What changed in this filing

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Item 1A. Risk Factors

2022-02-25 compared with 2021-02-25 · 80 added, 76 removed, 416 unchanged (27% of the section changed)

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The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business.

In the second half of March 2020, daily volume for routine tests started to decline as a result of decreased consumer demand driven by a significant reduction in physician office visits, the cancellation of elective medical procedures, and the negative impacts on discretionary spending resulting from the economic downturn, among other factors.

In addition, the performance of the Company’s drug development business was challenged by COVID-19 due to actions that clients have taken and are taking that slowed clinical trial progress and the associated testing as well as restrictions in trial site access in certain countries and interruptions in the supply chain.

Given the continued unpredictability pertaining to the COVID-19 pandemic and the corresponding government restrictions and customer behavior, the impact on the Company's business continues to be uncertain and depends on a number of evolving factors that the Company may not be able to predict or effectively respond to.

The further spread of COVID-19, including the rise of variants, and the Company’s initiatives to help limit the spread of the illness, will impact the Company’s ability to carry out its business as usual, which could materially adversely impact its business and financial condition.

Fluctuations in the number of COVID-19 cases typically result in corresponding fluctuations in the Company's COVID-19 PCR and antibody testing (COVID-19 Testing) volumes and its Base Business (operations except for COVID-19 Testing), and may have a negative effect on the Company's business and financial performance.

Given the continued unpredictability pertaining to the COVID-19 pandemic, the impact on the Company's business continues to be uncertain and depends on a number of evolving factors that the Company may not be able to predict or effectively respond to.

A further spread of COVID-19, including the rise of variants, and the Company’s initiatives to help limit the spread of the illness, continue to impact the Company’s ability to carry out its business as usual, which could materially adversely impact its business and financial condition.

The Company has incurred additional costs in order to provide for the safety of its employees and the continuity of its operations, including increased frequency of deep cleaning and sanitation at each of its physical locations, additional safety training and processes, enhanced hygiene practices and materials, flexible and remote working where possible, and allowing for greater social distancing for the Company’s employees who must work on-site.

Additionally, the Company has made a number of changes at the Company’s patient service centers for the comfort and safety of the patients, many of which have also increased costs for the Company.

For example, the Company has set aside the first business hour of every day for vulnerable patients, launched a mobile check-in process that allows patients to wait for their appointment from within their car or other nearby location, and increased sanitation and disinfection in check-in areas, waiting rooms, bathrooms, and hallways with CDC-approved disinfectants.

Additionally, the Company has made a number of changes at the Company’s patient service centers (PSCs) for the comfort and safety of the patients, many of which have also increased costs for the Company.

For example, the Company set aside the first business hour of every day for vulnerable patients, launched a mobile check-in process that allows patients to wait for their appointment from within their car or other nearby location, and increased sanitation and disinfection in check-in areas, waiting rooms, bathrooms, and hallways with CDC-approved disinfectants.

The Company faces increased cybersecurity risks due to the number of employees that are working remotely in regions impacted by stay-at-home orders.

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The Company expects to continue to incur additional costs, which may be significant, as it continues to implement operational changes in response to this pandemic.

Further, the COVID-19 outbreak has disrupted and could continue to disrupt the Company’s supply chain, including by impacting its ability to secure test collection supplies, equipment and testing supplies for its facilities, personal protective equipment for its employees in its testing locations, patient service centers, and drug development clinics.

Further, the COVID-19 pandemic has disrupted and could continue to disrupt the Company’s supply chain, including by impacting its ability to secure test collection supplies, equipment and testing supplies for its facilities, personal protective equipment for its employees in its testing locations, PSCs, and drug development clinics.

For similar reasons, the COVID-19 pandemic has also adversely impacted, and may continue to adversely impact, third parties that are critical to the Company’s business, including vendors, suppliers, and business partners.

These developments, and others that are difficult or impossible to predict, could materially impact the Company’s business, financial results, cash flows, and financial position.

During 2020, the Company diverted resources to developing and enhancing the accessibility of COVID-19 testing, while at the same time taking certain steps with respect to its business strategy in order to increase cash flexibility.

For example, the Company temporarily suspended its share repurchase program, applied a heightened threshold to acquisition activity, and delayed some of its non-COVID-19 related capital expenditures.

During 2020 and 2021, the Company diverted resources to developing and enhancing the accessibility of COVID-19 testing, while at the same time taking certain steps with respect to its business strategy in order to increase cash flexibility.

For example, in 2020 the Company temporarily suspended its share repurchase program, applied a heightened threshold to acquisition

activity, and delayed some of its non-COVID-19 related capital expenditures.

These measures, and any other measures the Company has taken and will continue to take to mitigate COVID-19, may be insufficient to ensure the financial stability of the Company, or may have other adverse impacts on the Company’s business, results of operations, cash flows, and financial position.

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six days prior to this characterization, the Company announced the availability of its Labcorp 2019 Novel Coronavirus (COVID-19) PCR test, which detects the presence of the underlying virus that causes COVID-19, for use with patients who meet current guidance for evaluation of infection with COVID-19.

On April 9, 2020, the Company announced an agreement to collaborate on a comprehensive U.S.-based COVID-19 patient data registry.

The Company also launched a self-collection kit for its COVID-19 PCR test under an emergency use authorization from the FDA, expanded availability of antibody tests to detect antibodies to the virus that causes COVID-19, and launched a series of innovations to increase test capacity, throughput, and efficiency to maximize the use of supplies.

The Company performed approximately 35 million COVID-19 tests in 2020, which represents about 31 million PCR tests and over 4 million antibody tests.

As of February 25, 2021, the Company has the capacity to perform 275,000 PCR tests per day, but the Company's testing capacity is dependent on access to multiple testing platforms and the availability of equipment and testing supplies and key personnel.

Through 2020 and 2021, the Company launched multiple options to expand access to COVID-19 PCR and antibody testing, and introduced a series of innovations to increase test capacity, throughput, and efficiency to maximize the use of supplies.

The Company performed approximately 30 million PCR tests and 4 million antibody tests in 2021, and has maintained the capacity to perform 275,000 PCR tests and 300,000 antibody tests per day.

The Company's testing capacity remains dependent on access to multiple testing platforms and the availability of equipment and testing supplies and key personnel.

The Company's central laboratory business has also seen a significant increase in demand for sample collection supplies and kits and for clinical trials testing, which has put some pressure on the Company's supply chain and caused some delays in delivery of kit orders and clinical trial testing result delivery.

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The Company’s management team and employees have been acutely focused on efforts to respond to and mitigate COVID-19, including developing COVID-19 Testing.

The Company has been continuously working to increase the number of tests that can be performed and improve the time for delivering test results.

The Company’s management team is also working closely with federal and state authorities, health officials, and other key constituencies to make testing available to patients who meet the CDC criteria for who should be tested, and HHS guidance for prioritization of testing.

These response efforts have required, and will continue to require, a large investment of time and resources that would otherwise be focused on the

development and growth of the Company.

Further, the Company's ability to maintain and expand testing capacity depend upon maintaining and expanding its employee population.

The Company has maintained its capacity to perform COVID-19 Testing and maintain the time for delivering test results.

The Company’s management team continues to work closely with federal and state authorities, health officials, clients, and other key constituencies to make testing available to patients.

These response efforts have required, and will continue to require, a large investment of time and resources that would otherwise be focused on the development and growth of the Company.

Further, the Company's ability to maintain and expand testing capacity depends upon maintaining and expanding its employee population.

If the Company’s management team or employees become unavailable due to illness or from other related factors, its operations could be materially adversely affected.

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by requiring that they be certified by the federal government or by a federally approved accreditation agency.

The sanction for failure to comply with CLIA requirements may be suspension, revocation or limitation of a

laboratory’s CLIA certificate, which is necessary to conduct business, as well as significant fines and/or criminal penalties.

The sanction for failure to comply with CLIA requirements may be suspension, revocation or limitation of a laboratory’s CLIA certificate, which is necessary to conduct business, as well as significant fines and/or criminal penalties.

In addition, the Company is subject to regulation under state law.

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In the U.S., the Health Insurance Portability and Accountability Act of 1996 (HIPAA) privacy and security regulations, including the expanded requirements under U.S.

Health Information Technology for Economic and Clinical Health Act (HITECH), establish comprehensive standards with respect to the use and disclosure of protected health information (PHI), by covered entities, in addition to setting standards to protect the confidentiality, integrity and security of PHI.

Health Information Technology for Economic and Clinical Health Act

(HITECH), establish comprehensive standards with respect to the use and disclosure of protected health information (PHI), by covered entities, in addition to setting standards to protect the confidentiality, integrity and security of PHI.

HIPAA restricts the Company’s ability to use or disclose PHI, without patient authorization, for purposes other than payment, treatment or healthcare operations (as defined by HIPAA), except for disclosures for various public policy purposes and other permitted purposes outlined in the privacy regulations.

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compliance with export controls and trade regulations;

changes in tax

policies or other foreign laws;

changes in tax policies or other foreign laws;

compliance with foreign labor and employee relations laws and regulations;

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The Company operates in some parts of the world where corruption may be common and where anti-corruption laws may conflict to some degree with local customs and practices.

The Company maintains an anti-corruption program including policies, procedures, training and safeguards in the engagement and management of third parties acting on the Company’s behalf.

The Company maintains an anti-corruption program including policies, procedures, training and safeguards in the

engagement and management of third parties acting on the Company’s behalf.

Despite these safeguards, the Company cannot guarantee protection from corrupt acts committed by employees or third parties associated with the Company.

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These laws and regulations include the U.S.

Animal Welfare Act (AWA),

which governs the care and use of warm-blooded animals for research in the U.S.

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.

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The AWA establishes facility standards regarding several aspects of animal welfare, including housing, ventilation, lighting, feeding and watering, handling, veterinary care, and recordkeeping.

Similar laws and regulations apply in other jurisdictions in which DD conducts animal research, including the EU and China.

Similar laws and regulations apply in other jurisdictions in which DD conducts animal research, including the UK, EU, and China.

DD complies with licensing and registration requirement standards set by these laws and regulations in the jurisdictions in which it conducts animal research.

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For noncompliance, the agency may take action against DD that may include fines, suspension and/or revocation of animal research licenses, or confiscation of research animals.

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

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

The FDA has regulatory responsibility for instruments, test kits, reagents and other devices used by clinical laboratories.

The FDA enforces laws and regulations that govern the development, testing, manufacturing, performance, labeling, advertising, marketing, distribution, and surveillance of diagnostic products, and it regularly inspects and reviews the manufacturing processes and product performance of diagnostic products.

manufacturing processes and product performance of diagnostic products.

Dx’s point-of-care testing devices are subject to regulation by the FDA.

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however, that draft guidance has not been finalized, and FDA has instead continued its enforcement discretion policy and has indicated that it intends to work with Congress to enact comprehensive legislative reform of diagnostics oversight.

As such, LDTs developed by high complexity clinical laboratories are currently generally offered as services to health care providers under the CLIA regulatory framework administered CMS, without the requirement for FDA clearance or approval.

As such, LDTs developed by high complexity clinical laboratories are currently generally offered as services to health care providers under the CLIA regulatory framework administered by CMS, without the requirement for FDA clearance or approval.

There are other regulatory and legislative proposals that would increase general FDA oversight of clinical laboratories and LDTs.

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

Regulation of diagnostics products in jurisdictions outside the U.S.

in which the Company operates may impact laboratory testing offered by the Company in both Dx and DD.

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.

Failure to comply with U.S., state, local or international environmental, health and safety laws and regulations, including the U.S.

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General or macro-economic factors in the U.S.

and globally may have a material adverse effect upon the Company, and a significant deterioration in the economy could negatively impact testing volumes, drug development services,

cash collections and the availability of credit.

The Company’s operations are dependent upon ongoing demand for diagnostic testing and drug development services by patients, physicians, hospitals, MCOs, biopharmaceutical companies and others.

and globally may have a material adverse effect upon the Company, and a significant deterioration in the economy could negatively impact testing volumes, drug development services, cash collections and the availability of credit.

The Company’s operations are dependent upon ongoing demand for diagnostic testing and drug development services by patients, physicians, hospitals, MCOs, pharmaceutical, biotechnology and medical device companies and others.

A significant downturn in the economy could negatively impact the demand for diagnostic testing and drug development services, as well as the ability of customers to pay for services rendered.

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In addition, some MCOs are implementing, directly or through third parties, various types of laboratory benefit management programs that may include lab networks, utilization management tools (such as prior authorization and/or prior notification), and claims edits, which may impact coverage or reimbursement for commercial laboratory tests.

Some of these programs

address commercial laboratory testing broadly, while others are focused on certain types of testing such as molecular, genetic and toxicology testing.

Some of these programs address commercial laboratory testing broadly, while others are focused on certain types of testing such as molecular, genetic and toxicology testing.

The Company expects the efforts to impose reduced reimbursement, more stringent payment policies, and utilization and cost controls by government and other payers to continue.

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CMS exercised enforcement discretion to permit reporting for an additional 60 days, through May 30, 2017.

CMS used that private market data to calculate weighted median prices for each test (based on applicable current procedural technology (CPT) codes) to represent the new CLFS rates beginning in 2018, subject to certain phase-in limits, which were revised by Congress in 2019 and 2020.

For 2018-2020, a test price could not be reduced by more than 10% per year.As a result of provisions included within the CARES Act, 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.

which were revised by Congress in 2019 and 2020.

For 2018-2020, a test price could not be reduced by more than 10% per year.

As a result of provisions included within the CARES Act, PAMA rate reductions for 2021 were suspended, and therefore the Company did not experience any incremental reimbursement rate impact due to PAMA in 2021.

As a result of the Protecting Medicare and American Farmers from Sequester Cuts Act that became law in December 2021, the data reporting requirements and Medicare reimbursement cuts that would have occurred under PAMA in 2022 were delayed by one additional year, and the Company will not experience incremental reimbursement rate impact due to PAMA in 2022.

For 2023-2025, 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 2023.

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.

CLFS rates for 2025 and subsequent periods will not be subject to phase-in limits.

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

The phase-in of rates for 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 (ADLTs) will be updated annually.

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For 2020, the Company realized a net reduction in reimbursement of approximately $72.01 million from all payers affected by the CLFS (approximately $107.0 million in 2019).

2021 and 2022 PAMA rates were frozen as described above.

Unless implementation of PAMA is further delayed or changed, an additional reduction of approximately $100.0 million is expected for 2023, from all payers affected by the CLFS.

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Given the limited release of regulations to guide compliance, as well as potential changes to the ACA, the exact impact to employers, including the Company, is uncertain.

Changes in government regulation or in practices relating to the biopharmaceutical industry could decrease the need for certain services that DD provides.

DD assists biopharmaceutical companies in navigating the regulatory drug approval process.

Changes in regulations such as a relaxation in regulatory requirements or the introduction of simplified drug approval procedures, or an increase in regulatory requirements that DD has difficulty satisfying or that make its services less competitive, could eliminate or substantially reduce the demand for its services.

Also, if government efforts to contain drug costs impact biopharmaceutical company profits from new drugs, or if health insurers were to change their practices with respect to reimbursement for biopharmaceutical products, some of DD’s customers may spend less, or reduce their growth in spending on R&D.

Changes in government regulation or in practices relating to the pharmaceutical, biotechnology, or medical device industries could decrease the need for certain services that DD provides.

DD assists pharmaceutical, biotechnology and medical device companies in navigating the regulatory approval process.

Changes in regulations such as a relaxation in regulatory requirements or the introduction of simplified approval procedures, or an increase in regulatory requirements that DD has difficulty satisfying or that make its services less competitive, could eliminate or substantially reduce the demand for its services.

Also, if government efforts to contain drug and medical product and device costs impact profits from such items, or if health insurers were to change their practices with respect to reimbursement for those items, some of DD’s customers may spend less, or reduce their growth in spending on R&D.

On December 13, 2016, the 21st Century Cures Act was signed into law.

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contains several provisions designed to help make the drug development process more streamlined and efficient;

and allows the FDA to increase staffing to support drug development, review and regulation.

These provisions should be helpful to biopharmaceutical companies and CROs, including DD, to the extent that they capitalize on the use of data, adaptive trial designs, real-world evidence, biomarkers and other development tools that are accepted by the FDA.

In addition, implementation of healthcare reform legislation that adds costs could limit the profits that can be made from the development of new drugs.

This could adversely affect R&D expenditures by biopharmaceutical companies, which could in turn decrease the business opportunities available to DD both in the U.S.

and allows the FDA to increase staffing to support drug, medical product and device development, review and regulation.

These provisions should be helpful to CROs, including DD, and their customers to the extent that they capitalize on the use of data, adaptive trial designs, real-world evidence, biomarkers and other development tools that are accepted by the FDA.

In addition, implementation of healthcare reform legislation that adds costs could limit the profits that can be made from the development of new drugs and medical products and devices.

This could adversely affect R&D expenditures by such companies, which could in turn decrease the business opportunities available to DD both in the U.S.

and other countries.

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Competitors in the CRO industry range from hundreds of smaller CROs to a limited number of large CROs with global capabilities.

DD’s main competition consists of these small and large CROs, as well as in-house departments of biopharmaceutical companies and, to a lesser extent, select universities and teaching hospitals.

DD’s main competition consists of these small and large CROs, as well as in-house departments of pharmaceutical, biotechnology and medical device companies and, to a lesser extent, select universities and teaching hospitals.

DD’s services have from time to time experienced periods of increased price competition that had an adverse effect on a segment's profitability and consolidated revenues and net income.

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The cost of compliance with CLIA makes it impractical for most physicians to operate clinical laboratories in their offices, and other laws limit the ability of physicians to have ownership in a laboratory and to refer tests to such a laboratory.

Manufacturers of laboratory equipment and test kits could seek to increase their sales by

marketing point-of-care of laboratory equipment to physicians and by selling test kits approved for home or physician office use to both physicians and patients.

Manufacturers of laboratory equipment and test kits could seek to increase their sales by marketing point-of-care of laboratory equipment to physicians and by selling test kits approved for home or physician office use to both physicians and patients.

Diagnostic tests approved for home use are automatically deemed to be “waived” tests under CLIA and may be performed in physician office laboratories as well as by patients in their homes with minimal regulatory oversight.

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The Company is also reliant on an extensive network of third-party suppliers and vendors of certain services and products, including for certain animal populations.

Disruptions to the continued supply of these services, products, or animal populations may arise from export/import restrictions or embargoes, political or economic instability, pressure from animal rights activists, adverse weather, natural disasters, public health crises, transportation disruptions, cyber attacks, or other causes, as well as from termination of relationships with suppliers or vendors for their failure to follow the Company’s performance standards and requirements.

Disruptions to the continued supply, or increases in costs, of these services, products, or animal populations may arise from export/import restrictions or embargoes, political or economic instability, pressure from animal rights activists, adverse weather, natural disasters, public health crises, transportation disruptions, cyber attacks, or other causes, as well as from termination of relationships with suppliers or vendors for their failure to follow the Company’s performance standards and requirements.

Disruption of supply could have a material adverse effect on the Company’s business.

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Part of the Company's strategy involves deploying capital in investments that enhance the Company's business, which includes pursuing strategic acquisitions to strengthen the Company's scientific capabilities and enhance therapeutic expertise, enhance esoteric testing and global drug development capabilities, and increase presence in key geographic areas.

Since 2015, the Company has invested net cash of approximately $7.2 billion and equity of $1.8 billion in strategic business acquisitions.

Since 2016, the Company has invested net cash of approximately $4.2 billion in strategic business acquisitions.

However, the Company cannot assure that it will be able to identify acquisition targets that are attractive to the Company or that are of a large enough size to have a meaningful impact on the Company's operating results.

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• the potential disruption of the ongoing business and diversion of management's resources.

The Company cannot assure that current or future acquisitions, if any, or any related integration efforts will be successful, or

that the Company's business will not be adversely affected by any future acquisitions, including with respect to revenues and profitability.

The Company cannot assure that current or future acquisitions, if any, or any related integration efforts will be successful, or that the Company's business will not be adversely affected by any future acquisitions, including with respect to revenues and profitability.

Even if the Company is able to successfully integrate the operations of businesses that it may acquire in the future, the Company may not be able to realize the benefits that it expects from such acquisitions.

Continued and increased consolidation of MCOs, biopharmaceutical companies, health systems, physicians and other customers could adversely affect the Company's business.

Many healthcare companies and providers, including MCOs, biopharmaceutical companies, health systems and physician practices are consolidating through mergers, acquisitions, joint ventures and other types of transactions and collaborations.

Continued and increased consolidation of MCOs, pharmaceutical, biotechnology and medical device companies, health systems, physicians and other customers could adversely affect the Company's business.

Many healthcare companies and providers, including MCOs, pharmaceutical, biotechnology and medical device companies, health systems and physician practices are consolidating through mergers, acquisitions, joint ventures and other types of transactions and collaborations.

In addition to these more traditional horizontal mergers that involve entities that previously competed against each other, the healthcare industry is experiencing an increase in vertical mergers, which involve entities that previously did not offer competing goods or services.

As the healthcare industry consolidates, competition to provide goods and services may become more intense, and vertical mergers may give those combined companies greater control over more aspects of healthcare, including increased bargaining power.

As the healthcare industry consolidates, competition to

provide goods and services may become more intense, and vertical mergers may give those combined companies greater control over more aspects of healthcare, including increased bargaining power.

This competition and increased customer bargaining power may adversely affect the price and volume of the Company’s services.

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Unproductive labor environments, union strikes, work stoppages, Works Council negotiations, or failure to comply with labor or employment laws could adversely affect the Company's operations and have a material adverse effect upon the Company's business.

The Company is a party to a limited number of collective bargaining agreements with various labor unions and is subject to unionization activity, employment and labor laws and unionization activity in the U.S.

The Company is a party to a limited number of collective bargaining agreements with various labor unions and is subject to employment and labor laws and unionization activity in the U.S.

Similar employment and labor obligations exist across other countries in which it conducts business, including appropriate engagement with Works Councils in Europe.

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In the future, if competition for the services of these professionals increases, the Company may not be able to continue to attract and retain individuals in its markets.

Changes in key management, or the ability to attract and retain qualified personnel, could lead to strategic and operational challenges and uncertainties, distractions of management from other key initiatives, and inefficiencies and increased costs, any of which could adversely affect the Company’s business, financial condition, results of operations, and cash flows.

Changes in key management, or the ability to attract and retain qualified personnel, as a result of increased competition for talent, wage growth, or other market factors, could lead to strategic and operational challenges and uncertainties, distractions of management from other key initiatives, and inefficiencies and increased costs, any of which could adversely affect the Company’s business, financial condition, results of operations, and cash flows.

Global economic conditions and government and regulatory changes, including, but not limited to, the U.K.'s exit from the European Union (EU) could adversely impact the Company’s business and results of operations.

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Although DD does not face the same level of complexity in its billing processes, it could also experience delays in billing or collection, and a material increase in DD’s days sales outstanding could have an adverse effect on the Company’s business, including potentially decreasing its cash flows.

DD’s revenues depend on the biopharmaceutical industry.

DD’s revenues depend greatly on the expenditures made by the biopharmaceutical industry in R&D.

In some instances, biopharmaceutical companies are reliant on their ability to raise capital in order to fund their R&D projects.

Biopharmaceutical companies are also reliant on reimbursement for their products from government programs and commercial payers.

DD’s revenues depend on the pharmaceutical, biotechnology and medical device industries.

DD’s revenues depend greatly on the expenditures made by the pharmaceutical, biotechnology and medical device industries in R&D.

In some instances, these companies are reliant on their ability to raise capital in order to fund their R&D projects.

These companies are also reliant on reimbursement for their products from government programs and commercial payers.

Accordingly, economic factors and industry trends affecting DD’s customers in these industries may also affect DD.

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To reduce the Company’s exposure to interest rate fluctuations and currency exchange fluctuations, it has entered into, and in the future may enter into for these or other purposes, financial swaps, or hedging arrangements, with various financial counterparties.

In addition to any risks related to the counterparties, there can be no assurances that the Company’s hedging activity will be effective in insulating it from the risks associated with the underlying transactions, that the Company would not have been better off without entering into these hedges, or that the Company will not have to pay additional amounts upon settlement.

In addition to any risks related to the counterparties, there can be no assurances that the Company’s hedging

activity will be effective in insulating it from the risks associated with the underlying transactions, that the Company would not have been better off without entering into these hedges, or that the Company will not have to pay additional amounts upon settlement.

The Company’s level of indebtedness could adversely affect the Company’s liquidity, results of operations and business.

At December 31, 2021, indebtedness on the Company's outstanding Senior Notes totaled approximately $5,450.0 million in aggregate principal.

The Company is also a party to credit agreements relating to a $1.0 billion revolving credit facility and a 2019 term loan with a balance of $375.0 million as of December 31, 2020.

Under the term loan facility and the revolving credit facility, the Company is subject to negative covenants limiting subsidiary indebtedness and certain other covenants typical for investment-grade-rated borrowers, and the Company is required to maintain a leverage ratio within certain limits.

The Company is also a party to credit agreements relating to a $ 1.0 billion revolving credit facility.

Under the revolving credit facility, the Company is subject to negative covenants limiting subsidiary indebtedness and certain other covenants typical for investment-grade-rated borrowers, and the Company is required to maintain a leverage ratio within certain limits.

The Company’s level of indebtedness could adversely affect its business.

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In addition, the Company depends upon the secure transmission of confidential information over public networks, including information permitting cashless payments.

The Company also works with third-party service providers and vendors that provide technology systems and services that are used in connection with the receipt, storage, and transmission of customer personal and financial

A compromise in the Company’s security systems, or those of the Company's third party service providers and vendors, that results in customer personal information being obtained by unauthorized persons or the Company’s or third party's failure to comply with security requirements for financial transactions could adversely affect the Company’s reputation with its customers and others, as well as the Company’s results of operations, financial condition and liquidity.

A compromise in the Company’s security systems, or those of the Company's third-party service providers and vendors, that results in customer personal information being obtained by unauthorized persons, or the Company’s or a third party's failure to comply with security requirements for financial transactions, including security standards for payment cards (e.g., the Payment Card Industry Data Security Standard), could adversely affect the Company’s reputation with its customers and others, as well as the Company’s results of operations, financial condition and liquidity.

It could also result in litigation against the Company and the imposition of fines and penalties.

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Despite network security measures and other precautions the Company has taken, its information technology systems are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptions.

In addition, the Company is in the process of integrating the information technology systems of its recently acquired subsidiaries, and the Company may experience system failures or interruptions as a result of this process.

In addition, the Company may experience system failures or interruptions as it integrates the information technology systems of newly acquired businesses.

Sustained system failures or interruption of the Company’s systems in one or more of its operations could disrupt the Company’s ability to process laboratory requisitions, perform testing, provide test results or drug development data in a timely manner and/or bill the appropriate party.

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The Company has experienced and expects to continue to experience attempts by computer programmers and hackers to attack and penetrate the Company’s layered security controls, like the 2018 ransomware attack.

The Company has also experienced and expects to continue to experience similar attempts to attack and penetrate the systems of third-party suppliers and vendors to whom the Company has provided data, like the 2019 data breach of Retrieval-Masters Credit Bureau, Inc.

d/b/a/ American Medical Collections Agency (AMCA).

These attempts, if successful, could result in the misappropriation or compromise of personal information or proprietary or confidential information stored within the Company's systems or within the systems of third parties, create system disruptions or cause shutdowns.

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However, because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and often are not recognized until launched against a target, the Company may be unable to anticipate all of these techniques or to implement adequate preventive measures.

In addition, as cyber threats continue to evolve, the Company may be required to expend additional resources to continue to enhance the Company’s information security measures or to

investigate and remediate any information security vulnerabilities.

In addition, as cyber threats continue to evolve, the Company may be required to expend additional resources to continue to enhance the Company’s information security measures or to investigate and remediate any information security vulnerabilities.

The Company’s remediation efforts may not be successful and could result in interruptions, delays or cessation of service.

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Additionally, any breaches of the information technology systems of third parties could have a material adverse effect on the Company's operations.

The Company depends on third parties to provide services critical to the Company's business, including supplies, ground and air transport of clinical and diagnostic testing supplies and specimens, research products, and people, among other services.

The Company depends on third parties to provide services critical to the Company's business, including supplies, ground

and air transport of clinical and diagnostic testing supplies and specimens, research products, and people, among other services.

Third parties that provide services to the Company are subject to similar risks related to security of customer-related information and compliance with U.S., state, local, or international environmental, health and safety, and privacy and security laws and regulations as the Company.

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DD contracts with physicians, also referred to as investigators, to conduct the clinical trials to test new drugs on clinical trial subjects.

These tests can create a risk of liability for personal injury or death to clinical trial subjects resulting from negative reactions to the drugs administered or from professional malpractice by third party investigators.

These tests can create a risk of liability for personal injury or death to clinical trial subjects resulting from negative

reactions to the drugs administered or from professional malpractice by third party investigators.

While DD endeavors to include in its contracts provisions entitling it to be indemnified and entitling it to a limitation of liability, these provisions are not always successfully obtained and, even if obtained, do not uniformly protect DD against liability arising from certain of its own actions.

4 unchanged sentences

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

What changed 10-K

Item 1A. Risk Factors