What changed in this filing

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Item 1A. Risk Factors

2022-02-28 compared with 2021-02-22 · 108 added, 93 removed, 260 unchanged (44% of the section changed)

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Additional risks not presently known to us, or that we presently deem immaterial, may also negatively impact us.

Our business, consolidated financial condition, revenues, results of operations, profitability, reputation or cash flows could be materially impacted by any of these factors.

Our business, consolidated financial condition, revenues, results of operations, profitability, reputation or cash flows, or the price of our common stock, could be materially impacted by any of these factors.

This Report also includes forward-looking statements that involve risks or uncertainties.

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healthcare system is evolving and medical laboratory testing market fundamentals are changing, and our business could be adversely impacted if we fail to adapt.

healthcare system is evolving, in part in response to the ACA.

The ACA established the Center for Medicare and Medicaid Innovation to examine alternative payment methodologies and conduct demonstration programs.

The ACA provided for extensive health insurance reforms, including the elimination of pre-existing condition exclusions and other limitations on coverage, fixed percentages on medical loss ratios, expansion in Medicaid and other programs, employer mandates, individual mandates, creation of state and regional health insurance exchanges, and tax subsidies for individuals to help cover the cost of individual insurance coverage.

The ACA also permits the establishment of ACOs.

Certain aspects of the ACA have been repealed, delayed or modified.

The scope and timing of any further legislation to repeal, amend, replace, or reform the rest of the ACA is uncertain, but if such legislation were to become law, it could have a significant impact on the U.S.

healthcare system.

In addition, uncertainty regarding the status of the ACA prior to any such repeal, amendment, replacement or reform could create uncertainty generally in the healthcare market.

Several federal courts have issued determinations that portions of the ACA are unconstitutional;

those rulings are net yet final.

healthcare system continues to evolve.

Significant change is taking place in the healthcare system, including as discussed above under the heading The Clinical Testing Industry, beginning on page 15.

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In addition, we believe that clinical testing market fundamentals are changing.

We believe that PAMA-driven reimbursement pressure is negatively impacting access to care and hurting the clinical testing industry, and remains a catalyst for structural change in the market.

We also believe that health plans increasingly are focusing on driving better value in laboratory testing services.

We also believe that ongoing consumerization in healthcare, with increased cost being borne by consumers, is sharpening focus on price disparities.

We believe that PAMA-driven reimbursement pressure remains a catalyst for structural change in the market.

We also believe that health plans and consumers increasingly are focusing on driving better value in laboratory testing services.

We expect that the evolution of the healthcare industry will continue, and that industry change is likely to be extensive.

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We primarily compete with three types of clinical testing providers:

other commercial clinical laboratories, hospital-affiliated laboratories and physician-office laboratories.

We also compete with other providers, including anatomic pathology practices and large physician group practices.

Hospitals generally maintain on-site laboratories to perform testing on their patients (inpatient or outpatient).

In addition, many hospitals compete with commercial clinical laboratories for outreach (non-hospital patients) testing.

Hospitals may seek to leverage their relationships with community clinicians and encourage the clinicians to send their outreach testing to the hospital's laboratory.

As a result of this affiliation between hospitals and community clinicians, we compete against hospital-affiliated laboratories primarily based on quality and scope of service as well as pricing.

In addition, hospitals that own physician practices may encourage or require the practices to refer testing to the hospital's laboratory.

In recent years, there has been a trend of hospitals acquiring physician practices, increasing the percentage of physician practices owned by hospitals.

Increased hospital ownership of physician practices may enhance clinician ties to hospital-affiliated laboratories and may strengthen their competitive position.

The formation of ACOs, DCEs and IDNs, and their approach to contracts with healthcare providers, in addition to the impact of informatics, also may increase competition to provide diagnostic information services.

other commercial clinical laboratories, IDN-affiliated laboratories and physician-office laboratories.

We also compete with other providers, including anatomic pathology practices, large physician group practices and providers of consumer-initiated testing.

IDNs generally maintain on-site laboratories to perform testing on their patients (inpatient or outpatient).

In addition, many IDNs compete with commercial clinical laboratories for outreach (non-IDN patients) testing.

IDNs may seek to leverage their relationships with community clinicians and encourage the clinicians to send their outreach testing to the IDN's laboratory.

As a result of this affiliation between IDNs and community clinicians, we compete against IDN-affiliated laboratories primarily based on quality and scope of service as well as pricing.

In addition, IDNs that own physician practices may encourage or require the practices to refer testing to the IDN's laboratory.

In recent years, there has been a trend of IDNs acquiring physician practices, increasing the percentage of physician practices owned by IDNs.

Increased IDN ownership of physician practices may enhance clinician ties to IDN-affiliated laboratories and may strengthen their competitive position.

The formation of ACOs and DCEs and their approach to contracts with healthcare providers also may increase competition to provide diagnostic information services.

In addition, new players have recently started to provide clinical lab testing services ( e.g ., employers;

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Competitors also may offer testing to be performed outside of a commercial clinical laboratory, such as (1) point-of-care testing that can be performed by physicians in their offices;

(2) advanced testing that can be performed by hospitals in their own laboratories;

(2) advanced testing that can be performed by IDNs in their own laboratories;

and (3) home testing that can be carried out without requiring the services of outside providers.

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We expect efforts to reduce reimbursements, to impose more stringent cost controls and to reduce utilization of clinical test services will continue.

Pursuant to PAMA, reimbursement rates for many clinical laboratory tests provided under Medicare were reduced in 2018, 2019 and 2020.

Pursuant to PAMA, reimbursement rates for many clinical laboratory tests provided under Medicare were reduced from 2018 - 2020.

PAMA calls for further revision of the Medicare Clinical Laboratory Fee Schedule for years after 2020, based on future surveys of market rates;

reimbursement rate reduction from 2023-25 is capped by PAMA at 15% annually.

The LAB Act provides an opportunity for reforms to PAMA by delaying PAMA's next data collection and reporting period until January 1, 2021 and by ordering a study to determine ways to improve future collection of more representative market rate data under PAMA.

The CARES Act, adopted in early 2020 in response to the COVID-19 pandemic, suspended the PAMA price cuts that had been scheduled for 2021 and delayed PAMA's next data collection and reporting period until January 1, 2022.

PAMA's next data collection and reporting period have been delayed, most recently by federal legislation adopted in December 2021, which further delayed the reimbursement rate reductions and reporting requirements until January 1, 2023.

In addition, CMS has adopted policies limiting or excluding coverage for clinical tests that we perform.

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Medicaid reimbursement varies by state and is subject to administrative and billing requirements and budget pressures.

The ACA includes further provisions that are designed to control utilization and payment levels.

In addition, over the last several years, the federal government has expanded its contracts with private health insurance plans for Medicare beneficiaries, called “Medicare Advantage” programs, and has encouraged such beneficiaries to switch from the traditional programs to the private programs.

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In addition, state budget pressures have encouraged states to consider several courses of action that may impact our business, such as delaying payments, reducing reimbursement, restricting coverage eligibility, denying claims and service coverage restrictions.

Reimbursement for Medicare services also is subject to annual reduction under the Budget Control Act of 2011, the Statutory Pay-As-You-Go Act of 2010 and the Physician Fee Schedule.

From time to time, the federal government has considered whether competitive bidding could be used to provide clinical testing services for Medicare beneficiaries at attractive rates while maintaining quality and access to care.

Congress periodically considers cost-saving initiatives.

These initiatives have included coinsurance for clinical testing services, co-payments for clinical testing and further laboratory fee schedule reductions.

These initiatives have included coinsurance for clinical testing services, co-payments for clinical testing and further laboratory physician fee schedule reductions.

Other steps taken to reduce utilization and reimbursement include requirements to obtain diagnosis codes to obtain payment, increased documentation requirements, limiting the allowable number of tests or ordering frequency, expanded prior authorization programs and otherwise increasing payment denials.

Steps to reduce utilization and reimbursement also discourage innovation and access to innovative solutions that we may offer.

Health plans and other third parties have taken steps to reduce the utilization and reimbursement of health services, including clinical testing services.

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Examples include increased use of prior authorization requirements and increased denial of coverage for services.

Since the passage of ACA, there is increased market activity regarding alternative payment models, including bundled payment models.

There is increased market activity regarding alternative payment models, including bundled payment models.

We expect continuing efforts by third-party payers, including in their rules, practices and policies, to reduce reimbursements, to impose more stringent cost controls and to reduce utilization of clinical testing services.

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The healthcare industry has experienced a trend of consolidation among health insurance plans, resulting in fewer but larger insurance plans with significant bargaining power to negotiate fee arrangements with healthcare providers, including clinical testing providers.

These health plans, and independent physician associations, may demand that clinical testing providers accept discounted fee structures or assume all or a portion of the financial risk associated with providing testing services to their members through capitated payment arrangements.

The increased consolidation among health plans also has increased pricing transparency and their bargaining power and the potential adverse impact of ceasing to be a contracted provider with any such insurer.

Health plans, and independent physician associations, may demand that clinical testing providers accept discounted fee structures or assume all or a portion of the financial risk associated with providing testing services to their members through capitated payment arrangements.

Some health plans also are reviewing test coding, evaluating coverage decisions and requiring preauthorization of certain testing.

There are also an increasing number of patients enrolling in consumer driven products and high deductible plans that involve greater patient cost-sharing.

The increased consolidation among health plans also has increased pricing transparency and bargaining power and the potential adverse impact of ceasing to be a contracted provider with any such insurer.

Government payers and third parties, including health plans, may establish reimbursement levels that do not properly recognize the value of new and innovative solutions.

Government payers and third parties, including health plans, are taking steps to reduce utilization of, and reimbursement for, some new and innovative healthcare solutions, including new tests and other solutions that we may offer.

In response to requests from payers to have a strategy to report a single or at most a few codes to describe procedures used to perform molecular and toxicology testing, the American Medical Association CPT® Editorial Panel has established and replaced billing codes used to report those procedures.

The adoption of these revised codes has resulted in limited coverage decisions on certain occasions, new requirements for documentation to facilitate payment from certain payers and increased payment denials.

While some payers have adopted the new payment methods, others have not yet modified their systems and ask that laboratories continue to report their services using the previous reporting strategies, when those codes still exist.

These steps may discourage innovation and access to innovative solutions that we may offer.

Steps to reduce utilization and reimbursement also discourage innovation and access to innovative solutions that we may offer.

Failure to develop, or acquire licenses for, new tests, technology and services could negatively impact our testing volume and revenues.

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In addition, if we are unable to develop and introduce, or license, new solutions, technology and services to expand our advanced testing capabilities, our services may become outdated when compared with our competition.

Failure to establish, and perform to, appropriate quality standards to assure that the appropriate standard of quality is observed in the performance of our diagnostic information services could adversely affect the results of our operations and adversely impact our reputation.

Failure to establish, and perform to, appropriate quality standards, or to assure that the appropriate standard of quality is observed in the performance of our diagnostic information services, could adversely affect the results of our operations and adversely impact our reputation.

The provision of diagnostic information services involves certain inherent risks.

The services that we provide are intended to provide information for healthcare providers in providing patient care.

The services that we provide are intended to provide information in providing patient care.

Therefore, users of our services may have a greater sensitivity to errors than the users of services or products that are intended for other purposes.

Negligence in performing our services can lead to injury or other adverse events.

We may be sued under physician liability or other liability law for acts or omissions by our pathologists, laboratory personnel and hospital employees who are under the supervision of our hospital-based pathologists.

We may be sued under physician liability or other liability law for acts or omissions by our pathologists, laboratory personnel and IDN employees who are under the supervision of our IDN-based pathologists.

We are subject to the attendant risk of substantial damages awards and risk to our reputation.

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• physician fee splitting;

• relationships with physicians and hospitals;

• relationships with physicians and IDNs;

• safety and health of laboratory employees;

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We may not be able to maintain, renew or secure required permits, licenses or any other regulatory approvals needed to operate our business or commercialize our services.

If we fail to comply with applicable laws and regulations, or if we fail to maintain, renew or obtain necessary permits, licenses and approvals, we could suffer civil and criminal penalties, fines, exclusion from participation in governmental healthcare programs and the loss of various licenses, certificates and authorizations necessary to operate our business, as well as incur additional liabilities from third-party claims.

governmental healthcare programs and the loss of various licenses, certificates and authorizations necessary to operate our business, as well as incur additional liabilities from third-party claims.

If any of the foregoing were to occur, our reputation could be damaged and important business relationships with third parties could be adversely affected.

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It has been used by the FDA, in part, to assert authority over the annotation software aspects of pharmacogenetic testing services.

In addition, the FDA continued during 2020 to work on a pre-certification program to help software developers have a speedier and less restrictive path to clearance or approval of their software.

Failure to accurately bill for our services, or to comply with applicable laws relating to government healthcare programs, could have a material adverse effect on our business .

Billing for diagnostic information services is complex and subject to extensive and non-uniform rules and administrative requirements.

Depending on the billing arrangement and applicable law, we bill various payers, such as patients, insurance companies, Medicare, Medicaid, clinicians, hospitals and employer groups.

Depending on the billing arrangement and applicable law, we bill various payers, such as patients, insurance companies, Medicare, Medicaid, clinicians, IDNs and employer groups.

The majority of billing and related operations for our Company are being provided by a third party under the Company's oversight.

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In addition, failure to comply with applicable laws relating to billing government healthcare programs may result in various consequences, including:

civil and criminal fines and penalties, exclusion from participation in governmental healthcare programs and the loss of various licenses, certificates and authorizations necessary to operate our business, as well as incur additional liabilities from third-party claims, all of which could have a material adverse effect on our business.

civil and criminal fines and penalties,

exclusion from participation in governmental healthcare programs and the loss of various licenses, certificates and authorizations necessary to operate our business, as well as incur additional liabilities from third-party claims, all of which could have a material adverse effect on our business.

Certain violations of these laws may also provide the basis for a civil remedy under the federal False Claims Act, including fines and damages of up to three times the amount claimed.

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intellectual property legal protections and remedies;

weak legal systems which may affect our ability to enforce contractual rights;

weak legal systems which may, among other things, affect our ability to enforce contractual rights;

trade regulations and procedures and actions affecting approval, production, pricing, reimbursement and marketing of services;

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Adverse results in material litigation could have an adverse financial impact and an adverse impact on our client base and reputation.

We are involved in various legal proceedings arising in the ordinary course of business including, among other things, disputes as to intellectual property, professional liability and employee-related matters, as well as inquiries from governmental agencies and Medicare or Medicaid carriers.

agencies and Medicare or Medicaid carriers.

Some proceedings against us involve claims that are substantial in amount and could divert management's attention from operations.

These proceedings also may result in substantial monetary damages.

Government rules and regulations concerning mandatory COVID-19 vaccination of U.S.-based employees of companies that work on or in support of federal government contracts, or other COVID-19 vaccine mandates, could have a material adverse impact on our business and consolidated results of operations.

In September 2021, President Biden issued an executive order requiring all employers with U.S.

Government contracts to ensure that their U.S.-based employees, contractors and subcontractors, that work on or in support of U.S.

government contracts, are fully vaccinated against COVID-19 as required by the executive order.

The executive order is being challenged in courts and is currently not in effect.

However, other federal, state and local government vaccine mandates are in effect;

some of these mandates have application to the Company (directly or indirectly), others do not have application to the Company.

Further, additional vaccine and testing mandates have been and may in the future be announced by private parties (such as contract counterparties) and in other jurisdictions in which we operate;

such mandates may conflict with each other.

Requirements to mandate COVID-19 vaccination of all or significant portions of our workforce could result in labor disruptions, employee attrition, difficulty in satisfying future labor needs and sanctions or penalties.

RISKS RELATED TO OUR INDEBTEDNESS

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Changes in our credit ratings, however, do not require repayment or acceleration of any of our debt.

Borrowings under our credit facilities may be made at interest rates that are based on the London Interbank Offered Rate (“LIBOR”), which is a widely used benchmark for establishing interest rates globally.

As a result of concerns regarding the accuracy of the calculation of LIBOR, the United Kingdom’s Financial Conduct Authority announced that it intends to no longer compel member banks to submit rates used to calculate LIBOR after December 31, 2021.

These reforms may cause LIBOR to cease to exist as a reference rate.

A committee established by the Federal Reserve Board announced a new index, based on overnight repurchase agreements collateralized by U.S.

Treasury securities, as an alternative to LIBOR;

other jurisdictions have proposed different alternatives.

At this time, it is not possible to predict the replacement rate for U.S.

dollar LIBOR (which is the LIBOR rate that we most frequently rely on), and the consequences to us cannot be predicted.

While we expect to be able to transition all LIBOR-based instruments and contracts to an alternative reference rate upon the cessation of LIBOR, there is no guarantee that we will be able to do so.

Changes in market interest rates may negatively influence our financing costs and the valuation of derivative instruments.

We or our subsidiaries may incur additional indebtedness in the future.

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RISKS RELATED TO OUR OPERATIONS

The development of new technologies (including artificial intelligence technologies) may impact the healthcare industry, and the development of new, more cost-effective solutions that can be performed by our customers or by patients, and the continued internalization of testing by hospitals or clinicians, could negatively impact our testing volume and revenues.

The development of new technologies (including artificial intelligence technologies) may impact the healthcare industry, and the development of new, more cost-effective solutions that can be performed by our customers or by patients, and the continued internalization of testing by IDNs or clinicians, could negatively impact our testing volume and revenues.

The diagnostic information services industry is faced with changing technology and new product introductions, including technology that enables more convenient or cost-effective testing.

For example, digital pathology is an emerging technology that may change the practice of pathology.

For example, digital pathology is an emerging

technology that may change the practice of pathology.

Information technology that includes self-learning or "artificial intelligence" features is growing and may impact the healthcare industry.

Competitors also may offer testing to be performed outside of a commercial clinical laboratory, such as (1) point-of-care testing that can be performed by clinicians in their offices;

(2) complex testing that can be performed by hospitals in their own laboratories;

(2) complex testing that can be performed by IDNs in their own laboratories;

and (3) home testing that can be carried out without requiring the services of outside providers.

Advances in technology also may lead to the need for less frequent testing.

Further, diagnostic tests approved or cleared by the FDA for home use are automatically deemed to be “waived” tests under CLIA and may be performed by patients in their homes;

Further, diagnostic tests approved or cleared by the FDA for home use are automatically deemed to be “waived” tests under CLIA and may be performed by consumers in their homes;

test kit manufacturers could seek to increase sales to patients of such test kits.

Some traditional customers for anatomic pathology services, including specialty physicians that generate biopsies through surgical procedures, such as dermatologists, gastroenterologists, urologists and oncologists, are consolidating, have added in-office histology labs or have retained pathologists to read cases on site.

Hospitals also are internalizing clinical laboratory testing, including some non-routine and advanced testing.

IDNs also are internalizing clinical laboratory testing, including some non-routine and advanced testing.

Internalization of testing may reduce demand for services previously referred to outside service providers, such as the Company.

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(a) the federal Health Insurance Portability and Accountability Act and the regulations thereunder, which establish (i) a complex regulatory framework including requirements for safeguarding protected health information and (ii) comprehensive federal standards regarding the uses and disclosures of protected health information;

(b) state laws, including the California Consumer Privacy Act;

(b) state laws, including the California Consumer Privacy Act and similar laws in other states;

and (c) laws outside the U.S., including the European Union's General Data Protection Regulation.

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Our IT systems have been and are subject to potential cyberattacks, tampering or other security breaches.

These attacks, if successful, could result in shutdowns or significant disruptions of our IT systems and/or in unauthorized persons misappropriating intellectual property and other confidential information, including patient data that we obtain, transmit and store on and through our IT systems.

External actors may develop and deploy viruses and other malicious software programs, including those that target our employees, designed to attack our IT systems or otherwise exploit security vulnerabilities, such as electronic spamming, phishing, spear phishing or similar tactics.

These attacks, if successful, could result in shutdowns or significant disruptions of our IT systems and/or in unauthorized persons exfiltrating and misappropriating intellectual property and other confidential information, including patient and employee data that we collect, transmit and store on and through our IT systems.

External actors may develop and deploy viruses, other malicious software programs, ransomware attacks, distributed denial of service attacks or other attempts to harm or obtain unauthorized access to our systems.

External actors may also deploy programs targeting our employees which are designed to attack our IT systems or otherwise exploit security vulnerabilities through programs such as electronic spamming, phishing, smishing, spear phishing or similar tactics.

As a result of the difficulty in detecting many of these attacks, intrusions and breaches, failures or losses may be repeated or compounded before they are discovered or rectified, which could further increase these costs and consequences.

From time to time, our IT systems have experienced other attacks, viruses, attempted intrusions or similar problems, but each was mitigated.

None materially disrupted, interrupted, damaged or shutdown the company's IT systems, materially disrupted the Company's performance of its business or, to the Company's knowledge, resulted in material unauthorized access to data.

In addition, certain third parties to whom we outsource certain of our services or functions, or with whom we interface, store or process our confidential patient data or other confidential information, as well as those third parties’ providers, are also subject to the risks outlined above.

A breach or attack affecting these third parties could also harm our business, results of operations and reputation and subject us to liability.

On June 3, 2019, the Company reported that Retrieval-Masters Creditors Bureau, Inc./American Medical Collection Agency (“AMCA”), informed the Company and Optum360 LLC, which provides revenue management services to the Company, about a data security incident involving AMCA (the “AMCA Data Security Incident”).

AMCA (which provided debt collection services for Optum360) informed the Company and Optum360 that AMCA had learned that an unauthorized user had access to AMCA’s system between August 1, 2018 and March 30, 2019.

AMCA first informed the Company of the AMCA Data Security Incident on May 14, 2019.

AMCA’s affected system included financial information ( e.g ., credit card numbers and bank account information), medical information and other personal information ( e.g ., social security numbers).

Test results were not included.

Neither Optum360’s nor the Company’s systems or databases were involved in the incident.

AMCA also informed us that information pertaining to other laboratories’ customers was also affected.

Although the Company has robust security measures implemented, which are monitored and routinely tested both by internal resources and external parties, cyber threats against us or our third party providers continue to evolve and are often not recognized until such attacks are launched against a potential target.

There can be no assurance that the Company or its third party providers can anticipate all such evolving future attacks, viruses or intrusions, implement adequate preventative measures, nor remediate any security vulnerabilities.

Such breaches could expose our or our third party providers' IT systems to attack, which could result in major disruption of our business, and compromise our customer’s confidential information, result in litigation and potential liability for the Company, government investigation, significant damage to our reputation or otherwise adversely affect our business.

Any mitigation or remediation efforts that we undertake may require expenditures of significant resources and the diversion of the attention of management.

We have taken, and continue to take, precautionary measures to reduce the risk of, and detect and respond to, future cyber threats, and prevent or minimize vulnerabilities in our IT systems, including the loss or theft of intellectual property, patient data or other confidential information that we obtain and store on our systems.

We also have taken, and will continue to take, measures to assess the cybersecurity protections used by our third-party providers.

In addition, we collaborate with government agencies regarding potential cyber threats and have worked with firms that have cyber security expertise to evaluate and strengthen our systems.

Although the Company has robust security measures implemented, which are monitored and routinely tested both by internal resources and external parties, cyber threats against us continue to evolve and may not be recognized until after an incident.

In August 2021, ReproSource, our subsidiary, experienced a data security incident in which an unauthorized party may have accessed or acquired protected health information and personally identifiable information of ReproSource patients (in connection with the incident, ReproSource discovered and contained ransomware).

The Company’s other systems were not impacted or compromised by this incident.

Although the attacks we have experienced have not materially disrupted, interrupted, damaged or shutdown the Company's IT systems, or materially disrupted the Company's performance of its business, the mitigation or remediation efforts that we have undertaken, and may undertake in the future, require the attention of management and expenditures of resources, which can be significant.

There can be no assurance that the Company can anticipate all evolving future attacks, viruses or intrusions, implement adequate preventative measures, or remediate any security vulnerabilities.

If our IT systems are successfully attacked, it could result in major disruption of our business, compromise confidential information, and result in litigation and potential liability for the Company, government investigation, significant damage to our reputation or otherwise adversely affect our business.

In addition, third parties to whom we outsource certain of our services or functions, or with whom we interface, store or process confidential patient and employee data or other confidential information, as well as those third parties’ providers, are also subject to the risks outlined above.

For example, in June 2019, the Company reported that Retrieval-Masters Creditors Bureau, Inc./American Medical Collection Agency (“AMCA”), informed the Company about a data security incident involving AMCA.

AMCA, which provided debt collection services for a company that provides revenue management services to the Company, informed the Company in May 2019 that AMCA had learned that an unauthorized user had access to AMCA’s system during 2018 and 2019.

AMCA’s affected system included financial, medical and other personal information.

The Company’s systems or databases were not involved in this incident.

A breach or attack affecting third parties with whom we engage could also harm our business, results of operations and reputation and subject us to liability.

We have taken, and continue to take, precautionary measures to reduce the risk of, and detect and respond to, future cyber threats, and prevent or minimize vulnerabilities in our IT systems, including the loss or theft of intellectual property, patient and employee data or other confidential information that we obtain and store on our systems.

We also have taken, and will continue to take, measures to assess the cybersecurity protections used by third parties to whom we outsource certain of our services or functions, or with whom we interface, store or process confidential patient and employee data or other confidential information.

In addition, we collaborate with government agencies regarding potential cyber threats and have worked with firms that have cyber security expertise to evaluate our systems and the attacks we experience and strengthen our systems.

There can be no assurances that our precautionary measures or measures used by our third party providers will prevent, contain or successfully defend against cyber or information security threats that could have a significant impact on our business, results of operations and reputation and subject us to liability.

Our ability to attract and retain qualified employees is critical to the success of our business and the failure to do so may materially adversely affect our performance.

Our people are a critical resource.

The supply of qualified personnel may be limited and competition for qualified employees is strong.

We may lose, or fail to attract and retain, key management personnel, or qualified skilled technical or professional employees ( e.g ., pathologists).

The supply of qualified technical, managerial and other personnel, including phlebotomists and processors, is currently constrained;

competition for qualified employees, even across different industries, is intense, including as individuals leave the job market.

We may lose, or fail to attract and retain, key management personnel, or qualified skilled technical, professional or other employees.

Business development activities are inherently risky and integrating our operations with businesses we acquire may be difficult.

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Our operations may be adversely impacted by the effects of natural disasters such as hurricanes and earthquakes, public health emergencies and health pandemics, hostilities or acts of terrorism and other criminal activities.

Such events may result in a decline in the number of patients who seek clinical testing services or in our employees' ability to perform their job duties.

In addition, such events may interrupt our ability to transport specimens, to receive materials from our suppliers or otherwise to provide our services.

We operate facilities across the United States, and consumers frequently visit our facilities in person.

The ability of our employees and consumers to access our facilities may be adversely impacted by the effects of extreme weather events and natural disasters, such as hurricanes, earthquakes, tropical storms, floods, fires, earthquakes or other extreme weather conditions, including major winter storms, droughts and heat waves, whether as a result of climate change or otherwise;

public health emergencies and health pandemics;

hostilities or acts of terrorism or other activities.

Although we maintain a business continuity program to prepare for and respond to such events, because of their unpredictable nature, these events may limit or interrupt our ability to conduct operations.

Additionally, such events may interrupt our ability to transport specimens, to receive materials from our suppliers or otherwise to provide our services.

These events also may result in a decline in the number of patients who seek clinical testing services or in our employees' ability to perform their job duties.

The COVID-19 pandemic has significantly affected our consolidated results of operations, financial position and cash flows, and may continue to do so.

A pandemic caused by a novel strain of coronavirus (COVID-19) continues to severely impact the economy of the United States and other countries around the world.

Federal, state and local governmental authorities in the United States have implemented numerous policies and initiatives to try and reduce the transmission of COVID-19, such as travel bans and restrictions, quarantines, shelter-in-place orders, and business shutdowns.

These policies and initiatives have resulted in, among other things, a significant reduction in physician office visits, the cancellation of elective medical procedures, customers closing or severely curtailing their operations (voluntarily or in response to government orders), increased unemployment and loss of healthcare insurance, and the adoption of work-from-home policies, all of which have had, and we believe will continue to have, an impact on our consolidated results of operations, financial position and cash flows.

These policies and initiatives have resulted in, among other things, a significant reduction in physician office visits, the cancellation of elective medical procedures, customers closing or severely curtailing their operations (voluntarily or in response to government orders), increased unemployment, constrained labor supply and loss of healthcare insurance, and the adoption of work-from-home policies, all of which have had, and we believe will continue to have, an impact on our consolidated results of operations, financial position and cash flows.

Due to the COVID-19 pandemic, we have experienced significant volatility, including periods of material decline compared to prior year periods, in testing volume in our base business (which excludes COVID-19 molecular and antibody testing) and this volatility, including periods of material decline, could continue.

Although we also have experienced heavy demand for COVID-19 molecular testing as a result of the COVID-19 pandemic, which has had a positive impact on our overall testing volume, the duration and level of the demand for, and reimbursement for, COVID-19 molecular testing is uncertain.

We may also experience an adverse impact on cash collections and supply chain disruptions, including shortages, delays and price increases in testing equipment and supplies, as a result of the impact of the COVID-19 pandemic.

We may also experience an adverse impact on cash collections and labor supply and supply chain disruptions, including shortages, delays and price increases in testing equipment and supplies, as a result of the impact of the COVID-19 pandemic.

A number of suppliers and manufacturers we rely upon have been experiencing and may continue to experience disruptions and delays, as a result of ongoing raw material and labor shortages, supply challenges, and business limitations or shutdowns resulting from the COVID-19 pandemic, which may prevent us from obtaining equipment and supplies in a timely manner or at a reasonable price.

The COVID-19 pandemic has also caused significant disruptions in transport and logistics services as a result of facility closures, labor shortages or other challenges, which may affect our ability to transport specimens, receive supplies or materials from our suppliers or otherwise provide our services.

These conditions may continue or deteriorate in the future.

Any of these events could have an adverse impact on our business, consolidated results of operation, financial position and cash flows.

We believe the COVID-19 pandemic’s adverse impact on our consolidated results of operations, financial position and cash flows will be primarily driven by:

the severity and duration of the COVID-19 pandemic;

the severity and duration of the COVID-19 pandemic (including any variants);

the COVID-19 pandemic’s impact on the U.S.

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the timing, scope and effectiveness of federal, state and local governmental responses;

and the ability to effectively and comprehensively administer COVID-19 vaccines across the U.S.

and effective and comprehensive COVID-19 vaccination across the U.S.

These primary drivers are beyond our knowledge and control and will change over time, and as a result, at this time we cannot reasonably estimate the adverse impact the COVID-19 pandemic will have on our businesses, consolidated results of operations, financial position and cash flows, and the adverse impact may be material.

Even after the COVID-19 pandemic has moderated and the business and social distancing restrictions have eased, we may continue to experience similar adverse effects to our businesses, consolidated results of operations, financial position and cash flows resulting from a recessionary economic environment that may persist.

Our business also may be impacted by changes in the severity of the COVID-19 pandemic at different times in the various cities and regions where we operate and offer services, and by challenges faced in implementing nationwide COVID-19 vaccinations, including the degree to which the public is vaccinated and the effectiveness of vaccines at preventing infection or illness in connection with new or existing variants of COVID-19.

Even after the COVID-19 pandemic has moderated and business conditions have eased, we may continue to experience similar adverse effects to our businesses, consolidated results of operations, financial position and cash flows arising from long-term changes in behavior by consumers or other healthcare system participants and resulting from a recessionary economic environment that may persist.

The impact that the COVID-19 pandemic will have on our businesses, consolidated results of operations, financial position and cash flows could exacerbate other risks identified in this Report.

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The following important factors could cause our actual financial results to differ materially from those projected, forecasted or estimated by us in forward-looking statements:

(a) Heightened competition from commercial clinical testing companies, hospitals, physicians and others.

(a) Heightened competition from commercial clinical testing companies, IDNs, physicians and others.

(b) Increased pricing pressure from customers, including payers and patients.

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(n) Failure of the Company to maintain, defend and secure its financial, accounting, technology, customer data and other operational systems from cyberattacks, IT system outages, telecommunications failures, malicious human acts and failure of the systems of third parties upon which the Company relies.

(o) Development of technologies that substantially alter the practice of clinical testing, including technology changes that lead to the development of more convenient or cost-effective testing, or testing to be performed outside of a commercial clinical laboratory, such as (1) point-of-care testing that can be performed by physicians in their offices, (2) advanced testing that can be performed by hospitals in their own laboratories or (3) home testing that can be carried out without requiring the services of clinical laboratories.

(o) Development of technologies that substantially alter the practice of clinical testing, including technology changes that lead to the development of more convenient or cost-effective testing, or testing to be performed outside of a commercial clinical laboratory, such as (1) point-of-care testing that can be performed by physicians in their offices, (2) advanced testing that can be performed by IDNs in their own laboratories or (3) home testing that can be carried out without requiring the services of clinical laboratories.

(p) Negative developments regarding intellectual property and other property rights that could prevent, limit or interfere with our ability to develop, perform or sell our tests or operate our business.

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(t) Increases in interest rates and negative changes in our credit ratings from Standard & Poor's, Moody's Investor Services or Fitch Ratings causing an unfavorable impact on our cost of or access to capital.

(u) Inability to hire or retain qualified or key senior management personnel.

(u) Inability to hire or retain qualified employees, including key senior management personnel.

(v) Terrorist and other criminal activities, hurricanes, earthquakes or other natural disasters, and public health emergencies and health pandemics, which could affect our customers or suppliers, transportation or systems, or our facilities, and for which insurance may not adequately reimburse us.

(w) Difficulties and uncertainties in the discovery, development, regulatory environment and/or marketing of new services or solutions or new uses of existing tests.

(x) Failure to adapt to changes in the healthcare system (including the medical laboratory testing market) and healthcare delivery, including those stemming from the ACA (or its repeal, amendment or replacement), PAMA, trends in utilization of the healthcare system and increased patient financial responsibility for services.

(x) Failure to adapt to changes in the healthcare system (including the medical laboratory testing market) and healthcare delivery, including those stemming from PAMA, trends in utilization of the healthcare system and increased patient financial responsibility for services.

(y) Results and consequences of governmental inquiries.

(z) Difficulty in implementing, or lack of success with, our strategic plan.

(aa) The impact of informatics on our industry and the ability of our Company to adapt to that impact.

(aa) The impact of healthcare data analysis on our industry and the ability of our Company to adapt to that impact.

(bb) Failure to adequately operationalize appropriate controls around use of our data, including risk of non-compliance with privacy law requirements.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors