Yahoo Finance's Anjalee Khemlani sat down with LabCorp CEO Adam Schechter to discuss the latest with the company, it's transition to coronavirus testing, and what to expect from their latest products.
ANJALEE KHEMLANI: Joining me now is Adam Schechter, CEO of LabCorp. Adam, thank you so much for joining me today. Pleasure to be speaking with you.
ADAM SCHECHTER: It's a pleasure to be here, Anjalee. Thanks for having me.
ANJALEE KHEMLANI: So I know that this has been culminating a very pivotal year for the company. You've been put in a position that I don't think you ever imagined being. LabCorp went from being the company you associate with drug testing for work to COVID-19 testing and everything that goes with it. So I'd love to start off there. Just walk us through what this year has been like, to be so in demand, and what it took to ramp up to the point that you are now in being able to process the tests.
ADAM SCHECHTER: Yeah, absolutely, Anjalee. And it's interesting, because I only became the CEO of LabCorp back in November. So I had this great plan. I knew exactly what we were going to do. We set our strategy.
And then three months later, COVID hit. And we had to rearrange everything. So we really started off with three principles. The first one was build capacity as fast as we can. Do whatever it takes to get as much capacity as quickly as possible.
The second one was that nobody was going to pay up front out-of-pocket cost. We wanted to make sure that people could have access to the test anywhere that they needed the test. And then the third thing was that nobody would be prioritized over anybody else. As the tests came into us, we would run the tests and get the results as quickly as possible.
Now, that third principle, the only time we broke it is when the CDC asked us to prioritize, for example, patients in hospitals, because they needed the hospital beds. They needed the PPE. Other than that, we have held to those three principles for the entire pandemic.
What that enabled us to do is build capacity fast. We went from several thousand tests per week to now we can do 275,000 tests per day. We can turn around those tests. On average, time to result is one to two days.
And at the same time, we've done more than 31.6 million PCR tests. We can do antibody tests. And we can do about 300,000 of those a day. And we turn those around in about a day. So we built extraordinary capacity as quickly as we could. We're in 21 labs across the country and run eight different platforms to run the tests.
ANJALEE KHEMLANI: And building up that capacity means purchasing new machines, correct? So as the FDA was authorizing these new machines and these new tests, you were able to then get in. So how do you reach the point where you think about long-term buying them to meet the demand now, but not overbuying for the future?
ADAM SCHECHTER: Yeah, so the first thing is we built our own laboratory-developed tests. That was the first test we launched, was one that we did ourselves. And we had some equipment to start to run those tests.
But as other EUAs were approved, we started to purchase a lot more equipment. The bottom line is we probably have more equipment than we'll need in the future. Once the vaccine is out and is probably used as we go into the summer months and there's not as much people inside and the spread isn't as fast, I would expect the need for PCR testing to still be there, but it'll be less than what it is today.
I think they'll be overcapacity in the entire industry. But that's OK, because we did this to help during the time of the pandemic. We were able to do that. And I think it was well worth it.
ANJALEE KHEMLANI: And you also have this relationship with Walgreens that has panned out for at-home test that you have, that Pixel test. And looking at it from the vantage point of we've seen the tests are covered this whole time. I know that you've talked about how in general, the COVID test will go up to $51 afterwards.
And you've seen that it's been such a huge part of revenue for the company this whole year. Talk to me about moving forward with the at-home tests just long term. Do you see that being in the Walgreens? And how does that correlate with the relationship in the partnership you have there?
ADAM SCHECHTER: Yeah, absolutely. The first thing I'd say is LabCorps has been a science innovation company for 50 years. And we've been able to use our innovative capabilities and our scientific capabilities to do everything that we just talked about for COVID.
But when COVID is done and gone, and hopefully that's as soon as possible, what made us successful in the past, I believe, will be even more successful in the future. And 40% of our revenue actually comes from drug development. What we've been able to show is that diagnostic testing combined with drug development will enable people to actually develop vaccines and drugs faster, in my opinion, than if you didn't have those two pieces together.
With regard to Walgreens, we're in 250 stores right now. We actually increased by more than 125 stores last year even with the pandemic. So hopefully this year, we'll be able to open up more. And we have a great relationship with them.
So Pixel by LapCorps was the first at-home collection test. It's been very popular. I mean, right before people were leaving for trips around Christmas time, around New Year's, the number of Pixel tests that were ordered were just very, very significant. Almost 10% of our total volume was coming through Pixel.
As we go into the future, I think Pixel will still be important. But we're going to roll out other tests outside of COVID for Pixel that people will be able to access within their home. So Pixel for COVID is the beginning. But our future is other tests for Pixel that will make it an important contribution in the future.
ANJALEE KHEMLANI: So it's a new brand altogether attached to the company. That's very interesting. Adam Schechter, CEO of LapCorps, thank you so much for joining me today.
ADAM SCHECHTER: It's a pleasure to be here. Thanks for having me.