UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, ~~2021~~2022

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission File Number 1-11353

LABORATORY CORPORATION OF AMERICA HOLDINGS

(Exact name of registrant as specified in its charter)


Delaware						13-3757370
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


358 South Main Street
Burlington,	North Carolina	27215
(Address of principal executive offices)		(Zip Code)

(Registrant's telephone number, including area code) 336-229-1127

Securities registered pursuant to Section 12(b) of the Exchange Act.

Title of Each Class Trading Symbol Name of exchange on which registered

Common Stock, $0.10 par value LH New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

The number of shares outstanding of the issuer's common stock is ~~95.7~~88.6 million shares as of ~~November 1, 2021.~~October 31, 2022.

INDEX

PART I. FINANCIAL INFORMATION


Item 1.	Financial Statements (unaudited)

	Condensed Consolidated Balance Sheets	2
	September 30, ~~2021~~2022 and December 31, ~~2020~~2021

	Condensed Consolidated Statements of Operations	3
	Three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021

	Condensed Consolidated Statements of Comprehensive Earnings	4
	Three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021

	Condensed Consolidated Statements of Changes in Shareholders’ Equity	5
	Three and nine months ended September 30, ~~2021~~2022 and ~~2020~~2021

	Condensed Consolidated Statements of Cash Flows	6
	Nine months ended September 30, ~~2021~~2022 and ~~2020~~2021

	Notes to Unaudited Condensed Consolidated Financial Statements	7

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2321

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	3330

Item 4.	Controls and Procedures	3431

PART II. OTHER INFORMATION


Item 1.	Legal Proceedings	3632

Item 1A.	Risk Factors	3632

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	3633

Item 5.	Other Information	3733

Item 6.	Exhibits	3733

INDEX

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)

(unaudited)


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	2,036.5	$	1,320.8	Cash and cash equivalents	$	409.9	$	1,472.7
Accounts receivable, net	Accounts receivable, net	2,335.4		2,479.8		Accounts receivable, net	2,164.2		2,261.5
Unbilled services	Unbilled services	719.6		536.8		Unbilled services	818.5		716.8
Supplies inventory	Supplies inventory	410.7		423.2		Supplies inventory	467.7		401.4
Prepaid expenses and other	Prepaid expenses and other	518.3		364.8		Prepaid expenses and other	511.5		478.1

Total current assets	Total current assets	6,020.5		5,125.4		Total current assets	4,371.8		5,330.5
Property, plant and equipment, net	Property, plant and equipment, net	2,692.2		2,729.6		Property, plant and equipment, net	2,884.7		2,815.4
Goodwill, net	Goodwill, net	7,906.8		7,751.5		Goodwill, net	8,217.6		7,958.9
Intangible assets, net	Intangible assets, net	3,755.1		3,961.1		Intangible assets, net	3,807.8		3,735.5
Joint venture partnerships and equity method investments	Joint venture partnerships and equity method investments	62.1		73.5		Joint venture partnerships and equity method investments	63.7		60.9
Deferred income taxes	Deferred income taxes	23.8		20.6		Deferred income taxes	29.4		21.6
Other assets, net	Other assets, net	406.0		410.0		Other assets, net	451.0		462.6

Total assets	Total assets	$	20,866.5	$	20,071.7	Total assets	$	19,826.0	$	20,385.4

LIABILITIES AND SHAREHOLDERS’ EQUITY	LIABILITIES AND SHAREHOLDERS’ EQUITY					LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	669.4	$	638.9	Accounts payable	$	765.5	$	621.3
Accrued expenses and other	Accrued expenses and other	1,423.8		1,357.7		Accrued expenses and other	1,040.8		1,404.1
Unearned revenue	Unearned revenue	593.9		506.5		Unearned revenue	530.9		558.5
Short-term operating lease liabilities	Short-term operating lease liabilities	189.1		192.0		Short-term operating lease liabilities	178.1		187.0
Short-term finance lease liabilities	Short-term finance lease liabilities	10.6		6.7		Short-term finance lease liabilities	5.3		10.5
Short-term borrowings and current portion of long-term debt	Short-term borrowings and current portion of long-term debt	1.6		376.7		Short-term borrowings and current portion of long-term debt	1.7		1.5

Total current liabilities	Total current liabilities	2,888.4		3,078.5		Total current liabilities	2,522.3		2,782.9
Long-term debt, less current portion	Long-term debt, less current portion	5,417.2		5,419.0		Long-term debt, less current portion	5,334.3		5,416.5
Operating lease liabilities	Operating lease liabilities	631.0		677.6		Operating lease liabilities	665.9		642.5
Financing lease liabilities	Financing lease liabilities	86.0		84.4		Financing lease liabilities	85.8		84.6
Deferred income taxes and other tax liabilities	Deferred income taxes and other tax liabilities	804.8		905.4		Deferred income taxes and other tax liabilities	672.7		762.9
Other liabilities	Other liabilities	494.0		526.4		Other liabilities	433.9		402.0

Total liabilities	Total liabilities	10,321.4		10,691.3		Total liabilities	9,714.9		10,091.4
Commitments and contingent liabilities	Commitments and contingent liabilities					Commitments and contingent liabilities
Noncontrolling interest	Noncontrolling interest	20.6		20.7		Noncontrolling interest	18.9		20.6
Shareholders’ equity:	Shareholders’ equity:					Shareholders’ equity:
Common stock, 95.8 and 97.5 shares outstanding at September 30, 2021, and December 31, 2020, respectively		8.8		9.0
Common stock, 89.6 and 93.1 shares outstanding at September 30, 2022, and December 31, 2021, respectively						Common stock, 89.6 and 93.1 shares outstanding at September 30, 2022, and December 31, 2021, respectively	8.2		8.5
Additional paid-in capital	Additional paid-in capital	—		110.3		Additional paid-in capital	—		—
Retained earnings	Retained earnings	10,786.6		9,402.3		Retained earnings	10,845.0		10,456.8

Accumulated other comprehensive loss	Accumulated other comprehensive loss	(270.9)		(161.9)		Accumulated other comprehensive loss	(761.0)		(191.9)
Total shareholders’ equity	Total shareholders’ equity	10,524.5		9,359.7		Total shareholders’ equity	10,092.2		10,273.4
Total liabilities and shareholders’ equity	Total liabilities and shareholders’ equity	$	20,866.5	$	20,071.7	Total liabilities and shareholders’ equity	$	19,826.0	$	20,385.4

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

INDEX

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,
		2021		2020		2021		2020			2022		2021		2022		2021
Revenues	Revenues	$	4,062.6	$	3,896.1	$	12,064.8	$	9,488.7	Revenues	$	3,606.1	$	4,062.6	$	11,202.6	$	12,064.8
Cost of revenues	Cost of revenues	2,677.1		2,336.7		7,815.5		6,440.8		Cost of revenues	2,546.4		2,677.1		7,787.3		7,815.5

Gross profit	Gross profit	1,385.5		1,559.4		4,249.3		3,047.9		Gross profit	1,059.7		1,385.5		3,415.3		4,249.3
Selling, general and administrative expenses	Selling, general and administrative expenses	519.9		419.5		1,408.4		1,211.3		Selling, general and administrative expenses	510.0		519.9		1,460.1		1,408.4
Amortization of intangibles and other assets	Amortization of intangibles and other assets	92.2		62.2		276.7		184.6		Amortization of intangibles and other assets	65.2		92.2		198.7		276.7
Goodwill and other asset impairments	Goodwill and other asset impairments	—		23.5		—		460.9		Goodwill and other asset impairments	—		—		1.2		—
Restructuring and other charges	Restructuring and other charges	6.5		7.1		35.3		38.9		Restructuring and other charges	15.1		6.5		72.1		35.3
Operating income	Operating income	766.9		1,047.1		2,528.9		1,152.2		Operating income	469.4		766.9		1,683.2		2,528.9
Other income (expense):	Other income (expense):									Other income (expense):
Interest expense	Interest expense	(42.2)		(51.4)		(169.0)		(159.1)		Interest expense	(46.3)		(42.2)		(131.0)		(169.0)
Equity method income (loss), net		8.4		3.0		20.9		(1.8)
Equity method income, net										Equity method income, net	1.7		8.4		6.5		20.9
Investment income	Investment income	3.2		2.6		8.3		7.7		Investment income	4.1		3.2		7.2		8.3
Other, net	Other, net	31.9		(54.2)		51.5		(22.6)		Other, net	(7.3)		31.9		(27.8)		51.5
Earnings before income taxes	Earnings before income taxes	768.2		947.1		2,440.6		976.4		Earnings before income taxes	421.6		768.2		1,538.1		2,440.6
Provision for income taxes	Provision for income taxes	180.4		243.4		614.7		358.0		Provision for income taxes	68.4		180.4		333.9		614.7
Net earnings	Net earnings	587.8		703.7		1,825.9		618.4		Net earnings	353.2		587.8		1,204.2		1,825.9
Less: Net earnings attributable to the noncontrolling interest	Less: Net earnings attributable to the noncontrolling interest	(0.5)		(0.3)		(1.6)		(0.6)		Less: Net earnings attributable to the noncontrolling interest	(0.4)		(0.5)		(1.2)		(1.6)
Net earnings attributable to Laboratory Corporation of America Holdings	Net earnings attributable to Laboratory Corporation of America Holdings	$	587.3	$	703.4	$	1,824.3	$	617.8	Net earnings attributable to Laboratory Corporation of America Holdings	$	352.8	$	587.3	$	1,203.0	$	1,824.3

Basic earnings per common share	Basic earnings per common share	$	6.10	$	7.22	$	18.79	$	6.35	Basic earnings per common share	$	3.91	$	6.10	$	13.09	$	18.79
Diluted earnings per common share	Diluted earnings per common share	$	6.05	$	7.17	$	18.63	$	6.31	Diluted earnings per common share	$	3.90	$	6.05	$	13.02	$	18.63

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

INDEX

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(in millions, except per share data)

(unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended September 30,				Nine Months Ended September 30,

		2021		2020		2021		2020			2022		2021		2022		2021
Net earnings	Net earnings	$	587.8	$	703.7	$	1,825.9	$	618.4	Net earnings	$	353.2	$	587.8	$	1,204.2	$	1,825.9
Foreign currency translation adjustments	Foreign currency translation adjustments	(91.6)		132.9		(114.6)		52.4		Foreign currency translation adjustments	(256.5)		(91.6)		(572.2)		(114.6)
Net benefit plan adjustments	Net benefit plan adjustments	2.6		2.1		7.7		7.5		Net benefit plan adjustments	1.3		2.6		4.2		7.7

Other comprehensive earnings before tax		(89.0)		135.0		(106.9)		59.9
Other comprehensive earnings (loss) before tax										Other comprehensive earnings (loss) before tax	(255.2)		(89.0)		(568.0)		(106.9)
Provision (benefit) for income tax related to items of comprehensive earnings	Provision (benefit) for income tax related to items of comprehensive earnings	(0.7)		(0.6)		(2.1)		(2.1)		Provision (benefit) for income tax related to items of comprehensive earnings	(0.3)		(0.7)		(1.1)		(2.1)
Other comprehensive earnings (loss), net of tax	Other comprehensive earnings (loss), net of tax	(89.7)		134.4		(109.0)		57.8		Other comprehensive earnings (loss), net of tax	(255.5)		(89.7)		(569.1)		(109.0)
Comprehensive earnings	Comprehensive earnings	498.1		838.1		1,716.9		676.2		Comprehensive earnings	97.7		498.1		635.1		1,716.9
Less: Net earnings attributable to the noncontrolling interest	Less: Net earnings attributable to the noncontrolling interest	(0.5)		(0.3)		(1.6)		(0.6)		Less: Net earnings attributable to the noncontrolling interest	(0.4)		(0.5)		(1.2)		(1.6)
Comprehensive earnings attributable to Laboratory Corporation of America Holdings	Comprehensive earnings attributable to Laboratory Corporation of America Holdings	$	497.6	$	837.8	$	1,715.3	$	675.6	Comprehensive earnings attributable to Laboratory Corporation of America Holdings	$	97.3	$	497.6	$	633.9	$	1,715.3

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

INDEX

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

SHAREHOLDERS’ EQUITY

(in millions)

(unaudited)


		Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Earnings (Loss)		Total Shareholders’ Equity			Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Earnings (Loss)		Total Shareholders’ Equity
BALANCE AT DECEMBER 31, 2019		$	9.0	$	26.8	$	7,903.6	$	(372.4)	$	7,567.0
Adoption of credit loss accounting standard		—		—		(7.0)		—		(7.0)
Net loss attributable to Laboratory Corporation of America Holdings		—		—		(317.2)		—		(317.2)
Other comprehensive earnings (loss), net of tax		—		—		—		(145.5)		(145.5)
Issuance of common stock under employee stock plans		—		26.9		—		—		26.9
Net share settlement tax payments from issuance of stock to employees		—		(22.0)		—		—		(22.0)
Stock compensation		—		17.9		—		—		17.9
Purchase of common stock		—		(49.6)		(50.4)		—		(100.0)
BALANCE AT MARCH 31, 2020		$	9.0	$	—	$	7,529.0	$	(517.9)	$	7,020.1
BALANCE AT DECEMBER 31, 20201												BALANCE AT DECEMBER 31, 20201	$	9.0	$	110.3	$	9,479.2	$	(161.9)	$	9,436.6
Net earnings attributable to Laboratory Corporation of America Holdings	Net earnings attributable to Laboratory Corporation of America Holdings	—		—		231.6		—		231.6		Net earnings attributable to Laboratory Corporation of America Holdings	—		—		769.6		—		769.6
Other comprehensive earnings (loss), net of tax	Other comprehensive earnings (loss), net of tax	—		—		—		68.9		68.9		Other comprehensive earnings (loss), net of tax	—		—		—		(64.6)		(64.6)
Issuance of common stock under employee stock plans	Issuance of common stock under employee stock plans	—		1.8		—		—		1.8		Issuance of common stock under employee stock plans	—		24.7		—		—		24.7
Net share settlement tax payments from issuance of stock to employees	Net share settlement tax payments from issuance of stock to employees	—		(9.5)		—		—		(9.5)		Net share settlement tax payments from issuance of stock to employees	—		(28.1)		—		—		(28.1)
Stock compensation	Stock compensation	—		39.8		—		—		39.8		Stock compensation	—		28.7		—		—		28.7

BALANCE AT JUNE 30, 2020		$	9.0	$	32.1	$	7,760.6	$	(449.0)	$	7,352.7
Purchase of common stock												Purchase of common stock	—		(68.5)		—		—		(68.5)
BALANCE AT MARCH 31, 20211												BALANCE AT MARCH 31, 20211	$	9.0	$	67.1	$	10,248.8	$	(226.5)	$	10,098.4
Net earnings attributable to Laboratory Corporation of America Holdings	Net earnings attributable to Laboratory Corporation of America Holdings	—		—		703.4		—		703.4		Net earnings attributable to Laboratory Corporation of America Holdings	—		—		467.4		—		467.4
Other comprehensive earnings (loss), net of tax	Other comprehensive earnings (loss), net of tax	—		—		—		134.4		134.4		Other comprehensive earnings (loss), net of tax	—		—		—		45.3		45.3
Issuance of common stock under employee stock plans	Issuance of common stock under employee stock plans	—		21.9		—		—		21.9		Issuance of common stock under employee stock plans	—		1.9		—		—		1.9
Net share settlement tax payments from issuance of stock to employees	Net share settlement tax payments from issuance of stock to employees	—		(0.5)		—		—		(0.5)		Net share settlement tax payments from issuance of stock to employees	—		(14.9)		—		—		(14.9)
Stock compensation	Stock compensation	—		27.2		—		—		27.2		Stock compensation	—		23.9		—		—		23.9

BALANCE AT SEPTEMBER 30, 2020		$	9.0	$	80.7	$	8,464.0	$	(314.6)	$	8,239.1

BALANCE AT DECEMBER 31, 2020		$	9.0	$	110.3	$	9,402.3	$	(161.9)	$	9,359.7
Purchase of common stock												Purchase of common stock	(0.1)		(78.0)		(221.9)		—		(300.0)
BALANCE AT JUNE 30, 20211												BALANCE AT JUNE 30, 20211	$	8.9	$	—	$	10,494.3	$	(181.2)	$	10,322.0
Net earnings attributable to Laboratory Corporation of America Holdings	Net earnings attributable to Laboratory Corporation of America Holdings	—		—		769.6		—		769.6		Net earnings attributable to Laboratory Corporation of America Holdings	—		—		587.3		—		587.3
Other comprehensive earnings (loss), net of tax	Other comprehensive earnings (loss), net of tax	—		—		—		(64.6)		(64.6)		Other comprehensive earnings (loss), net of tax	—		—		—		(89.7)		(89.7)
Issuance of common stock under employee stock plans	Issuance of common stock under employee stock plans	—		24.7		—		—		24.7		Issuance of common stock under employee stock plans	—		24.2		—		—		24.2
Net share settlement tax payments from issuance of stock to employees	Net share settlement tax payments from issuance of stock to employees	—		(28.1)		—		—		(28.1)		Net share settlement tax payments from issuance of stock to employees	—		(1.4)		—		—		(1.4)
Stock compensation	Stock compensation	—		28.7		—		—		28.7		Stock compensation	—		59.0		—		—		59.0
Purchase of common stock	Purchase of common stock	—		(68.5)		—		—		(68.5)		Purchase of common stock	(0.1)		(81.8)		(218.1)		—		(300.0)
BALANCE AT MARCH 31, 2021		$	9.0	$	67.1	$	10,171.9	$	(226.5)	$	10,021.5
BALANCE AT SEPTEMBER 30, 20211												BALANCE AT SEPTEMBER 30, 20211	$	8.8	$	—	$	10,863.5	$	(270.9)	$	10,601.4

BALANCE AT DECEMBER 31, 2021												BALANCE AT DECEMBER 31, 2021	$	8.5	$	—	$	10,456.8	$	(191.9)	$	10,273.4
Net earnings attributable to Laboratory Corporation of America Holdings	Net earnings attributable to Laboratory Corporation of America Holdings	—		—		467.4		—		467.4		Net earnings attributable to Laboratory Corporation of America Holdings	—		—		491.6		—		491.6
Other comprehensive earnings (loss), net of tax	Other comprehensive earnings (loss), net of tax	—		—		—		45.3		45.3		Other comprehensive earnings (loss), net of tax	—		—		—		(73.0)		(73.0)
Issuance of common stock under employee stock plans	Issuance of common stock under employee stock plans	—		1.9		—		—		1.9		Issuance of common stock under employee stock plans	—		18.2		—		—		18.2
Net share settlement tax payments from issuance of stock to employees	Net share settlement tax payments from issuance of stock to employees	—		(14.9)		—		—		(14.9)		Net share settlement tax payments from issuance of stock to employees	—		(27.3)		—		—		(27.3)
Stock compensation	Stock compensation	—		23.9		—		—		23.9		Stock compensation	—		38.2		—		—		38.2
Purchase of common stock		(0.1)		(78.0)		(221.9)		—		(300.0)
BALANCE AT JUNE 30, 2021		$	8.9	$	—	$	10,417.4	$	(181.2)	$	10,245.1

BALANCE AT MARCH 31, 2022												BALANCE AT MARCH 31, 2022	$	8.5	$	29.1	$	10,948.4	$	(264.9)	$	10,721.1
Net earnings attributable to Laboratory Corporation of America Holdings	Net earnings attributable to Laboratory Corporation of America Holdings	—		—		587.3		—		587.3		Net earnings attributable to Laboratory Corporation of America Holdings	—		—		358.6		—		358.6
Other comprehensive earnings (loss), net of tax	Other comprehensive earnings (loss), net of tax	—		—		—		(89.7)		(89.7)		Other comprehensive earnings (loss), net of tax	—		—		—		(240.6)		(240.6)
Dividends declared												Dividends declared	—		—		(68.6)		—		(68.6)
Issuance of common stock under employee stock plans	Issuance of common stock under employee stock plans	—		24.2		—		—		24.2		Issuance of common stock under employee stock plans	—		0.9		—		—		0.9
Net share settlement tax payments from issuance of stock to employees	Net share settlement tax payments from issuance of stock to employees	—		(1.4)		—		—		(1.4)		Net share settlement tax payments from issuance of stock to employees	—		(10.1)		—		—		(10.1)
Stock compensation	Stock compensation	—		59.0		—		—		59.0		Stock compensation	—		39.4		—		—		39.4
Purchase of common stock	Purchase of common stock	(0.1)		(81.8)		(218.1)		—		(300.0)		Purchase of common stock	(0.2)		(59.3)		(340.5)		—		(400.0)
BALANCE AT SEPTEMBER 30, 2021		$	8.8	$	—	$	10,786.6	$	(270.9)	$	10,524.5
BALANCE AT JUNE 30, 2022												BALANCE AT JUNE 30, 2022	$	8.3	$	—	$	10,897.9	$	(505.5)	$	10,400.7
Net earnings attributable to Laboratory Corporation of America Holdings												Net earnings attributable to Laboratory Corporation of America Holdings	—		—		352.8		—		352.8
Other comprehensive earnings (loss), net of tax												Other comprehensive earnings (loss), net of tax	—		—		—		(255.5)		(255.5)
Dividends declared												Dividends declared	—		—		(66.4)		—		(66.4)
Issuance of common stock under employee stock plans												Issuance of common stock under employee stock plans	—		31.5		—		—		31.5
Net share settlement tax payments from issuance of stock to employees												Net share settlement tax payments from issuance of stock to employees	—		(7.2)		—		—		(7.2)
Stock compensation												Stock compensation	—		36.3		—		—		36.3
Purchase of common stock												Purchase of common stock	(0.1)		(60.6)		(339.3)		—		(400.0)
BALANCE AT SEPTEMBER 30, 2022												BALANCE AT SEPTEMBER 30, 2022	$	8.2	$	—	$	10,845.0	$	(761.0)	$	10,092.2

1 Retained earnings and total shareholders’ equity as of March 31, 2021, June 30, 2021 and September 30, 2021, have been revised for the correction previously reported in the 2021 Annual Report on Form 10-K, and retained earnings and total equity as of December 31, 2020, March 31, 2021 and June 30, 2021 have been corrected from amounts previously reported in the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022.

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

INDEX

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2021		2020			2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	Net earnings	$	1,825.9	$	618.4	Net earnings	$	1,204.2	$	1,825.9
Adjustments to reconcile net earnings to net cash provided by operating activities:	Adjustments to reconcile net earnings to net cash provided by operating activities:					Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	Depreciation and amortization	557.1		440.8		Depreciation and amortization	477.7		557.1
Stock compensation	Stock compensation	111.6		84.9		Stock compensation	113.9		111.6
Operating lease right-of-use asset expense	Operating lease right-of-use asset expense	145.3		150.7		Operating lease right-of-use asset expense	145.7		145.3
Goodwill and other asset impairments	Goodwill and other asset impairments	—		460.9		Goodwill and other asset impairments	1.2		—
Deferred income taxes	Deferred income taxes	(102.0)		(48.5)		Deferred income taxes	(51.6)		(102.0)
Other	Other	(41.0)		55.2		Other	(4.9)		(41.0)
Change in assets and liabilities (net of effects of acquisitions and divestitures):	Change in assets and liabilities (net of effects of acquisitions and divestitures):					Change in assets and liabilities (net of effects of acquisitions and divestitures):
(Increase) decrease in accounts receivable		135.6		(546.9)
Decrease in accounts receivable						Decrease in accounts receivable	51.8		135.6
Increase in unbilled services	Increase in unbilled services	(185.9)		(117.8)		Increase in unbilled services	(127.6)		(185.9)
Increase in supplies inventory	Increase in supplies inventory	(6.5)		(147.5)		Increase in supplies inventory	(47.5)		(6.5)
(Increase) decrease in prepaid expenses and other		(72.4)		26.1
Increase in prepaid expenses and other						Increase in prepaid expenses and other	(67.8)		(72.4)
Increase in accounts payable	Increase in accounts payable	34.6		17.3		Increase in accounts payable	135.1		34.6
Increase in unearned revenue		83.8		44.1
Increase (decrease) in accrued expenses and other		(74.0)		323.0
Increase (decrease) in unearned revenue						Increase (decrease) in unearned revenue	(10.7)		83.8
Decrease in accrued expenses and other						Decrease in accrued expenses and other	(517.2)		(74.0)
Net cash provided by operating activities	Net cash provided by operating activities	2,412.1		1,360.7		Net cash provided by operating activities	1,302.3		2,412.1
CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	Capital expenditures	(310.4)		(282.3)		Capital expenditures	(364.0)		(310.4)
Proceeds from sale of assets	Proceeds from sale of assets	3.5		1.1		Proceeds from sale of assets	1.2		3.5
Proceeds from sale of business	Proceeds from sale of business	12.4		—		Proceeds from sale of business	—		12.4
Proceeds from sale or distribution of investments	Proceeds from sale or distribution of investments	10.4		1.0		Proceeds from sale or distribution of investments	0.7		10.4
Proceeds from exit from swaps	Proceeds from exit from swaps	—		3.1		Proceeds from exit from swaps	2.9		—
Investments in equity affiliates	Investments in equity affiliates	(20.0)		(29.3)		Investments in equity affiliates	(6.1)		(20.0)
Acquisition of businesses, net of cash acquired	Acquisition of businesses, net of cash acquired	(326.0)		(208.8)		Acquisition of businesses, net of cash acquired	(1,013.6)		(326.0)
Net cash used for investing activities	Net cash used for investing activities	(630.1)		(515.2)		Net cash used for investing activities	(1,378.9)		(630.1)
CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from senior note offerings	Proceeds from senior note offerings	1,000.0		—		Proceeds from senior note offerings	—		1,000.0
Payments on senior notes	Payments on senior notes	(1,000.0)		(412.2)		Payments on senior notes	—		(1,000.0)

Payments on term loan	Payments on term loan	(375.0)		—		Payments on term loan	—		(375.0)
Proceeds from revolving credit facilities		—		151.7
Payments on revolving credit facilities		—		(151.7)

Net share settlement tax payments from issuance of stock to employees	Net share settlement tax payments from issuance of stock to employees	(44.4)		(32.0)		Net share settlement tax payments from issuance of stock to employees	(44.6)		(44.4)
Net proceeds from issuance of stock to employees	Net proceeds from issuance of stock to employees	50.8		50.6		Net proceeds from issuance of stock to employees	50.6		50.8
Dividends paid						Dividends paid	(131.6)		—
Purchase of common stock	Purchase of common stock	(668.5)		(100.0)		Purchase of common stock	(800.0)		(668.5)
Other	Other	(20.1)		(22.8)		Other	(24.0)		(20.1)
Net cash used for financing activities	Net cash used for financing activities	(1,057.2)		(516.4)		Net cash used for financing activities	(949.6)		(1,057.2)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(9.1)		0.6		Effect of exchange rate changes on cash and cash equivalents	(36.6)		(9.1)
Net increase in cash and cash equivalents		715.7		329.7
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	(1,062.8)		715.7
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	1,320.8		337.5		Cash and cash equivalents at beginning of period	1,472.7		1,320.8

Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	2,036.5	$	667.2	Cash and cash equivalents at end of period	$	409.9	$	2,036.5

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

INDEX

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

1. BASIS OF FINANCIAL STATEMENT PRESENTATION

Laboratory Corporation of America® Holdings (Labcorp® or the Company) is a leading global life sciences company that provides vital information to help doctors, hospitals, pharmaceutical companies, researchers, and patients make clear and confident decisions. By leveraging its strong diagnostics and drug development capabilities, the Company provides insights and accelerates innovations to improve health and improve lives.

The Company reports its business in two segments, Labcorp Diagnostics (Dx) and Labcorp Drug Development (DD). For further financial information about these segments, see Note ~~14 Business~~11 (Business Segment ~~Information~~Information) to the Condensed Consolidated Financial Statements. During the three months ended September 30, ~~2021,~~2022, Dx and DD contributed approximately ~~64%~~61% and ~~36%~~39%, respectively, of revenues to the Company. During the nine months ended September 30, ~~2021,~~2022, Dx and DD contributed approximately ~~64%~~61% and ~~36%~~39%, respectively, of revenues to the Company.

On July 28, 2022, the Company announced that its board of directors authorized the Company to pursue a spin-off of its wholly owned Clinical Development business, which includes parts of its DD segment focused on providing Phase I-IV clinical trial management, market access, and technology solutions to pharmaceutical and biotechnology organizations. The planned spin-off will result in two independent, publicly traded companies. The spin-off is intended to be a tax-free transaction to the Company and its stockholders for United States (U.S.) federal income tax purposes and is expected to be effected through a dividend of the Clinical Development business’ shares to the Company's shareholders. The Company anticipates that, consistent with any applicable legal and tax requirements, there will be ongoing transitional and commercial arrangements to provide for a seamless delivery of services to the customers and other stakeholders of the independent companies following the spin-off. The Company is targeting completion of the spin-off with an accelerated timeframe of mid-2023. The spin-off will be subject to the satisfaction of certain customary conditions, including, among others, the receipt of final approval by the Company's board of directors, the receipt of appropriate assurances regarding the tax-free nature of the separation, and the effectiveness of any required filings with the U.S. Securities and Exchange Commission (SEC).

The condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries for which it exercises control. Long-term investments in affiliated companies in which the Company exercises significant influence, but which it does not control, are accounted for using the equity method. Investments in which the Company does not exercise significant influence (generally, when the Company has an investment of less than 20.0% and no representation on the investee's board of directors) are accounted for at fair value, or at cost minus impairment adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer for those investments that do not have readily determinable fair values. All significant inter-company transactions and accounts have been eliminated. The Company does not have any significant variable interest entities or special purpose entities whose financial results are not included in the condensed consolidated financial statements.

The financial statements of the Company's operating foreign subsidiaries are measured using the local currency as the functional currency. Assets and liabilities are translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average monthly exchange rates prevailing during the period. Resulting translation adjustments are included in “Accumulated other comprehensive income (loss).”

The accompanying condensed consolidated financial statements of the Company are unaudited. In the opinion of management, all adjustments necessary for a fair statement of results of operations, cash flows, and financial position have been made. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. Interim results are not necessarily indicative of results for a full year. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles.

The condensed consolidated financial statements and notes are presented in accordance with the rules and regulations of the ~~United States (U.S.) Securities and Exchange Commission (SEC)~~SEC and do not contain certain information included in the Company’s fiscal year ~~2020~~2021 Annual Report on Form 10-K (Annual Report). Therefore, these interim statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report.

Recently Adopted Accounting Guidance

In October 2021, the Financial Accounting Standards Board (FASB) issued a new accounting standard, Accounting Standards Update 2021-08, to improve the accounting for acquired revenue contracts with customers in a business combination. The Company early adopted this standard effective January 1, 2022. The adoption of this standard did not have a material impact on the consolidated financial statements.

INDEX

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

2. REVENUES

The Company's revenues by segment and by payers/customer groups for the three and nine months ended September 30, ~~2021,~~2022, and ~~2020,~~2021, were as follows:


		For the Three Months Ended September 30, 2021								For the Three Months Ended September 30, 2020									For the Three Months Ended September 30, 2022								For the Three Months Ended September 30, 2021
		North America		Europe		Other		Total		North America		Europe		Other		Total			North America		Europe		Other		Total		North America		Europe		Other		Total
Payer/Customer	Payer/Customer																	Payer/Customer
Dx	Dx																	Dx
Clients	Clients	17	%	—	%	—	%	17	%	22	%	—	%	—	%	22	%	Clients	18	%	—	%	—	%	18	%	17	%	—	%	—	%	17	%
Patients	Patients	6	%	—	%	—	%	6	%	5	%	—	%	—	%	5	%	Patients	6	%	—	%	—	%	6	%	6	%	—	%	—	%	6	%
Medicare and Medicaid	Medicare and Medicaid	6	%	—	%	—	%	6	%	7	%	—	%	—	%	7	%	Medicare and Medicaid	6	%	—	%	—	%	6	%	6	%	—	%	—	%	6	%
Third-party		35	%	—	%	—	%	35	%	34	%	—	%	—	%	34	%
Third party																		Third party	31	%	—	%	—	%	31	%	35	%	—	%	—	%	35	%
Total Dx revenues by payer	Total Dx revenues by payer	64	%	—	%	—	%	64	%	68	%	—	%	—	%	68	%	Total Dx revenues by payer	61	%	—	%	—	%	61	%	64	%	—	%	—	%	64	%
DD																		DD

DD
Biopharmaceutical and medical device companies		22	%	10	%	4	%	36	%	16	%	10	%	6	%	32	%

Pharmaceutical, biotechnology and medical device companies																		Pharmaceutical, biotechnology and medical device companies	19	%	12	%	8	%	39	%	22	%	10	%	4	%	36	%
Total revenues	Total revenues	86	%	10	%	4	%	100	%	84	%	10	%	6	%	100	%	Total revenues	80	%	12	%	8	%	100	%	86	%	10	%	4	%	100	%


		For the Nine Months Ended September 30, 2021								For the Nine Months Ended September 30, 2020									For the Nine Months Ended September 30, 2022								For the Nine Months Ended September 30, 2021
		North America		Europe		Other		Total		North America		Europe		Other		Total			North America		Europe		Other		Total		North America		Europe		Other		Total
Payer/Customer	Payer/Customer																	Payer/Customer
Dx	Dx																	Dx
Clients	Clients	18	%	—	%	—	%	18	%	20	%	—	%	—	%	20	%	Clients	18	%	—	%	—	%	18	%	18	%	—	%	—	%	18	%
Patients	Patients	6	%	—	%	—	%	6	%	6	%	—	%	—	%	6	%	Patients	6	%	—	%	—	%	6	%	6	%	—	%	—	%	6	%
Medicare and Medicaid	Medicare and Medicaid	6	%	—	%	—	%	6	%	7	%	—	%	—	%	7	%	Medicare and Medicaid	6	%	—	%	—	%	6	%	6	%	—	%	—	%	6	%
Third-party		34	%	—	%	—	%	34	%	30	%	—	%	—	%	30	%
Third party																		Third party	31	%	—	%	—	%	31	%	34	%	—	%	—	%	34	%
Total Dx revenues by payer	Total Dx revenues by payer	64	%	—	%	—	%	64	%	63	%	—	%	—	%	63	%	Total Dx revenues by payer	61	%	—	%	—	%	61	%	64	%	—	%	—	%	64	%
DD																		DD

DD
Biopharmaceutical and medical device companies		22	%	10	%	4	%	36	%	18	%	12	%	7	%	37	%

Pharmaceutical, biotechnology and medical device companies																		Pharmaceutical, biotechnology and medical device companies	19	%	13	%	7	%	39	%	22	%	10	%	4	%	36	%
Total revenues	Total revenues	86	%	10	%	4	%	100	%	81	%	12	%	7	%	100	%	Total revenues	80	%	13	%	7	%	100	%	86	%	10	%	4	%	100	%

Revenues in the U.S. were ~~$3,352.7 (82.5%~~$2,791.8 (77.4%) and ~~$3,198.8 (82.1%~~$3,352.7 (82.5%) for the three months ended September 30, ~~2021,~~2022, and ~~2020,~~2021, respectively, and for the nine months ended September 30, 2022, and 2021, were $8,649.3 (77.2%) and ~~2020, were~~ $9,926.7 (82.3%~~) and $7,505.9 (79.1%~~), respectively.

DD Contract costs

DD incurs sales commissions in the process of obtaining contracts with customers. Sales commissions that are payable upon contract award are recognized as assets and amortized over the expected contract term, along with related payroll tax expense. The amortization of commission expense is based on the weighted average contract duration for all commissionable awards in the respective business in which the commission expense is paid, which approximates the period over which goods and services are transferred to the customer. The amortization period of sales commissions ranges from approximately 1 to 5 years, depending on the business. For businesses that enter into primarily short-term contracts, the Company applies the practical expedient, which allows costs to obtain a contract to be expensed when incurred if the amortization period of the assets that would otherwise have been recognized is one year or less. Amortization of assets from sales commissions is included in selling, general, and administrative expense.

DD incurs costs to fulfill contracts with customers. Contract fulfillment costs include software implementation costs and setup costs for certain market access solutions. ~~These costs are recognized as~~


	September 30, 2022		December 31, 2021
Sales commission assets	$	38.9	$	36.2
Deferred contract fulfillment costs	15.7		14.4
Total	$	54.6	$	50.6

Amortization related to sales commission assets and ~~amortized over~~associated payroll taxes for the ~~expected term of~~three months ended September 30, 2022, and 2021, was $9.3 and $7.1, respectively, and for the ~~contract~~nine months ended September 30, 2022, and 2021, was $25.3 and $20.4, respectively. Amortization related to ~~which the implementation relates, which is the period over which services are expected to be provided to the customer. This period typically ranges from 2 to 5 years. Amortization of~~ deferred contract fulfillment costs ~~is included in cost of goods sold.~~for the three months ended September 30, 2022, and 2021, was $3.1 and $3.5, respectively, and was $9.1 and $10.0, respectively, for the nine months ended September 30, 2022, and 2021.

INDEX

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

September 30, 2021 December 31, 2020
Sales commission assets $ 36.6 $ 32.6
Deferred contract fulfillment costs 14.3 12.6
Total $ 50.9 $ 45.2

Amortization related to sales commission assets and associated payroll taxes for the three months ended September 30, 2021, and 2020, was $7.1 and $6.0, respectively and for the nine months ended September 30, 2021, and 2020, was $20.4 and $16.8, respectively. Amortization related to deferred contract fulfillment costs for the three months ended September 30, 2021, and 2020, was $3.5 and $2.3, respectively, and was $10.0 and $7.6, respectively, for the nine months ended September 30, 2021, and 2020.

~~Receivables,~~Accounts Receivable, Unbilled Services and Unearned Revenue

Unbilled services are comprised primarily of unbilled receivables, but also include contract assets. A contract asset is recorded when a right to payment has been earned for work performed, but billing and payment for that work is determined by certain contractual milestones, whereas unbilled receivables are billable upon the passage of time. While the Company attempts to negotiate terms that provide for billing and payment of services prior or in close proximity to the provision of services, this is not always possible and there are fluctuations in the level ofThe following table provides information about accounts receivable, unbilled services, and unearned revenue from ~~period to period. The following table provides information about receivables, unbilled services, and unearned revenue (contract liabilities) from~~ contracts with ~~customers which primarily exist within DD.~~customers:


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021
Receivables, which are included in accounts receivable		$	1,098.6	$	1,001.5
Dx accounts receivable						Dx accounts receivable	$	1,051.1	$	1,193.8
DD accounts receivable						DD accounts receivable	1,133.6		1,089.2
Less DD allowance for doubtful accounts						Less DD allowance for doubtful accounts	(20.5)		(21.5)
Accounts receivable						Accounts receivable	$	2,164.2	$	2,261.5

Gross unbilled services						Gross unbilled services	$	829.4	$	730.8
Less reserve for unbilled services						Less reserve for unbilled services	(10.9)		(14.0)
Unbilled services	Unbilled services	730.2		548.1		Unbilled services	$	818.5	$	716.8

Unearned revenue	Unearned revenue	574.3		492.2		Unearned revenue	$	530.9	$	558.5

Revenues recognized during the period that were included in the unearned revenue balance at the beginning of the period were ~~$267.6~~$277.9 and ~~$237.2~~$267.6 for the nine months ended September 30, ~~2021,~~2022, and ~~2020,~~2021, respectively.

Credit Loss Rollforward

The Company estimates future expected losses on accounts receivable, unbilled services and notes receivable over the remaining collection period of the instrument. The rollforward for the allowance for credit losses for the nine months ended September 30, ~~2021~~2022, is as follows:


		For the Nine Months Ended September 30, 2021									Accounts Receivable		Unbilled Services		Note and Other Receivables		Total
		Accounts Receivable		Unbilled Services		Note and Other Receivables		Total
Balance as of December 31, 2020		$	22.1	$	11.3	$	5.7	$	39.1
Balance as of December 31, 2021										Balance as of December 31, 2021	$	21.5	$	13.9	$	0.7	$	36.1
Plus, credit loss expense	Plus, credit loss expense	0.7		—		—		0.7		Plus, credit loss expense	4.0		—		—		4.0

Less, write offs	Less, write offs	4.5		0.1		—		4.6		Less, write offs	(5.0)		(3.0)		(0.7)		(8.7)
Balance as of September 30, 2021		$	18.3	$	11.2	$	5.7	$	35.2
Balance as of September 30, 2022										Balance as of September 30, 2022	$	20.5	$	10.9	$	—	$	31.4

Performance Obligations Under Long-Term Contracts

Long-term contracts at the Company consist primarily of fully managed clinical studies within DD. The amount of existing performance obligations unsatisfied under such long-term contracts ~~unsatisfied~~were $6,005.7 and $5,412.8 as of September 30, 2022, and 2021, ~~was $5,412.8.~~respectively. The Company expects to recognize revenue over the remaining contract term of the individual projects, with contract terms generally ranging from 1 to 8 years.

Within DD, revenues of ~~$10.1~~$6.6 and ~~$31.1~~$10.1 were recognized during the three months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, and revenues of ~~$38.9~~$75.8 and ~~$44.8~~$38.9 were recognized during the nine months ended September 30, ~~2021~~2022 and ~~2020,~~2021, respectively, from performance obligations that were satisfied in previous periods. This revenue primarily relates to adjustments related to changes in scope in full service clinical studies, and to a lesser extent, changes in estimates.

`3. BUSINESS ACQUISITIONS

During the nine months ended September 30, 2022, the Company acquired several businesses and related assets for approximately $1,013.6 in cash. The purchase consideration for these acquisitions has been allocated under the acquisition method of accounting to the estimated fair market value of the net assets acquired, including approximately $407.4 in identifiable intangible assets and a residual amount of non-tax deductible goodwill of approximately $571.3. The amortization periods for intangible assets acquired from the businesses range from 5 to 23 years for customer relationships, non-compete agreements, technology, and trade names. These acquisitions were made primarily to complement and accelerate the Company’s existing liquid biopsy capabilities and expand the Company’s clinical laboratory services. The preliminary valuation of acquired assets and assumed liabilities, include the following:

INDEX

LABORATORY CORPORATION OF AMERICA HOLDINGS AND ~~DISPOSITIONS~~SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)


	Preliminary Personal Genome Diagnostics Inc.		Preliminary Ascension Healthcare		Other Acquisitions		Measurement Period Adjustments		Amounts Acquired During Nine Months Ended September 30, 2022

Accounts receivable	$	4.1	$	—	$	—	$	—	$	4.1
Unbilled services	2.9		—		—		—		2.9
Inventories	2.5		24.6		—		—		27.1
Prepaid expenses and other	1.2		0.4		—		—		1.6
Property, plant and equipment	9.9		43.5		0.1		—		53.5
Deferred income taxes	—		—		—		17.7		17.7
Goodwill	285.6		161.2		62.2		62.3		571.3
Intangible assets	272.9		197.0		71.7		(134.2)		407.4
Other assets	—		—		0.8		—		0.8
Total assets acquired	$	579.1	$	426.7	$	134.8	$	(54.2)	$	1,086.4
Accounts payable	3.8		—		—		—		3.8
Accrued expenses and other	23.7		—		—		32.9		56.6
Unearned revenue	3.3		—		—		—		3.3
Deferred income taxes	17.1		—		—		(17.1)		—
Lease liabilities	—		2.9		—		—		2.9
Other liabilities	76.2		—		—		(70.0)		6.2
Total liabilities acquired	124.1		2.9		—		(54.2)		72.8
Net assets acquired	$	455.0	$	423.8	$	134.8	$	—	$	1,013.6

The purchase price allocation for several transactions are still preliminary and subject to change. The areas of the purchase price allocation that are not yet finalized relate primarily to contingent purchase price valuation, intangible assets, goodwill, and the impact of finalizing deferred taxes. Accordingly, adjustments may be made as additional information is obtained about the facts and circumstances that existed as of the valuation date. Any adjustments will be recorded in the period in which they are identified.

During the nine months ended September 30, 2021, the Company acquired ~~several businesses~~a business and related assets for approximately $326.0 in ~~cash within Dx.~~cash. The purchase ~~considerations~~consideration for ~~these acquisitions~~the acquisition in the nine months ended September 30, 2021, ~~have~~has been allocated under the acquisition method of accounting to the estimated fair market value of the net assets acquired, including approximately $142.5 in identifiable intangible assets and a residual amount of non-tax deductible goodwill of approximately $219.2. The amortization periods for intangible assets acquired from ~~these businesses~~the business range from 5

~~INDEX~~

~~LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(dollars and shares in millions, except per share data)~~

to 15 years for customer relationships, non-compete agreements, technology and trade names. ~~These acquisitions were~~The acquisition was made primarily to expand the Company's services for hospitals and health system ~~laboratories and acquire testing technology.~~laboratories. The excess of the fair value of the consideration conveyed over the fair value of the net assets acquired was recorded as goodwill. The goodwill reflects the Company's expectations to utilize the acquired business' workforce and established relationships and the benefits of being able to leverage operational efficiencies with favorable growth opportunities in these markets. ~~In addition, during~~

Pro Forma Information

Had the ~~nine months ended September 30,~~Company's total 2021 and 2022 acquisitions been completed as of January 1, 2021, the ~~Company sold certain assets within DD with proceeds of $12.4 and a loss of $6.1 recorded in Other, net on the Condensed Consolidated Statement of Operations.~~Company's pro forma results would have been as follows:

The purchase price allocation for several third quarter transactions are still preliminary and subject to change. The areas of the purchase price allocation that are not yet finalized relate primarily to intangible assets, goodwill, and the impact of finalizing deferred taxes. Accordingly, adjustments may be made as additional information is obtained about the facts and circumstances that existed as of the valuation date. Any adjustments will be recorded in the period in which they are identified.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021
Revenues	$	3,754.1	$	4,071.5	$	11,663.8	$	12,104.1
Net earnings attributable to Laboratory Corporation of America Holdings	$	352.0	$	584.6	$	1,201.8	$	1,811.1

4. EARNINGS PER SHARE

Basic earnings per share is computed by dividing net earnings attributable to Laboratory Corporation of America Holdings by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net earnings including the impact of dilutive adjustments by the weighted average number of common shares outstanding plus potentially dilutive shares, as if they had been issued at the earlier of the date of issuance or the beginning of the period

INDEX

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

presented. Potentially dilutive common shares result primarily from the Company’s outstanding stock options, restricted stock awards, restricted stock units, and performance share awards.

The following represents a reconciliation of basic earnings per share to diluted earnings per share:


		Three Months Ended September 30,										Nine Months Ended September 30,											Three Months Ended September 30,										Nine Months Ended September 30,
		2021					2020					2021					2020						2022					2021					2022					2021
		Earnings		Shares	Per Share Amount		Earnings		Shares	Per Share Amount		Earnings		Shares	Per Share Amount		Earnings		Shares	Per Share Amount			Earnings		Shares	Per Share Amount		Earnings		Shares	Per Share Amount		Earnings		Shares	Per Share Amount		Earnings		Shares	Per Share Amount
Basic earnings per share:	Basic earnings per share:																					Basic earnings per share:
Net earnings	Net earnings	$	587.3	96.3	$	6.10	$	703.4	97.4	$	7.22	$	1,824.3	97.1	$	18.79	$	617.8	97.3	$	6.35	Net earnings	$	352.8	90.2	$	3.91	$	587.3	96.3	$	6.10	$	1,203.0	91.9	$	13.09	$	1,824.3	97.1	$	18.79
Dilutive effect of employee stock options and awards	Dilutive effect of employee stock options and awards	—		0.8			—		0.7			—		0.8			—		0.6			Dilutive effect of employee stock options and awards	—		0.5			—		0.8			—		0.5			—		0.8

Net earnings including impact of dilutive adjustments	Net earnings including impact of dilutive adjustments	$	587.3	97.1	$	6.05	$	703.4	98.1	$	7.17	$	1,824.3	97.9	$	18.63	$	617.8	97.9	$	6.31	Net earnings including impact of dilutive adjustments	$	352.8	90.7	$	3.90	$	587.3	97.1	$	6.05	$	1,203.0	92.4	$	13.02	$	1,824.3	97.9	$	18.63

Diluted earnings per share represent the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. These potential shares include dilutive stock options and unissued restricted stock awards. The following table summarizes the potential common shares not included in the computation of diluted earnings per share because their impact would have been antidilutive:

Three Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Employee stock options and awards — 0.2 0.1 0.4


	Three Months Ended September 30,		Nine Months Ended September 30,
	2022	2021	2022	2021
Employee stock options and awards	0.2	—	0.2	0.1

5. ~~RESTRUCTURING AND OTHER CHARGES~~

During the three months ended September 30, 2021, the Company recorded net restructuring and other charges of $6.5: $3.3 within Dx and $3.2 within DD. The charges were comprised of $3.3 related to severance and other personnel costs and $3.7 in facility closures, lease terminations, and general integration activities. The charges were offset by the reversal of previously established liabilities of $0.5 in unused facility-related costs.

During the nine months ended September 30, 2021, the Company recorded net restructuring and other charges of $35.3: $16.8 within Dx and $18.5 within DD. The charges were comprised of $13.6 related to severance and other personnel costs and $22.4 in facility closures, lease terminations, and general integration activities. The charges were adjusted by the reversal of previously established liabilities of $0.7 in unused facility-related costs.

~~INDEX~~

~~LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(dollars and shares in millions, except per share data)~~

During the three months ended September 30, 2020, the Company recorded net restructuring and other special charges of $7.1: $1.6 within Dx and $5.5 within DD. The charges were comprised of $2.3 related to severance and other personnel costs, $3.0 for a DD lab facility and equipment impairment, and $4.0 in facility closures, impairment of operating lease right-of-use assets, and general integration initiatives. The charges were offset by the reversal of previously established liabilities of $0.1 and $2.1 in unused severance and facility-related costs, respectively.

During the nine months ended September 30, 2020, the Company recorded net restructuring and other charges of $38.9: $13.4 within Dx and $25.5 within DD. The charges were comprised of $12.8 related to severance and other personnel costs, $11.0 for a DD lab facility impairment and equipment impairments, and $24.0 in costs associated with facility closures, impairment of operating lease right-of-use assets, and general integration initiatives. The charges were offset by the reversal of previously established liabilities of $1.1 and $7.8 in unused severance costs and facility-related costs, respectively.

~~The following represents the Company’s restructuring reserve activities for the period indicated:~~

Dx DD
Severance and Other Employee Costs Facility Costs Severance and Other Employee Costs Facility Costs Total
Balance as of December 31, 2020 $ 0.3 $ 0.4 $ 2.4 $ 4.7 $ 7.8
Restructuring charges 6.4 10.4 7.2 12.0 36.0
Adjustments to prior restructuring accruals — — (0.1) (0.6) (0.7)
Cash payments and other adjustments (5.7) (10.4) (5.0) (12.6) (33.7)
Balance as of September 30, 2021 $ 1.0 $ 0.4 $ 4.5 $ 3.5 $ 9.4
Current $ 7.8
Non-current 1.6
$ 9.4

6. GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the nine months ended September 30, ~~2021,~~2022, are as follows:


		Dx		DD		Total			Dx		DD		Total

Balance as of December 31, 2020		$	3,800.2	$	3,951.3	$	7,751.5
Balance as of December 31, 2021								Balance as of December 31, 2021	$	4,046.2	$	3,912.7	$	7,958.9
Goodwill acquired during the period	Goodwill acquired during the period	219.2		—		219.2		Goodwill acquired during the period	453.5		117.8		571.3

Foreign currency impact and other adjustments to goodwill	Foreign currency impact and other adjustments to goodwill	3.8		(67.7)		(63.9)		Foreign currency impact and other adjustments to goodwill	(70.2)		(242.4)		(312.6)
Balance as of September 30, 2021		$	4,023.2	$	3,883.6	$	7,906.8
Balance as of September 30, 2022								Balance as of September 30, 2022	$	4,429.5	$	3,788.1	$	8,217.6

The Company assesses goodwill and indefinite-lived intangibles for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company recognizes an impairment charge for the amount by which the reporting unit's carrying amount exceeds its fair value.

~~Based upon~~Although the ~~revised forecasted revenues~~Company believes that the current assumptions and estimates used in its goodwill analysis are reasonable, supportable, and appropriate, the Company's business could be impacted by unfavorable changes, including those that impact the existing assumptions used in the impairment analysis. Various factors could reasonably be expected to unfavorably impact existing assumptions: primarily a worsening economic environment and protracted economic downturn and related impacts, including delays in revenue from new customers; increases in customer termination activity, or increases in operating ~~income following~~costs. Accordingly, there can be no assurance that the ~~declaration~~estimates and assumptions made for the purposes of the ~~COVID-19 global pandemic, management concluded there was a triggering event and updated its annual 2019~~ goodwill impairment ~~testing as~~analysis will prove to be accurate predictions of ~~March 31, 2020,~~future performance.

The Company will continue to monitor the financial performance of, and assumptions for, ~~certain of~~ its ~~DD reporting units and Dx~~ reporting units. ~~Based~~A significant increase in the discount rate, decrease in the revenue and terminal growth rates, decreased operating margin, or substantial reductions in end markets and volume assumptions, could have a negative impact on the ~~quantitative impairment assessment, performed in the same manner as the annual quantitative assessment, the Company concluded that the~~estimated fair value ~~was less than carrying value~~of the reporting units. A future impairment charge for ~~two of its reporting units and recorded a~~ goodwill ~~impairment of $418.7 for DD and $3.7 for Dx.~~

~~During the three months ended September 30, 2020, the Company also recorded goodwill and other asset impairment charges of $10.1 and $17.7 for customer relationships and technology~~or intangible assets ~~respectively, due to~~could have a material effect on the ~~loss~~Company's consolidated financial position and results of a contract from a DD prior acquisition. The Company reversed the $5.0 charge for the estimated loss related to the DD floating rate secured note receivable due 2022. The Company also recorded an impairment for a note receivable related to an Dx investment of $0.7 during the three months ended September 30, 2020.

operations.

INDEX

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

The components of identifiable intangible assets are as follows:


		September 30, 2021						December 31, 2020							September 30, 2022						December 31, 2021
		Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net			Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	Customer relationships	$	4,613.1	$	(1,648.5)	$	2,964.6	$	4,643.3	$	(1,534.9)	$	3,108.4	Customer relationships	$	4,413.0	$	(1,466.1)	$	2,946.9	$	4,336.0	$	(1,362.1)	$	2,973.9
Patents, licenses and technology	Patents, licenses and technology	489.5		(267.8)		221.7		434.7		(252.6)		182.1		Patents, licenses and technology	582.8		(293.7)		289.1		484.6		(267.4)		217.2
Non-compete agreements	Non-compete agreements	114.7		(79.4)		35.3		109.6		(70.7)		38.9		Non-compete agreements	114.3		(45.0)		69.3		70.2		(35.5)		34.7
Trade name	Trade name	403.5		(364.9)		38.6		401.8		(263.9)		137.9		Trade name	24.2		(1.2)		23.0		19.8		(15.5)		4.3
Land use right	Land use right	10.8		(7.8)		3.0		10.9		(6.9)		4.0		Land use right	10.3		(8.4)		1.9		10.4		(7.6)		2.8
Canadian licenses	Canadian licenses	491.9		—		491.9		489.8		—		489.8		Canadian licenses	468.1		—		468.1		493.5		—		493.5
Other														Other	14.3		(4.8)		9.5		9.1		—		9.1
		$	6,123.5	$	(2,368.4)	$	3,755.1	$	6,090.1	$	(2,129.0)	$	3,961.1		5,627.0		(1,819.2)		3,807.8		5,423.6		(1,688.1)		3,735.5

Amortization of intangible assets for the three and nine months ended September 30, 2022, and 2021, was $65.2 and ~~2020, was~~ $92.2 and ~~$62.2~~$198.7 and $276.7, ~~and $184.6,~~ respectively. During the fourth quarter of 2020, as part of a rebranding initiative, the Company reduced the estimated useful life of its trade name assets to reflect their anticipated use through December 2021. This change in estimated useful life resulted in acceleratedThe amortization ~~of $30.2 and $87.4, respectively, during the three and nine months ended September 30, 2021. Amortization~~ expense for the net carrying amount of intangible assets is estimated to be ~~$86.9~~$58.6 for the remainder of fiscal ~~2021, $221.0 in fiscal~~ 2022, ~~$218.0~~$264.4 in fiscal 2023, ~~$213.4~~$258.9 in fiscal 2024, ~~$201.2~~$244.2 in fiscal 2025, $234.5 in fiscal 2026, and ~~$2,144.3~~$2,194.2 thereafter.

7.6. DEBT

Short-term borrowings and the current portion of long-term debt at September 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, consisted of the following:


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021

2019 Term Loan		$	—	$	375.0
Debt issuance costs		—		(0.4)

Current portion of note payable	Current portion of note payable	1.6		2.1		Current portion of note payable	1.7		1.5
Total short-term borrowings and current portion of long-term debt	Total short-term borrowings and current portion of long-term debt	$	1.6	$	376.7	Total short-term borrowings and current portion of long-term debt	$	1.7	$	1.5

Long-term debt at September 30, ~~2021,~~2022, and December 31, ~~2020,~~2021, consisted of the following:


		September 30, 2021		December 31, 2020			September 30, 2022		December 31, 2021

3.20% senior notes due 2022		$	—	$	500.0
3.75% senior notes due 2022		—		500.0

4.00% senior notes due 2023	4.00% senior notes due 2023	300.0		300.0		4.00% senior notes due 2023	300.0		300.0
3.25% senior notes due 2024	3.25% senior notes due 2024	600.0		600.0		3.25% senior notes due 2024	600.0		600.0
2.30% senior notes due 2024	2.30% senior notes due 2024	400.0		400.0		2.30% senior notes due 2024	400.0		400.0
3.60% senior notes due 2025	3.60% senior notes due 2025	1,000.0		1,000.0		3.60% senior notes due 2025	1,000.0		1,000.0
1.55% senior notes due 2026	1.55% senior notes due 2026	500.0		—		1.55% senior notes due 2026	500.0		500.0
3.60% senior notes due 2027	3.60% senior notes due 2027	600.0		600.0		3.60% senior notes due 2027	600.0		600.0
2.95% senior notes due 2029	2.95% senior notes due 2029	650.0		650.0		2.95% senior notes due 2029	650.0		650.0
2.70% senior notes due 2031	2.70% senior notes due 2031	504.0		—		2.70% senior notes due 2031	417.5		502.9
4.70% senior notes due 2045	4.70% senior notes due 2045	900.0		900.0		4.70% senior notes due 2045	900.0		900.0

Debt issuance costs	Debt issuance costs	(42.0)		(37.1)		Debt issuance costs	(35.9)		(41.0)

Note payable	Note payable	5.2		6.1		Note payable	2.7		4.6
Total long-term debt	Total long-term debt	$	5,417.2	$	5,419.0	Total long-term debt	$	5,334.3	$	5,416.5

Senior Notes

On May 26, 2021, the Company issued new senior notes representing $1,000.0 in debt securities and consisting of $500.0 aggregate principal amount of 1.55% senior notes due 2026 and $500.0 aggregate principal amount of 2.70% senior notes due 2031. Interest on these notes is payable semi-annually in arrears on June 1 and December 1 of each ~~year, commencing on December 1, 2021.~~year. Net proceeds from the offering of these notes were $989.4 after deducting underwriting discounts and other expenses of the offering. The net proceeds were used, along with cash on hand, to redeem, prior to maturity, the Company's outstanding 3.20% senior notes due February 1, 2022 and 3.75% senior notes due August 23, 2022.

~~INDEX~~

~~LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(dollars and shares in millions, except per share data)~~

During the second quarter of 2021, the Company entered into fixed-to-variable interest rate swap agreements for its 2.70% senior notes due 2031 with an aggregate notional amount of $500.0 and variable interest rates based on three-month LIBOR plus 1.0706% to hedge against changes in the fair value of a portion of the Company's long-term debt. These interest rate swaps are included in other long-term ~~assets~~liabilities and ~~added to~~deducted from the value of the senior notes with an aggregate fair value of ~~$4.0~~$82.5 at September 30, ~~2021.~~2022.

INDEX

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

Credit Facilities

~~On June 3, 2019, the Company entered into an $850.0 term loan (the 2019 Term Loan) with a scheduled maturity date of June 3, 2021.~~ The Company ~~paid off the 2019 Term Loan balance during the first quarter of 2021.~~

~~The Company also~~ maintains a senior revolving credit facility, which was amended and restated on April 30, 2021. It consists of a five-year facility in the principal amount of up to $1,000.0, with the option of increasing the facility by up to an additional $500.0, subject to the agreement of one or more new or existing lenders to provide such additional amounts and certain other customary conditions. The revolving credit facility also provides for a subfacility of up to $100.0 for swing line borrowings and a subfacility of up to $150.0 for issuances of letters of credit. The Company is required to pay a facility fee on the aggregate commitments under the revolving credit facility, at a per annum rate ranging from ~~0.100%~~0.10% to ~~0.225%~~0.23%, depending on the Company's debt ratings. The revolving credit facility is permitted to be used for general corporate purposes, including working capital, capital expenditures, funding of share repurchases and certain other payments, acquisitions, and other investments. The revolving credit facility also provides for the issuance of letters of credit without a reduction of the availability of borrowings under the facility. There were no balances outstanding on the Company's current revolving credit facility as of September 30, ~~2021~~2022 and December 31, ~~2020.~~2021. As of September 30, ~~2021,~~2022, the effective interest rate on the revolving credit facility was ~~1.08%~~4.14%. The credit facility expires on April 30, 2026.

Under the revolving credit facility, the Company is subject to negative covenants limiting subsidiary indebtedness and certain other covenants typical for investment grade-rated borrowers, and the Company is required to maintain certain leverage ratios. The Company was in compliance with all covenants in the revolving credit facility at September 30, ~~2021,~~2022, and expects that it will remain in compliance with its existing debt covenants for the next twelve months.

~~The Company's availability of $1,000.0 at September 30, 2021, under its revolving credit facility reflects a reduction equivalent to the amount of the Company's~~There were $79.8 in outstanding letters of credit ~~if applicable. There were no outstanding letters of credit under the facility~~ as of September 30, ~~2021.~~2022.

8.7. PREFERRED STOCK AND COMMON SHAREHOLDERS’ EQUITY

The Company is authorized to issue up to 265.0 shares of common stock, par value $0.10 per share. The Company is authorized to issue up to 30.0 shares of preferred stock, par value $0.10 per share. There were no preferred shares outstanding as of September 30, ~~2021,~~2022, and December 31, ~~2020.~~2021.

The changes in common shares issued are summarized below:

Issued and Outstanding

Common shares at December 31, ~~2020~~2021

~~97.5~~93.1

Shares issued under employee stock plans

~~0.8~~0.6

Shares repurchased

~~(2.5)~~(4.1)

Common shares at September 30, ~~2021~~2022

~~95.8~~89.6

Share Repurchase Program

During the fourth quarter of 2021, the Company commenced an Accelerated Share Repurchase (ASR) program. At inception, the Company paid $1,000.0 and received 2.7 shares based on a calculation using 80% of the shares calculated at the price at the inception of the ASR agreements with two different banks, Goldman Sachs & Co. LLC (Goldman Sachs) and Barclays Bank PLC (Barclays). The initial shares received under the ASR were removed from the outstanding share count in 2021. In March 2022, the Company received 0.6 shares of its common stock, arising from a partial acceleration with Barclays and a final settlement from Goldman Sachs, based on the average daily volume weighted average price per share of $277.40. In April 2022, the Company received 0.2 shares of its common stock for final settlement from Barclays based on the average volume-weighted average price per share of $275.51.

Additionally, during the nine months ended September 30, ~~2021,~~2022, the Company purchased ~~2.5~~3.3 shares of its common stock at an average price of ~~$270.55. When the Company repurchases shares, the amount paid to repurchase the shares in excess~~$240.57 for a total cost of the par or stated value is allocated to additional paid-in-capital unless subject to limitation or the balance in additional paid-in-capital is exhausted. Remaining amounts are recognized as a reduction in retained earnings.$800.0. As of September 30, ~~2021,~~2022, the Company had outstanding authorization from the board of directors to purchase up to ~~$131.5~~$831.5 of the Company's common stock. The repurchase authorization has no ~~expiration date.~~expiration.

Dividends

For the nine months ended September 30, 2022, the Company paid $131.6 in common stock dividends. On October 12, 2022, the Company announced a cash dividend of $0.72 per share of common stock for the fourth quarter, or approximately $64.9 in the aggregate. The dividend will be payable on December 9, 2022, to stockholders of record of all issued and outstanding shares of common stock as of the close of business on November 17, 2022. The declaration and payment of any future dividends will be at the discretion of the Company's board of directors.

INDEX

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

Accumulated Other Comprehensive Earnings (Loss)

The components of accumulated other comprehensive earnings (loss) are as follows:


		Foreign Currency Translation Adjustments		Net Benefit Plan Adjustments		Accumulated Other Comprehensive Earnings (Loss)			Foreign Currency Translation Adjustments		Net Benefit Plan Adjustments		Accumulated Other Comprehensive Earnings (Loss)
Balance as of December 31, 2020		$	(21.3)	$	(140.6)	$	(161.9)
Balance as of December 31, 2021								Balance as of December 31, 2021	$	(125.9)	$	(66.0)	$	(191.9)
Current year adjustments	Current year adjustments	(114.6)		14.0		(100.6)		Current year adjustments	(571.3)		11.7		(559.6)
Amounts reclassified from accumulated other comprehensive income for settlement charge		—		(3.0)		(3.0)
Pension settlement charge								Pension settlement charge	—		(4.0)		(4.0)
Amounts reclassified from accumulated other comprehensive income	Amounts reclassified from accumulated other comprehensive income	—		(3.3)		(3.3)		Amounts reclassified from accumulated other comprehensive income	(0.9)		(3.5)		(4.4)
Tax effect of adjustments	Tax effect of adjustments	—		(2.1)		(2.1)		Tax effect of adjustments	—		(1.1)		(1.1)
Balance as of September 30, 2021		$	(135.9)	$	(135.0)	$	(270.9)
Balance as of September 30, 2022								Balance as of September 30, 2022	$	(698.1)	$	(62.9)	$	(761.0)

~~9. INCOME TAXES~~

The Company does not recognize a tax benefit unless it concludes that it is more likely than not that the benefit will be sustained on audit by the taxing authority based solely on the technical merits of the associated tax position. If the recognition threshold is met, the Company recognizes a tax benefit measured at the largest amount of the tax benefit that it believes is greater than 50% likely to be realized.

The year to date 2021 tax rate was favorable to the corresponding year to date 2020 tax rate due primarily to the 2020 impairment charges for which either no tax benefit was recorded (as they were not deductible) or the associated tax assets required a full valuation allowance. In addition, the tax rate was favorably impacted when the Company recorded tax benefits related to electing the Global Intangible Low Tax Income (GILTI) high-tax exclusion retroactively for previous tax years. On July 20, 2020, the U.S. Treasury issued and enacted final regulations related to GILTI that allows certain U.S. taxpayers to elect to exclude foreign income that is subject to a high effective tax rate from the GILTI inclusions. The GILTI high-tax exclusion is an annual election and is retroactively available. During the quarter, the Company completed a detailed analysis and took the appropriate steps to amend its previous tax filings and to reassess its position on its 2020 and 2021 tax years. Further, the rate was favorably impacted by foreign derived intangible income (FDII) as the Company finalized a comprehensive study related to previous tax filings and on its 2020 and 2021 tax years. On July 15, 2020, the U.S. Treasury issued and enacted final regulations related to FDII that governs the acceptable documentation reliability requirements and acceptable services that qualify as deduction eligible income. This was partially offset by a new uncertain tax position that was established during this quarter related to a foreign jurisdiction.

The gross unrecognized income tax benefits were $55.6 and $48.8 at September 30, 2021, and December 31, 2020, respectively. It is anticipated that the amount of the unrecognized income tax benefits will change within the next 12 months; however, these changes are not expected to have a significant impact on the results of operations, cash flows or the financial position of the Company.

As of September 30, 2021, and December 31, 2020, $53.4 and $46.7, respectively, are the approximate amounts of gross unrecognized income tax benefits that, if recognized, would favorably affect the effective income tax rate in future periods.

The Company recognizes interest and penalties related to unrecognized income tax benefits in income tax expense. Accrued interest and penalties related to uncertain tax positions totaled $9.5 and $8.3 as of September 30, 2021, and December 31, 2020, respectively.

The Company has substantially concluded all U.S. federal income tax matters for years through 2017. Substantially all material state and local and foreign income tax matters have been concluded through 2016 and 2011, respectively.

~~The Company has various state and foreign income tax examinations ongoing throughout the year. The Company believes adequate provisions have been recorded related to all open tax years.~~

~~10.~~8. COMMITMENTS AND CONTINGENCIES

The Company is involved from time to time in various claims and legal actions, including arbitrations, class actions, and other litigation (including those described in more detail below), arising in the ordinary course of business. Some of these actions involve claims that are substantial in amount. These matters include, but are not limited ~~to,~~to: intellectual property disputes; commercial and contract disputes; professional liability claims; employee-related matters; transaction related disputes; securities and corporate law matters; and inquiries, including subpoenas and other civil investigative demands, from governmental agencies, Medicare or Medicaid payers and MCOs

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~~LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(dollars and shares in millions, except per share data)~~

reviewing billing practices or requesting comment on allegations of billing irregularities that are brought to their attention through billing audits or third parties. The Company receives civil investigative demands or other inquiries from various governmental bodies in the ordinary course of its business. Such inquiries can relate to the Company or other parties, including physicians and other health care providers. The Company works cooperatively to respond to appropriate requests for information.

The Company also is named from time to time in suits brought under the qui tam provisions of the False Claims Act and comparable state laws. These suits typically allege that the Company has made false statements and/or certifications in connection with claims for payment from U.S. federal or state healthcare programs. The suits may remain under seal (hence, unknown to the Company) for some time while the government decides whether to intervene on behalf of the qui tam plaintiff. Such claims are an inevitable part of doing business in the healthcare field today.

The Company believes that it is in compliance in all material respects with all statutes, regulations, and other requirements applicable to its commercial laboratory operations and drug development support services. The healthcare diagnostics and drug development industries are, however, subject to extensive regulation, and the courts have not interpreted many of the applicable statutes and regulations. Therefore, the applicable statutes and regulations could be interpreted or applied by a prosecutorial, regulatory, or judicial authority in a manner that would adversely affect the Company. Potential sanctions for violation of these statutes and regulations include significant civil and criminal penalties, fines, the loss of various licenses, certificates, and authorizations, additional liabilities from third-party claims, and/or exclusion from participation in government programs.

Many of the current claims and legal actions against the Company are in preliminary stages, and many of these cases seek an indeterminate amount of damages. The Company records an aggregate legal reserve, which is determined using calculations based on historical loss rates and assessment of trends experienced in settlements and defense costs. In accordance with FASB Accounting Standards Codification Topic 450 “Contingencies,” the Company establishes reserves for judicial, regulatory, and arbitration matters outside the aggregate legal reserve if and when those matters present loss contingencies that are both probable and estimable and would exceed the aggregate legal reserve. When loss contingencies are not both probable and estimable, the Company does not establish separate reserves.

The Company is unable to estimate a range of reasonably probable loss for the proceedings described in more detail below in which damages either have not been specified or, in the Company's judgment, are unsupported and/or exaggerated and (i) the proceedings are in early stages; (ii) there is uncertainty as to the outcome of pending appeals or motions; (iii) there are significant factual issues to be resolved; and/or (iv) there are novel legal issues to be presented. For these proceedings, however, the Company does not believe, based on currently available information, that the adverse outcomes are probable and estimable, and it does not believe they will have a material adverse effect on the Company's financial ~~condition, though the outcomes could be material to the Company's operating results or cash flows for any particular period, depending, in part, upon the operating results for such period.~~statements.

As previously reported, the Company responded to an October 2007 subpoena from the U.S. Department of Health & Human Services Office of Inspector General's regional office in New York. On August 17, 2011, the U.S. District Court for the Southern District of New York unsealed a False Claims Act lawsuit, United States of America ex rel. NPT Associates v. Laboratory Corporation of America Holdings, which alleges that the Company offered UnitedHealthcare kickbacks in the form

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LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

of discounts in return for Medicare business. The Plaintiff's Third Amended Complaint further alleges that the Company's billing practices violated the False Claims Acts of 14 states and the District of Columbia. The lawsuit seeks actual and treble damages and civil penalties for each alleged false claim, as well as recovery of costs, attorney's fees, and legal expenses. The Company's Motion to Dismiss was granted in October 2014 and Plaintiff was granted the right to replead. On January 11, 2016, Plaintiff filed a motion requesting leave to file an amended complaint under seal and to vacate the briefing schedule for the Company's Motion to Dismiss, while the government reviewed the amended complaint. The Court granted the motion and vacated the briefing dates. Plaintiff then filed the Amended Complaint under seal. On August 24, 2021, the U.S. government filed a notice indicating that it ~~does~~did not intend to intervene in the matter. On October 27, 2021, the Fourth Amended Complaint was unsealed. The Fourth Amended Complaint is similar to the Third Amended Complaint in that it alleges that the Company offered UnitedHealthcare kickbacks in the form of discounts in return for Medicare and Medicaid business, and it further alleges that the Company unlawfully charged Medicare amounts substantially in excess of its alleged usual charges. Similar to the Third Amended Complaint, the Fourth Amended Complaint alleges violations of the federal False Claims Act and the False Claims Act of 14 states and the District of Columbia. ~~The~~On February 3, 2022, the Company filed a Motion to Dismiss all claims. On August 29, 2022, the Court entered an order granting the Motion to Dismiss and declining to exercise supplemental jurisdiction over the state law claims. Should the Plaintiff seek an appeal, the Company will vigorously defend the lawsuit.

In addition, the Company has received various other subpoenas since 2007 related to Medicaid billing. In October 2009, the Company received a subpoena from the State of Michigan Department of Attorney General seeking documents related to its billing to Michigan Medicaid. The Company cooperated with this request. In October 2013, the Company received a Civil Investigative Demand from the State of Texas Office of the Attorney General requesting documents related to its billing to

~~INDEX~~

~~LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(dollars and shares in millions, except per share data)~~

Texas Medicaid. The Company cooperated with this request. On October 5, 2018, the Company received a second Civil Investigative Demand from the State of Texas Office of the Attorney General requesting documents related to its billing to Texas Medicaid. The Company cooperated with this request. On January 26, 2021, the Company was notified that a qui tam Petition was pending under seal in the District Court, 250th Judicial District, Travis County, Texas, and that the State of Texas ~~has~~had intervened. On April 14, 2021, the Petition was unsealed. The Petition alleges that the Company submitted claims for reimbursement to Texas Medicaid that were higher than permitted under Texas Medicaid’s alleged “best price” regulations, and that the Company offered remuneration to Texas health care providers in the form of discounted pricing for certain laboratory testing services in exchange for the providers’ referral of Texas Medicaid business to the Company. The Petition seeks actual and double damages and civil penalties, as well as recovery of costs, attorney's fees, and legal expenses. On August 1, 2022, the District Court entered an order granting the Company's Motion for Partial Summary Judgment with respect to the claim that the Company submitted claims for reimbursement to Texas Medicaid that were higher than permitted under Texas Medicaid's alleged “best price” regulations. The Company will vigorously defend the lawsuit.

On August 31, 2015, the Company was served with a putative class action lawsuit, Patty Davis v. Laboratory Corporation of America, et al.,, filed in the Circuit Court of the Thirteenth Judicial Circuit for Hillsborough County, Florida. The complaint alleges that the Company violated the Florida Consumer Collection Practices Act by billing patients who were collecting benefits under the Workers' Compensation Statutes. The lawsuit seeks injunctive relief and actual and statutory damages, as well as recovery of attorney's fees and legal expenses. In April 2017, the Circuit Court granted the Company’s Motion for Judgment on the Pleadings. The Plaintiff appealed the Circuit Court’s ruling to the Florida Second District Court of Appeal. On October 16, 2019, the Florida Second District Court of Appeal reversed the Circuit Court’s dismissal, but certified a controlling issue of Florida law to the Florida Supreme Court. On February 17, 2020, the Florida Supreme Court accepted jurisdiction of the lawsuit. The Court held oral arguments on December 9, 2020. On May 26, 2022, the Florida Supreme Court issued an opinion approving the result of the Florida Second District Court of Appeal in favor of the Plaintiff. The Company will vigorously defend the lawsuit.

In December 2014, the Company received a Civil Investigative Demand issued pursuant to the U.S. False Claims Act from the U.S. Attorney's Office for South Carolina, which requested information regarding alleged remuneration and services provided by the Company to physicians who also received draw and processing/handling fees from competitor laboratories Health Diagnostic Laboratory, Inc. (HDL) and Singulex, Inc. (Singulex). The Company cooperated with the request. On April 4, 2018, the U.S. District Court for the District of South Carolina, Beaufort Division, unsealed a False Claims Act lawsuit, United States of America ex rel. Scarlett Lutz, et al. v. Laboratory Corporation of America Holdings, which alleges that the Company's financial relationships with referring physicians violate federal and state anti-kickback statutes. The Plaintiffs' Fourth Amended Complaint further alleges that the Company conspired with HDL and Singulex in violation of the Federal False Claims Act and the California and Illinois insurance fraud prevention acts by facilitating HDL's and Singulex's offers of illegal inducements to physicians and the referral of patients to HDL and Singulex for laboratory testing. The lawsuit seeks actual and treble damages and civil penalties for each alleged false claim, as well as recovery of costs, attorney's fees, and legal expenses. Neither the U.S. government nor any state government has intervened in the lawsuit. The Company filed a Motion to

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LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

Dismiss seeking the dismissal of the claims asserted under the California and Illinois insurance fraud prevention statutes, the conspiracy claim, the reverse False Claims Act claim, and all claims based on the theory that the Company performed medically unnecessary testing. On January 16, 2019, the Court entered an order granting in part and denying in part the Motion to Dismiss. The Court dismissed the Plaintiffs' claims based on the theory that the Company performed medically unnecessary testing, the claims asserted under the California and Illinois insurance fraud prevention statutes, and the reverse False Claims Act claim. The Court denied the Motion to Dismiss as to the conspiracy claim. On March 12, 2021, the Company filed a Motion for Summary Judgment related to all remaining claims. On June 16, 2021, the Court denied the Company’s Motion for Summary Judgment. The ~~Company will vigorously defend the lawsuit.~~

Prior to the Company's acquisition of Sequenom, Inc. (Sequenom) between August 15, 2016 and August 24, 2016, six putative class-action lawsuits were filed on behalf of purported Sequenom stockholders (captioned ~~Malkoff v. Sequenom, Inc., et al.,~~ ~~No. 16-cv-02054- JAH-BLM, Gupta v. Sequenom, Inc., et al., No. 16-cv-02084-JAH-KSC,~~ ~~Fruchter v. Sequenom, Inc., et al., No. 16-cv-02101- WQH-KSC,~~ ~~Asiatrade Development Ltd. v. Sequenom, Inc., et al., No. 16-cv-02113-AJB-JMA,~~ ~~Nunes v. Sequenom, Inc., et al., No. 16-cv-02128-AJB-MDD, and~~ ~~Cusumano v. Sequenom, Inc., et al., No. 16-cv-02134-LAB-JMA) in the U.S. District Court~~lawsuit is scheduled for ~~the Southern District of California challenging the acquisition transaction. The complaints asserted claims against Sequenom and members of its board of directors (the Individual Defendants). The~~ ~~Nunes~~ action also named the Company and Savoy Acquisition Corp. (Savoy), a wholly owned subsidiary of the Company, as defendants. The complaints alleged that the defendants violated Sections 14(e), 14(d)(4) and 20 of the Securities Exchange Act of 1934 by failing to disclose certain allegedly material information. In addition, the complaints in the ~~Malkoff~~ ~~action, the~~ ~~Asiatrade~~ ~~action, and the~~ ~~Cusumano~~ action alleged that the Individual Defendants breached their fiduciary duties to Sequenom shareholders. The actions sought, among other things, injunctive relief enjoining the merger. On August 30, 2016, the parties entered into a Memorandum of Understanding (MOU) in each of the above-referenced actions. On September 6, 2016, the Court entered an order consolidating for all pre-trial purposes the six individual actions described above under the caption ~~In re Sequenom, Inc. Shareholder Litig., Lead Case No. 16-cv-02054-JAH-BLM, and designating the complaint from the~~ ~~Malkoff~~ ~~action as the~~

~~INDEX~~

~~LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(dollars and shares in millions, except per share data)~~

operative complaint for the consolidated action. On November 11, 2016, two competing motions were filed by two separate stockholders (James Reilly and Shikha Gupta) seeking appointment as lead plaintiff under the terms of the Private Securities Litigation Reform Act of 1995. On June 7, 2017, the Court entered an order declaring Mr. Reilly as the lead plaintiff and approving Mr. Reilly's selection of lead counsel. The parties agree that the MOU has been terminated. The Plaintiffs filed a Consolidated Amended Class Action Complaint on July 24, 2017, and the Defendants filed a Motion to Dismiss, which remains pending. On March 13, 2019, the Court stayed the action in its entirety pending the U.S. Supreme Court's anticipated decision in ~~Emulex Corp. v. Varjabedian. On April 23, 2019, however, the U.S. Supreme Court dismissed the writ of certiorari in~~ ~~Emulex~~ ~~as improvidently granted.~~trial beginning January 9, 2023. The Company will vigorously defend the lawsuit.

On March 10, 2017, the Company was served with a putative class action lawsuit, Victoria Bouffard, et al. v. Laboratory Corporation of America Holdings, filed in the U.S. District Court for the Middle District of North Carolina. The complaint alleges that the Company's patient list prices unlawfully exceed the rates negotiated for the same services with private and public health insurers in violation of various state consumer protection laws. The lawsuit also alleges breach of implied contract or quasi-contract, unjust enrichment, and fraud. The lawsuit seeks statutory, exemplary, and punitive damages, injunctive relief, and recovery of attorney's fees and costs. In May 2017, the Company filed a Motion to Dismiss Plaintiffs' Complaint and Strike Class Allegations; the Motion to Dismiss was granted in March 2018 without prejudice. On October 10, 2017, a second putative class action lawsuit, Sheryl Anderson, et al. v. Laboratory Corporation of America Holdings, was filed in the U.S. District Court for the Middle District of North Carolina. The complaint contained similar allegations and sought similar relief to the Bouffard complaint, and added additional counts regarding state consumer protection laws. On August 10, 2018, the Plaintiffs filed an Amended Complaint, which consolidated the Bouffard and Anderson actions. On September 10, 2018, the Company filed a Motion to Dismiss Plaintiffs' Amended Complaint and Strike Class Allegations. On August 16, 2019, the Court entered an order granting in part and denying in part the Motion to Dismiss the Amended Complaint, and denying the Motion to Strike the Class Allegations. On August 26, 2021, Plaintiffs filed a Motion for Class Certification. On December 29, 2021, a related lawsuit, Nathaniel J. Nolan, et al. v. Laboratory Corporation of America Holdings, was filed in the U.S. District Court for the Middle District of North Carolina. The complaint alleges that the Company's patient acknowledgement of estimated financial responsibility form is misleading. The lawsuit seeks a declaratory judgement under the consumer protection laws of Nevada and Florida that the form is materially misleading and deceptive, an injunction barring the use of the form, damages on behalf of an alleged class, and attorney's fees and expenses. On February 28, 2022, the Company filed a Motion to Dismiss all claims. The Company will vigorously defend the ~~lawsuit.~~lawsuits.

On April 1, 2019, Covance Research Products was served with a Grand Jury Subpoena issued by the Department of Justice (DOJ) in Miami, Florida requiring the production of documents related to the importation into the United States of live non-human primate shipments originating from or transiting through China, Cambodia, and/or Vietnam from April 1, 2014 through March 28, 2019. The Company is cooperating with the DOJ.

On May 14, 2019, Retrieval-Masters Creditors Bureau, Inc. d/b/a American Medical Collection Agency (AMCA), an external collection agency, notified the Company about a security incident AMCA experienced that may have involved certain personal information about some of the Company’s patients (the AMCA Incident). The Company referred patient balances to AMCA only when direct collection efforts were unsuccessful. The Company’s systems were not impacted by the AMCA Incident. Upon learning of the AMCA Incident, the Company promptly stopped sending new collection requests to AMCA and stopped AMCA from continuing to work on any pending collection requests from the Company. AMCA informed the Company that it appeared that an unauthorized user had access to AMCA’s system between August 1, 2018, and March 30, 2019, and that AMCA could not rule out the possibility that personal information on AMCA’s system was at risk during that time period. Information on AMCA’s affected system from the Company may have included name, address, and balance information for the patient and person responsible for payment, along with the patient’s phone number, date of birth, referring physician, and date of service. The Company was later informed by AMCA that health insurance information may have been included for some individuals, and because some insurance carriers utilize the Social Security Number as a subscriber identification number, the Social Security Number for some individuals may also have been affected. No ordered tests, laboratory test results, or diagnostic information from the Company were in the AMCA affected system. The Company notified individuals for whom it had a valid mailing address. For the individuals whose Social Security Number was affected, the notice included an offer to enroll in credit monitoring and identity protection services that ~~will be~~was provided free of charge for 24 months.

Twenty-three putative class action lawsuits were filed against the Company related to the AMCA Incident in various U.S. District Courts. Numerous similar lawsuits have been filed against other health care providers who used AMCA. These lawsuits ~~have been~~were consolidated into a multidistrict litigation in the District of New Jersey. On November 15, 2019, the Plaintiffs filed a Consolidated Class Action Complaint in the U.S. District Court of New Jersey. On January 22, 2020, the Company filed Motions to Dismiss all claims. The consolidated Complaint generally ~~alleges~~alleged that the Company did not adequately protect its patients’ data and failed to timely notify those patients of the AMCA Incident. The Complaint asserts various causes of action, including but not limited to negligence, breach of implied contract, unjust enrichment, and the violation of state data protection statutes. The Complaint seeks damages on behalf of a class of all affected Company customers. The Company will vigorously defend the multi-district litigation.

1716

INDEX

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

patients’ data and failed to timely notify those patients of the AMCA Incident. The Complaint asserted various causes of action, including but not limited to negligence, breach of implied contract, unjust enrichment, and the violation of state data protection statutes. The Complaint sought damages on behalf of a class of all affected Company customers. On December 16, 2021, the Court granted in part and denied in part the Company's Motion to Dismiss. On March 31, 2022, the Plaintiffs filed an Amended Complaint alleging claims for negligence, negligence per se, breach of confidence, invasion of privacy, and various state statutory claims, including a claim under the California Confidentiality of Medical Information Act. The Company filed a Motion to Dismiss certain claims of the Amended Complaint. The Company will vigorously defend the remaining claims in the multi-district litigation.

The Company was served with a shareholder derivative lawsuit, Raymond Eugenio, Derivatively on Behalf of Nominal Defendant, Laboratory Corporation of America Holdings v. Lance Berberian, et al., filed in the Court of Chancery of the State of Delaware on April 23, 2020. The complaint asserts derivative claims on the Company’s behalf against the Company’s board of directors and certain executive officers. The complaint generally alleges that the defendants failed to ensure that the Company utilized proper cybersecurity safeguards and failed to implement a sufficient response to data security incidents, including the AMCA Incident. The complaint asserts derivative claims for breach of fiduciary duty and seeks relief including damages, certain disclosures, and certain changes to the Company’s internal governance practices. On June 2, 2020, the Company filed a Motion to Stay the lawsuit due to its overlap with the multi-district litigation referenced above. On July 2, 2020, the Company filed a Motion to Dismiss. On July 14, 2020, the Court entered an order staying the lawsuit pending the resolution of the multi-district litigation. The lawsuit will be vigorously defended.

Certain governmental entities have requested information from the Company related to the AMCA Incident. The Company received a request for information from the Office for Civil Rights (OCR) of the Department of Health and Human Services. On April 28, 2020, OCR notified the Company of the closure of its inquiry. The Company has also received requests from a multi-state group of state Attorneys General and is cooperating with these requests for information.

On January 31, 2020, the Company was served with a putative class action lawsuit, Luke Davis and Julian Vargas, et al. v. Laboratory Corporation of America Holdings, filed in the U.S. District Court for the Central District of California. The lawsuit alleges that visually impaired patients are unable to use the Company's touchscreen kiosks at Company patient service centers in violation of the Americans with Disabilities Act and similar California statutes. The lawsuit seeks statutory damages, injunctive relief, and attorney's fees and costs. On March 20, 2020, the Company filed a Motion to Dismiss Plaintiffs' Complaint and to Strike Class Allegations. In August 2020, the Plaintiffs filed an Amended Complaint. On April 26, 2021, the Plaintiffs and the Company each filed Motions for Summary Judgment and the Plaintiffs filed a Motion for Class Certification. On May 23, 2022, the Court entered an order granting Plaintiffs’ Motion for Class Certification. On June 6, 2022, the Company filed a Petition for Permission to Appeal the Order Granting Class Certification with the Ninth Circuit Court of Appeals. On September 22, 2022, the Ninth Circuit Court of Appeals granted the Company's Petition for Permission to Appeal the Order Granting Class Certification. The Company will vigorously defend the lawsuit.

On October 16, 2020, Ravgen Inc. filed a patent infringement lawsuit, Ravgen Inc. v. Laboratory Corporation of America Holdings, in the U.S. District Court for the Western District of Texas, alleging infringement of two Ravgen-owned U.S. patents. The lawsuit seeks monetary damages, enhancement of those damages for willfulness, and recovery of attorney’s fees and costs. On September 28, 2022, a jury rendered a verdict in favor of the Plaintiff on the remaining patent at issue, finding that the Company willfully infringed Ravgen's patent, and awarded damages of $272 million. Plaintiff has filed post-trial motions seeking enhanced damages of up to $817 million based on the finding of willfulness, as well as attorney's fees and costs. The Company strongly disagrees with the verdict, based on a number of legal factors, and will vigorously defend the lawsuit through the appeal process. The Company has also instituted proceedings before the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office challenging the validity of the Ravgen patent at issue in the trial, with a decision on validity expected in November 2022.

On May 14, 2020, the Company was served with a putative class action lawsuit, Jose Bermejo v. Laboratory Corporation of America (Bermejo I) filed in the Superior Court of California, County of Los Angeles Central District, alleging that certain non-exempt California-based employees were not properly compensated for driving time or properly paid wages upon termination of employment. The Plaintiff asserts these actions violate various California Labor Code provisions and Section 17200 of the Business and Professional Code. The lawsuit seeks monetary damages, civil penalties, and recovery of attorney’s fees and costs. On June 15, 2020, the lawsuit was removed to the U.S. District Court for the Central District of California. On June 16, 2020, the Company was served with a Private Attorney General Act lawsuit by the same plaintiff in Jose Bermejo v. Laboratory Corporation of America (Bermejo II), filed in the Superior Court of California, County of Los Angeles Central District, alleging that certain Company practices violated California Labor Code penalty provisions related to unpaid and minimum wages, unpaid overtime, unpaid meal and rest break premiums, untimely payment of wages following separation of employment,

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LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

failure to maintain accurate pay records, and non-reimbursement of business expenses. The second lawsuit seeks to recover civil penalties and recovery of attorney's fees and costs. On October 28, 2020, the court issued an order staying proceedings in Bermejo II pending resolution of Bermejo I. The second lawsuit seeks to recover civil penalties and recovery of attorney's fees and costs. On February 24, 2022, the parties entered into a Memorandum of Understanding of the terms of a settlement of the Bermejo I and Bermejo II lawsuits, subject to court approval. If approved, the settlement will also resolve the Becker and Poole lawsuits discussed below.

On June 14, 2021, a single plaintiff filed a Private Attorney General Act lawsuit, Becker v. Laboratory Corporation of America, in the Superior Court of California, County of Orange, alleging various violations of the California Labor Code, including that the Plaintiff was not properly compensated for work and overtime hours, not properly paid meal and rest break premiums, not reimbursed for certain business-related expenses, and received inaccurate wage statements. The lawsuit seeks monetary damages, civil penalties, and recovery of attorney’s fees and costs. A settlement of the Bermejo I and Bermejo II lawsuits, if approved by the court, will resolve the Becker lawsuit.

On November 23, 2021, the Company was served with a single plaintiff Private Attorney General Act lawsuit, Poole v. Laboratory Corporation of America, filed in the Superior Court of California, County of Kern, alleging various violations of the California Labor Code, including that Plaintiff was not properly paid wages owed, not properly paid meal and rest break premiums, not reimbursed for certain business related expenses, and other allegations including the untimely payment of wages and receipt of inaccurate wage statements. The lawsuit seeks monetary damages, civil penalties, and recovery of attorney's fees and costs. The case was removed to the U.S. District Court for the Eastern District of California. A settlement of the Bermejo I and Bermejo II lawsuits, if approved by the court, will ~~vigorously defend both lawsuits.~~resolve the Poole lawsuit.

On August 14, 2020, the Company was served with a Subpoena Duces Tecum issued by the State of Colorado Office of the Attorney General requiring the production of documents related to urine drug testing in all states. The Company is cooperating with this request.

On October ~~2, 2020, the Company was served with a putative class action lawsuit,~~ ~~Peterson v. Laboratory Corporation of America Holdings~~, filed in the U.S. District Court for the Northern District of New York, alleging claims for a failure to properly pay service representatives compensation for all hours worked and overtime under the Fair Labor Standards Act, as well as notice and recordkeeping claims under the New York Labor Code. On February 21, 2021, Plaintiff filed an amended complaint reiterating allegations of violations of the Fair Labor Standards Act and New York Labor Code, but narrowing the scope of the putative class to only those service representatives employed by the Company within the State of New York. The lawsuit seeks monetary damages, liquidated damages, equitable and injunctive relief, and recovery of attorney's fees and costs. The Company will vigorously defend the lawsuit.

~~On October~~ 5, 2020, the Company was served with a putative class action lawsuit, Williams v. LabCorp Employer Services, Inc. et ~~al,~~al., filed in the Superior Court of California, County of Los Angeles, alleging that certain non-exempt California-based employees were not properly compensated for work and overtime hours, not properly paid meal and rest break premiums, not reimbursed for certain business-related expenses, not properly paid for driving or wait times, and received inaccurate wage statements. The Plaintiff also asserts claims for unfair competition under Section 17200 of the Business and Professional Code.

~~INDEX~~

~~LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(dollars and shares in millions, except per share data)~~

On November 4, 2020, the lawsuit was removed to the U.S. District Court for the Central District of California. The lawsuit seeks monetary damages, liquidated damages, civil penalties, and recovery of attorney's fees and costs. On June 24, 2021, the District Court remanded the case to the Superior Court of California, County of Los Angeles on the grounds that potential damages did not meet the Class Action Fairness Act (CAFA), 28 U.S.C. § 1332(d), jurisdictional threshold. The ~~Company will vigorously defend the lawsuit.~~parties entered into a settlement agreement dated September 9, 2022, which is pending court approval.

On ~~March 1, 2021,~~February 7, 2022, the Company was served with a ~~putative class action lawsuit,~~ ~~Foy v. Laboratory Corporation~~Subpoena Duces Tecum issued by the DOJ in Camden, New Jersey requiring the production of ~~America Holdings d/b/~~documents related to non-invasive prenatal screening tests. The Company is cooperating with the DOJ.

On June 27, 2022, the Company was served with a ~~Labcorp Diagnostics, filed~~Subpoena Duces Tecum issued by the DOJ in Boston, Massachusetts requiring the production of documents related to urine drug testing. The Company is cooperating with the DOJ.

There are various other pending legal proceedings involving the Company including, but not limited to, additional employment-related lawsuits, professional liability lawsuits, and intellectual property lawsuits. While it is not feasible to predict the outcome of such proceedings, in the ~~U.S. District Court for~~opinion of the ~~Middle District~~Company, the likelihood of ~~North Carolina, alleging claims for failure~~loss is remote and any reasonably possible loss associated with the resolution of such proceedings is not expected to ~~properly pay service representatives employed outside~~be material to the Company’s financial condition, results of California and New York for all hours worked and overtime compensation under the Fair Labor Standards Act. The lawsuit seeks monetary damages, liquidated damages, equitable and injunctive relief, and recovery of attorney’s fees and costs. The Company will vigorously defend the lawsuit.

~~On June 14, 2021, a single plaintiff filed a Private Attorney General Act lawsuit,~~ ~~Becker v. Laboratory Corporation of America,~~ operations, or cash flows, either individually or in the Superior Court of California, County of Orange, alleging various violations of the California Labor Code, including that the Plaintiff was not properly compensated for work and overtime hours, not properly paid meal and rest break premiums, not reimbursed for certain business-related expenses, and received inaccurate wage statements. The lawsuit seeks monetary damages, civil penalties, and recovery of attorney’s fees and costs. The Company will vigorously defend the lawsuit.

~~On October 14 2021, a putative class action lawsuit,~~ ~~Tabacchino v. Laboratory Corporation of America Holdings~~, was filed in the Supreme Court of New York, Nassau County, alleging claims for a failure to properly pay service representatives compensation for all hours worked and overtime under the Fair Labor Standards Act and the New York Labor Code, as well notice and recordkeeping claims under the New York Labor Code. The lawsuit seeks monetary damages, liquidated damages, civil penalties, equitable and injunctive relief, and recovery of attorney's fees and costs. The Company will vigorously defend the lawsuit.aggregate.

Under the Company's present insurance programs, coverage is obtained for catastrophic exposure as well as those risks required to be insured by law or contract. The Company is responsible for the uninsured portion of losses related primarily to general, professional and vehicle liability, certain medical costs and workers' compensation. The self-insured retentions are on a per-occurrence basis without any aggregate annual limit. Provisions for losses expected under these programs are recorded based upon the Company's estimates of the aggregated liability of claims incurred.

~~11. FAIR VALUE MEASUREMENTS~~

~~The Company’s population of financial assets and liabilities subject to fair value measurements as of September 30, 2021, and December 31, 2020, is as follows:~~

Fair Value Measurements as of
September 30, 2021
Balance Sheet Fair Value as of Using Fair Value Hierarchy
Classification September 30, 2021 Level 1 Level 2 Level 3
Noncontrolling interest put Noncontrolling interest $ 16.2 $ — $ 16.2 $ —
Cross currency swaps Other liabilities 12.8 — 12.8 —
Interest rate swaps Other assets, net 4.0 — 4.0 —
Cash surrender value of life insurance policies Other assets, net 101.0 — 101.0 —
Deferred compensation liability Other liabilities 99.0 — 99.0 —
Investment in equity securities Other current assets 18.5 18.5 — —
Contingent consideration Other liabilities 12.8 — — 12.8

Fair Value Measurements as of
December 31, 2020
Balance Sheet Fair Value as of Using Fair Value Hierarchy
Classification December 31, 2020 Level 1 Level 2 Level 3
Noncontrolling interest put Noncontrolling interest $ 16.2 $ — $ 16.2 $ —
Cross currency swaps Other liabilities 40.4 — 40.4 —
Cash surrender value of life insurance policies Other assets, net 90.6 — 90.6 —
Deferred compensation liability Other liabilities 89.2 — 89.2 —
Contingent consideration Other liabilities 13.9 — — 13.9

1918

INDEX

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

9. FAIR VALUE MEASUREMENTS

The Company’s population of financial assets and liabilities subject to fair value measurements as of September 30, 2022, and December 31, 2021, is as follows:


				Fair Value Measurements as of
				September 30, 2022
	Balance Sheet	Fair Value as of		Using Fair Value Hierarchy
	Classification	September 30, 2022		Level 1		Level 2		Level 3
Noncontrolling interest put	Noncontrolling interest	$	15.0	$	—	$	15.0	$	—
Cross currency swaps	Other liabilities	8.1		—		8.1		—
Interest rate swaps	Other liabilities	82.5		—		82.5		—


Cash surrender value of life insurance policies	Other assets, net	95.5		—		95.5		—
Deferred compensation liability	Other liabilities	93.7		—		93.7		—

Contingent consideration	Other liabilities	62.0		—		—		62.0


				Fair Value Measurements as of
				December 31, 2021
	Balance Sheet	Fair Value as of		Using Fair Value Hierarchy
	Classification	December 31, 2021		Level 1		Level 2		Level 3
Noncontrolling interest put	Noncontrolling interest	$	16.3	$	—	$	16.3	$	—
Cross currency swaps	Other liabilities, net	32.8		—		32.8		—
Interest rate swaps	Other assets, net	2.9		—		2.9		—
Cash surrender value of life insurance policies	Other assets, net	106.4		—		106.4		—
Deferred compensation liability	Other liabilities	104.4		—		104.4		—
Investment in equity securities	Other current assets	10.9		10.9		—		—
Contingent consideration	Other liabilities	21.9		—		—		21.9


Fair Value Measurement of Level 3 Liabilities	Contingent Consideration
Balance at December 31, ~~2020~~2021	$	~~13.9~~21.9
Payments	(10.4)
Adjustments	~~(1.1)~~(2.4)
Additions	52.9
Balance atas of September 30, ~~2021~~2022	$	~~12.8~~62.0

The Company has a noncontrolling interest put related to its Ontario subsidiary that has been classified as mezzanine equity in the Company’s condensed consolidated balance sheets. The noncontrolling interest put is valued at its contractually determined value, which approximates fair value.

The Company offers certain employees the opportunity to participate in an employee-funded deferred compensation plan (DCP). A participant's deferrals are allocated by the participant to one or more of 16 measurement funds, which are indexed to externally managed funds. From time to time, to offset the cost of the growth in the participant's investment accounts, the Company purchases life insurance policies, with the Company named as beneficiary of the policies. Changes in the cash surrender value of the life insurance policies are based upon earnings and changes in the value of the underlying investments, which are typically invested in a similar manner to the participant's allocations. Changes in the fair value of the DCP obligation are derived using quoted prices in active markets based on the market price per unit multiplied by the number of units. The cash surrender value and the DCP obligations are classified within Level 2 because their inputs are derived principally from observable market data by correlation to the hypothetical investments.

Contingent accrued earn-out business acquisition consideration liabilities are measured at fair value using Level 3 valuations. These contingent consideration liabilities were recorded at fair value on the acquisition date and are remeasured quarterly based on the then assessed fair value and adjusted if necessary. The increases or decreases in the fair value of contingent consideration payable can result from changes in anticipated revenue levels and changes in assumed discount periods and rates. As the fair value measure is based on significant inputs that are not observable in the market, they are categorized as Level 3.

The carrying amounts of cash and cash equivalents, accounts receivable, income taxes receivable, and accounts payable are considered to be representative of their respective fair values due to their short-term nature. The fair market value of the senior notes, based on market pricing, was approximately ~~$5,910.7~~$4,921.2 and ~~$6,121.8~~$5,841.1 as of September 30, ~~2021,~~2022, and December 31, ~~2020, respectively. The Company's note and debt instruments are classified as Level 2 instruments, as the fair market values of these instruments are determined using other observable inputs.~~

~~12. DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES~~

The Company addresses its exposure to market risks, principally the market risk associated with changes in interest rates and foreign currency exchange rates, through a controlled program of risk management that includes, from time to time, the use of derivative financial instruments. ~~The Company does not hold or issue derivative financial instruments for trading purposes.~~ ~~The Company does not believe that its exposure to market risk is material to the Company’s financial position or results of operations.~~

~~Interest Rate Swaps~~

~~During the second quarter of~~ 2021, the Company entered into fixed-to-variable interest rate swap agreements for its 2.70% senior notes due 2031 with an aggregate notional amount of $500.0 and variable interest rates based on three-month LIBOR plus 1.0706%. These agreements were designated as hedges against changes in the fair value of a portion of the Company's long-term debt. The aggregate fair value of $4.0 at September 30, 2021, was included as a component of other long-term assets and added to the reported value of the senior notes.

~~Cross Currency Swaps~~

During the fourth quarter of 2018, the Company entered into U.S. Dollar to Swiss Franc cross-currency swap agreements with an aggregate notional value of $600.0. These instruments are designated as a hedge against the impact of foreign exchange movements on its net investment in a Swiss subsidiary. Of the notional value, $300.0 matures in 2022 and $300.0 matures in 2025. The cross currency swaps maturing in 2022 and 2025 with an aggregate fair value of $(11.8) and $(1.0) as of September 30, 2021, respectively, are included in other long-term liabilities. The cross currency swaps had an aggregate fair value of $(26.0) and $(14.4) as of December 31, 2020, respectively, and are included in other long-term liabilities. Changes in the fair value of the cross-currency swaps are recorded as a component of the foreign currency translation adjustment in accumulated other comprehensive income in the Condensed Consolidated Balance Sheet until the hedged item is recognized in earnings. The cumulative change in the fair value of these instruments of $3.9 and $27.6 for the three and nine months ended September 30, 2021, respectively, was recognized as currency translation within the Condensed Consolidated Statement of

2019

INDEX

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollars and shares in millions, except per share data)

~~Comprehensive Earnings. There were no amounts~~respectively. The Company's note and debt instruments are classified as Level 2 instruments, as the fair market values of these instruments are determined using other observable inputs.

Cross Currency Swap

During the fourth quarter of 2018, the Company entered into U.S. Dollar (USD) to Swiss Franc cross-currency swap agreements with an aggregate notional value of $600.0. During the second quarter of 2022, the Company terminated $300.0 of those cross-currency swap agreements and entered into new USD to Swiss Franc cross-currency swap agreements with an aggregate notional value of $300.0 that mature in 2024. In May 2022, the Company reclassified ~~from~~a gain of $0.9 to the ~~Condensed~~Consolidated Statement of Operations within other, net, due to the exit of $300.0 of the cross-currency swap agreements. These instruments are designated as a hedge against the impact of foreign exchange movements on its net investment in a Swiss subsidiary. These cross currency swaps are included in other long-term liabilities as appropriate with an aggregate fair value of $8.1 and $32.8 as of September 30, 2022 and December 31, 2021, respectively. Changes in the fair value of the cross-currency swaps are charged or credited through accumulated other comprehensive income in the Consolidated Balance Sheet until the hedged item is recognized in earnings. The cumulative amount of the fair value hedging adjustments are recognized as currency translation within the Consolidated Statement of Comprehensive ~~Earnings to the Condensed Consolidated Statement of Operations during the three or nine months ended September 30, 2021.~~

~~The table below presents the fair value of derivatives on a gross basis and the balance sheet classification of those instruments:~~

September 30, 2021 December 31, 2020
Fair Value of Derivative Fair Value of Derivative
Balance Sheet Caption Asset Liability U.S. Dollar Notional Asset Liability U.S. Dollar Notional
Derivatives Designated as Hedging Instruments
Interest rate swap Other assets, net $ 4.0 — $ 500.0 — — —
Cross currency swaps Other assets, net or Other liabilities $ — $ 12.8 $ 600.0 $ — $ 40.4 $ 600.0

~~The table below provides information regarding the location and amount of pretax (gains) losses of derivatives designated in fair value hedging:~~

Amount of pre-tax gain/(loss) included in other comprehensive income Amounts reclassified to the
Statement of Operations Amount of pre-tax gain/(loss) included in other comprehensive income Amounts reclassified to the
Statement of Operations
Three Months Ended September 30, Three Months Ended September 30, Nine Months Ended September 30, Nine Months Ended September 30,
2021 2020 2021 2020 2021 2020 2021 2020
Interest rate swap contracts $ — $ — $ — $ 1.6 $ — $ 0.8 $ — $ 1.6
Cross currency swaps $ 3.9 $ (23.1) $ — $ — $ 27.6 $ (12.0) $ — $ —

No gains or losses from derivative instruments have been recognized into income for the three and nine months ended September 30, 2021. For the three and nine months ended September 30, 2020, the Company recorded a gain of $1.6 on the extinguishment of the interest rate swap arrangement on the 4.625% Senior Notes due November 15, 2020, which was included in Other, net on the Condensed Consolidated Statement of Operations.Earnings.

~~13.~~10. SUPPLEMENTAL CASH FLOW INFORMATION


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2021		2020			2022		2021

Cash paid during period for:	Cash paid during period for:					Cash paid during period for:
Interest	Interest	$	169.0	$	195.8	Interest	$	159.4	$	169.0
Income taxes, net of refunds	Income taxes, net of refunds	789.9		217.5		Income taxes, net of refunds	422.5		789.9
Disclosure of non-cash financing and investing activities:	Disclosure of non-cash financing and investing activities:					Disclosure of non-cash financing and investing activities:

Change in accrued property, plant and equipment	Change in accrued property, plant and equipment	(6.9)		(24.5)		Change in accrued property, plant and equipment	6.3		(6.9)

~~14.~~11. BUSINESS SEGMENT INFORMATION

The following table is a summary of segment information for the three and nine months ended September 30, ~~2021,~~2022, and ~~2020.~~2021. The management approach has been used to present the following segment information. This approach is based upon the way the management of the Company organizes segments within an enterprise for making operating decisions and assessing performance. Financial information is reported on the basis ~~that~~as it is used internally by the chief operating decision maker (CODM) for evaluating segment performance and deciding how to allocate resources to segments. The Company’s chief executive officer has been identified as the CODM.

Segment asset information is not presented because it is not used by the CODM at the segment level. Operating earnings of each segment represent revenues less directly identifiable expenses to arrive at operating income for the segment. General management and administrative corporate expenses are included in general corporate expenses below.

~~INDEX~~

~~LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES~~

~~NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~(dollars and shares in millions, except per share data)~~

Three Months Ended Nine Months Ended
September 30, September 30,
2021 2020 2021 2020
Revenues:
Dx $ 2,617.5 $ 2,704.2 $ 7,740.8 $ 6,098.8
DD 1,459.5 1,241.9 4,392.9 3,479.4
Intercompany eliminations and other (14.4) (50.0) (68.9) (89.5)
Revenues 4,062.6 3,896.1 12,064.8 9,488.7
Operating earnings:
Dx 722.7 964.9 2,275.4 1,451.5
DD 141.6 142.0 445.3 (131.2)
General corporate expenses (97.4) (59.8) (191.8) (168.1)
Total operating income 766.9 1,047.1 2,528.9 1,152.2
Non-operating expenses, net 1.3 (100.0) (88.3) (175.7)
Earnings before income taxes 768.2 947.1 2,440.6 976.4
Provision for income taxes 180.4 243.4 614.7 358.0
Net earnings 587.8 703.7 1,825.9 618.4
Less: Net earnings attributable to the noncontrolling interest (0.5) (0.3) (1.6) (0.6)
Net earnings attributable to Laboratory Corporation of America Holdings $ 587.3 $ 703.4 $ 1,824.3 $ 617.8


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2022		2021		2022		2021
Revenues:
Dx	$	2,207.6	$	2,617.5	$	6,917.1	$	7,740.8
DD	1,405.8		1,459.5		4,317.0		4,392.9
Intercompany eliminations and other	(7.3)		(14.4)		(31.5)		(68.9)
Revenues	$	3,606.1	$	4,062.6	$	11,202.6	$	12,064.8

Operating earnings:
Dx	$	378.7	$	722.7	1,457.5		2,275.4
DD	156.7		141.6		431.8		445.3
General corporate expenses	(66.0)		(97.4)		(206.1)		(191.8)
Total operating income	$	469.4	$	766.9	$	1,683.2	$	2,528.9

2220

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

~~Laboratory Corporation of America~~® ~~Holdings together with its subsidiaries (the Company)~~The Company has made in this report, and from time to time may otherwise make in its public filings, press releases, and discussions by Company management, forward-looking statements concerning the Company’s operations, performance, and financial condition, as well as its strategic objectives. Some of these forward-looking statements relate to future events and expectations and can be identified by the use of forward-looking words such as “believes”, “expects”, “may”, “will”, “should”, “seeks”, “approximately”, “intends”, “plans”, “estimates”, or “anticipates” or the negative of those words or other comparable terminology. Such forward-looking statements speak only as of the time they are made and are subject to various risks and uncertainties and the Company claims the protection afforded by the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those currently anticipated due to a number of factors in addition to those discussed elsewhere herein, including in the ~~"Risk Factors"~~“Summary of Material Risks” and “Risk Factors” section of the Annual Report on Form 10-K, and in the Company’s other public filings, press releases, and discussions with Company management, including:

1. changes in government and third-party payer regulations, reimbursement, or coverage policies or other future reforms in the U.S. healthcare system (or in the interpretation of current regulations), new insurance ~~products~~ or payment systems, including state, regional or private insurance cooperatives (e.g., health insurance exchanges) affecting governmental and third-party coverage or reimbursement for commercial laboratory testing, including the impact of the U.S. Protecting Access to Medicare Act of 2014 (PAMA);

2. significant monetary damages, fines, penalties, assessments, refunds, repayments, damage to the Company’s reputation, unanticipated compliance expenditures, and/or exclusion or debarment from or ineligibility to participate in government programs, among other adverse consequences, arising from enforcement of anti-fraud and abuse laws and other laws applicable to the Company in jurisdictions in which the Company conducts business;

3. significant fines, penalties, costs, unanticipated compliance expenditures and/or damage to the Company’s reputation arising from the failure to comply with applicable privacy and security laws and regulations, including the U.S. Health Insurance Portability and Accountability Act of 1996, the U.S. Health Information Technology for Economic and Clinical Health Act, the European Union's General Data Protection Regulation and similar laws and regulations in jurisdictions in which the Company conducts business;

4. loss or suspension of a license or imposition of fines or penalties under, or future changes in, or interpretations of applicable licensing laws or regulations regarding the operation of clinical laboratories and the delivery of clinical laboratory test results, including, but not limited to, the U.S. Clinical Laboratory Improvement Act of 1967 and the U.S. Clinical Laboratory Improvement Amendments of 1988 and similar laws and regulations in jurisdictions in which the Company conducts business;

5. penalties or loss of license arising from the failure to comply with applicable occupational and workplace safety laws and regulations, including the U.S. Occupational Safety and Health Administration requirements, the U.S. Needlestick Safety and Prevention Act, and similar laws and regulations in jurisdictions in which the Company conducts business;

6. fines, unanticipated compliance expenditures, suspension of manufacturing, enforcement actions, damage to the Company’s reputation, injunctions, or criminal prosecution arising from failure to maintain compliance with current good manufacturing practice regulations and similar requirements of various regulatory agencies in jurisdictions in which the Company conducts business;

7. sanctions or other remedies, including fines, unanticipated compliance expenditures, enforcement actions, injunctions or criminal prosecution arising from failure to comply with the Animal Welfare Act or applicable national, state and local laws and regulations in jurisdictions in which the Company conducts business;

8. changes in testing guidelines or recommendations by government agencies, medical specialty societies and other authoritative bodies affecting the utilization of laboratory tests;

9. changes in applicable government regulations or policies affecting the approval, availability of, and the selling and marketing of diagnostic tests, drug development, or the conduct of drug development and medical device and diagnostic studies and trials, including regulations and policies of the U.S. Food and Drug Administration, the U.S. Department of Agriculture, the Medicine and Healthcare products Regulatory Agency in the United Kingdom (U.K.), the National Medical Products Administration in China, the Pharmaceutical and Medical Devices Agency in Japan, the European Medicines Agency, the European Union and similar regulations and policies of agencies in other jurisdictions in which the Company conducts business;

2321

INDEX

10. changes in government regulations or reimbursement pertaining to the ~~biopharmaceutical~~pharmaceutical, biotechnology and medical device and diagnostic industries, changes in reimbursement of ~~biopharmaceutical~~pharmaceutical products, or reduced spending on research and development by ~~biopharmaceutical~~pharmaceutical, biotechnology and medical device and diagnostic customers;

11. liabilities that result from the failure to comply with corporate governance requirements;

12. increased competition, including price competition, potential reduction in rates in response to price transparency initiatives and consumerism, competitive bidding and/or changes or reductions to fee schedules, and competition from companies that do not comply with existing laws or regulations or otherwise disregard compliance standards in the industry;

13. changes in payer mix or payment structure or ~~processes,~~process, including insurance carrier participation in health insurance exchanges, an increase in capitated reimbursement mechanisms, the impact of clearinghouses on the claims reimbursement process, the impact of a shift to consumer-driven health plans or plans carrying an increased level of member cost-sharing, and adverse changes in payer reimbursement or payer coverage policies (implemented directly or through a third-party utilization management organization) related to specific diagnostic tests, categories of testing or testing methodologies;

14. failure to retain or attract ~~managed care organization (MCO)~~MCO business as a result of changes in business models, including ~~risk-based~~risk based or network approaches, out-sourced laboratory network management or utilization management companies, or other changes in strategy or business models by MCOs;

15. failure to obtain and retain new customers, an unfavorable change in the mix of testing or other services ordered, or a reduction in tests ordered, specimens submitted, or services requested by existing customers, and reductions and delays in ~~payment~~payments from Dx and DD customers;

16. consolidation and convergence of customers, competitors, and suppliers, potentially causing material shifts in insourcing, utilization, pricing, reimbursement and supply chain access;

17. failure to effectively develop and deploy new systems, system modifications or enhancements required in response to evolving market and business needs;

18. customers choosing to insource services that are or could be purchased from the Company;

19. failure to identify, successfully close, and effectively integrate and/or manage acquisitions of new businesses or failure to maintain key customers and/or employees as a result of uncertainty surrounding the integration of acquisitions;

20. inability to achieve the expected benefits and synergies of newly-acquired businesses, including due to items not discovered in the due diligence process, and the impact on the Company's cash position, levels of indebtedness and stock price;

21. termination, loss, delay, reduction in scope or increased costs of contracts, including large contracts and multiple contracts;

22. liability arising from errors or omissions in the performance of testing services, contract research services or other contractual arrangements;

23. changes or disruption in the provision or transportation of services or supplies provided by third parties; or their termination for failure to follow the Company's performance standards and requirements;

24. damage or disruption to the Company's facilities;

25. damage to the Company's reputation, loss of business, or other harm from increased regulations and restrictions on the import of research animals, limitations of supply of research animals, and acts of animal rights activists, or potential harm and/or liability arising from animal research activities;

26. adverse results in litigation matters;

27. inability to attract and retain experienced and qualified personnel or the loss of significant personnel as a result of illness, increased competition for talent, wage growth, or other market factors;

28. failure to develop or acquire licenses for new or improved technologies, such as point-of-care testing, mobile health technologies, and digital pathology, or potential use of new technologies by customers and/or consumers to perform their own tests;

29. substantial costs arising from the inability to commercialize newly licensed tests or technologies or to obtain appropriate coverage or reimbursement for such tests;

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30. failure to obtain, maintain, and enforce intellectual property rights for protection of the Company's products and services and defend against challenges to those rights;

~~INDEX~~

31. scope, validity, and enforceability of patents and other proprietary rights held by third parties that may impact the Company's ability to develop, perform, or market the Company's products or services or operate its business;

32. business interruption, ~~receivable~~receivables impairment, delays in cash collection impacting days sales outstanding, supply chain disruptions or inventory obsolescence, increases in material cost or other operating costs, inflationary increases, or other impacts on the business due to natural disasters, including adverse weather, fires and earthquakes; ~~political crises,~~geopolitical events, including terrorism and war; public health crises and disease epidemics and pandemics; changes in the global economy; and other events outside of the Company's control;

33. discontinuation or recalls of existing testing products;

34. a failure in the Company's information technology systems, including with respect to testing turnaround time and billing processes, or the failure of the Company or its third-party suppliers and vendors to maintain the security of business information or systems or to protect against cybersecurity attacks such as denial of service attacks, malware, ransomware, and computer viruses, or delays or failures in the development and implementation of the Company’s automation platforms, any of which could result in a negative effect on the Company’s performance of services, a loss of business or increased costs, damages to the Company’s reputation, significant litigation exposure, an inability to meet required financial reporting deadlines, or the failure to meet future regulatory or customer information technology, data security and connectivity requirements;

35. business interruption, increased costs, and other adverse effects on the Company's operations due to the unionization of employees, union strikes, work stoppages, general labor unrest or failure to comply with labor or employment laws;

36. failure to maintain the Company's days sales outstanding levels, cash collections (in light of increasing levels of patient responsibility), profitability and/or reimbursement arising from unfavorable changes in third-party payer policies, payment delays introduced by ~~third party~~third-party utilization management organizations, and increasing levels of patient payment responsibility;

37. impact on the Company's revenues, cash collections and the availability of credit for general liquidity or other financing needs arising from a significant deterioration in the economy or financial markets or in the Company's credit ratings by Standard & Poor's and/or Moody's;

38. failure to maintain the expected capital structure for the Company, including failure to maintain the Company's investment grade rating, or leverage ratio covenants under its revolving credit facility;

39. changes in reimbursement by foreign governments and foreign currency fluctuations;

40. inability to obtain certain billing information from physicians, resulting in increased costs and complexity, a temporary disruption in receipts, and ongoing reductions in reimbursements and revenues;

41. expenses and risks associated with international operations, including, but not limited to, compliance with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, other applicable anti-corruption laws and regulations, trade sanction laws and regulations, and economic, political, legal and other operational risks associated with foreign jurisdictions;

42. failure to achieve expected efficiencies and savings in connection with the Company's business process improvement initiatives;

43. changes in tax laws and regulations or changes in their interpretation;

44. global economic conditions and government and regulatory changes; and

45. effects, duration, and severity of the ongoing COVID-19 pandemic, including the impact on operations, personnel, supplies, liquidity, and collections, as well as the impact of past or future actions or omissions by the Company or governments in response to the COVID-19 pandemic including, but not limited to, ~~emerging~~evolving government vaccine and testing mandates and policies, and damage to the Company's reputation or loss of business resulting from the perception of the Company's response to the COVID-19 pandemic, including the availability and accuracy and timeliness of delivery of any tests that the Company develops, collaborates on or provides for the detection of COVID-19, and the availability and timeliness of its drug development ~~services.~~services; and

46. risks associated with the impact, timing, expected benefits and costs, or terms of the planned spin-off of the Company’s Clinical Development business, which includes the parts of its DD segment focused on providing Phase I-IV clinical trial management, market access, and technology solutions to pharmaceutical and biotechnology organizations, including but not limited to (i) uncertainties as to the completion and timing of the transaction; (ii) the

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failure to obtain appropriate assurances regarding the tax-free nature of the spin-off; (iii) the receipt of regulatory approvals; (iv) the effect of the announcement or pendency of the transaction on the Company’s business relationships, operating results, and business generally; (v) unexpected issues that arise in the continued planning for the transaction; (vi) the failure to have the Form 10 registration statement that will be filed with the SEC declared effective on a timely basis, or at all; (vii) risks that the proposed transaction disrupts current plans and operations of Labcorp or Clinical Development; (viii) potential difficulties attracting or retaining Company or Clinical Development employees as a result of the spin-off announcement, pendency or completion of the spin-off; (ix) risks related to diverting management’s attention from the Company and Clinical Development’s ongoing business operations; (x) the ability of the Company to successfully separate Clinical Development operations from the Company’s ongoing operations; (xi) market receptiveness to effect transactions in the capital markets; and (xii) market reaction to the announcement and planning for the transaction.

Except as may be required by applicable law, the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Given these uncertainties, one should not put undue reliance on any forward-looking statements.

~~INDEX~~

GENERAL (dollars in millions, except per share data)

Revenues for the nine months ended September 30, ~~2021,~~2022, were ~~$12,064.8, an increase~~$11,202.6, a decrease of ~~27.1%~~7.1% from ~~$9,488.7~~$12,064.8 during the nine months ended September 30, ~~2020.~~2021. The ~~increase in revenues~~decrease was due to lower organic ~~growth~~revenue of ~~25.2%, acquisitions of 0.8%,~~6.9% and ~~favorable~~unfavorable foreign currency translation of ~~1.2%~~0.9%, partially offset by acquisitions net of divestitures of 0.6%. The ~~25.2% increase~~6.9% decline in organic revenue includes a ~~18.2% contribution from~~8.9% decrease in COVID-19 PCR and antibody testing (COVID-19 Testing), partially offset by a 2.0% increase in the ~~company's~~Company's organic Base ~~Business and a 7.0% increase from COVID-19 Testing.~~Business. Base Business includes the Company's business operations except for ~~PCR and antibody~~ COVID-19 ~~testing (COVID-19 Testing).~~Testing.

The Company defines organic growth as the increase in revenue excluding ~~revenue from~~the year-over-year impact of acquisitions, divestitures, and currency. Acquisition and divestiture impact is considered for ~~the first~~a twelve ~~months after~~month period following the close of each ~~acquisition.~~transaction.

~~As previously reported, in March 2021,~~Proposed Spin-Off of Clinical Development Business

On July 28, 2022, the Company announced that its board of directors authorized the Company to pursue a spin-off of its wholly owned Clinical Development business, which includes the parts of its DD segment focused on providing Phase I-IV clinical trials, market access, and ~~management had commenced~~technology solutions to pharmaceutical and biotechnology organizations. The planned spin-off would result in two independent, publicly traded companies. The spin-off is intended to be a ~~review~~tax-free transaction to the Company and its stockholders for U.S. federal income tax purposes and is expected to be effected through a dividend of the ~~Company’s structure~~Clinical Development business' shares to the Company's shareholders. The Company anticipates that, consistent with any applicable legal and ~~capital allocation strategy~~tax requirements, there will be ongoing transitional and commercial arrangements to ~~ensure that it~~provide for a seamless delivery of services to the customers and other stakeholders of the independent companies following the spin-off. The Company is ~~best positioned~~targeting completion of the spin-off with an accelerated timeframe of mid-2023, subject to ~~unlock shareholder value while~~ the ~~Company continues to support patients and customers around~~satisfaction of certain customary conditions, including receipt of final approval by the ~~world. The~~Company's board of directors, ~~has engaged Goldman Sachs & Co. LLC as its financial advisor to support~~receipt of appropriate assurances regarding the ~~process.~~tax-free nature of the transaction, and the effectiveness of any required filings with the SEC. There can be no assurances regarding the ~~outcome or~~ultimate timing of the ~~review process. The Company expects to provide an update in~~transaction or that the ~~fourth quarter, though it does not undertake any obligation to provide updates on this process until a conclusion is reached.~~spin-off will be completed.

RESULTS OF OPERATIONS (dollars in millions)

Three months ended September 30, ~~2021,~~2022, compared with three months ended September 30, ~~2020~~2021

Revenues


		Three Months Ended September 30,							Three Months Ended September 30,
		2021		2020		Change			2022		2021		Change
Dx	Dx	$	2,617.5	$	2,704.2	(3.2)	%	Dx	$	2,207.6	$	2,617.5	(15.7)	%
DD	DD	1,459.5		1,241.9		17.5	%	DD	1,405.8		1,459.5		(3.7)	%
Intercompany eliminations and other	Intercompany eliminations and other	(14.4)		(50.0)		(71.2)	%	Intercompany eliminations and other	(7.3)		(14.4)		49.3	%
Total	Total	$	4,062.6	$	3,896.1	4.3	%	Total	$	3,606.1	$	4,062.6	(11.2	%)

Total revenues for the three months ended September 30, ~~2021,~~2022, were ~~$4,062.6, an increase~~$3,606.1, a decrease of ~~4.3%~~11.2% over ~~$3,896.1~~$4,062.6 in the third quarter of ~~2020.~~2021. The ~~increase~~decrease was due to lower organic ~~Base Business growth~~revenue of ~~3.4%, acquisitions of 0.4%,~~10.7% and ~~favorable~~unfavorable foreign currency translation of ~~0.5%~~1.3%, partially offset by acquisitions of 0.8%. The ~~3.4% increase~~10.7% decrease in organic revenue iswas driven by a ~~10.2% increase~~11.8% decrease in ~~the company's organic Base Business,~~COVID-19 Testing, partially offset by a ~~6.8% decrease~~1.1% increase in ~~COVID-19 Testing.~~the Company's organic Base Business.

Dx revenues for the three months ended September 30, ~~2021,~~2022, were ~~$2,617.5,~~$2,207.6, a decrease of ~~3.2%~~15.7% over ~~$2,704.2~~$2,617.5 in the third quarter of ~~2020.~~2021. The decrease was primarily due to organic ~~Base Business reduction~~revenue of ~~3.9%~~16.4% and unfavorable foreign currency translation of

INDEX

0.1%, partially offset by acquisitions of ~~0.4%, and favorable foreign currency translation of 0.3%~~0.9%. The 16.4% decrease in organic revenue was due to a ~~9.7% reduction from~~18.4% decrease in COVID-19 Testing, partially offset by a ~~5.8%~~1.9% increase in the Base Business. Total Base Business growth compared to the Base Business in the prior year was 3.7%.

~~Total~~Dx total volume (measured by requisitions) for the three months ended September 30, ~~2021, increased~~2022, decreased by ~~0.2%~~10.3% as ~~acquisition volume contributed 0.2% and~~ organic volume decreased by ~~0.1%~~10.9% and acquisition volume contributed 0.6%. ~~The organic~~Organic volume was impacted by ~~a 5.9%~~an 12.8% decrease in COVID-19 Testing, partially offset by a ~~5.9%~~1.9% increase in Base Business. Price/mix decreased by ~~3.4%~~5.4% due to ~~lower~~a decrease in COVID-19 Testing of ~~3.8%, partially offset by acquisitions of 0.2% and favorable currency translation of 0.3%~~5.5%. ~~Organic~~ Base Business volume was up ~~7.7%~~3.1% compared to the Base Business last year, while price/mix was up ~~1.3%~~0.6%.

DD revenues for the three months ended September 30, ~~2021,~~2022, were ~~$1,459.5, an increase~~$1,405.8, a decrease of ~~17.5%~~3.7% over ~~$1,241.9~~$1,459.5 in the third quarter of ~~2020.~~2021. The ~~increase~~decrease was primarily due to ~~organic Base Business growth of 19.9%, acquisitions of 0.4%, and favorable~~unfavorable foreign currency translation of ~~1.0%, partially~~3.4%. The benefit of acquisitions of 0.5% was offset by ~~lower COVID-19 Testing performed through its Central Laboratories business of 3.5% and divestitures of 0.3%. Drug Development's~~a 0.7% decline in Base Business ~~benefited from broad-based demand, including~~organic growth, which was negatively impacted by approximately 5.0% due to reduced COVID-19 related work and the Ukraine/Russia crisis. COVID-19 related work includes lower COVID-19 vaccine and therapeutic ~~work.~~studies as well as reduced clinical development kits shipped and returned due to supply chain issues and labor constraints.

Cost of Revenues


		Three Months Ended September 30,									Three Months Ended September 30,
		2021			2020			Change			2022			2021			Change
Cost of revenues	Cost of revenues	$	2,677.1		$	2,336.7		14.6	%	Cost of revenues	$	2,546.4		$	2,677.1		(4.9)	%
Cost of revenues as a % of revenues	Cost of revenues as a % of revenues	65.9		%	60.0		%			Cost of revenues as a % of revenues	70.6		%	65.9		%

Cost of revenues ~~increased 14.6 %~~decreased 4.9% during the three months ended September 30, ~~2021,~~2022, as compared with the corresponding period in ~~2020.~~2021. Cost of revenues as a percentage of revenues during the three months ended September 30, ~~2021,~~2022, increased to ~~65.9%~~70.6% as compared to ~~60.0%~~65.9% in the corresponding period in ~~2020.~~2021. This increase in cost of revenues as a percent of revenues was primarily due to ~~the impact of~~a reduction in COVID-19 ~~Testing.~~

~~INDEX~~

Testing revenues, higher personnel expenses, and other inflationary costs, partially offset by organic Base Business growth and LaunchPad savings.

Selling, General and Administrative Expenses


		Three Months Ended September 30,									Three Months Ended September 30,
		2021			2020			Change			2022			2021			Change
Selling, general and administrative expenses	Selling, general and administrative expenses	$	519.9		$	419.5		23.9	%	Selling, general and administrative expenses	$	510.0		$	519.9		(1.9)	%
Selling, general and administrative expenses as a % of revenues	Selling, general and administrative expenses as a % of revenues	12.8		%	10.8		%			Selling, general and administrative expenses as a % of revenues	14.1		%	12.8		%

During the three months ended September 30, 2021, the Company incurred $9.6 of retention bonuses, $5.2 of acquisition and divestiture related costs, $2.8 in management transition costs, and $2.0 in COVID-related costs. In addition, the Company recorded $1.8 of non-capitalized costs associated with the implementation of a major system as part of its LaunchPad business process improvement initiative and $4.0 related to miscellaneous other items. These items increased selling, general and administrative expenses by $25.4.

During the three months ended September 30, 2020, the Company incurred $2.4 in acquisition and divestiture costs, $1.9 in COVID-related costs and $1.8 in management transition costs. In addition, the Company recorded $0.2 of non-capitalized costs associated with the implementation of a major system as part of its LaunchPad business process improvement initiative and $0.7 related to miscellaneous other items. These items increased selling, general and administrative expenses by $7.0.

~~Excluding these charges, selling,~~Selling, general and administrative expenses as a percentage of revenues were ~~12.2%~~14.1% and ~~10.6%~~12.8% during the three months ended September 30, 2022, and 2021, ~~and 2020, respectively,~~respectively. The increase is primarily due to ~~the impact of~~a reduction in COVID-19 ~~Testing.~~

~~Goodwill and Other Asset Impairments~~

Three Months Ended September 30,
2021 2020 Change
Goodwill and other asset impairments $ — $ 23.5 (99.9) %

During the three months ended September 30, 2020, the Company recorded goodwill and other asset impairment charges of $10.1 and $17.7 for customer relationships and technology intangible assets, respectively, due to the loss of a contract from a DD prior acquisition. The Company reversed the $5.0 charge for the estimated loss related to the DD floating rate secured note receivable due 2022 from Envigo. The Company also recorded an impairment for a note receivable related to a Dx investment of $0.7 during the three months ended September 30, 2020. There were no goodwill and other asset impairments for the three months ended September 30, 2021.Testing revenues, partially offset by LaunchPad savings.

Amortization of Intangibles and Other Assets


		Three Months Ended September 30,							Three Months Ended September 30,
		2021		2020		Change			2022		2021		Change
Dx	Dx	$	29.3	$	25.9	13.3	%	Dx	$	32.5	$	29.3	11.1	%
DD	DD	62.9		36.3		73.2	%	DD	32.7		62.9		(48.1)	%
Total amortization of intangibles and other assets	Total amortization of intangibles and other assets	$	92.2	$	62.2	48.3	%	Total amortization of intangibles and other assets	$	65.2	$	92.2	(29.3)	%

The ~~increase~~decrease in amortization of intangibles and other assets primarily reflects the ~~impact~~completion of ~~acquisitions occurring after September 30, 2020, and $30.2 of~~the accelerated amortization related to the Covance trade name as a result of a rebranding initiative ~~partially~~that resulted in $30.2 of expense in the three months ended September 30, 2021, offset by ~~lower~~additional amortization ~~due~~for assets acquired subsequent to ~~the impairment of intangible assets in 2020.~~September 30, 2021.

Restructuring and Other ~~Special~~ Charges

Three Months Ended September 30,
2021 2020 Change
Restructuring and other charges $ 6.5 $ 7.1 (9.1) %


	Three Months Ended September 30,
	2022		2021		Change
Restructuring and other charges	$	15.1	$	6.5	133.8	%

During the three months ended September 30, 2022, the Company recorded net restructuring and other charges of $15.1: $3.6 within Dx, $11.3 within DD, and $0.2 allocated to general corporate. The charges were comprised of $2.5 related to severance and other personnel costs and $11.4 in facility closures, lease terminations, and general integration activities. The charges were adjusted by the increase of $1.5 of previously established severance liabilities and the reversal of previously established liability of $0.3 in unused facility-related costs.

INDEX

$3.7 in facility closures, lease terminations, and general integration activities. The charges were adjusted by the reversal of a previously established liability of $0.5 in unused facility-related costs.

During the three months ended September 30, 2020, the Company recorded net restructuring and other special charges of $7.1: $1.6 within Dx and $5.5 within DD. The charges were comprised of $2.3 related to severance and other personnel costs, $3.0 for a DD lab facility and equipment impairment, and $4.0 in facility closures, impairment of operating lease right-of-use assets, and general integration initiatives. The charges were offset by the reversal of previously established reserves of $0.1 and $2.1 in unused severance and facility-related costs, respectively.

~~INDEX~~

Interest Expense

Three Months Ended September 30,
2021 2020 Change
Interest expense $ (42.2) $ (51.4) (18.0) %


	Three Months Ended September 30,
	2022		2021		Change
Interest expense	$	(46.3)	$	(42.2)	9.9	%

The ~~decrease~~increase in interest expense for the three months ended September 30, ~~2021,~~2022, as compared with the corresponding period in ~~2020,~~2021, is primarily due to ~~lower outstanding~~the increased interest rates on variable rate debt, and a lower ~~average cost~~benefit from cross currency swaps, partly offset by the impact of ~~debt.~~higher interest rates on cash.

Equity Method Income

Three Months Ended September 30,
2021 2020 Change
Equity method income, net $ 8.4 $ 3.0 173.6 %


	Three Months Ended September 30,
	2022		2021		Change
Equity method income, net	$	1.7	$	8.4	(79.3)	%

Equity method income represents the Company's ownership share in joint venture partnerships along with equity investments in other companies in the health care industry. The ~~increase~~decrease in income for the three months ended September 30, ~~2021,~~2022, as compared with the corresponding period in ~~2020,~~2021, was primarily due to the ~~write off or write down of certain of the Company's investments in 2020, which was primarily due to the negative impact of the COVID-19 global pandemic, and to increased~~decreased profitability of the Company's joint ventures in ~~2021.~~2022.

Other, net

Three Months Ended September 30,
2021 2020 Change
Other, net $ 31.9 $ (54.2) 159.0 %


	Three Months Ended September 30,
	2022		2021		Change
Other, net	$	(7.3)	$	31.9	(123.0)	%

The change in ~~other,~~Other, net for the three months ended September 30, ~~2021,~~2022, as compared to the three months ended September 30, ~~2020,~~2021, is primarily due to ~~the $55.9~~investment losses of ~~funding from the Public Health and Social Services Emergency Fund~~$5.2 for provider relief that was appropriated by Congress to the U.S. Department of Health and Human Services (HHS) in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act Provider Relief Funds) in the second quarter of 2020. The Company returned these funds to the government in the fourth quarter of 2020. This funding in 2020 was partially offset by the $5.2 write off or write down of certain of the Company's investments due to the negative impact of the COVID-19 global pandemic in 2020. During the three months ended September 30, ~~2021, the Company recorded~~2022 compared to investment gains of ~~$36.9.~~$36.9 for the corresponding period of 2021. In addition, foreign currency transaction gains of ~~$0.4~~$1.9 were recognized for the three months ended September 30, ~~2021, and losses~~2022 as compared to gains of ~~$1.9 were recognized in~~$0.4 for the corresponding period of ~~2020.~~2021.

Income Tax Expense


		Three Months Ended September 30,									Three Months Ended September 30,
		2021			2020			Change			2022			2021			Change
Income tax expense	Income tax expense	$	180.4		$	243.4		(25.9)	%	Income tax expense	$	68.4		$	180.4		(62.1)	%
Income tax expense as a % of earnings before income taxes	Income tax expense as a % of earnings before income taxes	23.5		%	25.7		%			Income tax expense as a % of earnings before income taxes	16.2		%	23.5		%

The current year effective tax rate was favorably impacted ~~when~~by the Company recorded tax benefits related to electing the Global Intangible Low Tax Income (GILTI) high-tax exclusion retroactively for previous tax years. On July 20, 2020, the U.S. Treasury issued and enacted final regulations related to GILTI that allows certain U.S. taxpayers to elect to excludeCompany's foreign income ~~that is subject to a high effective~~inclusion and research and development tax ~~rate from the GILTI inclusions. The GILTI high-tax exclusion is an annual election and is retroactively available.~~credits. During the quarter, the Company completed a detailed research and development tax credit analysis ~~and took~~for the ~~appropriate steps to amend its previous tax filings and to reassess its position on its~~2019, 2020, and 2021 tax ~~years. Further, the~~years that resulted in an incremental income tax benefit. The prior year effective tax rate was favorably impacted by ~~foreign derived intangible income (FDII) as~~stock-based compensation arrangements that was offset by the ~~Company finalized a comprehensive study~~deferred revaluation related to ~~previous tax filings and on its 2020 and 2021 tax years. On July 15, 2020,~~ the U.S. Treasury issued and enacted final regulations related to FDII that governs the acceptable documentation reliability requirements and acceptable services that qualify as deduction eligible income. This was partially offset by a new uncertain tax position that was established during this quarter related to a foreign jurisdiction.United Kingdom rate change.

Operating Income by Segment

Three Months Ended September 30,
2021 2020 Change
Dx operating income $ 722.7 $ 964.9 (25.1) %
Dx operating margin 27.6 % 35.7 % (8.1) %
DD operating income 141.6 142.0 (0.4) %
DD operating margin 9.7 % 11.4 % (1.7) %
General corporate expenses (97.4) (59.8) 62.7 %
Total operating income $ 766.9 $ 1,047.1 (26.7) %

~~INDEX~~


	Three Months Ended September 30,
	2022			2021			Change
Dx operating income	$	378.7		$	722.7		(47.6)	%
Dx operating margin	17.2		%	27.6		%	(10.4)	%
DD operating income	156.7			141.6			10.7	%
DD operating margin	11.1		%	9.7		%	1.4	%
General corporate expenses	(66.0)			(97.4)			(32.2)	%
Total operating income	$	469.4		$	766.9		(38.8)	%

Dx operating income was ~~$722.7~~$378.7 for the three months ended September 30, ~~2021,~~2022, a decrease of ~~$242.0~~$344.0 over operating income of ~~$964.9~~$722.7 in the corresponding period of ~~2020,~~2021, and Dx operating margin decreased ~~810~~1,040 basis points year-over-year. The decrease in adjusted operating income and adjusted operating margin was primarily due to a reduction in COVID-19 Testing, ~~and~~ higher personnel expense, and other inflationary costs, partially offset by organic Base Business growth and LaunchPad savings. ~~The Company remains on track to deliver approximately $200.0 of net savings from its three-year Dx LaunchPad initiative by the end of 2021.~~

DD operating income was ~~$141.6~~$156.7 for the three months ended September 30, ~~2021, a decrease~~2022, an increase of ~~0.4%~~$15.2 over operating income of ~~$142.0~~$141.6 in the corresponding period of ~~2020.~~2021. The ~~decrease~~increase was primarily due to ~~lower COVID-19 Testing and higher personnel costs, partially offset by~~less amortization expense in 2022 as a

INDEX

result of the completion of the accelerated amortization related to the Covance trade name, organic Base Business growth, and LaunchPad ~~savings. The Company continues to invest~~savings, partially offset by a reduction in ~~technology~~COVID-19 related work, the Ukraine/Russia crisis, inflationary costs, and ~~processes to drive profitable growth in DD.~~the mix impact of acquisitions.

General corporate expenses are comprised primarily of administrative services such as executive management, human resources, legal, finance, corporate affairs, and information technology. Corporate expenses were ~~$97.4~~$66.0 for the three months ended September 30, ~~2021, an increase~~2022, a decrease of ~~$37.6~~$31.4 over corporate expenses of ~~$59.8~~$97.4 in the corresponding period of ~~2020,~~2021, primarily due to ~~higher~~lower personnel costs, bonus allocation, and research and development costs.

The Company remains on track to deliver approximately $350.0 of net savings from its three-year LaunchPad initiative by the end of 2024.

Nine months ended September 30, ~~2021,~~2022, compared with nine months ended September 30, ~~2020~~2021

Revenues


		Nine Months Ended September 30,							Nine Months Ended September 30,
		2021		2020		Change			2022		2021		Change
Dx	Dx	$	7,740.8	$	6,098.8	26.9	%	Dx	$	6,917.1	$	7,740.8	(10.6)	%
DD	DD	4,392.9		3,479.4		26.3	%	DD	4,317.0		4,392.9		(1.7)	%
Intercompany eliminations and other	Intercompany eliminations and other	(68.9)		(89.5)		(23.0)	%	Intercompany eliminations and other	(31.5)		(68.9)		54.3	%
Total	Total	$	12,064.8	$	9,488.7	27.1	%	Total	$	11,202.6	$	12,064.8	(7.1)	%

The ~~increase~~decrease in revenues for the nine months ended September 30, ~~2021,~~2022, as compared with the corresponding period in ~~2020,~~2021 was ~~27.1%~~7.1%. The ~~increase in revenues~~decrease was due to lower organic ~~growth~~revenue of ~~25.2%, acquisitions of 0.8%,~~6.9% and ~~favorable~~unfavorable foreign currency translation of ~~1.2%~~0.9%, partially offset by acquisitions net of divestitures of 0.6%. The ~~25.2% increase~~6.9% decrease in organic revenue includes an 8.9% decrease from COVID-19 Testing and a ~~18.2%~~2.0% increase in the Company's organic Base ~~Business and a 7.0% contribution from COVID-19 Testing.~~Business.

Dx revenues for the nine months ended September 30, ~~2021,~~2022 were ~~$7,740.8, an increase~~$6,917.1, a decrease of ~~26.9%~~10.6% compared to revenues of ~~$6,098.8~~$7,740.8 during the nine months ended September 30, ~~2020.~~2021. The ~~increase in revenues~~decrease was primarily due to lower organic ~~growth~~revenue of ~~25.7%~~11.4%, partially offset by acquisitions of ~~0.7%, and favorable foreign currency translation of 0.5%~~0.8%. The ~~25.7%~~11.4% decrease in organic revenue was due to a ~~10.9% contribution from~~13.8% decrease in COVID-19 Testing, ~~and~~partially offset by a ~~14.8%~~2.4% increase in the Base Business.

Total volume, measured by requisitions, ~~increased~~decreased by ~~19.6%~~6.1% as organic volume ~~increased~~decreased by ~~19.0%~~6.5% and acquisition volume contributed ~~0.6%~~0.4%. COVID-19 Testing ~~contributed 6.4% to~~decreased organic volume ~~growth.~~growth by 9.1%. Price/mix ~~increased~~decreased by ~~7.3%~~4.6% due to lower COVID-19 Testing of ~~4.5%~~4.8%, lower organic Base Business of ~~2.2%~~0.1%, ~~favorable~~and unfavorable foreign currency translation of ~~0.5%~~0.1%, ~~and~~partially offset by acquisitions of ~~0.2%~~0.4%.

DD revenues for the nine months ended September 30, ~~2021~~2022 were ~~$4,392.9, an increase~~$4,317.0, a decrease of ~~26.3%~~1.7% over revenues of ~~$3,479.4~~$4,392.9 during the nine months ended September 30, ~~2020.~~2021. The ~~increase~~decrease in revenues was primarily due to ~~organic Base Business growth of 23.7%, acquisitions of 0.9%, favorable~~unfavorable foreign currency translation of ~~2.5%~~2.4%, ~~partially offset by~~ lower COVID-19 Testing performed through its Central Laboratories business of ~~0.6%~~0.8%, partially offset by an increase in organic Base Business revenue of 1.2% and acquisitions net of divestitures of ~~0.1%~~0.3%. ~~Drug Development's Base Business benefited from broad-based demand, including COVID-19 vaccine and therapeutic work.~~

Cost of Revenues


		Nine Months Ended September 30,									Nine Months Ended September 30,
		2021			2020			Change			2022			2021			Change
Cost of revenues	Cost of revenues	$	7,815.5		$	6,440.8		21.3	%	Cost of revenues	$	7,787.3		$	7,815.5		(0.4)	%
Cost of revenues as a % of revenues	Cost of revenues as a % of revenues	64.8		%	67.9		%			Cost of revenues as a % of revenues	69.5		%	64.8		%

Cost of revenues ~~increased 21.3%~~decreased 0.4% during the nine months ended September 30, ~~2021,~~2022, as compared with the corresponding period in ~~2020.~~2021. Cost of revenues as a percentage of revenues during the nine months ended September 30, ~~2021, decreased~~2022, increased to ~~64.8%~~69.5% as compared to ~~67.9%~~64.8% in the corresponding period in ~~2020.~~2021. This ~~decrease~~increase in cost of revenues as a percentage of revenues was primarily due to a reduction in COVID-19 Testing revenues, higher personnel expenses, and other inflationary costs, partially offset by organic Base Business growth ~~impact of COVID-19 Testing,~~ and ~~acquisitions, partially offset by higher personnel costs.~~

~~INDEX~~

LaunchPad savings.

Selling, General and Administrative Expenses


		Nine Months Ended September 30,									Nine Months Ended September 30,
		2021			2020			Change			2022			2021			Change
Selling, general and administrative expenses	Selling, general and administrative expenses	$	1,408.4		$	1,211.3		16.3	%	Selling, general and administrative expenses	$	1,460.1		$	1,408.4		3.7	%
Selling, general and administrative expenses as a % of revenues	Selling, general and administrative expenses as a % of revenues	11.7		%	12.8		%			Selling, general and administrative expenses as a % of revenues	13.0		%	11.7		%

During the nine months ended September 30, 2021, the Company incurred $17.4 of acquisition and divestiture related costs, $9.6 in retention bonuses, $7.8 in COVID-related costs and $5.6 in management transition costs. In addition, the Company recorded $4.6 of non-capitalized costs associated with the implementation of a major system as part of its LaunchPad business process improvement initiative and $17.2 related to miscellaneous other items. These items increased selling, general and administrative expenses by $62.2.

During the nine months ended September 30, 2020, the Company incurred $15.3 in acquisition and divestiture costs, $5.8 in COVID-related costs, and $12.4 in management transition costs. In addition, the Company recorded $1.3 of non-capitalized costs associated with the implementation of a major system as part of its LaunchPad business process improvement initiative and $1.7 related to miscellaneous other items. These charges were offset by insurance proceeds of $10.0 related to the 2018 ransomware attack. These items increased selling, general and administrative expenses by $26.5.

~~Excluding these charges, selling,~~Selling, general and administrative expenses as a percentage of revenues were ~~11.2%~~13.0% and ~~12.5%~~11.7% during the nine months ended September 30, 2022, and 2021, ~~and 2020, respectively,~~respectively. The increase is primarily due to ~~leveraging~~a reduction in COVID-19 Testing revenues and higher personnel expenses, partially offset by LaunchPad savings.

INDEX

Amortization of Intangibles and Other Assets


	Nine Months Ended September 30,
	2022		2021		Change
Dx	$	99.2	$	85.8	15.7	%
DD	99.5		190.9		(47.9)	%
Total amortization of intangibles and other assets	$	198.7	$	276.7	(28.2)	%

The decrease in amortization of intangibles and other assets primarily reflects the ~~Company's infrastructure on higher revenue.~~completion of the accelerated amortization related to the Covance trade name as a result of a rebranding initiative that resulted in $87.4 of expense in the nine months ended September 30, 2021, offset by additional amortization for assets acquired subsequent to September 30, 2021.

Goodwill and Other Asset Impairments

Nine Months Ended September 30,
2021 2020 Change
Goodwill and other asset impairments $ — $ 460.9 (100.0) %


	Nine Months Ended September 30,
	2022		2021		Change
Goodwill and other asset impairments	$	1.2	$	—	100.0%

~~During~~The Company recorded impairment charges of $1.2 in other assets in Ukraine and Russia during the nine months ended September 30, 2020, the Company recorded goodwill and other asset impairment charges of $460.9. The Company recorded goodwill impairment of $418.7 within DD and $3.7 within Dx. The Company also recorded impairment charges of $2.7 for a DD tradename, $10.1 and $17.7, respectively, for DD customer relationships and DD technology due to the loss of a contract from a prior acquisition, $7.3 for Dx software and $0.7 for the impairment of the a Dx investment.2022. There were no goodwill and other asset impairments for the nine months ended September 30, 2021.

~~Amortization of Intangibles and Other Assets~~

Nine Months Ended September 30,
2021 2020 Change
Dx $ 85.8 $ 77.3 10.9 %
DD 190.9 107.3 78.0 %
Total amortization of intangibles and other assets $ 276.7 $ 184.6 49.9 %

The increase in amortization of intangibles and other assets primarily reflects the impact of acquisitions occurring after September 30, 2020, and $87.4 of accelerated amortization related to the Covance trade name as a result of a rebranding initiative, partially offset by lower amortization due to the impairment of intangible assets in 2020.

Restructuring and Other Special Charges

Nine Months Ended September 30,
2021 2020 Change
Restructuring and other charges $ 35.3 $ 38.9 (9.4) %


	Nine Months Ended September 30,
	2022		2021		Change
Restructuring and other charges	$	72.1	$	35.3	104.6	%

During the nine months ended September 30, 2022, the Company recorded net restructuring and other charges of $72.1: $23.9 within Dx, $42.7 within DD, and $5.5 allocated to general corporate. The charges were comprised of $31.9 related to severance and other personnel costs and $38.6 in facility closures, lease terminations, and general integration activities. The charges were adjusted by an increase of $2.0 of previously established severance liabilities and the reversal of previously established liability of $0.4 in unused facility-related costs.

During the nine months ended September 30, 2021, the Company recorded net restructuring and other special charges of $35.3: $16.8 within Dx and $18.5 within DD. The charges were comprised of $13.6 related to severance and other personnel costs and $22.4 in facility closures, lease terminations, and general integration ~~activities.~~initiatives. The charges were adjusted by ana decrease of $0.1 of previously established severance liabilities and the reversal of previously established liability of $0.7 in unused facility-related costs.

During the nine months ended September 30, 2020, the Company recorded net restructuring and other special charges of $38.9: $13.4 within Dx and $25.5 within DD. The charges were comprised of $12.8 related to severance and other personnel costs, $11.0 for a DD lab facility impairment, and $24.0 in costs associated with facility closures, impairment of operating lease right-of-use assets, and general integration initiatives. The charges were offset by the reversal of previously established liability of $1.1 and $7.8 in unused severance costs and facility-related costs, respectively.

~~INDEX~~

Interest Expense

Nine Months Ended September 30,
2021 2020 Change
Interest expense $ (169.0) $ (159.1) 6.2 %


	Nine Months Ended September 30,
	2022		2021		Change
Interest expense	$	(131.0)	$	(169.0)	(22.4)	%

The ~~increase~~decrease in interest expense for the nine months ended September 30, ~~2021,~~2022, as compared with the corresponding period in ~~2020,~~2021, is primarily due to the costs of redeeming the 3.20% and 3.75% notes and issuing the new senior notes ~~partially offset by~~in 2021, lower ~~debt.~~outstanding debt and a lower average cost of debt in 2022.

Equity Method Income

Nine Months Ended September 30,
2021 2020 Change
Equity method income, net $ 20.9 $ (1.8) 1,255.2 %


	Nine Months Ended September 30,
	2022		2021		Change
Equity method income, net	$	6.5	$	20.9	(68.8)	%

Equity method income represents the Company's ownership share in joint venture partnerships along with equity investments in other companies in the health care industry. The ~~increase~~decrease in income for the nine months ended September 30, ~~2021,~~2022, as compared with the corresponding period in ~~2020,~~2021, was primarily due to the ~~write off or write down of certain of the Company's investments in 2020, which was primarily due to the negative impact of the COVID-19 global pandemic, and increased~~decreased profitability of the Company's joint ventures in ~~2021.~~2022.

Other, net

Nine Months Ended September 30,
2021 2020 Change
Other, net $ 51.5 $ (22.6) 327.8 %


	Nine Months Ended September 30,
	2022		2021		Change
Other, net	$	(27.8)	$	51.5	(153.9)	%

INDEX

The change in ~~other,~~Other, net for the nine months ended September 30, ~~2021,~~2022, as compared to the nine months ended September 30, ~~2020,~~2021, is primarily due to investment ~~activity. During the nine months ended September 30, 2020, the Company adjusted certain~~losses of ~~the Company's investments due~~$19.4 compared to ~~the negative impact~~$67.4 of ~~the COVID-19 global pandemic in 2020. During the nine months ended September 30, 2021, the Company recorded~~ investment gains in the corresponding period of ~~$67.4 which were partially offset by a loss on sale of a business of $6.1.~~2021. In addition, foreign currency transaction losses of ~~$2.4~~$5.1 were recognized for the nine months ended September 30, ~~2021,~~2022, and losses of ~~$6.4~~$2.4 were recognized in the corresponding period of ~~2020.~~2021.

Income Tax Expense


		Nine Months Ended September 30,									Nine Months Ended September 30,
		2021			2020			Change			2022			2021			Change
Income tax expense	Income tax expense	$	614.7		$	358.0		71.7	%	Income tax expense	$	333.9		$	614.7		(45.7)	%
Income tax expense as a % of earnings before income taxes	Income tax expense as a % of earnings before income taxes	25.2		%	36.7		%			Income tax expense as a % of earnings before income taxes	21.7		%	25.2		%

The 2021 tax rate was favorable to the 2020 tax rate due primarily to the 2020 impairment charges which were either not deductible or the associated tax assets required a full valuation allowance. In addition, thecurrent year effective tax rate was favorably impacted ~~when~~by the Company recorded tax benefits related to electing the GILTI high-tax exclusion retroactively for previous tax years. On July 20, 2020, the U.S. Treasury issued and enacted final regulations related to GILTI that allows certain U.S. taxpayers to elect to excludeCompany's foreign income ~~that is subject to a high effective~~inclusion and research and development tax ~~rate from the GILTI inclusions. The GILTI high-tax exclusion is an annual election and is retroactively available.~~credits. During the quarter, the Company completed a detailed research and development tax credit analysis ~~and took~~for the ~~appropriate steps to amend its previous tax filings and to reassess its position on its~~2019, 2020, and 2021 tax ~~years. Further, the~~years that resulted in an incremental income tax benefit. The prior year effective tax rate was favorably impacted by ~~FDII as~~stock-based compensation arrangements that was offset by the ~~Company finalized a comprehensive study~~deferred revaluation related to ~~previous tax filings and on its 2020 and 2021 tax years. On July 15, 2020,~~ the U.S. Treasury issued and enacted final regulations related to FDII that governs the acceptable documentation reliability requirements and acceptable services that qualify as deduction eligible income. This was partially offset by a new uncertain tax position that was established during this quarter related to a foreign jurisdiction.United Kingdom rate change.

Operating Income by Segment

Nine Months Ended September 30,
2021 2020 Change
Dx operating income $ 2,275.4 $ 1,451.5 56.8 %
Dx operating margin 29.4 % 23.8 % 5.6 %
DD operating income (loss) 445.3 (131.2) 439.4 %
DD operating margin 10.1 % (3.8) % 13.9 %
General corporate expenses (191.8) (168.1) (14.1) %
Total operating income (loss) $ 2,528.9 $ 1,152.2 119.5 %

~~INDEX~~


	Nine Months Ended September 30,
	2022			2021			Change
Dx operating income	$	1,457.5		$	2,275.4		$	(817.9)
Dx operating margin	21.1		%	29.4		%	(8.3)		%
DD operating income	431.8			445.3			(13.4)
DD operating margin	10.0		%	10.1		%	(0.1)		%
General corporate expenses	(206.1)			(191.8)			(14.3)
Total operating income	$	1,683.2		$	2,528.9		$	(845.7)

Dx operating income was ~~$2,275.4~~$1,457.5 for the nine months ended September 30, ~~2021, an increase~~2022, a decrease of ~~$823.9 over~~$817.9 from operating income of ~~$1,451.5~~$2,275.4 in the corresponding period of ~~2020,~~2021, and Dx operating margin ~~increased 560~~decreased 830 basis points year-over-year. The ~~increase~~decrease in adjusted operating income and adjusted operating margin was primarily due to ~~the increase~~a reduction in COVID-19 Testing, higher personnel expense, and other inflationary costs, partially offset by organic Base Business growth and LaunchPad ~~savings, partially offset by higher personnel costs. The Company remains on track to deliver approximately $200.0 of net savings from its three-year Dx LaunchPad initiative by the end of 2021.~~savings.

DD operating income was ~~$445.3~~$431.8 for the nine months ended September 30, ~~2021, an increase~~2022, a decrease of ~~$576.4 over~~$13.4 from operating ~~loss~~income of ~~$131.2~~$445.3 in the corresponding period of ~~2020.~~2021. The ~~increase~~decrease was primarily due to ~~goodwill~~a reduction in COVID-19 Testing, a reduction in COVID-19 related work, the interruption of some clinical trial activity due to the conflict in Ukraine, higher personnel expense, and other ~~asset impairments in 2020 and in 2021~~inflationary costs. These impacts were partially offset by less amortization expense as a result of the completion of the accelerated amortization related to the Covance trade name, organic Base Business growth and LaunchPad ~~savings, partially offset by lower COVID-19 Testing and higher personnel costs. The Company continues to develop and execute new LaunchPad programs to support profitable growth in DD.~~savings.

General corporate expenses are comprised primarily of administrative services such as executive management, human resources, legal, finance, corporate affairs, and information technology. Corporate expenses were ~~$191.8~~$206.1 for the nine months ended September 30, ~~2021,~~2022, an increase of ~~$23.7~~$14.3 over corporate expenses of ~~$168.1~~$191.8 in the corresponding period of ~~2020,~~2021, primarily due to higher personnel costs, bonus allocation, research and development costs, and other costs.

The Company remains on track to deliver approximately $350.0 of net savings from its three-year LaunchPad initiative by the end of 2024.

LIQUIDITY AND CAPITAL RESOURCES (dollars and shares in millions)

The Company's ~~strong~~ cash-generating ability and financial condition typically have provided ready access to capital markets. The Company's principal source of liquidity is operating cash flow, supplemented by proceeds from debt offerings. The Company's senior unsecured revolving credit facility is further discussed in Note ~~7 Debt~~6 (Debt) to the Company's ~~Condensed Consolidated Financial Statements.~~condensed consolidated financial statements.

INDEX

In summary, the Company's cash flows were as follows for the nine months ended September 30, ~~2021,~~2022, and ~~2020,~~2021, respectively:


		Nine Months Ended September 30,					Nine Months Ended September 30,
		2021		2020			2022		2021
Net cash provided by operating activities	Net cash provided by operating activities	$	2,412.1	$	1,360.7	Net cash provided by operating activities	$	1,302.3	$	2,412.1
Net cash used for investing activities	Net cash used for investing activities	(630.1)		(515.2)		Net cash used for investing activities	(1,378.9)		(630.1)
Net cash used for financing activities	Net cash used for financing activities	(1,057.2)		(516.4)		Net cash used for financing activities	(949.6)		(1,057.2)
Effect of exchange rate changes on cash and cash equivalents	Effect of exchange rate changes on cash and cash equivalents	(9.1)		0.6		Effect of exchange rate changes on cash and cash equivalents	(36.6)		(9.1)
Net increase in cash and cash equivalents		$	715.7	$	329.7
Net increase (decrease) in cash and cash equivalents						Net increase (decrease) in cash and cash equivalents	$	(1,062.8)	$	715.7

Cash and Cash Equivalents

Cash and cash equivalents at September 30, 2022, and 2021, totaled $409.9 and ~~2020, totaled~~ $2,036.5, ~~and $667.2,~~ respectively. Cash and cash equivalents consist of highly liquid instruments, such as time deposits, commercial paper, and other money market investments, ~~substantially all of~~ which have original maturities of three months or less.

Cash Flows from Operating Activities

During the nine months ended September 30, ~~2021,~~2022, the Company's operations provided ~~$2,412.1~~$1,302.3 of cash as compared to ~~$1,360.7~~$2,412.1 during the same period in ~~2020.~~2021. The ~~$1,051.4 increase~~$1,109.8 decrease in cash provided from operations in ~~2021~~2022 as compared with the corresponding ~~2020~~2021 period is primarily due to ~~higher~~lower cash earnings and ~~favorable~~unfavorable working ~~capital.~~capital requirements.

Cash Flows from Investing Activities

Net cash used for investing activities for the nine months ended September 30, ~~2021,~~2022, was ~~$630.1~~$1,378.9 as compared to ~~$515.2~~$630.1 for the nine months ended September 30, ~~2020.~~2021. The change in cash used for investing activities was primarily due to an increase in business acquisitions and higher capital expenditures during the nine months ended September 30, ~~2021, partially offset by higher proceeds from the sale of investments and a business.~~2022. Capital expenditures were ~~$310.4~~$364.0 and ~~$282.3~~$310.4 for the nine months ended September 30, ~~2021,~~2022, and ~~2020,~~2021, respectively.

~~The Company continues to evaluate a robust pipeline of acquisitions and anticipates an acceleration of acquisitions.~~

Cash Flows from Financing Activities

Net cash used by financing activities for the nine months ended September 30, ~~2021,~~2022, was ~~$1,057.2~~$949.6 as compared to ~~$516.4~~$1,057.2 for the nine months ended September 30, ~~2020.~~2021. The change in cash flows from financing activities for the nine months ended September 30, ~~2021,~~2022, as compared to the nine months ended September 30, ~~2020,~~2021, was primarily due to the repayment of the 2019 Term Loan in ~~February~~ 2021, the payment of dividends of $131.6 in 2022, and an increase of ~~$568.5~~$131.5 in share repurchases.

~~On May 26, 2021,~~At September 30, 2022, the Company ~~issued new senior notes representing~~had $409.9 of cash and $1,000.0 ~~in debt securities and consisting~~ of $500.0 aggregate principal amount of 1.55% senior notes due 2026 and $500.0 aggregate principal amount of 2.70% senior notes due 2031. Interest on these notes is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on

~~INDEX~~

December 1, 2021. Net proceeds from the offering of these notes were $989.4 after deducting underwriting discounts and other expenses of the offering. The net proceeds were used to redeem, prior to maturity, the Company's outstanding 3.20% senior notes due February 1, 2022 and 3.75% senior notes due August 23, 2022.

During the second quarter of 2021, the Company entered into fixed-to-variable interest rate swap agreements for its 2.70% senior notes due 2031 with an aggregate notional amount of $500.0 and variable interest rates based on three-month LIBOR plus 1.0706%. These instruments are designated as hedges against changes in the fair value of a portion of the Company's long-term debt. The aggregate fair value of $4.0 at September 30, 2021, was included as a component of other long-term assets and added to the reported value of the senior notes.

~~On April 30, 2021, the Company amended and restated~~available borrowings under its revolving credit ~~facility. It consists of a five-year revolving~~ facility, in the principal amount of up to $1,000.0, with the option of increasing the facility by up to an additional $500.0, subject to the agreement of one or more new or existing lenders to provide such additional amounts and certain other customary conditions. The Company is required to pay a facility fee on the aggregate commitments under the revolving credit facility, at a per annum rate ranging from 0.100% to 0.225%, depending on the Company’s debt ratings. Borrowings under the revolving credit facility will accrue interest at a per annum rate equal to, at the Company’s election, either (x) a LIBOR rate plus a margin ranging from 0.775% to 1.275% or (y) a base rate plus a margin ranging from 0% to 0.275%, in each case, depending on the Company’s debt ratings.

which does not mature until 2026. Under the Company's revolving credit facility, the Company is subject to negative covenants limiting subsidiary indebtedness and certain other covenants typical for investment grade-rated borrowers and the Company is required to maintain certain leverage ratios. The Company was in compliance with all covenants under the revolving credit facility at September 30, ~~2021,~~2022, and expects that it will remain in compliance with its existing debt covenants for the next twelve months.

~~At September 30, 2021, the Company had $2,036.5 of cash and $1,000.0 of available borrowings under its revolving credit facility, which does not mature until 2026.~~

For the nine months ended September 30, ~~2021,~~2022, the Company ~~repurchased $668.5~~purchased 3.3 shares of ~~the Company's~~its common stock ~~and~~at a total cost of $800.0. As of September 30, 2022, the Company had an outstanding authorization from the board of directors to purchase up to ~~$131.5~~$831.5 more of the Company's common stock with no expiration date.

Credit Ratings

The Company’s investment grade debt ratings from Moody’s and from Standard and Poor’s (S&P) contribute to its ability to access capital markets. The Company’s expectation is that it will seek to maintain an investment grade debt rating regardless of what, if anything, results from the Company’s current review of its structure and capital allocation strategy.

Contractual Cash Obligations
Payments Due by Period
Total Short-term Long-term
Operating lease obligations $ 820.1 $ 189.1 $ 631.0
Contingent future licensing payments (a) 19.0 4.0 15.0
Purchase obligations 35.6 15.6 20.0
Finance lease obligations 96.6 10.6 86.0
Scheduled interest payments on Senior Notes (b) 1,693.6 181.0 1,512.6
Long-term debt (c) 5,418.8 1.6 5,417.2
Total contractual cash obligations (d) (e) $ 8,083.7 $ 401.9 $ 7,681.8

~~(a)~~Contingent future licensing payments will be made if certain events take place, such as the launch of a specific test, the transfer of certain technology, and the achievement of specified revenue milestones.

~~(b)Interest payments due by period for the Company's debt subject to variable interest rates are calculated based on rates in place as of September 30, 2021.~~

~~(c)Excludes amount of debt issuance costs and fair value of swap included in the long-term debt balance.~~

~~(d)The table does not include obligations under the Company’s pension and postretirement benefit plans.~~

~~(e)The table does not include the Company’s reserve for unrecognized tax benefits.~~

~~INDEX~~

ITEM 3. Quantitative and Qualitative Disclosures about Market Risk (dollars in millions)

Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign currency exchange rates, interest rates, and other relevant market rate or price changes. In the ordinary course of business, the Company is exposed to various market risks, including changes in foreign currency exchange and interest rates, and the Company regularly evaluates its exposure to such changes. The Company addresses its exposure to market risks, principally the market risks associated with changes in foreign currency exchange rates and interest rates, through a controlled program of risk management that includes,

INDEX

from time to time, the use of derivative financial instruments such as foreign currency forward contracts, and interest rate and cross currency swap agreements.

Foreign Currency Exchange Rates

Approximately ~~15.2%~~15.1% of the Company's revenues for the nine months ended September 30, ~~2021,~~2022, and approximately ~~11.0%~~15.2% of the Company's revenue for the nine months ended September 30, ~~2020,~~2021, were denominated in currencies other than the U.S. ~~dollar.~~Dollar (USD). The Company's financial statements are reported in ~~U.S. dollars~~USD and, accordingly, fluctuations in exchange rates will affect the translation of revenues and expenses denominated in foreign currencies into ~~U.S. dollars~~USD for purposes of reporting the Company's consolidated financial results. In the third quarter of ~~2021~~2022 and the year ended December 31, ~~2020,~~2021, the most significant currency exchange rate exposures were to the Canadian dollar, Swiss Franc, Euro and British Pound. Excluding the impacts from any outstanding or future hedging transactions, a hypothetical change of 10% in average exchange rates used to translate all foreign currencies to ~~U.S. dollars~~USD would have impacted income before income taxes for the nine months ended September 30, ~~2021,~~2022, by approximately ~~$11.5.~~$20.6. Gross accumulated currency translation adjustments recorded as a separate component of shareholders’ equity were ~~($114.6)~~$(572.2) and ~~$52.4~~$(114.6) at September 30, ~~2021~~2022 and ~~2020,~~2021, respectively. The Company does not have significant operations in countries in which the economy is considered to be ~~highly-inflationary.~~highly inflationary.

The Company earns revenue from service contracts over a period of ~~several~~time, ranging from months ~~and, in some cases, over a period of several~~to years. Accordingly, exchange rate fluctuations during this period may affect the Company's profitability with respect to such contracts. The Company is also subject to foreign currency transaction risk for fluctuations in exchange rates during the period of time between the consummation and cash settlement of transactions. The Company limits its foreign currency transaction risk through exchange rate fluctuation provisions stated in some of its contracts with customers, or it may hedge transaction risk with foreign currency forward contracts. At September 30, ~~2021,~~2022, the Company had 2924 open foreign exchange forward contracts relating to service contracts with various amounts maturing monthly through October ~~2021~~2022 with a notional value totaling approximately ~~$915.2.~~$670.3. At December 31, ~~2020,~~2021, the Company had 3128 open foreign exchange forward contracts relating to service contracts with various amounts maturing monthly through January ~~2021~~2022 with a notional value totaling approximately ~~$601.2.~~$600.7.

The Company is party to U.S. ~~Dollar~~ to Swiss Franc cross-currency swap agreements with an aggregate notional amount of $600.0, $300.0 maturing in ~~2022~~2024 and $300.0 maturing in 2025, as a hedge against the impact of foreign exchange movements on its net investment in a Swiss Franc functional currency subsidiary.

Interest Rates

Some of the Company's debt from time to time is subject to interest at variable rates. As a result, fluctuations in interest rates can affect the business. The Company attempts to manage interest rate risk and overall borrowing costs through an appropriate mix of fixed and variable rate debt including by the utilization of derivative financial instruments, primarily interest rate swaps.

Borrowings under the Company's term loan credit facility, now repaid, and revolving credit facility are subject to variable interest rates, unless fixed through interest rate swaps or other agreements. ~~As of September 30,~~

In May 2021, and December 31, 2020, the Company had $0.0 and $375.0, respectively, of unhedged variable debt from the 2019 term loan credit facility and $0.0 and $0.0, respectively, outstanding on its revolving credit facility.

Toto hedge against changes in the fair value portion of the Company's long-term debt, the Company ~~is party to~~entered into fixed-to-variable interest rate swap agreements for the 2.70% senior notes due 2031 with an aggregate notional value of $500.0 and variable interest rates based on three-month LIBOR plus 1.0706%.

ITEM 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, the Company carried out, under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended). Based upon this evaluation, the Company’s principal executive officer and principal financial officer concluded that the Company’s disclosure controls and procedures were effective as of September 30, ~~2021.~~

~~INDEX~~

2022.

Changes in Internal Control Over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as defined in Rules13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended) that occurred during the quarter ended September 30, ~~2021,~~2022, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

3531

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LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

PART II - OTHER INFORMATION

Item 1. Legal Proceedings

See Note 108 (Commitments and Contingencies) to the Company’s condensed consolidated financial statements, above, which is incorporated herein by reference.

Item 1A. Risk Factors

The risk ~~factor~~factors set forth below ~~revises~~revise and ~~supplements~~supplement the corresponding risk factors set forth in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021. With the exception of the following, there have been no material changes in the risk factors that appear in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

The planned spin-off of the Company’s Clinical Development business may not be completed on the terms or timeline currently contemplated, if at all, and may not achieve the intended results.

The Company intends to pursue a spin-off of its wholly owned Clinical Development business, which includes the parts of its DD segment focused on providing Phase I-IV clinical trial management, market access, and technology solutions to pharmaceutical and biotechnology organizations, which would result in two independent, publicly traded companies. Unanticipated issues including, but not limited to, the failure to obtain regulatory approval, obtain appropriate assurances regarding the tax-free nature of the spin-off, or have the Form 10 registration statement that will be filed with the SEC declared effective on a timely basis or at all, could delay, prevent, or otherwise adversely affect the planned spin-off. There can be no assurance that the ~~Company’s review~~conditions of ~~its structure~~the spin-off will be satisfied or that Company will be able to complete the spin-off on the terms or on the anticipated timeline, or at all.

The Company expects that pursuing and ~~capital allocation strategy~~implementing the spin-off will ~~enhance shareholder value or result in any changes~~continue to ~~its structure or capital allocation strategy,~~require significant expenses and ~~speculation~~management time and ~~uncertainty regarding~~effort, may divert management’s attention from the ~~outcome of this review~~Company and Clinical Development's ongoing business operations and may adversely impact relationships with customers, suppliers, employees, and other business counterparties. The Company may experience delays, business disruption, increased costs, including from lost synergies or from restructuring transactions, negative market reaction to the announcement and planning for the transaction, change in market receptiveness to effect transactions in the capital markets, and other challenges during or following the spin-off, which could adversely affect the Company’s business, financial condition, and results of operations. The Company may also experience increased challenges in attracting, retaining, and motivating key personnel during the pendency of the spin-off and following its completion, which could harm the Company’s business. The Company anticipates that, consistent with any applicable legal and tax requirements, there will be ongoing transitional and commercial arrangements to provide for a seamless delivery of services to the customers and other stakeholders of the independent companies following the spin-off, but those arrangements may not meet the intended objectives, which could negatively impact the Company’s and Clinical Development’s business, including relationships with customers and other business counterparties.

Further, if the planned spin-off is completed, the anticipated benefits of the transaction may not be realized within the expected time periods or at all. Failure to implement the planned spin-off effectively or the negative reaction of customers, the Company’s employees, and other stakeholders could also result in a decline in value of one or both of the companies.

Increased regulations and restrictions on the import of research animals, limitations of supply of research animals, and actions of animal rights activists may have an adverse effect on the Company.

DD's preclinical services utilize animals in preclinical testing of the safety and efficacy of drugs and devices. Such activities are required for the development of new medicines and medical devices under regulatory regimes in the U.S., Europe, Japan, and other countries. Increased regulations and restrictions on the import of research animals into various countries, as well as limitations of supply, could impact DD’s ability to conduct preclinical research and could have an adverse effect on DD’s financial condition, results of operations, and cash flows. In ~~March 2021,~~addition, acts of vandalism and other acts by animal rights activists who object to the ~~Company announced~~use of animals in drug development could have an adverse effect on the Company.

U.S. Food and Drug Administration (FDA) regulation of diagnostic products, increased FDA regulation of laboratory-developed tests (LDTs), and regulation by other countries of diagnostic products could result in increased costs and the imposition of fines or penalties, and could have a material adverse effect upon the Company’s business.

The FDA has regulatory responsibility for instruments, test kits, reagents, and other devices used by clinical laboratories. The FDA enforces laws and regulations that govern the development, testing, manufacturing, performance, labeling, advertising, marketing, distribution, and surveillance of diagnostic products, and it regularly inspects and reviews the manufacturing processes and product performance of diagnostic products. Dx’s point-of-care testing devices are subject to regulation by the FDA.

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Since the 1990s, the FDA has asserted that it has authority to regulate LDTs as medical devices, but has exercised enforcement discretion to refrain from systematic regulation of LDTs. In 2014, the FDA issued draft guidance describing how it intended to discontinue its ~~board~~enforcement discretion policy and begin regulating LDTs as medical devices; however, that draft guidance has not been finalized, and the FDA has instead continued its enforcement discretion policy and has indicated that it intends to work with Congress to enact comprehensive legislative reform of ~~directors~~diagnostics oversight. As such, LDTs developed by high complexity clinical laboratories are currently generally offered as services to health care providers under the Clinical Laboratory Improvement Amendments of 1988 (CLIA) regulatory framework administered by the Centers for Medicare and ~~management team,~~Medicaid Services (CMS), without the requirement for FDA clearance or approval. There are other regulatory and legislative proposals that would increase general FDA oversight of clinical laboratories and LDTs. The outcome and ultimate impact of such proposals on the business is difficult to predict at this time. On February 20, 2020, the FDA issued a statement with a table of pharmacogenetic associations setting forth certain gene-drug interactions that the agency has determined are supported by the scientific literature to help ensure that claims being made for pharmacogenetic tests are grounded in sound science, thereby reducing the risk of enforcement actions with respect to LDTs offering claims consistent with the ~~assistance~~table. The FDA noted that while it is committed to work with Congress on new comprehensive diagnostic oversight reform legislation, it could still take enforcement actions under the current medical device framework regarding diagnostic claims the agency determines not to be sufficiently supported. Even without issuance of a finalized LDT oversight framework, in light of the April 4, 2019, FDA warning letter issued to Inova Genomics Laboratory related to certain LDTs that Inova offered, as well as the February 2020 pharmacogenetics statement, there may be an ~~independent financial advisor, had initiated a review~~increased risk of FDA enforcement actions for laboratory tests offered by companies without FDA clearance or approval.

Current FDA regulation of the Company’s ~~structure~~diagnostic products and ~~capital allocation strategy to ensure that~~ the Company is best positioned to unlock shareholder value while the Company continues to support patients and customers around the world. There can be no assurance the review will enhance shareholder value or result in changes to the Company’s structure or capital allocation strategy. In addition, speculation and uncertainty regarding the review process may cause or result in:

~~• disruption~~potential forfuture increased regulation of the Company’s ~~business;~~LDTs in the future could result in increased costs and administrative and legal actions for noncompliance, including warning letters, fines, penalties, product suspensions, product recalls, injunctions, and other civil and criminal sanctions, which could have a material adverse effect upon the Company.

~~• distraction~~Regulation of diagnostics products in jurisdictions outside the ~~Company’s employees;~~

~~• difficulty~~U.S. in ~~recruiting, hiring, motivating,~~which the Company operates may impact laboratory testing offered by the Company in both Dx and ~~retaining talented~~DD. For example, the European Union In Vitro Diagnostics Regulation (Regulation (EU) 2017/746 (EU IVDR)), which became applicable on May 26, 2022, establishes a new legislative framework for in vitro diagnostic devices that are used in certain circumstances, and ~~skilled personnel;~~

~~• difficulty in maintaining or negotiating~~includes a rule-based classification and ~~consummating new business or strategic relationships or transactions;~~

~~• adverse impacts on the Company’s~~quality and safety standards. The EU IVDR, where applicable to DD's services, could impact DD's ability to ~~incur debt, or refinance existing indebtedness,~~support trials, and could result in increased costs and administrative and legal actions, and have an adverse effect on ~~favorable terms; and~~

~~• increased stock price volatility.~~

If the Company is unable to mitigate these or other potential risks related to the uncertainty caused by the ongoing review process, it may disrupt the Company’s business or adversely impact its operating results andDD's financial condition, ~~in future periods.~~

The Company’s ability to complete any changes to its structure or capital allocation strategy, if the board of directors decides to pursue any changes, will depend on numerous factors, some of which are outside of the Company’s control, including market conditions, industry trends, and the response of customers, employees and other parties to any such changes. Further, it is not certain what impact any potential changes, or a decision not to pursue any changes, may have on the Company’s stock price, business, financial condition, and results of ~~operations.~~

operations, and cash flows.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds (dollars and shares in millions, except per share data)

The following table sets forth information with respect to purchases of shares of the Company’s common stock based on settled trades made during the three months ended September 30, ~~2021,~~2022, by or on behalf of the Company:


									Total Number of Shares Repurchased	Average Price Paid Per Share		Total Number of Shares Repurchased as Part of Publicly Announced Program	Maximum Dollar Value of Shares that May Yet Be Repurchased Under the Program

		Total Number of Shares Repurchased	Average Price Paid Per Share		Total Number of Shares Repurchased as Part of Publicly Announced Program	Maximum Dollar Value of Shares that May Yet Be Repurchased Under the Program

July 1 - July 31	July 1 - July 31	0.5	279.26		0.5	295.5		July 1 - July 31	0.7	243.49		0.7	1,051.5
August 1 - August 31	August 1 - August 31	0.3	297.41		0.3	218.7		August 1 - August 31	0.4	256.17		0.4	931.5
September 1 - September 30	September 1 - September 30	0.3	296.65		0.3	131.5		September 1 - September 30	0.4	229.32		0.4	831.5
		1.1	$	288.69	1.1	$	131.5		1.5	$	243.35	1.5	$	831.5

As of September 30, ~~2021,~~2022, the Company had outstanding authorization from the board of directors to purchase up to ~~$131.5~~$831.5 of the Company's common stock. The repurchase authorization has no expiration date.

~~INDEX~~

Item 5. Other Information

None.

INDEX

Item 6. Exhibits


(a)			Exhibits
31.1*			Certification by the Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a)
31.2*			Certification by the Chief Financial Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a)
32**			Written Statement of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
101.INS*			Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*			Inline XBRL Taxonomy Extension Schema
101.CAL*			Inline XBRL Taxonomy Extension Calculation Linkbase
101.DEF*			Inline XBRL Taxonomy Extension Definition Linkbase
101.LAB*			Inline XBRL Taxonomy Extension Label Linkbase
101.PRE*			Inline XBRL Taxonomy Extension Presentation Linkbase
104			Cover Page Interactive Data File (embedded within the Inline XBRL ~~document)~~document and included in Exhibit 101)


*						filed herewith
**						furnished herewith

3734

INDEX

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

LABORATORY CORPORATION OF AMERICA HOLDINGS

Registrant


			By:			/s/ ADAM H. SCHECHTER
						Adam H. Schechter
						Chief Executive Officer


			By:			/s/ GLENN A. EISENBERG
						Glenn A. Eisenberg
						Executive Vice President and
						Chief Financial Officer

November ~~2, 2021~~1, 2022

3835


	Dx				DD
	Severance and Other Employee Costs		Facility Costs		Severance and Other Employee Costs		Facility Costs		Total
Balance as of December 31, 2020	$	0.3	$	0.4	$	2.4	$	4.7	$	7.8

Restructuring charges	6.4		10.4		7.2		12.0		36.0
Adjustments to prior restructuring accruals	—		—		(0.1)		(0.6)		(0.7)


Cash payments and other adjustments	(5.7)		(10.4)		(5.0)		(12.6)		(33.7)
Balance as of September 30, 2021	$	1.0	$	0.4	$	4.5	$	3.5	$	9.4
Current									$	7.8
Non-current									1.6
									$	9.4


		September 30, 2021						December 31, 2020
		Fair Value of Derivative						Fair Value of Derivative
	Balance Sheet Caption	Asset		Liability		U.S. Dollar Notional		Asset		Liability		U.S. Dollar Notional
Derivatives Designated as Hedging Instruments
Interest rate swap	Other assets, net	$	4.0	—		$	500.0	—		—		—

Cross currency swaps	Other assets, net or Other liabilities	$	—	$	12.8	$	600.0	$	—	$	40.4	$	600.0


	Amount of pre-tax gain/(loss) included in other comprehensive income				Amounts reclassified to the Statement of Operations				Amount of pre-tax gain/(loss) included in other comprehensive income				Amounts reclassified to the Statement of Operations
	Three Months Ended September 30,				Three Months Ended September 30,				Nine Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020		2021		2020		2021		2020
Interest rate swap contracts	$	—	$	—	$	—	$	1.6	$	—	$	0.8	$	—	$	1.6
Cross currency swaps	$	3.9	$	(23.1)	$	—	$	—	$	27.6	$	(12.0)	$	—	$	—


Contractual Cash Obligations
	Payments Due by Period
	Total		Short-term		Long-term
Operating lease obligations	$	820.1	$	189.1	$	631.0
Contingent future licensing payments (a)	19.0		4.0		15.0
Purchase obligations	35.6		15.6		20.0
Finance lease obligations	96.6		10.6		86.0
Scheduled interest payments on Senior Notes (b)	1,693.6		181.0		1,512.6

Long-term debt (c)	5,418.8		1.6		5,417.2
Total contractual cash obligations (d) (e)	$	8,083.7	$	401.9	$	7,681.8