What changed in this filing

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Item 1. Financial Statements

2023-10-30 compared with 2023-08-04 · 172 added, 151 removed, 687 unchanged (32% of the section changed)

3 unchanged sentences

(in millions)

2023 December 31, 2022

September 30, 2023 December 31, 2022

Current assets:

34 unchanged sentences

Shareholders’ equity:

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

Common stock, 84.9 and 88.2 shares outstanding at September 30, 2023, and December 31, 2022, respectively

Additional paid-in capital 4.7 —

7 unchanged sentences

(in millions, except per share data)

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

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

2023 2022 2023 2022

9 unchanged sentences

Interest expense ( 50.3 ) ( 46.3 ) ( 150.8 ) ( 130.7 )

Equity method income, net 0.9 1.4 ( 1.2 ) 4.8

Investment income 15.9 3.7 22.6 6.2

Equity method income (expense), net ( 0.3 ) 1.7 ( 1.5 ) 6.5

Other, net 21.1 ( 17.6 ) ( 2.7 ) ( 62.8 )

18 unchanged sentences

(in millions, except per share data)

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

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

2023 2022 2023 2022

33 unchanged sentences

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

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

15 unchanged sentences

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

Net earnings attributable to Laboratory Corporation of America Holdings — — 183.3 — 183.3

Other comprehensive earnings (loss), net of tax — — — ( 55.1 ) ( 55.1 )

Dividends declared — — ( 64.6 ) — ( 64.6 )

Net share settlement tax payments from issuance of stock to employees — ( 0.9 ) — — ( 0.9 )

Stock compensation — 34.4 — — 34.4

Purchase of common stock ( 0.4 ) ( 123.2 ) ( 885.4 ) — ( 1,009.0 )

BALANCE AT SEPTEMBER 30, 2023 $ 7.7 $ 4.7 $ 8,069.5 $ ( 208.8 ) $ 7,873.1

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

2 unchanged sentences

(in millions)

Six Months Ended June 30,

Nine Months Ended September 30,

CASH FLOWS FROM OPERATING ACTIVITIES:

7 unchanged sentences

Deferred income taxes ( 18.2 ) ( 44.8 )

Other 3.1 14.5

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

1 unchanged sentence

Decrease (increase) in unbilled services 103.4 ( 64.6 )

Increase in supplies inventory ( 16.1 ) ( 35.7 )

Decrease (increase) in supplies inventory 9.7 ( 47.5 )

Increase in prepaid expenses and other ( 74.9 ) ( 52.7 )

29 unchanged sentences

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 of discontinued operations as of end of period $ — $ 105.0

Cash and cash equivalents at end of period $ 727.9 $ 304.9

15 unchanged sentences

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

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.

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

During the nine months ended September 30, 2023, Dx and BLS contributed approximately 77 % and 23 %, 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.

14 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.

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

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

4 unchanged sentences

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.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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.

2 unchanged sentences

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.

1 unchanged sentence

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

a $ 500.0 Term Loan A maturing June 30, 2028;

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

In connection with the spin-off, 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.

The costs to provide these services are included in operating income but the service fees are included in other income.

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,

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 do not include any allocation of general corporate overhead expense or interest expense of the Company.

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

2023 2022 2023 2022

8 unchanged sentences

Interest expense — — ( 0.5 ) ( 0.3 )

Investment income 0.5 0.3 ( 1.2 ) 0.6

Investment income (expense) — 0.4 ( 1.2 ) 1.0

Other, net — 10.3 4.2 35.0

2 unchanged sentences

Net earnings attributable to Laboratory Corporation of America Holdings $ — $ 75.9 $ 38.8 $ 237.8

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

11 unchanged sentences

Total assets $ 4,264.3

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities:

8 unchanged sentences

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

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

For the Three Months Ended September 30, 2023 For the Three Months Ended September 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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

For the Nine Months Ended September 30, 2023 For the Nine Months Ended September 30, 2022

North America Europe Other Total North America Europe Other Total

8 unchanged sentences

Revenues in the U.S.

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.

were $ 2,550.6 ( 83.4 %) and $ 2,392.4 ( 83.5 %) for the three months ended September 30, 2023, and 2022, respectively, and for the nine months ended September 30, 2023, and 2022, were $ 7,645.0 ( 83.8 %) and $ 7,454.0 ( 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:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

Dx accounts receivable $ 1,160.0 $ 1,046.9

6 unchanged sentences

Unearned revenue $ 360.8 $ 310.6

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

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Revenues recognized during the period that were included in the unearned revenue balance at the beginning of the period were $ 6.3 and $ 9.3 for the three months ended September 30, 2023 and 2022, respectively, and $ 79.1 and $ 65.9 for the nine months ended September 30, 2023, and 2022, respectively.

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 six months ended June 30, 2023, is as follows:

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

Accounts Receivable Unbilled Services Note and Other Receivables Total

2 unchanged sentences

Less, write offs ( 4.1 ) ( 1.6 ) — ( 5.7 )

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.

Balance as of September 30, 2023 $ 32.8 $ 8.9 $ 0.7 $ 42.4

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

BUSINESS ACQUISITIONS

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.

During the nine months ended September 30, 2023, the Company acquired several businesses and related assets for cash of approximately $ 516.7 .

These acquisitions consisted of the clinical and outreach businesses of Jefferson Health ($ 108.0 ), Enzo BioChem ($ 112.8 ), Providence Health & Services - Oregon ($ 110.0 ), Tufts Medicine ($ 157.0 ), and other smaller acquisitions

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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 $ 284.6 in identifiable intangible assets.

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

A residual amount of non-tax deductible goodwill of approximately $ 230.5 was recorded as of September 30, 2023.

The amortization period for non-compete agreements and customer list assets acquired from these businesses are 5 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 Six Months Ended June 30, 2023

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

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

Business Acquisitions Measurement Period Adjustments Amounts Acquired During the Nine Months Ended September 30, 2023

Cash and cash equivalents $ — $ 0.2 $ 0.2

Accounts receivable ( 3.0 ) — ( 3.0 )

Inventories 1.3 — 1.3

Prepaid expenses and other 0.4 0.6 1.0

2 unchanged sentences

Intangible assets 284.6 19.5 304.1

Other assets 2.1 — 2.1

Total assets acquired $ 520.6 $ ( 10.6 ) $ 510.0

3 unchanged sentences

Net assets acquired $ 516.7 $ — $ 516.7

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

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 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 $ 407.4 in identifiable intangible assets and a residual amount of non-tax deductible goodwill of approximately $ 571.3 .

2 unchanged sentences

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)

Amounts Acquired During Six Months Ended June 30, 2022

Preliminary Personal Genome Diagnostics Inc.

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

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

3 unchanged sentences

Property, plant and equipment 9.9 43.5 0.1 — 53.5

Deferred income taxes — — — 17.7 17.7

Goodwill 285.6 161.2 62.2 62.3 571.3

5 unchanged sentences

Unearned revenue 3.3 — — — 3.3

Lease liabilities — 2.9 — — 2.9

Deferred income taxes 17.1 — — ( 17.1 ) —

2 unchanged sentences

Net assets acquired $ 455.0 $ 423.8 $ 134.8 $ — $ 1,013.6

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

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

Had the Company's total 2023 and 2022 acquisitions been completed as of January 1, the Company's pro forma results would have been as follows:

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

2023 2023 2022 2022

Revenues $ 3,073.4 $ 9,218.6 $ 2,933.5 $ 9,205.7

5 unchanged sentences

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

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

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

2023 2022 2023 2022

7 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:

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,

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

2023 2022 2023 2022

1 unchanged sentence

GOODWILL AND INTANGIBLE ASSETS

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

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

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

1 unchanged sentence

Foreign currency impact and other adjustments to goodwill ( 18.6 ) ( 3.7 ) ( 22.3 )

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

Balance as of September 30, 2023 $ 4,745.4 $ 1,586.5 $ 6,331.9

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 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.

6 unchanged sentences

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.

During the fourth quarter of 2022, the company recorded a goodwill impairment, related to the early development reporting unit, at which time the amount of fair value in excess of carrying value was reduced to zero .

As such, the company continues to closely monitor the performance of the early development reporting unit.

The Company will continue to monitor the financial performance of, and assumptions for, its reporting units.

2 unchanged sentences

T he components of identifiable intangible assets are as follows:

June 30, 2023 December 31, 2022

September 30, 2023 December 31, 2022

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

7 unchanged sentences

4,906.4 ( 1,630.8 ) 3,275.6 4,593.2 ( 1,469.6 ) 3,123.6

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.

Amortization of intangible assets for the three and nine months ended September 30, 2023, and 2022, was $ 55.7 and $ 49.0 and $ 160.6 and $ 149.0 , respectively.

The amortization expense for the net carrying amount of intangible assets is estimated to be $ 57.0 for the remainder of fiscal 2023, $ 228.0 in fiscal 2024, $ 218.2 in fiscal 2025, $ 209.3 in fiscal 2026, $ 198.1 in fiscal 2027, and $ 1,784.0 thereafter.

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

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

September 30, 2023 December 31, 2022

Revolving line of credit $ 90.0 $ —

4.00% senior notes due 2023 300.0 300.0

3.25% senior notes due 2024 600.0 —

Debt issuance costs ( 0.8 ) ( 0.4 )

1 unchanged sentence

Total short-term borrowings and current portion of long-term debt $ 991.0 $ 301.3

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

June 30, 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)

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

September 30, 2023 December 31, 2022

2.30% senior notes due 2024 $ 400.0 $ 400.0

9 unchanged sentences

Total long-term debt $ 4,427.6 $ 5,038.8

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 $ 78.4 at June 30, 2023.

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 SOFR 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 $ 94.9 at September 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 June 30, 2023 and December 31, 2022.

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

There was $ 90.0 outstanding on the Company's current revolving credit facility as of September 30, 2023.

As of September 30, 2023, the effective interest rate on the revolving credit facility was 6.42 %.

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 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.

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

There were $ 85.4 in outstanding letters of credit as of September 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 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)

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

The changes in common shares issued are summarized below:

2 unchanged sentences

Shares issued under employee stock plans 0.6

Common shares at June 30, 2023 88.7

Shares retired due to Fortrea spin ( 0.2 )

Shares repurchased ( 3.7 )

Common shares at September 30, 2023 84.9

Share Repurchase Program

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 .

On August 8, 2023, the Company entered into accelerated share repurchase agreements (collectively, the ASR Agreements) with two different banks, Goldman Sachs & Co.

LLC and Morgan Stanley & Co.

LLC (collectively, the Financial Institutions),

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

to repurchase approximately $ 1,000.0 in the aggregate of the Company’s common stock (Common Stock), as part of the Company’s Common Stock repurchase program.

The remaining repurchase authorization has no expiration date.

Under the ASR Agreements, the Company made an aggregate payment of $ 1,000.0 to the Financial Institutions and received an aggregate initial number of approximately 3.7 shares of Common Stock from the Financial Institutions, which were removed from the outstanding share count in connection with entering into the ASR Agreements.

The 3.7 shares reflects the 80% of the shares that would ultimately be repurchased under the ASR Agreements if the price of the Common Stock established in the ASR Agreement as the inception of the ASR Agreements remains constant.

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

At settlement, under certain circumstances, the Financial Institutions may be required to deliver additional shares of Common Stock to the Company, or the Company may be required, at its election, either to make cash payments or deliver shares of Common Stock to the Financial Institutions.

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

Repurchases and settlements under the ASR Agreements are expected to be completed by the end of December 2023.

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

Remaining amounts are recognized as a reduction in retained earnings.

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

For the nine months ended September 30, 2023, the Company paid $ 192.9 in common stock dividends.

On October 12, 2023 , the Company announced a cash dividend of $ 0.72 per share of common stock for the fourth quarter, or approximately $ 62.1 in the aggregate.

The dividend will be payable on December 12, 2023 , to stockholders of record of all issued and outstanding shares of common stock as of the close of business on November 8, 2023 .

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

9 unchanged sentences

Tax effect of adjustments — ( 0.8 ) ( 0.8 )

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

Balance as of September 30, 2023 $ ( 186.9 ) $ ( 21.9 ) $ ( 208.8 )

COMMITMENTS AND CONTINGENCIES

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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 managed care organizations (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.

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The Company works cooperatively to respond to appropriate requests for information.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

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

The Company also is named from time to time in suits brought under the qui tam provisions of the False Claims Act and comparable state laws.

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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

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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.

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The court held oral arguments on December 9, 2020.

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

On May 26, 2022, the Florida Supreme Court issued an

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

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

opinion approving the result of the Florida Second District Court of Appeal in favor of the Plaintiff.

The Company will vigorously defend the lawsuit.

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On August 10, 2018, the Plaintiffs filed an Amended Complaint, which consolidated the Bouffard and Anderson actions.

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

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(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.

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.

In September 2023, the lawsuit was dismissed with prejudice.

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

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

The Company will vigorously defend the lawsuits.

The Company will vigorously defend the Nolan lawsuit.

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

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

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

The Company was served with a shareholder derivative lawsuit, Raymond Eugenio, Derivatively on Behalf of Nominal Defendant, Laboratory Corporation of America Holdings v.

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

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

2020, the Company filed a Motion to Dismiss.

On July 2, 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.

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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.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

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

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

2 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

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(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.

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

On August 23, 2023, the Company filed a Motion to Dismiss.

On September 5, 2023, the lawsuit was transferred to the U.S.

District Court for the Middle District of North Carolina.

On September 9, 2023, Plaintiffs filed an Amended Complaint.

Among other things, the Amended Complaint contains allegations that in addition to the Meta Pixel, the Company's website uses Google Analytics and other online tracking technologies.

The Company will vigorously defend the lawsuit.

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

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

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

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associated with the resolution of such proceedings is not expected to be material to the Company’s financial condition, results of operations, or cash flows, either individually or in the aggregate.

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

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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

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FAIR VALUE MEASUREMENTS

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:

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

Fair Value Measurements as of

June 30, 2023

September 30, 2023

Balance Sheet Fair Value as of Using Fair Value Hierarchy

Classification June 30, 2023 Level 1 Level 2 Level 3

Classification September 30, 2023 Level 1 Level 2 Level 3

Noncontrolling interest put Noncontrolling interest $ 15.2 $ — $ 15.2 $ —

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Adjustments ( 11.3 )

Balance as of June 30, 2023 $ 69.0

Balance as of September 30, 2023 $ 66.1

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.

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The Company offers certain employees the opportunity to participate in an employee-funded deferred compensation plan (DCP).

A participant's deferrals are allocated by the participant to one or more of 26 measurement funds, which are indexed to externally managed funds.

A participant's deferrals are allocated by the participant to one or more of multiple measurement funds, which are indexed to externally managed funds.

From time to time, to offset the cost of the growth in the participant's investment accounts, the Company purchases life insurance policies, with the Company named as beneficiary of the policies.

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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

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

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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 $ 5,007.7 and $ 4,973.9 as of June 30, 2023, and December 31, 2022,

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

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

respectively.

The fair market value of the senior notes, based on market pricing, was approximately $ 4,936.6 and $ 4,973.9 as of September 30, 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.

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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 $ 68.4 and $ 45.7 as of June 30, 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 $ 55.6 and $ 45.7 as of September 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.

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SUPPLEMENTAL CASH FLOW INFORMATION

Six Months Ended June 30,

Nine Months Ended September 30,

Cash paid during period for:

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BUSINESS SEGMENT INFORMATION

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

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

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

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

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

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

2023 2022 2023 2022

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SUBSEQUENT EVENTS

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 .

On October 4, 2023, the Company announced it had entered into an agreement with Baystate Health, Inc.

(Baystate Health) to acquire its outreach laboratory business and select operating assets, including laboratory service centers operated by Baystate Health throughout Massachusetts for $ 151.1 in cash.

This strategic relationship will build upon Labcorp's and Baystate Health's existing reference laboratory relationship to improve the efficiency of routine and specialty lab testing.

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