What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2023-02-28 compared with 2022-02-25 · 389 added, 449 removed, 1547 unchanged (35% of the section changed)

24 unchanged sentences

Information regarding executive officers is incorporated by reference to the Company’s 2023 Proxy Statement under the caption Executive Officers.

Information concerning the Company’s Audit Committee, including the designation of audit committee financial experts and information regarding compliance with Section 16(a) of the Exchange Act responsive to this item is incorporated by reference to the Company’s 2022 Proxy Statement under the captions Corporate Governance and Delinquent Section 16(a) Reports, respectively.

Information concerning the Company’s Audit Committee, including the designation of audit committee financial experts is incorporated by reference to the Company’s 2023 Proxy Statement under the captions Corporate Governance and Delinquent Section 16(a) Reports, respectively.

Information concerning the Company's code of ethics is incorporated by reference to the Company's 2023 Proxy Statement under the caption Corporate Governance Policies and Procedures.

17 unchanged sentences

3.2 Amended and Restated By-Laws of the Company, adopted and effective July 7, 2020 (incorporated by reference herein to Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2020).

and Restated By-Laws of the Company.

4.1 Specimen of the Company’s Common Stock Certificate (incorporated herein by reference to Exhibit 4.1 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2001).

1 unchanged sentence

Bank National Association, as trustee (incorporated herein by reference to Exhibit 4.1 to the Company’s Current Report on Form 8-K filed on November 19, 2010).

4.3 Second Supplemental Indenture, dated as of November 19, 2010, between the Company and U.S.

Bank National Association, as trustee, including the form of the 2020 Notes (incorporated herein by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on November 19, 2010).

4.4 Third Supplemental Indenture, dated as of August 23, 2012, between the Company and U.S.

Bank National Association, as trustee, including the form of the 2017 Notes (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on August 23, 2012).

4.5 Fourth Supplemental Indenture, dated as of August 23, 2012, between the Company and U.S.

Bank National Association, as trustee, including the form of the 2022 Notes (incorporated herein by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on August 23, 2012).

4.6 Fifth Supplemental Indenture, dated as of November 1, 2013, between the Company and U.S.

Bank National Association, as trustee, including the form of the 2018 Notes (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on November 1, 2013).

4.3 Sixth Supplemental Indenture, dated as of November 1, 2013, between the Company and U.S.

Bank National Association, as trustee, including the form of the 2023 Notes (incorporated herein by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on November 1, 2013).

4.8 Seventh Supplemental Indenture, dated as of January 30, 2015, between the Company and U.S.

Bank National Association, as trustee, including the form of the 2020 Notes (incorporated herein by reference to Exhibit 4.2 to the Company’s Current Report on Form 8-K filed on January 30, 2015).

4.9 Eighth Supplemental Indenture, dated as of January 30, 2015, between the Company and U.S.

Bank National Association, as trustee, including the form of the 2022 Notes (incorporated herein by reference to Exhibit 4.3 to the Company’s Current Report on Form 8-K filed on January 30, 2015).

4.4 Ninth Supplemental Indenture, dated as of January 30, 2015, between the Company and U.S.

13 unchanged sentences

4.11 Sixteenth Supplemental Indenture, dated as of May 26, 2021, between the Company and U.S.

Bank National Association, as trustee, including the form of the 2031 Notes (incorporated herein by reference to Exhibit 4.

3 to the Company's Current Report on Form 8-K filed on May 26, 2021).

4.18* Description of the Registrant's securities registered pursuant to Section 12 of the Securities Exchange Act of 1934.

Bank National Association, as trustee, including the form of the 2031 Notes (incorporated herein by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K filed on May 26, 2021).

4.12 Description of the Registrant's securities registered pursuant to Section 12 of the Securities Exchange Act of 1934 (incorporated by reference to Exhibit 4.18 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021).

National Health Laboratories Incorporated Pension Equalization Plan (incorporated herein by reference to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 1992).

2 unchanged sentences

Second Amendment to the Laboratory Corporation of America Holdings Amended and Restated New Pension Equalization Plan (incorporated herein by reference to Exhibit 10.4 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004).

Third Amendment to the Laboratory Corporation of America Amended and Restated New Pension Equalization Plan (incorporated herein by reference Exhibit 10.6 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2005).

Laboratory Corporation of America Holdings Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.22 the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2004).

1 unchanged sentence

Second Amendment to the Laboratory Corporation of America Holdings Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.8 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2005).

Third Amendment to the Laboratory Corporation of America Holdings Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.28 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006).

Fourth Amendment to the Laboratory Corporation of America Holdings Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.34 to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2007).

Laboratory Corporation of America Holdings 2008 Stock Incentive Plan (incorporated herein by reference to Annex III to the Company’s Definitive Proxy Statement on Schedule 14A filed on March 25, 2008).

Amendment to Laboratory Corporation of America Holdings 2008 Stock Incentive Plan (incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 7, 2008).

Laboratory Corporation of America Holdings 2012 Omnibus Incentive Plan (incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 2, 2012).

10.14 Second Amended and Restated Credit Agreement, dated as of September 15, 2017, (originally dated as of December 21, 2011), among the Company, Bank of America, N.A.

as Administrative Agent, Swing Line Lender and L/C Issuer, Wells Fargo Bank, National Association as Syndication Agent and L/C Issuer, Credit Suisse AG, Cayman Islands Branch as Documentation Agent and L/C Issuer, the Bank of Tokyo-Mitsubishi UFJ, LTD., Barclays Bank PLC, Credit Suisse AG, Cayman Islands Branch, KeyBank National Association, PNC Bank, National Association, TD Bank, N.A., and U.S.

Bank National Association, as Documentation Agents, Merrill Lynch, Pierce, Fenner & Smith Incorporated, Wells Fargo Securities, LLC and Credit Suisse Securities (USA) LL as Joint Lead Arrangers and Joint Book Managers, and the lenders named therein (incorporated herein by reference to Exhibit 10.3 to the Company’s Annual Report on Form 10-Q filed on November 2, 2017).

10.15 Amendment No.

1, dated as of May 7, 2020, to the Second Amended and Restated Credit Agreement, dated September 15, 2017 (originally dated as of December 21, 2011), among the Company, Bank of America, N.A.

as administrative agent, and the lenders party thereto (incorporated herein by reference to Exhibit 10.2 to the Company’s Quarterly Report on Form 10-Q filed on May 8, 2020).

10.11 Third Amended and Restated Credit Agreement, dated as of April 30, 2021, among the Company, Bank of America N.A., as administrative agent, and the lenders party thereto (incorporated herein by reference to Exhibit 10.1 to the Company's Quarterly Report on Form 10-Q filed on May 4, 2021).

Amendment No.

1, dated as of January 13, 2023, to the Third Amended and Restated Credit Agreement (originally dated as of April 30, 2021), among the Company, Bank of America, N.A., as administrative agent, and lenders party thereto.

Laboratory Corporation of America Holdings 2016 Omnibus Incentive Plan (incorporated by reference herein to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 16, 2016).

7 unchanged sentences

Schechter (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 5, 2019).

Amended and Restated Master Senior Executive Severance Plan.

Executive Employment Agreement, dated January 4, 2023, by and between Laboratory Corporation of America and Thomas Pike.

Amended and Restated Master Senior Executive Severance Plan (incorporated by reference to 10.22 to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2021).

16.1 Letter of PricewaterhouseCoopers LLP, dated November 5, 2020 (incorporated by reference to Exhibit 16.1 to the Company’s Current Report on Form 8-K filed on November 5, 2020).

16.2 L etter of Pricewaterhouse Coopers LLP , dated March 3, 2021 (inco rporated by reference to Exhibit 1 6.1 to the Company's Current Report on Form 8-K/A filed on M arch 3, 2021).

16.2 Letter of PricewaterhouseCoopers LLP, dated March 3, 2021 (incorporated by reference to Exhibit 16.1 to the Company's Current Report on Form 8-K/A filed on March 3, 2021).

21* List of Subsidiaries of the Company

23.1* Consent of Deloitte & Touche LLP, an independent registered public accounting firm

23.2* Consent of PricewaterhouseCoopers LLP, an independent registered public accounting firm

23.2* Consent of PricewaterhouseCoopers LLP, an independent register public accounting firm

24.1* Power of Attorney of Kerrii B.

3 unchanged sentences

Gary Gilliland, M.D., Ph.D.

24.5* Power of Attorney of Kirsten M.

24.6* Power of Attorney of Garheng Kong, M.D., Ph.D.

53 unchanged sentences

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Laboratory Corporation of America Holdings and subsidiaries (the “Company”) as of December 31, 2021, the related consolidated statements of operations, comprehensive earnings, changes in shareholders’ equity, and cash flows for the year ended December 31, 2021, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021, and the results of its operations and its cash flows for the year ended December 31, 2021, in conformity with accounting principles generally accepted in the United States of America.

We have audited the accompanying consolidated balance sheet of Laboratory Corporation of America Holdings and subsidiaries (the “Company”) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive earnings, changes in shareholders’ equity, and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 28, 2023, expressed an unqualified opinion on the Company’s internal control over financial reporting.

1 unchanged sentence

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s financial statements based on our audit.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

3 unchanged sentences

Critical Audit Matter Description

Within the Drug Development segment, the Company provides clinical development and commercialization services through the performance of clinical trial services for which revenue is recognized as services are performed.

Most of the contracts associated with these services are long term in nature and constitute a single performance obligation (e.g., management of a clinical trial), as the Company provides a significant service of integrating all promises in the contract and the promises are highly interdependent and interrelated with one another.

Revenue recognition is measured on a proportional-performance basis using costs as the input measure of progress, meaning revenue is recognized based on the proportion of actual costs incurred to total costs expected to complete the contract.

The Company reviews and revises estimated total costs to satisfy the performance obligation throughout the life of the contract, with adjustments to revenue resulting from such revisions being recorded in the period in which the change in estimate is determined.

Given the judgments necessary to estimate total expected contract costs for purposes of revenue recognition for full-service clinical trial contracts which use the cost-to-cost method, auditing such estimates required extensive audit effort due to the complexity of these contracts and a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures.

Within the Drug Development (DD) segment, the Company provides Phase I through Phase IV clinical development services to pharmaceutical, biotechnology, and medical device companies worldwide.

A majority of the Company’s revenues are earned under contracts that are long term in nature, ranging in duration from a few months to many years.

The majority of the Company's contracts contain a single performance obligation, as the Company provides a significant service of integrating all promises in the contract and the promises are highly interdependent and interrelated with one another.

Fixed-price contracts are typically recognized as revenue over time based on a proportional-performance basis, using either input or output methods that are specific to the service provided.

When using an input method, revenue is recognized by dividing the actual costs incurred by the total estimated contract costs expected to complete the contract and multiplying that percentage by the total contract value.

Contract costs principally include direct labor and reimbursable out-of-pocket costs.

The estimate of total costs expected to complete the contract requires significant judgment and estimates are based on various

assumptions of events that often span several years.

These estimates are reviewed periodically, and any adjustments are recognized on a cumulative catch-up basis in the period they become known.

Given the judgments necessary to recognize revenue for fixed-price contracts that use an input method based on estimated total costs, auditing such estimates required extensive audit effort due to the complexity of these contracts and a high degree of auditor judgment when performing audit procedures and evaluating the results of those procedures.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s estimates of total contract costs for purposes of revenue recognition for full-service clinical trial contracts which use the proportional-performance method included the following, among others:

• We tested the effectiveness of controls over long-term contract revenue, including those over the estimates of total contract costs related to the performance obligation.

Our audit procedures related to management’s estimates of costs for purposes of revenue recognition for full-service contracts which use an input method based on estimated total contract costs and included the following, among others:

• We tested the effectiveness of controls over fixed-price contract revenue, including those over the estimates of total contract costs related to the performance obligation.

• We selected a sample of long-term contracts and performed the following:

◦ Evaluated whether the contracts were properly included in management’s calculation of long-term contract revenue based on the terms and conditions of each contract, including whether continuous transfer of control to the customer occurred as progress was made toward fulfilling the performance obligation.

◦ Evaluated whether the contracts were properly accounted for by management based on the terms and conditions of each contract, including whether over time revenue recognition was appropriate.

◦ Compared the transaction prices to the consideration expected to be received based on current rights and obligations under the contracts and any contract modifications that were agreed upon with the customers.

◦ Evaluated management’s identification of distinct performance obligations by assessing whether the underlying services were highly interdependent and interrelated.

◦ Evaluated management’s identification of distinct performance obligations by assessing whether the underlying services were highly interdependent or highly interrelated.

◦ Tested the accuracy and completeness of the total contract costs incurred to date for the performance obligation.

18 unchanged sentences

• We tested the completeness and accuracy of underlying historical data used as an input to management’s methodology and our independent estimate.

Goodwill- Reporting Unit within the DD Segment – Refer to Notes 1 and 7 to the consolidated financial statements

Critical Audit Matter Description

The Company assesses goodwill for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

The Company recognizes an impairment charge for the amount by which a reporting unit's carrying amount exceeds its fair value.

Fair value of a reporting unit is estimated using both market-based valuation and income-based valuation approaches.

Management’s impairment assessments utilize significant judgments and assumptions related to the market multiples selected for the market-based valuation approach and the related estimates of cash flows arising from future revenues and profitability, terminal growth rates, and the discount rate used in the income-based valuation approach.

The Company performed an interim impairment assessment as of December 31, 2022, based on the loss in December 2022 of a supplier of critical testing supplies for the early development reporting unit in the Company’s DD segment.

Based on the results of the interim impairment assessment, the Company concluded that fair value was less than carrying value for this reporting unit and recorded a goodwill impairment charge of $260 million for the DD segment.

We identified goodwill for the early development reporting unit as a critical audit matter due to the significant estimates and assumptions by management to estimate the fair value of the reporting unit.

Performing audit procedures to evaluate management's estimate of fair value of the reporting unit required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the market multiples selected by management for the market-based valuation approach and management’s estimates related to the cash flows arising from future revenues and profitability, terminal growth rates, and the discount rate used in the income-based valuation approach included the following, among others:

• We tested the effectiveness of controls over management's goodwill impairment evaluation, including those over the determination of the fair value of the reporting unit, such as controls related to management's selection of market multiples, cash flows arising from future revenues and profitability, the terminal growth rate, and the discount rate.

• We evaluated the reasonableness of management’s forecasts by comparing the forecasts to (1) historical forecasts and the associated actual results, (2) internal communications to management, and (3) forecasted information included in analyst and industry reports for the Company and certain of its peer companies.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology, (2) the discount rate, and (3) market activity by:

◦ Testing the source information underlying the determination of the discount rate and market multiples, including the mathematical accuracy of the calculations.

◦ Developing a range of independent estimates and comparing those to the discount rate and market multiples selected by management.

/s/ Deloitte & Touche LLP

30 unchanged sentences

Opinion on the Financial Statements

We have audited the consolidated balance sheet of Laboratory Corporation of America Holdings and its subsidiaries (the “Company”) as of December 31, 2020, and the related consolidated statements of operations, comprehensive earnings, changes in shareholders' equity and cash flows for each of the two years in the period ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

We have audited the consolidated statements of operations, comprehensive earnings, changes in shareholders' equity and cash flows of Laboratory Corporation of America Holdings and its subsidiaries (the “Company”) for the year ended December 31, 2020, including the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the results of operations and cash flows of the Company for the year ended December 31, 2020 in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits of these consolidated financial statements in accordance with the standards of the PCAOB.

We conducted our audit of these consolidated financial statements in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ PricewaterhouseCoopers LLP

Raleigh, North Carolina

February 25, 2021, except for the effects of the revision discussed in Note 1 to the consolidated financial statements, as to which the date is February 25, 2022

February 25, 2021, except for the effects of the revision discussed in Note 1 (not presented herein) to the consolidated financial statements appearing under Item 8 of the Company’s 2021 annual report on Form 10-K, as to which the date is February 25, 2022, and except for the effects of the change in the segment performance measure discussed in Note 19, as to which the date is February 28, 2023

We served as the Company's auditor from 1997 to 2021.

38 unchanged sentences

Common stock, 88.2 and 93.1 shares outstanding at December 31, 2022 and 2021, respectively 8.1 8.5

Additional paid-in capital — 110.3

Retained earnings 10,581.7 10,456.8

49 unchanged sentences

Capital Retained

Earnings Treasury

Stock Accumulated

Earnings Accumulated

Comprehensive

2 unchanged sentences

BALANCE AT DECEMBER 31, 2019 $ 9.0 $ 26.8 $ 7,980.5 $ ( 372.4 ) $ 7,643.9

Adoption of credit loss accounting standard — — ( 7.0 ) — ( 7.0 )

Net earnings attributable to Laboratory Corporation of America Holdings — — 1,556.1 — 1,556.1

3 unchanged sentences

Stock compensation — 111.7 — — 111.7

Retirement of treasury stock ( 2.4 ) ( 1,145.8 ) — 1,148.2 — —

Purchase of common stock — ( 49.6 ) ( 50.4 ) — ( 100.0 )

BALANCE AT DECEMBER 31, 2020 9.0 110.3 9,479.2 ( 161.9 ) 9,436.6

Adoption of credit loss accounting standard — — ( 7.0 ) — — ( 7.0 )

Net earnings attributable to Laboratory Corporation of America Holdings — — 2,377.3 — 2,377.3

7 unchanged sentences

Other comprehensive earnings (loss), net of tax — — — ( 301.3 ) ( 301.3 )

Dividends declared — — ( 198.7 ) — ( 198.7 )

Issuance of common stock under employee stock plan — 50.6 — — 50.6

14 unchanged sentences

Stock compensation 144.1 153.7 111.7

Loss on sale of business — — 13.2

Operating lease right-of-use asset expense 194.4 194.9 200.3

7 unchanged sentences

Increase in prepaid expenses and other ( 256.9 ) ( 68.2 ) ( 5.4 )

Decrease in accounts payable ( 10.2 ) ( 5.3 ) ( 12.8 )

Increase (decrease) in accounts payable 307.1 ( 10.2 ) ( 5.3 )

Increase in deferred revenue 35.3 45.0 48.4

11 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from Senior Notes offerings 1,000.0 — 1,050.0

Proceeds from senior note offerings — 1,000.0 —

Payments on senior notes — ( 1,000.0 ) ( 412.2 )

Proceeds from term loan — — 850.0

Payments on term loan — ( 375.0 ) —

3 unchanged sentences

Net proceeds from issuance of stock to employees 50.6 51.7 55.9

Dividends paid ( 195.2 ) — —

Purchase of common stock ( 1,100.0 ) ( 1,668.5 ) ( 100.0 )

12 unchanged sentences

Laboratory Corporation of America ® Holdings (Labcorp ® or the Company) 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 75,500 employees, the Company serves clients in more than 100 countries.

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 80,000 employees, the Company serves clients in more than 100 countries.

The Company reports its business in two segments, Labcorp Diagnostics (Dx) and Labcorp Drug Development (DD).

As part of the Company's rebranding initiative announced in December 2020, the Company changed the names of its segments, which were previously referred to as LabCorp Diagnostics and Covance Drug Development.

For further financial information about these segments, including information for each of the last three fiscal years regarding revenue, operating income, and other important information, see Note 19 Business Segment Information to the Consolidated Financial Statements.

In 2022, Dx and DD contributed 61 % and 39 %, respectively, of revenues to the Company, and in 2021 contributed 64 % and 36 %, respectively.

19 unchanged sentences

Actual results could differ from those estimates.

The extent to which the COVID-19 pandemic has and will continue to impact the Company’s business and financial results depend on numerous evolving factors including, but not limited to:

the magnitude and duration of the COVID-19 pandemic, the impact to worldwide macroeconomic conditions including interest rates, employment rates and health insurance coverage, the speed of the anticipated recovery, and governmental and business reactions to the pandemic.

The Company assessed certain

The extent to which the COVID-19 pandemic has and will continue to impact the Company’s business and financial results depend on numerous evolving factors including, but not limited to the magnitude and duration of the COVID-19 pandemic, the impact to worldwide macroeconomic conditions including interest rates, employment rates and health insurance coverage, the speed of the anticipated recovery, and governmental and business reactions to the pandemic.

The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of December 31, 2022, and through the date of this Annual Report.

The accounting matters assessed included, but were not limited to, the Company’s implicit price

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

(Dollars and shares in millions, except per share data)

accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of December 31, 2021, and through the date of this Annual Report.

The accounting matters assessed included, but were not limited to, the Company’s implicit price concessions and credit losses, equity investments, and the carrying value of goodwill and other long-lived assets.

concessions and credit losses, equity investments, and the carrying value of goodwill and other long-lived assets.

The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could impact the Company’s consolidated financial statements in future reporting periods.

13 unchanged sentences

The agreed-upon reimbursement rates are subject to Ministry review at the end of year and can be adjusted (at the government's discretion) based upon the actual volume and mix of test work performed by the licensed healthcare providers in the province during the year.

The capitated accounts receivable balances from the Ontario government sponsored healthcare plan were CAD 7.2 and CAD 0.6 at December 31, 2021, and 2020, respectively.

There were no capitated accounts receivable balances from the Ontario government sponsored healthcare plan at December 31, 2022.

The balance was CAD 7.2 at December 31, 2021.

The portion of the Company's accounts receivable due from patients comprises the largest portion of credit risk.

45 unchanged sentences

Retirements, sales and other disposals of assets are recorded by removing the cost and accumulated depreciation from the related accounts with any resulting gain or loss reflected in the consolidated statements of operations.

Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.

If the carrying value is no longer recoverable based upon the undiscounted future cash flows of the asset, the amount of the impairment is the difference between the carrying amount and the fair value of the asset.

Capitalized Software Costs

2 unchanged sentences

Research and development (R&D) costs and other computer software maintenance costs related to software development are expensed as incurred.

Capitalized software costs are amortized using the straight-line method over the estimated useful life of the underlying system ranging from three to fifteen years, generally five years.

Amortization begins once the underlying system is substantially complete and ready for its intended use.

Capitalized software costs are amortized using the straight-line method over the estimated useful life of the underlying system ranging from three to

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

(Dollars and shares in millions, except per share data)

Long-Lived Assets

The Company assesses goodwill and indefinite-lived intangibles for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

fifteen years, generally five years.

Amortization begins once the underlying system is substantially complete and ready for its intended use.

Goodwill and Indefinite-lived Intangibles

The Company assesses goodwill and indefinite-lived intangibles, which are not amortized, for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.

The annual impairment test for goodwill includes an option to perform a qualitative assessment of whether it is more likely than not that a reporting unit's fair value is less than its carrying value.

1 unchanged sentence

If the Company determines that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then the Company performs the quantitative goodwill impairment test.

The Company may also chose to bypass the qualitative assessment for any reporting unit in its goodwill assessment and proceed directly to performing the quantitative assessment.

The Company may also choose to bypass the qualitative assessment for any reporting unit in its goodwill assessment and proceed directly to performing the quantitative assessment.

The Company recognizes an impairment charge for the amount by which the reporting unit's carrying amount exceeds its fair value.

8 unchanged sentences

If the estimated fair value of the reporting unit exceeds the carrying value, the goodwill is not impaired and no further review is required.

Long-lived assets, other than goodwill and indefinite-lived assets, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.

Recoverability of assets to be held and used is determined by the Company at the level for which there are identifiable cash flows by comparison of the carrying amount of the assets to future undiscounted net cash flows before interest expense and income taxes expected to be generated by the assets.

Impairment, if any, is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets (based on market prices in an active market or on discounted cash flows).

Assets to be disposed of are reported at the lower of the carrying amount or fair value.

Management performed its annual goodwill and intangible asset impairment testing as of the beginning of the fourth quarter of 2022.

The Company elected to perform the qualitative assessment for goodwill and intangible assets for the domestic Dx reporting units, and a quantitative assessment for all of the DD reporting units, and the Canadian reporting unit which includes indefinite-lived assets consisting of acquired Canadian licenses.

Based upon the results of the qualitative and quantitative assessments, the Company concluded that the fair values of each of its reporting units, as of October 1, 2022, were greater than the carrying values.

For the early development reporting unit, which is part of the DD segment, the fair value of the business exceeded the book value by approximately 10%.

In December 2022, a significant supplier of the early development reporting unit was no longer able to provide critical testing supplies resulting in an expectation of lower near term revenue and profitability and potential higher future costs.

Based on this information, management prepared a new forecast and updated the impairment testing valuations as of December 31, 2022.

Based on the quantitative impairment assessment performed in the same manner as the Company's annual quantitative assessment, the Company concluded that the fair value was less than carrying value for the early development reporting unit and recorded a goodwill impairment of $ 260.0 in the DD segment.

Although the Company believes that the current assumptions and estimates used in its goodwill analysis are reasonable, supportable, and appropriate, continued efforts to maintain or improve the performance of these businesses could be impacted by unfavorable or unforeseen changes which could impact the existing assumptions used in the impairment analysis.

Various factors could reasonably be expected to unfavorably impact existing assumptions:

primarily delays in new customer bookings and the related delay in revenue from new customers, increases in customer termination activity or increases in operating costs.

Accordingly, there can be no assurance that the estimates and assumptions made for the purposes of the goodwill impairment analysis will prove to be accurate predictions of future performance.

It is possible that the Company's conclusions regarding impairment or recoverability of goodwill or intangible assets in any reporting unit could change in future periods.

There can be no assurance that the estimates and assumptions used in the Company's goodwill and intangible asset impairment testing performed as of the beginning of the fourth quarter of 2022 or at the end of the year will prove to be accurate predictions of the future, if, for example, (i) the businesses do not perform as projected, (ii) overall economic conditions in 2023 or future years

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

vary from current assumptions (including changes in discount rates), (iii) business conditions or strategies for a specific reporting unit change from current assumptions, including loss of major customers, (iv) investors require higher rates of return on equity investments in the marketplace or (v) enterprise values of comparable publicly traded companies, or actual sales transactions of comparable companies, were to decline, resulting in lower multiples of revenues and EBITDA.

Intangible Assets

Intangible assets are amortized on a straight-line basis over the expected periods to be benefited, as set forth in the table below, such as legal life for patents and technology and contractual lives for non-compete agreements.

Intangible assets with finite lives are amortized on a straight-line basis over the expected periods to be benefited, as set forth in the table below, such as legal life for patents and technology and contractual lives for non-compete agreements.

Customer relationships 10 - 36

2 unchanged sentences

Trade names 1 - 15

Intangible assets with finite lives are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable.

Debt Issuance Costs

4 unchanged sentences

The liability is based on assumptions and factors for known and incurred but not reported claims, including the frequency and payment trends of historical claims.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

All leases with a lease term greater than 12 months, regardless of lease type classification, are recorded as an obligation on the balance sheet with a corresponding right-of-use asset.

14 unchanged sentences

The Company does not recognize a tax benefit unless the Company concludes that it is more likely than not that the benefit will be sustained on audit by the taxing authority based solely on the technical merits of the associated tax position.

If the recognition threshold is met, the Company recognizes a tax benefit measured at the largest amount of the tax benefit that the Company believes is greater than 50 % likely to be realized.

If the recognition threshold is met, the Company recognizes a tax benefit

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

measured at the largest amount of the tax benefit that the Company believes is greater than 50 % likely to be realized.

The Company records interest and penalties in income tax expense.

Derivative Financial Instruments

The Company addresses its exposure to market risks, principally the market risk associated with changes in interest rates and currency exchange rates, through a controlled program of risk management that includes, from time to time, the use of derivative financial instruments.

The Company does not hold or issue derivative financial instruments for trading purposes.

The Company does not believe that its exposure to market risk is material to the Company’s financial position or results of operations.

Interest rate swap agreements, which have been used by the Company from time to time in the management of interest rate exposure, are accounted for at fair value.

Cross currency swap agreements, which have been used by the Company to hedge exposure of its net investment in a foreign subsidiary denominated in non-U.S.

These derivative financial instruments are accounted for as fair value hedges that increase or decrease the value of the Senior Notes with the offset being recorded as a component of other long-term assets or liabilities, as applicable.

As the specific terms and notional amounts of the derivative financial instruments match those of the fixed-rate debt being hedged, the derivative instruments are assumed to be perfectly effective hedges and accordingly, there is no impact to the Company's consolidated statements of operations.

Cash flows from the interest rate swaps are including in operating activities.

Cross currency swap agreements, which have been used by the Company to hedge the foreign currency exposure of its net investment in a foreign subsidiary denominated in non-U.S.

currency, are accounted for at fair value.

See Note 17 Derivative Instruments and Hedging Activities for the Company’s objectives in using derivative instruments and the effect of derivative instruments and related hedged items on the Company’s financial position, financial performance and cash flows.

Changes in the fair value of the cross-currency swaps are charged or credited through accumulated other comprehensive income in the Consolidated Balance Sheet until the hedged item is recognized in earnings.

The cumulative amount of the fair value hedging adjustments are recognized as currency translation within the Consolidated Statements of Comprehensive Earnings.

Foreign currency forward contracts, which have been used by the Company to hedge foreign currency receivables, are recognized as assets or liabilities at their fair value.

These contracts do not qualify for hedge accounting and the changes in fair value are recorded directly to earnings.

The contracts are short-term in nature and the fair value of these contracts is based on market prices for comparable contracts.

The fair value of these contracts is not significant as of December 31, 2022 and 2021.

Fair Value of Financial Instruments

7 unchanged sentences

dollars at the monthly average rates of exchange prevailing during the period, assets and liabilities are translated at period-end exchange rates and equity accounts are translated at historical exchange rates.

Translation adjustments are accumulated in a separate component of shareholders’ equity in the consolidated balance sheets and are included in the determination of comprehensive income in the consolidated statements of comprehensive earnings and consolidated statements of changes in

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

shareholders’ equity.

Transaction gains and losses are included in the determination of net income in the consolidated statements of operations.

Revision to Prior Period Financial Statements

During the fourth quarter of the year ended December 31, 2021, the Company identified an immaterial error in its previously issued financial statements related to the recording of a deferred tax liability on unremitted foreign earnings that should have been released in 2015.

The correction of the error resulted in a decrease in Deferred income taxes and other tax liabilities of $ 76.9 and an increase to Retained earnings of $ 76.9 for all prior periods presented in the accompanying consolidated financial statements.

The misstatement had no impact on net earnings, comprehensive earnings, or cash flows from operating, investing, or financing activities in any of the periods presented herein.

Management determined that the impact of this error is not quantitatively or qualitatively material to the previously issued annual and interim financial statements using the guidance of SEC Staff Accounting Bulletin (SAB) No.

99, Materiality, and SAB No.

108, Considering the Effect of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements .

Previously reported balances, including those on the statement of changes in shareholders' equity and in the notes to the consolidated financial statements have been revised for the adjustment.

Description of Revenues

1 unchanged sentence

The Company's revenue by segment payers/customer groups for the years ended December 31, 2022, 2021 and 2020 is as follows:

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

For the Year Ended

December 31, 2022 For the Year Ended

21 unchanged sentences

Dx considers negotiated discounts and anticipated adjustments, including historical collection experience for the payer portfolio, when revenues are recorded.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

The following are descriptions of the Dx payer portfolios:

12 unchanged sentences

These adjustments are not material to Dx’s results of operations in any period presented .

Third party includes revenue related to MCOs.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

Third party includes revenue related to managed care organizations (MCOs).

The majority of Dx's third-party revenue is reimbursed on a fee-for-service basis.

9 unchanged sentences

Dx recognizes revenue monthly, based upon the established capitation rate or anticipated distribution from a capitated pool.

DD is a CRO business that provides end-to-end drug development services.

DD is a global contract research organization (CRO) business that provides end-to-end drug development services.

DD provides these services predominantly to pharmaceutical, biotechnology, and medical device companies worldwide.

A majority of DD’s revenues are earned under contracts that range in duration from a few months to several years.

These contracts generally take the form of fee-for-service or fixed-price arrangements subject to pricing adjustments based on changes in scope.

The total contract value is estimated at the beginning of the contract, and is equal to the amount expected to be billed to the customer.

Other payments and billing adjustments may also factor into the calculation of the total contract value, such as the reimbursement of out-of-pocket costs and volume-based rebates.

The majority of DD's contracts contain a single performance obligation.

A majority of DD’s revenues are earned under contracts that are long term in nature, ranging in duration from a few months to many years.

The majority of DD's contracts contain a single performance obligation, as DD provides a significant service of integrating all promises in the contract and the promises are highly interdependent and interrelated with one another.

For contracts that include multiple performance obligations, DD allocates the contract value to the goods and services based on a customer price list, if available.

If a price list is not available, DD will estimate the transaction price using either market prices or an “expected cost plus margin” approach.

The total contract value is estimated at the beginning of the contract, and is equal to the amount expected to be billed to the customer.

Other payments and billing adjustments may also factor into the calculation of total contract value, such as the reimbursement of out-of-pocket costs and volume-based rebates.

These contracts generally take the form of fixed-price or fee-for-service arrangements subject to pricing adjustments based on changes in scope.

Fixed-price contracts are typically recognized as revenue over time based on a proportional-performance basis, using either input or output methods that are specific to the service provided.

In an output method, revenue is determined by dividing the actual units of output achieved by the total units of output required under the contract and multiplying that percentage by the total contract value.

When using an input method, revenue is recognized by dividing the actual costs incurred by the total estimated cost expected to complete the contract, and multiplying that percentage by the total contract value.

Contract costs principally include direct labor and reimbursable out-of-pocket costs.

The estimate of total costs expected to complete the contract requires significant judgment and estimates are based on various assumptions of events that often span several years.

These estimates are reviewed periodically and any adjustments are recognized on a cumulative catch-up basis in the period they become known.

Fee-for-service contracts are typically priced based on transaction volume or time and materials.

1 unchanged sentence

For services billed based on time and materials, revenue is recognized using the right to invoice practical expedient.

Fixed-price contracts are typically recognized as revenue over time based on a proportional-performance basis, using either input or output methods that are specific to the service provided.

In an output method, revenue is determined by dividing the actual units of output achieved by the total units of output required under the contract and multiplying that percentage by the

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

total contract value.

When using an input method, revenue is recognized by dividing the actual units of input incurred by the total units of input budgeted in the contract, and multiplying that percentage by the total contract value.

The estimate of total units of input at completion requires significant judgment and the estimates are based on various assumptions of events that often span several years.

These estimates are reviewed periodically and any adjustments are recognized on a cumulative catch-up basis in the period they become known.

Contracts are often modified to account for changes in contract specifications and requirements.

4 unchanged sentences

Termination fees are included in revenues when services are performed and realization is assured.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

DD Contract costs

2 unchanged sentences

The amortization of commission expense is based on the weighted average contract duration for all commissionable awards in the respective business in which the commission expense is paid, which approximates the period over which goods and services are transferred to the customer.

The amortization period of sales commissions ranges from approximately 1 - 5 years, depending on the business.

For businesses that enter primarily short-term contracts, the Company applies the practical expedient which allows costs to obtain a contract to be expensed when incurred if the amortization period of the assets that would otherwise have been recognized is one year or less.

The amortization period of sales commissions ranges from approximately 1 to 5 years, depending on the business.

For businesses that enter primarily short-term contracts, DD applies the practical expedient which allows costs to obtain a contract to be expensed when incurred if the amortization period of the assets that would otherwise have been recognized is one year or less.

Amortization of assets from sales commissions is included in selling, general, and administrative expense.

2 unchanged sentences

These costs are recognized as assets and amortized over the expected term of the contract to which the implementation relates, which is the period over which services are expected to be provided to the customer.

This period typically ranges from 2 - 5 years.

This period typically ranges from 2 to 5 years.

Amortization of deferred contract fulfillment costs is included in cost of goods sold.

5 unchanged sentences

Amortization related to deferred contract fulfillment costs for the years ended December 31, 2022, 2021 and 2020 was $ 12.4 , $ 14.2 and $ 10.1 , respectively.

Impairment expense related to contract costs was immaterial to the Company’s consolidated statement of operations.

The Company applies the practical expedient to not recognize the effect of financing in its contracts with customers, when the difference in timing of payment and performance is one year or less.

Impairment expense related to contract costs was insignificant to the Company’s consolidated statements of operations.

DD applies the practical expedient to not recognize the effect of financing in its contracts with customers, when the difference in timing of payment and performance is one year or less.

Accounts Receivable, Unbilled Services and Unearned Revenue

1 unchanged sentence

Payments received in advance of services being provided are contract liabilities recognized as unearned revenue.

Revenue recognized in advance of billing are recognized as unbilled services and the majority of our unbilled services represent unbilled receivables.

Revenue recognized in advance of billing are recognized as unbilled services and the majority of DD's unbilled services represent unbilled receivables.

Once a customer is invoiced, the contract asset is reduced for the amount billed, and a corresponding accounts receivable is recognized.

All contract assets are billable to customers within one year from the respective balance sheet date.

The following table provides information about accounts receivables, unbilled services, and unearned revenue from contracts with customers:

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

The following table provides information about accounts receivable, unbilled services, and unearned revenue from contracts with customers:

December 31, 2022 December 31, 2021

9 unchanged sentences

Credit Loss Rollforward

With the adoption of the current expected credit loss standard in 2020, the Company estimates future expected losses on accounts receivable, unbilled services and notes receivable over the remaining collection period of the instrument.

DD estimates future expected losses on accounts receivable, unbilled services and notes receivable over the remaining collection period of the instrument.

The rollforward for the allowance for credit losses for the year ended December 31, 2022, is as follows:

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

Accounts Receivable Unbilled Services Note and Other Receivables Total

Allowance for credit losses as of December 31, 2020 $ 22.1 $ 11.3 $ 5.7 $ 39.1

Current expected credit losses opening balance impact on retained earnings 1.8 0.2 5.0 7.0

Credit loss expense 3.8 2.7 ( 5.0 ) 1.5

3 unchanged sentences

Write offs 6.9 ( 3.4 ) — 3.5

Ending allowance for credit losses $ 21.5 $ 13.9 $ 0.7 $ 36.1

Ending allowance for credit losses as of December 31, 2022 $ 43.5 $ 10.5 $ 0.7 $ 54.7

Performance Obligations Under Long-Term Contracts

Long-term contracts at the Company consist primarily of fully managed clinical studies within the DD segment.

The amount of existing performance obligations under such long-term contracts unsatisfied as of December 31, 2021, and 2020, was $ 5,757.5 and $ 5,128.4 , respectively.

The Company expects to recognize approximately 40.0 % of the remaining performance obligations as of December 31, 2021, as revenue over the next 12 months, and the balance thereafter.

The Company's long-term contracts generally range from 1 to 8 years.

The Company applied the practical expedient and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

The Company also did not disclose information about remaining performance obligations when the variable consideration was related to a wholly unsatisfied performance obligation within a series of obligations.

Within DD, revenue of $ 69.8 and $ 80.9 was recognized during the year ended December 31, 2021, and December 31, 2020, respectively, from performance obligations that were satisfied in previous periods.

This revenue comes primarily from adjustments related to changes in scope, and to a lesser extent changes in estimates in full service clinical studies.

Long-term contracts at DD consist primarily of fully managed clinical studies within the DD segment.

The amount of existing performance obligations under such long-term contracts unsatisfied as of December 31, 2022, was $ 5,122.1 .

DD expects to recognize approximately 30.0 % of the remaining performance obligations as of December 31, 2022, as revenue over the next 12 months, and the balance thereafter.

DD's long-term contracts generally range from 1 to 8 years.

DD applied the practical expedient and does not disclose information about remaining performance obligations that have original expected durations of one year or less.

DD also did not disclose information about remaining performance obligations when the variable consideration was related to a wholly unsatisfied performance obligation within a series of obligations.

Within DD, revenue of $ 73.0 and $ 69.8 was recognized during the year ended December 31, 2022, and December 31, 2021, respectively, from performance obligations that were partially satisfied in previous periods.

This revenue comes primarily from adjustments related to changes in scope.

BUSINESS ACQUISITIONS AND DISPOSITIONS

1 unchanged sentence

The purchase consideration for all acquisitions year to date has been allocated to the estimated fair market value of the net assets acquired, including approximately $ 542.3 in identifiable intangible assets and a residual amount of non-tax-deductible goodwill of approximately $ 598.5 .

The amortization periods for intangible assets acquired from these transactions range from 11 to 15 years for customer relationships, 5 to 10 years for patents and technology, 5 years for non-compete agreements, and 5 years for trade names.

The amortization periods for intangible assets acquired from these transactions range from 15 to 19 years for customer relationships, 15 years for patents and technology, 5 years for non-compete agreements, and 5 to 10 years for trade names.

These acquisitions were made primarily to extend the Company's geographic reach in important market areas and enhance the Company's scientific differentiation.

The excess of the

The excess of the fair value of the consideration conveyed over the fair value of the net assets acquired was recorded as goodwill.

The goodwill reflects the Company's expectations to utilize the acquired businesses’ workforce and established relationships and the benefits of being able to leverage operational efficiencies with favorable growth opportunities in these markets.

A summary of the net assets acquired in 2022 for these businesses is included below:

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

(Dollars and shares in millions, except per share data)

fair value of the consideration conveyed over the fair value of the net assets acquired was recorded as goodwill.

A summary of the net assets acquired in 2021 for these businesses is included below:

Amounts Acquired During Year Ended December 31, 2021

Preliminary Personal Genome Diagnostics Inc.

Preliminary Ascension Healthcare Other Acquisitions Measurement Period Adjustments Amounts Acquired During Year Ended December 31, 2022

Accounts receivable $ 4.1 $ — $ ( 1.3 ) $ ( 2.3 ) $ 0.5

3 unchanged sentences

Property, plant and equipment 9.9 43.5 0.1 — 53.5

Deferred income taxes 17.5 — — 15.2 32.7

Goodwill 346.8 125.0 126.7 ( 40.4 ) 558.1

Intangible assets 136.6 233.2 172.5 30.4 572.7

Other assets 12.5 — 2.3 ( 2.3 ) 12.5

Total assets acquired 534.0 426.7 300.6 ( 2.6 ) 1,258.7

2 unchanged sentences

Unearned revenue 3.3 — — ( 2.6 ) 0.7

Lease liabilities — 2.9 — — 2.9

Other liabilities 14.6 — — — 14.6

2 unchanged sentences

The purchase price allocation for several transactions are still preliminary and subject to change.

The areas of the purchase price allocation that are not yet finalized relate primarily to intangible assets, goodwill, and the impact of finalizing deferred taxes.

The areas of the purchase price allocation that are not yet finalized relate primarily to property, plant and equipment, intangible assets, goodwill, and the impact of finalizing deferred taxes.

Accordingly, adjustments may be made as additional information is obtained about the facts and circumstances that existed as of the valuation date.

7 unchanged sentences

The purchase consideration for all acquisitions year to date has been allocated to the estimated fair market value of the net assets acquired, including approximately $ 198.5 in identifiable intangible assets and a residual amount of non-tax-deductible goodwill of approximately $ 298.4 .

The amortization periods for intangible assets acquired from these businesses range from 12 to 15 years for customer relationships.

The amortization periods for intangible assets acquired from these businesses range from 15 to 19 years for customer relationships, 5 to 15 years for patents and technology, 5 years for non-compete agreements, and 10 years for trade names.

These acquisitions were made primarily to extend the Company's geographic reach in important market areas and enhance the Company's scientific differentiation.

8 unchanged sentences

Unbilled services 3.2

Inventories 1.6

Prepaid expenses and other 3.0

Property, plant and equipment 56.6

13 unchanged sentences

Net earnings attributable to Laboratory Corporation of America Holdings 2,378.3 1,554.5

On June 3, 2019, the Company's DD segment acquired Envigo's nonclinical contract research services business, expanding DD's global nonclinical drug development capabilities with additional locations and resources.

Additionally, the Company divested the CRP business, which was a part of the DD segment, to Envigo.

As part of this sale, DD entered into a multi-year, renewable supply agreement with Envigo.

The Company paid cash consideration of $ 601.0 , received a floating rate secured note of $ 110.0 , and recorded a loss on the sale of CRP of $ 12.2 .

The Company funded the transaction through the new term loan facility entered into in 2019 concurrently with the transaction.

Purchase Price Allocation for Envigo

Net Assets Acquired

Cash and cash equivalents $ 11.3

During the year ended December 31, 2020, the Company acquired various businesses and related assets for approximately $ 267.6 in cash (net of cash acquired).

The purchase consideration for all acquisitions year to date has been allocated to the estimated fair market value of the net assets acquired, including approximately $ 121.3 in identifiable intangible assets and a residual amount of non-tax-deductible goodwill of approximately $ 166.2 .

The amortization periods for intangible assets acquired from these businesses range from 12 to 15 years for customer relationships.

These acquisitions were made primarily to extend the Company's geographic reach in important market areas and enhance the Company's scientific differentiation.

The excess of the fair value of the consideration conveyed over the fair value of the net assets acquired was recorded as goodwill.

A summary of the net assets acquired in 2020 for these businesses is included below:

Amounts Acquired During Year Ended December 31, 2020

Accounts receivable $ 4.9

Unbilled services 2.4

Inventories 4.5

Prepaid expenses and other 10.8

Property, plant and equipment 1.3

Deferred income taxes 25.2

Goodwill 166.2

Customer relationships 140.8

Trade name and trademarks 0.6

Other assets 9.9

Intangible assets 121.3

Total assets acquired 296.1

4 unchanged sentences

Total liabilities acquired 28.5

Net Envigo assets acquired $ 601.0

Floating rate secured note receivable due 2022 $ 110.0

Total $ 711.0

Net assets acquired $ 267.6

Unaudited Pro Forma Information for 2020 Acquisitions

Had the aggregate of the Company's 2020 acquisitions been completed as of January 1, 2019, the Company's pro forma results would have been as follows:

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

(Dollars and shares in millions, except per share data)

The purchase consideration for Envigo has been allocated to the estimated fair market value of the net assets acquired, including approximately $ 141.4 in identifiable intangible assets and a residual amount of non-tax-deductible goodwill of approximately $ 376.6 .

The amortization period for intangible assets acquired is 11 years for customer relationships.

The Envigo transaction contributed $ 124.2 and $ 17.9 of revenues and operating income, respectively, during the year ended December 31, 2020.

The divested CRP business contributed operating income of $ 5.5 and $ 13.2 for the years ended December 31, 2019 and 2018, respectively.

During the year ended December 31, 2019, in addition to the Envigo transaction, the Company acquired various businesses and related assets for approximately $ 286.4 in cash (net of cash acquired).

The purchase consideration for all acquisitions has been allocated to the estimated fair market value of the net assets acquired, including approximately $ 184.3 in identifiable intangible assets and a residual amount of non-tax-deductible goodwill of approximately $ 115.1 .

These acquisitions were made primarily to extend the Company's geographic reach in important market areas, enhance the Company's scientific differentiation and to expand the breadth and scope of the Company's CRO services.

The excess of the fair value of the consideration conveyed over the fair value of the net assets acquired was recorded as goodwill.

Unaudited Pro Forma Information for 2019 Acquisitions

Had the aggregate of the Company's 2019 acquisitions been completed as of January 1, 2019, the Company's pro forma results would have been as follows:

Year Ended December 31, 2020

3 unchanged sentences

During 2022, the Company recorded net restructuring charges of $ 83.8 .

$ 18.6 within Dx and $ 24.5 within DD.

The charges were comprised of $ 39.3 in severance and other personnel costs, $ 45.7 in facility-related costs primarily associated with general integration activities.

The charges were offset by the reversal of previously established liability of $ 0.3 in unused severance and $ 0.9 in unused facility-related costs.

During 2021, the Company recorded net restructuring charges of $ 43.1 .

The charges were comprised of $ 16.3 in severance and other personnel costs and $ 28.0 in facility-related costs primarily associated with general integration activities.

1 unchanged sentence

During 2020, the Company recorded net restructuring charges of $ 40.6 .

$ 15.3 within Dx and $ 25.3 within DD.

The charges were comprised of $ 14.1 in severance and other personnel costs, $ 17.4 for facility, operating lease right-of-use and equipment impairments, and $ 18.9 in facility closures and general integration activities.

The charges were offset by the reversal of previously established liability of $ 0.6 and $ 9.2 in unused severance costs and facility-related costs, respectively.

During 2019, the Company recorded net restructuring charges of $ 54.6 ;

$ 26.7 within Dx and $ 27.9 within DD.

The charges were comprised of $ 32.9 in severance and other personnel costs and $ 24.9 in facility-related costs primarily associated with general integration activities.

The charges were offset by the reversal of previously established liability of $ 0.6 in unused severance and $ 9.2 in unused facility-related costs.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

The following represents the Company’s restructuring activities for the period indicated:

1 unchanged sentence

Employee Costs Lease and Other

Facility Costs Severance and Other

Employee Costs Lease and Other

Facility Costs

Facility Costs Total

Balance as of December 31, 2020 $ 2.7 $ 5.1 $ 7.8

Restructuring charges 16.3 28.0 44.3

Impairment of facility related assets — 7.5 — 9.9 17.4

Reduction of prior restructuring accruals ( 0.4 ) ( 0.8 ) ( 1.2 )

19 unchanged sentences

Total finance lease cost $ 13.2 $ 14.8

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

Supplemental cash flow information related to leases was as follows:

8 unchanged sentences

Finance leases — —

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

Supplemental balance sheet information related to leases was as follows:

31 unchanged sentences

Total variable payments for the year ended December 31, 2022, 2021 and 2020 were $ 27.9 , $ 28.4 , and $ 26.7 , respectively.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

PROPERTY, PLANT AND EQUIPMENT, NET

11 unchanged sentences

$ 2,956.2 $ 2,815.4

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

Depreciation expense and amortization of property, plant and equipment was $ 374.6 , $ 375.6 and $ 349.3 for 2022, 2021 and 2020, respectively, including software amortization of $ 84.2 , $ 82.4 , and $ 84.7 for 2022, 2021 and 2020, respectively.

4 unchanged sentences

Goodwill acquired during the year 557.9 245.1 40.6 53.3 598.5 298.4

Dispositions — — — — — —

Impairment — — ( 260.0 ) — ( 260.0 ) —

13 unchanged sentences

Canadian licenses 468.7 — 468.7 493.5 — 493.5

Content 5.1 ( 4.2 ) 0.9 — — —

In process research and development 9.1 — 9.1 9.1 — 9.1

$ 5,851.4 $ ( 1,904.5 ) $ 3,946.9 $ 5,423.6 $ ( 1,688.1 ) $ 3,735.5

During 2022, the Company recorded goodwill and other asset impairment charges of $ 271.5 which was primarily comprised of goodwill impairment and the impairment of a technology intangible asset.

During 2020, the Company recorded goodwill and other asset impairment charges of $ 462.1 , $ 450.5 within DD and $ 11.6 within Dx.

The Company concluded that the fair value was less than the carrying value for two of its reporting units and recorded goodwill impairment of $ 418.7 and $ 3.7 for DD and Dx, respectively.

This is the cumulative goodwill impairment for the Company through December 31, 2021.

Additional impairment of identifiable intangible and tangible assets of $ 31.8 and $ 7.9 was recorded for DD and Dx, respectively, in 2020, for impairment of a tradename, software, customer relationships, and technology assets.

As part of the rebranding initiative, the Company reduced the estimated useful life of its trade name assets to reflect their anticipated use through December 2021.

The cumulative goodwill impairment for the Company through December 31, 2022 is $ 733.6 .

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

In December 2020, the Company undertook a rebranding initiative and reduced the estimated useful life of its trade name assets to reflect their anticipated use through December 2021.

This change in estimated useful life resulted in accelerated amortization of $ 88.4 and $ 27.5 in 2021 and 2020.

Fully amortized intangible assets were written off during 2021.

A summary of amortizable intangible assets acquired during 2022, and their respective weighted average amortization periods are as follows:

5 unchanged sentences

Trade name 10.8 6.0

In process research and development 9.1 N/A

Amortization of intangible assets, including amortization of the Canadian license recorded in other assets, was $ 369.6 , $ 275.4 and $ 243.2 in 2021, 2020 and 2019, respectively.

The Company recorded purchase accounting adjustments and impairment

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

losses through amortization expense of $ 0.4 in 2019.

Amortization of intangible assets was $ 259.3 , $ 369.6 and $ 275.4 in 2022, 2021 and 2020, respectively.

Amortization expense of intangible assets is estimated to be $ 273.5 in fiscal 2023, $ 268.9 in fiscal 2024, $ 256.7 in fiscal 2025, $ 246.9 in fiscal 2026, $ 232.5 in fiscal 2027, and $ 2,055.6 thereafter.

8 unchanged sentences

December 31, 2022 December 31, 2021

Defined-benefit plan obligation $ 136.5 $ 220.5

Deferred compensation plan obligation $ 96.9 $ 104.4

Defined-benefit plan obligation $ 55.6 $ 136.5

Worker's compensation and auto 46.4 47.2

Cross currency swaps liability 45.7 32.8

Other 178.2 81.1

2 unchanged sentences

December 31, 2022 December 31, 2021

2019 term loan — 375.0

4.00% senior notes due 2023 300.0 —

Debt issuance costs ( 0.4 ) —

1 unchanged sentence

Total short-term borrowings and current portion of long-term debt $ 301.3 $ 1.5

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

Long-term debt at December 31, 2022, and 2021 consisted of the following:

9 unchanged sentences

4.70% senior notes due 2045 900.0 900.0

2.30% senior notes due 2024 400.0 400.0

2.95% senior notes due 2029 650.0 650.0

Debt issuance costs ( 33.8 ) ( 41.0 )

7 unchanged sentences

The revolving credit facility also provides for a subfacility of up to $ 100.0 for swing line borrowings and a subfacility of up to $ 150.0 for issuances of letters of credit.

The Company is required to pay a facility fee on the aggregate commitments under the revolving credit facility, at a per annum rate ranging from 0.10% to 0.25% , depending

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

on the Company's debt ratings.

The Company is required to pay a facility fee on the aggregate commitments under the revolving credit facility, at a per annum rate ranging from 0.10% to 0.225% , depending on the Company's debt ratings.

The revolving credit facility is permitted to be used for general corporate purposes, including working capital, capital expenditures, funding of share repurchases and certain other payments, acquisitions, and other investments.

2 unchanged sentences

The credit facility expires on April 30, 2026.

Under the Company's term loan facilities 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 certain leverage ratios.

Under the Company's 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 certain leverage ratios.

The Company was in compliance with all covenants in its term loans and the revolving credit facility at December 31, 2022, and expects that it will remain in compliance with its existing debt covenants for the next twelve months.

The Company’s availability of $ 1,000.0 at December 31, 2021, under its revolving credit facility is not encumbered by any of the Company's outstanding letters of credit.

The Company’s revolving credit facility is not encumbered by any of the Company's outstanding letters of credit.

There were $ 84.5 in outstanding letters of credit as of December 31, 2022.

4 unchanged sentences

During the second quarter of 2021, the Company entered into fixed-to-variable interest rate swap agreements for its 2.70% senior notes due 2031 with an aggregate notional amount of $500.0 and variable interest rates based on three-month LIBOR plus 1.0706% to hedge against changes in the fair value of a portion of the Company's long-term debt.

These interest rate swaps are included in other long-term assets and added to the value of the senior notes with an aggregate fair value of $ 2.9 at December 31, 2021.

On August 17, 2020 the Company redeemed the remaining $ 412.2 of its 4.625 % Senior Notes due November 15, 2020, using available cash on hand.

The Company exited the remaining fixed-to-variable interest rate swap agreement in August 2020, in connection with this redemption and recorded a gain of $ 1.6 on the extinguishment.

The gain was included in Other, net on the Consolidated Statement of Operations.

These interest rate swaps are included in other long-term liabilities and deducted from the value of the senior notes with an aggregate fair value of $ 79.7 at December 31, 2022.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

The scheduled payments of long-term debt at the end of 2022 are summarized as follows:

9 unchanged sentences

There were no preferred shares outstanding as of December 31, 2022 and 2021.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

The changes in common shares issued and held in treasury are summarized below:

3 unchanged sentences

Common stock issued under employee stock plans 0.7 0.8 0.9

Common stock issued upon conversion of zero-coupon subordinated notes — — 0.1

Retirement of treasury stock — — ( 23.6 )

Purchase of common stock ( 5.6 ) ( 5.2 ) ( 0.6 )

1 unchanged sentence

The Company’s treasury shares are recorded at aggregate cost.

During 2019, the board of directors approved the retirement of all current treasury shares and future shares received in settlement of tax liabilities related to restricted stock vesting.

Share Repurchase Program

On December 8, 2021, the board of directors adopted a new share repurchase plan authorizing up to $ 2,500.0 of the Company's shares in addition to the remaining amount outstanding under the previous plan.

On December 13, 2021, the Company entered into accelerated share repurchase agreements (collectively, the ASR Agreements) with two different banks, Goldman Sachs & Co.

LLC and Barclays Bank PLC (collectively, the Financial Institutions), to repurchase $ 1,000.0 in the aggregate of the Company’s common stock (Common Stock), as part of the Company’s Common Stock repurchase program.

The remaining repurchase authorization has no expiration date.

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

At final settlement, the Company may be entitled to receive additional shares of its common stock from the Financial Institutions or it may be required to make a payment.

If the Company are obligated to make a payment, it may elect to satisfy such obligation in cash or shares of its common stock.

The specific number of shares that the Company ultimately will repurchase under the ASR Agreements will be based generally on the average of the daily volume-weighted average price per share of the Common Stock during a repurchase period, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR Agreements.

The ASR Agreements contain provisions customary for agreements of this type, including provisions for adjustments to the transaction terms, the circumstances generally under which the ASR Agreements may be accelerated, extended or terminated early by the Financial Institutions and various acknowledgments, representations and warranties made by the parties to one another.

The initial shares received under the ASR have been removed from the outstanding share count and the final settlement is expected to be completed by the end of April 2022.

When the Company repurchases shares, the amount paid to repurchase the shares in excess of the par or stated value is allocated to additional paid-in-capital unless subject to limitation or the balance in additional paid-in-capital is exhausted.

Remaining amounts are recognized as a reduction in retained earnings.

During the fourth quarter of 2021, the board of directors (the Board) adopted a new share repurchase plan authorizing up to $ 2,500.0 of the Company's shares in addition to the remaining amount outstanding under the previous plan.

Under this plan, the Company commenced an Accelerated Share Repurchase (ASR) program.

At inception, the Company paid $ 1,000.0 and received 2.7 shares based on a calculation using 80% of the shares calculated at the price at the inception of the ASR agreements with two different banks, Goldman Sachs & Co.

LLC and Barclays Bank PLC.

The initial shares received under the ASR program were removed from the outstanding share count in 2021.

During the twelve months ended December 31, 2022, 0.9 shares were retired as part of this ASR program.

Additionally, during the twelve months ended December 31, 2022, the Company repurchased 4.7 shares of its common stock at an average price of $ 233.48 for a total cost of $ 1,100.0 .

At the end of 2022, the Company had outstanding authorization from the board of directors to purchase up to $ 531.5 of the Company's common stock.

The repurchase authorization has no expiration date.

On February 7, 2023, the Board approved an additional $ 1,000.0 for share repurchases, bringing the total available authorization to $ 1,531.5 .

The repurchase authorization has no expiration.

For the twelve months ended December 31, 2022, the Company paid $ 195.2 in common stock dividends.

On January 12, 2023 , the Company announced a cash dividend of $ 0.72 per share of common stock for the first quarter, or approximately $64.8 in the aggregate.

The dividend will be payable on March 13, 2023 , to stockholders of record of all issued and outstanding shares of common stock as of the close of business on February 23, 2023 .

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

8 unchanged sentences

Current year adjustments ( 104.6 ) 101.7 ( 2.9 )

264.1 ( 72.9 ) 191.2

Pension settlement charge — ( 3.7 ) ( 3.7 )

Amounts reclassified from accumulated other comprehensive earnings (a) — ( 6.3 ) ( 6.3 )

13 unchanged sentences

Total pre-tax income $ 1,582.6 $ 3,126.6 $ 2,219.1

The provisions (benefits) for income taxes in the accompanying consolidated statements of operations consist of the following:

The components of income tax expense attributable to continuing operations are as follows:

Years Ended December 31,

2022 2021 2020

Current tax expense:

Federal $ 189.4 $ 545.5 $ 455.3

2 unchanged sentences

$ 294.8 $ 825.1 $ 709.1

Deferred tax expense/(benefit):

Federal $ 7.8 $ ( 64.6 ) $ ( 6.7 )

2 unchanged sentences

7.2 ( 78.0 ) ( 47.0 )

$ 747.1 $ 662.1 $ 280.0

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

Total income tax expense $ 302.0 $ 747.1 $ 662.1

The effective tax rates on earnings before income taxes are reconciled to statutory U.S.

8 unchanged sentences

rate ( 0.5 ) ( 0.5 ) ( 0.4 )

Restructuring and acquisition items — — 0.7

Tax credits ( 4.4 ) ( 0.1 ) —

Impairment of assets 2.7 — 4.0

GILTI — ( 0.1 ) 1.1

Deferred tax adjustments ( 1.9 ) ( 0.1 ) 0.1

Other ( 1.6 ) ( 0.3 ) ( 0.2 )

Effective rate 19.0 % 23.9 % 29.8 %

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:

5 unchanged sentences

Acquisition and restructuring reserves 10.3 19.1

Capitalized R&D costs 54.4 —

Tax loss carryforwards 242.6 184.5

Other 116.4 92.7

Total gross deferred tax assets 749.8 640.1

valuation allowance ( 151.3 ) ( 149.2 )

14 unchanged sentences

The Company has U.S.

federal tax loss carryforwards of approximately $ 155.7 , which expire periodically through 2036, as well as post 2017 carryovers of $ 0.1 that are limited to 80 % of taxable income and have an indefinite carryover.

federal tax loss carryforwards of approximately $ 161.5 , which expire periodically through 2037, as well as post-2017 carryforwards of $ 202.7 that are limited to 80 % of taxable income and have an indefinite carryforward period.

The utilization of tax loss carryforwards is limited due to change of ownership rules;

2 unchanged sentences

The Company has U.S.

state tax loss carryforwards of $ 439.2 , which also expire periodically through 2038, and on which a valuation allowance of $ 367.2 has been provided.

In addition to federal and state tax loss carryforwards, the Company has other federal and state attribute carry forwards of $ 141.4 .

These attribute carryforwards have indefinite lives and a valuation allowance of $ 99.1 .

The Company has foreign tax loss carryforwards of $ 96.2 which have an indefinite life and on which a valuation allowance of $ 11.0 has been provided, as well as foreign tax loss carryforwards of $ 444.0 which expire periodically through 2034 that have a full valuation allowance.

In addition to the foreign net operating losses, the Company has a foreign capital loss carryforward of $ 15.5 .

The foreign capital loss carryforward has an indefinite life and has a full valuation allowance.

The valuation allowance decreased from $ 167.6 in 2020 to $ 149.2 in 2021 primarily due to utilization of state tax attributes and foreign net operating losses.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

state tax loss carryforwards of $ 485.5 , a portion of which expire annually, and on which a valuation allowance of $ 340.0 has been provided.

In addition to federal and state tax loss carryforwards, the Company has other federal and state attribute carryforwards of $ 129.6 .

A portion of these attribute carryforwards will expire through 2027 and have a valuation allowance of $ 88.1 while the remainder have indefinite carryforward periods.

The Company has foreign tax loss carryforwards of $ 115.7 , the majority of which have indefinite carryforward periods, but a valuation allowance of $ 20.3 has been provided for jurisdictions where the future tax benefits of the attributes are not more likely than not to be realized.

Additionally, the Company has foreign tax loss carryforwards of $ 444.2 which expire periodically through 2034 that have a full valuation allowance.

In addition to the foreign net operating losses, the Company has a foreign capital loss carryforward of $ 26.6 with an indefinite carryforward period and a full valuation allowance.

The valuation allowance increased from $ 149.2 in 2021 to $ 151.3 in 2022 primarily due to the establishment of valuation allowances related to acquired attributes and U.K.

losses, offset by the partial release of the valuation allowance on U.S.

capital losses.

Unrecognized income tax benefits were $ 44.0 and $ 52.4 at December 31, 2022, and 2021, respectively.

It is anticipated that the amount of the unrecognized income tax benefits will change within the next 12 months;

It is anticipated that the amount of the unrecognized income tax benefits will decrease by $ 10.6 within the next 12 months due to statute of limitation lapses and anticipated audit settlements;

however, these changes are not expected to have a significant impact on the results of operations, cash flows or the financial position of the Company.

1 unchanged sentence

Accrued interest and penalties related to uncertain tax positions totaled $ 4.7 and $ 6.5 as of December 31, 2022, and 2021, respectively.

During the years ended December 31, 2021, 2020 and 2019, the Company recognized $ 1.6 , $ 4.4 and $ 2.0 , respectively, in interest and penalties expense, which was offset by a benefit from reversing previous accruals for interest and penalties of $ 3.4 , $ 3.0 and $ 5.8 , respectively.

As of December 31, 2021 and 2020 interest expense of $ 0.0 , and $ 1.4 , respectively, was added to accrued interest from the opening balance sheet of an acquisition.

During the years ended December 31, 2022, 2021 and 2020, the Company recognized $ 1.6 , $ 1.6 and $ 4.4 , respectively, in

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

interest and penalties expense, which was offset by a benefit from reversing previous accruals for interest and penalties of $ 3.3 , $ 3.4 and $ 3.0 , respectively.

The following table shows a reconciliation of the unrecognized income tax benefits, excluding interest and penalties, from uncertain tax positions for the years ended December 31, 2022, 2021 and 2020:

7 unchanged sentences

Also included in the balance of unrecognized tax benefits as of December 31, 2022, 2021 and 2020, are $ 0.0 , $ 0.9 and $ 2.1 , respectively, of tax benefits that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes.

As of December 31, 2021, 2020 and 2019 there are $ 51.5 , $ 46.7 and $ 31.7 , respectively, of tax benefits that, if recognized would favorably affect the effective income tax rate.

As of December 31, 2022, 2021 and 2020 there are $ 44.0 , $ 51.5 and $ 46.7 , respectively, of tax benefits that, if recognized, would favorably impact the effective income tax rate.

The Company has substantially concluded all U.S.

federal income tax matters for years through 2017.

federal income tax matters for years through 2018 and is currently under IRS examination for tax years 2019 and 2020.

Substantially all material state and local and foreign income tax matters have been concluded through 2015 and 2012, respectively.

1 unchanged sentence

The Company believes adequate provisions have been recorded related to all open tax years.

As a result of the TCJA, the Company was effectively taxed on all of its previously unremitted foreign earnings.

As a result of the Tax Cuts and Jobs Act (TCJA), the Company was effectively taxed on all of its previously unremitted foreign earnings.

The TCJA also enacts a territorial tax system that allows, for the most part, tax-free repatriation of foreign earnings.

11 unchanged sentences

Also, for each grant, options vest ratably over a period of three years on the anniversaries of the grant date, and have a contractual exercise period of 10 years subject to their earlier expiration or termination.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

C hanges in options outstanding under the plans for the period indicated were as follows:

8 unchanged sentences

Exercisable at December 31, 2022 0.3 168.69 6.1 $ 23.3

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of 2022 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2022.

10 unchanged sentences

Expected volatility 28.6 % 28.6 % 20.3 %

Expected dividend yield N/A N/A N/A

Expected dividend yield 0.85 % N/A N/A

The Black Scholes model incorporates assumptions to value stock-based awards.

31 unchanged sentences

The plan permits substantially all U.S.

employees to purchase a limited number of shares of Company stock at 85 % of market value.

and Canada employees to purchase a limited number of shares of Company stock at 85 % of market value.

The Company issues shares to participating employees semi-annually in January and July of each year.

9 unchanged sentences

Expected dividend yield 0.9 % — % — %

COMMITMENTS AND CONTINGENT LIABILITIES

COMMITMENTS AND CONTINGENCIES

The Company is involved from time to time in various claims and legal actions, including arbitrations, class actions, and other litigation (including those described in more detail below), arising in the ordinary course of business.

Some of these actions involve claims that are substantial in amount.

These matters include, but are not limited to, intellectual property disputes;

commercial and contract disputes;

professional liability claims;

employee-related matters;

and inquiries, including subpoenas and other civil investigative demands, from governmental agencies, Medicare or Medicaid payers and MCOs reviewing billing practices or requesting comment on allegations of billing irregularities that are brought to their attention through billing audits or third parties.

These matters include, but are not limited to, intellectual property disputes, commercial and contract disputes, professional liability claims, employee-related matters, transaction related disputes, securities and corporate law matters, and inquiries, including subpoenas and other civil investigative demands, from governmental agencies, Medicare or Medicaid payers and MCOs reviewing billing practices or requesting comment on allegations of billing irregularities that are brought to their attention through billing audits or third parties.

The Company receives civil investigative demands or other inquiries from various governmental bodies in the ordinary course of its business.

18 unchanged sentences

When loss contingencies are not both probable and estimable, the Company does not establish separate reserves.

(ii) there is uncertainty as to the outcome of pending appeals or motions;

(iii) there are significant factual issues to be resolved;

and/or (iv) there are novel legal issues to be presented.

For these proceedings, however, the Company does not believe, based on currently available information, that the outcomes will have a material adverse effect on the Company's financial condition, though the outcomes could be material to the Company's operating results or cash flows for any particular period, depending, in part, upon the operating results for such period.

The Company is unable to estimate a range of reasonably probable loss for the proceedings described in more detail below in which damages either have not been specified or, in the Company's judgment, are unsupported and/or exaggerated and (i) the proceedings are in early stages, (ii) there is uncertainty as to the outcome of pending appeals or motions, (iii) there are significant factual issues to be resolved, and/or (iv) there are novel legal issues to be presented.

For these proceedings, however, the Company does not believe, based on currently available information, that the adverse outcomes are probable and estimable, and it does not believe they will have a material adverse effect on the Company's financial statements.

As previously reported, the Company responded to an October 2007 subpoena from the U.S.

15 unchanged sentences

Similar to the Third Amended Complaint, the Fourth Amended Complaint alleges violations of the federal False Claims Act and the False Claims Act of 14 states and the District of Columbia.

The Company will vigorously defend the lawsuit.

On February 3, 2022, the Company filed a Motion to Dismiss all claims.

On August 29, 2022, the Court entered an order granting the Motion to Dismiss and declining to exercise supplemental jurisdiction over the state law claims.

Plaintiff did not appeal the Court's order.

In addition, the Company has received various other subpoenas since 2007 related to Medicaid billing.

9 unchanged sentences

The Petition seeks actual and double damages and civil penalties, as well as recovery of costs, attorney's fees, and legal expenses.

On August 1, 2022, the District Court entered an order granting the Company's Motion for Partial Summary Judgment with respect to the claim that the Company submitted claims for reimbursement to Texas Medicaid that were higher than permitted under Texas Medicaid's alleged “best price” regulations.

Plaintiffs filed a Notice of Non-Suit and Motion for Entry of Final Judgment and, on November 11, 2022, the Court entered a Judgment.

Plaintiffs filed a Notice of Appeal with respect to the Court's order granting the Company's Motion for Partial Summary Judgment, referenced above.

The Company will vigorously defend the lawsuit.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

On August 31, 2015, the Company was served with a putative class action lawsuit, Patty Davis v.

5 unchanged sentences

The Plaintiff appealed the Circuit Court’s ruling to the Florida Second District Court of Appeal.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

October 16, 2019, the Court of Appeal reversed the Circuit Court’s dismissal, but certified a controlling issue of Florida law to the Florida Supreme Court.

On October 16, 2019, the Florida Second District Court of Appeal reversed the Circuit Court’s dismissal, but certified a controlling issue of Florida law to the Florida Supreme Court.

On February 17, 2020, the Florida Supreme Court accepted jurisdiction of the lawsuit.

The Court held oral arguments on December 9, 2020.

On May 26, 2022, the Florida Supreme Court issued an opinion approving the result of the Florida Second District Court of Appeal in favor of the Plaintiff.

The Company will vigorously defend the lawsuit.

18 unchanged sentences

On June 16, 2021, the Court denied the Company’s Motion for Summary Judgment.

The Company will vigorously defend the lawsuit.

Prior to the Company's acquisition of Sequenom, Inc.

(Sequenom) between August 15, 2016 and August 24, 2016, six putative class-action lawsuits were filed on behalf of purported Sequenom stockholders (captioned Malkoff v.

Sequenom, Inc., et al., No.

16-cv-02054- JAH-BLM , Gupta v.

Sequenom, Inc., et al ., No.

16-cv-02084-JAH-KSC, Fruchter v.

Sequenom, Inc., et al ., No.

16-cv-02101- WQH-KSC, Asiatrade Development Ltd.

Sequenom, Inc., et al.

16-cv-02113-AJB-JMA, Nunes v.

Sequenom, Inc., et al.

16-cv-02128-AJB-MDD, and Cusumano v.

Sequenom, Inc., et al.

16-cv-02134-LAB-JMA) in the U.S.

District Court for the Southern District of California challenging the acquisition transaction.

The complaints asserted claims against Sequenom and members of its board of directors (the Individual Defendants).

The Nunes action also named the Company and Savoy Acquisition Corp.

(Savoy), a wholly owned subsidiary of the Company, as defendants.

The complaints alleged that the defendants violated Sections 14(e), 14(d)(4) and 20 of the Securities Exchange Act of 1934 by failing to disclose certain allegedly material information.

In addition, the complaints in the Malkoff action, the Asiatrade action, and the Cusumano action alleged that the Individual Defendants breached their fiduciary duties to Sequenom shareholders.

The actions sought, among other things, injunctive relief enjoining the merger.

On August 30, 2016, the parties entered into a Memorandum of Understanding (MOU) in each of the above-referenced actions.

On September 6, 2016, the Court entered an order consolidating for all pre-trial purposes the six individual actions described above under the caption In re Sequenom, Inc.

Shareholder Litig.

, Lead Case No.

16-cv-02054-JAH-BLM, and designating the complaint from the Malkoff action as the operative complaint for the consolidated action.

On November 11, 2016, two competing motions were filed by two separate stockholders (James Reilly and Shikha Gupta) seeking appointment as lead plaintiff under the terms of the Private Securities Litigation Reform Act of 1995.

On June 7, 2017, the Court entered an order declaring Mr.

Reilly as the lead plaintiff and approving Mr.

Reilly's selection of lead counsel.

The parties agree that the MOU has been terminated.

The Plaintiffs filed a Consolidated Amended Class Action Complaint on July 24, 2017, and the Defendants filed a Motion to Dismiss, which remains pending.

On March 13, 2019, the Court stayed the action in its entirety pending the U.S.

Supreme Court's anticipated decision in Emulex Corp.

Varjabedian .

On April 23, 2019, however, the U.S.

Supreme Court dismissed the writ of certiorari in Emulex as improvidently granted.

The Company will vigorously defend the lawsuit.

In December 2022, the parties reached a settlement to resolve the lawsuit.

On March 10, 2017, the Company was served with a putative class action lawsuit, Victoria Bouffard, et al.

8 unchanged sentences

Laboratory Corporation of America Holdings , was filed in the U.S.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

Court for the Middle District of North Carolina.

District Court for the Middle District of North Carolina.

The complaint contained similar allegations and sought similar relief to the Bouffard complaint, and added additional counts regarding state consumer protection laws.

3 unchanged sentences

On August 26, 2021, Plaintiffs filed a Motion for Class Certification.

On February 13, 2023, the Court entered an order denying Plaintiffs' Motion for Class Certification.

On December 29, 2021, a related lawsuit, Nathaniel J.

3 unchanged sentences

The complaint alleges that the Company's patient acknowledgement of estimated financial responsibility form is misleading.

The lawsuit seeks a declaratory judgement under the consumer protection laws of Nevada and Florida that the form is materially misleading and deceptive, an injunction barring the use of the form, damages on behalf of an alleged class, and attorney's fees and expenses.

The lawsuit seeks a declaratory judgment under the consumer protection laws of Nevada and Florida that the form is materially misleading and deceptive, an injunction barring the use of the form, damages on behalf of an alleged class, and attorney's fees and expenses.

On February 28, 2022, the Company filed a Motion to Dismiss all claims.

On February 13, 2023, the Court entered an order granting the Company's Motion to Dismiss.

The Company will vigorously defend the lawsuits.

On April 1, 2019, Covance Research Products was served with a Grand Jury Subpoena issued by the Department of Justice (DOJ) in Miami, Florida requiring the production of documents related to the importation into the United States of live non-human primate shipments originating from or transiting through China, Cambodia, and/or Vietnam from April 1, 2014 through March 28, 2019.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

human primate shipments originating from or transiting through China, Cambodia, and/or Vietnam from April 1, 2014 through March 28, 2019.

The Company is cooperating with the DOJ.

13 unchanged sentences

Numerous similar lawsuits have been filed against other health care providers who used AMCA.

These lawsuits have been consolidated into a multidistrict litigation in the District of New Jersey.

These lawsuits were consolidated into a multidistrict litigation in the District of New Jersey.

On November 15, 2019, the Plaintiffs filed a Consolidated Class Action Complaint in the U.S.

1 unchanged sentence

On January 22, 2020, the Company filed Motions to Dismiss all claims.

The consolidated Complaint generally alleges that the Company did not adequately protect its patients’ data and failed to timely notify those patients of the AMCA Incident.

The Complaint asserts various causes of action, including but not limited to negligence, breach of implied contract, unjust enrichment, and the violation of state data protection statutes.

The Complaint seeks damages on behalf of a class of all affected Company customers.

The consolidated Complaint generally alleged that the Company did not adequately protect its patients’ data and failed to timely notify those patients of the AMCA Incident.

The Complaint asserted various causes of action, including but not limited to negligence, breach of implied contract, unjust enrichment, and the violation of state data protection statutes.

The Complaint sought damages on behalf of a class of all affected Company customers.

On December 16, 2021, the Court granted in part and denied in part the Company's Motion to Dismiss.

On March 31, 2022, the Plaintiffs filed an Amended Complaint alleging claims for negligence, negligence per se , breach of confidence, invasion of privacy, and various state statutory claims, including a claim under the California Confidentiality of Medical Information Act.

The Company filed a Motion to Dismiss certain claims of the Amended Complaint.

The Company will vigorously defend the remaining claims in the multi-district litigation.

10 unchanged sentences

Certain governmental entities have requested information from the Company related to the AMCA Incident.

The Company received a request for information from the Office for Civil Rights (OCR) of the Department of Health and Human

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

The Company received a request for information from the Office for Civil Rights (OCR) of the Department of Health and Human Services.

On April 28, 2020, OCR notified the Company of the closure of its inquiry.

8 unchanged sentences

On April 26, 2021, the Plaintiffs and the Company each filed Motions for Summary Judgment and the Plaintiffs filed a Motion for Class Certification.

On May 23, 2022, the Court entered an order granting Plaintiffs’ Motion for Class Certification.

On June 6, 2022, the Company

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

filed a Petition for Permission to Appeal the Order Granting Class Certification with the Ninth Circuit Court of Appeals.

On September 22, 2022, the Ninth Circuit Court of Appeals granted the Company's Petition for Permission to Appeal the Order Granting Class Certification.

The Company will vigorously defend the lawsuit.

On October 16, 2020, Ravgen Inc.

filed a patent infringement lawsuit, Ravgen Inc.

Laboratory Corporation of America Holdings , in the U.S.

District Court for the Western District of Texas, alleging infringement of two Ravgen-owned U.S.

The lawsuit seeks monetary damages, enhancement of those damages for willfulness, and recovery of attorney’s fees and costs.

On September 28, 2022, a jury rendered a verdict in favor of the Plaintiff on the remaining patent at issue, finding that the Company willfully infringed Ravgen's patent, and awarded damages of $272 million.

Plaintiff has filed post-trial motions seeking enhanced damages of up to $817 million based on the finding of willfulness, as well as attorney's fees and costs.

The Company strongly disagrees with the verdict, based on a number of legal factors, and will vigorously defend the lawsuit through the appeal process.

On June 4, 2021, the Company also instituted proceedings before the Patent Trial and Appeal Board of the U.S.

Patent and Trademark Office challenging the validity of the Ravgen patent at issue in the trial.

In November 2022, the Patent Trial and Appeal Board issued a decision upholding the validity of the Ravgen patent, and the Company has filed an appeal of this decision.

On May 14, 2020, the Company was served with a putative class action lawsuit, Jose Bermejo v.

9 unchanged sentences

The second lawsuit seeks to recover civil penalties and recovery of attorney's fees and costs.

The Company will vigorously defend both lawsuits.

On August 14, 2020, the Company was served with a Subpoena Duces Tecum issued by the State of Colorado Office of the Attorney General requiring the production of documents related to urine drug testing in all states.

The Company is cooperating with this request.

On October 2, 2020, the Company was served with a putative class action lawsuit, Peterson v.

Laboratory Corporation of America Holdings , filed in the U.S.

District Court for the Northern District of New York, alleging claims for a failure to properly pay service representatives compensation for all hours worked and overtime under the Fair Labor Standards Act, as well as notice and recordkeeping claims under the New York Labor Code.

On February 21, 2021, Plaintiff filed an amended complaint reiterating allegations of violations of the Fair Labor Standards Act and New York Labor Code, but narrowing the scope of the putative class to only those service representatives employed by the Company within the State of New York.

The lawsuit sought monetary damages, liquidated damages, equitable and injunctive relief, and recovery of attorney's fees and costs.

On December 17, 2021, the Court approved settlement of the lawsuit and entered its dismissal.

On February 24, 2022, the parties entered into a Memorandum of Understanding of the terms of a settlement of the Bermejo I and Bermejo II lawsuits, subject to court approval.

If approved, the settlement will also resolve the Becker and Poole lawsuits discussed below.

On June 14, 2021, a single plaintiff filed a Private Attorney General Act lawsuit, Becker v.

Laboratory Corporation of America , in the Superior Court of California, County of Orange, alleging various violations of the California Labor Code, including that the Plaintiff was not properly compensated for work and overtime hours, not properly paid meal and rest break premiums, not reimbursed for certain business-related expenses, and received inaccurate wage statements.

The lawsuit seeks monetary damages, civil penalties, and recovery of attorney’s fees and costs.

A settlement of the Bermejo I and Bermejo II lawsuits, if approved by the court, will resolve the Becker lawsuit.

On November 23, 2021, the Company was served with a single plaintiff Private Attorney General Act lawsuit, Poole v.

Laboratory Corporation of America , filed in the Superior Court of California, County of Kern, alleging various violations of the California Labor Code, including that Plaintiff was not properly paid wages owed, not properly paid meal and rest break premiums, not reimbursed for certain business related expenses, and other allegations including the untimely payment of wages and receipt of inaccurate wage statements.

The lawsuit seeks monetary damages, civil penalties, and recovery of attorney's fees and costs.

The case was removed to the U.S.

District Court for the Eastern District of California.

A settlement of the Bermejo I and Bermejo II lawsuits, if approved by the court, will resolve the Poole lawsuit.

On October 5, 2020, the Company was served with a putative class action lawsuit, Williams v.

LabCorp Employer Services, Inc.

et al, filed in the Superior Court of California, County of Los Angeles, alleging that certain non-exempt California-based employees were not properly compensated for work and overtime hours, not properly paid meal and rest break premiums, not reimbursed for certain business-related expenses, not properly paid for driving or wait times, and received inaccurate wage statements.

, filed in the Superior Court of California, County of Los Angeles, alleging that certain non-exempt California-based employees were not properly compensated for work and overtime hours, not properly paid meal and rest break premiums, not reimbursed for certain business-related expenses, not properly paid for driving or wait times, and received inaccurate wage statements.

The Plaintiff also asserts claims for unfair competition under Section 17200 of the Business and Professional Code.

4 unchanged sentences

§ 1332(d), jurisdictional threshold.

The Company will vigorously defend the lawsuit.

On June 14, 2021, a single plaintiff filed a Private Attorney General Act lawsuit, Becker v.

The lawsuit seeks monetary damages, civil penalties, and recovery of attorney’s fees and costs.

The Company will vigorously defend the lawsuit.

On March 1, 2021, the Company was served with a putative class action lawsuit, Foy v.

Laboratory Corporation of America Holdings d/b/a Labcorp Diagnostics , filed in the U.S.

District Court for the Middle District of North Carolina, alleging claims

The parties entered into a settlement agreement dated September 9, 2022, which is pending court approval.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

(Dollars and shares in millions, except per share data)

for failure to properly pay service representatives employed outside of California and New York for all hours worked and overtime compensation under the Fair Labor Standards Act.

The lawsuit sought monetary damages, liquidated damages, equitable and injunctive relief, and recovery of attorney’s fees and costs.

The lawsuit was dismissed without prejudice in June 2021, but the Plaintiff is a named party in the Tabacchino lawsuit.

On October 14, 2021, a putative class action lawsuit, Tabacchino v.

Laboratory Corporation of America Holdings , was filed in the Supreme Court of New York, Nassau County, alleging claims for a failure to properly pay service representatives compensation for all hours worked and overtime under the Fair Labor Standards Act and the New York Labor Code, as well as notice and recordkeeping claims under the New York Labor Code.

The lawsuit seeks monetary damages, liquidated damages, civil penalties, equitable and injunctive relief, and recovery of attorney's fees and costs.

On December 16, 2021, the Court issued an order approving the parties' settlement.

A stipulation of discontinuance with prejudice will be filed upon the conclusion of the settlement claims process.

On November 23, 2021, the Company was served with a single plaintiff Private Attorney General Act lawsuit, Poole v.

The lawsuit seeks monetary damages, civil penalties, and recovery of attorney's fees and costs.

The case was removed to the U.S.

District Court for the Eastern District of California.

The Company will vigorously defend the lawsuit.

The Company is cooperating with this request.

On February 7, 2022, the Company was served with a Subpoena Duces Tecum issued by the DOJ in Camden, New Jersey requiring the production of documents related to non-invasive prenatal screening tests.

The Company will cooperate with the DOJ.

The Company is cooperating with the DOJ.

On June 27, 2022, the Company was served with a Subpoena Duces Tecum issued by the DOJ in Boston, Massachusetts requiring the production of documents related to urine drug testing.

The Company is cooperating with the DOJ.

There are various other pending legal proceedings involving the Company including, but not limited to, additional employment-related lawsuits, professional liability lawsuits, and commercial lawsuits.

While it is not feasible to predict the outcome of such proceedings, in the opinion of the Company, the likelihood of loss is remote and any reasonably possible loss associated with the resolution of such proceedings is not expected to be material to the Company’s financial condition, results of operations, or cash flows, either individually or in the aggregate.

Under the Company's present insurance programs, coverage is obtained for catastrophic exposure as well as those risks required to be insured by law or contract.

17 unchanged sentences

and German plans are aggregated for disclosure as the Non-U.S.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

Net Periodic Benefit Costs

10 unchanged sentences

Defined-benefit plan costs $ 7.7 $ 8.6 $ 11.0 ( 5.5 ) ( 3.7 ) ( 3.3 )

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

Service costs are the only component of net periodic benefit costs recorded within Operating income.

26 unchanged sentences

Company contributions — — 15.7 14.3

Participant contributions — — — 0.1

Actual return on plan assets ( 48.2 ) 27.5 ( 157.5 ) 22.3

2 unchanged sentences

Fair value of plan assets at end of year $ 226.8 $ 299.9 $ 331.9 $ 544.6

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

Change in Funded Status and Reconciliation of Amounts Recorded in the Balance Sheet

7 unchanged sentences

Other liabilities 32.5 44.4 27.1 88.6

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

Weighted average assumptions used to determine net periodic benefit costs are as follows:

25 unchanged sentences

If the rate of growth assumed increases, the size of the pension obligations will increase, as will the amount recorded in Accumulated other comprehensive income (loss) in the Company's Consolidated Statement of Financial Position and amortized into earnings in subsequent periods.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

The Company evaluates other assumptions periodically, such as retirement age, mortality and turnover, and updates them as necessary to reflect the Company's actual experience and expectations for the future.

1 unchanged sentence

These differences are amortized into earnings over the remaining average future service of active participating employees or the expected life of inactive participants, as applicable.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

The fair values of the assets at December 31, 2022, and 2021, by asset category are as follows:

32 unchanged sentences

Plan fiduciaries of various plans set investment policies and strategies, based on consultation with professional advisors, and oversee investment allocation, which includes selecting investment managers and setting long-term strategic targets.

The primary strategic investment objectives are balancing investment risk and return and monitoring the plan’s liquidity position in order to meet the near-term benefit payment and other cash needs.

Target allocation percentages are established at an asset class level by plan fiduciaries.

Target allocation ranges are guidelines, not limitations, and occasionally plan fiduciaries will approve allocations above or below a target range.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

(Dollars and shares in millions, except per share data)

primary strategic investment objectives are balancing investment risk and return and monitoring the plan’s liquidity position in order to meet the near-term benefit payment and other cash needs.

Target allocation percentages are established at an asset class level by plan fiduciaries.

Target allocation ranges are guidelines, not limitations, and occasionally plan fiduciaries will approve allocations above or below a target range.

The weighted average asset allocation of the plan assets as of December 31, 2022, by asset category is as follows:

34 unchanged sentences

2022 2021 2020

Service cost for benefits earned $ — $ — $ —

Interest cost on benefit obligation $ 0.1 $ 0.1 $ 0.2

1 unchanged sentence

Post-retirement medical plan costs $ 0.3 $ 0.4 $ 0.6

Amounts included in accumulated other comprehensive earnings consist of unamortized net (income) loss of $( 0.2 ) and $ 0.8 .

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

(Dollars and shares in millions, except per share data)

Amounts included in accumulated other comprehensive earnings consist of unamortized net loss of $ 0.8 and $ 1.6 .

A summary of the changes in the accumulated post-retirement benefit obligation follows:

26 unchanged sentences

Cross currency swaps Other liabilities, net 45.7 — 45.7 —

Interest rate swaps Other assets, net 2.9 — 2.9 —

Interest rate swaps Other liabilities, net 79.7 — 79.7 —

Cash surrender value of life insurance policies Other assets, net 100.7 — 100.7 —

Deferred compensation liability Other liabilities 96.9 — 96.9 —

Investment in equity securities Other current assets 10.9 10.9 — —

Contingent consideration Other liabilities 21.9 — — 21.9

Contingent consideration Accrued expenses and other;

Other liabilities 77.4 — — 77.4

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

6 unchanged sentences

Noncontrolling interest put Noncontrolling interest $ 16.3 $ — $ 16.3 $ —

Cross currency swaps liability Other liabilities 40.4 — 40.4 —

Cross currency swaps Other liabilities, net 32.8 — 32.8 —

Interest rate swaps Other assets, net 2.9 — 2.9 —

Cash surrender value of life insurance policies Other assets, net 106.4 — 106.4 —

Deferred compensation liability Other liabilities 104.4 — 104.4 —

Investment in equity securities Other current assets 10.9 10.9 — —

Contingent consideration Other liabilities 21.9 — — 21.9

1 unchanged sentence

Balance at January 1, 2021 $ 13.9

Addition 10.8

Cash payments and adjustments ( 1.1 )

Balance at December 31, 2021 21.9

Addition 68.3

Cash payments and adjustments ( 12.8 )

Balance at December 31, 2022 $ 77.4

The Company has a noncontrolling interest put related to its Ontario subsidiary that has been classified as mezzanine equity in the Company’s condensed consolidated balance sheets.

The Company has a noncontrolling interest put related to its Ontario subsidiary that has been classified as mezzanine equity in the Company’s consolidated balance sheets.

The noncontrolling interest put is valued at its contractually determined value, which approximates fair value.

14 unchanged sentences

DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

The Company does not hold or issue derivative financial instruments for trading purposes.

The Company does not believe that its exposure to market risk is material to the Company’s financial position or results of operations.

Interest Rate Swap

During the second quarter of 2021, the Company entered into fixed-to-variable interest rate swap agreements for its 2.70 % senior notes due 2031 with an aggregate notional amount of $ 500.0 and variable interest rates based on three-month LIBOR

These agreements were designated as hedges against changes in the fair value of a portion of the Company's long-term debt.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

(Dollars and shares in millions, except per share data)

plus 1.0706 %.

These agreements were designated as hedges against changes in the fair value of a portion of the Company's long-term debt.

The aggregate fair value of $ 2.9 at December 31, 2021, was included as a component of other long-term assets and added to the reported value of the senior notes.

During the third quarter of 2013, the Company entered into two fixed-to-variable interest rate swap agreements for the 4.625 % Senior Notes due 2020 with an aggregate notional amount of $ 600.0 and variable interest rates based on one-month LIBOR plus 2.298 % to hedge against changes in the fair value of a portion of the Company's long-term debt.

The Company exited one of these swap arrangements in December 2019 in connection with the redemption of $ 187.9 of the 4.625 % Senior Notes due 2020.

The Company exited the remaining fixed-to-variable interest rate swap agreement in August 2020, in connection with the redemption of the remaining $ 412.2 of its 4.625 % Senior Notes due November 15, 2020, and recorded a gain of $ 1.6 on the extinguishment.

The gain was included in Other, net on the Consolidated Statement of Operations.

These derivative financial instruments are accounted for as fair value hedges which increased or decreased the value of the Senior Notes with the offset being recorded as a component of other long-term assets or liabilities, as applicable.

Cash flows from the interest rate swaps are including in operating activities.

Foreign Currency Forward Contracts

The Company periodically enters into foreign currency forward contracts, which are recognized as assets or liabilities at their fair value.

These contracts do not qualify for hedge accounting and the changes in fair value are recorded directly to earnings.

The contracts are short-term in nature and the fair value of these contracts is based on market prices for comparable contracts.

The fair value of these contracts is not significant as of December 31, 2021 and 2020.

Cross Currency Swaps

During the fourth quarter of 2018, the Company entered into six USD to Swiss Franc cross-currency swap agreements with an aggregate notional value of $ 600.0 and which are accounted for as a hedge against the impact of foreign exchange movements on its net investment in a Swiss Franc functional currency subsidiary.

Of the notional value, $ 300.0 matures in 2022 and $ 300.0 matures in 2025.

These cross currency swaps maturing in 2022 and 2025 with an aggregate fair value of $ 20.6 and $ 12.2 as of December 31, 2021, respectively, are included in other long-term liabilities.

These cross currency swaps maturing in 2022 and 2025 with an aggregate fair value of $ 26.0 and $ 14.4 as of December 31, 2020, respectively, are included in other long-term liabilities.

Changes in the fair value of the cross-currency swaps are recorded as a component of the foreign currency translation adjustment in accumulated other comprehensive income in the Consolidated Balance Sheet until the hedged item is recognized in earnings.

The cumulative amount of the fair value hedging adjustment included in the current value of the cross currency swaps is $( 32.8 ) for the year ended December 31, 2021, and was recognized as currency translation within the Consolidated Statement of Comprehensive Earnings.

There were no amounts reclassified from the Consolidated Statement of Comprehensive Earnings to the Consolidated Statement of Operations during the year ended December 31, 2021.

During the fourth quarter of 2018, the Company entered into U.S.

Dollar (USD) to Swiss Franc cross-currency swap agreements with an aggregate notional value of $ 600.0 .

During the second quarter of 2022, the Company terminated $ 300.0 of those cross-currency swap agreements and entered into new USD to Swiss Franc cross-currency swap agreements with an aggregate notional value of $ 300.0 that mature in 2024.

These instruments are designated as a hedge against the impact of foreign exchange movements on its net investment in a Swiss subsidiary.

The table below presents the fair value of derivatives on a gross basis and the balance sheet classification of those instruments:

7 unchanged sentences

Cross currency swaps Other liabilities — 45.7 600.0 — 32.8 600.0

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

The table below provides information regarding the location and amount of pretax (gains) losses of derivatives designated in fair value hedging relationships:

5 unchanged sentences

Cross currency swaps $ ( 12.9 ) $ 7.6 $ ( 43.6 ) $ 0.9 $ — $ —

The Company recognized a gain of $ 1.6 and $ 1.6 on the extinguishment of its interest rate swap agreement in the years ended December 31, 2020 and December 31, 2019, respectively, in connection with the redemption of the 4.625 % Senior Notes due 2020.

No gains or losses from derivative instruments classified as hedging instruments have been recognized into income for the year ended December 31, 2021.

The Company recognized a gain of $ 1.6 on the extinguishment of its interest rate swap agreement in the year December 31, 2020 in connection with the redemption of the 4.625 % Senior Notes due 2020.

No gains or losses from derivative instruments classified as hedging instruments were recognized into income for the year ended December 31, 2021.

In May 2022, the Company reclassified a gain of $ 0.9 to the Consolidated Statement of Operations within other, net, due to the exit of $ 300.0 of the cross-currency swap agreements.

SUPPLEMENTAL CASH FLOW INFORMATION

6 unchanged sentences

Disclosure of non-cash financing and investing activities:

Conversion of zero-coupon convertible debt — — 8.4

Assets acquired under finance leases — — 48.7

Change in accrued property, plant and equipment ( 3.9 ) 11.8 ( 1.2 )

Floating rate secured note receivable due 2022 from the sale of CRP — — 110.0

BUSINESS SEGMENT INFORMATION

1 unchanged sentence

The “management approach” has been used to present the following segment information.

This approach is based upon the way the management of the Company organizes segments within an enterprise for making operating decisions and assessing performance.

This approach is based upon the way the management of the Company organizes segments within an enterprise for making operating decisions and assessing

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

Financial information is reported on the basis that it is used internally by the chief operating decision maker (CODM) for evaluating segment performance and deciding how to allocate resources to segments.

The Company’s chief executive officer has been identified as the CODM.

During the fourth quarter of 2022, the Company modified the segment performance measure to exclude the amortization of intangibles and other assets, restructuring and other charges, goodwill and other asset impairments, and certain corporate charges for items such as transaction costs, COVID-19 costs, and other special items.

These changes align with how the CODM now evaluates segment performance and allocates resources.

Prior periods have been conformed for comparability.

Segment asset information is not presented because it is not used by the CODM at the segment level.

Operating earnings (loss) of each segment represents revenues less directly identifiable expenses to arrive at operating income for the segment.

General management and administrative corporate expenses are included in general corporate expenses below.

2022 2021 2020

4 unchanged sentences

Operating Earnings:

Dx $ 2,988.5 $ 2,634.9 $ 1,086.0

DD 547.7 37.3 411.5

General corporate expenses ( 276.7 ) ( 226.8 ) ( 167.3 )

Dx segment operating income $ 2,025.5 $ 3,205.6 $ 2,801.3

DD segment operating income 801.1 887.1 721.6

Segment operating income 2,826.6 4,092.7 3,522.9

General corporate and unallocated expenses ( 438.1 ) ( 420.5 ) ( 299.4 )

Amortization of intangibles and other assets ( 259.3 ) ( 369.6 ) ( 275.4 )

Restructuring and other charges ( 83.8 ) ( 43.1 ) ( 40.6 )

Goodwill and other asset impairments ( 271.5 ) — ( 462.1 )

Total operating income $ 1,773.9 $ 3,259.5 $ 2,445.4

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars and shares in millions, except per share data)

2022 2021 2020

Depreciation and Amortization

Dx $ 227.1 $ 238.7 $ 222.6

1 unchanged sentence

General corporate 3.7 2.6 2.0

Total depreciation and amortization $ 745.1 $ 624.7 $ 564.7

Dx DD Intercompany Eliminations and Other Total

Geographic distribution of revenues

Total depreciation $ 374.6 $ 375.6 $ 349.3

Geographic Distribution of property, plant and equipment, net:

December 31, 2022

North America $ 1,669.2 $ 730.0 $ 2,399.2

1 unchanged sentence

Other — 131.5 131.5

Total revenues $ 10,363.6 $ 5,845.5 $ ( 88.2 ) $ 16,120.9

Geographic distribution of property, plant and equipment, net

Total property, plant and equipment, net $ 1,669.2 $ 1,287.0 $ 2,956.2

December 31, 2021

North America $ 1,507.3 $ 670.2 $ 2,177.5

3 unchanged sentences

SUBSEQUENT EVENTS

On February 9, 2022, the Company entered into agreements to create a comprehensive strategic relationship with Ascension, a Catholic, non-profit health system.

Through the expansive strategic collaboration, the Company will manage Ascension’s hospital-based laboratories in 10 states and purchase select assets of the health system’s outreach laboratory business.

This long-term relationship will expand the Company’s clinical laboratory services in several states across the country while creating opportunities to enhance care across all clinical areas.

The arrangement includes acquisition of certain outreach laboratory assets with a purchase price of $ 400.0 .

On February 18, 2022, the Company closed its acquisition of Personal Genome Diagnostics Inc.

(PGDx), a cancer genomics company with a portfolio of comprehensive liquid biopsy and tissue-based products.

The addition of PGDx and its technology complements and accelerates Labcorp’s existing liquid biopsy capabilities and expands Labcorp’s oncology portfolio of next-generation sequencing (NGS)-based genomic profiling capabilities.

Under the terms of the agreement, Labcorp paid $ 450.0 in cash at closing and up to an additional $ 125.0 on achieving future performance milestones.

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 9A. Controls and Procedures