What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2022-11-01 compared with 2022-08-01 · 101 added, 97 removed, 230 unchanged (46% of the section changed)

82 unchanged sentences

GENERAL (dollars in millions, except per share data)

Revenues for the six months ended June 30, 2022, were $7,596.5, a decrease of 5.1% from $8,002.2 during the six months ended June 30, 2021.

Revenues for the nine months ended September 30, 2022, were $11,202.6, a decrease of 7.1% from $12,064.8 during the nine months ended September 30, 2021.

The decrease was due to lower organic revenue of 6.9% and unfavorable foreign currency translation of 0.9%, partially offset by acquisitions net of divestitures of 0.6%.

9 unchanged sentences

The Company anticipates that, consistent with any applicable legal and tax requirements, there will be ongoing transitional and commercial arrangements to provide for a seamless delivery of services to the customers and other stakeholders of the independent companies following the spin-off.

The Company is targeting completion of the spin-off in the second half of 2023, subject to the satisfaction certain customary conditions, including receipt of final approval by the Company's board of directors, receipt of appropriate assurances regarding the tax-free nature of the transaction, and the effectiveness of any required filings with the SEC.

The Company is targeting completion of the spin-off with an accelerated timeframe of mid-2023, subject to the satisfaction of certain customary conditions, including receipt of final approval by the Company's board of directors, receipt of appropriate assurances regarding the tax-free nature of the transaction, and the effectiveness of any required filings with the SEC.

There can be no assurances regarding the ultimate timing of the transaction or that the spin-off will be completed.

RESULTS OF OPERATIONS (dollars in millions)

Three months ended June 30, 2022, compared with three months ended June 30, 2021

Three Months Ended June 30,

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

Three Months Ended September 30,

2022 2021 Change

3 unchanged sentences

Total $ 3,606.1 $ 4,062.6 (11.2 %)

Total revenues for the three months ended June 30, 2022, were $3,696.9, a decrease of 3.7% over $3,840.7 in the second quarter of 2021.

The decrease was due to lower organic revenue of 3.4% and unfavorable foreign currency translation of 1.1%, partially offset by acquisitions net of divestitures of 0.8%.

Total revenues for the three months ended September 30, 2022, were $3,606.1, a decrease of 11.2% over $4,062.6 in the third quarter of 2021.

The decrease was due to lower organic revenue of 10.7% and unfavorable foreign currency translation of 1.3%, partially offset by acquisitions of 0.8%.

The 10.7% decrease in organic revenue was driven by a 11.8% decrease in COVID-19 Testing, partially offset by a 1.1% increase in the Company's organic Base Business.

Dx revenues for the three months ended June 30, 2022, were $2,255.4, a decrease of 4.7% over $2,365.5 in the second quarter of 2021.

The decrease was primarily due to a decrease in organic revenue of 5.7%, partially offset by acquisitions of

Dx revenues for the three months ended September 30, 2022, were $2,207.6, a decrease of 15.7% over $2,617.5 in the third quarter of 2021.

The decrease was primarily due to organic revenue of 16.4% and unfavorable foreign currency translation of

0.1%, partially offset by acquisitions of 0.9%.

The 16.4% decrease in organic revenue was due to a 18.4% decrease in COVID-19 Testing, partially offset by a 1.9% increase in the Base Business.

Total Base Business growth compared to the Base Business in the prior year was 3.7%.

Dx total volume (measured by requisitions) for the three months ended June 30, 2022, decreased by 2.7% as organic volume decreased by 3.1% and acquisition volume contributed 0.4%.

Dx total volume (measured by requisitions) for the three months ended September 30, 2022, decreased by 10.3% as organic volume decreased by 10.9% and acquisition volume contributed 0.6%.

Organic volume was impacted by an 12.8% decrease in COVID-19 Testing, partially offset by a 1.9% increase in Base Business.

Price/mix decreased by 2.0% due to a decrease in COVID-19 Testing of 2.2% and a decline in organic Base Business of 0.4%, partially offset by acquisitions of 0.8%.

Price/mix decreased by 5.4% due to a decrease in COVID-19 Testing of 5.5%.

Base Business volume was up 3.1% compared to the Base Business last year, while price/mix was up 0.6%.

DD revenues for the three months ended June 30, 2022, were $1,451.9, a decrease of 2.9% over $1,495.2 in the second quarter of 2021.

The decrease was due to unfavorable foreign currency translation of 2.6% and lower COVID-19 Testing of 0.6%, partially offset by acquisitions net of divestitures of 0.2% and organic Base Business growth of 0.1%.

Organic Base Business growth was impacted by reduced COVID-19 related work, the conflict in Ukraine, and lower pass-throughs.

DD revenues for the three months ended September 30, 2022, were $1,405.8, a decrease of 3.7% over $1,459.5 in the third quarter of 2021.

The decrease was primarily due to unfavorable foreign currency translation of 3.4%.

The benefit of acquisitions of 0.5% was offset by a 0.7% decline in Base Business organic growth, which was negatively impacted by approximately 5.0% due to reduced COVID-19 related work and the Ukraine/Russia crisis.

COVID-19 related work includes lower COVID-19 vaccine and therapeutic studies as well as reduced clinical development kits shipped and returned due to supply chain issues and labor constraints.

Cost of Revenues

Three Months Ended June 30,

Three Months Ended September 30,

2022 2021 Change

1 unchanged sentence

Cost of revenues as a % of revenues 70.6 % 65.9 %

Cost of revenues decreased 0.1% during the three months ended June 30, 2022, as compared with the corresponding period in 2021.

Cost of revenues as a percentage of revenues during the three months ended June 30, 2022, increased to 69.6% as compared to 67.1% in the corresponding period in 2021.

Cost of revenues decreased 4.9% during the three months ended September 30, 2022, as compared with the corresponding period in 2021.

Cost of revenues as a percentage of revenues during the three months ended September 30, 2022, increased to 70.6% as compared to 65.9% in the corresponding period in 2021.

This increase in cost of revenues as a percent of revenues was primarily due to a reduction in COVID-19 Testing revenues, higher personnel expenses, and other inflationary costs, partially offset by organic Base Business growth and LaunchPad savings.

Selling, General and Administrative Expenses

Three Months Ended June 30,

Three Months Ended September 30,

2022 2021 Change

1 unchanged sentence

Selling, general and administrative expenses as a % of revenues 14.1 % 12.8 %

Selling, general and administrative expenses as a percentage of revenues were 13.1% and 11.9% during the three months ended June 30, 2022, and 2021, respectively.

The increase is primarily due to a reduction in COVID-19 Testing revenues, and higher personnel expenses, partially offset by LaunchPad savings.

Selling, general and administrative expenses as a percentage of revenues were 14.1% and 12.8% during the three months ended September 30, 2022, and 2021, respectively.

The increase is primarily due to a reduction in COVID-19 Testing revenues, partially offset by LaunchPad savings.

Amortization of Intangibles and Other Assets

Three Months Ended June 30,

Three Months Ended September 30,

2022 2021 Change

2 unchanged sentences

Total amortization of intangibles and other assets $ 65.2 $ 92.2 (29.3) %

The decrease in amortization of intangibles and other assets primarily reflects the completion of the accelerated amortization related to the Covance trade name as a result of a rebranding initiative that resulted in $28.0 of expense in the three months ended June 30, 2021, offset by additional amortization for assets acquired subsequent to June 30, 2021.

The decrease in amortization of intangibles and other assets primarily reflects the completion of the accelerated amortization related to the Covance trade name as a result of a rebranding initiative that resulted in $30.2 of expense in the three months ended September 30, 2021, offset by additional amortization for assets acquired subsequent to September 30, 2021.

Restructuring and Other Charges

Three Months Ended June 30,

Three Months Ended September 30,

2022 2021 Change

Restructuring and other charges $ 15.1 $ 6.5 133.8 %

During the three months ended June 30, 2022, the Company recorded net restructuring and other charges of $44.4:

During the three months ended September 30, 2022, the Company recorded net restructuring and other charges of $15.1:

$3.6 within Dx, $11.3 within DD, and $0.2 allocated to general corporate.

The charges were comprised of $2.5 related to severance and other personnel costs and $11.4 in facility closures, lease terminations, and general integration activities.

The charges were adjusted by the reversal of a previously established liability of $0.9 in severance costs.

During the three months ended June 30, 2021, the Company recorded net restructuring and other charges of $9.6:

The charges were adjusted by the increase of $1.5 of previously established severance liabilities and the reversal of previously established liability of $0.3 in unused facility-related costs.

During the three months ended September 30, 2021, the Company recorded net restructuring and other charges of $6.5:

$3.3 within Dx and $3.2 within DD.

The charges were comprised of $6.1 related to severance and other personnel costs and $3.5 in facility closures, lease terminations, and general integration activities.

The charges were adjusted by an increase of $0.1 of previously established severance liabilities and the reversal of a previously established liability of $0.1 in unused facility-related costs.

The charges were comprised of $3.3 related to severance and other personnel costs and

$3.7 in facility closures, lease terminations, and general integration activities.

The charges were adjusted by the reversal of a previously established liability of $0.5 in unused facility-related costs.

Interest Expense

Three Months Ended June 30,

Three Months Ended September 30,

2022 2021 Change

Interest expense $ (46.3) $ (42.2) 9.9 %

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

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

Equity Method Income

Three Months Ended June 30,

Three Months Ended September 30,

2022 2021 Change

1 unchanged sentence

Equity method income represents the Company's ownership share in joint venture partnerships along with equity investments in other companies in the health care industry.

The decrease in income for the three months ended June 30, 2022, as compared with the corresponding period in 2021, was primarily due to the decreased profitability of the Company's joint ventures in 2022.

Three Months Ended June 30,

The decrease in income for the three months ended September 30, 2022, as compared with the corresponding period in 2021, was primarily due to the decreased profitability of the Company's joint ventures in 2022.

Three Months Ended September 30,

2022 2021 Change

Other, net $ (7.3) $ 31.9 (123.0) %

The change in Other, net for the three months ended June 30, 2022, as compared to the three months ended June 30, 2021, is primarily due to investment losses of $6.2 for the three months ended June 30, 2022 compared to investment gains of $22.1 for the corresponding period of 2021.

In addition, foreign currency transaction losses of $4.4 were recognized for the three months ended June 30, 2022 as compared to losses of $1.7 for the corresponding period of 2021.

The change in Other, net for the three months ended September 30, 2022, as compared to the three months ended September 30, 2021, is primarily due to investment losses of $5.2 for the three months ended September 30, 2022 compared to investment gains of $36.9 for the corresponding period of 2021.

In addition, foreign currency transaction gains of $1.9 were recognized for the three months ended September 30, 2022 as compared to gains of $0.4 for the corresponding period of 2021.

Income Tax Expense

Three Months Ended June 30,

Three Months Ended September 30,

2022 2021 Change

1 unchanged sentence

Income tax expense as a % of earnings before income taxes 16.2 % 23.5 %

For the three months ended June 30, 2022 and 2021, the effective income tax rate was 24.7% and 28.1%, respectively.

The current year effective tax rate was favorably impacted by the Company's foreign income inclusion.

The prior year effective tax rate was favorably impacted by stock-based compensation arrangements and was partially offset by the deferred revaluation related to a U.K.

The current year effective tax rate was favorably impacted by the Company's foreign income inclusion and research and development tax credits.

During the quarter, the Company completed a detailed research and development tax credit analysis for the 2019, 2020, and 2021 tax years that resulted in an incremental income tax benefit.

The prior year effective tax rate was favorably impacted by stock-based compensation arrangements that was offset by the deferred revaluation related to the United Kingdom rate change.

Operating Income by Segment

Three Months Ended June 30,

Three Months Ended September 30,

2022 2021 Change

5 unchanged sentences

Total operating income $ 469.4 $ 766.9 (38.8) %

Dx operating income was $455.5 for the three months ended June 30, 2022, a decrease of $148.1 over operating income of $603.6 in the corresponding period of 2021, and Dx operating margin decreased 530 basis points year-over-year.

Dx operating income was $378.7 for the three months ended September 30, 2022, a decrease of $344.0 over operating income of $722.7 in the corresponding period of 2021, and Dx operating margin decreased 1,040 basis points year-over-year.

The decrease in adjusted operating income and adjusted operating margin was primarily due to a reduction in COVID-19 Testing, higher personnel expense, and other inflationary costs, partially offset by organic Base Business growth and LaunchPad savings.

DD operating income was $150.9 for the three months ended June 30, 2022, a increase of $3.5 over operating income of $147.3 in the corresponding period of 2021.

The increase was primarily due to less amortization expense in 2022 as a result of the completion of the accelerated amortization related to the Covance trade name, organic Base Business growth, and LaunchPad savings, partially offset by lower COVID-19 Testing, a reduction in COVID-19 related work, the interruption of some clinical trial activity due to the conflict in Ukraine, and other inflationary costs.

DD operating income was $156.7 for the three months ended September 30, 2022, an increase of $15.2 over operating income of $141.6 in the corresponding period of 2021.

The increase was primarily due to less amortization expense in 2022 as a

result of the completion of the accelerated amortization related to the Covance trade name, organic Base Business growth, and LaunchPad savings, partially offset by a reduction in COVID-19 related work, the Ukraine/Russia crisis, inflationary costs, and the mix impact of acquisitions.

General corporate expenses are comprised primarily of administrative services such as executive management, human resources, legal, finance, corporate affairs, and information technology.

Corporate expenses were $80.5 for the three months ended June 30, 2022, an increase of $33.7 over corporate expenses of $46.8 in the corresponding period of 2021, primarily due to higher personnel costs, bonus allocation, research and development costs, and other costs.

Corporate expenses were $66.0 for the three months ended September 30, 2022, a decrease of $31.4 over corporate expenses of $97.4 in the corresponding period of 2021, primarily due to lower personnel costs, bonus allocation, and research and development costs.

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

Six months ended June 30, 2022, compared with six months ended June 30, 2021

Six Months Ended June 30,

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

Nine Months Ended September 30,

2022 2021 Change

3 unchanged sentences

Total $ 11,202.6 $ 12,064.8 (7.1) %

The decrease in revenues for the six months ended June 30, 2022, as compared with the corresponding period in 2021 was 5.1%.

The decrease in revenues for the nine months ended September 30, 2022, as compared with the corresponding period in 2021 was 7.1%.

The decrease was due to lower organic revenue of 6.9% and unfavorable foreign currency translation of 0.9%, partially offset by acquisitions net of divestitures of 0.6%.

The 4.9% decrease in organic revenue includes a 7.4% decrease from COVID-19 Testing and a 2.5% increase in the Company's organic Base Business.

Dx revenues for the first half of the year were $4,709.5, a decrease of 8.1% compared to revenues of $5,123.3 during the six months ended June 30, 2021.

The decrease was primarily due to lower organic revenue of 8.8% and unfavorable foreign currency translation of 0.1%, partially offset by acquisitions of 0.8%.

The 8.8% decrease in organic revenue was due to an 11.5% decrease in COVID-19 Testing, partially offset by a 2.7% increase in the Base Business.

The 6.9% decrease in organic revenue includes an 8.9% decrease from COVID-19 Testing and a 2.0% increase in the Company's organic Base Business.

Dx revenues for the nine months ended September 30, 2022 were $6,917.1, a decrease of 10.6% compared to revenues of $7,740.8 during the nine months ended September 30, 2021.

The decrease was primarily due to lower organic revenue of 11.4%, partially offset by acquisitions of 0.8%.

The 11.4% decrease in organic revenue was due to a 13.8% decrease in COVID-19 Testing, partially offset by a 2.4% increase in the Base Business.

Total volume, measured by requisitions, decreased by 6.1% as organic volume decreased by 6.5% and acquisition volume contributed 0.4%.

1 unchanged sentence

Price/mix decreased by 4.6% due to lower COVID-19 Testing of 4.8%, lower organic Base Business of 0.1%, and unfavorable foreign currency translation of 0.1%, partially offset by acquisitions of 0.4%.

DD revenues for the six months ended June 30, 2022 were $2,911.2, an decrease of 0.8% over revenues of $2,933.4 during the six months ended June 30, 2021.

DD revenues for the nine months ended September 30, 2022 were $4,317.0, a decrease of 1.7% over revenues of $4,392.9 during the nine months ended September 30, 2021.

The decrease in revenues was primarily due to unfavorable foreign currency translation of 2.4%, lower COVID-19 Testing performed through its Central Laboratories business of 0.8%, partially offset by an increase in organic Base Business revenue of 1.2% and acquisitions net of divestitures of 0.3%.

Cost of Revenues

Six Months Ended June 30,

Nine Months Ended September 30,

2022 2021 Change

1 unchanged sentence

Cost of revenues as a % of revenues 69.5 % 64.8 %

Cost of revenues increased 2.0% during the six months ended June 30, 2022, as compared with the corresponding period in 2021.

Cost of revenues as a percentage of revenues during the six months ended June 30, 2022, increased to 69.0% as compared to 64.2% in the corresponding period in 2021.

Cost of revenues decreased 0.4% during the nine months ended September 30, 2022, as compared with the corresponding period in 2021.

Cost of revenues as a percentage of revenues during the nine months ended September 30, 2022, increased to 69.5% as compared to 64.8% in the corresponding period in 2021.

This increase in cost of revenues as a percentage of revenues was primarily due to a reduction in COVID-19 Testing revenues, higher personnel expenses, and other inflationary costs, partially offset by organic Base Business growth and LaunchPad savings.

Selling, General and Administrative Expenses

Six Months Ended June 30,

Nine Months Ended September 30,

2022 2021 Change

1 unchanged sentence

Selling, general and administrative expenses as a % of revenues 13.0 % 11.7 %

Selling, general and administrative expenses as a percentage of revenues were 12.5% and 11.1% during the six months ended June 30, 2022, and 2021, respectively.

Selling, general and administrative expenses as a percentage of revenues were 13.0% and 11.7% during the nine months ended September 30, 2022, and 2021, respectively.

The increase is primarily due to a reduction in COVID-19 Testing revenues and higher personnel expenses, partially offset by LaunchPad savings.

Amortization of Intangibles and Other Assets

Six Months Ended June 30,

Nine Months Ended September 30,

2022 2021 Change

2 unchanged sentences

Total amortization of intangibles and other assets $ 198.7 $ 276.7 (28.2) %

The decrease in amortization of intangibles and other assets primarily reflects the completion of the accelerated amortization related to the Covance trade name as a result of a rebranding initiative that resulted in $57.2 of expense in the six months ended June 30, 2021, offset by additional amortization for assets acquired subsequent to June 30, 2021.

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

Goodwill and Other Asset Impairments

Six Months Ended June 30,

Nine Months Ended September 30,

2022 2021 Change

Goodwill and other asset impairments $ 1.2 $ — 100.0%

The Company recorded impairment charges of $1.2 in other assets in Ukraine and Russia during the six months ended June 30, 2022.

There were no goodwill and other asset impairments for the six months ended June 30, 2021.

The Company recorded impairment charges of $1.2 in other assets in Ukraine and Russia during the nine months ended September 30, 2022.

There were no goodwill and other asset impairments for the nine months ended September 30, 2021.

Restructuring and Other Special Charges

Six Months Ended June 30,

Nine Months Ended September 30,

2022 2021 Change

Restructuring and other charges $ 72.1 $ 35.3 104.6 %

During the six months ended June 30, 2022, the Company recorded net restructuring and other charges of $57.0:

During the nine months ended September 30, 2022, the Company recorded net restructuring and other charges of $72.1:

$23.9 within Dx, $42.7 within DD, and $5.5 allocated to general corporate.

1 unchanged sentence

The charges were adjusted by an increase of $2.0 of previously established severance liabilities and the reversal of previously established liability of $0.4 in unused facility-related costs.

During the six months ended June 30, 2021, the Company recorded net restructuring and other special charges of $28.8:

During the nine months ended September 30, 2021, the Company recorded net restructuring and other special charges of $35.3:

$16.8 within Dx and $18.5 within DD.

The charges were comprised of $13.6 related to severance and other personnel costs and $22.4 in facility closures, lease terminations, and general integration initiatives.

The charges were adjusted by an increase of $0.1 of previously established severance liabilities and the reversal of previously established liability of $0.2 in unused facility-related costs.

The charges were adjusted by a decrease of $0.1 of previously established severance liabilities and the reversal of previously established liability of $0.7 in unused facility-related costs.

Interest Expense

Six Months Ended June 30,

Nine Months Ended September 30,

2022 2021 Change

Interest expense $ (131.0) $ (169.0) (22.4) %

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

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

Equity Method Income

Six Months Ended June 30,

Nine Months Ended September 30,

2022 2021 Change

1 unchanged sentence

Equity method income represents the Company's ownership share in joint venture partnerships along with equity investments in other companies in the health care industry.

The decrease in income for the six months ended June 30, 2022, as compared with the corresponding period in 2021, was primarily due to the decreased profitability of the Company's joint ventures in 2022.

Six Months Ended June 30,

The decrease in income for the nine months ended September 30, 2022, as compared with the corresponding period in 2021, was primarily due to the decreased profitability of the Company's joint ventures in 2022.

Nine Months Ended September 30,

2022 2021 Change

Other, net $ (27.8) $ 51.5 (153.9) %

The change in Other, net for the six months ended June 30, 2022, as compared to the six months ended June 30, 2021, is primarily due to investment losses of $14.2 compared to $30.5 of investment gains in the corresponding period of 2021.

In addition, foreign currency transaction losses of $7.0 were recognized for the six months ended June 30, 2022, and losses of $2.8 were recognized in the corresponding period of 2021.

The change in Other, net for the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021, is primarily due to investment losses of $19.4 compared to $67.4 of investment gains in the corresponding period of 2021.

In addition, foreign currency transaction losses of $5.1 were recognized for the nine months ended September 30, 2022, and losses of $2.4 were recognized in the corresponding period of 2021.

Income Tax Expense

Six Months Ended June 30,

Nine Months Ended September 30,

2022 2021 Change

1 unchanged sentence

Income tax expense as a % of earnings before income taxes 21.7 % 25.2 %

For the six months ended June 30, 2022, and 2021, the effective income tax rate was 23.8% and 26.0%, respectively.

The current year effective tax rate was favorably impacted by the Company's foreign income inclusion.

The prior year effective tax rate was favorably impacted by stock-based compensation arrangements and was partially offset by the deferred revaluation related to a U.K.

The current year effective tax rate was favorably impacted by the Company's foreign income inclusion and research and development tax credits.

During the quarter, the Company completed a detailed research and development tax credit analysis for the 2019, 2020, and 2021 tax years that resulted in an incremental income tax benefit.

The prior year effective tax rate was favorably impacted by stock-based compensation arrangements that was offset by the deferred revaluation related to the United Kingdom rate change.

Operating Income by Segment

Six Months Ended June 30,

Nine Months Ended September 30,

2022 2021 Change

5 unchanged sentences

Total operating income $ 1,683.2 $ 2,528.9 $ (845.7)

Dx operating income was $1,078.8 for the six months ended June 30, 2022, an decrease of $473.9 from operating income of $1,552.7 in the corresponding period of 2021, and Dx operating margin decreased 740 basis points year-over-year.

Dx operating income was $1,457.5 for the nine months ended September 30, 2022, a decrease of $817.9 from operating income of $2,275.4 in the corresponding period of 2021, and Dx operating margin decreased 830 basis points year-over-year.

DD operating income was $275.1 for the six months ended June 30, 2022, a decrease of $28.6 from operating income of $303.7 in the corresponding period of 2021.

DD operating income was $431.8 for the nine months ended September 30, 2022, a decrease of $13.4 from operating income of $445.3 in the corresponding period of 2021.

The decrease was primarily due to a reduction in COVID-19 Testing, a reduction in COVID-19 related work, the interruption of some clinical trial activity due to the conflict in Ukraine, higher personnel expense, and other inflationary costs.

1 unchanged sentence

General corporate expenses are comprised primarily of administrative services such as executive management, human resources, legal, finance, corporate affairs, and information technology.

Corporate expenses were $140.1 for the six months ended June 30, 2022, an increase of $45.7 over corporate expenses of $94.4 in the corresponding period of 2021, primarily due to higher personnel costs, bonus allocation, research and development costs, and other costs.

Corporate expenses were $206.1 for the nine months ended September 30, 2022, an increase of $14.3 over corporate expenses of $191.8 in the corresponding period of 2021, primarily due to higher personnel costs, bonus allocation, research and development costs, and other costs.

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

3 unchanged sentences

The Company's senior unsecured revolving credit facility is further discussed in Note 6 (Debt) to the Company's condensed consolidated financial statements.

In summary, the Company's cash flows were as follows for the six months ended June 30, 2022, and 2021, respectively:

Six Months Ended June 30,

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

Nine Months Ended September 30,

Net cash provided by operating activities $ 1,302.3 $ 2,412.1

4 unchanged sentences

Cash and Cash Equivalents

Cash and cash equivalents at June 30, 2022, and 2021, totaled $1,068.8 and $1,963.2, respectively.

Cash and cash equivalents at September 30, 2022, and 2021, totaled $409.9 and $2,036.5, respectively.

Cash and cash equivalents consist of highly liquid instruments, such as time deposits, commercial paper, and other money market investments, which have original maturities of three months or less.

Cash Flows from Operating Activities

During the six months ended June 30, 2022, the Company's operations provided $928.5 of cash as compared to $1,644.8 during the same period in 2021.

During the nine months ended September 30, 2022, the Company's operations provided $1,302.3 of cash as compared to $2,412.1 during the same period in 2021.

The $1,109.8 decrease in cash provided from operations in 2022 as compared with the corresponding 2021 period is primarily due to lower cash earnings and unfavorable working capital requirements.

Cash Flows from Investing Activities

Net cash used for investing activities for the six months ended June 30, 2022, was $815.6 as compared to $222.8 for the six months ended June 30, 2021.

The change in cash used for investing activities was primarily due to an increase in business acquisitions and higher capital expenditures during the six months ended June 30, 2022.

Capital expenditures were $260.5 and $192.6 for the six months ended June 30, 2022, and 2021, respectively.

Net cash used for investing activities for the nine months ended September 30, 2022, was $1,378.9 as compared to $630.1 for the nine months ended September 30, 2021.

The change in cash used for investing activities was primarily due to an increase in business acquisitions and higher capital expenditures during the nine months ended September 30, 2022.

Capital expenditures were $364.0 and $310.4 for the nine months ended September 30, 2022, and 2021, respectively.

Cash Flows from Financing Activities

Net cash used by financing activities for the six months ended June 30, 2022, was $497.4 as compared to $775.5 for the six months ended June 30, 2021.

The change in cash flows from financing activities for the six months ended June 30, 2022, as compared to the six months ended June 30, 2021, was primarily due to the repayment of the 2019 Term Loan in 2021, the payment of dividends of $66.7 in 2022, and an increase of $31.5 in share repurchases.

At June 30, 2022, the Company had $1,068.8 of cash and $1,000.0 of available borrowings under its revolving credit facility, which does not mature until 2026.

Net cash used by financing activities for the nine months ended September 30, 2022, was $949.6 as compared to $1,057.2 for the nine months ended September 30, 2021.

The change in cash flows from financing activities for the nine months ended September 30, 2022, as compared to the nine months ended September 30, 2021, was primarily due to the repayment of the 2019 Term Loan in 2021, the payment of dividends of $131.6 in 2022, and an increase of $131.5 in share repurchases.

At September 30, 2022, the Company had $409.9 of cash and $1,000.0 of available borrowings under its revolving credit facility, which does not mature until 2026.

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

The Company was in compliance with all covenants under the revolving credit facility at June 30, 2022, and expects that it will remain in compliance with its existing debt covenants for the next twelve months.

For the six months ended June 30, 2022, the Company purchased 1.7 shares of its common stock at a total cost of $400.0.

As of June 30, 2022, t he Company had an outstanding authorization from the board of directors to purchase up to $1,231.5 more of the Company's common stock with no expiration date.

For the six months ended June 30, 2022, the Company paid $66.7 in common stock dividends or $0.72 per share.

On July 14, 2022, the Company announced a cash dividend of $0.72 per share of common stock for the third quarter, or approximately $66.1 in the aggregate.

The dividend will be payable on September 9, 2022, to stockholders of record of all issued and outstanding shares of common stock as of the close of business on August 18, 2022.

The Company was in compliance with all covenants under the revolving credit facility at September 30, 2022, and expects that it will remain in compliance with its existing debt covenants for the next twelve months.

For the nine months ended September 30, 2022, the Company purchased 3.3 shares of its common stock at a total cost of $800.0.

As of September 30, 2022, t he Company had an outstanding authorization from the board of directors to purchase up to $831.5 more of the Company's common stock with no expiration date.

For the nine months ended September 30, 2022, the Company paid $131.6 in common stock dividends.

On October 12, 2022, the Company announced a cash dividend of $0.72 per share of common stock for the fourth quarter, or approximately $64.9 in the aggregate.

The dividend will be payable on December 9, 2022, to stockholders of record of all issued and outstanding shares of common stock as of the close of business on November 17, 2022.

The declaration and payment of any future dividends will be at the discretion of the Company's board of directors.

2 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-Q

Item 2. Management’s Discussion and Analysis