What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-05-04 compared with 2022-11-01 · 165 added, 290 removed, 511 unchanged (47% of the section changed)

3 unchanged sentences

(in millions)

September 30,

2023 December 31, 2022

31 unchanged sentences

Shareholders’ equity:

Common stock, 89.6 and 93.1 shares outstanding at September 30, 2022, and December 31, 2021, respectively 8.2 8.5

Common stock, 88.6 and 88.2 shares outstanding at March 31, 2023, and December 31, 2022, respectively 8.1 8.1

Additional paid-in capital 47.7 —

7 unchanged sentences

(in millions, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Revenues $ 3,777.9 $ 3,899.6

22 unchanged sentences

(in millions, except per share data)

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Net earnings $ 213.3 $ 492.1

18 unchanged sentences

BALANCE AT DECEMBER 31, 2021 $ 8.5 $ — $ 10,456.8 $ ( 191.9 ) $ 10,273.4

$ 9.0 $ 110.3 $ 9,479.2 $ ( 161.9 ) $ 9,436.6

Net earnings attributable to Laboratory Corporation of America Holdings — — 491.6 — 491.6

3 unchanged sentences

Stock compensation — 38.2 — — 38.2

Purchase of common stock — ( 68.5 ) — — ( 68.5 )

BALANCE AT MARCH 31, 2022 $ 8.5 $ 29.1 $ 10,948.4 $ ( 264.9 ) $ 10,721.1

$ 9.0 $ 67.1 $ 10,248.8 $ ( 226.5 ) $ 10,098.4

Net earnings attributable to Laboratory Corporation of America Holdings — — 467.4 — 467.4

Other comprehensive earnings (loss), net of tax — — — 45.3 45.3

Issuance of common stock under employee stock plans — 1.9 — — 1.9

Net share settlement tax payments from issuance of stock to employees — ( 14.9 ) — — ( 14.9 )

Stock compensation — 23.9 — — 23.9

Purchase of common stock ( 0.1 ) ( 78.0 ) ( 221.9 ) — ( 300.0 )

BALANCE AT JUNE 30, 2021 1

$ 8.9 $ — $ 10,494.3 $ ( 181.2 ) $ 10,322.0

Net earnings attributable to Laboratory Corporation of America Holdings — — 587.3 — 587.3

Other comprehensive earnings (loss), net of tax — — — ( 89.7 ) ( 89.7 )

Issuance of common stock under employee stock plans — 24.2 — — 24.2

Net share settlement tax payments from issuance of stock to employees — ( 1.4 ) — — ( 1.4 )

Stock compensation — 59.0 — — 59.0

Purchase of common stock ( 0.1 ) ( 81.8 ) ( 218.1 ) — ( 300.0 )

BALANCE AT SEPTEMBER 30, 2021 1

$ 8.8 $ — $ 10,863.5 $ ( 270.9 ) $ 10,601.4

BALANCE AT DECEMBER 31, 2022 $ 8.1 $ — $ 10,581.7 $ ( 493.2 ) $ 10,096.6

1 unchanged sentence

Other comprehensive earnings (loss), net of tax — — — 49.0 49.0

Issuance of common stock under employee stock plans — 18.2 — — 18.2

Net share settlement tax payments from issuance of stock to employees — ( 27.3 ) — — ( 27.3 )

Stock compensation — 38.2 — — 38.2

BALANCE AT MARCH 31, 2022 $ 8.5 $ 29.1 $ 10,948.4 $ ( 264.9 ) $ 10,721.1

Net earnings attributable to Laboratory Corporation of America Holdings — — 358.6 — 358.6

Other comprehensive earnings (loss), net of tax — — — ( 240.6 ) ( 240.6 )

Dividends declared — — ( 64.7 ) — ( 64.7 )

2 unchanged sentences

Stock compensation — 40.6 — — 40.6

Purchase of common stock ( 0.2 ) ( 59.3 ) ( 340.5 ) — ( 400.0 )

BALANCE AT JUNE 30, 2022 $ 8.3 $ — $ 10,897.9 $ ( 505.5 ) $ 10,400.7

Net earnings attributable to Laboratory Corporation of America Holdings — — 352.8 — 352.8

Other comprehensive earnings (loss), net of tax — — — ( 255.5 ) ( 255.5 )

Dividends declared — — ( 66.4 ) — ( 66.4 )

Issuance of common stock under employee stock plans — 31.5 — — 31.5

Net share settlement tax payments from issuance of stock to employees — ( 7.2 ) — — ( 7.2 )

Stock compensation — 36.3 — — 36.3

Purchase of common stock ( 0.1 ) ( 60.6 ) ( 339.3 ) — ( 400.0 )

BALANCE AT SEPTEMBER 30, 2022 $ 8.2 $ — $ 10,845.0 $ ( 761.0 ) $ 10,092.2

1 Retained earnings and total shareholders’ equity as of March 31, 2021, June 30, 2021 and September 30, 2021, have been revised for the correction previously reported in the 2021 Annual Report on Form 10-K, and retained earnings and total equity as of December 31, 2020, March 31, 2021 and June 30, 2021 have been corrected from amounts previously reported in the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2022.

BALANCE AT MARCH 31, 2023 $ 8.1 $ 47.7 $ 10,729.9 $ ( 444.2 ) $ 10,341.5

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

2 unchanged sentences

(in millions)

Nine Months Ended September 30,

Three Months Ended March 31,

CASH FLOWS FROM OPERATING ACTIVITIES:

8 unchanged sentences

Change in assets and liabilities (net of effects of acquisitions and divestitures):

Decrease in accounts receivable 51.8 135.6

Increase in unbilled services ( 127.6 ) ( 185.9 )

Decrease (increase) in accounts receivable ( 117.5 ) 20.4

Decrease (increase) in unbilled services 91.6 ( 84.5 )

Increase in supplies inventory ( 10.0 ) ( 37.4 )

Increase in prepaid expenses and other ( 59.8 ) ( 41.1 )

Increase in accounts payable 135.1 34.6

Decrease in accounts payable ( 56.4 ) ( 5.5 )

Increase (decrease) in unearned revenue 2.5 ( 2.9 )

4 unchanged sentences

Proceeds from sale of assets 0.1 1.0

Proceeds from sale of business — 12.4

Proceeds from sale or distribution of investments — 0.4

Proceeds from exit from swaps 2.9 —

Investments in equity affiliates ( 6.1 ) ( 2.2 )

2 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from senior note offerings — 1,000.0

Payments on senior notes — ( 1,000.0 )

Payments on term loan — ( 375.0 )

Proceeds from revolving credit facilities 827.9 —

Payments on revolving credit facilities ( 827.9 ) —

Net share settlement tax payments from issuance of stock to employees ( 20.5 ) ( 27.3 )

1 unchanged sentence

Dividends paid ( 64.4 ) —

Purchase of common stock ( 800.0 ) ( 668.5 )

Other ( 3.3 ) ( 8.6 )

1 unchanged sentence

Effect of exchange rate changes on cash and cash equivalents 3.0 ( 4.4 )

Net increase (decrease) in cash and cash equivalents ( 1,062.8 ) 715.7

Net decrease in cash and cash equivalents ( 36.1 ) ( 239.2 )

Cash and cash equivalents at beginning of period 430.0 1,472.7

9 unchanged sentences

For further financial information about these segments, see Note 11 (Business Segment Information) to the Condensed Consolidated Financial Statements.

During the three months ended September 30, 2022, Dx and DD contributed approximately 61 % and 39 %, respectively, of revenues to the Company.

During the nine months ended September 30, 2022, Dx and DD contributed approximately 61 % and 39 %, respectively, of revenues to the Company.

On July 28, 2022, the Company announced that its board of directors authorized the Company to pursue a spin-off of its wholly owned Clinical Development business, which includes parts of its DD segment focused on providing Phase I-IV clinical trial management, market access, and technology solutions to pharmaceutical and biotechnology organizations.

During the three months ended March 31, 2023, Dx and DD contributed approximately 63 % and 37 %, respectively, of revenues to the Company.

On July 28, 2022, the Company announced that its board of directors authorized the Company to pursue a spin-off of its wholly owned Clinical Development and Commercialization Services business, which includes parts of its DD segment focused on providing Phase I-IV clinical trial management, market access, and technology solutions to pharmaceutical and biotechnology organizations.

The planned spin-off will result in two independent, publicly traded companies.

20 unchanged sentences

Therefore, these interim statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report.

Recently Adopted Accounting Guidance

In October 2021, the Financial Accounting Standards Board (FASB) issued a new accounting standard, Accounting Standards Update 2021-08, to improve the accounting for acquired revenue contracts with customers in a business combination.

The Company early adopted this standard effective January 1, 2022.

The adoption of this standard did not have a material impact on the consolidated financial statements.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

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

The Company's revenues by segment and by payers/customer groups for the three and nine months ended September 30, 2022, and 2021, were as follows:

For the Three Months Ended September 30, 2022 For the Three Months Ended September 30, 2021

North America Europe Other Total North America Europe Other Total

Payer/Customer

Clients 18 % — % — % 18 % 17 % — % — % 17 %

Patients 6 % — % — % 6 % 6 % — % — % 6 %

Medicare and Medicaid 6 % — % — % 6 % 6 % — % — % 6 %

Third party 31 % — % — % 31 % 35 % — % — % 35 %

Total Dx revenues by payer 61 % — % — % 61 % 64 % — % — % 64 %

Pharmaceutical, biotechnology and medical device companies 19 % 12 % 8 % 39 % 22 % 10 % 4 % 36 %

Total revenues 80 % 12 % 8 % 100 % 86 % 10 % 4 % 100 %

For the Nine Months Ended September 30, 2022 For the Nine Months Ended September 30, 2021

The Company's revenues by segment and by payers/customer groups for the three months ended March 31, 2023, and 2022, were as follows:

For the Three Months Ended March 31, 2023 For the Three Months Ended March 31, 2022

North America Europe Other Total North America Europe Other Total

8 unchanged sentences

Revenues in the U.S.

were $ 2,791.8 ( 77.4 %) and $ 3,352.7 ( 82.5 %) for the three months ended September 30, 2022, and 2021, respectively, and for the nine months ended September 30, 2022, and 2021, were $ 8,649.3 ( 77.2 %) and $ 9,926.7 ( 82.3 %), respectively.

were $ 2,959.2 ( 78.3 %) and $ 3,000.5 ( 76.9 %) for the three months ended March 31, 2023, and 2022, respectively.

DD Contract costs

1 unchanged sentence

Contract fulfillment costs include software implementation costs and setup costs for certain market access solutions.

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Sales commission assets $ 38.3 $ 38.2

1 unchanged sentence

Total $ 52.6 $ 53.2

Amortization related to sales commission assets and associated payroll taxes for the three months ended September 30, 2022, and 2021, was $ 9.3 and $ 7.1 , respectively, and for the nine months ended September 30, 2022, and 2021, was $ 25.3 and $ 20.4 , respectively.

Amortization related to deferred contract fulfillment costs for the three months ended September 30, 2022, and 2021, was $ 3.1 and $ 3.5 , respectively, and was $ 9.1 and $ 10.0 , respectively, for the nine months ended September 30, 2022, and 2021.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Amortization related to sales commission assets and associated payroll taxes for the three months ended March 31, 2023, and 2022, was $ 8.4 and $ 7.2 , respectively.

Amortization related to deferred contract fulfillment costs for the three months ended March 31, 2023, and 2022, was $ 2.4 and $ 3.1 , respectively.

Accounts Receivable, Unbilled Services and Unearned Revenue

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

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Dx accounts receivable $ 1,131.6 $ 1,046.9

6 unchanged sentences

Unearned revenue $ 586.7 $ 582.1

Revenues recognized during the period that were included in the unearned revenue balance at the beginning of the period were $ 277.9 and $ 267.6 for the nine months ended September 30, 2022, and 2021, respectively.

Revenues recognized during the period that were included in the unearned revenue balance at the beginning of the period were $ 165.3 and $ 163.8 for the three months ended March 31, 2023, and 2022, respectively.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Credit Loss Rollforward

The Company 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 nine months ended September 30, 2022, is as follows:

The rollforward for the allowance for credit losses for the three months ended March 31, 2023, is as follows:

Accounts Receivable Unbilled Services Note and Other Receivables Total

2 unchanged sentences

Less, write offs ( 1.8 ) 0.3 — ( 1.5 )

Balance as of September 30, 2022 $ 20.5 $ 10.9 $ — $ 31.4

Balance as of March 31, 2023 $ 52.8 $ 10.8 $ 0.7 $ 64.3

The credit loss expense in the first quarter primarily related to the the collection risk from several biotech receivable balances.

Performance Obligations Under Long-Term Contracts

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

The amount of existing performance obligations unsatisfied under such long-term contracts were $ 6,005.7 and $ 5,412.8 as of September 30, 2022, and 2021, respectively.

The Company expects to recognize revenue over the remaining contract term of the individual projects, with contract terms generally ranging from 1 to 8 years.

Within DD, revenues of $ 6.6 and $ 10.1 were recognized during the three months ended September 30, 2022 and 2021, respectively, and revenues of $ 75.8 and $ 38.9 were recognized during the nine months ended September 30, 2022 and 2021, respectively, from performance obligations that were satisfied in previous periods.

The amount of existing performance obligations unsatisfied under such long-term contracts were $ 4,720.0 as of March 31, 2023.

DD expects to recognize approximately 30.0 % of the remaining performance obligations as of March 31, 2023, as revenue over the next 12 months.

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

Within DD, revenues of $ 10.4 and $ 31.7 were recognized during the three months ended March 31, 2023 and 2022, respectively, from performance obligations that were satisfied in previous periods.

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

BUSINESS ACQUISITIONS

During the nine months ended September 30, 2022, the Company acquired several businesses and related assets for approximately $ 1,013.6 in cash.

The purchase consideration for these acquisitions has been allocated under the acquisition method of accounting to the estimated fair market value of the net assets acquired, including approximately $ 407.4 in identifiable intangible assets and a residual amount of non-tax deductible goodwill of approximately $ 571.3 .

The amortization periods for intangible assets acquired from the businesses range from 5 to 23 years for customer relationships, non-compete agreements, technology, and trade names.

These acquisitions were made primarily to complement and accelerate the Company’s existing liquid biopsy capabilities and expand the Company’s clinical laboratory services.

The preliminary valuation of acquired assets and assumed liabilities, include the following:

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Preliminary Personal Genome Diagnostics Inc.

Preliminary Ascension Healthcare Other Acquisitions Measurement Period Adjustments Amounts Acquired During Nine Months Ended September 30, 2022

Accounts receivable $ 4.1 $ — $ — $ — $ 4.1

Unbilled services 2.9 — — — 2.9

Inventories 2.5 24.6 — — 27.1

Prepaid expenses and other 1.2 0.4 — — 1.6

Property, plant and equipment 9.9 43.5 0.1 — 53.5

Deferred income taxes — — — 17.7 17.7

During the three months ended March 31, 2023, the Company recorded several measurement period adjustments for 2022 acquisitions, relating to final valuations and deferred tax true-ups.

The adjustments include the following:

Measurement Period Adjustments During Three Months Ended March 31, 2023

Cash and cash equivalents $ 0.2

Goodwill ( 30.5 )

Intangible assets 19.9

Other assets — — 0.8 — 0.8

Total assets acquired $ ( 10.4 )

Accounts payable 3.8 — — — 3.8

Accrued expenses and other ( 8.4 )

Unearned revenue 3.3 — — — 3.3

Deferred income taxes ( 2.0 )

Lease liabilities — 2.9 — — 2.9

Other liabilities 76.2 — — ( 70.0 ) 6.2

Total liabilities acquired ( 10.4 )

Net assets acquired $ —

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 contingent purchase price valuation, 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.

Any adjustments will be recorded in the period in which they are identified.

During the nine months ended September 30, 2021, the Company acquired a business and related assets for approximately $ 326.0 in cash.

The purchase consideration for the acquisition in the nine months ended September 30, 2021, has been allocated under the acquisition method of accounting to the estimated fair market value of the net assets acquired, including approximately $ 142.5 in identifiable intangible assets and a residual amount of non-tax deductible goodwill of approximately $ 219.2 .

The amortization periods for intangible assets acquired from the business range from 5 to 15 years for customer relationships, non-compete agreements, technology and trade names.

The acquisition was made primarily to expand the Company's services for hospitals and health system laboratories.

During the three months ended March 31, 2022, the Company closed its acquisition of Personal Genome Diagnostics Inc.

(PGDx), a leader in cancer genomics with a portfolio of comprehensive liquid biopsy and tissue-based products, for approximately $ 455.1 in cash.

The preliminary purchase considerations for this acquisition were allocated under the acquisition method of accounting to the estimated fair market value of the net assets acquired, including approximately $ 270.0 in identifiable intangible assets and a residual amount of non-tax deductible goodwill of approximately $ 286.2 .

Inclusive of measurement period adjustments, approximately $ 136.6 in identifiable intangible assets and a residual amount of non-tax deductible goodwill of approximately $ 346.8 were recorded as of March 31, 2023.

The amortization period for technology intangible assets acquired from this business is 15 years.

The acquisition was made primarily to complement and accelerate the Company’s existing liquid biopsy capabilities and expand the Company’s leading oncology portfolio of next-generation sequencing (NGS)-based genomic profiling capabilities.

The transaction includes two milestone earnout payments, with one based on the successful development of the in-process testing and the other based on revenue.

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 business' workforce and established relationships and the benefits of being able to leverage operational efficiencies with favorable growth opportunities in these markets.

The Company has several other acquisitions for which the purchase price allocation have not been finalized as of March 31, 2023.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Pro Forma Information

Had the Company's total 2021 and 2022 acquisitions been completed as of January 1, 2021, the Company's pro forma results would have been as follows:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Had the Company's total 2022 acquisitions been completed as of January 1, 2022, the Company's pro forma results would have been as follows:

Three Months Ended March 31,

Revenues $ 3,943.0

2 unchanged sentences

Basic earnings per share is computed by dividing net earnings attributable to Laboratory Corporation of America Holdings by the weighted average number of common shares outstanding.

Diluted earnings per share is computed by dividing net earnings including the impact of dilutive adjustments by the weighted average number of common shares outstanding plus potentially dilutive shares, as if they had been issued at the earlier of the date of issuance or the beginning of the period

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Potentially dilutive common shares result primarily from the Company’s outstanding stock options, restricted stock awards, restricted stock units, and performance share awards.

The following represents a reconciliation of basic earnings per share to diluted earnings per share:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Earnings Shares Per Share Amount Earnings Shares Per Share Amount Earnings Shares Per Share Amount Earnings Shares Per Share Amount

Three Months Ended March 31,

Earnings Shares Per Share Amount Earnings Shares Per Share Amount

Basic earnings per share:

5 unchanged sentences

The following table summarizes the potential common shares not included in the computation of diluted earnings per share because their impact would have been antidilutive:

Three Months Ended September 30, Nine Months Ended September 30,

2022 2021 2022 2021

Three Months Ended March 31,

Employee stock options and awards 0.6 0.3

GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the nine months ended September 30, 2022, are as follows:

The changes in the carrying amount of goodwill for the three months ended March 31, 2023, are as follows:

March 31, 2023 March 31, 2023 March 31, 2023

Balance as of December 31, 2022 $ 4,533.5 $ 3,587.5 $ 8,121.0

Goodwill acquired during the period 453.5 117.8 571.3

Foreign currency impact and other adjustments to goodwill ( 19.2 ) 14.2 ( 5.0 )

Balance as of September 30, 2022 $ 4,429.5 $ 3,788.1 $ 8,217.6

Balance as of March 31, 2023 $ 4,514.3 $ 3,601.7 $ 8,116.0

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.

3 unchanged sentences

primarily a worsening economic environment and protracted economic downturn and related impacts, including delays in revenue from new customers;

increases in customer termination activity, or increases in operating costs.

increases in customer termination activity;

or increases in operating costs.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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.

2 unchanged sentences

A future impairment charge for goodwill or intangible assets could have a material effect on the Company's consolidated financial position and results of operations.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

T he components of identifiable intangible assets are as follows:

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Gross Carrying Amount Accumulated Amortization Net Gross Carrying Amount Accumulated Amortization Net

7 unchanged sentences

5,891.8 ( 1,979.5 ) 3,912.3 5,851.4 ( 1,904.5 ) 3,946.9

Amortization of intangible assets for the three and nine months ended September 30, 2022, and 2021, was $ 65.2 and $ 92.2 and $ 198.7 and $ 276.7 , respectively.

Amortization of intangible assets for the three months ended March 31, 2023, and 2022, was $ 69.3 and $ 67.1 , respectively.

The amortization expense for the net carrying amount of intangible assets is estimated to be $ 206.2 for the remainder of fiscal 2023, $ 267.5 in fiscal 2024, $ 255.3 in fiscal 2025, $ 245.5 in fiscal 2026, $ 233.9 in fiscal 2027, and $ 2,141.3 thereafter.

Short-term borrowings and the current portion of long-term debt at September 30, 2022, and December 31, 2021, consisted of the following:

September 30, 2022 December 31, 2021

Short-term borrowings and the current portion of long-term debt at March 31, 2023, and December 31, 2022, consisted of the following:

March 31, 2023 December 31, 2022

4.00% senior notes due 2023 $ 300.0 $ 300.0

Debt issuance costs ( 0.3 ) ( 0.4 )

Current portion of note payable 1.7 1.7

Total short-term borrowings and current portion of long-term debt $ 301.4 $ 301.3

Long-term debt at September 30, 2022, and December 31, 2021, consisted of the following:

September 30, 2022 December 31, 2021

4.00% senior notes due 2023 300.0 300.0

Long-term debt at March 31, 2023, and December 31, 2022, consisted of the following:

March 31, 2023 December 31, 2022

2.30% senior notes due 2024 $ 400.0 $ 400.0

9 unchanged sentences

Total long-term debt $ 5,052.3 $ 5,038.8

On May 26, 2021, the Company issued new senior notes representing $ 1,000.0 in debt securities and consisting of $ 500.0 aggregate principal amount of 1.55 % senior notes due 2026 and $ 500.0 aggregate principal amount of 2.70 % senior notes due 2031.

Interest on these notes is payable semi-annually in arrears on June 1 and December 1 of each year.

Net proceeds from the offering of these notes were $ 989.4 after deducting underwriting discounts and other expenses of the offering.

The net proceeds were used, along with cash on hand, to redeem, prior to maturity, the Company's outstanding 3.20 % senior notes due February 1, 2022 and 3.75 % senior notes due August 23, 2022.

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 liabilities and deducted from the value of the senior notes with an aggregate fair value of $ 82.5 at September 30, 2022.

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 $ 67.3 at March 31, 2023.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

8 unchanged sentences

The revolving credit facility also provides for the issuance of letters of credit without a reduction of the availability of borrowings under the facility.

There were no balances outstanding on the Company's current revolving credit facility as of September 30, 2022 and December 31, 2021.

As of September 30, 2022, the effective interest rate on the revolving credit facility was 4.14 %.

There were no balances outstanding on the Company's current revolving credit facility as of March 31, 2023 and December 31, 2022.

As of March 31, 2023, the effective interest rate on the revolving credit facility was 5.63 %.

The credit facility expires on April 30, 2026.

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

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

There were $ 79.8 in outstanding letters of credit as of September 30, 2022.

The Company was in compliance with all covenants in the revolving credit facility at March 31, 2023, and expects that it will remain in compliance with its existing debt covenants for the next twelve months.

There were $ 84.5 in outstanding letters of credit as of March 31, 2023.

PREFERRED STOCK AND COMMON SHAREHOLDERS’ EQUITY

1 unchanged sentence

The Company is authorized to issue up to 30.0 shares of preferred stock, par value $ 0.10 per share.

There were no preferred shares outstanding as of September 30, 2022, and December 31, 2021.

There were no preferred shares outstanding as of March 31, 2023, and December 31, 2022.

The changes in common shares issued are summarized below:

2 unchanged sentences

Shares issued under employee stock plans 0.4

Shares repurchased ( 4.1 )

Common shares at September 30, 2022 89.6

Common shares at March 31, 2023 88.6

Share Repurchase Program

During the fourth quarter of 2021, 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 (Goldman Sachs) and Barclays Bank PLC (Barclays).

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

In March 2022, the Company received 0.6 shares of its common stock, arising from a partial acceleration with Barclays and a final settlement from Goldman Sachs, based on the average daily volume weighted average price per share of $ 277.40 .

In April 2022, the Company received 0.2 shares of its common stock for final settlement from Barclays based on the average volume-weighted average price per share of $ 275.51 .

Additionally, during the nine months ended September 30, 2022, the Company purchased 3.3 shares of its common stock at an average price of $ 240.57 for a total cost of $ 800.0 .

As of September 30, 2022, the Company had outstanding authorization from the board of directors to purchase up to $ 831.5 of the Company's common stock.

As of March 31, 2023, the Company had outstanding authorization from the board of directors to purchase up to $ 1,531.5 of the Company's common stock.

The repurchase authorization has no expiration.

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

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

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

For the three months ended March 31, 2023, the Company paid $ 64.4 in common stock dividends.

On April 6, 2023 , the Company announced a cash dividend of $ 0.72 per share of common stock for the second quarter, or approximately $ 64.7 in the aggregate.

The dividend will be payable on June 8, 2023 , to stockholders of record of all issued and outstanding shares of common stock as of the close of business on May 18, 2023 .

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Accumulated Other Comprehensive Earnings (Loss)

6 unchanged sentences

Tax effect of adjustments — ( 0.3 ) ( 0.3 )

Balance as of September 30, 2022 $ ( 698.1 ) $ ( 62.9 ) $ ( 761.0 )

Balance as of March 31, 2023 $ ( 414.2 ) $ ( 30.0 ) $ ( 444.2 )

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

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;

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.

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.

14 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.

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.

Department of Health & Human Services Office of Inspector General's regional office in New York.

On August 17, 2011, the U.S.

District Court for the Southern District of New York unsealed a False Claims Act lawsuit, United States of America ex rel.

NPT Associates v.

Laboratory Corporation of America Holdings , which alleges that the Company offered UnitedHealthcare kickbacks in the form

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

of discounts in return for Medicare business.

The Plaintiff's Third Amended Complaint further alleges that the Company's billing practices violated the False Claims Acts of 14 states and the District of Columbia.

The lawsuit seeks actual and treble damages and civil penalties for each alleged false claim, as well as recovery of costs, attorney's fees, and legal expenses.

The Company's Motion to Dismiss was granted in October 2014 and Plaintiff was granted the right to replead.

On January 11, 2016, Plaintiff filed a motion requesting leave to file an amended complaint under seal and to vacate the briefing schedule for the Company's Motion to Dismiss, while the government reviewed the amended complaint.

The Court granted the motion and vacated the briefing dates.

Plaintiff then filed the Amended Complaint under seal.

On August 24, 2021, the U.S.

government filed a notice indicating that it did not intend to intervene in the matter.

On October 27, 2021, the Fourth Amended Complaint was unsealed.

The Fourth Amended Complaint is similar to the Third Amended Complaint in that it alleges that the Company offered UnitedHealthcare kickbacks in the form of discounts in return for Medicare and Medicaid business, and it further alleges that the Company unlawfully charged Medicare amounts substantially in excess of its alleged usual charges.

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.

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.

Should the Plaintiff seek an appeal, the Company will vigorously defend the lawsuit.

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

The Company has received various subpoenas and other civil investigative demands related to Medicaid billing.

In October 2009, the Company received a subpoena from the State of Michigan Department of Attorney General seeking documents related to its billing to Michigan Medicaid.

4 unchanged sentences

The Company cooperated with this request.

On January 26, 2021, the Company was notified that a qui tam Petition was pending under seal in the District Court, 250 th Judicial District, Travis County, Texas, and that the State of Texas had intervened.

On January 26, 2021, the Company was notified that a qui tam Petition was pending under seal in the District Court, 250th Judicial District, Travis County, Texas, and that the State of Texas has intervened.

On April 14, 2021, the Petition was unsealed.

2 unchanged sentences

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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.

11 unchanged sentences

The Company will vigorously defend the lawsuit.

In December 2014, the Company received a Civil Investigative Demand issued pursuant to the U.S.

False Claims Act from the U.S.

Attorney's Office for South Carolina, which requested information regarding alleged remuneration and services provided by the Company to physicians who also received draw and processing/handling fees from competitor laboratories Health Diagnostic Laboratory, Inc.

(HDL) and Singulex, Inc.

The Company cooperated with the request.

On April 4, 2018, the U.S.

District Court for the District of South Carolina, Beaufort Division, unsealed a False Claims Act lawsuit, United States of America ex rel.

Scarlett Lutz, et al.

Laboratory Corporation of America Holdings , which alleges that the Company's financial relationships with referring physicians violate federal and state anti-kickback statutes.

The Plaintiffs' Fourth Amended Complaint further alleges that the Company conspired with HDL and Singulex in violation of the Federal False Claims Act and the California and Illinois insurance fraud prevention acts by facilitating HDL's and Singulex's offers of illegal inducements to physicians and the referral of patients to HDL and Singulex for laboratory testing.

The lawsuit seeks actual and treble damages and civil penalties for each alleged false claim, as well as recovery of costs, attorney's fees, and legal expenses.

Neither the U.S.

government nor any state government has intervened in the lawsuit.

The Company filed a Motion to

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Dismiss seeking the dismissal of the claims asserted under the California and Illinois insurance fraud prevention statutes, the conspiracy claim, the reverse False Claims Act claim, and all claims based on the theory that the Company performed medically unnecessary testing.

On January 16, 2019, the Court entered an order granting in part and denying in part the Motion to Dismiss.

The Court dismissed the Plaintiffs' claims based on the theory that the Company performed medically unnecessary testing, the claims asserted under the California and Illinois insurance fraud prevention statutes, and the reverse False Claims Act claim.

The Court denied the Motion to Dismiss as to the conspiracy claim.

On March 12, 2021, the Company filed a Motion for Summary Judgment related to all remaining claims.

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

The lawsuit is scheduled for trial beginning January 9, 2023.

The Company will vigorously defend the lawsuit.

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

14 unchanged sentences

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

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

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

On February 27, 2023, Plaintiffs filed a Petition for Permission to Appeal the court’s order with the U.S.

Court of Appeals for the Fourth Circuit.

On April 5, 2023, the Fourth Circuit denied Plaintiffs’ Petition.On December 29, 2021, a related lawsuit, Nathaniel J.

Nolan, et al.

2 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.

On March 13, 2023, Plaintiffs filed a Notice of Appeal.

The Company will vigorously defend the lawsuits.

9 unchanged sentences

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

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

No ordered tests,

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

laboratory test results, or diagnostic information from the Company were in the AMCA affected system.

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

7 unchanged sentences

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

The consolidated Complaint generally alleged that the Company did not adequately protect its

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

patients’ data and failed to timely notify those patients of the AMCA Incident.

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.

27 unchanged sentences

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

On June 6, 2022, the Company 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.

On June 6, 2022, the Company filed a Petition for Permission to Appeal the Order Granting Class Certification with the U.S.

Court of Appeals for the Ninth Circuit.

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

The Company will vigorously defend the lawsuit.

4 unchanged sentences

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.

Plaintiff has filed post-trial motions seeking enhanced damages of up to $ 817.0 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.

The Company has 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, with a decision on validity expected in November 2022.

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.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

5 unchanged sentences

On June 16, 2020, the Company was served with a Private Attorney General Act lawsuit by the same plaintiff in Jose Bermejo v.

Laboratory Corporation of America (Bermejo II), filed in the Superior Court of California, County of Los Angeles Central District, alleging that certain Company practices violated California Labor Code penalty provisions related to unpaid and minimum wages, unpaid overtime, unpaid meal and rest break premiums, untimely payment of wages following separation of employment,

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

failure to maintain accurate pay records, and non-reimbursement of business expenses.

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

1 unchanged sentence

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

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 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 and on March 17, 2023, the court issued a preliminary approval of the parties’ settlement agreement of the Bermejo I lawsuit, but the Bermejo II lawsuit settlement is still pending Court approval.

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

7 unchanged sentences

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 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.

A settlement of the Bermejo I and Bermejo II lawsuits, if approved by the court, will resolve the portion of the Poole lawsuit relating to service representatives and senior service representatives.

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

8 unchanged sentences

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

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.

2 unchanged sentences

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 intellectual property lawsuits.

In April 2023, the Company received Civil Investigative Demands issued by the DOJ in Washington, D.C.

requiring the production of information related to the Medicare billing rule regarding reimbursement for laboratory testing performed for hospital patients.

The Company is cooperating with the DOJ.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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.

3 unchanged sentences

Provisions for losses expected under these programs are recorded based upon the Company's estimates of the aggregated liability of claims incurred.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

FAIR VALUE MEASUREMENTS

The Company’s population of financial assets and liabilities subject to fair value measurements as of September 30, 2022, and December 31, 2021, is as follows:

The Company’s population of financial assets and liabilities subject to fair value measurements as of March 31, 2023, and December 31, 2022, is as follows:

Fair Value Measurements as of

September 30, 2022

March 31, 2023

Balance Sheet Fair Value as of Using Fair Value Hierarchy

Classification September 30, 2022 Level 1 Level 2 Level 3

Classification March 31, 2023 Level 1 Level 2 Level 3

Noncontrolling interest put Noncontrolling interest $ 15.1 $ — $ 15.1 $ —

3 unchanged sentences

Deferred compensation liability Other liabilities 102.7 — 102.7 —

Contingent consideration Other liabilities 62.0 — — 62.0

Contingent consideration Accrued expenses and other;

Other liabilities 69.0 — — 69.0

Fair Value Measurements as of

4 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

Fair Value Measurement of Level 3 Liabilities Contingent Consideration

Balance at December 31, 2022 $ 77.4

Payments ( 10.4 )

Adjustments ( 8.4 )

Additions 52.9

Balance as of September 30, 2022 $ 62.0

Balance as of March 31, 2023 $ 69.0

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.

6 unchanged sentences

The cash surrender value and the DCP obligations are classified within Level 2 because their inputs are derived principally from observable market data by correlation to the hypothetical investments.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Contingent accrued earn-out business acquisition consideration liabilities are measured at fair value using Level 3 valuations.

3 unchanged sentences

The carrying amounts of cash and cash equivalents, accounts receivable, income taxes receivable, and accounts payable are considered to be representative of their respective fair values due to their short-term nature.

The fair market value of the senior notes, based on market pricing, was approximately $ 4,921.2 and $ 5,841.1 as of September 30, 2022, and December 31, 2021,

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

respectively.

The fair market value of the senior notes, based on market pricing, was approximately $ 5,082.0 and $ 4,973.9 as of March 31, 2023, and December 31, 2022, respectively.

The Company's note and debt instruments are classified as Level 2 instruments, as the fair market values of these instruments are determined using other observable inputs.

3 unchanged sentences

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.

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.

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

These cross currency swaps are included in other long-term liabilities as appropriate with an aggregate fair value of $ 8.1 and $ 32.8 as of September 30, 2022 and December 31, 2021, respectively.

These cross currency swaps are included in other long-term liabilities as appropriate with an aggregate fair value of $ 48.5 and $ 45.7 as of March 31, 2023 and December 31, 2022, respectively.

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.

1 unchanged sentence

SUPPLEMENTAL CASH FLOW INFORMATION

Nine Months Ended September 30,

Three Months Ended March 31,

Cash paid during period for:

4 unchanged sentences

BUSINESS SEGMENT INFORMATION

The following table is a summary of segment information for the three and nine months ended September 30, 2022, and 2021.

The following table is a summary of segment information for the three months ended March 31, 2023, and 2022.

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.

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

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.

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

Operating earnings of each segment represent 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.

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The Corporate costs not allocated to segments include the costs of centralized functions other charges such as acquisition expenses, spin off costs and COVID-19 related costs not deemed to relate to segment.

Centralized functions include corporate governance, executive management and related human resources, finance, legal, risk management, and information technology functions.

Three Months Ended March 31,

Dx $ 2,382.8 $ 2,454.1

1 unchanged sentence

Intercompany eliminations and other ( 6.2 ) ( 13.8 )

Revenues $ 3,606.1 $ 4,062.6 $ 11,202.6 $ 12,064.8

Total revenues $ 3,777.9 $ 3,899.6

Operating Earnings:

Dx $ 378.7 $ 722.7 1,457.5 2,275.4

DD 156.7 141.6 431.8 445.3

General corporate expenses ( 66.0 ) ( 97.4 ) ( 206.1 ) ( 191.8 )

Dx segment operating income $ 441.5 $ 683.1

DD segment operating income 123.9 168.6

Segment operating income 565.4 851.7

General corporate and unallocated expenses ( 144.3 ) ( 82.9 )

Amortization of intangibles and other assets ( 69.3 ) ( 67.1 )

Restructuring and other charges ( 8.6 ) ( 12.6 )

Goodwill and other asset impairments ( 2.2 ) ( 1.2 )

Total operating income $ 341.0 $ 687.9

SUBSEQUENT EVENTS

On May 3, 2023, the Company entered into agreements to create a comprehensive strategic relationship with Jefferson Health (Jefferson), the largest health system serving the greater Philadelphia area and Southern New Jersey.

When complete, the arrangements between Jefferson and the Company will serve to build academic collaborations around teaching and the development of innovative tests.

The new strategic collaboration will deliver efficiency and comprehensive laboratory aspects of healthcare for the communities served by Jefferson through the Company's leading clinical laboratory services, robust data and digital tools and extensive network of patient service centers.

The transaction is expected to close by mid-year 2023, subject to customary closing conditions and applicable regulatory approvals.

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

What changed 10-Q

Item 1. Financial Statements