the way from clinical to now even into the lab space with Global Specimen Solutions on the specimen tracking capabilities that no one else has. Now, when you look at the takeaways from the Covance presentation, what are they? What did you hear from John and myself? Clearly, we have a 1.36 book-to-bill. We increased our backlog from $5 billion to $7 billion last year.
We announced within the earnings guidance that that would now achieve 20%-24% in terms of revenue growth in 2018. At the same time, organically, then we would grow in that single mid to high digit growth even on the legacy Covance. Clear capabilities of growth postured for growth with that 1.36 consistent book-to-bill. Secondly, with that combined strength of diagnostics and drug development, clearly, we believe we have a best-in-class identifiable patient site selection capabilities with that patient intelligence with our science side that no one else has. Third, yes, it is transforming the investments that we've made, but it's time for us to capitalize on those investments. Whether that's in the talent side, whether that's in the solution side, whether that's in the tools and technology, we know Covance is postured and committing to profitable growth in 2018.
It is my pleasure to introduce Gary Huff to take us through the diagnostics area. Thank you very much.
Good job. Thank you, sir. Good job.
Thank you, John and John. Hello and welcome, everyone. I would like to take you through and provide you a high-level overview of Labcorp Diagnostics and our capabilities today. My colleagues will follow up with more in-depth discussions in regards to what I will be talking about today. Labcorp Diagnostics is a $7 billion clinical laboratory with a strong history of performance. We have a 10-year compound annual growth rate of approximately 6%. We have strong free cash flow. In 2017, we grew revenue by $577 million and expanded our adjusted operating income by $120 million. We also have a differentiated market position, one that is very difficult to replicate. We also are a company with unmatched expertise and breadth and depth of solutions that is bolstered by our expertise in science, therapeutics, value-based care, and information technology expertise.
We have a vast infrastructure that can service every viable market in the United States through 1,900 patient service centers, 5,000 in-office phlebotomists, 12,000 collection phlebotomists, 26 regional laboratories performing an expansive menu of over 4,800 tests, 3,100 specimen couriers. We service over 500,000 patients testing per day. We are a differentiated value. The combination of Labcorp Diagnostics and Covance's drug development provides us a differentiated value to expand our growth opportunities, growth opportunities in hospitals, health systems, large independent physician groups, accountable care organizations, managed care, and companion diagnostics. We are a data powerhouse. We reach approximately 50% of the U.S. population through our 30,000 or 30 billion test result database. We have a big data platform that enables us to connect to disparate systems. We, in essence, connect to anything and everything.
We are an innovator, whether we innovate through investments in our investment fund where we invest in entrepreneurial healthcare companies or whether we develop proprietary technologies internally, such as our Labcorp Express, Labcorp PreCheck, and mobile applications. We have differentiated leadership that is talented and deep with a proven history of performance. Our top eight operational leaders have a combined experience of 145 years in the clinical lab industry. Another differentiator that's very difficult for our competitors to replicate is our structure. We are structured to be close to the customer so we can be flexible and nimble and make decisions rapidly as needed. We are a leader in a stable, growing, but fragmented $80 billion market. We have approximately a 9% market share. The majority of the market opportunity is in a higher cost setting, of which the majority of that setting is in hospital outreach and hospitals.
We are very well positioned to capture growth in an addressable market in the higher cost setting of $37 billion. The market dynamics right now are driving higher cost setting testing into a lower cost environment, such as Labcorp, where we have economies of scale, efficiency, and high-quality testing. We are driving profitable growth by focusing on acquisitions, strategic partnerships, and delivering valuable solutions to help our customers transition to value-based care. Also, we are continuing to build on the value of the combination between Labcorp Diagnostics and Covance's drug development. Multiple dynamics are occurring that are in our favor. Play to Labcorp's strengths. First of all, consumers. Consumers require high-quality, low-cost, accessible technologies. They require the use of technology.
In response to that, Labcorp has opened two new channels: the Labcorp at Walgreens, where we place a Labcorp patient service center inside of a Walgreens beside the Walgreens pharmacy. As Dave mentioned, we have seen a 28% increase in new patients. We also have developed an in-home testing program, which Tom will discuss later today, where we take services to where the patient wants to be met. Scientific innovation, precision medicine today holds significant promise to lower cost and improve care. Personalized medicine is the future to lowering cost and improving care. We have invested significantly in next-generation sequencing technologies. We also have developed a partnership with a company called OmniSeek, where we are working to identify better patient care and treatment for cancer through molecular profiling. Technology and innovation. Data is the key to improving care and lowering cost.
Our big data platform enables us to take vast and massive amounts of data and identify relevant insights to improve care and to lower cost. Lastly, pricing pressure. Pressure from Protecting Access to Medicare Act is driving pressure on the clinical lab fee schedule for Medicare by 30% over three years. This is causing significant impact on smaller players and those players who are performing testing at an inflated reimbursement level. In addition, health insurers and health plans are driving higher-cost testing out of that setting into a lower-cost setting such as Labcorp, where we have efficiencies, economies of scale, and high-quality testing. In 2018, we are focusing on two priorities. The first priority is to drive profitable growth. The second is to optimize opportunities.
In essence, optimize our margins through acquisition integration, doing them better and faster through bad debt improvement, and through the expansion of our Labcorp at Walgreens, where we can drive additional volume. We will drive growth through two segments of focus. We are investing significantly in these two areas. First of all, the customer segment that we focus on are hospitals, health systems, large independent physician groups, accountable care organizations, managed care, and consumers. We have invested significantly in developing a value-based care team of experts, and some of those you will see here after me, that are guiding us to develop the tools and solutions that are necessary to help our customers in these segments to transition to value-based care. Also, in regards to the testing segments that we will focus on, genetics. Genetics is being driven by the direct-to-consumer market.
Consumers want to know what their genetic makeup is. They want to know more and more about their health. In addition, the aging population is driving genetics and the need to diagnose more rapidly to be able to improve treatment. The genetics marketplace is anticipated to be approximately $14 billion by the year 2023. Labcorp has invested significantly in our next-generation sequencing capabilities in our central location in North Carolina, as well as in our California location. In addition, we have the nation's largest genetics counseling group, of which, as genetics grows, health insurers require genetic counseling. We have 135 counselors and growing to assist in this area. Oncology is about a $5billion-$6 billion market opportunity. This is a significant area where a lot of research and testing advancement is occurring.
Our investment in OmniSeek is helping us to be a leader in focusing on the oncology market. The drivers in this area include precision medicine, precision medicine, and the need to diagnose quicker and faster to improve cancer care treatment. Medical drug monitoring is about a $1 billion market opportunity. The drivers in medical drug monitoring are the opioid epidemic. In response to this, Labcorp has invested significantly in expanding our capacity, not only in our drug testing facilities, but also in our divisional facilities. In addition, we have partnered with a medical drug monitoring platform that helps physicians to manage the opioid crisis and to manage those patients on prescription drugs and opioids. Women's health is a significant market opportunity, about a $5billion-$6 billion market. Labcorp is the leader in women's health. What is driving women's health is the awareness of non-invasive prenatal testing.
In addition, there are significant chronic disease increases that are occurring in this segment. In response, Labcorp acquired Sequinel, the leader in the non-invasive prenatal testing world. Lastly, rare and orphan disease testing. The combination of Labcorp Diagnostics and Covance's drug development together provides us a new opportunity in companion diagnostics in these areas. How will we grow? We are growing by focusing on hospitals, health systems, partnerships, acquisitions that are strategic and accretive, and organic growth. In addition, we are focusing on developing those value-based care tools and resources that support these customer segments and position us to be a leader. Lastly, we're going to leverage and continue to build on the Labcorp Covance diagnostics platform. We can't stop there. We're going to continue investing and utilizing technology to improve care, lower cost, and enhance the experience.
To improve care, we will continue to develop these value-based tools, such as our chronic kidney stone disease management program, clinical decision support that will help the physician and guide them through managing the patient appropriately. In addition, in lowering cost, improving quality, we will expand on our automation, such as our chemistry automation, where we have lowered cost per test by 26%, and we have expanded our capacity by 35%. Also, we will continue deployment of our Propel proprietary sorting and splitting automation, which has reduced our specimen rejection rate by 40%. Lastly, we will continue to deploy our Touch System. That is a system that is automated guidance for specimen collectors. It guides them through the process, and we will continue to deploy them in our customers, in Labcorp at Walgreens, and in our patient service centers.
This tool has proven to reduce errors per million by 60%. Lastly, enhancing the experience. We will continue rolling out new tools and solutions, self-service for our patients and for our customers. Tools such as Labcorp Express, Labcorp PreCheck on our mobile applications. Also, improving our price transparency. The ability for a patient through our patient estimator to be able to see exactly what the estimated cost will be before services, which is something that is really unknown to the healthcare world today. Tom and team will demonstrate those products here later today. In closing, I would like to, first of all, say that I am excited. I have been in this business for 25 years. This is the first time that we have been significantly positioned to be a market leader ahead of our competition significantly.
Our company has prepared itself to be very well positioned to take that leadership role through developing innovative solutions and by positioning ourselves with our high-quality innovative solutions, but also high-quality services and other innovative types of solutions. Thank you. With that, I would like to introduce you to our Chief Medical Officer, Brian Cavaney, and our Senior Vice President of Hospital and Health Systems, Bryan Vaughn.
Good morning. The world of healthcare is moving to one that's more value-based, which essentially just means demanding more clinical quality and better outcomes and a better patient experience while still managing cost. All of our customers are going to be in this world, and we'll be right at the center of that.
As government payers and private payers move most physicians and other healthcare providers to take some extra level of financial accountability for the care they're delivering, diagnostics and drug development will still be right at the center of that. We still will have the same three main customer groups. We just need to help them in their businesses so that they can succeed in the new value-based contracts that they're going to have. As Gary mentioned, health systems, ordering physicians and other clinicians, and the payers who demand so much from us. We just need to add more value to the services we're already providing so that they can succeed in their contracts.
Some astute investors have asked us whether we need to completely change our business model in order to prepare for the changing regulatory framework and to prepare for some of the new demands and expectations of our customers. We think just the opposite. The way we've structured our business is perfectly positioned with the main attributes that physicians and other providers require to succeed in a value-based care world. They need to focus on cost, not just the unit cost of any individual test that they need to order for their patients, but also managing the total cost of care across the enterprise. We are the low-cost provider in a unit price basis of the diagnostics that we offer in lower-cost settings like our patient service centers and in outpatient settings.
As providers now have a greater incentive to manage total cost of care, they'll be even more responsive to finding a lower cost site of care and think that we're well positioned to offer that. Payers have always focused on demanding appropriate utilization of testing through their coverage policies and others. As providers take on more financial responsibility for managing care, they also will be even more looking for help and expertise to make sure that they're using the right protocols and that they're managing their clinical algorithms and pathways to order the right tests. We encourage all of our ordering providers to call our physicians, call our pathologists, our scientists, or our 135 genetic counselors to understand what the right test to order is at the right time.
When we match those two up together, we're able to offer that consultative service to providers that most of our competition can't, and therefore they want to work with us to order their testing protocols at that lower cost to deliver a more appropriate clinical outcome for their patients. We think that the labs that will prevail in a value-based care world are those that add more value to their clients than do all of the others. We're going to show you quite a few of those tools and technologies that we have available to help them make better decisions and succeed in their contracts.
Gary described some of the expertise that we have in our laboratory services, bringing almost 100 new innovative tests to market per year, demanding absolute quality in those so that we know we're giving the right result to a doctor who orders one of our tests at economies of scale that make us the low-cost provider and the natural partner to deliver those. As payers and providers work together to manage the total cost of care and deliver better clinical outcomes, they typically are adding more clinical quality metrics into those contracts, expecting physicians to produce better quality outcomes and close clinical gaps in care that can be identified in order to demonstrate their clinical outcomes.
In fact, just in the CMS programs for traditional Medicare, more than 50 of the MACRA and MIPS clinical quality metrics that doctors are being measured on and that payers are measuring the providers in their network on have a lab test at the center of that clinical quality metric. By providing that in a high quality and fast turnaround time to the doctors, they're able to be measured for the clinical outcomes that they're delivering in a more efficient manner. There are tens of thousands of different tests available and even just genetic markers that can be measured. Doctors have an incredible difficulty trying to keep up with that. The clinical decision support tools and the expertise and consultation that we can offer to them helps them make those better decisions, order the right tests, develop protocols.
Some of the joint ventures that we have with health systems, we're working with them to build templates into the electronic medical record systems so that the doctors and other clinicians in those health systems can follow the clinical pathways that we know have the highest amount of evidence and get them to the right clinical result in the most efficient manner using the right diagnostic tests. With our partnership with Covance, we know that we are unmatched in our ability to broaden the level of consultation we can offer to providers in that regard. Payers and doctors want to get the right drug to their patient at the lowest possible cost.
The companion diagnostics, complementary diagnostics, and other biomarkers that we develop while we're working on bringing drugs to market give us the best insight into the right test to order, and we're having those conversations with payers and pharmacy benefit managers in order to build their prior authorization protocols to include the right testing parameters to get the right drug approved and covered for their patients and plan members at the end of the day. As some of the pharma companies and payers and PBMs are entering some outcomes-based contracts whereby clinical thresholds need to be met in order to determine what the payment would be for the drug that has been acquired from that pharma company, most of those are most readily carried out when there's a specific quantitative biomarker or threshold that can be measured so it's easier to determine whether the right clinical outcome has been delivered.
Our companion diagnostics and other biomarkers are perfectly positioned to be part of those protocols and determine what that payment should be when we're having those conversations with our customers and other partners. Doctors and other stakeholders in the system are drowning in data but starving for insights. We've always delivered high-quality, effective tests that we can stand behind and deliver with utmost quality and innovation, but it takes more than that for the providers in the system to succeed in a value-based care world. They want us to be able to take the data that we have on their patients, plan members, and others, and bring it to them in an even more structured manner. Providers, for example, they want the right answer for the test that they've ordered, but they also need insight into other tests that their patient has gotten, maybe even from other doctors.
They want to know how a certain biomarker has changed over time so they can see whether or not the treatment that they're offering to them is actually delivering the results that they're being measured on by the payers that are determining how much they get paid. We're offering more and more intricate results and reporting tools so that they can see their panel of patients and the longitudinal results that they've been given so that they can make those better clinical decisions and they can hit the metrics that are in their own contracts. Payers, as you know, have always demanded lots of information from all of those that they're paying. Most of those traditionally have been transactional and claims-oriented.
More and more, the payers are wanting to get the actual lab result information from us and to help them with analytics so that we can help them track how well their plan members are performing in any given contract that they have, even when they've gotten lab tests before they were one of their own plan members. We're offering them all sorts of tools so that they can measure the quality of care being delivered by the doctors in their network. As they're making decisions about whether to narrow their network, tier their network, limit their network for next year, we're helping them identify the highest value providers in their network by looking at their ability to manage chronic conditions through their serial lab testing so they can make those decisions.
Patients are no longer the wallflowers that just expect their doctors to be paternalistic and tell them what to do anymore. As you all know, patients are becoming more demanding consumers. They want more and better information from us about what their lab test results are and what they mean. It can enrich the questions that they go and then ask their doctor about what they should do next, what treatment protocols they should follow, and where they can go from there. We're making more visually appealing, more understandable, more simply communicated results reporting available through electronic means to our customers and through the patients so that they can take that information and make better decisions on their own as a result.
One new set of customers that has emerged as a part of the value-based care movement are a whole new industry of care management companies, population health management companies, software tools, and other intermediaries that help doctors and groups of physicians take accountability for populations, often helping them negotiate with the managed care companies or with Medicare and helping them track their progression towards hitting the quality metrics in their contracts. We're talking with and working with all of them so that we can give them specific data feeds of our lab test results, and they can, again, also monitor the quality that's being delivered. They can fill gaps in care. They can hit all of the metrics that are required for them to optimize their Medicare Advantage contract incentives with CMS, for example.
Also, many of the provider groups and large health systems that are taking risk themselves are also asking for our help in getting more of these enriched reports so that they can manage their own patient populations internally and deliver better quality outcomes so they can hit their contract metrics. We know that we're perfectly positioned and our business model is right for us to succeed in a value-based care world. We're constantly innovating to add extra value to the reporting and data feeds that we're offering to the providers and other customers that we have, and we know that we are positioned to help them succeed in their own contracts. Now, Bryan Vaughn is going to go even deeper into how we partner with specific health systems and other ACOs to help them succeed in their contracts.
All right. Thank you, Dr. Cavaney. It's great to be with you this morning. One of the ways in which we implement our value-based care strategy is through partnerships with large health systems and ACOs and large provider organizations. When we discuss with the leadership teams of those organizations, we talk about all of the capabilities that we bring to bear, but we talk about how a lab strategy can position them to succeed in a value-based and consumer-driven world of the future. We talk to them about how Labcorp's efficiencies and scale can bring down their costs, how our standardized testing platforms and IT platforms can simplify their organization and bring simplicity to things that are otherwise complex. We talk about how our tools and our quality programs and our processes can bring efficiencies and convenience and satisfaction to their patients and clinicians.
We talk about how a partnership with Labcorp strategically can help them redeploy scarce assets into things that are more strategic and more core to their organization. We also talk about bringing clinical trials to their patient population through the Covance business and also how we can innovate together to help them succeed in this world long-term that's constantly changing. You heard us talk about a number of things over the past year or so, a number of transactions, a number of partnerships, and we have significant momentum in this space. We're very pleased with the acquisition of PAML and Mount Sinai and how those acquisitions are going, but also the long-term growth opportunity it gives us with some really large, prestigious, and anchor health systems to do things with in the future.
We announced a deal with Capital Health in New Jersey that's comprehensive and innovative, and we're very pleased with that relationship. We're constantly renewing relationships and continuing to innovate with partners that we've had for a long time, like Novant Health and the University of Tennessee. We have momentum in this space, and as Gary mentioned, we're also really excited about the opportunity that lies ahead.
There is a multi-billion dollar market opportunity out there that's at a significantly higher cost than Labcorp, and as these forces of value-based care drive models to providers that will make those settings feel and look more like cost centers, and then as the transparency effects of PAMA and the demand for price transparency from consumers set in, those two forces will push on that market, and we're exceptionally well-positioned as a low-cost, high-quality, innovative provider to capitalize on that multi-billion dollar opportunity. I want to give you a little bit of color on how we work with health systems. You heard us talk about the Mount Sinai outreach acquisition last year. There are other facets to the relationship as well.
Not only was there a transaction last year in which the outreach business of Mount Sinai was purchased by Labcorp that had certain monetary benefits for Mount Sinai, but it also brought benefits like freeing up space here in Manhattan, which is a very scarce resource, so that Mount Sinai could do other things with that space. We structured that transaction in a way that really preserved the academic mission of the institution. It was very important to Mount Sinai that the molecular and genetics programs stay very robust. It was important to the residency programs, so we worked with them to ensure that that mission of their organization stayed intact. We're working with Sinai on consolidating their number of reference laboratories that are out there.
Not only bringing Labcorp's cost and efficiencies into bringing those to bear to their hospitals, but also simplifying the IT connections and the maintenance of all the IT interfaces and all of this complexity, bringing it into a simpler, more cost-effective world. As a Covance partnership site, we've dramatically increased the number of trial opportunities that we have shared with Mount Sinai over the past year, bringing more opportunities for their patients to participate in leading-edge clinical trials, more opportunities for their clinicians to participate in research, which brings a host of benefits to their organization. You heard Dr. Cavaney mention our data and data feeds to organizations. We're sharing data with Mount Sinai on the lives that they're accountable for in their contracts.
We have this very rich data set going to them of standardized lab results data going to their care management teams, going to their population health teams, and they can do really innovative things with that data. One of the things we're working together with them on is identifying hepatitis C positive patients and then tracking them over time to make sure that their treatment has been completed and effective. That's just one example of the many things we can do with a really robust, high-quality, and comprehensive lab data set.
All of those things, all of the facets of this relationship bring value to their patients, bring value to their clinicians, but they also bring certain financial benefits to Mount Sinai, not only in the form of the one-time transaction, but ongoing benefits of being more efficient, ongoing benefits of having the trials come into the system. We think that's a really nice way and emblematic of the way we're going to work with health systems going forward. We mentioned innovation, and innovation is a pillar of our partnership strategy with health systems. I wanted to give you a little more color on other ways in which we're innovating with health systems. We're working with a large health system and specifically their cancer unit to change the way in which pre-infusion testing is done.
In the traditional model, a patient would come in an hour or two before they're scheduled to have a chemotherapy infusion. A certain portion of the time, their blood work would actually make them, their blood counts would actually make them ineligible to have the treatment that day. The patient ends up coming in for no reason, only to get sent home and rescheduled later. Instead of that inconvenient way for the patient and inefficient way for the facility, we're sending a phlebotomist out 48 hours before that patient is scheduled for an infusion, going to the patient's home, drawing their blood. Their clinician and care team gets their blood results the next day. If any modifications need to be made to their appointment, they can do that before the patient actually drives in and comes in for care.
A really nice way to improve convenience for patients and efficiencies for the facility. We talked about clinical trials in the context of Mount Sinai. There are a number of Covance partnership sites now around the U.S. with large health systems. They're bringing more innovative clinical trials to these health systems, and those bring great benefits to the patients, great benefits to the clinicians. We also saw in working with those sites and the Covance team working with these health systems on streamlining agreements and key processes and key lines of communication, Covance partnership sites were actually 15% faster to start up than non-Covance partner sites. Real benefits to the sponsors there as well.
We brought some innovative molecular testing into one of our health system partners' acute care laboratories and took something that was traditional microbiology that took days, moving it to a new technology that takes hours and a couple of results from that. One, when those results come back, some of the patients can go home right away. They do not need to stay in the hospital. That is great for the hospital. It is great for the patient to be able to get out of the hospital. It also drove down antibiotic use because a lot of patients would go on antibiotics pending the results of the test. That is great for antibiotic stewardship and resource utilization. A great example of how we are working with health systems to bring new technologies.
Lastly, Gary touched on this, but there is hardly a day or a week that goes by where we do not, unfortunately, hear something terrible about the cost of the opioid crisis. We are very pleased to have partnered with a technology platform that we are deploying with a number of customers around the country that can help clinicians comprehensively and compliantly and more efficiently work with their opioid-addicted patients. We are optimistic that that platform can have a meaningful impact in this terrible public health crisis. One other case study I wanted to walk you through. We are working with a number of organizations that are taking risk on their commercial contracts or on their Medicare contracts. This is an example.
Shore Quality Partners is a couple hundred physicians in New Jersey, and we had worked with their clinicians and a number of their docs for a while as their laboratory. As they moved into this world of risk, taking financial risk, we deployed our care intelligence population health tool. We then fed that tool with a really high-quality lab data feed, all the lab results from their patients that they're taking risk on. That enabled them; they put that together with claims and other data sources in the tool, and it enabled them to do a couple of things. Not unlike we do with managed care organizations, we got very granular visibility into high-cost and out-of-network laboratory providers that then we could go work with Shore on helping redirect some of that work to a lower-cost setting.
Shore was also able to get very granular into what their high-risk and rising-risk patients' populations were that were likely to be high cost. That enabled them to manage those patients differently, intervene upfront, and prevent the more costly downstream acute care episodes. You can see on the right side of the slide here some of the results that Shore achieved in one of their commercial contracts, which was quite remarkable. This is the way we are going to work with accountable care organizations going forward. To wrap up, we are uniquely positioned to succeed as a company in the world of value-based care and delivering great solutions to all of the stakeholders that we serve. We will continue to innovate with our health system partners and our large provider groups to provide new solutions and new models that help them succeed in a value-based and consumer-driven world.
Lastly, for our company and for our investors, we're very pleased about the opportunity that lies ahead and optimistic about our opportunity to grow in this market and be the laboratory of choice. With that, I'd like to turn it over to Dr. Marcia Eisenberg and Dr. Steve Anderson to talk a little more about our leadership in companion diagnostics. Thank you.
Thanks, Brian. Good morning. I'm Dr. Marcia Eisenberg. I'm Labcorp Diagnostics' Chief Scientific Officer. As Brian mentioned, we're going to talk to you today, Steve and I, about extending our leadership in companion diagnostics. We've talked a lot about key areas where we believed since the acquisition that Covance and Labcorp would be more successful together than we each were individually because of our complementary strengths and capabilities. One of those key areas that we're going to focus on today is companion diagnostics. Why is this important? Personalized medicines topped 30%, so over 30% of the FDA approvals in 2017. This is an area of growth for us. If you think about what is precision medicine or personalized medicine or companion diagnostic, these are genomic and proteomic biomarkers. These are key features that are actually used to develop the new therapies and the diagnostics.
They actually help to define the disease biology, and they are the things that actually provide the targets for the new therapies. A companion diagnostic, in a sense, is the ultimate biomarker. It's actually developed at the same time with a specific therapy. It helps identify the patients who are going to benefit from the drug, but also, equally as importantly, it identifies those patients that won't or, at worst, would have an adverse reaction to that drug. As we hear more about value-based medicine and care, these are expensive drugs. We want to talk about the right drug for the right patient, and that's what a companion diagnostic helps us to identify. We have combined over two decades of experience with companion diagnostics commercialization. We've participated in and launched a multitude of companion diagnostics over these 20 years.
Beginning with the late 1990s, Steve and his team actually participated in the validation and the launch of one of the first companion diagnostics, which is HER2. Throughout the 2000s, you can look at and see the names displayed up here on our timeline for key companion diagnostics that we participated in and often were first to market launch, such as EGFR mutation analysis or ALK for non-small cell lung cancer, through to some of the newer ones, so the Cobas EGFR, which is a liquid biopsy, their version two assay. We are together an unmatched franchise that provides end-to-end clinical development and commercial lab testing capabilities. If you look across the development of a drug, there are matched capabilities that we have along the biomarker and companion diagnostic development continuum.
Our capabilities go from bench, so helping to develop the biomarker itself, helping to design the companion diagnostic assay, determine its feasibility, participate in the actual development and validation of that test, all the way through to commercialization. We are leaders in both in vitro diagnostic or IVD submissions as well as single lab PMA regulatory approaches. Steve, in a few minutes, will spend a little bit more time on that. We have experience with over 300 IVD and medical device studies. To date, we have actually supported, as you have heard, over 70% of the key companion diagnostics FDA approvals, the ones that we have talked about, which include HER2, EGFR, KRAS, BRAF. That takes us through to some of the newer technologies that we are developing and validating and launching today.
Things that you're beginning to hear about in immuno-oncology and liquid biopsy and companion diagnostics that have been developed on next-gen sequencing capabilities. We have really end-to-end capabilities that are a differentiator, and I think both John spoke about this, that differentiate our company just clearly away from our competitors in this space. What I'd like to do now is turn it over to Steve, and he's going to take even a deeper dive into how Covance has been building out our companion diagnostics capabilities to strengthen us as we take the future and take on more of these studies.
Thanks, Marcia. I'm Steve Anderson. I'm the Chief Scientific Officer for Covance. What I'd like to do this morning in my time is build upon those points that Marcia laid out, which are the importance of precision medicine in the world that we live in today, the critical role that companion diagnostics play in that space, and then our leadership position in this area, both on Labcorp historical and Covance, but now as a combined organization. I'll talk about how we're going to expand that leadership role, thinking about how we look at our resources committed to companion diagnostics, the solutions we provide for customers, and the evolving landscape and how we match that with our thinking as we expand beyond oncology for companion diagnostics, as we look at new technologies and their role in companion diagnostics.
As was mentioned by John Cook this morning, our commitment to precision medicine and companion diagnostics was demonstrated by, in the middle of last year, we built out and opened a dedicated facility for companion diagnostics. Its sole purpose and the sole purpose of the staff at that location is to develop and shepherd companion diagnostics through the process, roll them out into our central labs where appropriate for clinical trial services and/or our diagnostic laboratories when regulatory approval is achieved. This facility, almost 40,000 sq ft, is staffed with scientists dedicated to this purpose: scientific staff that develop assays that meet our clients' needs under design control, much like we were an in vitro diagnostic manufacturer, project management staff that make sure that we meet our clients' timelines and expectations, and regulatory staff that can then shepherd the process for regulatory filing and approval of that companion diagnostic.
At this location, we focus on genomic-based technologies, molecular pathology-based technologies, developing assays to meet clients' needs. As I mentioned, at this facility, we become the manufacturer of the assay. Also on this campus, we have staff and processes that allow us to be a manufacturer for distribution to our central lab sites or to our diagnostic lab sites under good manufacturing processes. Again, dedicated facility, dedicated staff solely for the purposes of developing and implementing companion diagnostics. The second thing that we've thought long and hard about and that we've implemented are solutions for our customers. When you think about companion diagnostics, and many of those that Marcia talked about, they really fall in the pathway described in the left-hand part of this slide.
It's a three-way partnership between a biotech and a pharma company, an in vitro diagnostic company that is the developer and the distributor of the assay, and a CRO or a lab that's the service provider. The three parties work together to generate the clinical data to support the submission and the approval of the therapy and the analytical data to support the submission and approval of the companion diagnostic assay. Still today, the vast majority of the studies that we perform, about 75%, fall into this traditional three-way partnership. In the evolving landscape of this industry, there's a growing interest in a simpler, more flexible partnership between the lab, the CRO, and the pharma or biotech client. Instead of being a three-way partnership, it's a two-way partnership. In that partnership, then we become the test developer under design control. We validate its analytical performance.
We run the clinical trial. We support the regulatory submission. On approval, we introduce that assay into our diagnostic laboratory. About a quarter of all of our projects right now are under this pathway. It is known as the single-site PMA approach. It is, again, the development at a single site, and that is the launch within our diagnostic laboratory network. Clients like this because when they come to us, we can help them find the right solution for their need. John Ratliff mentioned this morning the growth we have seen in this space. We both had a historical footprint in companion diagnostics. When we brought the two organizations together, clients understand that we are the leader. We have solutions for them. We have the right appropriate resources. That is demonstrated by the growth both in new orders and our backlog.
By having those resources, by having those solutions, by matching those with the current environment, we're poised to continue along this impressive growth rate. Companion diagnostics, biomarker-driven drug development, is really essential to how pharma thinks about drug development today. John Ratliff mentioned that we have beginning-to-end services within Covance and within Labcorp. Clients do not always buy that way. In this particular case, for an immuno-oncology therapy, the client contracted with us to develop the companion diagnostic. We commercialized it in our diagnostic laboratory, but they also work with us at many other touchpoints. In our bio CMC group, we qualified the therapy, its stability, its potency before it was put into use in trials. In our early development laboratory, we did the pharmacokinetic and pharmacodynamic assessment before the drug went into the later phases of development. As I mentioned, we developed the companion diagnostic.
We launched it in our diagnostic laboratory. Now post-approval, our bio CMC group is still doing potency, stability, sterility assessment of that therapy now that it's being used to treat patients. There's a variety of factors that will continue to fuel this growth in precision medicine and companion diagnostics for us and for the industry. The first is that the applications are extending beyond oncology. The vast majority of the applications in use today are in oncology. Some of the early examples were in infectious disease. We continue to see other examples in infectious disease, but also in immunology, in neurosciences, and in rare disease. Our client base is diversifying. On the slide that John Cook showed, summarizing companion diagnostic, we have over 40 clients that are working with us on projects in 2017. They represent big pharma, emerging pharma, and biotech. Technology is evolving.
Historically, we've looked at one gene or one protein as a companion diagnostic. In today's world, we look at multiple genes, multiple proteins through our diagnostic partners and our diagnostic division. We have access to technology in those applications. We're evolving technologically with the demands of the industry. As I mentioned, we're a solution provider. We can either offer the three-way partnership with the IVD company, the pharma client, and ourselves, or a two-way partnership through that single-site PMA. Commercialization clients love the fact that through Covance, we can develop a companion diagnostic. Then on day one, when their therapy is approved and the companion diagnostic is approved, we can launch it into our diagnostic laboratory.
We're looking at how we expand that to meet the global needs for companion diagnostics, particularly as there's harmonization around the way that we think about companion diagnostics in the EU and in Asia-Pacific as well as in North America. Lastly, we have a leadership position that's been demonstrated through our historical performance and our current performance. We see an increasing focus on precision medicine expanding beyond oncology. It really opens up that horizon for growth. Lastly, we are solution providers. When we go to clients, we offer them appropriate solutions for their molecule development and their appropriate companion diagnostic. Those three things position us very well for continued growth in this area. With that, I'll turn it back to Scott Fromer to tell us about the break.
Great. At this point, we're going to take a 10-minute break until 10:15. Please come back to this room at 10:15. Thank you.
Should I introduce myself that way? Good morning. My name is Lance Berberian, and I am the Chief Information Officer of Labcorp. Today, I would like to share three components of our enterprise-wide technology strategy. The first component relates to the unique value of our data based on specific attributes that, when coupled with our tethered relationships with key constituents in the healthcare lifecycle, makes the data more actionable than companies that have big data alone. The second component relates to our strategy to develop apps that extend the clinical trial software ecosystem with value-added solutions for pharmaceutical companies. The third is the digitization of the transactions for each of the customer segments within our Labcorp Diagnostics business unit in a manner that adds value to all of the customer segments.
To start, I'd like to talk about some of those attributes of our data that other healthcare data may not have. Our data is very timely. We know information well before other healthcare providers. If you think of the general care of a patient, the diagnostic process precedes ordering pharmaceuticals for that patient, performing surgeries, issuing claims. The first step in the process is the diagnosis of the patient, and that's when we receive things like diagnosis codes and tests that are ordered. We generate those lab results very quickly so we know things early about the patient. Also, if you think of a lot of healthcare data, it may be large in size, but it's unwieldy to work with. Think about medical notes, that text in a system that a hospital or a healthcare organization uses. It's very hard to mine the data out of it.
Same thing with images. They're very large. They're data-intense, but hard to use. What we have is laboratory results. It's very standardized. It's even standardized from an industry standpoint in the naming of the tests and the test results. It's very precise. It's a precise value that we get from the lab test. Another key aspect is it's identified. It's identified at the patient level as well as the physician level. This also applies not only to Labcorp Diagnostics, but it also applies to the Covance drug development business in that there is also laboratory testing done there. There are clinical trial values that we have. There are investigator databases that we have. All of the data across both businesses can be intersected together.
Now, that's important, but I would argue that the fact that we have the tethered relationships with key constituents of the healthcare lifecycle makes it much more actionable. This gives us an opportunity to reach directly out to a patient or directly out to a physician in a way that other companies cannot. We see those physicians on a day-to-day basis, whether it's our courier driver picking up samples, whether we're delivering supplies for their testing, whether we're educating them about a new test that came in the market. When we contact that physician, it's based on a relationship. Same thing for the patient, same things for the pharmaceutical company. Interestingly, one of the things we do is generate a tremendous number of connections to the systems that hospitals and physicians use because we pass orders and results back and forth electronically. Those systems are called EMR systems.
We generate between 8,000 and 10,000 unique EMR connections every year, and therefore we have very strong relationships with those EMR companies. This makes all of our data and relationships combined together very actionable, whether it's recruiting for clinical trials, whether it's helping providers fill gaps in care for a patient that may need assistance, whether it's all of the goals of precision medicine that can be accomplished through the combination of the data and the relationships. Now, I'd like to talk about that concept of extending the clinical trial software ecosystem with key apps. These are apps that we feel that because of our data or because of our intellectual property or because of our capabilities give us a unique opportunity to extend portions of the clinical trial process in a way that pharmaceutical companies would value.
The first product line I'm going to talk to you about is called PharmaQuity. The goal of PharmaQuity is to assist a pharmaceutical company in planning their trial better, with a better strategy for the clinical trial, being able to know which countries to run the trial in, being able to know the protocols that could be used. Knowing that information will mean that the trial execution is faster and better. It is that planning and strategy, and hopefully you will see that demonstrated by Krish and Eric later in the demonstration period. We also have products from a branding of Endpoint. Endpoint makes the solution that allows a physician with a patient that potentially could be included in a clinical trial to prompt through all of the questions and data gathering to know whether that person is a good match for the trial.
Then, once they're brought into the trial, the system determines whether that patient will get the drug or the placebo. Then it manages the material flow to the physician who's giving that drug or placebo to the patient because it is the control point of which one they receive. The third product I'd like to talk to you about is Accelerate. Accelerate is used during the clinical trial process in the concept that we can extract data out of all of the different systems used in the trial. They all have weird acronyms, the EDC, the CTMS, the ETMF, to extract all of that data together and then present it to the people running the clinical trial in a way that brings insights that they wouldn't otherwise have. The fourth I'm going to talk about is Global Specimen Solutions.
This is a unique capability that provides access from the pharmaceutical company to the laboratory doing the testing for a trial to the investigator or physician that has the patient. It is sort of a network that allows the data to flow between those three entities. In the old days of clinical trials, you'd get your report once a month, but in today's day and age, people want to see it on a real-time basis. This is an information-sharing capability that is unique. Now I would like to go to the third component of our strategy. This is the idea that we can digitize the interactions with all of the various constituents within the lifecycle that count on Labcorp Diagnostics. These are our core customer segments. It's the physician and the health system. It's the consumer, and it's the payer.
All of them, as you notice, have an interspersed relationship throughout the transaction. Whether it is ordering the test or the patient going to our site for the blood draw, or the patient wants to see the result, and of course, the physician wants to see the result, all the way through the invoicing and data collection and quality reporting, it is an interaction across all three of those segments. What we are able to do is to tie the three together into an information hub so that they can, in a sense, share the experience together throughout the transaction. More importantly, each of those lab order transactions that generates lab results can be longitudinally linked together for that patient. The patient cares about their view over time. The physician cares about the patient's view over time.
The payer would call that patient a member, and they care about them over time as well. We have that unique ability to tie together the patient's data over time and interact with all three customer segments in a way that brings value to all of them. Again, it's that unique data assets and the tethered relationships together. It's the apps that extend the clinical trial software ecosystem. It's the unique ability to digitize the relationships with the customer segments for our Labcorp Diagnostic business that brings value to all of the customer segments. Now I'd like to introduce Gabby Feldberg, who's going to delve deeply on patient recruiting.
Thank you, Lance. Hello, everyone. It's a pleasure to be here with you today. As Lance said, I'm going to take some time now and really make this real for you all. I'm going to talk in detail about our largest proprietary databases. I'm going to talk about an example of how we're using this every single day. I'm going to talk you through some case studies that prove the value we're able to derive from not only these proprietary databases, but our deep clinical and drug development expertise. Let's start with the Labcorp Real World database. You've heard a lot about it so far. Why is real-world data important to us? As we're planning a clinical study, it's incredibly important to have an unbiased view of what's actually going on as our patients are dealing and coping with their diseases every single day.
The Labcorp Real World database is exactly that. It is extremely differentiated for some very key reasons, especially specifically when I am trying to use it to run my clinical studies. Let's start with the number one most important reason. It is identified. If you think about the other types of real-world data that are out there, such as claims or prescriptions data, the best you could probably get to are maybe some hotspots of patients, some amount of volume. You might be able to get to an identified prescribing physician. You might not. Here, not only can I get to that Labcorp physician that ordered that test and has a relationship both with Labcorp and that patient, but I can know specifically who that patient is.
I know that Gabby Feldberg has migraines and that there is a study two miles from her house that I can enroll her in tomorrow. That specificity is extremely differentiated. The other most differentiating part of this data is it is real-time. Prescriptions, claims data, you're looking at it months and months later. Labcorp data, we can see real-time, so real-time that we can actually set up surveillance systems to see when a patient is getting a lab test back that will help you understand what is that next point in their treatment plan. Before they get on standard of care that would potentially make them ineligible for my clinical study, I can have a conversation with that Labcorp physician that, again, I have a relationship with.
I can get that patient into that study, get them the chance to get on that novel therapy before they got on standard of care and could never be a part of my study or would have to wait six to nine months. Really differentiating stuff. On top of that, it's vast, right? I mean, we're talking about $30 billion test results across thousands of different assays. That means to me that I have tons of different disease areas that I can dig into detail with. It's granular. It's structured. This is real-world data that I can quickly and easily access. You heard a little bit about the tools, and we're going to dig into them a lot more today. That means I can gather insights. I'm not just going to be drowning in that data and starving for insights.
I get those insights out of the technology that we build on top of it. It's also growing very quickly. It's real-time and growing at a clip of 2.5 million samples collected and processed per week. That's amazing for what we can do with that data every single day. Let's dig into our next large proprietary database. That's our Accelerate Covance Investigator Performance database. This is a global database, right? Covance Chiltern Global Organization, powerhouses across the globe. This is my largest, most differentiated data asset across the globe. Because this is powered by our Covance Central Lab business, it represents 50% of all clinical trials that are out there. None of my competitors have that view into what's going on at any given time. We have 175,000 unique investigator records across the entire globe. So what am I looking at? I'm looking at performance.
I don't just look at this one-dimensionally. I look at this across three different dimensions: quality, how many patients they've recruited or gotten onto my studies, and how quickly they were able to recruit. I can create a standardized ranking easily across these three parameters, and it serves up with metrics that very easily I can rank the right investigators for the right trial at that right time. Even more compelling than that, because of the amount of clinical trials that we have within our database, that view that no one else has, I can see something called capacity. I can see whether or not that investigator right now is running two, three, five competing studies.
I can have that be a part of my equation so that not only do I want to understand if they're going to perform for me, but I want to understand if they're going to perform for me right now with what's going on in their practice. No one else can do that except for us with the view that we have. Let's get into those case studies. Let me make this real for you. In this example, we had a pharma client that came to us, and they needed to run a suite of registration studies: large, global, cost-effective, and fast as possible, what everybody wants. They needed to recruit 2,700 patients across the globe. This was an extremely competitive area. What we did is we went into our Accelerate Investigator Performance database.
We looked at not only which were the right investigators at that point in time that had consistently outperformed their peers in these disease areas, but we looked at their capacity. We understood, were they able to run more than one study? Because this was a suite of studies, we actually wanted them to run maybe two or three studies in the same site. We were able to see that. We were able to select a lot of sites and investigators that could run multiple studies at the same place. Why is this important? That means I'm saving costs and I'm saving time. The proof is in the—you can see on the bottom. I mean, we outperformed versus industry in almost every single way.
That critical first patient in metric that we all report out, we went way ahead of schedule, 18% faster to get this up versus what we see in the industry. We did this because we had 75% more high-performing investigators. I had 41% fewer non-performing investigators. Those guys not only cost us money, but they cost us time. All of this is proved in the fact that we were able to recruit our patients more quickly than the industry by 31%. A truly compelling case study. Now I'm going to go through an example because I want you to walk away today seeing exactly how I use this every single day. This is going to be an ulcerative colitis or UC, an extremely competitive area for those of you that are familiar. The tools that we use to create this analysis will actually be demonstrated a little bit later.
The first thing that happens, I get that study. It comes across my desk, and I need to figure out how many patients I'm going to be looking at. For this analysis, we looked at about a year's worth of data, right? One hundred million patients, but we wanted to look at the specific subset that worked for this patient population in this study, around 51,000 patients. Now I'm going to start clicking through these. I don't expect you to read every single one or even understand exactly what's happening, but I'm going to tell you why this is important. Why am I keeping this in this presentation? Because this is to show you the level of granularity and specificity that I can see.
As every single inclusion or exclusion criteria of my study is applied to that overall starting patient pool of 51,000 patients, I can see exactly what happens. Not only can I see exactly what's happening to my patient pool when I apply that criteria, but I can even understand a next level of granularity. As I start tweaking the upper and lower bounds of these different lab values or these different criteria, I can see how can I open this up so that I can get the most number of patients into my study. By having this level of real-world data that is easily accessible to me, I can pinpoint the right area to go after. If I didn't have this, I would have to try to guess.
I would have to try to just use my past experience, maybe have a couple conversations with a handful of investigators. Instead, I have all this at my fingertips. What we see after we've optimized this as much as possible through conversations with that pharma client, we see a 75% reduction in the overall patient pool. This number is important to me too. In the industry, we call this the screen fail rate. This means that there's a likelihood that there's quite a few patients that when they make it to that door, they're not going to be able to get through onto that study. We use this number extensively when we're planning how many countries, how many sites, how quickly is this going to go. What we want is predictable, right?
We want this to go as fast as possible, but I want it to be predictable because there's so much that goes into my clinical study, like drug supply, that I want to be very predictable. Next step, once we have that optimal patient pool, I'm going to geolocate those patients onto a map. You see that here. The larger the dots and the darker the dots, the higher the concentration of Labcorp patients and physicians that matched my study. Now we're going to dig back into that Accelerate Global Investigator Performance database. We talked about how this represents 50% of all clinical studies going on at any given time. In certain disease areas, it's vastly more. In UC, again, that extremely competitive area, we had 53 active UC studies that I could see at my fingertips.
Not only was I able to understand who were the right investigators that had that high performance based on those metrics that we talked about, that composite scoring, but here I did an extensive analysis of the capacity of those investigators to run these studies. Not surprisingly, if you look at the table on the right, you see there's quite very few investigators that are not running any active studies or running very few. Now, if I didn't have insights into capacity and performance coupled together, I would logically say I want to go towards those investigators that don't have anything going on right now. They've probably performed reasonably well for me from a performance standpoint, and they have capacity.
If we look at the table and you look at the trends, you can see when you get to investigators that are running about four active studies, there's this blip where all of a sudden they're actually pulling in quite a few number of patients per investigator, even though they're pretty loaded up with studies. If I didn't have both capacity and investigator performance, I wouldn't know this. Of course, I have a table in here for the purposes of the presentation. What's important for you guys to understand is I don't need to look at a trend or a table. I have this granular detail on every single investigator's performance on all of the studies, right? I can pick exactly the right guys across this entire table that are the right ones for my study.
Now that we found our investigators, we found our patients, now we pull those two together. You can see on the right-hand side is that map we just looked at with the patients from Labcorp that have been geolocated onto our map. The green stars are now the high-performing investigators that outperform their peers consistently and have capacity to actually run the study. We do not want to only do this in the United States. We need to keep growing. We want global real-world data. We want other types of real-world data that have already been briefly talked about, and we will talk a little bit more about it.
In this example, we actually had some data in the U.K. as well that we were able to run a very similar analysis to understand in the U.K. where was the right places to go and start pulling those patients onto our study. Okay? Is this working? Yes. I'm going to walk you through now some case studies that show you how we're getting value out of this for our clients and our patients every single day. In this first example, we were brought in early enough that we were able to help design the study. This pharma client came to us and wanted to run a study in type 2 diabetes with kidney disease. They wanted to look for an actual rare subset of that population, which is about less than 7% of all of those patients.
We went ahead and we looked at the Labcorp database. We pulled back all the relevant data of those patients that matched the study design as it stood at that moment. We went through criteria by criteria by criteria, like I just showed you, and we were able to pinpoint the exact criteria that was causing the most drain on that patient pool. That was the eGFR lab value or a measure of kidney function. Because we knew this so early, we were able to work with our pharma client, and they were able to tweak that parameter and enable 50% more patients to come into their study. Now, remember, if we were not involved early, if we did not have this data, they would not have known it until they already started running their study, done an analysis of why patients were not able to go into their study.
That means an amendment. That means costs. That means time. All of this prevented. In this next case study, we actually used both of our data sources together. Now we're running that study. The pharma client came to us. It was in acute myeloid leukemia or AML, and again, rare subset of patients. It was less than 15% of AML patients that had this rare genetic mutation, which we had in our Labcorp real-world data. On top of that, this client had obviously run a number of studies in the past in this therapeutic area, and they had relationships with health systems and sites. Because of the competitive landscape and some changes in standard of care that happened just last minute, they weren't able to go to their preferred sites. We went into the Labcorp database. We found those patients.
We mapped them and found the ones that matched the criteria of that study. We had conversations with the Labcorp physicians, which, again, you'll remember, we have already existing deep relationships with. I told them specifically that this person had the AML, had that rare genetic mutation, and was near an investigative site. We looked across the globe to try to find the right investigators that could perform consistently well in this type of a very competitive study. I'm happy to say we were able to open up 274 investigative sites across 28 different countries, and the study is on track for enrollment, and this pharma client has regained their competitive advantage in the market. Now, for this last case study, we've spent a lot of time talking about our proprietary database and how we're using it.
The truth is the value of our enterprise is so much deeper than this. It's more than just our data. It's actually the enterprise itself, the infrastructure that exists across all of these combined and powerful companies. In this example, we had a client that came to us, and they wanted to run a study that was optimized on cost, of course, but also they were really focused on reducing the burden of travel on our patients. We thought through, looked at what we had within our organization, and we were able to come up with a completely virtual study, leveraging all different components of the combined enterprise. The patients went online. They completed an electronic screener. If they passed that point, they would call into a Covance call center that had knowledgeable qualified staff that understood clinical research.
They would get consented electronically into that study, so still on that very same phone conversation. They would complete a survey that was administered by this knowledgeable staff. At that point, we needed to collect labs on those patients. If you think about your typical study, you'd have maybe 50-100 sites that's opened up. That's one of our challenges, right? How do you get so many patients through so many sites across countries, especially countries as vast as the United States? Now think about our patient service centers. We have over 1,900 of them at the ready at any point in time to run the labs for these patients. As they were on the call with the Covance call center, we found the nearest patient service center that worked for that patient that reduced that travel burden on that patient.
They went and they had the labs collected. The labs were sent to the Covance Central Laboratory Services for analysis. This study went so well, and this client was so pleased that we were able to recruit these 315 patients across 65 patient service centers that we're now increasing this next program tenfold. Okay? Let's talk about the future. We've talked a lot about how we're using it today, but we want to continue to grow, and we want to continue to invest. Real-world data is extremely important to us. What we have in the United States with Labcorp is truly delicious. I mean, hopefully, you walk away just understanding that. We want more. We are strategically thinking through where we are going to invest next.
We're going to align it to our Covance and Chiltern pipelines, and we're going to go after the diseases that are just right for use with real-world data. That means that my investments will very, very quickly make an impact to my business. There's also a subset of the Labcorp patients that have already raised their hand and said, "I am interested in learning more about clinical research, and I might want to be on one of your studies." While we're working to place those patients onto a clinical study, we're also working to gather insights from them. We want to understand their perceptions of clinical research.
As I'm running a study or I'm about to run a study, I want to understand what they think about the materials that I'm going to put in front of patients that are suffering with their diseases and make sure they resonate. I also want to educate those patients. It's not just about what they can do for me. It's about what I can do for them. As we're waiting to get them on those studies, I'm going to educate them on clinical research. At the point that I have that perfect study for them, they already understand clinical research. They know the next step, and they can very quickly convert over. We've talked a lot about relationships too. Lance said it, right? It's not just our data. It's those relationships.
We are working really hard across the globe to create very deep relationships with health systems. This is a critical, important thing for Covance and for Chiltern. What we want to get out of these deep relationships is to make sure we're increasing the flow of patients that can come in through fewer sites. We want these studies to start up faster. We want our organizations to be so well aligned on day one that we can get around all of those contracting hurdles and slowdowns that happen during the startup of a study. We are working on this across the globe. In the United States, of course, we come to bear with the Labcorp partnership. Labcorp already has such deep relationships with health systems that we're able to start on day one already on step 20, right? Very compelling.
Last but not least, we've talked about virtual studies. We have our eye to the future. We don't want to just be best in industry today. We want to lead the industry. Virtual studies, mobile health, that's where we're moving. That's the direction that we're all going in. You could see that from the case study that we just went through. To wrap up, what I want you to walk away with today, besides being extremely excited about all of the data that we have and everything that we've been able to do so far, is to understand that we're looking at this really holistically. We want a strategy that truly changes the way that we run our clinical studies. I want faster patient recruitment and streamlined clinical trials.
We're engaging with a lot of different patients, health systems, clients, novel vendors out in the market that we can partner with that can really move us forward, not only in mobile health, but getting access to more real-world data. We're investing. We're investing strategically. We're investing smartly so that we can make sure that we're really meeting our mission to improve health and improve lives. Okay? With that, it's my pleasure to introduce Tom Kaminski and Mark Wright that are going to talk you through how they're accelerating the customer innovation platform.
Thanks, Gabby. My name is Tom Kaminski. It's great to spend time with you this morning. Mark and I are going to talk through how we're accelerating our consumer innovation platform. First, why focus on patients as consumers? If you think about the macro trend, we see consumers increasingly wanting to take charge of their health and wellness. In last year, in the United States, for the first time ever, the consumption of bottled water outstripped the consumption of carbonated beverages, right? You couple that with the fact that consumers are facing increasingly high copays and deductibles, that they are increasingly having influence around how the utilization of healthcare services is happening. We did a survey last year.
You can see on the chart on the slide of 1,500 consumers in the United States and asked them the simple question, "Who's involved in the decision on where to get your lab testing?" You can see that the % of people who said me, basically the consumer seeing themselves as a primary influencer, was almost as high as the % of people who chose physician as primary influencer and higher than other stakeholders such as managed care and employer. You also couple this with the fact that in a world of smartphones and Amazon and Uber, we have technology advances generating an expectation of convenience. Our belief is that healthcare is not going to be immune to this and that the organizations that embrace this trend are going to be the ones that are successful in the future.
We've heard a lot already today about the scale that the Labcorp diagnostics business brings to the table, right? We see two and a half million patients per week. We are physically seeing 150,000 patients per day, both through our patient service centers and through our in-office phlebotomist. It's a great platform to be able to connect with consumers and convert our transactions into relationships. We also have highly specific information about those patients, so diagnosis code, test result information. When you think about our ability to deliver personalized content, it doesn't get much more personal than receiving information that's based on what's in your blood. When we think about designing new solutions and offerings that are oriented around the consumer, there's four principles that we have top of mind when we do this. The first is convenient and flexible options.
That can range from how do we make the current experience through our patient service centers have less friction? How do we place new patient service centers in convenient settings such as Walgreens? How are we moving beyond the patient service centers and meeting the patients in their homes? Thinking about the future, how can we eliminate the need for needles to actually collect blood specimens? Second is on price transparency. That is the easy concept of making sure that consumers know before services are performed how much they're going to owe. In the future, that's hopefully thinking about how can we reach the consumer as soon as possible after they receive a physician order and help them understand what their options for fulfilling that order are and help them make more informed decisions. The third is access and insights.
This is about enabling consumers to have access to their lab test result information as easy as possible and being able to understand that information in context of their overall health. It is also about personalized content, whether that be clinical research opportunities, care management programs they might be eligible for, information about diet and nutrition that is relevant to their lab test results. How do we really personalize that experience? The fourth is engagement. Engagement is about how do we modernize the way that we are interacting and communicating with consumers. To dive a little bit more into engagement, this is all about interacting and communicating with consumers in a way that they want to interact with us. Whether that is mail or whether that is email or text or social media, we are meeting the consumers where they want to be met.
It's also about moving from Scantron-based feedback forms to capturing information in real time when they're leaving patient service centers about their patient experience. This is increasingly important not only to us so we can capture that information, feed it to the front line, continuously improve our service offerings, but we're seeing managed care organizations and others increasingly interested in the Net Promoter Score as a key metric in terms of their success. Not only being able to track it, but being able to improve that over time through continuous improvement. One way that we're doing that is through deploying technology throughout the patient experience to improve their satisfaction and Net Promoter Score. Mark Wright's going to walk you through some examples of some of those tools.
Thanks, Tom. Good morning. I'm Mark Wright, Senior Vice President of Customer Products for Labcorp Diagnostics. As Tom mentioned, our consumers are all being trained. I think you know it, and you're probably experts at it. Every time you go get an Uber or get on an airplane or do a financial transaction, you're being conditioned to a certain level of convenience expectation that is a little foreign in the healthcare market. I have the privilege of sharing with you some experience inventions that our team has built in the past year and launched into market to change that experience when dealing with Labcorp, to bring a new level of convenience and value to the engagement with us.
We launched a new mobile-optimized pre-check reservation system that allows patients to do all the work ahead of time before they show up in one of our service centers so that they do not have to stand in line and wait and watch someone type all their information into a computer. If you launch pre-check from our patient app, it already knows everything about you and only asks you to say when, where, and why you are coming to a service center, and it completes the reservation for you without asking for any additional information. If you come in without having a patient account and start from scratch, we allow you to take a picture of your driver's license, and we extract all the information off we need about your patient demographics.
If we don't have your insurance on file, we'll let you take a picture of your insurance card, and we'll extract the information from your insurance card and check to make sure that you're covered before you ever show up to the service center. Our patients are voting with their clicks on this app. Our reservations have gone up over 50% since we launched last September. Our patients are telling us that this is far more convenient than the prior experience they used to have. Labcorp Express is a new solution we've put into our waiting rooms. It's unlike anything else we've seen in the healthcare industry. This was designed by our experience designers to try to avoid all touching of the screen. I'm sure many of you have gone to your doctor, and they've excitedly handed you a new iPad and said, "We've got new technology.
This is going to be great. You sit down to find out all they're asking you to do is fill out the same forms by typing on a keyboard. This is not that. It's exactly the opposite. The whole experience is designed to take information from you. If you have a reservation, all you have to do is scan your driver's license barcode or the QR code we send you, and everything's already done. You're completely checked in and ready to be serviced. If you come in as a walk-in with no reservation, we'll scan your driver's license. If we don't have your insurance on file, we'll take a picture of your insurance card, check your insurance coverage in real time, and complete the transaction with an absolute minimum of touching or typing on the screen.
We have a demo set up after lunch today to show you these new solutions in action. I think you'll find it very unlike what you've experienced in many healthcare settings. This is currently deployed in over 200 locations, and we are on target to have it deployed in all 1,900 locations this year, including our new Walgreens locations. Our phlebotomists also like this because for a 15-minute encounter, they tend to spend close to 12 minutes doing required administrative work. Because this takes that load off of them, they're able to focus more on patient care, which is what they enjoy and thrive in delivering to our patients. Another new invention is a patient out-of-pocket cost estimator.
This is built on real-time access to insurance company coverage so that we can take thousands of pieces of information about where you are and your deductible and what you've paid and what your copays are and what your coverage is and produce a very accurate, easy-to-understand estimate that fits on one page. Our consumers really value this because it's addressing the need to want to know what's my out-of-pocket expense going to be before I get a service performed. Now this is available in all of our in-office phlebotomists and across the entire PSC network of over 1,900 locations. We've also taken the same technology and made it available to patients who are considering pregnancy-related genetic testing.
Before they even show up at a service center, they can go online and provide their personal and insurance information and answer a few questions, and we'll provide an easy-to-understand mobile-optimized estimate for patients considering that option. Just less than a year ago, we launched a brand new mobile-optimized Labcorp Patient App that brings everything our patients have told us they want to engage with us on in one place on one app. When you activate your Labcorp Patient account, you have access to all of your lab test results for the entire history of testing with Labcorp, including the ability to access and download official lab reports to share with your doctor or caregivers. We also provide access to all of your invoices and the ability to pay online. You can set up and manage your own profile to keep your information accurate and current.
Something that's particularly valuable to our patients is the ability to set up dependents. Whether it's children or parents or other people that you're giving care for, you can set up dependent relationships and manage all of their engagement with Labcorp through this single app. As you've also heard mentioned, this is a very important recruiting tool for us to allow patients to get educated on clinical research and to indicate their interest in participating in trials so that we can outreach to them later. Now I'd like to bring Tom back to talk about more innovations in the market with consumers.
Thanks, Mark. You heard Dave and Gary mention today Labcorp at Walgreens. This is an initiative that we launched in the second half of last year that represents a new channel for us to be able to engage with consumers in a kind of convenient healthcare setting. The initial feedback on the initial six sites that we have up and running right now has been extremely positive. We have Net Promoter Scores from the patients of 93, which is off the charts in terms of patient satisfaction. In common words, we hear associated with it are friendly, convenient, and less stressful than being in a doctor setting. We also have evidence that we're seeing patients that we wouldn't otherwise have seen if we weren't in the Walgreens sites.
You can see on the chart on the screen here, the percentage of new patients that we're seeing in the Walgreens sites is 28% compared to 18% of comparable patient service centers. So seeing about a 10% lift in that mix of patients new to Labcorp. This is something that we are very excited about and will continue to expand the rollout to at least 50 sites in 2018. Beyond kind of traditional settings, we have several things going on in terms of meeting consumers where they want to be. On the topic of consumer genomics, which a lot of you are probably increasingly familiar with as a category that's really gone mainstream in the last two years or so. In that category, we've been working now with 23andMe for more than 10 years. And as they've grown in the marketplace, we've grown that business as well.
You have telemedicine, and while still nascent on a % basis, it's growing very rapidly where patients are wanting to interact with physicians remotely in an online setting. We're increasingly getting inquiries from telemedicine providers who are wanting to order lab tests on behalf of their patients. We've signed several agreements in the last 12 months to enable that type of model. Finally, on the home healthcare side, you heard from Brian one example of a mobile phlebotomy project that we have going on. More broadly, we work with a wide range of home health providers who are collecting specimen in the home and working with them to process as efficiently as possible the testing that goes along with that. The final example I'll share is one that we're especially excited about.
This is moving to a whole new level to enable consumers to collect their own specimens, their own blood specimens from the comfort of their home, eliminating for certain applications the need to go to a patient service center. This is going to be supported by a new blood collection device that we're going to bring to market in the first half of 2018. It's going to be deployed through a consumer-initiated channel. This is how it's going to work. As a consumer, you'll be able to go online, whether it's through your phone or through your computer, and go to a website that you can see a list of the 17 most commonly ordered and important wellness tests. You'll have transparent pricing for all those tests and be able to purchase those tests online.
You'll then receive a kit in the mail that we'll ship to you. You'll be able to collect your blood specimen at home and be able to just put that back into your mailbox or drop it off at the post office, regular standard mail, to be sent back to one of our labs. Two to four days after our lab receives it, you'll get the results back. We have physician involvement seamlessly integrated into this process at the points where it matters most. Once you receive your results, we spent a lot of energy to really modernize what does that results experience look like. You can see an example of this on the slide. It's a very visual and interactive type of interface. We have evidence-based content written in consumer-friendly language integrated into the test result reports.
If you're willing to provide additional demographic and health information, we're able to personalize and customize content even more. One thing I want to emphasize on the development of this offering is the emphasis and focus that we've put on quality and reliability of results. This isn't something that happens overnight. This has been a multi-year development project. Through that, we've ensured concordance between traditional blood draw and this new methodology. What does that mean? That means when a consumer gets a test result, they have a test result they can trust from the lab that the doctors trust. To summarize, hopefully you got a sense of the fact that consumer engagement is increasingly important to us as an enterprise, both for our diagnostics business and the drug development business. You've seen examples of how we're deploying technology-enabled solutions to improve the consumer experience.
We firmly believe that our consumer platform will accelerate revenue growth. Thank you. I'm going to turn it over to Glenn Eisenberg, who's going to provide an overview on finance.
Thanks, Tom. Good morning, everybody. As you've heard throughout the day, Labcorp is very well positioned to continue to grow profitably as we have a strong and demonstrated track record of doing that. We are very excited about all the key initiatives, and hopefully you've enjoyed and appreciated all the things that we have ahead of us. We talk about our top line organically, a lot of the key initiatives that we have. As you know, we're also a very acquisitive company, and we supplement that top line growth with strategic acquisitions, and we'll talk more about that in a moment. In addition, we look to drive our margins, our earnings through our business process improvement initiatives. You heard John Ratliff talk about our Launchpad initiative that's going on right now within our drug development business.
That combination has delivered strong earnings per share growth, a track record of double-digit earnings per share growth over the recent past. We will provide more details on that in a moment. In addition to the strong profitable growth that we have, we generate significant cash flow, cash flow that we reinvest in our business, to supplement and to help grow our top line, as well as invest in opportunities to improve our margins. In addition, we invest additional capital for our M&A program, as well as returning capital back to our shareholders.
If you look at our track record on some of our key financial metrics here, looking historically back a few years, as well as the guidance that we've recently provided for 2018, and starting with our revenues, again, strong top line growth, essentially doubling our revenues over this period of time, both organically as well as through acquisitions. You see that in 2015, the big growth that we achieved was the result of the Covance acquisition. Overall, the company has targeted around mid-single-digit organic growth with the additional supplemented with the acquisitions. Between the two segments that we have, our diagnostics business, again, organically, low to mid-single-digit growth, while on the drug development side, historically, mid to high single digits. That profitability or that revenue stream translates into profitability here as measured by our earnings per share.
Again, consistent growth year on year, driving earnings improvement, compounded growth over this period of time at around 14%. Obviously, in 2018, benefiting from new tax reform that obviously has a big impact on our company. Even excluding the impact of tax reform, we'd be looking at double-digit earnings per share growth driven by the strong top line as well as margin improvement that we've realized over the period of time. Again, we've talked about that earnings fostering into strong cash flow, again, more than doubling of our free cash flow. This is cash from our operating activities after our capital investments. You can see the significant growth that we've enjoyed. 2017, as Dave started the discussion today, was a very critical year for us. We delivered very solid performance.
One of the key metrics that we performed extremely well on was our ability to generate substantial cash flow at roughly $1 billion, a $250 million increase over the cash flow that we generated the prior year, which happened to be our record prior to 2017, benefiting from the strong top line, benefiting from the margin improvement that drove our earnings, but also benefiting from our key Launchpad initiatives, not only from driving margins, but also from working capital management. We saw a significant source of cash coming from working capital as one of our key initiatives was bringing our DSO days down. Our day sales outstanding in 2017 came down by around four days. The positive, as you look to 2018, you see another year of substantial free cash flow while maintaining that same benefit on the DSO.
The growth in our earnings being partially offset by the accelerated investments that we're making, and we'll talk more about that in a moment, but additional capital investments in support of our business growth and margin improvement, as well as in 2018, providing a one-time bonus for our non-bonus eligible employees, so around 50,000 of our associates, given the benefit of the tax reform bill that's been enacted. With that, now talk a little bit about just our guidance for 2018. Already talked a little bit about some of the key metrics, but provide a little bit more color here. First, within our Labcorp diagnostics business, we're looking at top line growth of 3%-5%, with roughly half of that growth coming organically and the other half from acquisitions.
Again, realizing that the organic growth is still constrained in 2018 by the impact of the PAMA legislation. Again, we'll talk a little bit about that. On the drug development side, you see 20-24% top line growth, obviously benefiting from the acquisition of Chiltern that we had on board for around four months last year and obviously for all of 2018. Organically, drug development is looking to grow at their historical growth rates of mid to high single digits and across the board spectrum of their business. You see the effective tax rate for the company that has historically been 33-34%, now projected to be down to 25% with the new tax reform. That's helping drive, call it around a 20% increase in our earnings per share, helping deliver $1.1 billion-$1.2 billion of free cash flow.
That's after spending, again, more in CapEx this year, targeting around 3.5% of our revenues or roughly $400 million of investments supporting a lot of the key initiatives that you've seen this morning. With that, spend a minute talking about our earnings. Again, 20% growth in earnings. Here you see the bridge that breaks out a couple of the key components. The impact of having the 25% lower tax rate driving around $1.30 a share in earnings. The negative impact of PAMA impacting our results by around $0.50 a share.
Excluding those two discrete items, you're still looking operationally as well as utilizing our capital deployment of still double-digit earnings per share growth, getting us to that, call it, $11.50 a share midpoint in our guidance range, which again is the key driver in getting us to around $1.1 billion-$1.2 billion of our free cash flow. When you think about the company's capital deployment, here you see a chart that shows kind of the spend that we've done over the past five years at roughly $11.5 billion. Half of that is cash that we've generated from operating activities. The other half, utilization of our balance sheet to support the growth of the company. You can see roughly half of that spend was for the transformative acquisition of Covance moving us into the CRO space.
You'll see there was an additional 25% or roughly $3 billion over the past five years that we did tuck-in acquisitions, supporting both the drug development business, such as the acquisition of Chiltern, as well as the diagnostics business, such as the PAMA and Mount Sinai transactions that we did in 2017. You'll see the CapEx for the company is the smallest component of our capital allocation at roughly 11%, but still $1.3 billion spent over the last five years. We're not a very capital-intensive company, but we do see opportunities to invest in our business for growth that's very profitable. Right now, again, we've talked about 2018 at roughly $400 million higher than the average of the spend that would have been more like $250million-$300 million in the past.
Finally, you'll see the final component, 15% of that capital deployed went back to our shareholders. We'll talk more about our share repurchase program in a moment. With that, cover the three key components of our capital deployment, first being our capital investments, our internal investments in our business. You can see that roughly half of the spend that we do in CapEx is targeted for IT. Virtually every single presentation you've heard this morning had a component of the investments that we're making in our information technology, a key part of our differentiation in the marketplace.
The other half of the spend between our facilities, so expansion given the growth that we have as we continue to look to add capacity, as well as investments in our labs for equipment for growth, but as well to continue to see automation and, again, our business process improvement initiatives. Again, on the slide, you'll see some of the growth areas that we're expecting or we're making investments in 2018 in addition to the Launchpad spend. When you look at our acquisition program, Labcorp is a very acquisitive company doing transactions every year. You see on the left-hand side of the slide the brand names of the companies that we've acquired over the past several years. On the right side, you'll see our acquisition criteria. Given the amount of acquisitions we do, we are a very disciplined acquirer.
We follow a strict set of criteria, both strategic as well as financial, on every acquisition that we do. You can see the criteria being first and foremost that we acquire companies that leverage our core competencies in the life sciences markets. We acquire businesses that are market leaders or that add to our existing market-leading position. We look for businesses that have strong management teams. Or said differently, we're not looking for turnaround situations, but good businesses that we can integrate into Labcorp to continue to drive synergies and enhance shareholder value. We look to continue to broaden our franchise more globally. Right now, we're doing around 20% of our revenues derived from outside of the U.S., and the Chiltern acquisition done last year is another example of acquiring a global company that helps expand our presence outside of the U.S.
From the financial standpoint, all of our acquisitions are accretive to earnings and cash flow in year one, as well as earn our cost of capital by year three. We use those two criteria, again, going back to the we're not looking for turnaround situations. These are businesses that are profitable and that combined with us, with the synergies and integrating the businesses, we're able to deliver earnings and cash right away and earning a good return within a relatively short period of time before, obviously, that enhances over a longer period of time. Finally, returning capital to our shareholders. From a philosophy standpoint, Labcorp's committed to having an investment-grade credit. We do that so we have access to capital and to low-cost capital. We target our leverage at roughly 2.5-3 times debt to trailing 12 months EBITDA.
Here you see the line on the chart that represents our leverage and the bars that represent the shares that we repurchased in each particular year. A couple of things worth noting from the slide. First is that in 2015, when we acquired Covance, we levered up to around 4.2 times debt to EBITDA. Clearly well above our targeted range. Also, because of the strength of our free cash flow and the commitment to bring down our debt, we were able to maintain our credit, our investment-grade credit. We did suspend, however, the share repurchase program until we got the balance sheet a little stronger. Notice within two years of that acquisition, we were back in the market. In the fourth quarter of 2016, back repurchasing shares as our targeted leverage was getting closer to, call it, the three times.
Also worth noting that in 2017, where we did close to $2 billion in acquisitions, when we acquired Chiltern, we took the leverage up to three and a half times. Again, above our targeted range, but knowing we have substantial cash and flexibility to bring it down, one, we're able to maintain our ratings, but two, we continue to be in the market repurchasing shares every quarter during 2017. Our expectation as we think about capital deployment for 2018 will be very similar: capital to invest in our businesses, capital to invest in acquisitions, capital to pay down debt, as well as capital to return to our shareholders.
In summary, again, the company is extremely well positioned to continue to deliver on our profitable top line growth, continue to optimize our margins through our business process improvement initiatives with the expectation that we'll continue to generate very strong and substantial free cash flow that we'll redeploy back into our business in M&A and in buybacks. The mantra of the company, Dave said it from our leadership conference that we've had around a month or two ago, it's all about execution for 2018. We feel we've come off 2017 extremely strong with very strong performance and a lot of momentum with a lot of the key initiatives that you've heard about today. Our objective this year, like last, is continue to execute extremely well.
With that, we'll deliver on the financial metrics that we've shared and continue to drive strong earnings, strong cash, and strong shareholder value. With that, that wraps up our formal presentations for this morning. Ask Scott to talk about the agenda and the logistics for the rest of the day. Scott?
Great. Thanks, Glenn. At this point, we're going to break for lunch. We have boxed lunches out in the gallery behind you. We're going to take 20 minutes for that, and then please come back here at 11:35 for Q&A. After Q&A, Dave's going to make a few parting remarks, and then we will have the demonstration portion where we'll demonstrate some of the innovative technology within Labcorp. Thank you.
All right, at this point, I'm going to ask Dave, Glenn, John, and Gary to the podium. There will be two floating mics, myself and Alan, who's in the back. We'd ask just with a show of hands if you have a question to put your hand up. If you could, for the transcript, please state your name and your firm before you ask your question. Thank you. First one, Jack.
Thank you. Jack Meehan from Barclays. I wanted to start with the payers. The overarching themes of healthcare moving toward low-cost providers, better engaging patients. As you negotiate with UnitedHealth and Aetna, how open are they to doing collaborative things with data and driving more value through Labcorp?
Jack, I think that what we're seeing is we've spent a good bit of time with both of them talking about many of the initiatives that we've talked about with you today. There is a better understanding of why utilization goes to higher cost setting. There is a better alignment around just saying to the laboratory, "Get the utilization to a lower cost environment," is not sufficient in and of itself. A lot of that is just driven by showing the data about why the work is going elsewhere.
I also think the value-based care model helps a lot simply because the payers have a new way to talk with the higher-cost in-network providers like the health systems about why it's in their interests to reduce the procurement cost, essentially, of their laboratory services. I think there's good alignment around it. Again, I think there's much more interest in the use of data and analytics to cause utilization to migrate to a more effective environment. It's obviously not something that's going to happen overnight, but I would say there's a more favorable environment for it than we've seen in the past.
Thank you. Lisa Gill with JPMorgan. I know today was more big picture, understanding your businesses a little bit better. But Glenn, how do we think about putting the numbers behind this?
I know you're not giving long-term guidance today, but as we think about the business and we think about 2018, there's challenges around PAMA, but yet you're still going to see growth on the lab side of your business. You see strong growth on the Covance side of the business. Can you maybe just help us to frame how you think about this in a three to five-year kind of period? What are some of the challenges and some of the opportunities? Dave, if you wanted to weigh in as well.
Lisa, I'll go ahead and start. Obviously, we've given the guidance for 2018. Even with the issue of having the PAMA reductions, you're looking at pretty substantial growth top line across both of our businesses.
The demand continues to be very strong, and diagnostics, again, obviously constrained by the pricing impact, but as well on the drug development side. We are really pleased about the top line. We have talked about the margin profile because of PAMA constraining in diagnostics, but expect to see good margin improvement within drug development benefiting from the strong demand as well as through the LaunchPad initiative. You have seen, obviously, the big increase in the earnings benefiting from, call it the tax reform, and then another strong year of cash flow. Obviously, the focus from a financial performance in 2018 is there. We are excited about the prospect. Longer term, there is really no change, if you will, from the trajectory that we see right now. Again, Dave may want to provide some more color, but you have seen all the long-term initiatives.
I mean, this isn't just about this current period of time. We're excited about the top line opportunities across both of our businesses. We know there's going to be some more constraints with PAMA, assuming it stays in its current configuration. We're also going to see strong demand, strong margin improvement initiatives, new business opportunities, new areas that we haven't been in that Gary and John both spoke about as well as the others, and a relentless focus to drive cash flow, to reinvest in the business, as well as to continue to find good strategic opportunities. We've talked a lot or heard a lot about the potential that PAMA, while it's a negative on the pricing, could be a positive on the acquisition front, that there could be continued consolidation going on. We'll see how that progresses.
That is a potential for us down the road as well, as well as returning capital. Dave, you may want to share some more color.
Thanks, Glenn. Lisa, I would just say, in addition to everything Glenn has said, I think the commentary from John and Gary was, so within the Covance business, I think share gain is a huge opportunity. I just think we are bigger in clinical now. We are winning in the marketplace because of the power of some of the tools that you saw today. The market is continuing to grow with the favorable regulatory environment, the outsourcing. We are right at the sweet spot with oncology, with med devices, with the things that we are building out in Covance, and with the technology tools and the data. I just think share gain is a huge opportunity for us to really see accelerated top line growth here.
Of course, margin improvement, Glenn's already mentioned with the LaunchPad initiative. I think on the diagnostic side, in addition to the points that Glenn has mentioned, we've been very focused on leadership in women's health. We've been very focused in genetics and oncology. Those are areas that are sizable market opportunities, as Gary identified, and I think are going to continue to grow. I think the landscape of growth opportunities in the businesses that we have already is very bright. For that reason, I have been asked this question a couple of times already in the hallway. I mean, when we talk about the international market opportunity, that is not a, "We're going to do that in 2018 or even a 2019 priority." That is a long-term opportunity for us that with the right partner and the right set of circumstances, we will consider.
We have plenty of opportunity in the near term to grow our business both in top line revenue and in earnings.
Hi, it's Ross Muken from Evercore. Dave, you just talked about sort of the opportunity for share gain on the Covance drug development side. As we think about the tools that you kind of showed today and the demonstrable results you're driving for certain clients and how you're finally at a proof point where you've got case study after case study where you're changing patient enrollment timelines or helping identify sites quicker, etc., how would you characterize the awareness on the customer side in terms of how much of the customer base or how much of the market kind of actually understands what you can bring to bear, what these tools can do?
How would you kind of characterize the momentum that's had in terms of helping inflect the order rate, which has seemed to consistently tick up here over the last, call it, three, four quarters?
I'm just going to make two quick comments, and then I'm going to turn it over to John because he's the guy who spends 200 days a year with the customers. I mean, one, we're winning in the market. Look at the book-to-bill. Look at the comparables. Look at the revenue, the conversion of orders to revenue. I mean, we're winning in the marketplace, and we're winning in complex studies, and we're winning in big deals.
Two, we're getting into—we're getting the audience with customers who Covance has been locked out of on the clinical side for years: therapeutic expertise, data, the things that Gabby showed you about our ability to bring patients to trials and investigators to trials faster. We're getting in places, and we're winning in places that we haven't won historically for some period of time. John is really the guy who's making that happen. I'm going to let him comment on it.
I think they're very aware, plus they understand the power of the lab data. It was always taught that the lab data is the best data, IVR being the timeliness of that. Clearly, the lab data and the detail that you get from that, it might be less than 5% of the cost space, but it has 70% of the analytics.
To be in that power position of having that data, anytime we go into pharma, large, small, medium, clearly they understand that power. Now, generically, they aren't interested in, "I can get a site up in 30 days," or, "I can move into patient recruitment." Generically, they want to know, just like yesterday afternoon on a NASH study, "Help me with where the sites are saturated. Help me with how fast I can move through the site penetration. Where are of the 700 sites that we've been to, the 200 that don't recruit anyone?" We can identify those investigators. We can actually then come in with where those patients potentially are. That's what they want to know. It's not generic. You have to get into the details of that individual therapeutic area, and that's what we're doing.
We're doing that on small, medium, and large. We're doing that to break into locked-out accounts. We're also doing that on a much greater basis pervasively in terms of the marketplace in general. It is a great door opener, but you have to prove it at the end of the day, and that's what we're doing. That gives you then that winning accomplishment at the end of the day, the book-to-bill.
Brian Tanquilut from Jeffreies, just to follow up on your answer to Jack's question. As the renewals come up, whether it's Aetna, United, Cigna in the next few years, how should we be thinking about pricing in general? Then putting PAMA in the background, where in the future they'll reset and look at commercial rates again. What's your view on pricing strategy and just the market dynamics in that regard? Thanks.
Brian, pricing in the industry has been relatively stable. Obviously, anytime that you're in a contract renewal discussion, I think it's an unstated premise that the payers would like you to provide more service at less price, and we would like to provide less service at more price. We are never going to quite shake hands on that conceptually. We are committed to price discipline and particularly to rejecting the idea that because PAMA is resetting the Medicare rates, that that should spill over into managed care negotiations. I think it's very important to establish with our managed care partners, and they are our partners, but to establish the principle that they have had the advantage, whether it's through narrow networks or whether it's through contract negotiations, of pricing that has been favorable vis-à-vis Medicare for some period of time.
The downleg in Medicare is not a justification for a downleg in commercial pricing. In fact, in my view, if anything, it's a justification for an upleg so that we don't—if that's even a word—so that we don't go through another PAMA reset three years from now. We are very committed to discipline in pricing negotiations and to maintaining, and particularly with price transparency. We're already at the low price point. It's not about price reduction. It's about moving work to the least acute, highest value, lowest cost setting.
Ricky Goldwasser, Morgan Stanley. Follow-up question on the Covance business. What % of the new of the backlog and the new wins include a component of the protocol design or the new tools that you have? When you look at the entire opportunity, what do you think is really the addressable market there?
What % of your business could have that add-on? And then on the pricing side, any thoughts on fixed pricing model and any interest from the trial sponsors to move to that model?
You don't want to give the foreword. In terms of the tools and technology of our business and how much that has touched, and then on the data side as well, I think it'd be fair to say over $1 billion those tools and technologies have been utilized in. I think from the standpoint of the applicable trials that use the data to the extent that our customers want, we need to move that up to 100% of the clinical trials, but that sits and resides just over half. Now we've got to move that forward. And then your last question was—I apologize—fixed price.
I know there's elements of the deals that we do that will have a milestone base that act like a fixed price. We are in that performance metrics on almost the vast majority. When you say, and you extend that to fixed price, no caveats, investigator grants within that fixed pricing, that's minimal. Even with data, I know that there's a lot of discussion out there of what's happening in the competition and the industry in general. As Dave even said on the diagnostic side, we're pretty disciplined. We know and understand and are confident in our data. At the same time, we also understand when you're working on protocol amendment six, that you're not necessarily going to be in or committed to a pure fixed price all-encompass. I haven't seen that pervasive throughout the industry.
Thanks, Ralph Jacobi, at CITI. Among your 2018 priorities, you talked about optimizing opportunities and specifically called out bad debt improvement as I think one of the three areas of focus. I mean, can you help frame sort of what kind of savings you can get there, what's left there? Quest shifted their lab billing and collection to Optum. Just wondering if that's an option for you to consider, or will you continue to operate that yourself?
Thanks. Ralph, I'll make a couple of comments and then pass the mic to Gary. Let me start with the second question first. We did an extensive evaluation of sort of the outsource versus insource.
Although we use tools from others, in fact, you'll see today when you see Mark Wright's demonstration of the patient service center experience, you'll see some of the tools we use from others, like going out and validating eligibility at the time the patient presents, which we were not able to do in the past. Now we can go out to the clearinghouse, validate eligibility, show where the patient is on their deductible, and present them a transparent estimate of price. We use tools from others, but we could not make the financial case that outsourcing collections would be beneficial to us as an organization. Furthermore, I don't think it's strategically wise to give up that direct relationship with the patient. I mean, we send out an enormous number of bills to patients.
That's a great communication tool, particularly as we move, as Tom Kaminski was pointing out, to electronic, text message, social, away from the paper bill that comes in the mail. That's a very valuable communication tool with patients. We probably send out a million bills a week. I don't want to give that to somebody else, and all of a sudden they're getting a bill not from Labcorp, but from somebody who's a billing service. On the bad debt opportunity, again, you'll see the demonstration after lunch. Showing the patient what they're owing at the time of service and being able to collect an exact dollar amount that we know from eligibility check is what the patient's going to owe is a very significant opportunity.
Being able over time to move that out into the physician office so that the doctor can tell the patient exactly what the patient responsibility is going to be. Again, just the greater and broader the engagement with the patient, the better our opportunity to collect at the time of service, as opposed to once the time of service is over, having to send a bill and chase. There is a whole set of strategies around bad debt improvement. I think we have commented the percentage of patient responsibility continues to increase, whether it is because of the high deductible plans, because of payment policies that do not pay for things that used to be paid for. So "bad debt improvement," some of that is just maintaining the same level of bad debt and the same dollar amount of bad debt in an environment where patient responsibility is increasing.
We have a series of strategies this year in revenue cycle management to further drive down our bad debt %. I'll pass it to Gary for further color.
Yeah, that's a great question. Thank you. I think one of the things—Dave had mentioned it—as you see the responsibility going more to the patient and consumers taking more responsibility, you have to be good at collecting bad debt. It's not something that you can outsource, in my mind, and be able to continue that momentum to be good at it. We're really focused on getting better and better with improving our collections. We'll continue to get better. We'll continue to get closer to our customers and our patients and be able to deliver a valuable service, but also get paid for it appropriately.
I would just say last thing is, when you see the patient tool—so we have this patient portal now that we're adding to that, essentially a mobile app—that patient tool, when you're inside Labcorp patient, make an appointment, pay your bill, get your results. It's a very flexible tool that will enable patients to—it will enable us to address the patient directly through their phone, through their iPad, through their computer, as opposed to mailing a bill and kind of chasing the patient afterwards.
Kevin Ellich, Craig Hallam. A couple of questions for Dave and Gary on the consumer strategy shift. You talked about taking testing in-home to patients. Wondering if that's something you're going to build out yourself, if that's really an efficient model sending nurses, phlebotomists into the home. What's the margin profile look like?
Then also provide a little bit more color on the self-collected testing opportunity at home. For John, you talked about mid to high single-digit organic growth for the legacy Covance business and driving margin expansion over the next three years. Wondering how much and how high that can go to. We will use the development of assays for clinical trial testing as a way to reduce costs on the Covance side.
You did not have one for Glenn? I think he is feeling a bit forlorn. Kevin, the home. In my recent conversations with both managed care executives and CMS executives and former CMS people, the home is being recognized as the place where if you think about the setting where it is hardest to actually reach the patient, that is the home. That is where your chronically ill patients are.
That's where your patients who show up acutely in the emergency room are because they don't have a regular primary care physician or they don't want to go anywhere. We are not at the present time planning on launching mobile phlebotomy to the home, aside from the pilots that we're doing around things like chemotherapy infusion. There are multiple ways this channel with the self-collection can reach the home. One is you have a home health agency that's sending a nurse out anyway. Nothing is more uncomfortable in the home than a venous blood draw by a nurse who's not an expert in drawing blood versus an assistant fingerstick, a scrape, and mail back the specimen, and we can run 17 different analytes off that.
I'm sure Tom said this, but I want to emphasize this home device that we'll be rolling out is validated exactly against the Labcorp venous blood draw. This is not the kind of things that we see among the competitors, which is because, again, Tom can talk about this, but he's done every single one of these competitive tests, and the values are all over the place. There's no consistency. There's no reproducibility. These tests are validated against the Labcorp gold standard of the venous blood draw. Existing home health providers, managed care plans that are trying to reach the home, home businesses that send medical supplies to the home now can send testing to the home. Walgreens can sell this device over the counter in the drugstore if they wish.
I think there are multiple channels to reach the home that do not require us to set up a new channel. I would just say this is meeting the patient where they want or need to be met or where the payer tells us we have to help meet them. I think that answered the home question, and I am going to pass it to John.
On margins, we announced the $150 million in terms of LaunchPad savings. All I would say to you is margins, we are going to get to peer-level margins in the segment. With all the revenue recognition changes, who knows what that margin is?
I think it would be fair to say that we have room to grow our margins and expand with the tools and technology and the re-engineering of the processes and management of the resourcing that we believe we can get there. We have about 10 minutes. I see a couple here, and I want to make sure everybody gets a chance to have their questions answered. Just make sure your hand is up where Scott and Allen can see it so we can get to everybody. Great.
Thanks. Erin Wright, Credit Suisse. Just wanted to ask about, on the CRO side of the business, broader insourcing and outsourcing trends given the evolution of the space and the greater utilization of data-driven clinical trial processes.
Do you feel like you're at the forefront of that effort, and are you actually starting to see customers, maybe larger pharma companies that may have insourced more, actually convert to outsourcing more given it's more efficient? Can you talk a little bit about how, I guess, you're leveraging your combined data assets on a global basis rather than—I know some of the examples were more U.S.-focused—talk about how much of your business today or combined data assets you're actually leveraging globally.
Thanks. Sure. If I don't get to all of them, please. In terms of, A, on the insourcing outsourcing, we do see greater penetration in terms of the CRO industry in general. I think it'd be fair to say take a look at the book-to-bill ratios even across the industry. I think you're seeing a level of momentum.
Ours might be best in class, I'll say that. At the same time, you're seeing strength across the industry. Now, I've been in this for a while. You always see a couple of organizations that move in and out of insourcing. That's for a couple of different reasons. Number one would be they have a level of resourcing. Their pipeline's a little bare. What they'll do is bring back insourcing in terms of satisfying a specific workload demand. Secondly, you'll get a new head of outsourcing or clinical that is making their own stamp on things. Then they'll have a strategy that says, "Okay, I'd like to rebalance the portfolio in this way." I think that's kind of the normal ins and outs of our industry.
At the end of the day, I think most of the data would say, most of the market surveys would say that outsourcing is increasing year-on-year percentages of the total development pie. As to the data internationally, really where we've utilized that extensively is on, as Gabby was talking about, our global central lab data. That's where if we're participating, especially with those labs in over 50% of the trials, not just Covance's, but all trials, then what you can do is you can see where that site saturation is. You can have that relationship with the investigator. You can actually dig into now the data that we have on that global central labs and then develop the strategies around that. Have we seen that data now influence whether insourced or outsourced? Yes.
Have we seen that to a great extent where there are full-scale changes in strategy? I think what we've seen more so is just a deeper penetration of the utilization of the data and then more and more increase of what portfolio they have based on that data. I know that we're never through on that journey of getting more and more data. While we have the databases that are extensive, we'll continue to supplement, especially on the international side. Clearly, with our global central lab data, that's a huge base and a great springboard in terms of the data for the trials themselves.
John, this is Tim Evans from Wells Fargo. I want to go just a step deeper into the data question. As you're speaking with clients, which specific offerings do they seem most interested in right now?
My guess is that it might be Accelerate, and I just want to see if that's true or not as we sit here today. The bigger picture question that I'm trying to get at is when one listens to presentations from the other CROs, it's easy to walk away with the impression that maybe these investments in data and technology are becoming more table stakes than they are differentiator. Can you kind of speak to what gives you the level of conviction that this is truly a differentiator for Covance versus just what you need to compete at this point?
Sure. In terms of the last part of the discussion, it's what data is best. You want to rely on claims data versus the laboratory data? I'll go with the laboratory data all day long. I've got a better career on it.
From that standpoint, that identifiable patient data, the investigator performance, the capabilities of real-time nature of that is tremendous. It is not table stakes. It is a differentiator for our company, especially when you supplement that with the extent that we have the actual share of our lab side globally, then clearly we have a significant advantage over all others. I'll drop the mic on that one, so to speak. I think from the standpoint of your first question, apologize, what was that again? Just most popular offering. I apologize. On the tools and technology, it would be Accelerate because it's much more extensive.
You'd have to say that PharmaQuity is lifting Global Specimen Solutions now, pushing through on the data side, the analytics, the database capabilities, the utilization of Accelerate, as well as the extension of those capabilities through time, you'd have to say is the most utilized. Now, at the same time, we're now going to push through all of our technology suites. Clearly, Accelerate is the most extensively used. I'd also say, and then you then look to the future in terms of the risk-based monitoring, the delineation of medical monitoring, clinical monitoring, statistical monitoring. There's no better solution for that. Not only is it being utilized today, but for the future as we evolve to that, then you'll see even more extensive usage.
We had one over there and one over there. Thank you.
Dan Leonard with Deutsche Bank.
I was hoping you could comment on this concept that the PAMA Medicare cuts are going to lead to an increased availability of lab assets from hospital outreach programs or wherever. Can you comment on your appetite for those deals and whether or not you're doing anything proactively to catalyze the funnel?
I think instinctively, one would say that if PAMA is implemented as it's sketched out, and I realize there are a wide range of outcomes on what people think this year is, but we've said it's about 8%. I think everybody's agreed that in the next two years, if nothing changes, it's 10%. If you think about laboratories that are less efficient, that have a higher cost base, and that may have more of a Medicare and a Medicaid utilization base than we do, there's going to be pressure.
There's just no question there's going to be pressure on the ability to have those labs be financially sustainable. The unfortunate part of that, as I've said over and over again, and as we've said to CMS over and over again, is that in underserved populations like nursing homes, there's going to be a real shakeout in the industry, and it's not going to be a good thing for patients. We're not supportive of that. It's going to be a very difficult situation because these tend to be small labs with thin margins that are now seeing essentially and almost all Medicare and Medicaid that are essentially going to see those margins go away. More broadly, sure, it's going to lead to increased demand. What are we doing to be prepared for it?
I mean, obviously, we're working on the efficiency of our own delivery systems and our own business and our standardization. We have a list of potential acquisition opportunities that we're interested in, and we continue to engage with the parties on that list. It doesn't have to be acquisitions. I mean, hospitals can certainly, as we've done with Novant, be part of broad partnership arrangements where we can bring a lot of value without a straight-out acquisition. Every acquisition goes through rigorous financial metrics, and we're going to continue to be very disciplined about how we deploy the capital for those purposes. Great.
Thanks, guys. Seems like there's a disconnect. You see—I'm sorry, Mark Massaro at Canaccord Genuity. You see 115 million people a year in your lab, yet only a small number have been consented or to be notified by Covance. I think you said over 200,000.
Where do you think that 200,000 can go over the next three years? For Glenn, it seems like operating margins probably have a better opportunity over a couple of years. Can you speak about gross margin potential? If I can, finally, Dave, on the ACLA lawsuit, can you speak to the timing of that and whether or not you think the outcome is likely to have any change in the collection process three years from now?
Okay. Let me start with the ACLA lawsuit. My understanding is opening briefs were filed by ACLA, and there were a number of amicus briefs from the College of American Pathologists, the National Association of Independent Labs. AdvMedDx, I believe, filed an amicus brief, an amicus brief being in support of the lawsuit. The government's response is due, I think, in March. We have the opportunity to reply.
By mid-April, all of the briefing should be done. This is an administrative litigation, so it'll be decided on the factual record. There shouldn't be any depositions or any extensive discovery. All other things being equal, we could, depending on Judge Sullivan's docket and his level of interest in the case, have a decision by, let's say, June. I continue to be optimistic about the prospects for the lawsuit. I think we are right on the merits. As I've said, anytime you sue the government, you start with less than a 50% chance. I still think we're right on the merits. If we win, then yes, it does have an implication for the data collection, not only three years from now, but to go back. They'll have to read the challenge is not to the data.
The challenge is to the rule. They'd have to rewrite the rule to carry out the intention of Congress in terms of the market survey. Let's see. That was one of the three questions, and now I forgot the other two. Glenn was asked something that I'm going to pass to him and you can rem ember.
Okay. I think the second question was on margins and, I guess, more specifically on gross margins. I'd say the issue that we talked about for 2018, for the most part, is going to carry on for the next couple of years, again, assuming PAMA comes in as it's laid out. Margins will be constrained on the diagnostic side, but conversely, we're going to expect to see continued margin improvement on the drug development side based upon demand and based upon launchpad.
As you break it down between gross profit and SG&A, we expect to see, again, on the diagnostic side, the degradation is going to come on that because it's all pricing. It is going to impact our gross margin for diagnostics. Similarly, on the Covance drug development side, a lot of the launchpad initiative is driven off of gross margin improvement. Plus, the top-line growth of the company is going to be driven a lot on gross margin as well as some SG&A. Overall, it is going to be that blend between the two that we are experiencing in 2018 and leveling off, if you will, in 2019 and 2020.
On the patients that opt in, we need to get on a hypergrowth.
We are doing a lot, as you heard, even on the mobile applications to motivate that pathway journey in, as well as then even on the actual engagement at the patient service center or at some of the new alliances that we've offered. In addition to that, focused on how you actually take it from the patients that now are opting into those clinical research to how do you get them to the investigator, etc. I don't disagree that 200,000 is way too low. I have my own objectives for the team, and I'll smile. At the same time, I know that that's got to go up by a factor.
I think, Mark, it's a great question. I think we
have probably made the process too complicated for the consumer.
We are going back and reevaluating the whole process to simplify it and streamline it because that number should be way bigger than 200,000, and we are committed to making it way bigger.
Okay. We are now at the concluding point, and I just want to make a few final comments b ecause I do not do this well from a chairman to stand up. I apologize to my colleagues for—I do not actually get to tower over Glenn very often, so this is really a happy experience for me. First of all, I just want to say thank you again for attending. This has been a terrific turnout for what we think is really a signal event. Second of all, our team over there, I want to thank them, not only for 2017 performance, but I know it seems like this was pretty simple, and it is for me.
I do like five slides and show up. There was a tremendous amount of work that the team did to put this together and to really provide you with a comprehensive look at what we're doing as an organization. I'm really proud of them and appreciate everything that you guys have done to put together a great presentation today. Thank you. I know the investors thank you. Maybe we give them a round of applause for the effort. I just want to talk a little bit about, in closing, about—I don't need to go over the strength of the diagnostics business or the strength of the Covance business. I think those have been covered in detail.
I want to talk a little bit about the differentiating nature of the enterprise and why are we different from the people who would be identified as our natural peers. First of all, I would just say again, this is kind of where I started. We have multiple market opportunities for growth driven by scale, reach, and the quality of our data. I'll keep coming back to the data because I think it is very important. When I think about the lab side of the business, let's talk about why Labcorp is beyond the diagnostics business, is beyond the pure laboratory. Number one, the ability to offer the trial opportunity to our customers and to our consumers. For our customers, for the hospitals, for the physicians, for the ACOs, I talk to hospital CEOs who say, "I'm in Washington. I'm in Idaho. I'm in Oregon.
I'm in Alaska. How do I deliver cutting-edge cancer care in the community clinic context? That care can be delivered through the combination of what Labcorp brings in the diagnostic sector, but also what Covance brings in the trial sector. Nobody else can present that value proposition. For the consumer, back to Mark's question, it's not only the opportunity to participate in research, but it's to be able to access cutting-edge trials. The biggest problem for getting patients into trials is getting patients into trials. The biggest problem with getting oncology drugs approved is getting patients into trials. To be able to engage directly with the consumer in a way that no other CRO can takes us beyond lab and beyond CRO. Our consumer engagement at Labcorp is more than just a blood draw. Think about what the competitors have.
Yes, they have a consumer engagement strategy. It's around a blood draw. Ours is around the clinical trial. It's around being able to participate in an observational study. I thought Gabby's example of Covance and Labcorp working together was great. We need an observational study for a client, for a sponsor. We can use Covance to recruit them. We can use Labcorp to draw their blood. We can return their results to the physician. We can counsel the patient on next steps, and we can expand these studies. We have the opportunity to engage in the patient around more than just a blood draw in a patient service center. We also, through our—and Gary and Brian both talked about the chronic kidney disease program, the kidney stone program, the diabetes management, cardiovascular.
We can engage the patient directly with care management tools in a way that takes us beyond lab. We also have physician engagement in a way that takes us beyond lab on a global basis with the Covance investigator site. We know who the thought leaders and the innovators are. We know where the expertise is. We know what kind of practice they're in based on the trials that they're conducting. This gives us significant opportunity to go out and not only recruit new investigators, but recruit new customers for our diagnostics business. Finally, we have the ability beyond Labcorp's diagnostic capabilities to develop companion diagnostics at Covance and then commercialize them through our diagnostics business. We are way beyond a pure lab experience in our diagnostics business. Similarly, in our CRO, we are way beyond a traditional CRO.
Number one, direct consumer engagement with 100 million patients a year, in person, through portal, through the web, through text message, right? Using technology to meet the consumer where they want to be met in a way that no other CRO can do today or is going to be able to do anytime in the foreseeable future. Number two, and I thought Gabby's presentation on this was just really compelling, access to real-time, real-world evidence from lab data that is granular, that is structured, and that with our analytical capability can be used to evaluate patient and investigator fit, to recruit trials, to do observational studies, to have a list of patients suffering from conditions that may be relevant to the next drug study or to drug adoption. Why is a drug not being adopted?
Let's look at all the list of patients who we know who have that condition, and let's ask them why their physician hasn't switched them to that drug, or let's ask the physician. We have access to real-time, real-world evidence that nobody else has. We have the PSC infrastructure that supports access and response to patient preference. When we reached out to those 200,000 patients, one of the things they told us is, "I don't want to go more than 25 mi to be in a trial." It's a reasonable statement that we have a patient service center within 25 mi of just about everybody in the United States. They may—they live in New Mexico or they live in Utah.
They may not want to drive 50 or 75 mi to see a doctor, but there's going to be a patient service center close by, with the exception of North Dakota. I'll carve that one out right now. The last thing that takes us beyond CRO is the companion diagnostics expertise. You saw the doubling of the backlog and the revenue base. Think about companion diagnostics. We have the esoteric testing capability. We have the ability to commercialize to support the drug launch. We have the ability to develop the analytes. Companion diagnostics is so fundamental because these high-priced drugs, we're going to move in value-based care, make no mistake, to a system in which if the drug is not efficacious for the patient, it's not going to be paid for.
Labcorp is going to be at the front of the market in telling the physician and the patient, "This drug is going to work for you. It's not going to work for you. We're still, as Marcia pointed out, it's going to have an adverse effect on you." We are going to be the link between the drug company, the patient, and the payer to make sure the patient gets the right drug and that it gets reimbursed. Again, nobody else is going to be able to be in that position. Finally, the value of the shared enterprise capabilities. Number one, the IT solutions. You saw them all: trial planning, trial optimization, trial management, trial performance, population health, decision support driven by the aggregation of data.
All of this is founded on the power of the analytic platform that we have that other people do not have. It is going to be very hard to replicate because we have the data pool underneath it, and we have the analytic platform that we have built over the top of it. Our competition is not in a position to deliver that. That database is real-time. It is powerful, and it is growing. It grows every day as new patients come in to see us. It is going to grow even further as we use technological innovations to create more intimacy with the patient. Second, we have the value of automation and efficiency.
Whether that's the standardization, whether that's automation, whether that's all of the things we've done in the laboratory, we have the power to drive those things through the entire organization, and we have the innovation and, again, the technology to support it. Number three, and this is where I'm going to finish, we have—I called it data in action, but now I'm going to call it something a little different—we have actionable data for everyone. We have actionable data for the payer. Who are your high-risk patients? Who are your patients with elevated eGFRs that's indicating that they are progressing through the stages of kidney disease and you'd like to intervene with them before they end up in crisis in the emergency room needing vascular access? We have actionable data for the consumer. How is my health? How do I find out about it?
I can go to Walgreens. I can do it at home. I can go to my physician. I can get it online. I can look at my results. I can see very clearly, am I red, yellow, or green in my metrics? For the physician, the ACO, and the health system, and we have data that allows them to fill gaps in care, meet their HEDIS and STAR metrics. I mean, all the things are going to be so critical in the value-based care environment. For the pharma sponsors, we have data that allows them to do exactly what we've talked about as our strategic point number two, which is streamline and make more efficient the process of drug development and of bringing cutting-edge drugs to market.
From my perspective, I think everybody understands well the value of the individual businesses, but as we focus on the differentiated value proposition of the overall enterprise, I think it is a very compelling value proposition today and in the years ahead. With that, the first thing I am going to do is excuse the Labcorp team because they need to get out and get in position for the demonstrations. Again, thank you, guys, for a terrific job today. After we give them a little head start, the rest of the agenda now is we have two breakout sessions, and I think Scott will probably give you better instructions. One is across the hall. The other one, I think, is to the side.
One is a demonstration of the consumer tools, and one is a much deeper demonstration from Gabby of the data tool and also from Chris Ghosh and his team of PharmaQuity, which is our trial planning and trial setup tool. With that, Scott, is there anything further that you would like to cover?
Yeah. Thanks, Dave. If you flip your name tags over, you'll see an indicator of where we'd like you to go first. If your tag says the drug development technology demo and the Morgan suite, it's going to be outdoor to the right here. If you have the consumer platform technology demo, that's going to be in Empire ballroom two directly out the back across the other side of the staircase. There are easels indicating where to go.
When each of those demos ends, the group will then switch, and at the conclusion of the second demo, that will be the end of the event. Again, to echo what Dave said, thank you very much for attending. Look forward to following up with each of you. We will take five minutes, and then the demos will get started.
Thank you again. Have a great day.