On October 26, 2016 Sangamo BioSciences, Inc. (NASDAQ: SGMO), the leader in therapeutic genome editing, reported its third quarter 2016 financial results and provided an update on recent events and development timelines for its therapeutic programs (Press release, Sangamo BioSciences, OCT 26, 2016, View Source [SID1234516044]).

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Sangamo BioSciences, Inc. (PRNewsFoto/Sangamo BioSciences, Inc.)
"The third quarter of 2016 has been a pivotal time for Sangamo, as we worked to focus our efforts and execute on our prioritized therapeutic programs in hemophilia B, hemophilia A, MPS I and MPS II," said Sandy Macrae, M.B., Ch.B., Ph.D., Sangamo’s president and chief executive officer. "I am pleased to announce that the Phase 1/2 clinical trial for SB-FIX, our in vivo genome editing program for hemophilia B, is open. We are also on track to file an IND application for our AAV cDNA Factor 8 gene therapy program for hemophilia A by the end of this year. In addition, we submitted the additional data package for our MPS I and MPS II programs to the FDA in September, and I am pleased to report that the FDA has cleared these programs for clinical development. Preparations are now underway to initiate Phase 1/2 clinical trials for these indications in early 2017."

Dr. Macrae continued, "We also made a number of organizational changes, including several key hires in our clinical and technical operations teams and instituted new procedures in order to position the company for clinical success. I am very encouraged by the commitment of our entire team and the progress we have made in the third quarter to drive these activities forward. I remain confident that we can demonstrate the value and therapeutic potential of our genome editing and gene therapy platforms and with reliable steps, make sensible progress and realize our vision of transforming Sangamo into a patient-focused therapeutics company."

Recent Highlights

Initiation of FIXtendz (SB-FIX-1501) Phase 1/2 clinical trial designed to assess safety, tolerability and potential efficacy of SB-FIX in adults with hemophilia B. In October, Sangamo opened the first clinical study of an in vivo genome editing therapeutic, its Phase 1/2 clinical trial (FIXtendz, SB-FIX-1501). SB-FIX-1501 is an open-label, dose-escalation study in male subjects over eighteen years of age, with severe hemophilia B, who do not have inhibitors or hypersensitivity to recombinant Factor IX protein (rFIX). The study will enroll up to nine subjects in three dosing cohorts of two subjects per cohort, with additional subjects to be enrolled at the optimal therapeutic dose, and will evaluate the safety and potential efficacy of a single administration of SB-FIX.

U.S. Food and Drug Administration (FDA) grants orphan drug designation to SB-FIX, the first in vivo genome editing therapeutic in development. In September, Sangamo announced that the FDA granted Orphan Drug Designation (ODD) to SB-FIX, the company’s zinc finger nuclease (ZFN)-mediated in vivo genome editing therapeutic candidate for hemophilia B. Orphan drug designation is granted to investigational drugs and biologics that are intended to treat rare diseases that affect fewer than 200,000 people in the U.S. This designation helps facilitate drug development by providing several benefits to drug developers, including assistance with clinical study design and drug development, tax credits for qualified clinical trial costs, exemption from certain FDA application fees and seven years of market exclusivity upon regulatory product approval.

FDA clearance to initiate Phase 1/2 clinical trials for SB-318 (MPS I) and SB-913 (MPS II) therapeutic programs. Sangamo submitted the additional in vitro studies requested by the FDA in September and recently received clearance to initiate Phase 1/2 clinical trials for the Mucopolysaccharidosis Type I (MPS I, Hurler syndrome) and Mucopolysaccharidosis Type II (MPS II, Hunter syndrome) programs based on its ZFN-mediated in vivo genome editing therapeutic platform. The company expects to initiate the clinical studies in early 2017.

Appointment of new head of technical operations. In August, Sangamo appointed Mohammad El-Kalay, Ph.D., as Vice President, Technical Operations. Dr. El-Kalay brings over 25 years of operational management experience in the life sciences field, including expertise in process development and cGMP manufacturing operations at clinical scale with hematopoietic stem cells, T-cells and various other cell types. Dr. El-Kalay is responsible for process development and manufacturing of all biotherapeutics for Sangamo.

Third Quarter 2016 Results
For the third quarter ended September 30, 2016, Sangamo reported a consolidated net loss of $19.0 million, or $0.27 per share, compared to a net loss of $9.2 million, or $0.13 per share, for the same period in 2015. As of September 30, 2016, the Company had cash, cash equivalents, marketable securities and interest receivable of $155.4 million.

Revenues for the third quarter of 2016 were $2.8 million, compared to $8.6 million for the same period in 2015. Third quarter 2016 revenues were generated from the Company’s collaboration agreements with Biogen and Shire International GmbH (Shire), enabling technology agreements and research grants. The revenues recognized for the third quarter of 2016 consisted of $2.7 million from collaboration agreements and $0.1 million from research grants, compared to $8.4 million and $0.2 million, respectively, for the same period in 2015. The decrease in collaboration agreement revenues was a result of an amendment to the Company’s collaboration and license agreement with Shire in the third quarter of 2015, which returned the rights to the hemophilia programs to Sangamo, as well as a decrease in revenues from the Biogen agreement as the initial research phase of these programs has matured and activities during this quarter were largely internal.

In the third quarter of 2016, Sangamo recognized $1.2 million of revenues related to research services performed under the collaboration agreement with Biogen, and $0.2 million of revenues related to research services performed under the collaboration agreement with Shire. In addition, Sangamo received upfront payments of $13.0 million and $20.0 million pursuant to the agreements entered into with Shire in 2012 and Biogen in 2014, respectively. The Shire payment is being recognized as revenue on a straight-line basis over the initial six-year research term. Beginning in January 2016, the Biogen payment is being recognized over approximately 42 months which reflects the revised service period related to Sangamo’s deliverables under the Biogen agreement. The Company recognized $0.5 million of the Shire upfront payment and $0.6 million of the Biogen upfront payment as revenue for the third quarter of 2016.

Research and development expenses were $17.0 million for the third quarter of 2016, compared to $16.7 million for the same period in 2015. General and administrative expenses were $5.0 million for the third quarter of 2016, compared to $4.6 million for the same period in 2015.

Total operating expenses for the third quarter of 2016 were $22.0 million, compared to $21.3 million for the same period in 2015.

Nine Months Results
For the nine months ended September 30, 2016, the consolidated net loss was $62.0 million, or $0.88 per share, compared to a consolidated net loss of $26.7 million, or $0.38 per share, for the nine months ended September 30, 2015. Revenues were $10.5 million for the nine months ended September 30, 2016, compared to $30.4 million for the same period in 2015. The decrease in revenues was primarily related to the amendment of our collaboration and license agreement with Shire, as well as a decrease in revenues related to our agreements with Sigma and Biogen. Total operating expenses were $73.2 million for the nine months ended September 30, 2016, compared to $61.6 million for the same period in 2015 and reflect increased expenses related to salaries and benefits, including stock-based compensation expense, as well as professional fees, consulting services and other corporate costs.

Financial Guidance for 2016
The Company reiterates guidance as follows:

Cash and Investments: Sangamo expects that its cash, cash equivalents and marketable securities will be at least $140 million at the end of 2016, inclusive of research funding from existing collaborators but exclusive of funds arising from any additional new collaborations or partnerships, equity financings or other new sources.

Revenues: Sangamo expects that revenues will be in the range of $12 million to $17 million in 2016, inclusive of research funding from existing collaborations.

Operating Expenses: Sangamo expects that operating expenses will be in the range of $85 million to $95 million for 2016.

On October 26, 2016 Genomic Health, Inc. (NASDAQ: GHDX) reported publication in Reviews in Urology of a comprehensive economic analysis of the use of the Oncotype DX Genomic Prostate ScoreTM (GPS) in low-risk prostate cancer patients (Press release, Genomic Health, OCT 26, 2016, View Source [SID1234516026]). Results showed that use of the GPS results in a net savings of $2,286 per patient – including the cost of the test – by decreasing unnecessary immediate invasive treatment.

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"Not all low-risk prostate cancers are aggressive, but it is critical to know exactly which patient can forego immediate surgery safely," said study principal investigator David M. Albala, M.D., chief of urology, Crouse Hospital, Syracuse, New York. "Better treatment decisions can be made when patients have genomic information about their prostate tumors. Our study reconfirms that the GPS provides physicians and patients with additional risk assessment that resolves uncertainty in prognosis and informs individuals’ treatment decisions based on tumor biology."

Led by Associated Medical Professionals (AMP) of New York, the study demonstrated that incorporation of the GPS as part of the treatment decision algorithm for prostate cancer patients with NCCN very low and low-risk disease (64 percent of the study population) led to a 21 percent net increase in the use of active surveillance. The study specifically included prostate cancer patients covered by Excellus BlueCross BlueShield insurance in New York. Of these, treatment patterns and cost for 80 men tested with Oncotype DX were compared to 100 patients in the same practice without genomic testing.

Based on a real-world practice setting with a contemporary patient population and using current treatment cost averages, these published results demonstrated that the use of Oncotype DX represented a more than 50 percent return on investment over six months by reducing the cost of unnecessary immediate interventions. Additional savings can also be expected by removing the cost of management of associated side effects of treatment such as impotence and incontinence.

"The cost of caring for prostate cancer patients in the United States is estimated to be approximately $18 billion by 2020," said Phil Febbo, M.D., chief medical officer, Genomic Health. "The study provides additional important evidence to support broader adoption of Oncotype DX as we continue to fulfill Genomic Health’s vision to bring precision medicine to cancer patients, to empower physicians with actionable molecular information and to provide value and cost savings to our healthcare systems."

About Oncotype DX
The Oncotype DX portfolio of breast, colon and prostate cancer tests applies advanced genomic science to reveal the unique biology of a tumor in order to optimize cancer treatment decisions. The Oncotype DX prostate cancer test identifies which clinically low-risk patients are eligible for active surveillance, as well as those who may benefit from immediate treatment by predicting disease aggressiveness. With more than 600,000 patients tested in more than 90 countries, Oncotype DX testing has redefined personalized medicine by making genomics a critical part of cancer diagnosis and treatment. To learn more about the Oncotype DX prostate cancer test, visit www.OncotypeDX.com or www.MyProstateCancerTreatment.org.

On October 26, 2016 Lion Biotechnologies, Inc. (NASDAQ: LBIO), a biotechnology company developing novel cancer immunotherapies based on tumor-infiltrating lymphocyte technology (TIL), reported that presentations related to the Company’s TIL technology will be made at the upcoming Society for Immunotherapy of Cancer (SITC) (Free SITC Whitepaper) Annual Meeting & Associated Programs, being held on November 9-13, 2016 in National Harbor, MD (Press release, Lion Biotechnologies, OCT 26, 2016, View Source [SID1234516025]).

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Presentations at SITC (Free SITC Whitepaper) relate to:

Feasibility of growing TIL from non-melanoma solid tumors and development of TIL therapies for other solid tumors – Lion cultured TIL from non-melanoma solid tumors including bladder, cervical, head and neck, lung and triple negative breast cancer (TNBC) to investigate the feasibility of using adoptive cell therapy (ACT) as a therapy for patients in other cancer types (poster #42, Sethuraman, Saturday, November 12, 7:00 a.m. to 8:00 p.m. ET)

Evaluation of artificial antigen presenting cells (aAPC) as a potential substitute for allogeneic peripheral blood mononuclear cells (PBMC) – Preclinical evaluation of artificial antigen presenting cells as a substitute for PBMC (peripheral blood mononuclear cells) was conducted with a novel aAPC CD64+ MOLM-14 human leukemia cell line (poster #47, Veerapathran, Friday, November 11, 12:00 p.m. to 8:00 p.m ET)

Addressing the need to assess lytic potential of TILs – In order to test the potency of TILs that are infused into patients, a surrogate target cell line was developed that can be used to assess the lytic potential of TILs in a BRLA (poster #14, Gokuldass, Saturday, November 12, 7:00 a.m. to 8:00 p.m. ET)

Effect of cryopreservation on the measured phenotypic characteristics of TIL – Lion tested if cryopreservation affected the measured phenotypic characteristics of TIL which could enable Lion to further investigate the possibility of using cryopreserved TIL in a clinical setting (poster #11, Frank, Friday, November 11, 12:00 p.m. to 8:00 p.m ET)

Additional information, including a presentation schedule, titles and abstracts, can be found at View Source

On October 26, 2016 Varian Medical Systems (NYSE:VAR) reported GAAP net earnings of $1.24 per diluted share and non-GAAP net earnings of $1.38 per diluted share for the fourth quarter of fiscal year 2016 (Filing, Q3, Varian Medical Systems, 2016, OCT 26, 2016, View Source [SID1234516023]). For the full fiscal year 2016, GAAP net earnings were $4.19 per diluted share, and non-GAAP net earnings were $4.68 per diluted share. Varian’s revenues totaled $912 million for the fourth quarter of fiscal year 2016, up 12 percent in dollars from the year-ago quarter and up 11 percent in constant currency. Varian’s revenues for the full fiscal year were $3.2 billion, up 4 percent in dollars versus fiscal year 2015 and up 5 percent in constant currency. The company ended the fourth quarter with a $3.5 billion backlog, down 1 percent from the end of fiscal year 2015 with a gain in Oncology business offset by declines in the Particle Therapy and Imaging Components backlogs.

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"The company finished the year on a strong note with solid growth in revenues and margins for both of its major businesses," said Dow R. Wilson, CEO of Varian Medical Systems. "For the fourth quarter, total company gross margin increased by nearly four percentage points over the year-ago quarter. Weak oncology orders in EMEA, where we had tough year-ago comparisons, offset gross order growth in the Americas and in Asia."

The company finished the fiscal year with $844 million in cash and cash equivalents and
$667 million of debt. Cash flow from operations was $152 million for the fourth quarter and $356 million for the fiscal year. During the quarter, the company spent $87 million to repurchase about 1 million shares of common stock.

Oncology Systems
Oncology Systems’ fourth quarter revenues totaled $678 million, up 7 percent in dollars from the same quarter of fiscal year 2015 and up 6 percent in constant currency. Annual revenues were $2.5 billion, up 5 percent in dollars from the prior fiscal year and up 6 percent in constant currency.

Fourth-quarter gross orders were $897 million, down 2 percent in dollars from the year-ago quarter and down 4 percent in constant currency. For the full fiscal year 2016, Oncology gross orders were $2.7 billion, up 1 percent in dollars and up 2 percent in constant currency. Oncology gross orders in the Americas rose 4 percent in dollars and increased 3 percent in constant currency for the fourth quarter. For fiscal year 2016, Americas gross orders rose 4 percent both in dollars and constant currency. Gross orders in Asia rose 8 percent in dollars and fell 1 percent in constant currency in the fourth quarter. For the fiscal year 2016, gross orders in Asia rose 5 percent in dollars and 3 percent in constant currency. Gross orders in EMEA fell 17 percent in both dollars and constant currency for the quarter. For the fiscal year, Oncology gross orders in EMEA fell 6 percent in dollars and 4 percent in constant currency.

"Oncology Systems generated healthy revenue growth, and strong gains in both its gross and operating margins with a favorable product mix and a sharp focus on product cost initiatives during the quarter," said Wilson. "We saw respectable gross orders growth in the Americas and in emerging markets during the quarter while facing challenging conditions in Western Europe where we had record-setting growth in the year ago period. Gross orders in North America were down 2 percent in the quarter but up 5 percent for the full fiscal year."

Imaging Components
Imaging Components revenues were $166 million for the fourth quarter, up 7 percent from the year-ago period, and $598 million for the fiscal year, down 2 percent from fiscal year 2015. Gross orders totaled $168 million for the fourth quarter, up 2 percent from the year-ago period, and totaled $571 million for the fiscal year, down 6 percent from fiscal year 2015.

"Our Imaging Components business continued to strengthen in the second half of the fiscal year with ongoing revenue growth driven in part by recent acquisitions and with solid improvements in its gross and operating margins," said Wilson. "This business has successfully weathered some severe challenges in the first half of the year and finished a fiscal year highlighted by two consecutive quarters of strong revenue growth and favorable product mix as well as several key new product introductions."

Varian intends to establish the Imaging Components business as a new, independent publicly-traded company, Varex Imaging Corporation, through a tax-free spin.

Other
The company’s Other category, including the Varian Particle Therapy business and the Ginzton Technology Center, recorded fourth quarter revenues of $68 million, up $38 million from the prior year period. Revenues for fiscal year 2016 were $163 million, up 13 percent from fiscal year 2015. During the quarter, the Particle Therapy business booked its first order for its Compact single room system. However, proton system gross orders were down from the prior year quarter and prior fiscal year when the company booked an unusually high number of orders. "While gross orders remain lumpy and timing is difficult to forecast, the sales funnel remains strong," said Wilson.

Outlook
"We believe that for the first quarter of fiscal year 2017, non-GAAP earnings for the total company, including the Imaging Components business and ramp-up costs for its separation, will be in the range of $1.03 to $1.07 per diluted share and revenues will increase by about 1 to 2 percent," said Wilson. "As we announced earlier, we will not give earnings guidance for the full fiscal year until after we have completed the separation of the Imaging Components business. For the full fiscal year 2017, we expect that Varian revenues, excluding the Imaging Components business, will rise by 3 to 4 percent. We expect that Imaging Components revenues for the full fiscal year 2017 will also rise by 3 to 4 percent."

Please refer to the attached "Discussion of Non-GAAP Financial Measures" for a description of items excluded from expected non-GAAP earnings.

On October 26, 2016 Laboratory Corporation of America Holdings (LabCorp) (NYSE: LH) reported results for the quarter ended September 30, 2016 (Press release, LabCorp, OCT 26, 2016, View Source [SID1234516021]).

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"The Company delivered another quarter of solid revenue and adjusted EPS growth, despite some headwinds," said David P. King, chairman and chief executive officer. "We continued to execute on our strategy to deliver world class diagnostics, bring innovative medicines to patients faster and change the way care is provided. We remain confident in our outlook for the balance of the year and our positioning for long-term profitable growth, as we deliver proprietary solutions that address our customers’ greatest needs, and improve the health and lives of patients around the globe."

Consolidated Results

Third Quarter Results
Net revenue for the quarter was $2.37 billion, an increase of 4.5% over last year’s $2.27 billion. The increase in net revenue was due to organic growth and acquisitions, partially offset by the negative impact of foreign currency translation of approximately 50 basis points. Organic revenue growth in the quarter, excluding the impact of currency, was 3.6%.

Operating income for the quarter was $324.0 million, or 13.7% of net revenue, compared to $308.1 million, or 13.6%, in the third quarter of 2015. The increase in operating income and margin were primarily due to price, mix, the Company’s LaunchPad business process improvement initiative and cost synergies related to the acquisition of Covance, partially offset by personnel costs. The Company recorded restructuring charges and special items of $38.9 million in the quarter, compared to $31.2 million during the same period in 2015. Adjusted operating income (excluding amortization of $41.1 million, restructuring and special items) for the quarter was $404.0 million, or 17.0% of net revenue, compared to $384.2 million, or 16.9%, in the third quarter of 2015.

Net earnings in the quarter were $179.5 million, compared to $154.7 million in the third quarter of 2015. Diluted EPS were $1.71 in the quarter, an increase of 14.0% compared to $1.50 last year. Adjusted EPS (excluding amortization, restructuring and special items) were $2.25 in the quarter, an increase of 8.7% compared to $2.07 in the third quarter of 2015. The Company’s results in the quarter included two special items — a benefit of $0.02 per diluted share from the early adoption in the third quarter of the new FASB pronouncement relating to tax benefits of stock compensation, and a loss of $0.02 per diluted share from the impairment of an investment in its venture fund. In addition, the Company incurred a loss of $0.01 per diluted share in the quarter from the acquisition of Sequenom, which closed on September 7, 2016.

Operating cash flow for the quarter was $249.9 million, compared to $288.0 million last year. The decline in operating cash flow was primarily due to fees tied to the acquisition of Sequenom, and greater working capital requirements, including an advance payment as part of an exclusive strategic alliance that enhanced the global specimen tracking and data management solutions of the Company’s central laboratory business. Capital expenditures totaled $66.2 million, compared to $67.8 million in the third quarter of 2015. As a result, free cash flow (operating cash flow less capital expenditures) was $183.7 million, compared to $220.2 million in the third quarter of 2015.

At the end of the quarter, the Company’s cash balance and total debt were $567.6 million and approximately $6.2 billion, respectively. During the quarter, the Company invested $252.7 million in acquisitions and acquired $130.0 million of debt from the acquisition of Sequenom, which was retired in October.

Year-To-Date Results
The following year-to-date consolidated results of the Company include Covance as of February 19,
2015; prior to February 19, 2015, the consolidated results exclude Covance.

Net revenue was $7.05 billion, an increase of 12.6% over last year’s $6.26 billion. The increase was primarily due to the inclusion of Covance’s financial results for the entire first nine months of the year as well as solid organic growth and acquisitions, partially offset by the negative impact of foreign currency translation.

Operating income was $989.0 million, or 14.0% of net revenue, compared to $760.3 million, or 12.1%, in the first nine months of 2015. The increase in operating income and margin were primarily due to strong revenue growth, and a decline in restructuring charges and special items (costs primarily associated with the acquisition of Covance), partially offset by personnel costs. The Company recorded restructuring charges and special items of $82.7 million in the first nine months of 2016, compared to $193.1 million during the same period in 2015. Adjusted operating income (excluding amortization of $130.7 million, restructuring and special items) was $1.2 billion, or 17.1% of net revenue, compared to $1.1 billion, or 17.2%, in the first nine months of 2015.

Net earnings in the first nine months of 2016 were $547.7 million, or $5.25 per diluted share, compared to $327.6 million, or $3.29 per diluted share, last year. Adjusted EPS (excluding amortization, restructuring and special items) were $6.67, compared to $5.94 in the first nine months of 2015. The Company’s year-to-date results included a benefit of $0.11 per diluted share from the early adoption of the new FASB pronouncement relating to tax benefits of stock compensation, and a net gain of $0.03 per diluted share from its venture fund.

Operating cash flow was $727.0 million, compared to $597.8 million in the first nine months of 2015. The Company’s operating cash flow was negatively impacted by $153.5 million last year due to non-recurring items relating to the acquisition of Covance. Excluding these items, operating cash flow was $751.3 million last year. Capital expenditures totaled $204.6 million, compared to $170.7 million in the first nine months of 2015. As a result, free cash flow (operating cash flow less capital expenditures) was $522.4 million, compared to $427.1 million in the first nine months of 2015. Excluding non-recurring items, free cash flow was $580.6 million during the first nine months of 2015.

The following segment results exclude amortization, restructuring, special items and unallocated corporate expenses. Reconciliations of segment results to historically reported results are included in the Condensed Pro Forma Segment Information tables and notes.

Segment Results

LabCorp Diagnostics
Net revenue for the quarter was $1.67 billion, an increase of 4.4% over last year’s $1.60 billion. The increase in net revenue was the result of price, mix and acquisitions, partially offset by organic volume (measured by requisitions) and the negative impact of foreign currency translation of 0.1%. Total volume (measured by requisitions) increased 0.3% year over year, as organic volume declined 0.3% and acquisition volume increased 0.6%. Revenue per requisition increased by 4.2%.

Adjusted operating income (excluding amortization, restructuring and special items) for the quarter was $341.8 million, or 20.4% of net revenue, compared to $318.5 million, or 19.9%, in the third quarter of 2015. The increase was primarily due to price, mix, the LaunchPad initiative and acquisitions, partially offset by personnel costs. LaunchPad remains on track to deliver net savings of $150 million through the three-year period ending in 2017.

Covance Drug Development
Net revenue for the quarter was $701.1 million, an increase of 4.8% over last year’s $669.0 million. The increase in net revenue was primarily due to broad-based demand, partially offset by the negative impact of foreign currency translation of approximately 150 basis points. Excluding the impact from currency and the expiration of the Sanofi site support agreement, net revenue increased 9.5% year over year.

Adjusted operating income (excluding amortization, restructuring and special items) was $95.5 million, or 13.6% of net revenue, compared to $96.9 million, or 14.5%, in the third quarter of 2015. The decline was primarily due to the expiration of the Sanofi site support agreement, an unusually high level of rework in the clinical business, and personnel costs, including investments in clinical research associates (CRAs) and the sales force, partially offset by demand and cost synergies. The Company remains on track to deliver cost synergies of $100 million related to the acquisition of Covance through the three-year period ending in 2017.

During the quarter, net orders (gross orders less cancellations and reductions) were $755 million, representing a net book-to-bill of 1.08, and a trailing twelve month net book-to-bill of 1.14.

Outlook for 2016
The following updated guidance assumes foreign exchange rates effective as of September 30, 2016 for the remainder of the year:

• Net revenue growth of 10.0% to 11.0% over 2015 net revenue of $8.51 billion, which includes the impact from approximately 60 basis points of negative currency. This is an increase from prior guidance of 9.5% to 10.5%, primarily due to the acquisition of Sequenom.

• Net revenue growth in LabCorp Diagnostics of 5.0% to 6.0% over 2015 pro forma revenue of $6.21 billion, which includes the impact from approximately 30 basis points of negative currency. This is an increase from prior guidance of 4.5% to 5.5%, primarily due to the acquisition of Sequenom.

• Net revenue growth in Covance Drug Development of 7.5% to 9.0% over 2015 pro forma revenue of $2.63 billion, which includes the impact from approximately 110 basis points of negative currency. This is an update from prior guidance of 7.0% to 9.0%. Excluding the impact from currency and the expiration of the Sanofi site support agreement, net revenue is expected to increase 11.2% to 12.7%.

• Adjusted EPS of $8.70 to $8.90, versus prior guidance of $8.60 to $8.95, and as compared to $7.91 last year.

• Free cash flow (operating cash flow less capital expenditures) of $840 million to $880 million, an increase of approximately 17% to 24% over the prior year. This is an update from prior guidance of $900 million to $950 million.

Use of Adjusted Measures
The Company has provided in this press release and accompanying tables "adjusted" financial information that has not been prepared in accordance with GAAP, including Adjusted EPS, Adjusted Operating Income, and Free Cash Flow. The Company believes these adjusted measures are useful to investors as a supplement to, but not as a substitute for, GAAP measures, in evaluating the Company’s operational performance. The Company further believes that the use of these non-GAAP financial measures provides an additional tool for investors in evaluating operating results and trends, and growth and shareholder returns, as well as in comparing the Company’s financial results with the financial results of other companies. However, the Company notes that these adjusted measures may be different from and not directly comparable to the measures presented by other companies. Reconciliations of these non-GAAP measures to the most comparable GAAP measures are included in the tables accompanying this press release.

The Company today is furnishing its Current Report on Form 8-K that will include additional information on its business and operations. This information will also be available on the Company’s website at www.labcorp.com. Analysts and investors are directed to the Current Report on Form 8-K and the website to review this supplemental information.