What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-26 compared with 2023-02-28 · 481 added, 417 removed, 1519 unchanged (37% of the section changed)

20 unchanged sentences

OTHER INFORMATION

Insider Adoption or Termination of Trading Arrangements:

During the fiscal quarter ended December 31, 2023, none of the Company's directors or officers informed it of the adoption, modification or termination of a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408, except as described in the table below:

Name and Title Date Adopted Character of Trading Agreement Aggregate Number of Shares of Common Stock to be (Sold) Purchased Pursuant to Trading Agreement

Schroeder 12/7/2023 Rule 10b5-1 Trading Arrangement Up to

( 17,044 ) (1) (2)

12/6/2024 (3)

President, Diagnostics Laboratories and

Chief Operations Officer

Summy 12/7/2023 Rule 10b5-1 Trading Arrangement Up to

( 4,916 ) (1) (2)

Chief Marketing Officer

(1) The figure presented represents the shares to be sold on the vesting of equity awards before reduction for shares to be withheld for tax purposes.

Schroeder’s plan provides for the exercise of vested stock options and the associated sale of up to 2,119 shares of the Company’s Common Stock.

(3) This trading arrangement permits transactions through and including the earlier to occur of (a) the completion of all sales on the respective order entry date or (b) the date listed in the table.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

4 unchanged sentences

Information concerning the Company's code of ethics is incorporated by reference to the Company's 2024 Proxy Statement under the caption Corporate Governance Policies and Procedures.

Insider Trading Arrangements and Policies:

The Company is committed to promoting high standards of ethical business conduct and compliance with applicable laws, rules and regulations.

As part of this commitment, the Company has adopted the Insider Trading Policy governing the purchase, sale, and/or other dispositions of its securities by the Company's directors, officers, employees and designated contractors, as well as by Laboratory Corporation of America Holdings itself, that the Company believes is reasonably designed to promote compliance with insider trading laws, rules and regulations, and the exchange listing standards applicable to us.

EXECUTIVE COMPENSATION

14 unchanged sentences

(3) Index to and List of Exhibits

3.1 Amended and Restated Certificate of Incorporation of the Company dated May 24, 2001 (incorporated herein by reference to Exhibit 3.1 to the Company’s Registration Statement on Form S-3, filed with the Commission on October 19, 2001, File No.

2.1†* Separation and Distribution Agreement, dated June 29, 2023, by and between Laboratory Corporation of America Holdings and Fortrea Holdings Inc.

(incorporated herein by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K filed on July 3, 2023).

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

31 unchanged sentences

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

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

Laboratory Corporation of America Holdings 2016 Employee Stock Purchase Plan (incorporated by reference herein to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 16, 2016).

Laboratory Corporation of America Holdings Amended and Restated 2016 Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 10.4 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2023)

First Amendment to the Laboratory Corporation of America Holdings Amended and Restated 2016 Employee Stock Purchase Plan (incorporated herein by reference to Exhibit 10.5 to the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2023

S ec ond Amendment to the Laboratory Corporation of America Holdings Am ended and R estated 2016 Employee Stock Purchase Plan

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

1 unchanged sentence

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

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

Laboratory Corporation of America Holdings 2016 Employee Stock Purchase Plan (incorporated by reference herein to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on May 16, 2016).

10.18 Term Loan Credit Agreement, dated June 3, 2019, by and among Laboratory Corporation of America Holdings, Bank of America, N.A., as administrative agent, and the lenders party thereto (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on June 3, 2019).

7 unchanged sentences

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

Tax Matters Agreement, dated June 29, 2023, by and between Laboratory Corporation of America Holdings and Fortrea Holdings Inc.

(incorporated herein by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 3, 2023).

Employee Matters Agreement, dated June 29, 2023, by and between Laboratory Corporation of America Holdings and Fortrea Holdings Inc.

(incorporated herein by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 3, 2023).

Transition Services Agreement, dated June 29, 2023, by and between Laboratory Corporation of America Holdings and Fortrea Holdings Inc.

(incorporated herein by reference to Exhibit 10.3 to the Company’s Current Report on Form 8-K filed on July 3, 2023).

Employment Separation Agreement and General Release, effective September 8, 2023, by and between Laboratory Corporation of America Holdings Inc.

and Paul Kirchgraber (incorporated herein by reference to Exhibit 10.1 to the Company’s Quarterly Report for the period ended September 30, 2023).

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

2 unchanged sentences

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

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

Power of Attorney of Kerrii B.

7 unchanged sentences

Power of Attorney of Richelle P.

Power of Attorney of Paul B.

Rothman, M.D.

Power of Attorney of Kathryn E.

5 unchanged sentences

Section 1350)

101.INS* Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH* Inline XBRL Taxonomy Extension Schema

101.CAL* Inline XBRL Taxonomy Extension Calculation Linkbase

101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase

101.LAB* Inline XBRL Taxonomy Extension Label Linkbase

101.PRE* Inline XBRL Taxonomy Extension Presentation Linkbase

Incentive Compensation Recoupment Policy, effective October 11, 2023

Inline XBRL Instance Document - The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Inline XBRL Taxonomy Extension Schema

Inline XBRL Taxonomy Extension Calculation Linkbase

Inline XBRL Taxonomy Extension Definition Linkbase

Inline XBRL Taxonomy Extension Label Linkbase

Inline XBRL Taxonomy Extension Presentation Linkbase

Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Filed or furnished herewith, as required

+ Management contracts or compensatory plans or arrangements

† Certain schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

The registrant agrees to furnish supplementally copies of any of the omitted schedules to the Securities and Exchange Commission upon its request.

* Certain portions of this exhibit have been redacted pursuant to Item 601(b)(2)(ii) and Item 601(b)(10)(iv) of Regulation S-K, as applicable.

The Company agrees to furnish supplementally an unredacted copy of the exhibit to the Commission upon its request.

** Filed or furnished herewith, as required

FORM 10-K SUMMARY

23 unchanged sentences

Report of Independent Registered Public Accounting Firm Deloitte & Touche LLP

Report of Independent Registered Public Accounting Firm PricewaterhouseCoopers LLP

Consolidated Financial Statements:

6 unchanged sentences

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and Board of Directors of Laboratory Corporation of America Holdings

To the shareholders and the Board of Directors of Laboratory Corporation of America Holdings

Opinion on the Financial Statements

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

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

We have audited the accompanying consolidated balance sheets of Laboratory Corporation of America Holdings and subsidiaries (the “Company”) as of December 31, 2023, and 2022, the related consolidated statements of operations, comprehensive earnings, changes in shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2024, expressed an unqualified opinion on the Company’s internal control over financial reporting.

13 unchanged sentences

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Revenue Recognition for Full-Service Clinical Trial Contracts— Refer to Note 2 to the financial statements

Critical Audit Matter Description

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

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

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

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

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

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

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

assumptions of events that often span several years.

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

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

How the Critical Audit Matter Was Addressed in the Audit

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

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

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

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

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

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

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

◦ Evaluated the estimates of total contract cost for the performance obligation by:

– Comparing costs incurred to date to the costs management estimated to be incurred to date.

– Assessing management’s ability to achieve the estimates of total contract cost by performing corroborating inquiries with the Company’s project managers and project financial analysts and comparing the estimates to management’s work plans and cost estimates.

– Comparing management’s estimates for the selected contracts to historical experience and original budgets, when applicable.

◦ Tested the mathematical accuracy of management’s calculation of revenue for the performance obligation.

• We evaluated management’s ability to accurately estimate total contract costs and revenue by comparing actual costs to management’s historical estimates for performance obligations that have been fulfilled.

Valuation of Labcorp Diagnostics Segment (Dx) Net Accounts Receivable— Refer to Note 2 to the financial statements

Valuation of Labcorp Diagnostics (Dx) Segment Net Accounts Receivable— Refer to Note 3 to the consolidated financial statements

Critical Audit Matter Description

10 unchanged sentences

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

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

Tax Free Spin-Off – Refer to Note 2 to the consolidated financial statements

Critical Audit Matter Description

On June 30, 2023, the Company completed the spin-off of its Clinical Development and Commercialization Services business comprised of certain clinical research business units within the former Drug Development segment into a standalone, publicly traded company named Fortrea Holdings, Inc.

The transaction was executed by distributing shares of Fortrea to the Company’s shareholders (the “Distribution”).

The Company concluded the Distribution to be a tax-free transaction for U.S.

Federal income tax purposes.

We identified the Company’s conclusion that the Distribution was a tax-free transaction for U.S.

federal income tax purposes to be a critical audit matter because of the complexity of the interpretation and application of the U.S.

Internal Revenue Code (the “Code”), the materiality of the potential tax consequences, and the need to involve our income tax specialists when performing audit procedures to evaluate the qualification of the Distribution as a tax-free transaction.

How the Critical Audit Matter Was Addressed in the Audit

With the assistance of our income tax specialists, the audit procedures we performed related to the Company’s conclusion that the Distribution was a tax-free transaction for U.S.

federal income tax purposes included the following, among others:

• We tested the effectiveness of controls over the Company’s conclusion that the Distribution was a tax-free transaction.

• We inspected the Private Letter Ruling (PLR) received by the Company from the U.S.

Internal Revenue Service and the external opinions received by the Company from third-party advisors, which were relied upon in the Company’s evaluation of whether the Distribution qualified as a tax-free transaction.

• We evaluated the key factors addressed in the PLR and external opinions regarding the qualification of the Distribution as a tax-free transaction in comparison to the corresponding criteria prescribed by the Code, including interpretations of the Code and related statutes.

• We evaluated the tax-free transaction materials prepared by the Company and used in its evaluation of whether the Distribution qualified as a tax-free transaction.

• We searched for contradictory evidence regarding the qualification of the Distribution as a tax-free transaction by reading relevant documentation, such as income tax returns and historical financial, tax, and legal information, of the Company and the legal entities included in the Distribution, as applicable.

Goodwill – Reporting Unit within the BioPharma Laboratory Services (BLS) Segment – Refer to Notes 1 and 8 to the consolidated financial statements

Critical Audit Matter Description

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

2 unchanged sentences

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

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

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

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

The Company performed impairment testing during the fourth quarter of 2023 and concluded that fair value was less than carrying value in its Early Development (ED) reporting unit within the BLS segment.

As a result, the Company recorded a goodwill impairment charge in the BLS segment.

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

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

35 unchanged sentences

February 26, 2024

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of Laboratory Corporation of America Holdings

Opinion on the Financial Statements

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

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

Basis for Opinion

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

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

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

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

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

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

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

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

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

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

/s/ PricewaterhouseCoopers LLP

Raleigh, North Carolina

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

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

PART I – FINANCIAL INFORMATION

10 unchanged sentences

Prepaid expenses and other 655.3 610.4

Current assets of discontinued operations

Total current assets 3,765.4 4,625.0

5 unchanged sentences

Other assets, net 536.5 378.4

Long-term assets of discontinued operations — 3,038.2

Total assets $ 16,725.1 $ 20,155.1

7 unchanged sentences

Short-term borrowings and current portion of long-term debt 999.8 301.3

Current liabilities of discontinued operations — 657.6

Total current liabilities 3,225.2 3,078.5

4 unchanged sentences

Other liabilities 409.3 401.1

Long-term liabilities of discontinued operations — 241.3

Total liabilities 8,834.6 10,039.6

3 unchanged sentences

Common stock, 83.9 and 88.2 shares outstanding at December 31, 2023 and 2022, respectively 7.7 8.1

Additional paid-in capital 38.4 —

Retained earnings 7,888.2 10,581.7

18 unchanged sentences

Interest expense ( 199.6 ) ( 179.8 ) ( 211.8 )

Equity method income, net 5.4 26.5 2.9

Investment income 28.8 7.5 8.8

Equity method (loss) income, net

( 1.4 ) 5.4 26.5

Other, net 15.5 ( 32.2 ) 15.5

Earnings before income taxes 1,582.6 3,126.6 2,219.1

Earnings from continuing operations before income taxes 568.9 1,237.4 2,887.6

Provision for income taxes 188.5 233.9 690.0

Earnings from continuing operations 380.4 1,003.5 2,197.6

Earnings from discontinued operations, net of tax 38.8 277.1 181.9

Net earnings 419.2 1,280.6 2,379.5

2 unchanged sentences

Basic earnings per common share:

Basic earnings per common share continuing operations $ 4.35 $ 11.00 $ 22.71

Basic earnings per common share discontinued operations $ 0.45 $ 3.04 $ 1.88

Basic earnings per common share $ 4.80 $ 14.05 $ 24.60

Diluted earnings per common share:

Diluted earnings per common share continuing operations $ 4.33 $ 10.94 $ 22.52

Diluted earnings per common share discontinued operations $ 0.44 $ 3.03 $ 1.87

Diluted earnings per common share $ 4.77 $ 13.97 $ 24.39

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

8 unchanged sentences

Other comprehensive earnings (loss) before tax 197.7 ( 291.6 ) ( 12.9 )

(Provision) benefit for income tax related to items of comprehensive earnings ( 9.7 ) ( 17.1 ) 12.1

Provision for income tax related to items of comprehensive earnings

( 1.8 ) ( 9.7 ) ( 17.1 )

Other comprehensive earnings (loss), net of tax 195.9 ( 301.3 ) ( 30.0 )

13 unchanged sentences

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

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

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

7 unchanged sentences

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

Dividends declared — — ( 198.7 ) — ( 198.7 )

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

5 unchanged sentences

Other comprehensive earnings (loss), net of tax — — — 195.9 195.9

Fortrea Holdings Inc.

spin-off — — ( 1,970.0 ) 238.0 ( 1,732.0 )

Dividends declared — — ( 256.1 ) — ( 256.1 )

12 unchanged sentences

Net earnings $ 419.2 $ 1,280.6 $ 2,379.5

Earnings from discontinued operations ( 38.8 ) ( 277.1 ) ( 181.9 )

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

7 unchanged sentences

(Increase) decrease in accounts receivable ( 103.8 ) 46.5 267.4

Increase in unbilled services ( 100.0 ) ( 179.2 ) ( 42.5 )

(Increase) decrease in unbilled services 28.5 ( 23.4 ) ( 41.1 )

(Increase) decrease in inventory ( 0.7 ) ( 45.5 ) 2.8

2 unchanged sentences

Increase in deferred revenue 105.5 67.8 3.8

Increase (decrease) in accrued expenses and other ( 559.3 ) ( 275.9 ) 257.9

Decrease in accrued expenses and other ( 323.2 ) ( 462.9 ) ( 339.9 )

Net cash provided by continuing operating activities 1,202.3 1,764.8 2,846.3

Net cash provided by discontinued operating activities 125.4 191.1 263.3

Net cash provided by operating activities 1,327.7 1,955.9 3,109.6

7 unchanged sentences

Acquisition of businesses, net of cash acquired ( 671.5 ) ( 1,164.0 ) ( 496.9 )

Net cash used for continuing investing activities

( 1,146.8 ) ( 1,599.6 ) ( 845.7 )

Net cash used for discontinued investing activities

( 24.7 ) ( 52.6 ) ( 38.9 )

Net cash used for investing activities ( 1,171.5 ) ( 1,652.2 ) ( 884.6 )

10 unchanged sentences

Other ( 19.6 ) ( 27.0 ) ( 26.5 )

Net cash used for continuing financing activities ( 1,559.0 ) ( 1,322.2 ) ( 2,065.8 )

Net cash provided by discontinued financing activities 1,499.7 — —

Net cash used for financing activities ( 59.3 ) ( 1,322.2 ) ( 2,065.8 )

2 unchanged sentences

Cash and cash equivalents at beginning of period 430.0 1,472.7 1,320.8

Less cash and cash equivalents of discontinued operations at the end of the period

Cash and cash equivalents at end of period $ 536.8 $ 320.6 $ 1,381.4

5 unchanged sentences

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.

Laboratory Corporation of America ® Holdings (Labcorp or the Company) (Labcorp or the Company) is a global leader of innovative and comprehensive laboratory services that provides vital information to help doctors, hospitals, pharmaceutical companies, researchers, and patients make clear and confident decisions.

By leveraging its unparalleled diagnostics and drug development capabilities, the Company provides insights and accelerates innovations to improve health and improve lives.

With more than 67,000 employees, the Company serves clients in more than 100 countries.

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

The Company reports its business in two segments, Labcorp Diagnostics (Dx) and Biopharma Laboratory Services (BLS), formerly Drug Development (DD).

For further financial information about these segments, including information for each of the last three fiscal years regarding revenue, operating income, and other important information, see Note 20 Business Segment Information.

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

In 2023, Dx and BLS contributed 77 % and 23 %, respectively, of revenues to the Company, and in 2022 contributed 77 % and 23 %, respectively.

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

7 unchanged sentences

Resulting translation adjustments are included in “Accumulated other comprehensive income.”

On June 30, 2023, the Company completed the separation (spin-off) of Fortrea Holdings Inc.

(Fortrea), formerly the Company’s Clinical Development and Commercialization Services (CDCS) business, into a separate, publicly-traded company.

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

As a result of the spin-off the Company recast segment results to exclude the historical results of the CDCS business for all periods presented.

The remaining operations of the previously reported Drug Development segment has been renamed the Biopharma Laboratory Services segment.

Additional disclosures regarding the spin-off of Fortrea are provided in Note 2 (Discontinued Operations).

Reimbursable Out-of-Pocket Expenses

DD pays on behalf of its customers certain out-of-pocket costs for which the Company is reimbursed at cost, without mark-up or profit.

Out-of-pocket costs paid by DD are reflected in cost of revenues, while the reimbursements received are reflected in revenues in the consolidated statements of operations.

BLS pays on behalf of its customers certain out-of-pocket costs for which the Company is reimbursed at cost, without mark-up or profit.

Out-of-pocket costs paid by BLS are reflected in cost of revenues, while the reimbursements received are reflected in revenues in the consolidated statements of operations.

Cost of Revenues

Cost of revenue includes direct labor and related benefit charges, reimbursable expenses, other direct costs, shipping and handling fees, and an allocation of facility charges and information technology costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of administrative payroll and related benefit charges, advertising and promotional expenses, administrative travel and an allocation of facility charges and information technology costs.

Cost of advertising is expensed as incurred.

Research and Development

The Company expenses R&D costs as incurred.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Use of Estimates

4 unchanged sentences

The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of December 31, 2023, and through the date of this Annual Report.

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

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

Concentration of Credit Risk

12 unchanged sentences

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

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

The balance was CAD 7.2 at December 31, 2021.

The capitated accounts receivable balance from the Ontario government sponsored healthcare plan was CAD 5.5 at December 31, 2023.

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

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

3 unchanged sentences

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

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

7 unchanged sentences

Diluted earnings per share $ 418.0 87.6 $ 4.77 $ 1,279.1 91.6 $ 13.97 $ 2,377.3 97.5 $ 24.39

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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:

27 unchanged sentences

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

4 unchanged sentences

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

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

fifteen years, generally five years.

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

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

16 unchanged sentences

Management performed its annual goodwill and intangible asset impairment testing as of the beginning of the fourth quarter of 2023.

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

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

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

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

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

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

The Company elected to perform the qualitative assessment for goodwill and intangible assets for the domestic Dx reporting unit and the Clinical Trials Testing Solutions (CTTS) reporting unit, and a quantitative assessment for the Early Development (ED) reporting unit, and the Canadian reporting unit which includes indefinite-lived assets consisting of acquired Canadian licenses.

Based upon the results of the qualitative and quantitative assessments, the Company concluded that the fair values of its domestic Dx, CTTS and Canadian reporting units, as of October 1, 2023, were greater than the carrying values.

However, due to lower demand in the ED reporting unit in late 2023, which the Company anticipates will continue into early 2024 there is an expectation of lower near term revenue and profitability.

Therefore, the Company concluded that the fair value of the ED reporting unit was less than carrying value and recorded a goodwill impairment of $ 333.6 in the BLS segment.

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

1 unchanged sentence

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

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

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

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

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

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

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

There can be no assurance that the estimates and assumptions used in the Company's goodwill and intangible asset impairment testing performed as of the beginning of the fourth quarter of 2023 will prove to be accurate predictions of the future, if, for example, (i) the businesses do not perform as projected, (ii) overall economic conditions in 2024 or future years vary from current assumptions (including changes in discount rates), (iii) business conditions or strategies for a specific reporting unit change from current assumptions, including loss of major customers, (iv) investors require higher rates of return on equity investments in the marketplace or (v) enterprise values of comparable publicly traded companies, or actual sales transactions of comparable companies, were to decline, resulting in lower multiples of revenues and EBITDA.

Intangible Assets

24 unchanged sentences

The Company accounts for income taxes utilizing the asset and liability method.

Under this method deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and for tax loss carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

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

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

Under this method deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

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

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

amounts of existing assets and liabilities and their respective tax bases and for tax loss carryforwards.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

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

The Company records interest and penalties in income tax expense.

18 unchanged sentences

A three-tiered fair value hierarchy draws distinctions between market participant assumptions based on (i) observable inputs such as quoted prices in active markets (Level 1), (ii) inputs other than quoted prices in active markets that are observable either directly or indirectly (Level 2), and (iii) unobservable inputs that require the Company to use present value and other valuation techniques in the determination of fair value (Level 3).

Research and Development

The Company expenses R&D costs as incurred.

Foreign Currencies

4 unchanged sentences

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

Description of Revenues

Dx attributes revenues to a geographical region based upon where the diagnostic test is performed, while DD attributes revenues to a geographical region based upon where the services are performed.

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

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

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:

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

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

or (iii) 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 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 (Distribution Date).

The Company received external opinions from tax counsel and a private letter ruling from the U.S.

Internal Revenue Service (the “IRS”) regarding the qualification of the spin-off of Fortrea as tax-free to Fortrea, the Company and the shareholders of the Company for U.S.

federal income tax purposes.

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

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

The Company does not guarantee the Fortrea Notes.

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

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 and the service fees earned 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 spin-off-related fees, and do not include any allocation of general corporate overhead expense or interest expense of the Company.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO 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 years ended December 31, 2023, 2022, and 2021:

For the Year Ended December 31,

2023 2022 2021

Revenues $ 1,506.6 $ 3,012.9 $ 2,984.8

Cost of revenues 1,244.5 2,336.7 2,352.9

Gross profit 262.1 676.2 631.9

Selling, general and administrative expenses 184.1 233.5 261.8

Amortization of intangibles and other assets 31.9 65.7 140.1

Goodwill and other asset impairments — 9.8 —

Restructuring and other charges 3.0 29.8 19.1

Operating income 43.1 337.4 210.9

Other income (expense):

Interest expense ( 0.5 ) ( 0.5 ) ( 0.3 )

Investment income (expense) ( 1.2 ) 1.4 1.4

Other, net 4.2 6.9 27.0

Earnings before income taxes 45.6 345.2 239.0

Provision for income taxes 6.8 68.1 57.1

Net earnings attributable to Laboratory Corporation of America Holdings $ 38.8 $ 277.1 $ 181.9

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

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Description of Revenues

Dx attributes revenues to a geographical region based upon where the diagnostic test is performed, while BLS attributes revenues to a geographical region based upon where the services are performed.

The Company's revenue by segment payers/customer groups for the years ended December 31, 2023, 2022 and 2021 is as follows:

For the Year Ended

17 unchanged sentences

In addition to diagnostic testing along with occupational and wellness testing for employers and forensic DNA analysis, Dx also offered a range of other testing services.

Within the Dx segment, a revenue transaction is initiated when Dx receives a requisition order to perform a diagnostic test.

Within the Dx segment, a majority of the revenue transactions initiated when Dx receives a requisition order to perform a diagnostic test.

The information provided on the requisition form is used to determine the party that will be billed for the testing performed and the expected reimbursement.

Dx recognizes revenue and satisfies its performance obligation for services rendered when the testing process is complete and the associated results are reported.

The Dx segment also enters into agreements that have monthly and non-testing based fees which are recognized each month as the services are provided.

Revenues are distributed among four payer portfolios - clients, patients, Medicare and Medicaid and third party.

8 unchanged sentences

Dx bills insured patients as directed by their health plan and after consideration of the fees and terms associated with an established health plan contract.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Medicare and Medicaid

4 unchanged sentences

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

5 unchanged sentences

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

Third-party reimbursement is also received through capitation agreements with MCOs and independent physician associations (IPAs).

Third-party reimbursement is also received through capitation agreements with MCOs and independent physician associations.

Under capitated agreements, revenue is recognized based on a negotiated per-member, per-month payment for an agreed upon menu of tests, or based upon the proportionate share earned by Dx from a capitation pool.

2 unchanged sentences

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

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

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

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

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

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

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

BLS revenue is generally recognized over time, as the services are delivered to the customer, based on the extent of progress towards completion of the performance obligation.

The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided.

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

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

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

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

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

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

2 unchanged sentences

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

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

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

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

Contract costs principally include direct labor costs, research model costs and allocated overhead.

The estimate of total costs expected to complete the contract requires significant judgment, and these estimates are reviewed periodically.

Any adjustments to the estimates are recognized on a cumulative catch-up basis in the period they become known.

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

5 unchanged sentences

Most contracts are terminable with or without cause by the customer, either immediately or upon notice.

These contracts often require payment to DD of expenses to wind-down the study or project, fees earned to date and, in some cases, a termination fee or a payment to DD of some portion of the fees or profits that could have been earned by DD under the contract if it had not been terminated early.

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

These contracts often require payment to BLS of expenses, fees earned to date and, in some cases, a termination fee or a payment to BLS of some portion of the fees or profits that could have been earned by BLS under the contract if it had not been terminated early.

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

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

DD Contract costs

DD incurs sales commissions in the process of obtaining contracts with customers, which are recoverable through the service fees in the contract.

BLS incurs sales commissions in the process of obtaining contracts with customers, which are recoverable through the service fees in the contract.

Sales commissions that are payable upon contract award are recognized as assets and amortized over the expected contract term, along with related payroll tax expense.

1 unchanged sentence

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

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

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

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

DD incurs costs to fulfill contracts with customers, which are recoverable through the service fees in the contract.

BLS incurs costs to fulfill contracts with customers, which are recoverable through the service fees in the contract.

Contract fulfillment costs include software implementation costs and setup costs for certain services.

2 unchanged sentences

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

December 31, 2022 December 31, 2021

Sales commission assets $ 38.2 $ 36.2

Deferred contract fulfillment costs 15.0 14.4

Total $ 53.2 $ 50.6

Amortization related to sales commission assets and associated payroll taxes for the years ended December 31, 2022, 2021, and 2020 was $ 33.9 , $ 27.5 and $ 23.2 , respectively.

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

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

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

Accounts Receivable, Unbilled Services and Unearned Revenue

1 unchanged sentence

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

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

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

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

3 unchanged sentences

Dx accounts receivable $ 1,135.2 $ 1,046.9

DD accounts receivable 1,218.6 1,089.2

Less DD allowance for doubtful accounts ( 43.5 ) ( 21.5 )

BLS accounts receivable 810.8 769.4

Less BLS allowance for doubtful accounts ( 32.7 ) ( 30.8 )

Accounts receivable $ 1,913.3 $ 1,785.5

5 unchanged sentences

Credit Loss Rollforward

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

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

The rollforward for the allowance for credit losses for the year ended December 31, 2023, is as follows:

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Accounts Receivable Unbilled Services Note and Other Receivables Total

6 unchanged sentences

Ending allowance for credit losses as of December 31, 2023 $ 32.7 $ 7.5 $ 0.7 $ 40.9

Performance Obligations Under Long-Term Contracts

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

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

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

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

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

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

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

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

BUSINESS ACQUISITIONS AND DISPOSITIONS

During the year ended December 31, 2022, the Company acquired various businesses and related assets for approximately $ 1,164.0 in cash (net of cash acquired).

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

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

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

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

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

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

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

Preliminary Personal Genome Diagnostics Inc.

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

BUSINESS ACQUISITIONS AND DISPOSITIONS

During the year ended December 31, 2023, the Company acquired several businesses and related assets for cash of approximately $ 671.5 .

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 $ 340.8 in identifiable intangible assets and a residual amount of tax-deductible goodwill of approximately $ 296.9 The goodwill reflects the Company's expectations to utilize the acquired businesses’ workforce and established relationships and the benefits of being able to leverage operational efficiencies with favorable growth opportunities in these markets.

The amortization period for non-compete agreements and customer list assets acquired from these businesses are 5 and 15 years, respectively.

These acquisitions were made primarily to extend the Company's geographic reach in important market areas and to partner with hospitals and health systems.

The purchase price allocations for these acquisitions have not been finalized as of December 31, 2023.

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

Jefferson Health Enzo BioChem Providence Health and Services - Oregon Tufts Medicine Legacy Other Business Acquisitions Measurement Period Adjustments Amounts Acquired During the Year Ended December 31, 2023

Accounts receivable $ — $ ( 2.8 ) $ — $ — $ — $ 2.0 $ 0.2 $ ( 0.6 )

Unbilled services 2.9 — — ( 3.2 ) ( 0.3 )

Inventories — — 1.3 — — — — 1.3

1 unchanged sentence

Property, plant and equipment — — 4.7 — 3.3 6.5 ( 1.5 ) 13.0

Deferred income taxes 17.5 — — 15.2 32.7

Goodwill 50.8 54.1 50.7 73.8 49.0 18.5 ( 29.4 ) 267.5

4 unchanged sentences

Accrued expenses and other — — 3.9 — — 1.2 ( 8.3 ) ( 3.2 )

Unearned revenue 3.3 — — ( 2.6 ) 0.7

Lease liabilities — 2.9 — — 2.9

Deferred income taxes — — — — — — ( 2.3 ) ( 2.3 )

Other liabilities — — — — — ( 4.1 ) — ( 4.1 )

1 unchanged sentence

Net assets acquired $ 110.2 $ 112.8 $ 110.0 $ 157.0 $ 107.7 $ 73.8 $ — $ 671.5

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

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

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

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

Unaudited Pro Forma Information for 2023 Acquisitions

2 unchanged sentences

Revenues $ 12,350.1 $ 12,126.3

Net earnings attributable to Laboratory Corporation of America Holdings 1,282.4 2,362.1

Earnings from continuing operations

397.2 1,030.3

During the year ended December 31, 2022, the Company acquired various businesses and related assets for approximately $ 1,164.0 in cash (net of cash acquired).

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

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

1 unchanged sentence

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

The purchase price allocation for several of these transaction was preliminary for the year ended December 31, 2022.

The areas of the purchase

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

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

Amounts Acquired During Year Ended December 31, 2021

price allocation that were not yet finalized related primarily to property, plant and equipment, intangible assets, goodwill and deferred income taxes.

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

Preliminary Personal Genome Diagnostics Inc.

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

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

3 unchanged sentences

Property, plant and equipment 9.9 43.5 0.1 — 53.5

Deferred income taxes 17.5 — — 15.2 32.7

Goodwill 346.8 125.0 126.7 ( 40.4 ) 558.1

Intangible assets 136.6 233.2 172.5 30.4 572.7

Other assets 12.5 — 2.3 ( 2.3 ) 12.5

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

2 unchanged sentences

Unearned revenue 3.3 — — ( 2.6 ) 0.7

Lease liabilities — 2.9 — — 2.9

Other liabilities 14.6 — — — 14.6

5 unchanged sentences

Revenues $ 11,984.7 $ 13,325.7

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

Earnings from continuing operations

1,006.8 2,182.4

During the year ended December 31, 2021, the Company acquired various businesses and related assets for approximately $496.9 in cash (net of cash acquired).

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

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

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

2 unchanged sentences

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Amounts Acquired During Year Ended December 31, 2021

1 unchanged sentence

Unbilled services 3.2

Inventories 1.6

Prepaid expenses and other 3.0

Property, plant and equipment 56.6

10 unchanged sentences

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Year Ended December 31, 2020

Years Ended December 31, 2021

Revenues $ 13,231.8

Net earnings attributable to Laboratory Corporation of America Holdings 1,564.6

Earnings from continuing operations

RESTRUCTURING AND OTHER CHARGES

1 unchanged sentence

The charges were comprised of $ 33.4 in severance and other personnel costs, $ 22.3 in facility-related costs primarily associated with general integration activities.

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

The charges were offset by the reversal of a previously established liability of $ 1.7 in unused severance and $ 4.9 in unused facility-related costs.

During 2022, the Company recorded net restructuring charges of $ 54.0 .

The charges were comprised of $ 24.8 in severance and other personnel costs and $ 31.1 in facility-related costs primarily associated with general integration activities.

The charges were offset by the reversal of previously established liability of $ 0.4 in unused severance and $ 0.8 in unused facility-related costs.

The charges were offset by the reversal of a previously established liability of $ 1.4 in unused severance and $ 0.5 in unused facility-related costs.

During 2021, the Company recorded net restructuring charges of $ 24.0 .

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

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

The charges were comprised of $ 12.4 in severance and other personnel costs, $ 12.0 in facility-related costs primarily associated with general integration activities.

The charges were offset by the reversal of a previously established liability of $ 0.3 in unused severance and $ 0.2 in unused facility-related costs.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

25 unchanged sentences

Total finance lease cost $ 11.9 $ 13.2

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Supplemental cash flow information related to leases was as follows:

8 unchanged sentences

Finance leases 2.3 —

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Supplemental balance sheet information related to leases was as follows:

19 unchanged sentences

$ 200.1 $ 11.3

2024 160.9 9.9

2025 119.4 7.8

2026 89.0 7.2

2027 72.5 7.2

Thereafter 330.1 78.3

6 unchanged sentences

Total variable payments for the year ended December 31, 2023, 2022 and 2021 were $ 32.7 , $ 27.9 , and $ 28.4 , respectively.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

PROPERTY, PLANT AND EQUIPMENT, NET

11 unchanged sentences

$ 2,911.8 $ 2,794.1

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Depreciation expense and amortization of property, plant and equipment was $ 361.1 , $ 343.6 and $ 347.6 for 2023, 2022 and 2021, respectively, including software amortization of $ 76.6 , $ 75.7 , and $ 73.7 for 2023, 2022 and 2021, respectively.

GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill (net of impairment) for the years ended December 31, 2022 and 2021 are as follows:

The changes in the carrying amount of goodwill (net of impairment) for the years ended December 31, 2023 and 2022 were as follows:

December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022 December 31, 2023 December 31, 2022

19 unchanged sentences

$ 5,058.4 $ ( 1,716.4 ) $ 3,342.0 $ 4,593.3 $ ( 1,469.7 ) $ 3,123.6

During 2023, the Company recorded goodwill and other asset impairment charges of $ 349.0 which was primarily comprised of $ 333.6 of goodwill impairment for the ED reporting unit.

During 2022, the Company recorded goodwill and other asset impairment charges of $ 261.7 which was primarily comprised of goodwill impairment and the impairment of a technology intangible asset.

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

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

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

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The cumulative goodwill impairment for the Company through December 31, 2023 was $ 648.5 and relates completely to the ED reporting unit of the BLS segment.

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

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

This change in estimated useful life resulted in accelerated amortization of $ 30.8 in 2021.

A summary of amortizable intangible assets acquired during 2023, and their respective weighted average amortization periods are as follows:

2 unchanged sentences

Customer relationships $ 260.6 12.5

Patents, licenses and technology 106.4 13.8

Non-compete agreements 53.3 0.8

Trade name 10.8 6.0

Amortization of intangible assets was $ 219.8 , $ 193.6 and $ 229.5 in 2023, 2022 and 2021, respectively.

Amortization expense of intangible assets is estimated to be $ 235.4 in fiscal 2024, $ 225.7 in fiscal 2025, $ 216.8 in fiscal 2026, $ 205.5 in fiscal 2027, $ 197.3 in fiscal 2028, and $ 1,675.0 thereafter.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

ACCRUED EXPENSES AND OTHER

2 unchanged sentences

Accrued taxes payable 127.5 105.6

Accrued pass through expenses 136.5 149.1

Other 245.1 236.8

11 unchanged sentences

4.00% senior notes due 2023 — 300.0

2.30% senior notes due 2024

3.25% senior note due 2024

Debt issuance costs ( 1.3 ) ( 0.4 )

1 unchanged sentence

Total short-term borrowings and current portion of long-term debt $ 999.8 $ 301.3

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

8 unchanged sentences

4.70% senior notes due 2045 900.0 900.0

Debt issuance costs ( 26.3 ) ( 33.8 )

4 unchanged sentences

The Company fully repaid the remaining 2019 Term Loan balance during the first quarter of 2021.

The Company also maintains a senior revolving credit facility, which was amended and restated on April 30, 2021.

The Company maintains a senior revolving credit facility, which was amended and restated on April 30, 2021.

It consists of a five-year revolving facility in the principal amount of up to $ 1,000.0 , with the option of increasing the facility by up to an additional $ 500.0 , subject to the agreement of one or more new or existing lenders to provide such additional amounts and certain other customary conditions.

2 unchanged sentences

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

There were no balances outstanding on the Company's current revolving credit facility at December 31, 2022, or December 31, 2021.

There were no balances outstanding on the Company's current revolving credit facility at December 31, 2023, or

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

December 31, 2022.

As of December 31, 2023, the effective interest rate on the revolving credit facility was 6.44 %.

2 unchanged sentences

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

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

There were $ 91.3 in outstanding letters of credit as of December 31, 2023.

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

Interest on these notes is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2021.

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

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

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

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The scheduled payments of long-term debt at the end of 2023 are summarized as follows:

2024 $ 1,001.1

Thereafter 1,981.0

Total scheduled payments 5,082.1

Less long-term debt issuance costs ( 33.8 )

Total long-term debt 5,340.1

Less current portion ( 1,001.1 )

13 unchanged sentences

Share Repurchase Program

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), 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.

In December 2023, the Company received 1.1 shares of its Common Stock as a final settlement from the Financial Institutions.

The average daily volume weighted average price less discount per share was $ 206.85 .

The Company has accrued $ 9.0 of excise tax related to this accelerated share repurchase which will be paid in April 2024.

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

4 unchanged sentences

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

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

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

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

The repurchase authorization has no expiration.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

During 2021, the Company repurchased 5.2 shares of its common stock at an average price of $ 282.05 for a total cost of $ 1,668.5 , which included $ 1,000.0 paid as part of an ASR.

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 December 31, 2023 the remaining total available authorization was under the ASR was $ 530.4 .

For the twelve months ended December 31, 2023, the Company paid $ 254.0 in Common Stock dividends.

2 unchanged sentences

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Accumulated Other Comprehensive Earnings

9 unchanged sentences

Balance at December 31, 2022 $ ( 462.3 ) $ ( 30.9 ) $ ( 493.2 )

Fortrea Holdings Inc.

spin 231.6 6.4 238.0

Current year adjustments 183.1 30.1 213.2

10 unchanged sentences

Total pre-tax income $ 568.9 $ 1,237.4 $ 2,887.6

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

24 unchanged sentences

Impairment of assets 10.8 3.7 —

Limitation of officer compensation 1.7 1.2 0.3

Worthless stock loss ( 2.6 ) — —

Deferred tax adjustments 2.7 ( 2.4 ) ( 0.1 )

1 unchanged sentence

Effective rate 33.1 % 18.9 % 23.9 %

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

18 unchanged sentences

Net deferred tax liabilities $ ( 374.9 ) $ ( 469.2 )

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The table below provides a rollforward of the valuation allowance:

1 unchanged sentence

Beginning balance $ 151.3 $ 149.2 $ 167.6

Additions charged to expense 10.2 6.8 5.8

Movements charged to expense ( 8.9 ) 10.2 6.8

Reductions and other adjustments 7.8 ( 8.1 ) ( 25.2 )

10 unchanged sentences

The Company has foreign tax loss carryforwards of $ 117.2 , the majority of which have indefinite carryforward periods, but a valuation allowance of $ 7.9 has been provided for jurisdictions where the future tax benefits of the attributes are not more likely than not to be realized.

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

Additionally, the Company has foreign tax loss carryforwards of $ 444.3 which expire periodically through 2038 and foreign tax loss carryforwards of $ 14.5 which expire periodically through 2043 that have full valuation allowances.

In addition to the foreign net operating losses, the Company has a foreign capital loss carryforward of $ 27.4 with an indefinite carryforward period and a full valuation allowance.

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

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

capital losses.

The valuation allowance decreased from $ 151.3 in 2022 to $ 150.2 in 2023 primarily due to releases of valuation allowances on certain U.S.

capital losses and state net operating losses which were offset by the establishment of valuation allowances on acquired net operating losses recorded through purchase accounting.

Unrecognized income tax benefits were $ 29.9 and $ 37.5 at December 31, 2023, and 2022, respectively.

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

It is anticipated that the amount of the unrecognized income tax benefits will decrease by $ 0.2 within the next 12 months due to statute of limitation lapses;

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

1 unchanged sentence

Accrued interest and penalties related to uncertain tax positions totaled $ 0.1 and $ 2.3 as of December 31, 2023, and 2022, respectively.

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

During the years ended December 31, 2023, 2022 and 2021, the Company recognized $ 0.0 , $ 0.8 and $ 0.0 , respectively, in interest and penalties expense, which was offset by a benefit from reversing previous accruals for interest and penalties of $ 1.8 , $ 0.0 and $ 1.1 , respectively.

The following table shows a reconciliation of the unrecognized income tax benefits, excluding interest and penalties, from uncertain tax positions for the years ended December 31, 2023, 2022 and 2021:

2 unchanged sentences

Increase in reserve for tax positions taken in the current year 1.8 1.8 —

Increase in reserve from an acquisition's opening balance sheet — — 8.2

Decrease in reserve as a result of payments ( 13.5 ) ( 7.1 ) ( 0.3 )

Increase in reserve for tax positions taken in a prior period 10.4 10.6 31.1

Decrease in reserve for tax positions taken in a prior period ( 4.0 ) — ( 8.1 )

Decrease in reserve as a result of settlements ( 7.2 ) ( 10.4 ) —

Decrease in reserve as a result of lapses in the statute of limitations ( 8.6 ) ( 4.1 ) ( 2.0 )

7 unchanged sentences

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

4 unchanged sentences

A determination of the amount of the unrecognized deferred tax liability related to these undistributed earnings is not practicable due to the complexity and variety of assumptions necessary based on the manner in which the undistributed earnings would be repatriated.

Pillar Two legislation arising from the Organisation for Economic Co-operation and Development’s base erosion and profit shifting initiative has been enacted or substantively enacted in certain jurisdictions the Company operates.

The legislation will be effective for the Company’s financial year beginning January 1, 2024.

The Company is in scope of the enacted or substantively enacted legislation and has performed an assessment of the Company’s potential exposure to Pillar Two income taxes.

The assessment of the potential exposure to Pillar Two income taxes is based on the most recent tax filings, country-by-country reporting, and financial statements for the constituent entities in the Company.

Based on the assessment, the Pillar Two effective tax rates in most of the jurisdictions in which the Company operates are above 15%.

However, there are a limited number of jurisdictions where the transitional safe harbor relief does not apply and the Pillar Two effective tax rate is close to 15%.

The Company does not expect a material exposure to Pillar Two income taxes in those jurisdictions.

STOCK COMPENSATION PLANS

13 unchanged sentences

Granted 0.1 219.83

Exercised ( 0.1 ) 118.99

Outstanding at December 31, 2023 0.6 174.45 6.0 $ 32.2

Exercisable at December 31, 2023 0.5 159.05 5.4 $ 31.3

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The aggregate intrinsic value in the table above represents the total pre-tax intrinsic value (the difference between the Company’s closing stock price on the last trading day of 2023 and the exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2023.

4 unchanged sentences

Aggregate intrinsic value $ 0.7 $ 8.2 $ 13.4

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The following table shows the weighted average grant-date fair values of options issued during the respective year and the weighted average assumptions that the Company used to develop the fair value estimates:

4 unchanged sentences

Expected volatility 29.8 % 28.6 % 28.6 %

Expected dividend yield 0.85 % N/A N/A

Expected dividend yield 1.4 % 0.9 % N/A

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

14 unchanged sentences

For 2023, 2022, and 2021, total restricted stock, restricted stock unit, and performance share compensation expense was $ 111.1 , $ 97.7 and $ 114.6 , respectively.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The following table shows a summary of non-vested shares for the year ended December 31, 2023:

11 unchanged sentences

Under the 2016 Employee Stock Purchase Plan, the Company is authorized to issue 1.8 shares of Common Stock.

The plan permits substantially all U.S.

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

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

The plan permits substantially all U.S., Canada and United Kingdom employees to purchase a limited number of shares of Company stock at 85 % of market value.

The Company issues shares to participating employees semi-annually in January and July of each year, although due to the spin-off of Fortrea shares for the first offering period were issued in May of 2023.

Approximately 0.3 , 0.2 and 0.2 shares were purchased by eligible employees in 2023, 2022 and 2021, respectively.

For 2023, 2022 and 2021, expense related to the Company’s employee stock purchase plan was $ 13.8 , $ 14.8 and $ 14.6 , respectively.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

The Company uses the Black-Scholes model to calculate the fair value of the employee’s purchase right.

18 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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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.

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.

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.

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

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

On August 17, 2011, the U.S.

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

NPT Associates v.

Laboratory Corporation of America Holdings , which alleges that the Company offered UnitedHealthcare kickbacks in the form of discounts in return for Medicare business.

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

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

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

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

The Court granted the motion and vacated the briefing dates.

Plaintiff then filed the Amended Complaint under seal.

On August 24, 2021, the U.S.

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

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

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

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

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

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

Plaintiff did not appeal the Court's order.

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

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.

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

4 unchanged sentences

The Company cooperated with this request.

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

On January 26, 2021, the Company was notified that a qui tam

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Petition was pending under seal in the District Court, 250th Judicial District, Travis County, Texas, and that the State of Texas has intervened.

On April 14, 2021, the Petition was unsealed.

5 unchanged sentences

The Company will vigorously defend the lawsuit.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

10 unchanged sentences

The Company will vigorously defend the lawsuit.

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

False Claims Act from the U.S.

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

(HDL) and Singulex, Inc.

The Company cooperated with the request.

On April 4, 2018, the U.S.

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

Scarlett Lutz, et al.

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

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

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

Neither the U.S.

government nor any state government has intervened in the lawsuit.

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

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

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

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

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

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

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

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

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

District Court for the Middle District of North Carolina.

The complaint alleges that the Company's patient list prices unlawfully exceed the rates negotiated for the same services with private and public health insurers in violation of various state consumer protection laws.

The lawsuit also alleges breach of implied contract or quasi-contract, unjust enrichment, and fraud.

The lawsuit seeks statutory, exemplary, and punitive damages, injunctive relief, and recovery of attorney's fees and costs.

In May 2017, the Company filed a Motion to Dismiss Plaintiffs' Complaint and Strike Class Allegations;

the Motion to Dismiss was granted in March 2018 without prejudice.

On October 10, 2017, a second putative class action lawsuit, Sheryl Anderson, et al.

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

District Court for the Middle District of North Carolina.

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

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

On December 29, 2021, the Company was served with a putative class action lawsuit, Nathaniel J.

Nolan, et al.

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

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

District Court for the Middle District of North Carolina.

3 unchanged sentences

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

The Company will vigorously defend the lawsuits.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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.

The Company is cooperating with the DOJ.

14 unchanged sentences

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

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

On November 15, 2019, the Plaintiffs filed a

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Consolidated Class Action Complaint in the U.S.

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.

22 unchanged sentences

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

On June 6, 2022, the Company

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

The Company will vigorously defend the lawsuit.

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

Court of Appeals for the Ninth Circuit.

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

On February 8, 2024, the Ninth Circuit affirmed the trial court’s decision to certify both a California damages class and a nationwide injunctive class.

The Company will vigorously seek rehearing and further appeal if necessary.

On October 16, 2020, Ravgen Inc.

3 unchanged sentences

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

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

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

Plaintiff 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 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.

8 unchanged sentences

District Court for the Central District of California.

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

Laboratory Corporation of America (Bermejo II), filed in the Superior Court of California, County of Los Angeles Central District, alleging that certain Company practices violated California Labor Code penalty provisions related to unpaid and minimum wages, unpaid overtime, unpaid mean and rest break premiums, untimely payment of wages following separation of employment, failure to maintain accurate pay records, and non-reimbursement of business expenses.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

1 unchanged sentence

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

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

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

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

The court granted preliminary approval of the parties' settlement agreement of the Bermejo I lawsuit on March 17, 2023, and of the Bermejo II lawsuit on November 29, 2023.

The settlement funds for the Bermejo I and Bermejo II settlements have been transferred to a claims administrator for processing.

Once the claims administration is completed, the parties will seek final settlement approval from the Court.

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

7 unchanged sentences

District Court for the Eastern District of California.

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

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

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

7 unchanged sentences

§ 1332(d), jurisdictional threshold.

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

The parties entered into a settlement agreement dated September 9, 2022.

On December 13, 2023, the Court granted preliminary approval of the settlement.

The settlement funds have been transferred to a claims administrator for processing.

Once the claims administration is completed, the parties will seek final settlement approval from the Court.

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.

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.

On October 11, 2023, the Company filed a Motion to Dismiss the Amended Complaint.

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.

The Company is cooperating with this request.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

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

The Company is cooperating with this request.

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

2 unchanged sentences

The Company is cooperating with the DOJ.

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

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

The Company is cooperating with the DOJ .

On February 13, 2024, a putative class action lawsuit, Michael Wiggins and Teri Stevens v.

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

District Court for the Eastern District of Pennsylvania, alleging that the Company’s website includes a computer code created by Google that sent information to Google related to Plaintiffs and their online activities.

Plaintiffs assert statutory and common law claims against the Company and seek to represent a class of all persons whose protected health information was allegedly shared with Google from the Company's website before March 8, 2023.

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

The Company will vigorously defend the lawsuit.

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.

13 unchanged sentences

The Company sponsors both funded and unfunded defined benefit pension plans which provide benefits based on various criteria such as years of service and salary.

The Company maintained two plans in the United States, three plans in the United Kingdom and one in Germany.

The Company maintained two plans in the United States, two plans in the United Kingdom and one in Germany.

The two plans in the United States (U.S.

Plans) were closed to new entrants and the accrual of service credits at the end of 2009.

pension plans were closed to new entrants and the accrual of service credits for one plan as of December 31, 2002, and the accrual of service credits for the other two plans as of December 31, 2019.

pension plan was closed to new entrants and the accrual of service credits for one plan as of December 31, 2002, and the accrual of service credits for the other plan as of December 31, 2019.

The German plan was closed to new entrants on December 31, 2009 but participants continue to accrue service credits.

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Net Periodic Benefit Costs

7 unchanged sentences

Net amortization and deferral 4.5 4.6 10.0 0.1 0.8 1.9

Expected participant contributions — — — — — ( 0.1 )

Settlements 10.9 4.1 3.7 — ( 1.1 ) —

Defined-benefit plan costs $ 20.0 $ 7.7 $ 8.6 — ( 4.6 ) ( 3.0 )

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

30 unchanged sentences

Fair value of plan assets at end of year $ 195.3 $ 226.8 $ 335.9 $ 301.2

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

7 unchanged sentences

Other liabilities 34.1 32.5 30.6 29.2

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

25 unchanged sentences

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

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

Differences between actual results and assumptions utilized are recorded in Accumulated other comprehensive income each period.

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

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

Differences between actual results and assumptions utilized are recorded in Accumulated other comprehensive income each period.

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

The fair values of the assets at December 31, 2023, and 2022, by asset category are as follows:

32 unchanged sentences

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

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

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

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

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

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

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

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

The weighted average asset allocation of the plan assets as of December 31, 2023, by asset category is as follows:

37 unchanged sentences

Post-retirement medical plan costs $ 0.2 $ 0.3 $ 0.4

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

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

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

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

18 unchanged sentences

The Company's general assets may be used to fund obligations and pay DCP benefits.

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

FAIR VALUE MEASUREMENTS

5 unchanged sentences

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

Cross currency swaps Other liabilities, net 45.7 — 45.7 —

Cross currency swaps Accrued expenses and other/Other liabilities 109.0 — 109.0 —

Interest rate swaps Other liabilities, net 69.6 — 69.6 —

Cash surrender value of life insurance policies Other assets, net 95.4 — 95.4 —

Deferred compensation asset Other assets, net 21.1 — 21.1 —

Deferred compensation liability Other liabilities 107.4 — 107.4 —

Contingent consideration Accrued expenses and other;

Other liabilities 77.4 — — 77.4

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Contingent consideration Accrued expenses and other/Other liabilities 66.1 — — 66.1

Fair Value Measurements as of

4 unchanged sentences

Cross currency swaps Other liabilities, net 45.7 — 45.7 —

Interest rate swaps Other assets, net 2.9 — 2.9 —

Interest rate swaps Other liabilities 79.7 — 79.7 —

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

Deferred compensation liability Other liabilities 96.9 — 96.9 —

Investment in equity securities Other current assets 10.9 10.9 — —

Contingent consideration Other liabilities 21.9 — — 21.9

Contingent consideration Accrued expenses and other/Other liabilities 77.4 — — 77.4

Fair Value Measurement of Level 3 Liabilities Contingent Consideration

Balance at January 1, 2022 $ 21.9

Addition 68.3

Cash payments and adjustments ( 12.8 )

Balance at December 31, 2022 77.4

Addition 68.3

Cash payments and adjustments ( 11.3 )

4 unchanged sentences

The Company offers certain employees the opportunity to participate in a DCP.

A participant's deferrals are allocated by the participant to one or more of 16 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.

4 unchanged sentences

These contingent consideration liabilities were recorded at fair value on the acquisition date and are remeasured quarterly based on the then assessed fair value and adjusted if necessary.

The increases or decreases in the fair value of contingent consideration payable can result from changes in anticipated revenue levels and changes in assumed discount periods and rates.

The increases or decreases in the fair value of contingent consideration payable can result from changes in anticipated revenue levels and changes in assumed discount

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

periods and rates.

As the fair value measure is based on significant inputs that are not observable in the market, they are categorized as Level 3.

4 unchanged sentences

Interest Rate Swap

During the second quarter of 2021, the Company entered into fixed-to-variable interest rate swap agreements for its 2.70 % senior notes due 2031 with an aggregate notional amount of $ 500.0 and variable interest rates based on three-month SOFR (changed from LIBOR to SOFR during 2023) plus 1.0706 %.

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

Cross Currency Swaps

1 unchanged sentence

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

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

The initial cross-currency swap matures in 2025 and the cross currency swap entered into in 2022 matures in 2024.

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

5 unchanged sentences

Dollar Notional

Derivatives Designated as Hedging Instruments

Interest rate swap Other assets, net/Other liabilities — 79.7 500.0 2.9 — 500.0

Cross currency swaps Other liabilities — 45.7 600.0 — 32.8 600.0

Interest rate swap Other liabilities — 69.6 500.0 — 79.7 500.0

Cross currency swaps Accrued expenses and other/Other liabilities — 109.0 600.0 — 45.7 600.0

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

3 unchanged sentences

2023 2022 2021 2023 2022 2021

Interest rate swap contracts $ — $ — $ 0.8 $ — $ — $ 1.6

Cross currency swaps $ ( 63.3 ) $ ( 12.9 ) $ 7.6 $ — $ 0.9 $ —

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

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

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

8 unchanged sentences

Change in accrued property, plant and equipment 13.2 ( 5.6 ) 11.3

BUSINESS SEGMENT INFORMATION

The following table is a summary of segment information for the years ended December 31, 2022, 2021, and 2020.

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

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

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1 unchanged sentence

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

BUSINESS SEGMENT INFORMATION

The following table is a summary of segment information for the years ended December 31, 2023, 2022, and 2021.

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

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

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

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

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

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

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.

The Company's segment performance measure was changed to exclude the amortization of intangibles and other assets, restructuring and other charges, goodwill and other asset impairments, and certain corporate charges for items such as transaction costs, COVID-19 costs, and other special items.

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

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

1 unchanged sentence

Dx $ 9,415.1 $ 9,203.5 $ 10,363.6

DD 5,710.2 5,845.5 4,877.7

BLS 2,774.2 2,697.3 2,860.7

Intercompany eliminations and other ( 27.7 ) ( 36.9 ) ( 88.2 )

2 unchanged sentences

Dx segment operating income $ 1,591.3 $ 2,025.5 $ 3,205.6

DD segment operating income 801.1 887.1 721.6

BLS segment operating income 396.3 389.1 501.0

Segment operating income 1,987.6 2,414.6 3,706.6

6 unchanged sentences

Dx $ 236.1 $ 227.1 $ 238.6

DD 143.8 134.3 124.7

BLS 112.5 112.8 106.3

General corporate 8.9 3.7 2.6

11 unchanged sentences

Total property, plant and equipment, net $ 1,669.2 $ 1,124.9 $ 2,794.1

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

SUBSEQUENT EVENTS

On February 14, 2024, the Company terminated its 2024 and 2025 U.S.

Dollar to Swiss Franc cross currency swaps and entered into two new swaps, each with a notional value of $ 300.0 and maturity dates of 2031 and 2034, respectively.

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

What changed 10-K

Item 9A. Controls and Procedures