What changed in this filing

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Item 1. Financial Statements

2023-08-04 compared with 2023-05-04 · 303 added, 141 removed, 535 unchanged (45% of the section changed)

10 unchanged sentences

Prepaid expenses and other 659.9 610.4

Current assets of discontinued operations — 1,226.1

Total current assets 5,120.9 4,625.0

5 unchanged sentences

Other assets, net 425.8 378.4

Long-term assets of discontinued operations — 3,038.2

Total assets $ 17,718.7 $ 20,155.1

7 unchanged sentences

Short-term borrowings and current portion of long-term debt 301.4 301.3

Current liabilities of discontinued operations — 657.6

Total current liabilities 2,183.3 3,078.5

4 unchanged sentences

Other liabilities 418.5 401.1

Long-term liabilities of discontinued operations — 241.3

Total liabilities 8,913.9 10,039.6

2 unchanged sentences

Shareholders’ equity:

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

Common stock, 88.7 and 88.2 shares outstanding at June 30, 2023, and December 31, 2022, respectively 8.1 8.1

Additional paid-in capital 94.4 —

7 unchanged sentences

(in millions, except per share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Revenues $ 3,033.7 $ 2,923.0 $ 6,071.5 $ 6,067.5

11 unchanged sentences

Other, net ( 16.9 ) ( 29.5 ) ( 23.8 ) ( 45.2 )

Earnings before income taxes 277.8 640.1

Earnings from continuing operations before income taxes 205.0 360.1 477.3 911.7

Provision for income taxes 49.8 92.1 113.7 222.6

Earnings from continuing operations 155.2 268.0 363.6 689.1

Earnings from discontinued operations, net of tax 33.9 90.9 38.8 161.9

Net earnings 189.1 358.9 402.4 851.0

2 unchanged sentences

Basic earnings per common share:

Basic earnings per common share continuing operations $ 1.75 $ 2.90 $ 4.10 $ 7.43

Basic earnings per common share discontinued operations $ 0.38 $ 0.99 $ 0.43 $ 1.74

Basic earnings per common share $ 2.13 $ 3.89 $ 4.53 $ 9.17

Diluted earnings per common share:

Diluted earnings per common share continuing operations $ 1.74 $ 2.89 $ 4.08 $ 7.38

Diluted earnings per common share discontinued operations $ 0.38 $ 0.98 $ 0.43 $ 1.73

Diluted earnings per common share $ 2.12 $ 3.87 $ 4.51 $ 9.11

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

2 unchanged sentences

(in millions, except per share data)

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Net earnings $ 189.1 $ 358.9 $ 402.4 $ 851.0

24 unchanged sentences

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 — — ( 68.6 ) — ( 68.6 )

Issuance of common stock under employee stock plans — 0.9 — — 0.9

Net share settlement tax payments from issuance of stock to employees — ( 10.1 ) — — ( 10.1 )

Stock compensation — 39.4 — — 39.4

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

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

6 unchanged sentences

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

Net earnings attributable to Laboratory Corporation of America Holdings $ — $ — $ 188.9 $ — $ 188.9

Other comprehensive earnings (loss), net of tax — — — 52.5 52.5

Fortrea Holdings Inc.

spin off — — ( 2,018.1 ) 238.0 ( 1,780.1 )

Dividends declared — — ( 64.5 ) — ( 64.5 )

Issuance of common stock under employee stock plans — 26.8 — — 26.8

Net share settlement tax payments from issuance of stock to employees — ( 18.2 ) — — ( 18.2 )

Stock compensation — 38.1 — — 38.1

BALANCE AT JUNE 30, 2023 $ 8.1 $ 94.4 $ 8,836.2 $ ( 153.7 ) $ 8,785.0

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

2 unchanged sentences

(in millions)

Three Months Ended March 31,

Six Months Ended June 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings $ 402.4 $ 851.0

Earnings from discontinued operations, net of tax ( 38.8 ) ( 161.9 )

Adjustments to reconcile net earnings to net cash provided by operating activities:

10 unchanged sentences

Increase in prepaid expenses and other ( 30.2 ) ( 17.5 )

Decrease in accounts payable ( 56.4 ) ( 5.5 )

Increase (decrease) in unearned revenue 2.5 ( 2.9 )

Increase (decrease) in accounts payable ( 160.3 ) 112.5

Increase in unearned revenue 34.8 29.6

Decrease in accrued expenses and other ( 272.8 ) ( 272.2 )

Net cash provided by continuing operating activities 347.2 904.6

Net cash provided by discontinued operating activities 125.4 23.9

Net cash provided by operating activities 472.6 928.5

3 unchanged sentences

Proceeds from sale or distribution of investments — 0.4

Proceeds from exit from swaps — 3.0

Investments in equity affiliates ( 10.4 ) ( 4.7 )

Acquisition of businesses, net of cash acquired ( 136.9 ) ( 554.9 )

Net cash used in continuing investing activities ( 328.6 ) ( 802.5 )

Net cash used in discontinued investing activities ( 24.7 ) ( 13.1 )

Net cash used for investing activities ( 353.3 ) ( 815.6 )

5 unchanged sentences

Dividends paid ( 129.0 ) ( 66.7 )

Purchase of common stock — ( 400.0 )

Other ( 11.4 ) ( 12.4 )

Net cash used for financing activities ( 60.6 ) ( 17.7 )

Net cash used in continuing financing activities ( 124.7 ) ( 497.4 )

Net cash provided by discontinued financing activities 1,609.1 —

Net cash provided by (used in) financing activities 1,484.4 ( 497.4 )

Effect of exchange rate changes on cash and cash equivalents 6.3 ( 19.4 )

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

Net increase (decrease) in cash and cash equivalents 1,610.0 ( 403.9 )

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

Cash and cash equivalents of discontinued operations as of beginning of period $ 109.4 $ 90.5

Cash and cash equivalents at end of period $ 1,930.6 $ 978.3

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BASIS OF FINANCIAL STATEMENT PRESENTATION

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.

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

Laboratory Corporation of America® Holdings (Labcorp® or the Company) is a global leader of innovative and comprehensive laboratory service that serves physicians, hospitals, patients and biopharmaceutical clients.

The Company provides insights and advances science to improve health and improve lives through its strong diagnostics and drug development laboratory capabilities.

On June 30, 2023 (the Distribution Date), Labcorp completed the previously announced separation (the Separation) of Fortrea Holdings Inc.

(Fortrea) from the Company, see Note 2 (Discontinued Operations) to the Condensed Consolidated Financial Statements.

The remainder of the Drug Development segment has been renamed as the Biopharma Laboratory Services Segment.

All current and historical operating results of Fortrea are presented as Discontinued Operations, net of tax, in the consolidated statement of operations.

All historical assets and liabilities of Fortrea are classified as current and long-term assets of discontinued operations and current and long-term liabilities of discontinued operations in the accompanying balance sheet as of December 31, 2022.

The spin-off is expected to be treated as tax-free for the Company and its shareholders for U.S.

federal income tax purposes.

The Company reports its business in two segments, Diagnostics Laboratories (Dx) and Biopharma Laboratory Services (BLS).

For further financial information about these segments, see Note 12 (Business Segment Information) to the Condensed Consolidated Financial Statements.

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.

The spin-off is intended to be a tax-free transaction to the Company and its stockholders for United States (U.S.) federal income tax purposes and is expected to be effected through a dividend of the Clinical Development business’ shares to the Company's shareholders.

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

The Company is targeting completion of the spin-off with an accelerated timeframe of mid-2023.

The spin-off will be subject to the satisfaction of certain customary conditions, including, among others, the receipt of final approval by the Company's board of directors, the receipt of appropriate assurances regarding the tax-free nature of the separation, and the effectiveness of any required filings with the U.S.

Securities and Exchange Commission (SEC).

During the three months ended June 30, 2023, Dx and BLS contributed approximately 77 % and 23 %, respectively, of revenues to the Company.

During the six months ended June 30, 2023, Dx and BLS contributed approximately 78 % and 22 %, respectively, of revenues to the Company.

The condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries for which it exercises control.

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The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles.

The condensed consolidated financial statements and notes are presented in accordance with the rules and regulations of the SEC and do not contain certain information included in the Company’s fiscal year 2022 Annual Report on Form 10-K (Annual Report).

The condensed consolidated financial statements and notes are presented in accordance with the rules and regulations of the Securities and Exchange Commission (SEC) and do not contain certain information included in the Company’s fiscal year 2022 Annual Report on Form 10-K (Annual Report).

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

Recent Accounting Pronouncements

14, 2022, the SEC adopted significant amendments to Rule 10b5-1 under the Securities Exchange Act of 1934 and new rules and disclosure requirements associated with 10b5-1 trading plans meant to address the SEC and other industry participants’ views of potential abuses under the current insider trading regime, including “cooling-off” periods for insiders, prohibitions on overlapping plans, certain insider certifications, and other requirements.

The final rules became effective for the Company in the second quarter of 2023.

On May 3, 2023, the SEC adopted amendments to the disclosure requirements relating to repurchases of an issuer’s equity securities, including requiring issuers to provide daily repurchase activity on a quarterly basis.

These disclosures will be required in the Company's first filing that covers its first full fiscal quarter beginning on or after October 1, 2023.

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 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

On July 26, 2023, the SEC adopted amendments intended to enhance and standardize disclosures related to cybersecurity.

The amendments require timely disclosure of material cybersecurity incidents and annual disclosures related to cybersecurity risk management, strategy, and governance.

These annual disclosures will be required beginning with annual reports for fiscal years ending after December 15, 2023, or the Company's 2023 Annual Report on Form 10-K.

DISCONTINUED OPERATIONS

A discontinued operation may include a component or a group of components of the Company's operations.

A disposal of a component or a group of components is reported in discontinued operations if the disposal represents a strategic shift that has or will have a major effect on the Company's operations and financial results when the following occurs:

(1) a component (or group of components) meets the criteria to be classified as held for sale;

(2) the component or group of components is disposed of by sale;

or (3) the component or group of components is disposed of other than by sale (for example, by abandonment or in a distribution to owners in a spin-off).

For any component classified as held for sale or disposed of by sale or other than by sale, qualifying for presentation as a discontinued operation, the Company reports the results of operations of the discontinued operations (including any gain or loss recognized on the disposal or loss recognized on classification as held for sale of a discontinued operation), less applicable income taxes (benefit), as a separate component in the consolidated statement of operations for current and all prior periods presented.

The Company also reports assets and liabilities associated with discontinued operations as separate line items on the consolidated balance sheet for prior periods.

The spin-off of Fortrea from Labcorp was achieved through the Company’s pro-rata distribution of 100% of the outstanding shares of Fortrea common stock to holders of record of Labcorp common stock.

Each holder of record of Labcorp common stock received one share of Fortrea common stock for every share of Labcorp common stock held at 5:00 p.m., Burlington, North Carolina, time on June 20, 2023, the record date for the distribution.

In June 2023, Fortrea, prior to the Separation and while a subsidiary of the Company, issued $ 570.0 of 7.500 % senior secured notes due 2030 (the Fortrea Notes).

As of June 30, 2023, the initial proceeds were held in escrow for release to Fortrea upon satisfaction of certain conditions, including completion of the Separation.

The proceeds from the Fortrea Notes were used to fund cash payments of approximately $ 1,600.0 to the Company in connection with the Separation.

The Company does not guarantee the Fortrea Notes following the Separation.

Also in June 2023, Fortrea entered into three floating secured overnight financing rate (SOFR) credit facilities totaling $ 1,520.0 .

These are comprised of $ 450.0 Revolver maturing June 30, 2028;

$ 500.0 Term Loan A maturing June 30, 2028;

and $ 570.0 Term Loan B maturing June 30, 2030.

In connection with the spin-off, all outstanding (vested and unvested) share-based awards of the Company held by Fortrea employees were adjusted and converted into awards of Fortrea common stock.

In each case, the award was equitably adjusted or converted in a manner intended to preserve the aggregate intrinsic value of the original Company equity award and, other than regarding performance share awards, the terms of the equity awards, such as vesting dates, generally remain substantially the same.

These conversions and adjustments did not materially impact the number of Company share-based awards outstanding.

In addition, the Company entered into several agreements with Fortrea on or prior to the Distribution Date that, among other things, provide a framework for the Company’s relationship with Fortrea after the spin-off, including a separation and distribution agreement, a tax matters agreement, an employee matters agreement, and a transition services agreement.

These agreements contain the key provisions relating to the spin-off, including provisions relating to the principal intercompany transactions required to effect the spin-off, the conditions to the spin-off and provisions governing the relationship between Fortrea and the Company after the spin-off.

Financial Information of Discontinued Operations

Earnings from Discontinued Operations, Net of Tax in the Consolidated Statements of Operations reflect the after-tax results of Fortrea's business and Separation-related fees, and does not include any allocation of general corporate overhead expense or interest expense of the Company.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The following table summarizes the significant line items included in Earnings from Discontinued Operations, Net of Tax in the Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022:

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Revenues $ 766.5 $ 773.9 $ 1,506.6 $ 1,529.0

Cost of revenues 629.1 593.7 1,244.5 1,198.0

Gross profit 137.4 180.2 262.1 331.0

Selling, general and administrative expenses 85.4 53.6 184.1 95.7

Amortization of intangibles and other assets 16.0 16.6 31.9 33.5

Restructuring and other charges 4.1 12.9 3.0 22.0

Operating income 31.9 97.1 43.1 179.8

Other income (expense):

Interest expense ( 0.5 ) ( 0.2 ) ( 0.5 ) ( 0.3 )

Investment income 0.5 0.3 ( 1.2 ) 0.6

Other, net 8.3 19.1 4.2 24.7

Earnings before income taxes 40.2 116.3 45.6 204.8

Provision for income taxes 6.3 25.4 6.8 42.9

Net earnings attributable to Laboratory Corporation of America Holdings $ 33.9 $ 90.9 $ 38.8 $ 161.9

The following table summarizes the carrying value of the significant classes of assets and liabilities classified as discontinued operations as of December 31, 2022:

Current assets:

Cash and cash equivalents $ 109.4

Accounts receivable, net 436.5

Unbilled services 583.6

Prepaid expenses and other 96.6

Total current assets 1,226.1

Property, plant and equipment, net 162.1

Goodwill, net 1,997.3

Intangible assets, net 823.3

Deferred income taxes 1.2

Other assets, net 54.3

Total assets $ 4,264.3

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

Accounts payable $ 82.6

Accrued expenses and other 281.8

Unearned revenue 271.5

Short-term operating lease liabilities 21.7

Total current liabilities 657.6

Operating lease liabilities 26.8

Deferred income taxes and other tax liabilities 192.8

Other liabilities 21.7

Total liabilities 898.9

Total shareholders’ equity 3,365.4

Total liabilities and shareholders’ equity $ 4,264.3

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The Company's revenues by segment and by payers/customer groups for the three and six months ended June 30, 2023, and 2022, were as follows:

For the Three Months Ended June 30, 2023 For the Three Months Ended June 30, 2022

North America Europe Other Total North America Europe Other Total

7 unchanged sentences

Total revenues 87 % 9 % 4 % 100 % 87 % 9 % 4 % 100 %

For the Six Months Ended June 30, 2023 For the Six Months Ended June 30, 2022

North America Europe Other Total North America Europe Other Total

Payer/Customer

Clients 25 % — % — % 25 % 22 % — % — % 22 %

Patients 10 % — % — % 10 % 7 % — % — % 7 %

Medicare and Medicaid 8 % — % — % 8 % 7 % — % — % 7 %

Third party 35 % — % — % 35 % 41 % — % — % 41 %

Total Dx revenues by payer 78 % — % — % 78 % 77 % — % — % 77 %

Pharmaceutical, biotechnology and medical device companies 9 % 9 % 4 % 22 % 10 % 9 % 4 % 23 %

Total revenues 87 % 9 % 4 % 100 % 87 % 9 % 4 % 100 %

Revenues in the U.S.

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

DD incurs costs to fulfill contracts with customers.

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

March 31, 2023 December 31, 2022

Sales commission assets $ 38.3 $ 38.2

Deferred contract fulfillment costs 14.3 15.0

Total $ 52.6 $ 53.2

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.

were $ 2,537.0 ( 83.6 %) and $ 2,449.5 ( 83.8 %) for the three months ended June 30, 2023, and 2022, respectively, and for the six months ended June 30, 2023, and 2022, were $ 5,094.4 (83.9%) and $ 5,061.6 (83.4%), 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:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Dx accounts receivable $ 1,114.4 $ 1,046.9

DD accounts receivable 1,266.0 1,218.6

Less DD allowance for doubtful accounts ( 52.8 ) ( 43.5 )

BLS accounts receivable 821.0 769.3

Less BLS allowance for doubtful accounts ( 30.6 ) ( 30.7 )

Accounts receivable $ 1,904.8 $ 1,785.5

3 unchanged sentences

Unearned revenue $ 349.7 $ 310.6

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.

Revenues recognized during the period that were included in the unearned revenue balance at the beginning of the period were $20.2 and $21.1 for the three months ended June 30, 2023 and 2022, respectively, and $ 72.8 and $ 56.6 for the six months ended June 30, 2023, and 2022, respectively.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

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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 three months ended March 31, 2023, is as follows:

The rollforward for the allowance for credit losses for the six months ended June 30, 2023, is as follows:

Accounts Receivable Unbilled Services Note and Other Receivables Total

2 unchanged sentences

Less, write offs ( 4.4 ) 0.4 — ( 4.0 )

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 $ 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.

Balance as of June 30, 2023 $ 30.6 $ 10.9 $ 0.7 $ 42.2

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

BUSINESS ACQUISITIONS

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.

During the six months ended June 30, 2023, the Company closed two acquisitions for cash of $ 136.9 which expanded its presence in the northeastern U.S.

The preliminary purchase considerations for these acquisitions were allocated under the acquisition method of accounting to the estimated fair market value of the net assets acquired, including approximately $ 84.1 in identifiable intangible assets.

A residual amount of non-tax deductible goodwill of approximately $ 50.8 was recorded as of June 30, 2023.

The amortization period for non-compete agreements and customer list assets acquired from these businesses are 7 and 15 years, respectively.

The purchase price allocations for these acquisitions have not been finalized as of June 30, 2023.

Had the Company's total 2023 acquisitions been completed as of January 1, 2023, the Company's pro forma results would not have been materially different from those reported.

During the six months ended June 30, 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

Measurement Period Adjustments During Six Months Ended June 30, 2023

Cash and cash equivalents $ 0.2

Prepaid expenses and other 0.6

Property, plant and equipment ( 1.5 )

Goodwill ( 29.4 )

5 unchanged sentences

Net assets acquired $ —

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

During the six months ended June 30, 2022, the Company acquired several businesses and related assets for approximately $ 554.9 in cash.

The purchase considerations for these acquisitions were allocated under the acquisition method of accounting to the estimated fair market value of the net assets acquired, including approximately $ 325.3 in identifiable intangible assets and a residual amount of non-tax deductible goodwill of approximately $ 332.8 .

The amortization period for intangible assets acquired from this businesses range from 5 to 15 years for customer relationships and non-compete agreements.

These acquisitions were made primarily to complement and accelerate the Company’s existing liquid biopsy capabilities and enhance the Company's diagnostic footprint and capabilities.

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

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

Amounts Acquired During Six Months Ended June 30, 2022

Accounts receivable $ 4.1

Unbilled services 2.9

Inventories 2.6

Prepaid expenses and other 1.2

Property, plant and equipment 10.0

Goodwill 332.8

Intangible assets 325.3

Other assets 0.8

Total assets acquired $ 679.7

Accounts payable 4.1

Accrued expenses and other 24.1

Unearned revenue 3.3

Deferred income taxes 17.1

Other liabilities 76.2

Total liabilities acquired 124.8

Net assets acquired $ 554.9

Pro Forma Information

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,

Three Months Ended June 30, Six Months Ended June 30,

Revenues $ 2,961.9 $ 6,149.8

Net earnings attributable to Laboratory Corporation of America Holdings $ 490.9

Net earnings from continuing operations attributable to Laboratory Corporation of America Holdings $ 270.2 $ 690.0

EARNINGS PER SHARE

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.

Basic earnings per share is computed by dividing net earnings attributable to the Company 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 presented.

1 unchanged sentence

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

Three Months Ended March 31,

Earnings Shares Per Share Amount Earnings Shares Per Share Amount

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

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

Basic earnings per share:

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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 March 31,

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Employee stock options and awards 0.5 0.5 0.4 0.3

GOODWILL AND INTANGIBLE ASSETS

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

The changes in the carrying amount of goodwill for the six months ended June 30, 2023, are as follows:

June 30, 2023 June 30, 2023 June 30, 2023

Balance as of December 31, 2022 $ 4,533.5 $ 1,590.2 $ 6,123.7

Goodwill acquired during the period 50.8 — 50.8

Foreign currency impact and other adjustments to goodwill ( 16.3 ) 24.0 7.7

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

Balance as of June 30, 2023 $ 4,568.0 $ 1,614.2 $ 6,182.2

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.

5 unchanged sentences

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.

3 unchanged sentences

T he components of identifiable intangible assets are as follows:

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

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

7 unchanged sentences

4,738.5 ( 1,584.4 ) 3,154.1 4,593.2 ( 1,469.6 ) 3,123.6

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

Amortization of intangible assets for the three and six months ended June 30, 2023, and 2022, was $ 51.5 and $ 49.8 and $ 104.9 and $ 100.0 , respectively.

The amortization expense for the net carrying amount of intangible assets is estimated to be $ 107.6 for the remainder of fiscal 2023, $ 210.8 in fiscal 2024, $ 201.4 in fiscal 2025, $ 192.5 in fiscal 2026, $ 181.1 in fiscal 2027, and $ 1,675.4 thereafter.

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Short-term borrowings and the current portion of long-term debt at June 30, 2023, and December 31, 2022, consisted of the following:

June 30, 2023 December 31, 2022

4.00% senior notes due 2023 $ 300.0 $ 300.0

2 unchanged sentences

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

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

March 31, 2023 December 31, 2022

Long-term debt at June 30, 2023, and December 31, 2022, consisted of the following:

June 30, 2023 December 31, 2022

2.30% senior notes due 2024 $ 400.0 $ 400.0

10 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 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

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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 $ 78.4 at June 30, 2023.

Credit Facilities

5 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 March 31, 2023 and December 31, 2022.

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

There were no balances outstanding on the Company's current revolving credit facility as of June 30, 2023 and December 31, 2022.

As of June 30, 2023, the effective interest rate on the revolving credit facility was 6.17 %.

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 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.

The Company was in compliance with all covenants in the revolving credit facility at June 30, 2023, and expects that it will remain in compliance with its existing debt covenants for the next twelve months.

There were $ 84.7 in outstanding letters of credit as of June 30, 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 March 31, 2023, and December 31, 2022.

There were no preferred shares outstanding as of June 30, 2023, and December 31, 2022.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The changes in common shares issued are summarized below:

2 unchanged sentences

Shares issued under employee stock plans 0.5

Common shares at March 31, 2023 88.6

Common shares at June 30, 2023 88.7

Share Repurchase Program

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 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 .

As of June 30, 2023, the Company had outstanding authorization from the board of directors to purchase up to $ 1,531.5 of the Company's common stock.

For the six months ended June 30, 2023, the Company paid $ 129.0 in common stock dividends.

On July 13, 2023 , the Company announced a cash dividend of $ 0.72 per share of common stock for the third quarter, or approximately $ 64.8 in the aggregate.

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

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

3 unchanged sentences

Balance as of December 31, 2022 $ ( 462.3 ) $ ( 30.9 ) $ ( 493.2 )

Fortrea Holdings Inc.

spin off 231.6 6.4 238.0

Current year adjustments 99.8 12.5 112.3

2 unchanged sentences

Tax effect of adjustments — ( 0.6 ) ( 0.6 )

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)

Balance as of June 30, 2023 $ ( 130.9 ) $ ( 22.8 ) $ ( 153.7 )

COMMITMENTS AND CONTINGENCIES

10 unchanged sentences

Such claims are an inevitable part of doing business in the healthcare field today.

The Company believes that it is in compliance in all material respects with all statutes, regulations, and other requirements applicable to its commercial laboratory operations and drug development support services.

The healthcare diagnostics and drug development industries are, however, subject to extensive regulation, and the courts have not interpreted many of the applicable statutes and regulations.

These industries are, however, subject to extensive regulation, and the courts have not interpreted many of the applicable statutes and regulations.

Therefore, the applicable statutes and regulations could be interpreted or applied by a prosecutorial, regulatory, or judicial authority in a manner that would adversely affect the Company.

Potential sanctions for violation of these statutes and regulations include significant civil and criminal penalties, fines, the loss of various licenses, certificates and authorizations, additional liabilities from third-party claims, and/or exclusion from participation in government programs.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Many of the current claims and legal actions against the Company are in preliminary stages, and many of these cases seek an indeterminate amount of damages.

The Company records an aggregate legal reserve, which is determined using calculations based on historical loss rates and assessment of trends experienced in settlements and defense costs.

In accordance with FASB Accounting Standards Codification Topic 450 “Contingencies,” the Company establishes reserves for judicial, regulatory, and arbitration matters outside the aggregate legal reserve if and when those matters present loss contingencies that are both probable and estimable and would exceed the aggregate legal reserve.

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

In accordance with FASB Accounting Standards Codification Topic 450 “Contingencies,” the Company establishes reserves for judicial, regulatory, and arbitration matters outside the aggregate legal reserve if and when those matters present loss contingencies that are both probable and reasonably estimable and would exceed the aggregate legal reserve.

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

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.

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

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

10 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 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.

26 unchanged sentences

On September 10, 2018, the Company filed a Motion to Dismiss Plaintiffs' Amended Complaint and Strike Class Allegations.

On August 16, 2019, the court entered an order granting in part and denying in part the Motion to Dismiss the Amended Complaint, and denying the Motion to Strike the Class Allegations.

On August 16, 2019, the court entered

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

an order granting in part and denying in part the Motion to Dismiss the Amended Complaint, and denying the Motion to Strike the Class Allegations.

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

2 unchanged sentences

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.

On April 5, 2023, the Fourth Circuit denied Plaintiffs’ Petition.

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

Nolan, et al.

17 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 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.

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

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

6 unchanged sentences

District Court of New Jersey.

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

1 unchanged sentence

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

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

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

1 unchanged sentence

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

On May 5, 2023, the court granted in part and denied in part the Company's Motion to Dismiss.

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

6 unchanged sentences

On June 2, 2020, the Company filed a Motion to Stay the lawsuit due to its overlap with the multi-district litigation referenced above.

On July 2, 2020, the Company filed a Motion to Dismiss.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

2020, the Company filed a Motion to Dismiss.

On July 14, 2020, the court entered an order staying the lawsuit pending the resolution of the multi-district litigation.

23 unchanged sentences

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 $ 272.0 .

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.

Plaintiff 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.

On May 12, 2023, the court issued an order granting Plaintiff's motion in part and awarding enhanced damages of $ 100.0 .

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

2 unchanged sentences

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.

14 unchanged sentences

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

14 unchanged sentences

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

On June 7, 2023, the Company was served with a putative class action lawsuit, Connie Howard, Yadira Yazmin Hernandez, and Deborah Reynolds, et al.

Laboratory Corporation of America, Laboratory Corporation of America Holdings, and Meta Platforms, Inc.

, filed in the U.S.

District Court for the Northern District of California, alleging that the Company’s website includes a tracking code created by Meta, known as the Meta Pixel, that sent information related to Plaintiffs and their online activities to Meta.

Plaintiffs assert claims against the Company under California and Pennsylvania law and seek to represent classes of all persons in California, or in Pennsylvania, who allegedly entered search terms into the Company’s website and who used Facebook during a time that Plaintiffs allege the Meta Pixel was active on the Company’s website.

Plaintiffs seek an injunction, damages, attorneys’ fees, and costs.

The Company will vigorously defend the 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.

7 unchanged sentences

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)

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.

4 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 March 31, 2023, and December 31, 2022, is as follows:

The Company’s population of financial assets and liabilities subject to fair value measurements as of June 30, 2023, and December 31, 2022, is as follows:

Fair Value Measurements as of

March 31, 2023

June 30, 2023

Balance Sheet Fair Value as of Using Fair Value Hierarchy

Classification March 31, 2023 Level 1 Level 2 Level 3

Classification June 30, 2023 Level 1 Level 2 Level 3

Noncontrolling interest put Noncontrolling interest $ 15.5 $ — $ 15.5 $ —

19 unchanged sentences

Adjustments ( 8.4 )

Balance as of March 31, 2023 $ 69.0

Balance as of June 30, 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 $ 5,082.0 and $ 4,973.9 as of March 31, 2023, and December 31, 2022, respectively.

The fair market value of the senior notes, based on market pricing, was approximately $ 5,007.7 and $ 4,973.9 as of June 30, 2023, and December 31, 2022,

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 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.

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.

These cross currency swaps are included in other long-term liabilities as appropriate with an aggregate fair value of $ 68.4 and $ 45.7 as of June 30, 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

Three Months Ended March 31,

Six Months Ended June 30,

Cash paid during period for:

4 unchanged sentences

BUSINESS SEGMENT INFORMATION

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

The following table is a summary of segment information for the three and six months ended June 30, 2023, and 2022.

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

2 unchanged sentences

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

As a result of the spin-off, the Company recast the segment results to exclude the historical results of Fortrea.

Additionally, the remaining operations of the Drug Development segment has been renamed as the BLS Segment.

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.

The Corporate costs not allocated to segments include the costs of centralized functions other charges such as acquisition expenses, spin-off costs, remaining unallocated costs of the CDCS business, 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.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

(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,

Three Months Ended June 30, Six Months Ended June 30,

2023 2022 2023 2022

Dx $ 2,340.8 $ 2,255.4 $ 4,723.6 $ 4,709.5

DD 1,401.3 1,459.3

BLS 699.0 677.9 1,360.3 1,382.1

Intercompany eliminations and other ( 6.1 ) ( 10.3 ) ( 12.4 ) ( 24.1 )

2 unchanged sentences

Dx segment operating income $ 409.7 $ 515.6 $ 851.2 $ 1,198.7

DD segment operating income 123.9 168.6

BLS segment operating income 104.6 93.0 178.2 188.9

Segment operating income 514.3 608.6 1,029.4 1,387.6

5 unchanged sentences

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.

On July 6, 2023, the Company entered into an agreement to acquire select assets of Legacy Health's outreach laboratory business in the northwest U.S.

Labcorp will also manage Legacy Health's inpatient hospital laboratories through a long-term agreement to provide staffing, leadership, scientific knowledge, analytics, supply chain services and laboratory support.

On July 24, 2023, the Company also completed the acquisition of certain assets of Enzo Biochem, Inc.

in New Jersey, which serves the New York tri-state healthcare communities.

On August 3, 2023, the Company announced it had entered into an agreement with Tufts Medicine, a leading integrated academic health system in Massachusetts, to acquire the Tufts Medicine outreach laboratory business and select operating assets as a first step toward a larger strategic partnership.

The combined purchase price for these transactions was approximately $ 385.0 .

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