What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-02-25 compared with 2021-02-25 · 439 added, 304 removed, 471 unchanged (61% of the section changed)

Labcorp ® is a leading global life sciences company that provides vital information to help doctors, hospitals, pharmaceutical companies, researchers, and patients make clear and confident decisions.

By leveraging its strong diagnostics and drug development capabilities, the Company provides insights and accelerates innovations to improve health and improve lives.

With over 72,400 employees, the Company serves clients in more than 100 countries.

Through its Labcorp Diagnostics (Dx) and Labcorp Drug Development (DD) segments, the Company provides diagnostic, drug development, and technology-enabled solutions for more than 160 million patient encounters per year, or more than 3 million patients per week.

The Company also supports clinical trial activity in approximately 100 countries through its industry-leading central laboratory, preclinical, and clinical development businesses.

The breadth of the Company's offerings has resulted in revenue growth of 23%, and operating income growth of 84%, from 2018 through 2020.

The Company believes that its diversified service offerings across drug development and diagnostics also help to balance the impact of changes in the global economic and healthcare systems, and the influence of unplanned events such as the COVID-19 pandemic.

By leveraging its unparalleled diagnostics and drug development capabilities, the Company provides insights and accelerates innovations to improve health and improve lives.

With more than 75,500 employees, the Company serves clients in more than 100 countries.

In addition, the Company's world-class central laboratory, preclinical, and clinical development businesses support clinical trial activity in approximately 100 countries.

The Company's capabilities enable it to play a leading role in advancing healthcare across the globe, and to provide crucial, ongoing support for the response to the COVID-19 pandemic.

The significant reach, breadth, and advancement of the Company's offerings have resulted in revenue growth of 39.5%, and operating income growth of 145.0%, from 2019 through 2021.

The Company believes that its diversified offerings across DD and Dx help to balance the impact of changes in the global economic and healthcare systems, as well as the continued impact of the COVID-19 pandemic.

For the period ended December 31, 2021, the Company generated revenues of $16,120.9 million, diluted earnings per share of $24.39, and had a total operating cash flow of $3,109.6 million.

The Company believes that science, technology and innovation are behind its successes and are foundational to its future.

The Company's commitment to leading with science and innovation enables it to improve the health and lives of people around the world.

In December 2020, the Company announced an evolution of its brand identity, to highlight the pivotal role the Company plays in healthcare and showcase the power of the Company’s combined diagnostic and drug development offerings through one powerful brand.

As part of the rebranding, the Company introduced a new company logo and has begun associating its business unit brands with the Labcorp name.

The Company’s drug development segment, formerly referred to as Covance Drug Development, became Covance by Labcorp for a transition period, and by mid-2021 is expected to transition to Labcorp Drug Development.

The Company's diagnostics segment, formerly referred to as LabCorp Diagnostics, is transitioning to the Labcorp name and new logo during 2021.

The Company believes that science, technology, and innovation drive its continued success, differentiate the Company, and are foundational to its future.

They are critical to the Company's ability to carry out its mission to improve health and improve lives.

Strategic Review of Company Structure and Capital Allocation Strategy

In March 2021, the Company announced the undertaking of a comprehensive review by its board of directors (the Board) and management team of Labcorp's structure and capital allocation strategy.

The review reflected the Board's and management team's view that the Company's value was not appropriately reflected in its stock price.

As a part of this review, the Board and management worked with outside advisors, held extensive discussions with third parties, and considered a wide range of options, including significant acquisitions, divestitures, spinning off businesses, as well as spinning and merging those businesses with strategic partners.

Ultimately, the Board unanimously concluded that the Company's existing structure is in the best interest of all stakeholders at this time and represents compelling opportunities to grow and create significant shareholder value.

In December 2021, the Company announced the Board's conclusion, as well as actions that the management team and the Board are taking to enhance shareholder returns.

These actions include:

• initiating a dividend in the second quarter of 2022, with a target dividend payout ratio of between 15 to 20% of adjusted earnings;

• authorizing a $2.50 billion share repurchase program.

As part of this program, $1.0 billion is being repurchased under an accelerated share repurchase plan that is expected to be complete by the end of April 2022;

• implementing a new LaunchPad business process improvement initiative, targeting savings of $350.0 million over the next three years;

• providing a longer-term outlook in connection with the announcement of the Company's 2021 year-end results in addition to the Company's annual guidance;

• providing additional business insights through enhanced disclosures beginning with Labcorp's results for the first quarter of 2022;

• continuing a commitment to profitable growth through investments in science, innovation, and new technologies.

Management and the Board are committed to continuing to evaluate all avenues for enhancing shareholder value.

The updated capital allocation plan enables the Company to continue investment in key growth areas, including oncology, Alzheimer's disease, autoimmune disorders, and women's health.

This plan is expected to fuel growth through innovation by using Labcorp's unparalleled data and insights to bring scientific advancements—both Labcorp-developed and those of other scientists—to market at scale.

It reflects the Board's confidence in the Company's strong balance sheet and cash flow generation profile, as well as the Board's commitment to deploying capital to enhance value for shareholders, patients, providers, and pharmaceutical customers worldwide.

Enterprise Strategy

Labcorp is positioned at the convergence of research and care delivery to enable more precise and individualized healthcare, bringing together world-class diagnostics and drug development capabilities.

The Company believes that it can continue to expand its role in the rapidly evolving healthcare environment by advancing the following strategic priorities:

Leveraging the Power of the Company’s Combined Capabilities

The combination of Dx’s and DD’s core capabilities and scientific and technological expertise uniquely enables the Company to create compelling solutions for clients.

The Company’s combined strengths allow it to help biopharmaceutical and medical device partners design better clinical studies, execute those studies faster through enhanced patient recruitment, take greater advantage of virtual and hybrid study options, and satisfy post-market surveillance requirements.

For example, the Company can advance companion and complementary diagnostics and other precision medicine innovations that match patients with targeted treatments based on genomics and other individual characteristics because of its experience, resources and data in both drug development and diagnostics.

Labcorp delivers world-class diagnostics solutions, brings innovative medicines to patients faster, and uses technology to improve the delivery of care.

The Company is expanding its important role in the rapidly evolving healthcare market by strengthening its market-leading positions across its portfolio of capabilities, growing strategic opportunities that drive new business, and differentiating its unique offerings, capabilities, and financial performance.

To do so, Labcorp is focusing these efforts across the following strategic priorities:

Leveraging the Company's Diagnostic and Drug Development Capabilities

Together, Dx’s and DD’s core capabilities and scientific and technological expertise empower the Company to create compelling solutions for clients and patients.

The Company’s collective strength allows it to help pharmaceutical, biotechnology, and medical device partners design better clinical studies, execute those studies faster through enhanced patient recruitment, take greater advantage of virtual and hybrid study options, and satisfy post-market surveillance requirements.

For example, insights gained through diagnostics support drug development operations by assisting in the identification of patterns in disease progression, as well as individuals who would benefit from enrollment in certain clinical trials.

Further, the Company's connections with a broad and diverse range of patients and healthcare providers allow it to both expand clinical trial participation opportunities to typically underrepresented communities, and to make clinical trials a viable treatment option for patients whose current treatment options may be limited or inadequate.

In addition, the Company can advance companion and complementary diagnostics and other precision medicine innovations that match patients with targeted treatments based on genomics and other individual characteristics due to the experience, resources and data harnessed by both Dx and DD.

Through comprehensive integration of those capabilities, the Company has a unique opportunity to extend its position as a market leader in the development and commercialization of new therapies and tests by providing data, insights, and answers for doctors, drug developers, and the public.

Advancing the Company's Leadership Position in Oncology

Oncology continues to receive significant investment in research and treatment, but despite decades of focus and research, it is still an area of great unmet medical need.

The Company believes the diagnosis and treatment of cancer is expected to be the fastest-growing therapeutic area for the near future.

As oncology's standard of care trends towards the adoption of precision medicine, providers are relying on advanced testing to identify patients who will benefit from new, targeted treatments that are more effective, and usually have fewer side effects, than traditional treatments like chemotherapy.

The Company is expanding its leadership through strategic partnerships in oncology testing, major customer wins in late-stage clinical trials, and the recruitment of leaders in the field to further build the

Company's oncology team.

In addition, the Company’s strong connections with patients, physicians, and health systems, along with its extensive data, are powerful tools to support the Company's leadership role in diagnosing and treating cancer and its goal of improving patient outcomes.

Integrating Artificial Intelligence, Data, Digitalization and Analytics Across the Company's Business

Advances in technology have impacted nearly every business, and healthcare more than most.

By maximizing the use of technology, and in particular advances in artificial intelligence, data, digitalization, and analytics, the Company strives to improve operating efficiency and create new, differentiated products and services that the Company believes will help its customers and will deliver better care to patients.

Artificial intelligence helps the Company to better predict trends, such as where and when demand for certain tests is likely to change, which supports more efficient use of supplies, staffing adjustments, and the Company’s advanced logistics to route testing to the most appropriate laboratories to deliver results quickly.

Artificial intelligence capabilities and advanced logistics have played an important role in the Company’s response to the demand for COVID-19 polymerase chain reaction (PCR) testing.

Embedding Data and Digitalization Throughout the Company's Business

The healthcare and life sciences industries remain among the most significantly impacted by technological advancements.

By maximizing the use of advances in artificial intelligence, data, digitalization, and analytics, the Company strives to improve operating efficiency and create new, differentiated products and services that the Company believes will help its customers and deliver better care to patients.

The Company is using artificial intelligence to better identify and predict trends such as the timing and location of demand shifts for certain tests.

In doing so, the Company is supporting an efficient use of supplies, staffing, and the Company’s advanced logistics used to route testing to the most appropriate laboratories and quickly deliver results.

Artificial intelligence capabilities and advanced logistics continue to play an important role in the Company’s response to periods of heightened demand for COVID-19 polymerase chain reaction (PCR) testing.

The Company creates, and has access to, significant volumes of data.

1 unchanged sentence

The Company’s repository of test results help study sponsors assess patients' eligibility for clinical trials more quickly and accurately, enroll those patients faster, shorten the time needed for regulatory submission, and accelerate the availability of new medicines.

Digitalization is affecting every aspect of the Company’s business.

For example, healthcare providers now have multiple ways to retrieve and analyze their patients' health data;

MCOs have various tools to manage their membership;

consumers can more readily access testing and their results to have more control over their care;

and decentralized clinical trials can help remove barriers that have slowed or prevented studies from being conducted in the past.

As the Company experienced in 2020, digitalization also allowed many of the Company’s employees to quickly shift from working in traditional offices to working remotely in response to COVID-19.

Putting Customers at the Center of All the Company Does

Labcorp serves a broad range of customers, including MCOs, biopharmaceutical, medical device and diagnostics companies, governmental agencies, physicians and other healthcare providers, hospitals and health systems, employers, patients and consumers, contract research organizations (CROs), and independent clinical laboratories.

The Company prioritizes a consistent, coordinated focus across all aspects of the Company's operations, placing the customer at the center of its services, with the objective of becoming the customer's primary partner for solutions to their needs.

Customer feedback, communication of best-practices and lessons learned, and robust employee training with respect to the needs of its customers are all methods that the Company employs to provide a top customer experience.

The introduction of the Company’s new branding is intended to send a clear signal of who the Company is, what it does, and how it is differentiated from its competitors.

It is the Company's goal that the Labcorp brand represents a promise to its customers about how they will be treated, and the levels of service, quality, and innovation that the Company will deliver.

Evaluate and Execute on High-Growth Opportunities

Data is also being used by the Company to advance science and the public's understanding of certain treatments and illnesses, including chronic kidney disease.

Digitalization continues to be an area of focus for the Company as it responds to the use of technology-enabled tools and services by healthcare providers, patients and pharmaceutical companies for absorbing, handling, and disseminating information.

These services include decentralized clinical trials, which offer the potential to remove barriers that may have slowed or prevented studies from being conducted in the past.

Decentralized clinical trials can also make trial participation an option for more people, including individuals from underrepresented populations.

Digitalization enabled many of the Company's employees to transition to remote work in the early stages of the COVID-19 pandemic and maintain their remote work environment in 2021 with no discernible loss of productivity.

Digitalization is also helping to reduce physical, study-related paperwork, which generates positive emissions impacts.

In the U.S., the Company continues to improve its patients' experience in patient service centers (PSCs) by creating a seamless digital journey from appointment scheduling to results delivery.

With an average of 3 million patients served in a given week, the Company strives to enhance their experience using its digital channels.

In addition, the Company enhanced its digital capabilities through the acquisition of Ovia Health, a leading digital platform trusted by millions of individuals for family planning, pregnancy, and parenting support.

Intensify Customer Focus

Labcorp serves a broad range of customers, including managed care organizations (MCOs), pharmaceutical, biotechnology, medical device and diagnostics companies, governmental agencies, physicians and other healthcare providers, hospitals and health systems, employers, patients and consumers, contract research organizations (CROs), and independent clinical laboratories.

The Company prioritizes a consistent, coordinated focus across all aspects of its operations, placing the customer at the center of its services, with the objective of becoming the customer's primary partner for solutions to their needs.

effort to provide a leading customer experience, the Company seeks customer feedback, communicates best practices and lessons learned, and provides robust employee training with respect to the needs of its customers.

Labcorp routinely introduces new products and services that benefit its customers.

For example, in 2021, the Company began deploying the Labcorp Diagnostic Assistant, which delivers comprehensive lab results and clinical insights directly to the point of care.

In April 2021, the Company opened an automated clinical trial kit production line in Belgium, doubling the automated production capacity of its industry leading central laboratory services business.

The Company announced the opening of a new, integrated bioanalytical laboratory in Singapore during the fourth quarter of 2021, expanding customer access in the Asia-Pacific region.

The Company also continued improving the patient experience in its U.S.

PSCs, focusing its efforts to create a seamless digital journey from appointment scheduling to easier access to results.

The Company will continue to explore and implement further actions to improve the experience for its customers.

Fortify the Company's Position as an Oncology Leader

The field of oncology receives significant investment in research, development, and treatment.

However, it remains an area of great unmet medical need.

The Company believes the diagnosis and treatment of cancer will be the fastest-growing therapeutic area in the near future.

With the increased adoption of precision medicine, health and cancer care providers are relying on advanced testing to identify patients who will benefit from new, targeted treatments and therapies that are more effective and often have fewer side effects than chemotherapy and other traditional treatments.

To harness the breadth of the Company's unique capabilities and further address this need, the Company formed an oncology business unit and launched an enterprise oncology platform in 2021.

By focusing its diagnostic and drug development services on the fight against cancer, the Company is delivering targeted solutions that power better decisions and improved patient outcomes.

The Company is expanding its leadership in oncology through the introduction of new tests, strategic partnerships, acquisitions, and customer wins in clinical trials.

In 2021, the Company launched OmniSeq INSIGHT, a comprehensive genomic and immune profiling, tissue-based test that integrates next-generation sequencing (NGS) technology.

The Company capitalized on a previous investment in OmniSeq, announcing in July 2021 that it exercised its option to acquire the remaining ownership interest.

In addition, the Company enhanced its precision diagnostic portfolio and its ability to increase access to oncology care globally by agreeing in late 2021 to acquire Personal Genome Diagnostics (PGDx), a provider of comprehensive liquid biopsy and tissue-based genomic products and services.

PGDx offers the only diagnostic kit cleared by the FDA for pan-solid cancer comprehensive tumor profiling using a 500+ gene panel.

The acquisition of PGDx closed in February 2022.

The Company’s work in oncology has created meaningful business relationships across the healthcare ecosystem that it plans to enhance and grow.

Pursue Opportunities with Short- and Long-Term and High-Growth Potential

The Company has a long history of disciplined use of capital to invest in the growth of the business.

The Company has made significant investments in the deployment of new technologies through both licensing and internal research and development, strategic and fold-in acquisitions, and establishing collaborative partnerships with other leading companies and organizations that share the Company’s goals and expectations.

The Company has made significant investments in the deployment of new technologies through both licensing and internal research and development, as well as strategic and tuck-in acquisitions in oncology, women's health, autoimmune disorders, diagnostic testing, and other important areas.

Labcorp has also invested in establishing collaborative partnerships with other leading companies and organizations that share the Company’s goals and expectations.

The Company continually evaluates its business and the broader healthcare and life sciences markets to proactively identify and assess:

4 unchanged sentences

• a balanced formula for capital allocation.

Through continued focus on these priorities, the Company expects to be in the optimal position to make tough, disciplined choices that maximize shareholder value, better protect the Company from market fluctuations and outside impacts, and fuel significant, profitable revenue growth.

COVID-19 Response

The Company has been intensely focused on supporting the fight against COVID-19 since the earliest stages of the pandemic.

Through a continued focus on these priorities, reinforced through the Company's review of its structure and capital allocation strategy that concluded in December 2021, Labcorp expects to be in an optimal position to make disciplined choices that maximize shareholder value, better protect the Company from market fluctuations and outside impacts, and fuel significant and profitable short- and long-term revenue growth.

COVID-19 Pandemic Response

The Company has been intensely focused on supporting the fight against COVID-19 since the earliest stages of the pandemic, and it continues to play a substantial role in ongoing response efforts.

Diagnostic Testing and Clinical Trial Leadership

In tandem with the first confirmed cases, the Company began preparations to be able to offer diagnostic testing to identify cases of COVID-19, working closely with diagnostic manufacturers and suppliers, and with regulators and public health authorities.

On March 5, 2020, the Company became the first commercial laboratory in the U.S.

to launch PCR testing for COVID-19, and the Company received Emergency Use Authorization (EUA) from the U.S.

Food and Drug Administration (FDA) on March 16, 2020.

That was the first of a steady series of innovations introduced by the Company to rapidly expand COVID-19 test capacity, options, access, and efficiency.

These COVID-19 innovations include:

• the first FDA EUA for an at-home collection kit on its Pixel by Labcorp ® platform;

• the first digital COVID-19 service, which is also available through healthcare providers from the Company’s Labcorp at Home offering;

• early participation in COVID-19 research projects in collaboration with partners that included Adaptive Biotechnologies, Microsoft, and Pacific Biosciences;

• introduction of new test options to increase test capacity, throughput, and efficiency to maximize use of supplies, including the introduction of a new method to extract RNA from samples using heat and technology;

• the increased use of robotics and automation in the PCR testing process.

The Company has steadily increased its COVID-19 test capacity, from several thousand PCR tests per day in early March to 275,000 per day by the end of 2020.

The Company performed over 31 million PCR tests and nearly 4 million antibody tests in 2020.

As a result, the Company developed an expertise and understanding of COVID-19 that led to it becoming a leader in supporting clinical trials of potential treatments and vaccines for the virus.

By the end of 2020, the Company had won approximately 440 COVID-19 trial and study opportunities, from small nonclinical programs to late-stage clinical trials.

Base Business Normalization

In the initial months of the COVID-19 pandemic, the Company experienced a significant drop in its non-COVID-19 business (Base Business) as patients avoided routine medical care and most elective and non-emergency procedures were postponed.

This decline, coupled with the suspension of most global clinical trial activity resulted in a negative impact to the Company's Base Business in the latter part of the first quarter and initial part of the second quarter of 2020.

By the end of the second quarter of 2020, however, the Company experienced a steady recovery in its Base Business, which continued through the third quarter of 2020.

During the fourth quarter, the Dx Base Business volume recovery flattened with volumes below prior year in the high single digits.

Throughout 2020, the Company's PCR and antibody COVID-19 testing (COVID-19 Testing) has helped to more than offset the pressure experienced in the Base Business.

In 2021, the Company further expanded access to testing for COVID-19 and aided pharmaceutical companies in the development of critical COVID-19 vaccines and therapies by harnessing its diagnostic and drug development capabilities.

The Company received FDA Emergency Use Authorization (EUA) for multiple innovations during the year, including the use of its Pixel by Labcorp ® COVID-19 test home collection kit for children ages 2-17.

The Company was granted FDA EUA for a combined home collection kit enabling individuals as young as 2 years of age to simultaneously be tested for COVID-19 and influenza A/B.

It also received FDA EUA for observed self-collection of COVID-19 PCR tests in its PSCs, providing flexibility and convenience for individuals who want the certainty of a PCR test or need PCR test results for work, travel, or other purposes.

These achievements built on the Company's first COVID-19-related FDA EUA, which was received on March 16, 2020, for COVID-19 PCR testing.

Labcorp was the first commercial laboratory in the U.S.

to launch and receive an EUA for such testing.

The Company also received FDA EUA in April 2020 for the Pixel by Labcorp ® COVID-19 test home collection kit, and in December 2020 for over-the-counter purchase of these home collection kits.

Labcorp's additional contributions to the pandemic response in 2021 included:

• assisting in the identification and monitoring of COVID-19 variants and spikes in confirmed cases;

• facilitating mass vaccination programs and expanding access to at-home test collections for underserved populations through partnerships at the state and local level;

• partnering with the U.S.

Department of Health and Human Services (HHS) to raise awareness of monoclonal antibody therapies;

• facilitating access to at-home COVID-19 test collection kits in retail stores such as Walgreens, and through on-demand delivery services;

• introducing new test options and building on the Company's portfolio of antibody testing.

The Company maintained its ability to quickly scale-up COVID-19 PCR testing capacity throughout the year, even during periods of reduced demand.

In doing so, the Company was able to immediately and effectively respond to surges in positive cases and testing needs.

The Company performed approximately 30 million COVID-19 PCR tests and 4 million antibody tests in 2021, and since the start of the pandemic has performed approximately 61.5 million COVID-19 PCR tests and 8 million antibody tests.

In addition, the Company's expertise and understanding of COVID-19, developed through its diagnostic offerings, has allowed it to become a leader in supporting clinical trials of COVID-19 treatments and vaccines.

By the end of 2021, the Company won approximately 700 COVID-19 trial and study opportunities, ranging from small, nonclinical programs to late-stage clinical trials.

Base Business

The Company's non-COVID-19 testing business (Base Business) continued its recovery in 2021.

Base Business was negatively impacted in the first and second quarters of 2020, began to recover in the third quarter of 2020 and experienced a flattening in Base Business recovery in the fourth quarter of 2020.

Patients continued their return to pre-pandemic healthcare routines in 2021, and the Company's pharmaceutical and biotechnology customers resumed their important research and development work.

Throughout 2021, the Company's Base Business recovery helped to more than offset a decrease in PCR and antibody COVID-19 testing (COVID-19 Testing).

COVID-19 Outlook

COVID-19 has had, and continues to have, an extensive impact on the global health and economic environments.

The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of the business, given the continued unpredictability and the corresponding government restrictions and customer behavior.

While the Company anticipates that COVID-19 will continue to have a significant impact on its business through 2021 and potentially beyond, the Company expects that the rollout of COVID-19 vaccines will likely lead to a gradual decline in the demand for COVID-19 Testing.

The Company continues to closely monitor the impact of the COVID-19 pandemic on all aspects of its business, given continued unpredictability, corresponding state, local and federal government restrictions and policies, the continued emergence of new variants that may cause increases in cases that may impact the Company, and the potential for shifts in customer behavior.

While the Company anticipates that COVID-19 will continue to impact its business in 2022 and potentially beyond, the Company expects that increases in vaccination rates and booster shots, the development of new therapeutics and greater availability of rapid COVID-19 tests should result in a continued, significant decline in demand for COVID-19 Testing, with the potential for increases in demand at different times and across different geographies.

As a result, COVID-19 Testing demand is not predicted to match 2021 levels.

However, the Company believes that other diagnostic testing should continue to expand, and both COVID-19 and non-COVID-19 drug development activity is expected to grow in 2021.

Capital Allocation

2 unchanged sentences

The acquisitions have expanded the Company’s service offerings, expanded its customer and revenue mix, and strengthened and broadened the scope of its geographic presence.

The Company continues to evaluate acquisition opportunities that leverage the Company’s core

competencies, complement existing scientific and technological capabilities, increase the Company’s presence in key geographic, therapeutic and strategic areas, and meet or exceed the Company’s financial criteria.

During 2020, the Company purchased 0.6 million shares of its common stock at an average price of $178.85 for a total cost of $100.0 million.

After making these purchases in the first quarter, the Company temporarily suspended its share repurchase program as a part of the fiscal measures it took in response to the uncertainty of the COVID-19 pandemic, to preserve liquidity and financial flexibility.

The Company reinstated its share repurchase program in the fourth quarter but made no additional purchases in 2020.

At the end of 2020, the Company had a remaining authorization with no expiration date to purchase an additional $800.0 million of Company common stock.

During 2020, capital expenditures were $381.7 million and the Company also repaid $412.2 million of its Senior Notes.

The Company expects capital expenditures in 2021 to be approximately 4.0% of revenues, primarily in connection with projects to support growth in the Company's core businesses, facility expansion and updates, projects related to both ongoing and new LaunchPad initiatives, and further acquisition integration initiatives.

The Company continues to evaluate acquisition opportunities that leverage the Company’s core competencies, complement existing scientific and technological capabilities, increase the Company’s presence in key geographic, therapeutic and strategic areas, and meet or exceed the Company’s financial criteria.

During 2021, the Company repurchased 5.2 million shares of its common stock at an average price of $282.05 for a total cost of $1,668.5 million, which included $1,000.0 million paid in respect of an Accelerated Share Repurchase (ASR) program for which the Company received 80% of the shares calculated at the price at the inception of the ASR Agreements.

At the end of 2021, the Company had outstanding authorization from the Board to purchase $1,631.5 of Company common stock.

The repurchase authorization has no expiration date.

During 2021, capital expenditures were $460.4 million.

The Company also repaid $1,000.0 million of its Senior Notes along with $375.0 million of the outstanding 2019 Term Loan, and also issued $1,000.0 million of new Senior Notes.

The Company expects capital expenditures in 2022 to be approximately 4.0% of revenues, primarily in connection with projects to support growth in the Company's core businesses, facility expansion and updates, projects related to its new LaunchPad initiative, and further acquisition integration initiatives.

The Company will continue to evaluate all opportunities for strategic deployment of capital in light of market conditions.

3 unchanged sentences

Declines in testing volume reduce revenues, operating margins and cash flows.

Operations are also impacted by changes in the global economy, exchange rate fluctuations, political and regulatory changes, the progress of ongoing studies and the startup of new studies, as well as the level of expenditures made by the biopharmaceutical industry in R&D.

In 2020, as discussed in more detail elsewhere in Item 1, COVID-19 had significant impact on the Company.

This impact included both the effect of the Company’s response to the virus through its testing and drug development services and the effect of COVID-19 on the global economy and how that affected demand for the Company’s non-COVID-19 services.

As discussed in more detail elsewhere in Item 1, COVID-19 impacted the Company in 2021.

This impact included the effect of the Company’s response to the virus through its testing and drug development services, as well as the effect of COVID-19 on the global economy and demand for the Company’s non-COVID-19 services.

In 2021, approximately 15.3% of the Company's revenues were billed in currencies other than the U.S.

11 unchanged sentences

The Company experienced growth across all key financial metrics in 2021.

Years Ended December 31,

In Millions, Except Per Share Data Years Ended December 31,

Revenues $ 16,120.9 $ 13,978.5

26 unchanged sentences

Total Dx revenues by payer 64 % — % — % 64 % 65 % — % — % 65 % 60 % — % — % 60 %

Biopharmaceutical and medical device companies 17 % 11 % 7 % 35 % 21 % 12 % 7 % 40 % 19 % 12 % 7 % 38 %

Pharmaceutical, biotechnology and medical device companies 17 % 13 % 6 % 36 % 17 % 11 % 7 % 35 % 21 % 12 % 7 % 40 %

Total revenues 81 % 13 % 6 % 100 % 82 % 11 % 7 % 100 % 81 % 12 % 7 % 100 %

During 2021, the Dx segment generated $ 10,363.6 million in total revenues and $ 2,988.5 million in operating income, resulting in an operating margin of 28.8%.

Dollars in millions Year Ended December 31,

In Millions Year Ended December 31,

Revenues $ 10,363.6 $ 9,253.4

1 unchanged sentence

Dx is an independent clinical laboratory business.

It offers a comprehensive menu of frequently requested and specialty testing through an integrated network of primary and specialty laboratories across the U.S.

It offers a comprehensive menu of frequently requested core testing and specialty testing through an integrated network of primary and specialty laboratories across the U.S.

This network is supported by a sophisticated information technology system, with more than 80,000 electronic interfaces to deliver test results, nimble and efficient logistics, and local labs offering rapid response testing.

Dx also provides patient access points, strategically and conveniently located throughout the U.S., including nearly 2,000 patient service centers (PSCs) operated by Dx and more than 6,000 in-office phlebotomists who are located in customer offices and facilities.

Although testing for healthcare purposes and customers who provide healthcare services represents the most significant portion of the clinical laboratory industry, clinical laboratories also perform testing for other purposes and customers, including employment and occupational testing, DNA testing to determine parentage and to assist in immigration eligibility determinations, environmental testing, wellness testing, toxicology testing, pain management testing, and medical drug monitoring.

Dx offers an expansive test menu including a wide range of clinical, anatomic pathology, genetic and genomic tests, and regularly adds new tests and improves the methodology of existing tests to enhance patient care.

Dx also offers consumer-initiated wellness testing available online through its Pixel by Labcorp ® platform, which saw growth and increased consumer awareness in 2020 as a result of offering the first at-home collection kit for COVID-19 PCR testing to receive an EUA from the FDA and the first to receive an EUA for retail availability without a prescription.

The COVID-19 at-home collection kits are also available for healthcare providers to order for their patients through Labcorp at Home.

Through the dedicated effort of approximately 42,000 employees, Dx typically processes tests for more than 3 million patient encounters each week.

As part of an ongoing commitment to be an efficient and high value provider of laboratory services, beginning in 2015, Dx implemented a comprehensive business process improvement initiative, referred to as LaunchPad, to reengineer its systems and processes to create a sustainable and more efficient business model, and to improve the experience of all stakeholders.

Dx achieved its goals for the initial phase of LaunchPad of delivering both short- and long-term savings, and implementing system

and process improvements that are expected to continue to yield benefits for the foreseeable future.

Dx has subsequently extended LaunchPad, adding new enterprise-wide projects and establishing the initiative as an ongoing continuous improvement program.

Dx’s LaunchPad initiative is currently on track to deliver approximately $200.0 million in net savings for the period of late 2018 through the end of 2021, while incurring approximately $40.0 million in one-time implementation costs.

Dx also provides patient access points that are strategically and conveniently located throughout the U.S., including nearly 2,000 PSCs and more than 6,000 in-office phlebotomists located in customer offices and facilities.

testing, wellness testing, toxicology testing, pain management testing, and medical drug monitoring.

Dx offers an expansive test menu that includes a wide range of clinical, anatomic pathology, genetic and genomic tests, and regularly adds new tests and improves the methodology of existing tests to enhance patient care.

Dx also offers consumer-initiated wellness testing available online through its Labcorp OnDemand™ platform.

The Pixel by Labcorp ® COVID-19 PCR and combined COVID-19 + flu at-home collection kits are also available through Labcorp OnDemand.

Dx typically processes tests for more than 3 million patient encounters each week.

As part of an ongoing commitment to be an efficient and high-value provider of laboratory services, beginning in 2015, Dx implemented a comprehensive business process improvement initiative known as LaunchPad.

The initiative was designed to reengineer the Company's systems and processes to create a sustainable and more efficient business model, and to improve the experience of all stakeholders.

Dx achieved its goals for the initial phase of LaunchPad of delivering both short- and long-term savings, and of implementing system and process improvements that are expected to continue generating benefits for the foreseeable future.

Dx subsequently extended LaunchPad, adding new enterprise-wide projects and establishing the initiative as an ongoing continuous improvement program.

Dx’s LaunchPad initiative delivered approximately $200 million in net savings for the period of late 2018 through the end of 2021.

As mentioned above in Part I of this Annual Report, the Company is implementing a new, enterprise-wide LaunchPad initiative, targeting savings of $350 million beginning in 2022 and ending in 2024.

The Dx business can be categorized into the following components:

Service Key Features

Testing Operations and Productivity • Network of PSCs offering specimen selection services

Testing Operations and Productivity • Network of PSCs offering specimen collection services

• Comprehensive, nimble supply chain for transferring specimens across the entire life cycle of a patient sample

• 1-2 day turnaround time for most test results, with the vast majority of results delivered electronically to healthcare providers

• 1-2 day turnaround time for most test results, with the vast majority of results delivered electronically to healthcare providers and to patients who have a Labcorp Patient™ account

• Rigorous standard of quality - 22 regional/specialty labs hold ISO 15189 certification

2 unchanged sentences

• Specialty Testing Services - industry leader in gene-based and esoteric testing;

advanced tests target specific diseases and use new technologies including anatomic pathology/oncology, cardiovascular disease, coagulation, diagnostic genetics, endocrinology, infectious disease, women's health, pharmacogenetics, parentage and donor testing, occupational testing services, medical drug monitoring services, chronic disease programs, and kidney stone prevention

advanced tests target specific diseases and use new technologies;

services include anatomic pathology/oncology, cardiovascular disease, coagulation, diagnostic genetics, endocrinology, infectious disease, women's health, pharmacogenetics, parentage and donor testing, occupational testing services, medical drug monitoring services, chronic disease programs, and kidney stone prevention

• Dx offers a range of health and wellness services to employers and MCOs, including health fairs, on-site and at-home testing, vaccinations and health screenings

Development of New Tests • Approximately 100 new tests launched in 2020

• Active diagnostics and therpeutics research division:

Nearly 700 studies, articles, and presentations produced in 2020

Development of New Tests • Approxima tely 50 new tests launched in 2021

• Active diagnostics and therapeutics research division:

more than 700 studies, articles, and presentations produced in 2021

• Continuous investing, internally and externally, in new testing technologies and advanced testing capabilities

Development of New Tests A range of services and support using proprietary technologies to improve the customer and patient experience and provide convenient access to data and analytics, including:

• More than 6 million enhanced clinical decision support (CDS) reports delivered to physicians and health systems

• Online and mobile applications allowing patients to check test results, schedule appointments and manage their accounts

• Patient self-service apps for scheduling PSC visits, checking in upon arrival, and completing documentation, expediting and improving the patient experience

• Online applications for MCOs and accountable care organizations (ACOs) to obtain test results and quality data

Technology-Enabled Services and Support A range of services and support using proprietary technologies to improve the customer and patient experience and provide convenient access to data and analytics, including:

• Nearly 6.5 million enhanced clinical decision support (CDS) reports delivered to physicians and health systems

• Online and mobile applications improving the patient experience by allowing patients to schedule PSC visits, check-in upon arrival, complete documentation, access test results, and manage their accounts

• Online applications for MCOs and accountable care organizations (ACOs) to obtain test results and population and health management data

Effect of U.S.

3 unchanged sentences

Measures to regulate healthcare delivery in general and clinical laboratories in particular have resulted in reduced prices, added costs and decreased test utilization for the clinical laboratory industry by imposing new, increasingly complex regulatory and administrative requirements.

The government also has continued to adjust the Medicare and Medicaid fee schedules at the national and local level, and Dx believes that pressure to reduce government reimbursement will continue.

The government also has continued to adjust the Medicare and Medicaid fee schedules at the national and local level, and the Company believes that pressure to reduce government reimbursement will continue.

Fees for most laboratory services reimbursed by Medicare are established in the Clinical Laboratory Fee Schedule (CLFS) and fees for other testing reimbursed by Medicare, primarily related to pathology, are covered by the Physician Fee Schedule (PFS).

During 2021, approximately 8.5% of Dx’s revenue was reimbursed under the CLFS (8.8% in 2020), and approximately 0.4% was reimbursed under the PFS (0.4% in 2020).

Over the past several years, Dx has experienced governmental reimbursement reductions as a direct result of several Congressional acts and regulatory initiatives, the most significant of which was PAMA.

PAMA, which became law on April 1, 2014, and which went into effect on January 1, 2018, resulted in a

net reduction in reimbursement revenue of approximately $72.0 million in 2020 from all payers affected by the CLFS (approximately $107.0 million in 2019).

Over the past several years, Dx has experienced governmental reimbursement reductions as a direct result of several Congressional acts and regulatory initiatives.

These laws include provisions designed to control healthcare expenses reimbursed by government programs through a combination of reductions to fee schedules, incentives to physicians to participate in alternative payment models such as risk-sharing, and new methods to establish and adjust fees.

In 2020, Dx realized a net reduction of approximately $0.5 million in PFS revenue, driven by reductions in reimbursement for flow cytometry procedures ($1.9 million in 2019).

In 2020, Dx realized an increase of approximately $10.1 million in aggregate Medicare reimbursement associated with the suspension of sequestration through December of 2020 as a result of provisions included in the CARES Act.

In 2021, Dx anticipates it will realize increases of approximately $0.3 million in PFS revenue and $4.1 million in aggregate Medicare reimbursement associated with the extended suspension of sequestration through March 2021 as a result of provisions included in the Omnibus Appropriations and Coronavirus Relief Package.

The most significant of these developments was the Protecting Access to Medicare Act (PAMA), which became law on April 1, 2014, and which went into effect on January 1, 2018.

Beginning in 2018, under PAMA, the Centers for Medicare and Medicaid Services (CMS) of the U.S.

3 unchanged sentences

For 2018-2020, a test price could not be reduced by more than 10.0% per year.

As a result of provisions included within the CARES Act, passed by Congress in 2020, PAMA rate reductions for 2021 have been suspended, and therefore the Company will not experience any incremental reimbursement rate impact due to PAMA in 2021.

For 2022-2024, a test price cannot be reduced by more than 15.0% per year.

The process of data reporting and repricing will be repeated every three years for Clinical Diagnostic Laboratory Tests (CDLTs) beginning in 2022.

Under current law, as revised in the CARES Act, the next data reporting period for CDLTs (based on data collected in 2019) will occur during the first quarter of 2022, and new CLFS rates for CDLTs will be established based on that data beginning in 2023, subject to the previously described phase-in limits.

The subsequent data reporting period for CDLTs (based on data collected in 2023) will occur during the first quarter of 2025, and new CLFS rates for CDLTs will be established based on that data beginning in 2026.

PAMA resulted in a net reduction in reimbursement revenue of approximately $245.0 million between 2018-2020 from all payers affected by the CLFS.

Due to enactment of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) passed by Congress on March 27, 2020, the Medicare reimbursement cuts that would have occurred under PAMA in 2021 were delayed by one year.

In 2021, Dx realized an increase of approximately $0.3 million in PFS revenue as a result of the provisions included in the Omnibus Appropriations and Coronavirus Relief Package.

In 2021, Dx realized an additional increase of approximately $5.8 million in aggregate Medicare reimbursement associated with the suspension of sequestration through December of 2021, as a result of provisions included in the Omnibus Appropriations and Coronavirus Relief Package that were extended as a result of an Act to Prevent Across-the-Board Direct Spending Cuts.

On December 10, 2021, President Biden signed into law S.

610, the Protecting Medicare and American Farmers from Sequester Cuts Act, which delayed by one additional year the data reporting requirements and Medicare reimbursement cuts that would have occurred under PAMA in 2022.

In 2022, Dx anticipates that it will realize a decrease of approximately $0.4 million in PFS revenue, driven by reductions in reimbursement for flow cytometry procedures and a decrease of approximately $10.0 million in aggregate Medicare reimbursement associated with the phased in reinstitution of sequestration as a result of provisions included in the Protecting Medicare and American Farmers from Sequester Cuts Act.

The Protecting Medicare and American Farmers from Sequester Cuts Act also included mitigations to several other non-PAMA Medicare cuts in addition to delaying Medicare reimbursement cuts under PAMA.

It delayed the 4% Medicare cuts that would otherwise have occurred in 2022 under statutory “pay-as-you-go,” or PAYGO, rules to offset the cost of the American Rescue Plan Act by one year.

In addition, it delayed the resumption of the 2% Medicare sequestration until April 1, 2022, and reduces to 0.75% the previous 3.75% reduction to PFS reimbursement that was scheduled for 2022.

To offset the cost, the Medicare sequestration is increased to 2.25% for January-June of 2030, and to 3.0% for July-December 2030.

Pursuant to PAMA, for 2023-2025, a test price cannot be reduced by more than 15.0% per year.

CLFS rates for 2026 and subsequent periods will not be subject to phase-in limits.

The phase-in of rates for Clinical Diagnostic Laboratory Tests (CDLTs) established in 2018 will continue in 2023.

New CLFS rates will be established in 2024 based on data from 2019 to be reported in 2023.

New CLFS rates will be established in 2027 based on data from 2025 to be reported in 2026.

CLFS rates for Advanced Diagnostic Laboratory Tests will be updated annually.

The American Clinical Laboratory Association (ACLA) has filed a federal civil action challenging the legal basis for the data collection methodology CMS used to derive the data from which the median prices were calculated.

Since the initial data collection, CMS has revised its PAMA regulations to increase the number of hospital outreach labs that will be required to report private market data in future collections.

Since the initial data

collection, CMS has revised its PAMA regulations to increase the number of hospital outreach labs that will be required to report private market data in future collections.

Reports by the U.S.

Government Accountability Office (GAO) and the HHS Office of Inspector General (OIG) on PAMA implementation have identified certain instances of actual or potential increased Medicare expenditures under PAMA that could result in further efforts to amend PAMA by Congress.

Government Accountability Office (GAO), the HHS Office of Inspector General (OIG), and the Medicare Payment Advisory Commission (MedPAC) on PAMA implementation have identified certain instances of actual or potential increased Medicare expenditures under PAMA, as well as potential alternative methodologies for data collection under PAMA, which could result in further efforts to amend PAMA by Congress.

ACLA continues to work with Congress on potential legislative reform of PAMA, which if adopted could reduce the negative impact of PAMA as currently implemented by CMS.

Under the Laboratory Access for Beneficiaries (LAB) Act, the Medicare Payment Advisory Commission is required to conduct a study and make recommendations to Congress on ways to improve data collection, reporting, and rate setting under PAMA to achieve, in a less burdensome manner, CLFS rates that accurately and fairly reflect private market rates.

Under the Laboratory Access for Beneficiaries (LAB) Act, MedPAC was required to conduct a study and make recommendations to Congress on ways to improve data collection, reporting, and rate setting under PAMA to achieve, in a less burdensome manner, CLFS rates that accurately and fairly reflect private market rates.

MedPAC's June 2021 report to Congress included an analysis of potential statistical sampling methodologies that could accomplish that objective, and ACLA has incorporated the concept in PAMA reform proposals to Congress.

The Company supports the ongoing efforts to prevent or lessen the negative impact of the changes to the CLFS pursuant to PAMA, and the full impact of those efforts, and what the long-term effect will be on the CLFS rates is not yet known.

Further healthcare reform could occur in 2021, including changes to the ACA and Medicare reform, initiatives to address surprise billing and increased price transparency, as well as administrative requirements that may continue to affect coverage, reimbursement, and utilization of laboratory services in ways that are currently unpredictable.

Further healthcare reform could occur in 2022, including changes to the Patient Protection and Affordable Care Act (ACA) and Medicare reform, as well as administrative requirements that may continue to affect coverage, reimbursement, and utilization of laboratory services in ways that are currently unpredictable.

In addition, market-based changes have affected and will continue to affect the clinical laboratory business.

1 unchanged sentence

The growth of the managed care sector and consolidation of MCOs present various challenges and opportunities to Dx and other clinical laboratories.

Dx's ability to attract and retain MCO customers has become even more important as the impact of various healthcare reform initiatives continues, including expanded health insurance exchanges and ACOs.

The Company serves many MCOs.

3 unchanged sentences

In some cases, those fee structures are specific to independent clinical laboratories, while the fees paid to hospital-based and physician-office laboratories may be different, and are typically higher.

MCOs may also offer Managed Medicare or

Managed Medicaid plans.

MCOs may also offer Managed Medicare or Managed Medicaid plans.

In addition, some MCOs use capitation rates to fix the cost of laboratory testing services for their enrollees.

Under a capitated reimbursement arrangement, the clinical laboratory receives a per-member, per-month payment for an agreed upon menu of laboratory tests provided to MCO members during the month, regardless of the number of tests performed.

Under a capitated reimbursement arrangement, the clinical laboratory receives a per-member, per-month payment for an agreed upon menu of laboratory tests, or based upon the proportionate share earned by Dx from a capitation pool.

When the agreed upon reimbursement is based solely on an established rate per member, revenue is not impacted by the volume of testing performed.

Under a capitation pool arrangement, the aggregate value of an established rate per member is distributed based on the volume and complexity of the procedures performed by laboratories participating in the agreement.

For the year ended December 31, 2021, capitated contracts with MCOs accounted for approximately $332.3 million, or 3.2%, of Dx's revenues.

In addition to reductions in test reimbursement, the Company also anticipates potential declines in test volumes as a result of increased controls over the utilization of laboratory services by Medicare, Medicaid, and other third-party payers, particularly MCOs.

2 unchanged sentences

In addition, continued movement by patients into consumer-driven health plans may have an impact on the utilization of laboratory testing.

Despite the overall negative market changes regarding reimbursement discussed above, Dx believes that the volume of clinical laboratory testing is positively influenced by several factors, including the expansion of Medicaid, managed care, and private insurance exchanges.

In addition, Dx believes that increased knowledge of the human genome and continued innovation in laboratory medicine will continue to foster greater appreciation of the value of gene-based diagnostic assays.

Test volumes in 2022 could also decline compared to 2021 and 2020 if demand for SARS-CoV-2 testing declines.

Despite the overall negative market changes regarding reimbursement discussed above, the Company believes that the volume of clinical laboratory testing is positively influenced by several factors, including the expansion of Medicaid, managed care, and private insurance exchanges.

In addition, the Company believes that increased knowledge of the human genome and continued innovation in laboratory medicine will continue to foster greater appreciation of the value of gene-based diagnostic assays.

Additional factors that may lead to future volume growth include an increase in the number and types of tests that are readily available (due to advances in technology and increased cost efficiencies) for the diagnosis of disease, and the general aging of the U.S.

Dx also believes that it and other large, independent clinical laboratory testing companies will be able to increase their share of the overall clinical laboratory testing market due to a number of market factors, primarily related to a continued drive to improve outcomes and reduce costs across the healthcare system.

Periodic infectious disease outbreaks such as the SARS-CoV-2 virus also have the potential to generate additional testing volume in the future.

The Company also believes that it and other large, independent clinical laboratory testing companies will be able to increase their share of the overall clinical laboratory testing market due to a number of market factors, primarily related to a continued drive to improve outcomes and reduce costs across the healthcare system, including but not limited to greater price transparency required under new “surprise billing” laws and regulations requiring

disclosure of hospital charges.

Dx believes that its enhanced and growing esoteric menu of tests, leading position with companion diagnostics, broad geographic footprint, and operating efficiency provide a strong platform for growth.

During 2021, the DD segment generated $ 5,845.5 million in total revenue and $ 547.7 million in operating income, resulting in an operating margin of 9.4%.

Dollars in millions Year Ended December 31,

In Millions Year Ended December 31,

Revenues $ 5,845.5 $ 4,877.7

1 unchanged sentence

DD provides end-to-end drug development, medical device and companion diagnostic development solutions from early-stage research to clinical development and commercial market access.

Its customers are comprised of biopharmaceutical, medical device, and diagnostic companies across the world.

With more than 28,000 employees worldwide and a global network of operations, DD offers deep expertise in early development and clinical trials in each therapeutic area.

DD collaborated on 87% of the novel drugs approved by the U.S.

FDA in 2020, including 86% of the novel oncology drugs and 88% of the rare and orphan disease drugs.

Its customers are comprised of pharmaceutical, biotechnology, medical device, and diagnostic companies across the world.

With a global network of operations, DD offers deep expertise in early development and clinical trials in each therapeutic area.

DD collaborated on 82% of the novel drugs and therapeutic products approved in 2021 by the U.S.

FDA, including 63% of those specific to oncology and 95% of those specific to rare and orphan diseases.

Through its industry-leading central laboratory business, it supports clinical trial activity in approximately 100 countries.

In late 2018, the Company commenced a series of LaunchPad projects focused on DD, which delivered in excess of $150.0 million of net savings through 2020.

Service Key Features

19 unchanged sentences

• Operates world's largest automated clinical trial sample collection kit production line that enables kits to be produced with 5.5 sigma precision

• Seven ISO 15189-certified laboratories

• Six ISO 15189-certified laboratories

• Collaborated with more than 65 clients on more than 265 companion diagnostic projects in 2021

4 unchanged sentences

• Market access solutions

Technology Solutions Proprietary digital tools and services providing customer with greater access to key insights and results, as well as improved trial management, enhanced transparency, quality, and speed of clinical trials, that results in reduced costs and increased market potential for customers:

Technology Solutions Proprietary digital tools and services providing customers with greater access to key insights and results, as well as improved trial management, enhanced transparency, quality, and speed of clinical trials, resulting in reduced costs and increased market potential for customers:

• Patient-facing software applications supporting virtual, hybrid, and traditional trials

2 unchanged sentences

• Patient randomization and Clinical Supply Management

In December 2020, the Company announced the evolution of its brand to signify the pivotal role the Company's capabilities play in society as a source of health answers.

It underscores the Company's commitment to science and data, moving with urgency, empowering better health outcomes, and breakthrough and transformative approaches to patient care using the Company's diverse and global expertise.

As part of the rebranding, the Company introduced a new company logo and associated its business unit brands with the Labcorp name.

The Company’s drug development segment, formerly referred to as Covance Drug Development, became Labcorp Drug Development in June 2021.

The Company's diagnostics segment, formerly referred to as LabCorp Diagnostics, transitioned to Labcorp Diagnostics and a new logo in 2021.

Human Capital

The purpose-driven mission of the Company is “improving health and improving lives.” Given the nature of the Company's global life sciences business, the Company's employees are critical to its success.

It takes the efforts and focus of all of the Company's specialized and highly skilled employees to deliver the power of the combined Dx and DD segments to patients and customers throughout the world.

The COVID-19 pandemic during 2020 provided unique challenges to the Company, and its employees were paramount to the Company's ability to meet the increasing needs of patients and customers.

Mission and Culture

Labcorp believes in the power of science to change lives.

The Company’s culture centers around its mission to improve health and improve lives.

The Company's more than 75,500 employees serve clients in over 100 countries.

They are essential to the Company’s ability to innovate and advance science and technology to empower patients, providers, and pharmaceutical companies to make clear and confident decisions.

Labcorp’s employees are also critical to its ongoing support of the COVID-19 pandemic response through diagnostic testing and its work to aid pharmaceutical companies in the development of vaccines and treatments.

Engaging the collective expertise and passion of its employees is vital to achieving the Company’s mission, which permeates its performance-driven, collaborative, inclusive, customer-centered, and inquisitive culture.

Workforce Demographics

The Company's future success is dependent on its continued capabilities to recruit, develop, and retain a specialized and highly skilled global workforce, and the Company believes that it has good working relationships with its employees.

The Company's 72,400 employees are globally dispersed, with 77% in the U.S.

and Canada, 10% in the Asia region, 13% in the EMEA region, and less than 1% in the Latin American region.

The Company's workforce is 61% in the Dx segment and 39% in the DD segment, with 90% full-time, and 10% part-time.

Approximately 3.6% of the Company's global workforce is employed under a collective bargaining agreement.

To manage fluctuations in volume and other business demands, the Company uses contingent labor to supplement its workforce by approximately 10%.

Throughout the pandemic, a significant portion of the Company's employees have been working diligently to serve patients and customers.

To meet the increased demands of the pandemic, the Company increased its global workforce by 12.5% during

To promote the safety and welfare of its employees, the Company transitioned those employees who do not work with patients, animals, in labs or logistics, to remote working.

The Company’s success depends on its sustained ability to attract, develop, and retain a highly specialized and skilled global workforce.

Management believes that the Company has good working relationships with its employees.

Employees are globally dispersed, with 75% in the U.S.

and Canada, 12% in Asia, 13% in Europe, the Middle East, and Africa, and less than 1% in Latin America.

Of the Company’s global workforce, 90% of employees are full time, and 10% are part time.

Four percent of Labcorp’s global workforce is employed under a collective bargaining agreement.

Depending on business demand and the talent-hiring environment, Labcorp supplements up to 12% of its workforce with contingent workers.

The challenges of 2021, felt globally, also presented the Company with significant challenges in acquiring and retaining talent.

Despite these obstacles, Labcorp’s global workforce increased by more than 4%.

The majority of Labcorp's hires are sourced through an internal talent acquisition team.

In addition, the Company continues to grow its workforce through mergers and acquisitions.

The Company implemented significant investments to retain talent and enable the organization to meet the business needs for growth, which are discussed further in the section below on “Compensation and Benefits.”

Throughout the pandemic, a significant portion of Labcorp’s employees have been working diligently to serve patients and customers.

To ensure the safety and welfare of our employees, the majority of employees who do not work with patients, animals, in labs, or in logistics, continue to work remotely.

This includes call center employees, customer service teams, sales teams, and corporate and functional teams.

Going forward, the Company expects that a significant number of employees will continue working remotely, or through hybrid, in-office and remote work arrangements.

The Company believes that flexibility in work location and arrangements expands the pool from which it can source experienced and valuable talent.

Diversity and Inclusion

The Company has a diverse workforce with a broad range of unique experiences and talents.

Labcorp's diverse, global talent is core to its ability to innovate and meet patient and customer needs.

The Company believes that the diversity of its employees and its inclusive programs contribute to a healthy, productive, and respectful work environment.

Workforce Diversity Profile:

United States:

Gender and Ethnicity

Employees Male Female White Total Non White Black Hispanic Asian Other

Executive/Managerial 40% 60% 70% 30% 13% 6 % 9 % 2%

Professional and Sales 34% 66% 62% 38% 14% 7% 14% 3%

Technician/Admin/Operatives 24% 76% 45% 55% 29% 14% 8% 4%

Totals 29% 71% 52% 48% 23% 12% 10 % 3%

headcount on payroll as of 12/31/20, excluding casual employees and event workers employed by Labcorp Staffing Solutions .

The social unrest and unique impact of the pandemic around the world in 2020 provided the Company an opportunity to refocus efforts to further improve its diversity profile for the benefit of employees, patients, and customers.

The Company appointed a new Chief Diversity and Inclusion Officer (CDIO), who reports dually to the Chief Executive Officer (CEO) and Chief Human Resources Officer (CHRO).

The CDIO also provides periodic reports to the Compensation and Human Capital Committee of the Board of Directors.

The Company’s key diversity and inclusion priorities going forward include:

empowering inclusive leadership, developing and sustaining a diverse talent pipeline, and creating an environment for engagement across the Company and in its communities.

The Company's leadership is engaging with its six employee resource groups with 50 chapters around the world, to drive these diversity and inclusion priorities.

In 2021, the Company was recognized for the fourth consecutive year as a Best Place to Work for LGBTQ Equality with a perfect score from Human Rights Campaign's Corporate Equality Index, the nation's premier benchmarking survey and report on corporate policies and practices related to LGBTQ workplace equality.

The Company was also named to FORTUNE ® magazine's 2021 List of World's Most Admired Companies, making the annual list for the third time, as well as the 2020 List of World's Best Employers and as one of Forbes' 2020 List of the Best Employers for New Graduates .

Compensation and Benefits

As the Company's business becomes increasingly complex, global, mobile, and technology-enabled, it recognizes the importance of having compensation and benefits programs that provide sufficient flexibility to attract and retain the specialized and skilled talent needed to move the business forward.

The Company continually monitors market activity and employee movement to maintain competitiveness in a dynamic life sciences industry.

During the pandemic, the Company has taken steps to protect our competitive positioning with a focus on front line workers, given their on-premises direct interaction with patients and the handling of specimens and results throughout the supply chain and operations.

Although the Company initially suspended discretionary payments, such as the annual merit adjustments and U.S.

401K company contributions, in July 2020, as business improved, the Company retroactively reinstated both programs, returning over $100 million back to our employees globally.

In addition, during 2020, the company provided over $50 million in discretionary incentives and awards to our employees globally to thank and reward them for their response to the pandemic.

The Company also made over $8 million in broad, off-cycle wage rate adjustments, primarily to its U.S.

non-exempt employees.

The Company is focusing on enhancing our benefits positioning by not increasing employee contributions in 2021 for the U.S.

non-union medical, dental, and vision plans, as well as providing disability coverage at no cost to U.S.

non-union employees.

In the area of wellness, the Company covered the cost or provided a subsidy to all global employees for flu shots to protect their health and safety, as well as the health and safety of patients and customers.

The Company built these enhancements on top of other benefits and wellness programs, such as in the U.S.

medical plans where the Company subsidizes part of the monthly contributions for employees earning less than $50,000 annually and provides up to $1,000 in medical reimbursements for engaging in healthy activities.

The Company also provides U.S.

employees a $300 fitness reimbursement to encourage healthy lifestyles.

Gender, Ethnicity, and Race

Global Workforce by GENDER

Workforce by GENDER

Workforce by RACE & ETHNICITY

The Company has a Diversity and Inclusion (D&I) strategic framework, with three overarching pillars of focus:

empowering inclusive leadership;

developing and sustaining a diverse talent pipeline;

and creating an environment for engagement across the Company and in its communities.

Labcorp’s D&I strategy is designed as a continuing journey to maintain and further evolve its inclusive workforce consistent with the changing dynamics of the global workforce.

Highlights of actions supporting the Company’s D&I framework that it believes will foster a more inclusive environment and strengthen its culture include:

• the launch of an unconscious bias training program designed to improve self-awareness of personal biases.

The program was rolled out globally to all of the Company's people leaders, with over 6,000 completing the training in 2021;

• a formal mentoring initiative that includes a Reverse Diverse Mentoring program that received the Gold Award in the category of Best Advance in Mentoring to Develop Diverse Leaders from the Brandon Hall Group;

• a first-ever virtual women's summit for executive women leaders.

This event, called the Power of Women, is part of the Company's leadership development programs for women that include specific offerings for mid-level and senior leaders;

• the introduction of additional Employee Resource Groups (ERGs).

ERGs are led by employee volunteers and are important resources to foster cross-company connections, encourage belonging, support career development, and champion employee voices.

The Company now has eight unique ERGs with more than 70 chapters in 11 countries.

Each ERG has executive sponsorship from senior leadership.

The Company was named to FORTUNE ® magazine's 2022 List of World's Most Admired Companies, making the annual list for the fourth time.

Labcorp also made the Forbes 2021 list of World's Best Employers for the second consecutive year.

In addition, the Company was named to Fast Company's list of the World's Most Innovative Companies for 2021.

In 2021 and 2022, the Company was recognized for the fourth and fifth consecutive years as a Best Place to Work for LGBTQ+ Equality, with a perfect score on the Human Rights Campaign Foundation's Corporate Equality Index.

The Index is the nation's foremost benchmarking survey and report on corporate policies and practices related to LGBTQ+ workplace equality.

The Company has also implemented opportunities for greater engagement between employees and management, including quarterly town halls that are held virtually and open to all employees, interaction with front-line employees on visits to the Company facilities, and town halls with employees in business units.

In early 2022, the Company initiated a Voice of the Employee Survey.

As the Company’s business becomes increasingly complex, global, and dynamic, the Company believes that its compensation and benefits programs must be competitive and flexible to attract and retain the caliber of talent needed to continue to move the business forward.

In 2021, the Company faced unique challenges to growing and maintaining its global workforce.

The Company believes that its ability to expand the workforce in 2021 evidences that the Company's compensation and benefit strategies are market competitive and support the business needs to attract and retain talent.

The Company continually monitors market activity and employee movement within and outside of the core life sciences industry to maintain competitiveness, given the dynamic business environment and labor market challenges it faces.

Labcorp’s employees met the unique challenges faced by patients and clients as the COVID-19 pandemic continued in 2021.

The Company invested more than $120 million to recognize and reward our global workforce, with particular focus placed on frontline workers.

These investments included:

• $51 million in market-based pay adjustments, including an increase in the minimum wage for all non-union employees in the U.S.

to $15 per hour;

• $21 million to increase base wages up to an additional 1.5% to encourage participation in the 401(k) retirement savings plan for 37,000 U.S.

employees earning less than $75,000 per year;

• $35 million in two separate, global “gratitude” bonuses for more than 61,500 employees;

• $14 million in retention payments to employees in key global positions to encourage continued career development with the Company.

Employee Wellness

The Company also continued investing in the health and wellness of its global workforce, with particular emphasis on improving its U.S.

health benefits program for employees.

The Company’s efforts on this front included:

• no annual cost increase for the payroll contributions in its U.S.

Healthy Value medical, dental and vision insurance plans, impacting approximately 36,000 covered employees and more than 30,000 dependents.

For approximately 26,000 employees in the U.S.

earning less than $50,000 per year, the Company further reduced the cost of monthly medical insurance contributions by $240 per year;

• adding company-paid disability insurance coverage for short- and long-term disability for all U.S.

• providing up to $4,560 in annual medical plan contribution discounts for over 36,000 employees and their spouses for committing to and maintaining a healthy and tobacco-free lifestyle;

• encouraging health and wellness education and activities by providing up to $1,000 in Health Reimbursement Account contributions to approximately 31,000 employees and their spouses or partners.

This included $100 for COVID-19 vaccines and $50 for Flu vaccines;

• reimbursing up to $300 in fitness-related costs for approximately 16,000 employees.

The Company continually educates its workforce on health issues of importance.

For example, the Company provided a series of videos throughout 2021 from its medical experts covering the facts, safety, and effectiveness of the COVID-19 vaccines.

Further, the Company has also prioritized continuous education on the importance of mental well-being, through communications and resources made available to all employees.

The Company believes that its investments in compensation and wellness are crucial to maintaining competitive positioning and a productive and engaged workforce.

Development and Training

Because the life sciences industry is heavily regulated, the Dx and DD segments require a significant investment in technical training to prepare their workforces to meet the necessary standards to run and manage business operations.

Across the enterprise considerable attention is focused on employee skills training.

While the technical training is important to the Company’s success in differentiating its science and technology, the Company also invests in training for the professional development of its talent and to retain its best employees for future opportunities in the Company.

In 2020, 3,500 employees attended professional development webinars consisting of 7,000 hours of professional development.

To strengthen leadership capabilities, the organization provided 6,200 hours of core leadership training to early in career leaders.

Finally, the expanded mentoring program had 2,100 employees participate with 10,200 mentoring hours recorded from April to December 2020.

The pandemic has provided challenges to the ability to provide both technical and leadership training.

The Company has adapted by utilizing technology to deliver unique virtual learning and development opportunities.

To meet the needs of patients and clients in the evolving and competitive diagnostics and drug development markets, the Company is committed to creating a work environment that supports a focus on the continuous development and training of its

With this focus, t he Company believes it is well-positioned in the long term to meet the demands of the regulatory environment and accelerate its ability to innovate and develop talent in a highly skilled and competitive talent market.

Labcorp's curriculum has three primary focus areas:

regulatory training, technical training, and professional development.

Regulatory training is required by laws and regulations for the Company to operate in certain areas within the life sciences industry and in certain jurisdictions.

Technical training and professional development enable the Company to compete more effectively in the life sciences industry.

The Company maintains an extensive library of over 46,000 courses that are available virtually within its global learning management system.

In 2021, Labcorp employees completed over 3.2 million hours of training, primarily consisting of regulatory and technical training.

In addition, due to the Company’s access to sensitive and personally identifiable information, employees completed over 1.3 million IT security training courses, representing more than 300,000 total hours, with the goal of maintaining IT system safety and security for clients and patients.

Labcorp also invests in the professional development of its talent, and in retaining our best employees for future internal opportunities.

In 2021, employees completed more than 65,000 hours of professional development.

Challenges in the talent labor market have reinforced the need to offer new and engaging learning resources.

In 2021, the Company expanded its approach to tuition assistance, helping an additional 500 employees complete college degrees in the life science and healthcare fields.

In addition, Labcorp added new relationships with leading learning partners that provide open, online courses.

These partners provide video courses, job aides, and short, self-paced learning taught by industry experts.

Health and Safety

The nature of the Dx and DD business segments requires employees to work directly with patients, handle, process or test human specimens on a daily basis.

As a result, the health and safety of the Company's employees is a primary concern.

The Company has established procedures, processes and controls, including providing personal protective equipment (PPE) to protect our employees.

During the pandemic, the Company supplied more than 250 million units of PPE to employees, including personal cloth facemasks for each employee, N95 respirators, and ear-loop masks, gloves, face shields and disposable lab coats.

The nature of the Company's business requires employees to work directly with patients and animals.

This includes the handling, processing, and testing of human or animal specimens on a daily basis.

As the health and safety of employees is a primary concern, the Company has established numerous employee health and safety protocols, including engineering and administrative controls, policies, procedures, processes, and training to minimize the potential for, and the severity of, work-related injuries and illnesses.

In 2021, the Company reorganized its Environment, Health and Safety (EHS) function, combining Dx and DD programs to enable consistency and common policies, procedures, and areas of focus.

The Company was able to maintain its work-related injury rate per 100 employees at a low 1.6, and to reduce its work-related lost work injury rate per 100 employees by 40%, from 0.5 to 0.3.

The Company also implemented a common Corporate EHS Audit process, allowing it to assess locations against common expectations and performance criteria.

In response to COVID-19, the Company modified the audit format so that it could be effectively performed virtually.

While COVID-19 presented continued challenges, the Company minimized the impact on staff and operations through careful planning and consistent global implementation of precautionary measures.

These measures included additional cleaning and sanitization, social distancing, the use of protective equipment such as facemasks, face shields and respirators, the increased utilization of work from home, and leveraging video and communications technology.

Employee Giving

The COVID-19 crisis left many communities and individuals facing health challenges and financial crisis.

Through the Company’s U.S.

annual Employee Giving Campaign, donations helped to support the American Cancer Society, American Heart Association, American Diabetes Association, American Red Cross Disaster Relief, United Way, and the National Urban League.

The National Urban League was added based on feedback from the Company's employees requesting a charity focused on social and economic justice.

The Company and its employees focused their efforts on helping the underserved in 2020 by donating to local food pantries and shelters, by supporting educational programs aimed at helping to provide students and teachers with the resources they needed during the pandemic and supporting a number of patient assistance programs aimed at helping the underserved while they received care.

In addition, the Company established the Labcorp Charitable Foundation which supports the Company’s strategic mission of improving health and improving lives with contributions focused on health and welfare, education and community.

The Labcorp Charitable Foundation, a private, charitable 501(c)(3) organization established by the Company, invested in more than 70 programs in 2021 that align with the Company’s strategic mission to improve health and improve lives.

The Foundation’s funding supports the focus areas of health, education, and community across the globe.

In addition, the Company's employees took advantage of many opportunities to support charitable causes and make a positive impact in their communities.

Annually, U.S.

colleagues have the opportunity to automatically direct a portion of each paycheck to one or more of six selected charities through the Employee Giving Campaign:

the American Cancer Society, American Heart Association, American Diabetes Association, American Red Cross (Disaster Relief), United Way, and the National Urban League.

Employee contributions support these charities to provide needed services in their local communities and across the nation.

The Company's global colleagues also support the local communities where they live and work.

For example, as India endured a second, severe wave of positive COVID-19 cases, Labcorp’s India Crisis Management Team helped 2,398 employees and their families get vaccinated.

Additionally, in celebration of Earth Day, Labcorp colleagues in China took an active part in the American Chamber of Commerce Shanghai Annual E-waste Drive, in which employees donated personal electronics that they no longer use.

The donated equipment was distributed to schools throughout rural communities in China to improve access to technology.

The Company provides its services to a broad range of customers across Dx and DD.

The primary customer groups serviced by the Company include:

The Company serves many MCOs, each of which operate on a national, regional, or local basis.

• Biopharmaceutical, Medical Device, and Diagnostics Companies.

The Company provides development services to hundreds of biopharmaceutical (including pharmaceutical and biotechnology-based organizations), medical device, and diagnostics companies, ranging from the world's largest multi-nationals to emerging, mid-market companies.

• Health Plans.

The Company serves many health plans, including MCOs and other health insurance providers, each of which operate on a national, regional, or local basis.

In certain locations, health plans may delegate to independent physician associations (IPAs) or other alternative delivery systems (e.g., ACOs) the ability to negotiate for services on behalf of certain members.

• Pharmaceutical, Biotechnology, Medical Device, and Diagnostics Companies.

The Company provides development services to hundreds of pharmaceutical, biotechnology, medical device, and diagnostics companies, ranging from the world's largest multi-nationals to emerging, small and mid-market companies.

• Physicians and Other Healthcare Providers.

4 unchanged sentences

• Other Customers.

The Company serves a broad range of other customers, incl uding, but not limited to, governmental agencies, employers, patients and consumers, CROs, crop protection and chemical companies, academic institutions and independent clinical laboratories.

Sales, Marketing, and Customer Service

2 unchanged sentences

For Dx, these market segments generally include primary care, women's health, specialty medicine (e.g., infectious diseases, endocrinology, gastroenterology, and rheumatology), oncology, ACOs, and hospitals and health systems, with different representatives focused on each segment to better understand and respond to the unique needs of each clinical area.

DD’s global sales organization provides customer coverage across the biopharmaceutical industry for services including lead optimization, preclinical safety assessment, analytical services, clinical trials, central laboratories, biomarkers, and companion diagnostics, market access and technology solutions.

As part of its ongoing strategic priority to maximize the power of the combined, sales representatives from each business segment work together on outreach to potential customers of each business, including hospitals and health systems that may purchase testing and participate in clinical trials, or biopharmaceutical companies whose studies may benefit from use of Dx’s specialty testing or network of PSCs.

In 2020, the Company initiated a greater emphasis on establishing a centralized marketing program to support both of its primary business segments, rather than separate programs for each segment.

The Company anticipates that this will provide further support for fully leveraging the power of its combined capabilities, and it is also aligned with the Company’s rebranding initiative, which was launched in December 2020.

The DD global sales organization provides customer coverage across the pharmaceutical, biotechnology, and medical device industries for services including lead optimization, preclinical safety assessment, analytical services, clinical trials, central laboratories, biomarkers, and companion diagnostics, market access and technology solutions.

As part of the Company's ongoing strategic priority to maximize the value of its unique leadership in both diagnostics and drug development, sales representatives from each business segment work together on outreach to potential customers of each business, including hospitals and health systems that may purchase testing and participate in clinical trials, or pharmaceutical, biotechnology or medical device companies whose studies may benefit from use of Dx’s specialty testing or network of PSCs.

In mid-2021, Labcorp launched its “In Pursuit of Answers” campaign to emphasize the Company's commitment to its customers and the dedication of its employees.

This campaign also highlights the Company's impact on public health, its new, unified brand, and its critical role in the fight against COVID-19.

Market Opportunity

4 unchanged sentences

The clinical laboratory business is intensely competitive.

CMS has estimated that in 2020 there were approximately 9,100 hospital-based laboratories, more than 121,000 physician-office laboratories and approximately 6,500 independent clinical and anatomic pathology laboratories in the U.S.

CMS has estimated that, as of January 2022, there were 9,254 hospital-based laboratories, 131,238 physician-office laboratories, and 8,430 independent clinical and anatomic pathology laboratories in the U.S.

Dx competes with all of those laboratories.

9 unchanged sentences

In addition, Dx believes that it and other large, independent clinical laboratory testing companies will be able to increase their share of the overall clinical laboratory testing market due to a number of factors, including cost efficiencies afforded by large-scale automated testing, mergers and acquisitions of complementary businesses, changes in payment models to performance and value-based reimbursement to deliver better outcomes at lower cost, and the increasing importance of large, integrated service networks.

addition, legal restrictions on physician referrals and physician ownership of laboratories, as well as ongoing regulation of laboratories, are expected to continue to contribute to the ongoing consolidation of the industry.

Drug development services companies like DD are also referred to as CROs and typically derive substantially all of their revenue from research and development (R&D), as well as marketing expenditures, of the biopharmaceutical industry.

Outsourcing of R&D services by biopharmaceutical companies to CROs has increased in the past, and is expected to continue increasing in the future.

Increasing pressures to improve return on investment, to increase R&D productivity, to stay abreast of scientific advances and to comply with stringent government regulations have all contributed to this outsourcing to CROs.

A CRO provides biopharmaceutical companies flexibility in aligning resources to demand.

In addition, legal restrictions on physician referrals and physician ownership of laboratories, as well as ongoing regulation of laboratories, are expected to continue to contribute to the ongoing consolidation of the industry.

Outsourcing of R&D services to CROs has increased in the past, and is expected to continue increasing in the future.

A CRO provides clients with flexibility in aligning resources to demand.

In the face of mounting complexity, the investment and amount of time required to develop new products are significant and have been increasing.

1 unchanged sentence

The drug development industry has many participants ranging from hundreds of small providers to a limited number of large CROs with global capabilities.

DD competes against these small and large CROs, as well as in-house departments of biopharmaceutical, medical device and diagnostic companies, and to a lesser extent, selected academic research centers, universities and teaching hospitals.

DD competes against these small and large CROs, as well as in-house departments of pharmaceutical, biotechnology, medical device and diagnostic companies, and to a lesser extent, selected academic research centers, universities and teaching hospitals.

DD believes that customers selecting a CRO often consider the following factors, all of which the Company believes it competes favorably in:

13 unchanged sentences

• size and scale;

• decentralized clinical trial capabilities;

• ability to develop companion diagnostics;

• access to talent.

2 unchanged sentences

The Company has procedures for monitoring its internal performance, as well as that of its vendors, suppliers, and other key stakeholders.

In addition, various groups and departments within the Company provide oversight to monitor and control vendor products and performance, and play an essential role in the Company’s approach to quality through improvements in processes and automation.

In addition, various groups and departments within the Company provide oversight to monitor and control

vendor products and performance, and play an essential role in the Company’s approach to quality through improvements in processes and automation.

Virtually all facets of the Company’s services are subject to quality programs and procedures, including accuracy and reproducibility of tests;

3 unchanged sentences

patient satisfaction;

The Company’s quality program includes measures that compare current performance against desired performance goals to monitor critical aspects of service to its customers and patients.

The Company’s quality programs include measures that compare current performance against desired performance goals to monitor critical aspects of service to its customers and patients.

This includes licensing, credentialing, training and competency of professional and technical staff, and internal auditing.

2 unchanged sentences

and inspections and audits by customers.

Thirty-four of the Company's laboratories have received ISO-15189 accreditation, demonstrating that they meet international standards for quality and technical competence.

Twenty eight of the Company's laboratories have received ISO-15189 accreditation, demonstrating that they meet international standards for quality and technical competence.

Information Systems

3 unchanged sentences

The primary laboratory systems include standardized support for molecular diagnostics, digital pathology and enhanced specialty laboratory solutions.

The Company's centralized information systems are responsible for tremendous operational efficiencies, enabling the Company to achieve consistent, structured, and standardized operating results and superior patient care.

In addition, Dx and DD each offer proprietary and industry-leading information systems, which are discussed in more detail in the sections dedicated to each of those segments.

The Company's centralized information systems are responsible for operational efficiencies, enabling the Company to achieve consistent, structured, and standardized operating results and effective patient care.

In addition, the information systems used by Dx and DD are discussed in more detail in the sections dedicated to each of those segments.

Intellectual Property Rights

21 unchanged sentences

In most cases, that certification is regulated by CMS through CLIA, which requires that applicable clinical laboratories meet quality assurance, quality control, and personnel standards.

Laboratories also must undergo proficiency testing and are subject to inspections.

Laboratories also must undergo

proficiency testing and are subject to inspections.

Clinical laboratories in locations other than the U.S.

5 unchanged sentences

The sanctions for failure to comply with CLIA requirements include suspension, revocation, or limitation of a laboratory's CLIA certificate, which is necessary to conduct business;

cancellation or suspension

of the laboratory's approval to receive Medicare and/or Medicaid reimbursement;

cancellation or suspension of the laboratory's approval to receive Medicare and/or Medicaid reimbursement;

as well as significant fines and/or criminal penalties.

7 unchanged sentences

FDA and Other Regulatory Agency Laws and Regulations

Various regulatory agencies, including the FDA in the U.S., have regulatory responsibility over the development, testing, manufacturing, labeling, advertising, marketing, distribution, storage, import, export, and surveillance of diagnostic and therapeutic products and services, including certain products and services offered by the Company, and the development of therapeutic products that comprise the majority of DD’s business.

The FDA and other regulatory agencies periodically inspect and review the manufacturing processes and product performance of diagnostic and therapeutic products.

Various regulatory agencies, including CMS and the FDA in the U.S., regulate the development, testing, manufacturing, labeling, advertising, marketing, distribution, storage, import, export, performance, and surveillance of diagnostic and therapeutic products and services, including certain products and services offered by the Company and the development of therapeutic products that comprise the majority of DD’s business.

The FDA and other regulatory agencies periodically inspect and review the manufacturing processes and product performance of diagnostic and therapeutic products, while CMS, certain state programs, and accreditation entities inspect and review the facilities, personnel, and procedures of clinical laboratories and their laboratory operations.

The FDA and other regulatory agencies also periodically inspect clinical study sites and CROs that conduct clinical trials, including test facilities that perform tests on samples from human subjects enrolled in such clinical studies of drugs, biologics, and medical devices.

These agencies have the authority to take various administrative and legal actions for noncompliance, such as fines, withdrawal of product approval, warning or untitled letters, seizures, recalls, injunctions, and other civil and criminal sanctions.

There are similar national and regional regulatory agencies in the jurisdictions outside the U.S.

in which the Company operates.

Since 2014, there have been ongoing discussions and advocacy between stakeholders, including the clinical laboratory industry, the FDA, and Congress, about potential FDA regulation of laboratory-developed tests (LDTs), which are assays developed and performed in-house by clinical laboratories and can be made available to the public without pre-market review by the FDA (although COVID-19 diagnostic PCR LDTs have been subject to FDA pre-market requirements as modified by guidance issued by FDA on February 29, 2020, as a consequence of the national health emergency).

Various regulatory and legislative proposals are under consideration, including some that could increase general FDA oversight of clinical laboratories and LDTs.

The outcome and ultimate impact of such proposals on the Company is difficult to predict at this time.

There are similar national and regional regulatory agencies, and regulations, in the jurisdictions outside of the U.S.

in which the Company operates.

For example, the European Union In Vitro Diagnostics Regulation (Regulation (EU) 2017/746 (EU IVDR)), scheduled to become applicable May 26, 2022, establishes a new legislative framework for in vitro diagnostic devices including a rule-based classification and quality and safety standards.

The Company continues to assess and prepare for compliance with the EU IVDR, where applicable.

DD’s laboratory facilities and Dx's clinical laboratory facilities that perform testing in support of clinical trials, must conform to a range of standards and regulations, including good laboratory practice (GLP) and good clinical practice (GCP), good manufacturing practice (cGMP), human subject protection and investigational product exemption regulations, and quality system regulation (QSR) requirements, as applicable.

The preclinical and clinical studies that the Company conducts are subject to periodic inspections by the FDA as well as other regulatory agencies in the jurisdictions outside the U.S.

in which the Company operates, which may include, without limitation, the Medicines and Healthcare products Regulatory Agency (MHRA) in the U.K., the European Medicines Agency, the National Medical Products Administration in China, and the Pharmaceuticals and Medical Devices Agency in Japan, to determine compliance with GLP and GCP as well as other applicable standards and regulations.

applicable standards and regulations.

If a regulatory agency determines during an inspection that the Company’s equipment, facilities, laboratories, operations, or processes do not comply with applicable regulations and GLP and/or GCP standards, the regulatory agency may issue a formal notice, which may be followed by a warning letter if observations are not addressed satisfactorily.

5 unchanged sentences

Failure to maintain compliance with cGMP regulations and other applicable requirements of various regulatory agencies could result in, among other things, fines, warnings or untitled letters, unanticipated compliance expenditures, suspension of manufacturing, enforcement actions, product seizures or recalls, injunctions, or criminal prosecution.

Some Dx products are regulated by the FDA as medical devices.

The FDA defines a medical device in part as an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article which is intended for the diagnosis of disease or other conditions or in the cure, mitigation, treatment, or prevention of disease in man.

FDA regulates the development, testing, manufacturing, marketing, post‑market surveillance, distribution, advertising and labeling of products classified as medical devices separate from clinical diagnostic testing services offered under CLIA requirements.

FDA regulatory requirements include:

all of the relevant elements of the Quality System Regulation (which requires manufacturers to follow stringent design, testing, control, documentation and other quality assurance procedures), labeling regulations, restrictions on promotion and advertising, Medical Device Reporting regulations (which requires the manufacturer to report to the FDA if its device may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if it were to recur), the Reports of Corrections and Removals regulations (which requires manufacturers to report certain recalls and field actions to the FDA), and other post-market requirements.

To ensure compliance with regulatory requirements, medical device manufacturers are subject to market surveillance and periodic, pre-scheduled and unannounced inspections by the FDA.

Failure to comply with applicable regulatory requirements can result in enforcement action by the FDA, which may include sanctions, operating restrictions, partial suspension or total shutdown of production;

refusal to grant clearance or approvals of new devices;

withdrawal of clearance or approval;

and civil or criminal prosecution.

Animal Welfare Laws and Regulations

The conduct of animal research at DD’s facilities in the U.S.

must be in compliance with the AWA, which governs the care and use of warm-blooded animals for research in the U.S.

must be in compliance with the Animal Welfare Act (AWA), which governs the care and use of warm-blooded animals for research in the U.S.

other than laboratory rats, mice, and chickens, and is enforced through periodic inspections by the U.S.

27 unchanged sentences

These changes to the conversion factor may be offset by reductions to the relative value units, as was the case with the 2016 PFS reductions.

For 2022, Congress increased the conversion factor by 3.0% over the amount announced in the final rule, instead of allowing a 3.75% reduction to take effect.

Approximately 0.4% of Dx's revenue is reimbursed under the PFS.

2 unchanged sentences

Further, some payers require additional information to process claims, employ third-party utilization management tools, or have implemented prior authorization policies which delay or prohibit payment.

In 2020, with the exception of those specifically related to COVID-19 testing, there were limited coding and billing changes.

In 2021, there were limited coding and billing changes.

While limited changes are expected to be implemented in 2022, the Company typically expects some delays in pricing and reimbursement as new codes are introduced.

Future changes in national, state and local laws and regulations (or in the interpretation of current regulations) affecting government payment for clinical laboratory testing could have a material adverse effect on the Company.

Further healthcare reform could occur in 2022, including changes to the ACA and Medicare reform, as well as administrative requirements that may continue to affect coverage, reimbursement, and utilization of laboratory services in ways that are currently unpredictable.

Privacy, Security and Confidentiality of Health Information and Other Personal Information

5 unchanged sentences

(iii) the Security Rule;

(iv) the Standard Unique Employer Identifier Rule, which requires the use of a unique employer identifier in connection with certain electronic transactions;

(v) the National Provider Identifier Rule, which requires the use of a unique healthcare provider identifier in connection with certain electronic transactions;

and (vi) the Health Plan Identifier Rule, which required the use of a unique health plan identifier in connection with certain electronic transactions.

(iv) the Standard Unique Employer Identifier Rule;

(v) the National Provider Identifier Rule;

and (vi) the Health Plan Identifier Rule.

The Company believes that it is in compliance in all material respects with each of the HIPAA Rules identified above.

2 unchanged sentences

The Privacy Rule requires covered entities to contractually bind third parties, known as business associates, in the event that they perform an activity or service for or on behalf of the covered entity that involves the creation, receipt, maintenance, or transmission of PHI.

The Company believes that it is in compliance in all material respects with the requirements of the HIPAA Privacy Rule.

On February 6, 2014, CMS and HHS published final regulations that amended the HIPAA Privacy Rule to provide individuals (or their personal representatives) with the right to receive copies of their test reports from laboratories subject to HIPAA, or to request that copies of their test reports be transmitted to designated third parties.

The Company believes its policies and procedures and privacy notice comply with the Privacy Rule access requirements.

On December 12, 2018, HHS issued a request for information (RFI) seeking input from the public on how the HIPAA regulations and the Privacy Rule, in particular, could be modified to amend existing, or impose additional, obligations relating to the processing of PHI.

Subsequent to the RFI, on January 21, 2021, HHS published a notice of proposed rulemaking (NPRM) containing potential modifications to the Privacy Rule addressing standards that may impede the transition to value-based health care.

healthcare and strengthen individuals' rights to access their health information.

The public comment period for the NPRM was closed on May 6, 2021.

The Company is monitoring the NPRM process.

5 unchanged sentences

Business associates are similarly required to notify covered entities of a breach.

The Company believes its policies and procedures are fully compliant with HIPAA as modified by the HITECH requirements.

The administrative simplification provisions of HIPAA mandate the adoption of standard unique identifiers for healthcare providers.

2 unchanged sentences

NPI replaces the unique provider identification number and other provider numbers previously assigned by payers and other entities for the purpose of identifying healthcare providers in standard electronic transactions.

The Company believes that it is in compliance with the HIPAA National Provider Identifier Rule in all material respects.

The Health Plan Identifier (HPID) was a unique identifier designed to furnish a standard way to identify health plans in electronic transactions.

5 unchanged sentences

Violations of the HIPAA provisions could result in civil and/or criminal penalties, including significant fines and up to 10 years in prison.

civil actions seeking either injunctions or damages in response to violations of the HIPAA privacy and security regulations that affect the privacy of state residents.

HITECH also significantly strengthened HIPAA enforcement by increasing the civil penalty amounts that may be imposed, requiring HHS to conduct periodic audits to confirm compliance and authorizing state attorneys general to bring civil actions seeking either injunctions or damages in response to violations of the HIPAA privacy and security regulations that affect the privacy of state residents.

The total cost associated with meeting the ongoing requirements of HIPAA and HITECH is not expected to be material to the Company’s operations or cash flows.

However, future regulations and interpretations of HIPAA and HITECH could impose significant costs on the Company.

In addition to the HIPAA regulations described above, numerous other data protection, privacy and similar laws govern the confidentiality, security, use, and disclosure of personal information.

On May 1, 2020, HHS published a final rule making the information blocking provisions (Information Blocking Rules) of the 21 st Century Cures Act effective on November 2, 2020.

On November 4, 2020, HHS extended the effective date of the Information Blocking Rules to April 5, 2021.

The Information Blocking Rules prohibit covered actors, including healthcare providers, from engaging in activity that is likely to interfere with the access, exchanges, or use of electronic health information (EHI) unless such activity falls into one of eight exceptions.

The Information Blocking Rules provide for civil monetary penalties for noncompliance by healthcare IT vendors and, separately, “appropriate disincentives” for noncompliance by healthcare providers.

The Company believes that it is in compliance in all material respects with the requirements of the Information Blocking Rules.

In addition to the regulations described above, numerous other data protection, privacy and similar laws govern the confidentiality, security, use, and disclosure of personal information.

These laws vary by jurisdiction, but they most commonly regulate or restrict the collection, use, and disclosure of medical and financial information and other personal information.

1 unchanged sentence

Penalties for violation of these laws may include sanctions against a laboratory's licensure, as well as civil and/or criminal penalties.

Congress and state legislatures also have been considering new legislation relating to privacy and data protection.

Congress and state legislatures also have been implementing new legislation relating to privacy and data protection.

For example, on June 28, 2018, the California legislature passed the California Consumer Privacy Act (CCPA), which became effective January 1, 2020.

The CCPA created new transparency requirements and granted California residents several new rights with regard to their personal information.

The CCPA created transparency requirements and granted California residents several new rights with regard to their personal information.

In addition, in November 2020, California voters approved the California Privacy Rights Act (CPRA) ballot initiative, which introduced significant amendments to the CCPA and established and funded a dedicated California privacy regulator, the California Privacy Protection Agency (CPPA).

The amendments introduced by the CPRA go into effect on January 1, 2023, and new implementing regulations are expected to be introduced by the CPPA.

Failure to comply with the CCPA may result in, among other things, significant civil penalties and injunctive relief, or potential statutory or actual damages.

Failure to comply with the CCPA may result in, among other things, significant civil penalties and injunctive relief, or potential

statutory or actual damages.

In addition, California residents have the right to bring a private right of action in connection with certain types of incidents.

These claims may result in significant liability and potential damages.

The Company implemented processes to manage compliance with the CCPA and continues to assess the impact of the CPRA on the Company’s business as additional information and guidance becomes available.

Other states have passed legislation similar to the CCPA, including the Virginia Consumer Data Protection Act (VCDPA), effective January 1, 2023, and the Colorado Privacy Act (CPA), effective July 1, 2023.

Both the VCDPA and CPA heavily mirror the principles and requirements of the CCPA;

however, neither provides for a private right of action.

The Company implemented processes to manage compliance with the CCPA and continues to assess the impact of the CPRA, VCDPA, and CPA on the Company’s business as additional information and guidance becomes available.

Effective August 14, 2020, the Substance Abuse and Mental Health Services Administration of HHS (SAMHSA) announced the finalization of proposed changes to the Confidentiality of Substance Use Disorder Patient Records regulation, 42 Code of Federal Regulations Part 2.

11 unchanged sentences

and performance of data protection impact assessments for certain processing activities.

Personal data may only be transferred outside of the European Union to a country that offers an adequate level of data protection under standards set by the European Union.

The GDPR also provides individual data subjects with certain rights, where applicable, including the right of access, the right to rectification, the right to be forgotten, the right to restrict or object to processing, and the right to data portability.

The GDPR requires that personal data may only be transferred outside of the European Union to a country that offers an adequate level of data protection under standards set by the European Union, or where such transfer is otherwise pursuant to a legal framework approved by the European Union.

On July 16, 2020, the Court of Justice of the European Union (CJEU) released its decision in Data Protection Commission v.

Facebook Ireland Limited, Maximillian Schrems (Schrems II) , which invalidated the EU-U.S.

Privacy Shield as a legal framework for the transfer of personal data outside of the European Union, and suggesting additional safeguards for the use of Standard Contractual Clauses (SCCs) as a legal framework for the transfer of personal data outside of the European Union.

On June 4, 2021, the European Commission release updated SCCs, which, in part, adopted many of the additional safeguards highlighted in the Schrems II decision.

Companies using SCCs for the transfer of personal data outside of the European Union are required to use the new SCCs for new transfers of personal data as of September 27, 2021, and for all transfers of personal data as of December 27, 2022.

The Company has established processes and frameworks to manage compliance with the GDPR and other global privacy and data protection requirements, and to manage preparation for future enacted regulations.

2 unchanged sentences

The legislative and regulatory landscape for privacy and data protection is complex and continually evolving.

Data protection regulations have been enacted or updated in regions where the Company does business including in Asia, Latin America, and Europe, and in countries such as Canada and the UK.

Data protection regulations have been enacted or updated in regions where the Company does business including in Asia, Latin America, and Europe, and in countries such as Canada, India, and the UK.

Failure to comply with these regulations may result in, among other things, civil, criminal and contractual liability, fines, regulatory sanctions and damage to the Company’s reputation.

8 unchanged sentences

Amendments to the False Claims Act, and other enhancements to the U.S.

fraud and abuse laws enacted as part of the ACA, have further increased fraud and abuse enforcement efforts and compliance risks.

fraud and abuse laws enacted as part of the ACA, have further increased fraud and abuse enforcement

efforts and compliance risks.

For example, the ACA established an obligation to report and refund overpayments from Medicare or Medicaid within 60 days of identification (whether or not paid through any fault of the recipient);

1 unchanged sentence

Anti-Kickback Statute prohibits knowingly providing anything of value in return for, or to induce the referral of, Medicare, Medicaid or other U.S.

healthcare program business.

federal healthcare program business.

Violations can result in imprisonment, fines, penalties, and/or exclusion from participation in U.S.

healthcare programs.

federal healthcare programs.

The OIG has published “safe harbor” regulations that specify certain arrangements that are protected from prosecution under the Anti-Kickback Statute if all conditions of the relevant safe harbor are met.

7 unchanged sentences

(i) providing employees to furnish valuable services for physicians (other than collecting patient specimens for testing) that are typically the responsibility of the physicians’ staff;

(ii) offering certain laboratory services at prices below fair market value in return for referrals of other tests that are billed to Medicare at higher rates;

(ii) offering or providing discounted laboratory services billed to referral sources in return for referrals of other tests that are billed to U.S.

federal healthcare programs;

(iii) providing free testing to physicians’ managed care patients in situations where the referring physicians benefit from such reduced laboratory utilization;

2 unchanged sentences

(vi) providing free testing for healthcare providers, their families and their employees (i.e., so-called “professional courtesy” testing);

(vii) compensation paid by laboratories to physicians for blood specimen processing and for submitting patient data to registries;

and (viii) the provision of discounts on laboratory services billed to customers in return for the referral of U.S.

healthcare program business.

(vii) rental of space in physician offices by equipment suppliers or other healthcare entities to which the physicians make referrals;

(viii) compensation paid by laboratories to physicians for blood specimen processing and for submitting patient data to registries;

and (ix) remuneration provided to physicians and other health care professionals by pharmaceutical and medical device companies in connection with company-sponsored speaker programs.

In addition to the Anti-Kickback Statute, in October 2018, the U.S.

4 unchanged sentences

Significantly, EKRA permits the U.S.

Department of Justice to issue regulations clarifying EKRA’s exceptions or adding additional exceptions, but such regulations have not yet been issued.

The Company is working through its trade association to address the scope of EKRA and is seeking clarification or correction.

Enrollment and re-enrollment in U.S.

healthcare programs, including Medicare and Medicaid, are subject to certain program integrity requirements intended to protect the programs from fraud, waste, and abuse.

In September 2019, CMS published a final rule implementing program integrity enhancements to provider enrollment requiring Medicare, Medicaid, and Children’s Health Insurance Program (CHIP) providers and suppliers to disclose on an enrollment application or a revalidation application any current or previous direct or indirect affiliation with a provider or supplier that (1) has uncollected debt;

(2) has been or is subject to a payment suspension under a federal health care program;

(3) has been or is excluded by the OIG from Medicare, Medicaid, or CHIP;

or (4) has had its Medicare, Medicaid, or CHIP billing privileges denied or revoked.

This rule permits CMS to deny enrollment based on such an affiliation when CMS determines that the affiliation poses an undue risk of

fraud, waste, or abuse.

CMS is phasing in this new affiliation disclosure requirement.

Department of Justice to issue regulations clarifying EKRA’s exceptions or adding additional exceptions, but such regulations have not yet been issued, and there is no additional DOJ or other government guidance to indicate how and to what extent it will be applied and enforced in the industry.

The Company is working through its trade association to address the scope of EKRA.

Under another U.S.

9 unchanged sentences

In December 2020, the OIG and CMS published final rules to amend the regulations implementing the Anti-Kickback Statute and the Stark Law, respectively.

The amendments are primarily intended to alleviate perceived impediments to coordinated care and value-based compensation arrangements through new safe harbors to the Anti-Kickback Statute and new exceptions to the Stark Law, and have varying degrees of applicability to laboratories.

The amendments were primarily intended to alleviate perceived impediments to coordinated care and value-based compensation arrangements through new safe harbors to the Anti-Kickback Statute and new exceptions to the Stark Law, and have varying degrees of applicability to laboratories.

The CMS final rule incorporates laboratories and permits support for value-based arrangements, under certain conditions for purposes of the Stark Law.

However, the OIG final rule excludes laboratories from protection under the Anti-Kickback Statute safe harbors for value-based arrangements.

However, the OIG final rule generally excludes laboratories from protection under the Anti-Kickback Statute safe harbors for

value-based arrangements.

There are a variety of other types of U.S.

and state fraud and abuse laws, including laws prohibiting submission of false or fraudulent claims.

and state fraud and abuse laws, including laws prohibiting submission of false or fraudulent claims and that require certain companies to disclose payments and other transfers of value to certain healthcare professionals and providers.

The Company seeks to conduct its business in compliance with all U.S.

6 unchanged sentences

In addition, any significant criminal or civil penalty resulting from such proceedings could have a material adverse effect on the Company's business.

Environmental, Health, and Safety

The Company is subject to licensing and regulation under laws and regulations relating to the protection of the environment, and human health and safety laws and regulations relating to the handling, transportation and disposal of medical specimens and hazardous materials, infectious and hazardous waste and radioactive materials.

All Company laboratories are subject to applicable laws and regulations relating to biohazard disposal of all laboratory specimens, and the Company generally utilizes outside vendors for disposal of such specimens.

In addition, the U.S.

Occupational Safety and Health Administration (OSHA) has established extensive requirements relating to workplace safety for healthcare employers, including clinical laboratories, whose workers may be exposed to blood-borne pathogens such as HIV, HCV and hepatitis B virus (HCB).

These regulations, among other things, require work practice controls, protective clothing and equipment, training, medical follow-up, vaccinations, and other measures designed to minimize exposure to, and transmission of, blood-borne pathogens.

Other countries where the Company conducts business have similar laws and regulations concerning the environment and human health and safety with which the Company must also comply.

Enrollment and re-enrollment in U.S.

healthcare programs, including Medicare and Medicaid, are subject to certain program integrity requirements intended to protect the programs from fraud, waste, and abuse.

(2) has been or is subject to a payment suspension under a federal health care program;

(3) has been or is excluded by the OIG from Medicare, Medicaid, or CHIP;

or (4) has had its Medicare, Medicaid, or CHIP billing privileges denied or revoked.

This rule permits CMS to deny enrollment based on such an affiliation when CMS determines that the affiliation poses an undue risk of fraud, waste, or abuse.

CMS is phasing in this new affiliation disclosure requirement.

In November 2021, CMS published a final rule for the 2022 Medicare Physician Fee Schedule, which included further program integrity requirements.

CMS finalized its proposal to expand the categories of parties within the purview of the denial and revocation provisions to include excluded administrative or management services personnel who furnish services payable by a federal healthcare program, such as a billing specialist, accountant, or human resources specialist.

CMS also codified the billing privilege deactivation rebuttal process, under which a provider or supplier would have 15 calendar days from receipt of written notice of a deactivation to submit a rebuttal, and CMS could, in its discretion, extend the 15-day period to account for certain special situations.

In addition, CMS defined factors it would use to determine whether revocation or suspension of billing privileges is appropriate due to a pattern or practice of non-compliant billing, which would be:

(a) the percentage of submitted claims that were denied during the period under consideration;

(b) whether the provider or supplier has any history of final adverse actions and the nature of any such actions;

(c) the type of billing non-compliance and the specific facts surrounding said non-compliance (to the extent this can be determined);

and (d) any other information regarding the provider's or supplier's specific circumstances that CMS deems relevant to the determination.

This is a reduction in the number of factors that were previously considered and a revision of some previous factors.

Environment, Health, and Safety

The Company is subject to licensing and requirements under laws and regulations relating to the protection of the environment, and employee health and safety.

These laws and regulations include the safe handling, use, transportation and disposal of potentially infectious and hazardous materials;

the assessment of potential work-related risks and establishment of work practice and engineering controls, and providing protective clothing and equipment, training, and medical surveillance;

designed to minimize risk to employee health and safety and the environment.

The Company is committed to reducing its carbon footprint.

Energy-saving measures are continuing at Company facilities, including installation of energy-saving LED lighting, engaging in waste-to-energy projects, and helping reduce waste going to landfills, as well as capital investments to systems to improve energy and water usage.

Labcorp participates in the Carbon Disclosure Project (CDP) and the EcoVadis sustainable procurement rating processes and has committed to submitting a Science Based Target by the end of 2022.

Energy-saving measures at Company facilities include for example, installation of more efficient boilers, chillers, ventilation systems and LED lighting, engaging in waste-to-energy disposition, and reducing waste going to landfills.

Funding for these and similar projects continued through 2021 and are continuing in 2022.

The Company seeks to comply with all relevant environmental and human health and safety laws and regulations.

The Company seeks to comply with all relevant environment, employee health and safety laws and regulations.

Failure to comply could subject the Company to various administrative and/or other enforcement actions .

6 unchanged sentences

Southaven, Mississippi;

Spokane, Washington;

Paul, Minnesota are all SAMHSA certified.

26 unchanged sentences

and to facilitate prompt resumption of operations if a system disruption or interruption should occur.

The Company has implemented policies and procedures designed to comply with global laws and regulations related to the privacy and security of personal or health information.

In addition, the Company follows protocols for evaluating the cybersecurity status of vendors or third-parties that will have access to the Company's data or information technology systems.

The Company also carries cybercrime and business interruption insurance.

The Company has implemented policies and procedures designed to comply with global laws and regulations related to the privacy and security of personal and health information.

Additionally, the Company maintains a comprehensive behavior management and communications program, which addresses the human element of cybersecurity by providing staff with extensive awareness, education, and training to help prevent cybercrime from succeeding through human error.

The Company is exposed to risks related to information security arising from the information technology systems and operations of third parties, including the Company's vendors and partners.

Therefore, a stringent process is followed for evaluating the cybersecurity status of vendors or third parties that will have access to the Company's data or information technology systems.

The Company also carries cybersecurity and business interruption insurance.

Over the past several years, the Company has significantly increased its investment in cybersecurity technology and training to help protect its information technology systems and operations in response to the ever-evolving cyber threat landscape.

Additional resources have been and will be dedicated to expanding the Company’s ability to investigate and remediate any cybersecurity vulnerabilities, and to manage any impact of a cybersecurity event on its business and operations.

Additional resources will be dedicated as needed to expand the Company’s ability to investigate and remediate any cybersecurity vulnerabilities, and to manage any impact of a cybersecurity event on its business and operations.

In July 2018, the Company experienced a ransomware incident which affected certain Dx information technology systems.

The incident temporarily affected test processing and customer access to test results, and also affected certain other information technology systems involved in conducting Company-wide operations.

The investigation determined that the ransomware did not and could not transfer patient or client data outside of Company systems and that there was no theft or misuse of patient or client data.

The Company is also exposed to risks related to information security arising from the information technology systems and operations of third parties, including those of the Company's vendors and partners.

For example, on May 14, 2019, Retrieval-Masters Credit Bureau, Inc.

d/b/a/ American Medical Collections Agency (AMCA), an external collection agency, notified the Company about a security incident AMCA experienced that may have involved certain personal information about some of the

Company's patients (the AMCA Incident).

The Company referred patient balances to AMCA only when direct collection efforts were unsuccessful.

The Company's systems were not impacted by the AMCA Incident.

Upon learning of the AMCA Incident, the Company promptly stopped sending new collection requests to AMCA and stopped AMCA from continuing to work on any pending collection requests on behalf of the Company.

AMCA informed the Company that it appeared that an unauthorized user had access to AMCA's system between August 1, 2018 and March 30, 2019, and that AMCA could not rule out the possibility that personal information on AMCA's system was at risk during that time period.

Information on AMCA's affected system from the Company may have included name, address, and balance information for the patient and person responsible for payment, along with the patient's phone number, date of birth, referring physician, and date of service.

The Company was later informed by AMCA that health insurance information may have been included for some individuals, and because some insurance carriers utilize the Social Security Number as a subscriber identification number, the Social Security Number for some individuals may also have been affected.

No ordered tests, laboratory test results, or diagnostic information from the Company were in the AMCA affected system.

The Company notified individuals for whom it had a valid mailing address.

For the individuals whose Social Security Number was affected, the notice included an offer to enroll in credit monitoring and identity protection services that will be provided free of charge for 24 months.

The Company has incurred, and expects to continue to incur, costs related to the AMCA Incident.

The incident temporarily affected certain other information technology systems involved in conducting Company-wide operations.

An investigation determined that the ransomware did not and could not transfer patient or client data outside of Company systems and that there was no theft or misuse of patient or client data.

On May 14, 2019, Retrieval-Masters Credit Bureau, Inc.

The Company is involved in pending and threatened litigation related to the AMCA Incident, as well as various government and regulatory inquiries and processes.

1 unchanged sentence

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 1. Business