What changed in this filing

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Item 1A. Risk Factors

2024-02-22 compared with 2023-02-21 · 117 added, 105 removed, 255 unchanged (47% 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, or the price of our common stock, could be materially impacted by any of these factors.

Our business, consolidated financial condition, revenues, results of operations, profitability, cash flows or reputation , 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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RISKS RELATED TO OUR BUSINESS

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 continues to evolve, and medical laboratory testing market fundamentals are changing, and our business could be adversely impacted if we fail to adapt.

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 14.

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

For example, value-based reimbursement is increasing ( e.g.

, UnitedHealthcare's Preferred Lab Network);

CMS has set goals for value-based reimbursement to be achieved by 2030.

, UnitedHealthcare's Preferred Lab Network) and CMS has set goals for value-based reimbursement to be achieved by 2030.

Patients are encouraged to take increased interest in and responsibility for, and often are bearing increased responsibility for payment for, their healthcare.

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

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

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

Unfortunately, as a result of a flawed implementation of PAMA, the data collected did not accurately represent the laboratory market as required under PAMA.

Independent laboratories were overrepresented, and hospitals and physician office laboratories were underrepresented, making the first round of PAMA cuts too extreme and resulting in below market rates.

Congress reintroduced federal legislation in 2023 (the Saving Access to Laboratory Services Act), which, if enacted, would reform PAMA and create a true market-based CLFS.

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

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We primarily compete with three types of clinical testing providers:

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

other commercial clinical laboratories, including smaller regional and local commercial clinical laboratories and specialized advanced laboratories, hospital-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.

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 and their approach to contracts with healthcare providers also may increase competition to provide diagnostic information services.

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Competitors also may compete on the basis of new service offerings.

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 IDNs in their own laboratories;

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

Competitors also may offer new testing services that can be performed outside of a commercial clinical laboratory, such as point-of-care testing that can be administered by physicians in their offices, complex testing that can be performed by hospitals in their own laboratories, and home testing that can be carried out without requiring the services of outside providers.

Government payers, such as Medicare and Medicaid, have taken steps to reduce the utilization and reimbursement of healthcare services, including clinical testing services.

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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 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;

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

Unfortunately, as a result of a flawed implementation of PAMA, the data collected did not accurately represent the laboratory market as required under PAMA.

PAMA calls for further revision of the Medicare CLFS for years after 2020, based on future surveys of market rates.

PAMA's next data collection and reporting period have been delayed, most recently by federal legislation adopted in November 2023 (the Further Continuing Appropriations and Other Extensions Act of 2024), which further delayed the reimbursement rate reductions and reporting requirements until January 1, 2025;

reimbursement rate reduction from 2025-2027 is capped by PAMA at 15% annually.

PAMA's next data collection and reporting period have been delayed, most recently by federal legislation adopted in December 2022, which further delayed the reimbursement rate reductions and reporting requirements until January 1, 2024.

Congress reintroduced federal legislation in 2023 (the Saving Access to Laboratory Services Act), which, if enacted, would reform PAMA and create a true market-based CLFS.

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

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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.

ACOs and IDNs also may undertake efforts to reduce utilization of, or reimbursement for, diagnostic information services.

ACOs and hospitals also may undertake efforts to reduce utilization of, or reimbursement for, diagnostic information services.

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 clinical testing providers.

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

The increased consolidation among health plans also has increased pricing transparency, insurer bargaining power and the potential

adverse impact of ceasing to be a contracted provider with an 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.

Some health plans also are reviewing test coding, evaluating coverage decisions, requiring additional documentation for claims payment 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.

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.

Other steps taken to reduce utilization and reimbursement include requirements to obtain diagnosis codes (which can be inconsistent between health plans and government payers) 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.

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In addition, they could introduce new tests, technologies or services that may result in a decrease in the demand for our services or cause us to reduce the prices of our services.

Our success in continuing to introduce new solutions, technology and services will depend, in part, on our ability to license new and improved technologies on favorable terms.

Our success in continuing to introduce new solutions, technology and services will depend, in part, on our ability to develop or license new and improved technologies on favorable terms.

We may be unable to develop or introduce new solutions or services.

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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 IDN employees who are under our supervision.

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 our supervision.

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

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Our business is subject to or impacted by extensive and frequently changing laws and regulations in the United States (including at both the federal and state levels) and the other jurisdictions in which we engage in business.

While we seek to conduct our business in compliance with all applicable laws, many of the laws and regulations applicable to us are vague or indefinite and have not been extensively interpreted by the courts, including many of those relating to:

• billing and reimbursement of clinical testing;

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• physician fee splitting;

• relationships with physicians and IDNs;

• relationships with physicians and hospitals;

• marketing to consumers;

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• decreases to the amount of reimbursement related to diagnostic information services performed;

• adverse affects to important business relationships with third parties;

• adverse effects to important business relationships with third parties;

• decreased demand for our services;

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Such changes also could require us to modify our business objectives.

Our business could be adversely impacted by the FDA's approach to regulation.

The FDA has regulatory responsibility over, among other areas, instruments, software, test kits, reagents and other devices used by clinical laboratories to perform diagnostic testing in the U.S.

A number of tests we develop internally are offered as LDTs.

Our business and operations could be adversely impacted by the FDA's approach to regulation.

The FDA has regulatory responsibility over, among other areas, instruments, software, test kits, reagents and other devices used by clinical laboratories to perform diagnostic testing in the United States A number of tests we develop internally are offered as LDTs.

The FDA has claimed regulatory authority over all LDTs, but has stated that it exercised enforcement discretion with regard to most LDTs performed by high complexity CLIA-certified laboratories.

As the FDA moves to regulate more clinical laboratory testing, its approach to regulation is impacting industry practices and participants, new competitors may enter the industry, and competition may come in new forms.

As the FDA moves to regulate more clinical laboratory testing, its approach to regulation is expected to impact industry practices and participants, new competitors may enter the industry, and competition may come in new forms.

The FDA and HHS have expressed views regarding the regulation of LDTs.

Legislation introduced in recent sessions of Congress that would authorize the FDA to regulate LDTs has not become law.

If legislation that authorizes the FDA to regulate LDTs were to become law, it could have a significant impact on the clinical laboratory testing industry, including regulating LDTs in new ways, while creating avenues of opportunity and competition regarding clinical laboratory testing.

Legislation introduced in Congress in 2022 and again in 2023 that would authorize the FDA to regulate LDTs has not become law.

In October 2023, the FDA announced a proposed rule that would broaden the definition of medical devices to include diagnostic tests and laboratories that develop them.

Publication of a final rule initiates a four-year period for a staged process of compliance and submissions.

The proposed rule could also impact a revitalization and passage of legislation that authorizes the FDA to regulate LDTs by amending the Food, Drug and Cosmetic Act.

If either the rule or legislation were to become law, it could have a significant impact on the clinical laboratory testing industry, including regulating LDTs in new ways, while creating new avenues of opportunity and competition regarding clinical laboratory testing.

New competitors may enter the industry, and competition may come in new forms.

Pursuant to the 21st Century Cures Act, the FDA issued final guidance regarding its position on the regulation of clinical decision software, which may be used in connection with LDTs.

The guidance attempts to clarify whether FDA approval of certain software is required.

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

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, IDNs and employer groups.

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

Failure to accurately bill for our services could have a material adverse effect on our business.

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.

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.

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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Legislative provisions relating to healthcare fraud and abuse provide government enforcement personnel with substantial funding, powers, penalties and remedies to pursue suspected cases of fraud and abuse.

We are subject to numerous political, legal, operational and other risks as a result of our international operations which could impact our business in many ways.

We are subject to numerous political (including geopolitical), legal, operational and other risks as a result of our international operations which could impact our business in many ways.

Our international operations increase our exposure to risks inherent in doing business in non-U.S.

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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;

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

existing and emerging data privacy regulations affecting the processing and transfer of personal data;

emerging regulations relating to the use of AI;

and challenges based on differing languages and cultures.

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

Borrowings under our unsecured credit facility may be made at interest rates that are based on the London Interbank Offered Rate (“LIBOR”), which has been a widely used benchmark for establishing interest rates globally, but which is being phased out as a reference rate.

While we expect to be able to transition the facility 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.

Our ability to make principal and interest payments will depend on our ability to generate cash in the future.

Increases in interest rates may increase our financing costs making it more challenging for us to incur additional debt necessary to fund our operations and strategic objectives.Our ability to make principal and interest payments will depend on our ability to generate cash in the future.

If we incur additional debt, a greater portion of our cash flows may be needed to satisfy our debt service obligations and if we do not generate sufficient cash to meet our debt service requirements, we may need to seek additional financing.

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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 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.

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 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.

The development of new technologies is rapidly changing diagnostic testing, which will impact the healthcare industry and the competitive environment.

The development of new, more cost-effective solutions that can be performed by our customers or by patients, which could accelerate the internalization of testing by hospitals or clinicians, could negatively impact our testing volume and revenues.

The diagnostic information services industry is facing rapidly changing technology and innovations in product offerings, including technology that enables more convenient, accessible and cost-effective testing.

For example, digital pathology is an emerging technology that may change the practice of pathology and our role in it.

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.

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.

Hardware and software failures or delays in our information technology systems, including failures resulting from our systems conversions or otherwise, could disrupt our operations and cause the loss of confidential information, customers and business opportunities or otherwise adversely impact our business.

Additionally, 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.

These technological advances (and the ones yet to come) and the continued internalization of testing services may lead to the need for less frequent testing and/or less use of the testing services we offer.

We have been and expect to continue to use AI technology in the testing services we offer.

The challenges with properly managing the development and use of these technological innovations could result in harm to our reputation, business or customers, and adversely affect our results of operations.

We have been and expect to continue to use AI technology in our testing services, and we anticipate it will become increasingly important to us over time.

This technology, including generative AI, which is in its early stages of commercial implementation, presents a number of risks inherent in its use, including risks related to cybersecurity, privacy and data use practices.

Additionally, AI technology can create accuracy issues and other outcomes that could harm our customers and negatively impact our reputation and our business.

Further, our competitors may develop new testing services and other products relying on AI more rapidly or more successfully than us, which could hinder our ability to compete effectively and adversely affect our results of operations.

Using AI successfully will require significant resources, including having the technical expertise required to develop, test and maintain AI-based testing services.

In addition, we anticipate that there will continue to be new regulatory requirements concerning the use of AI, which may aim to regulate, limit, or block the use of AI in our testing and other services or otherwise impose other restrictions that may hinder their usability or effectiveness.

Hardware and software failures or delays in our IT systems, including failures resulting from our systems conversions or otherwise, could disrupt our operations and cause the loss of confidential information, customers and business opportunities or otherwise adversely impact our business.

IT systems are used extensively in virtually all aspects of our business, including clinical testing, test reporting, billing, customer service, logistics and management of medical data.

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A failure or delay in our IT systems could impede our ability to serve our customers and patients and protect their confidential data.

Despite redundancy and backup measures and precautions that we have implemented, our IT systems may be vulnerable to damage, disruptions and shutdown from a variety of sources, including telecommunications or network failures, system conversion or standardization initiatives, human acts and natural disasters.

Despite redundancy and backup measures and precautions that we have implemented, our IT systems may be vulnerable to damage, disruptions and shutdown from a variety of sources, including the age of the technology, telecommunications or network failures, system conversion, standardization or modernization initiatives, human acts and natural disasters.

These issues can also arise as a result of failures by third parties with whom we do business and over which we have limited control.

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Our business could be negatively affected if we are unable to continue to strengthen our efficiency.

It is important that we continue to strengthen our efficiency to promote our competitive position and to enable us to mitigate the impact on our profitability of steps taken by government payers and health insurers to reduce the utilization and reimbursement of diagnostic information services.

It is important that we continue to strengthen our efficiency to promote our competitive position and enable us to mitigate the impact on our profitability of steps taken by government payers and health insurers to reduce the utilization and reimbursement of diagnostic information services, and to partly offset pressures from the current inflationary environment, including labor and benefit cost increases, and reimbursement pressures.

Our business operations and reputation may be materially impaired if we do not comply with privacy laws or information security policies.

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If we do not use or adequately safeguard that information in compliance with applicable requirements under federal, state and international laws, or if it were disclosed to persons or entities that should not have access to it, our business could be materially impaired, our reputation could suffer, and we could be subject to fines, penalties and litigation.

These issues can also arise as a result of failures by third parties with whom we do business and over which we have limited control.

In the event of a data security breach, we may be subject to notification obligations, litigation and governmental investigation or sanctions, and may suffer reputational damage, which could have an adverse impact on our business.

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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 (e.g., California) and similar laws in other states;

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

(b) state laws ( e.g.

, California) and similar laws in other states;

and (c) laws outside the United States, including the European Union's General Data Protection Regulation and similar laws in other jurisdictions.

Our approach to environmental, social and governance (ESG) matters may not satisfy all our stakeholders.

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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 develop and deploy viruses, other malicious software programs, ransomware attacks, AI, 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.

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.

Although the Company has robust security measures implemented, which are monitored and routinely tested both by internal resources and external parties, cybersecurity 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).

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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 have taken, and continue to take, precautionary measures to reduce the risk of, and detect and respond to, future cybersecurity 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.

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

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.

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

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

The supply of qualified technical, professional, managerial and other personnel, including cytotechs, phlebotomists and specimen 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.

In addition, we believe that our overall relations with our employees are good.

However, unfavorable labor environments, unionization activity, or a failure to comply with labor or employment laws could result in, among other things, labor unrest, strikes, work stoppages, slowdowns by the affected workers, fines and penalties.

If any of these events were to occur, the Company could experience a disruption of its operations or higher ongoing labor costs, either of which could have a material adverse effect upon the Company's business.

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

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Acquisitions may involve the integration of a separate company that has different systems, processes, policies and cultures.

Integration of acquisitions involves a number of risks including the diversion of management's attention to the assimilation of the operations of assets or businesses we have acquired, difficulties in the integration of operations and systems and the realization of potential operating synergies, the assimilation and retention of the personnel of the acquired businesses, challenges in retaining the customers of the combined businesses, and potential adverse effects on operating results.

Integration of acquisitions involves a number of risks including the diversion of management's attention to the assimilation of the operations of assets or businesses we have acquired, difficulties in the diligence and integration of operations and systems and the realization of potential operating synergies, or introduction of IT security vulnerabilities not adequately investigated during diligence, the assimilation and retention of the personnel of the acquired businesses, challenges in retaining the customers of the combined businesses, and potential adverse effects on operating results.

The process of combining acquisitions may be disruptive to our businesses and may cause an interruption of, or a loss of momentum in, such businesses as a result of the following difficulties, among others:

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Even if we are able to successfully complete the integration of the operations of other assets or businesses we may acquire in the future, we may not be able to realize all or any of the benefits that we expect to result from such integration, either in monetary terms or in a timely manner.

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.

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

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.

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, or other extreme weather conditions, including major winter storms, droughts and heat waves;

public health emergencies and pandemics;

geopolitical matters, 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.

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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 or any future pandemic may negatively affect us, including through its impact on the labor force and supply chain.

A pandemic caused by a novel strain of coronavirus (COVID-19) has severely impacted the economy of the United States and other countries around the world, including affecting labor supply and causing supply chain disruptions.

While certain of the economic impacts of the COVID-19 pandemic have eased and many COVID-19 related restrictions have been lifted or relaxed as a result of progress in COVID-19 vaccination, testing and treatment, a rise in infection rates, the emergence of new COVID-19 variants or any future pandemic could result in, among other things, a reduction in physician office visits and diagnostic testing volume, the cancellation of elective medical procedures, or customers closing or curtailing their operations, as well as increased unemployment and loss of health insurance.

We may also experience labor shortages and supply chain disruptions, including shortages, delays and price increases in testing equipment and supplies, as a result of the COVID-19 pandemic or any future pandemic.

A number of suppliers and manufacturers we rely upon have experienced, and may continue to experience, disruptions and delays stemming from raw material and labor shortages, supply challenges and

significant disruptions in transport and logistics services due to facility closures, labor constraints and other challenges.

Any future public health emergencies or pandemics may negatively affect us, including through its impact on the labor force and supply chain.

We are subject to risks associated with public health emergencies and pandemics, such as the COVID-19 pandemic.

Any future public health emergency or pandemic could expose us to the risks we experienced during the COVID-19 pandemic and result in, among other things, a reduction in physician office visits and diagnostic testing volume, the cancellation of elective medical procedures, or customers closing or curtailing their operations, as well as increased unemployment and loss of health insurance.

We may also experience labor shortages and supply chain disruptions, including shortages, delays and price increases in testing equipment and supplies, as a result of a public health emergency or pandemic.

Suppliers and manufacturers we rely upon may experience disruptions and delays stemming from raw material and labor shortages, supply challenges and significant disruptions in transport and logistics services due to facility closures, labor constraints and other challenges.

These challenges may affect our ability to transport specimens, receive equipment, supplies or materials, or otherwise provide our services in a timely manner or at a reasonable price.

In addition, labor shortages may affect our ability to achieve our staffing or productivity goals.

These conditions may continue or deteriorate in the future, including in the event of a future pandemic outbreak.

The extent to which we may be impacted by the COVID-19 pandemic or any future pandemic will depend on many factors beyond our knowledge or control.

The extent to which we may be impacted by future public health emergencies and pandemics will depend on many factors beyond our knowledge or control.

These factors include:

the timing, extent, trajectory and duration of any pandemic;

increases in COVID-19 infection rates and the geographic location of such increases;

the timing, extent, trajectory and duration of any public health emergency or pandemic;

increases in infection rates and the geographic location of such increases;

the development, availability, distribution and effectiveness of vaccines and treatments;

the imposition of protective public safety measures;

and the impact of any pandemic on supply chain and the global economy.

To the extent the COVID-19 pandemic or any future pandemic adversely affects our business, results of operations and financial condition, it may also have the effect of heightening other risks described in this Report.

and the impact of any public health emergency or pandemic on supply chain and the global economy.

To the extent any future public health emergency or pandemic adversely affects our business, results of operations and financial condition, it may also have the effect of heightening other risks described in this Report.

Inflationary pressures could adversely impact us because of increases in the costs of materials, supplies and services, and increased labor and people-related expenses.

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Some statements and disclosures in this document are forward-looking statements.

Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan” or “continue.” These forward-looking statements are based on our current plans and expectations and are subject to a number of risks and uncertainties that could cause our plans and expectations, including actual results, to differ materially from the forward-looking statements.

Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “aim,” “endeavor” or “continue.” These forward-looking statements are based on our current plans and expectations and are subject to a number of risks and uncertainties that could cause our plans and expectations, including actual results, to differ materially from the forward-looking statements.

Investors are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this document.

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, IDNs, physicians and others.

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

(b) Increased pricing pressure from customers, including payers and patients, and changing relationships with customers, payers, suppliers or strategic partners.

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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 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.

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

(p) Challenges with properly managing the development and use of AI.

(q) 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.

These include:

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(2) inability to obtain or maintain adequate patent or other proprietary rights for our products and services or to successfully enforce our proprietary rights.

(q) Development of tests by our competitors or others which we may not be able to license, or usage (or theft) of our technology or similar technologies or our trade secrets or other intellectual property by competitors, any of which could negatively affect our competitive position.

(r) Regulatory delay or inability to commercialize newly developed or licensed tests or technologies or to obtain appropriate reimbursements for such tests.

(s) The complexity of billing and revenue recognition for clinical laboratory testing.

(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 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 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 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.

(cc) The COVID-19 pandemic.

Unresolved Staff Comments

There are no unresolved SEC comments that require disclosure.

(r) Development of tests by our competitors or others which we may not be able to license, or usage (or theft) of our technology or similar technologies or our trade secrets or other intellectual property by competitors, any of which could negatively affect our competitive position.

(s) Regulatory delay or inability to commercialize newly developed or licensed tests or technologies or to obtain appropriate reimbursements for such tests.

(t) The complexity of billing and revenue recognition for clinical laboratory testing.

(u) 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.

(v) Inability to hire or retain qualified employees, including key senior management personnel, and maintain good relations with our employees.

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

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

(y) 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.

(z) Results and consequences of governmental inquiries.

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

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

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

(dd) Any future public health emergency or pandemic.

(ee) The other factors that are discussed within “Item 1.

Business,” “Item 1A.

Risk Factors” and “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Annual Report on Form 10-K.

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What changed 10-K

Item 1A. Risk Factors