Adam Schechter: Yeah. So the first thing I’d say is that the Labcorp was supportive of the Valid Act, which we thought was the right way to provide oversight of the FDA of LDTs. It was legislation that was fit for purpose for our industry. We’re not supportive of the current rule, although we haven’t seen the final rule. We still have to see that in a whole judgment until we see exactly what’s in there. But I worry about most — and we have great quality organization. We have terrific scientists, and we do so much research and need to — it in the marketplace. What I worry about is speed to market of LDTs. And patients that need these LDTs, they’re typically smaller groups of patients. Other people aren’t necessarily developing tests for them. And they need to test as quickly as possible. So the real question to me is going to be how fast the FDA will be able to review the new LVPs and get them into the marketplace.
Ann Hynes: Great. Thanks.
Operator: Thank you. One moment for our next question. Our next question comes from Elizabeth Anderson of Evercore ISI. Your line is open.
Elizabeth Anderson: Hi, guys. Good morning. Thanks so much for the question. I was wondering if you could comment on the pacing of the lab management deal integration. Anything to pick up on proceeding as sort of as you guys thought any learnings you would say in terms of others as you continue on that path?
Adam Schechter: Yes. So we’ve gotten quite good at being able to efficiently and effectively run the lab management agreements that we have. When you do 100 hospitals with 1 organization quickly, you become an expert pretty fast. So what I would say is we take our time because the most important thing is to ensure that there’s no patient disruption. The second thing is to make sure that the physicians are very satisfied with the way in which they can order and the speed once they get their results. And then over time, we find ways to use our size, our scale and our ability to synergize to reduce cost. And we’ve learned that the most important thing is to do it really well. And although the margins never get to our average margins, they start off low and they increase over time.
I think you’ve seen with the announcement of several deals closing in the first quarter, multiple deals closing at the end of last year. There’s a slight impact on our margin in the beginning. But over time, the margin is going to improve. And that’s why we believe our Diagnostics margin will increase when you look at the totality of 2024 versus 2023.
Elizabeth Anderson: Got it. That’s helpful. Anything you can comment to in the early development business about sort of non NHP growth? Because I just wanted to like sort that out in terms of the impact on the revenues in the quarter.
Adam Schechter: Yes. So what I would say is that there’s no longer a supply issue with NHP. The only thing that we’re seeing with any fees is a bit of a revenue drag because the cost of NHPs when there was a supply issue were much higher. We were charging the higher price, but we weren’t making a margin on that higher price. So now that the prices have come down, the actual revenue for those studies come down with the price. So you’re seeing less revenue growth in that area, which I would say is probably a bit artificial because of the price of the NHPs coming down.
Elizabeth Anderson: Yes, that makes sense. I just wanted to sort of understand that versus the dynamics in the non-NHP portion of the business.
Adam Schechter: Yeah. I would say that — in the non-NHP. You’re seeing growth rates that would be a bit higher than the NHP. But again, that’s more — they’re both less than what we have seen historically because of what’s happening in the biotech world. We are beginning to see signs of recovery in the biotech world. So both of those parts of the business should recover over time.
Elizabeth Anderson: Got it. Thanks so much.
Operator: Thank you. One moment for our next question. And our next question comes from Kevin Caliendo of UBS. Your line is open.
Kevin Caliendo: [indiscernible]
Adam Schechter: Kevin, we can’t hear you. You’re breaking up pretty significantly.
Kevin Caliendo: I’m sorry, is it better?
Adam Schechter: No.
Kevin Caliendo: I’ll try to ask you, but we wanted to talk a little bit about margin expectations in the DX segment, specifically around your expectation of labor trends and a margin in the GS business going forward, like in the first quarter as we jumping off…
Adam Schechter: Yes. Are you talking margins in CLS or Diagnostics? I couldn’t tell.
Kevin Caliendo: Diagnostics, sorry.
Adam Schechter: Okay, in Diagnostics. What I would say is that if you look at the Diagnostics business, the business performed very well. We had basically 7% growth in the base business and volume was good at almost 5% and — the margin was down versus prior year was driven by three things, it was driven by COVID. There was some impact from weather. And as I previously mentioned, there was some impact from the lab management agreements as we begin to roll those out in the fourth quarter of last year, so in the first quarter, we’ll see the margins get better as we go through the year. Overall, we expect the diagnostic margins in ’24 to be higher than the margins in ’23.
Glenn Eisenberg: Yeah. The only thing I’d add too is, as Adam said, margins up even despite COVID and weather and lab management agreements for the full year margins to be up slightly but also to see that expected beginning in the second quarter where you’ll see nice growth year-over-year. We’ll have the normal seasonality. So when you look at the absolute margins, they’ll fluctuate based on seasonality and but the year-over-year improvement, you’ll see pick up nicely beginning in the second quarter that gives us the confidence that the margins will be up for the full year.
Operator: Thank you. One moment for our next question. Our next question comes from Andrew Brackmann of William Blair. Your line is open.
Adam Schechter: Good Morning, Andrew.
Andrew Brackmann: Morning. Thanks for taking the question. Maybe just to piggyback off some of those margin questions on the diagnostics front, but more specifically on the specialty diagnostics side of things, I guess, how should we be thinking about moving the moving pieces there moving forward? Obviously, you gave some color around invite, but just as that entire specialty business grows, how are you thinking about its impact on total segment margins here?
Adam Schechter: Yeah. So the first thing I would say is as we look at the businesses, they’re both strong right now are routine testing as well as our specialty testing. We are seeing the specialty testing grow at a slightly accelerated rate versus the routine testing, but routine testing is still the vast majority of the business that we do. A big part of the reason that specialty testing is important is, number one, they’re typically very serious diseases. Number two, when people get specialty testing, they get a lot of routine tests around those specialty tests as well. And then third of all, they typically or show how strong you are in science and innovation, and it’s got a good overhang of the company because we are a scientifically based organization. So for those three reasons, you’ll see specialty testing growing faster than routine testing, but routine tends to go with the specialty testing to some degree.
Andrew Brackmann: Okay. That’s helpful and then I guess maybe a little bit unrelated, but as it relates to your Alzheimer’s portfolio more specifically. Can you maybe just give us a sense of the current scale for that business today? And I guess, as you think in longer term here, just can you talk about the market opportunity that you see in that segment moving forward? Thank you.
