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Item 1. Business

2025-02-25 compared with 2024-02-26 · 278 added, 318 removed, 541 unchanged (52% of the section changed)

Labcorp ® (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.

Labcorp® Holdings Inc.

(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 is organized under two segments, consisting of Diagnostics Laboratories (Dx), which includes routine testing and specialty/esoteric testing, and Biopharma Laboratory Services (BLS), consisting of Early Development Research Laboratories and Central Laboratory Services.

The Company’s nearly 70,000 employees serve clients in approximately 100 countries, provided support for more than 75% of the new drugs and therapeutic products approved in 2024 by the FDA, and performed more than 700 million tests annually for patients around the world.

On April 25, 2024, Laboratory Corporation of America Holdings (LCAH) announced plans to implement a new public holding company structure, with Labcorp Holdings Inc.

as the holding company.

On May 17, 2024, the Company completed the holding company reorganization (Reorganization) and became the successor issuer to LCAH.

Labcorp Holdings Inc.

has no independent assets or operations and its sole ownership interest is in LCAH.

The Company ’ s strength in science, technology, and innovation, as well as its global scale, enable it to play a leading role in advancing healthcare across the globe.

The Company worked on 90% of the new drugs approved by the FDA in 2023 and performed more than 600 million tests for patients around the world.

The significant reach, breadth, and advancement of the Company's offerings have resulted in Base Business revenue growth of 11.8% from 2022 through 2023 and 7.2% versus 2019 CAGR.

Base Business includes the Company's business operations except for COVID-19 PCR and antibody testing (COVID-19 Testing).

For the period ended December 31, 2023, the Company generated revenues of $12,161.6 million, diluted earnings per share from continuing operations of $4.33, and had a total operating cash flow from continuing operations of 1,202.3 million.

The significant reach, breadth, and advancement of the Company’s offerings have resulted in Base Business revenue growth of 4.9% from 2023 through 2024 and 7.4% versus 2019 compound annual growth rate (CAGR).

Base Business includes the Company’s business operations except for COVID-19 PCR testing (COVID-19 Testing).

For the year ended December 31, 2024, the Company generated revenues of $13,008.9 million, diluted earnings per share from continuing operations of $8.84, and had a total operating cash flow provided by continuing operations of $1,585.8 million.

The Company believes that science, technology, and innovation drive its continued success, differentiate the Company, and are foundational to its future.

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On June 30, 2023, the Company completed the previously announced separation (Spin-off) of its former clinical development and commercialization services (CDCS) business, Fortrea Holdings Inc.

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 (Common Stock).

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

In June 2023, Fortrea, prior to the spin-off and while a subsidiary of the Company, issued $ 570.0 million 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 million to the Company in connection with the spin-off.

The Company does not guarantee the Fortrea Notes following the spin-off.

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

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

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

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

Upon closing of the spin-off, Fortrea made a cash distribution to the Company of approximately $ 1,600.0 million as partial consideration for the assets that the Company contributed to Fortrea in connection with the spin-off.

The Company used these proceeds to repurchase approximately $1,000.0 million in the aggregate of Common Stock pursuant to accelerated share repurchase agreements and paying down $300.0 million of debt that matured in 2023, with the remaining funds to be returned to shareholders through additional future share repurchases and/or cash dividends.

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

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

federal income tax purposes.

As a result of the spin-off, the Company recast its 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.

The spin-off provides the Company with:

• strengthened strategic flexibility and operational focus to pursue specific market opportunities and better meet customer needs;

• focused capital structures and capital allocation strategies to drive innovation and growth;

• a more targeted investment opportunity for different investor bases;

• the ability to align its particular incentive compensation with its financial performance.

Following the spin-off, the Company believes that it is positioned to:

• invest in R&D and innovation to develop and launch diagnostic advancements globally in key clinical areas including oncology, women's health, autoimmune disease and neurology through organic and inorganic opportunities;

• utilize its worldwide laboratory network to serve a broad, growing and global customer base including pharmaceutical and biotechnology companies, physicians, health systems, consumers, and other start-ups and laboratories that require lab services or diagnostic testing;

• launch innovative tests globally, providing patients, physicians, health systems and pharmaceutical companies with access to its advanced science, technology and diagnostic capabilities.

(Fortrea), 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 (Common Stock).

Each holder of record of Common Stock received one share of Fortrea common stock for every share of Common Stock.

Upon closing of the Spin-off, Fortrea made a cash distribution to the Company of approximately $1,600.0 million.

In 2023, these proceeds were mainly used to repurchase approximately $1,000.0 million in the aggregate of Common Stock pursuant to accelerated share repurchase agreements and paying down $300.0 million of debt that matured in 2023.

The remaining funds were used in 2024 to support continued programs to return value to shareholders, through cash dividends and/or share repurchases.

As a result of the Spin-off, all current and historical operating results of Fortrea are presented as Earnings from discontinued operations, net of tax, in the Consolidated Statements of Operations and the Company has recast its BLS segment results to exclude the historical results of the CDCS business for all periods presented.

Enterprise Strategy

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The Company is focused on two near-term strategic opportunities for growth across both Dx and BLS:

To Be the Partner of Choice for Health Systems and Local and Regional Laboratories

Be the Partner of Choice for Health Systems and Local and Regional Laboratories

The Company expects industry consolidation to continue, as hospitals and health systems focus on investing in core patient care services.

The depth and the breadth of opportunity and the quality of the pipeline is robust, and the Company is optimistic about continued expansion.

The depth and the breadth of opportunity and the quality of the pipeline is robust, and the Company is optimistic

about continued expansion.

The Company seeks partnerships that meet financial criteria, including being accretive in the first year, returning each transaction’s cost of capital within three years, and providing a clear path to improve margins.

The Company signed or completed six collaboration transactions with health systems in 2023.

The Company believes it is an attractive partner for hospitals and health systems for multiple reasons:

• Innovative product offerings in high growth specialty areas:

Many hospital and health systems want to be at the forefront of their offerings to patients with the latest specialty testing;

The Company signed or completed 10 collaboration transactions with health systems and local and regional laboratories in 2024.

The Company believes it is an attractive partner for hospitals and health systems for multiple reasons, including its:

• innovative offerings in high growth specialty areas;

• industry-leading test portfolio and national presence;

Hospitals and health systems seek a partner who can scale as they expand and grow;

• unique data and analytics capabilities;

Clients need the ability to combine data from across multiple tests, healthcare IT systems, and labs, and the Company’s team has expertise to do this in a way that provides important patient care insights;

• ability to integrate a hospital’s laboratory services seamlessly.

Clients value the Company’s track record of successful integrations to provide continuity of care for patients and providers.

To Lead in the Development, Licensing, and Scaling of Specialty Testing Including Companion Diagnostics

Lead in the Development, Licensing, and Scaling of Specialty Testing

The Company is focused on four primary specialty testing areas:

oncology, women's health, autoimmune disease, and neurology, which the Company believes represent significant growth areas.

The development of specialty tests and companion diagnostics are attractive to health systems partners and biopharma as they continue to develop more products in specialty areas and cell and gene therapy.

The development of specialty tests and companion diagnostics (CDx) are attractive to health systems partners and biopharma as they continue to develop more products in specialty areas and cell and gene therapy.

The Company has demonstrated its ability to provide comprehensive portfolios in these four areas, which comprise more than half of clinical trials conducted in its Central Laboratory Services business.

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Establish leadership and partnership capabilities in cell and gene therapy

Cell and gene therapy is a growing focus of biopharma pipelines, with more than 2,000 clinical trials being conducted globally and representing approximately 20% of all biopharma drug pipelines.

Cell and gene therapy is a growing focus of biopharma pipelines, with approximately 2,000 clinical trials being conducted globally and representing approximately 20% of all biopharma drug pipelines.

The Company expects the cell and gene therapy market to grow at a substantially higher rate than other types of therapies over the next five years.

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Consumerism trends, such as greater choice, convenience, and transparency, continue to have a growing influence across the healthcare landscape and present new opportunities for growth.

Through its core customer groups, the Company has more than 150 million customer interactions per year and has invested in modern capabilities to digitize and improve the patient journey across patient service centers.

Through the Labcorp OnDemand channel, the Company has also demonstrated its ability to connect with consumers directly and is now offering more than 50 health and wellness tests through Labcorp OnDemand.

Through its core customer groups, the Company has approximately 175 million patient encounters per year and has invested in modern capabilities to digitize and improve the patient journey across patient service centers.

Through the Labcorp OnDemand™ channel, the Company has also demonstrated its ability to connect with consumers directly and is now offering 75 health and wellness tests through Labcorp OnDemand.

Across its core businesses, the Company has an opportunity to make strategic investments to continue to enhance the customer experience through its patient portal, patient service center network, and other consumer-focused initiatives, and to capitalize on select direct revenue streams that require elevated consumer capabilities.

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International expansion of specialized diagnostics remains a key opportunity for future growth as the Company continues to add to its pipeline of specialty diagnostics.

The Company is already a key partner to biopharma in companion diagnostics (CDx) wit h greater than $500.0 million in net orders in the BLS segment in 2023.

As its pip eline of specialty diagnostics grows, the Company will seek to leverage its scientific leadership in new markets through a differentiated set of capabilities:

The Company is already a key partner to biopharma in CDx.

As its pip eline of specialty diagnostics grows, the Company will seek to leverage its scientific leadership in new markets through a differentiated set of capabilities, including:

• a global central laboratory footprint;

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• deep customer relationships in diagnostics and biopharma laboratory services.

As CDx continue to become more important for serving customers across the enterprise, the Company has a unique set of capabilities to be an end-to-end partner to biopharma and will continue to expand these capabilities to fuel further targeted growth internationally.

COVID-19 Pandemic Response

The Company has supported the global response to COVID-19 since the earliest stages of the pandemic, and it continues to contribute to ongoing efforts.

The Company's additional contributions to the pandemic response in 2023 included assisting in the identification and monitoring of COVID-19 variants and surges in confirmed cases.

The Company maintained its ability to quickly scale up COVID-19 PCR testing capacity throughout the year, even during periods of reduced demand.

In doing so, the Company was able to immediately and effectively respond to surges in positive cases and testing needs.

The Company performed approximately 13 million COVID-19 PCR tests and 1 million antibody tests in 2023, and since the start of the pandemic has performed approximately 74 million COVID-19 PCR tests and 9 million antibody tes ts.

As CDx continues to become more important for serving customers across the enterprise, the Company has a unique set of capabilities to be an end-to-end partner to biopharma and will continue to expand these capabilities to fuel further targeted growth internationally.

Capital Allocation

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The Company continues to evaluate acquisition opportunities that leverage the Company’s core competencies, complement existing scientific and technological capabilities, increase the Company’s presence in key geographic, therapeutic and strategic areas, and meet or exceed the Company’s financial criteria.

During 2023, the Company repurchased 4.8 million shares of Common Stock at an average price of $206.85 per share for a total cost of $1,000.0 million.

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

At the end of 2023, the Company had outstanding authorization from the Board to purchase $530.4 million of Common Stock.

During 2023, capital expenditures were $453.6 million.

The Company expects capital expenditures in 2024 to be approximately 3.5% of revenues, primarily in connection with projects to support growth in the Company's core businesses, facility expansion and updates, projects related to its LaunchPad initiative, and further acquisition integration initiatives.

During 2024, the Company repurchased 1.1 million shares of Common Stock at an average price of $219.57 per share for a total cost of $250.1 million and paid dividends of $243.1 million.

At the end of 2024, the Company had outstanding authorization from its Board of Directors (Board) to purchase up to $1,280.4 million maximum value of Common Stock.

During 2024, capital expenditures were $489.9 million, or 3.8% of the Company’s revenues.

The Company expects this level of spending to remain consistent in 2025, primarily in connection with projects to support growth in the Company’s core businesses, facility expansion and updates, projects related to its LaunchPad initiative, and further acquisition integration initiatives.

The Company will continue to evaluate opportunities for strategic deployment of capital in light of market conditions.

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For example, testing volume generally declines during the year-end holiday period and other major holidays and can also decline due to inclement weather or natural disasters.

Testing volumes can also be impacted by changes in the global economy, exchange rate fluctuations, political and regulatory changes, the progress of ongoing studies and the startup of new studies, as well as the level of expenditures made by the pharmaceutical, biotechnology and medical device industries in R&D.

Declines in testing volume reduce revenues, operating margins, and cash flows.

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Company Reporting

The Company’s Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and all amendments to those reports are made available free of charge through the Investor Relations section of the Company’s website at www.labcorp.com as soon as reasonably practicable after such material is electronically filed with, or furnished to, the SEC.

Securities and Exchange Commission (SEC).

Additionally, the SEC maintains a website at http://www.sec.gov that contains reports, proxy and information statements, and other information regarding issuers, including the Company, that file electronically with the SEC.

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The Company ’ s Business

For the year ended December 31, 2023, the Company's revenues from continuing operations were $12.2 billion, an increase of 2.5% from $11.9 billion in 2022.

The 2.5% increase in revenues for the year ended December 31, 2023, as compared to the corresponding period in 2022 was due to acquisitions, net of divestitures of 1.7%, organic revenue of 0.6%, and favorable foreign currency translation of 0.2%.

The 0.6% increase in organic revenue was due to an 8.7% increase in the Company's organic Base Business, partially offset by an 8.1% decrease in COVID-19 Testing.

In Millions, Except Per Share Data Years Ended December 31,

For the year ended December 31, 2024, the Company’s revenues were $13,008.9 million, an increase of 7.0% from $12,161.6 million in 2023.

The 7.0% increase in revenues for the year ended December 31, 2024, as compared to the corresponding period in 2023, was primarily due to organic revenue of 3.9%, acquisitions, net of divestitures of 2.8%, and favorable foreign currency translation of 0.2%.

The 3.9% increase in organic revenue was due to a 4.9% increase in the Company’s organic Base Business, partially offset by an 1.0% decrease in COVID-19 Testing.

In Millions, Except Per Share Data Year Ended December 31,

Revenues $ 13,008.9 $ 12,161.6

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Operating income $ 1,086.7 $ 725.6

Net earnings attributable to Laboratory Corporation of America Holdings $ 418.0 $ 1,279.1

Cash flows from continuing operating activities $ 1,202.3 $ 1,764.8

Net earnings attributable to Labcorp Holdings Inc.

$ 746.0 $ 418.0

Cash flows provided by continuing operating activities $ 1,585.8 $ 1,202.3

Basic earnings per common share from continuing operations $ 8.89 $ 4.35

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Although this allocation of revenues provides some protection from economic shifts in any one country, it is still heavily tilted towards the U.S.

As a result, the Company continues to actively explore new business opportunities outside the U.S.

to further diversify its sources of revenues.

As a result, to further diversify its operations, the Company may explore select business opportunities outside the U.S.

The Company’s revenues by segment payers/customer groups and by geography for the years ended December 31, 2024 and 2023 are as follows:

For the Year Ended

December 31, 2023 For the Year Ended

December 31, 2022 For the Year Ended

December 31, 2021

North America Europe Other Total North America Europe Other Total North America Europe Other Total

Year Ended December 31, 2024 Year Ended December 31, 2023

North America Europe Other Total North America Europe Other Total

Payer/Customer

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

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 chief operating decision maker now evaluates segment performance and allocates resources.

Prior periods have been conformed for comparability.

Diagnostics Laboratories Segment

During 2023, the Dx segment generated $ 9,415.1 million in total revenues and $ 1,591.3 million in segment operating income, resulting in an operating margin of 16.9%.

During 2024, the Dx segment generated $10,144.3 million in revenues and $1,606.3 million in segment operating income, resulting in an operating margin of 15.8%.

In Millions Year Ended December 31,

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Dx segment operating income $ 1,606.3 $ 1,591.3

Dx is an independent clinical laboratory business.

It offers a comprehensive menu of frequently requested core testing and specialty testing through an integrated network of primary and specialty laboratories across the U.S.

Dx offers a comprehensive menu of frequently requested core testing and specialty testing through an integrated network of primary and specialty laboratories across the U.S.

This network is supported by a sophisticated information technology system, with more than 80,000 electronic interfaces to deliver test results, nimble and efficient logistics, and local labs offering rapid response testing.

Dx also provides patient access points that are strategically and conveniently located throughout the U.S., including more than 2,200 patient service centers (PSCs) and more than 6,800 in-office phlebotomists located in customer offices and facilities.

Although testing for healthcare purposes and customers who provide healthcare services represents the most significant portion of the clinical laboratory industry, clinical laboratories also perform testing for other purposes and customers, including employment and occupational testing, DNA testing to determine parentage and to assist in immigration eligibility determinations, environmental testing, wellness testing, toxicology testing, pain management testing, and medical drug monitoring.

Although testing for healthcare purposes and customers who provide healthcare services represents the most significant portion of the clinical laboratory industry, clinical laboratories also perform testing for other purposes and customers, including employment and occupational testing, deoxyribonucleic acid testing to determine parentage and to assist in immigration eligibility determinations, environmental testing, wellness testing, toxicology testing, pain management testing, and medical drug monitoring.

Dx offers an expansive test menu that includes a wide range of clinical, anatomic pathology, genetic and genomic tests, and regularly adds new tests and improves the methodology of existing tests to enhance patient care.

Dx also offers more than 50 consumer-initiated wellness testing available online through its Labcorp OnDemand™ platform.

Dx has more than 160 million patient interactions per year, including patients getting lab results, going to the Company's websites, and purchasing testing online through Labcorp OnDemand.

Dx also offers more than 75 consumer-initiated wellness tests available online through its Labcorp OnDemand platform.

As part of an ongoing commitment to be an efficient and high-value provider of laboratory services, Dx implemented and has maintained a comprehensive business process improvement initiative known as LaunchPad.

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• Comprehensive, nimble supply chain for transferring specimens across the entire life cycle of a patient sample

• 1-2 day turnaround time for most test results, with the vast majority of results delivered electronically to healthcare providers and to patients who have a Labcorp Patient™ account

• Rigorous standard of quality - 24 regional/specialty labs hold ISO 15189 certification, 3 labs hold ISO 13485 certification, and one lab holds both

Testing and Related Services • Standard Testing Services - frequently-ordered tests used in regular patient care include blood chemistry analyses, urinalyses, blood cell counts, thyroid tests, PAP tests, hemoglobin A1C, prostate-specific antigen (PSA), tests for sexually transmitted diseases (e.g., chlamydia, gonorrhea, trichomoniasis and human immunodeficiency (HIV), and hepatitis C (HCV)), vitamin D, microbiology cultures and procedures, and alcohol and other substance abuse tests

• One- to two- day turnaround time for most test results, with the vast majority of results delivered electronically to healthcare providers and to patients who have a Labcorp Patient™ account

• Rigorous standard of quality - 25 regional/specialty labs hold International Organization for Standardization (ISO) 15189 certification, five labs hold ISO 13485 certification, and two labs hold both

Testing and Related Services • Standard Testing Services - frequently-ordered tests used in regular patient care include blood chemistry analyses, urinalyses, blood cell counts, thyroid tests, PAP tests, hemoglobin A1C, prostate-specific antigen (PSA), tests for sexually transmitted diseases (e.g., chlamydia, gonorrhea, trichomoniasis, human immunodeficiency (HIV), and hepatitis C (HCV)), vitamin D, microbiology cultures and procedures, and alcohol and other substance abuse tests

• Specialty Testing Services - industry leader in gene-based and esoteric testing;

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• Dx offers a range of health and wellness services to employers and MCOs, including health fairs, on-site and at-home testing, vaccinations and health screenings

Development of New Tests • More than 130 new tests launched in 2023

Development of New Tests • Nearly 100 new tests launched in 2024

• Active diagnostics and therapeutics research division:

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Technology-Enabled Services and Support A range of services and support using proprietary technologies to improve the customer and patient experience and provide convenient access to data and analytics, including:

• More than 6.7 million enhanced clinical decision support (CDS) reports delivered to physicians and health systems

• Online and mobile applications improving the patient experience by allowing patients to learn about the Company's services and products, schedule PSC visits, check-in upon PSC arrival, complete documentation, access tests and test results, and manage their accounts

• More th an 6.7 million en hanced clinical decision support (CDS) reports delivered to physicians and health systems

• Online and mobile applications improving the patient experience by allowing patients to learn about the Company’s offerings, schedule PSC visits, check-in upon PSC arrival, complete documentation, access tests and test results, and manage their accounts

• Online applications for providers, MCOs and accountable care organizations (ACOs) to obtain test results and population and health management data

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Market Changes on the Clinical Laboratory Business

T he delivery of, and reimbursement for, healthcare continues to change in the U.S., impacting all stakeholders, including the clinical laboratory business.

The delivery of, and reimbursement for, healthcare continues to change in the U.S., impacting all stakeholders, including the clinical laboratory business.

Medicare (which principally serves patients who are 65 and older), Medicaid (which principally serves low-income patients), and insurers have increased their efforts to control the cost, utilization, and delivery of healthcare services.

Measures to regulate healthcare delivery in general and clinical laboratories in particular have resulted in reduced prices, added costs, increased coverage denials and claims edits, and decreased test utilization for the clinical laboratory industry by imposing new, increasingly complex regulatory and administrative requirements.

industry by imposing new, increasingly complex regulatory and administrative requirements.

The government also has continued to adjust the Medicare and Medicaid fee schedules at the national and local level, and the Company believes that pressure to reduce government reimbursement will continue.

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Dx has experienced governmental reimbursement reductions as a direct result of several Congressional acts and regulatory initiatives, including those designed to control healthcare expenses reimbursed by government programs through a combination of reductions to fee schedules, incentives to physicians to participate in alternative payment models such as risk-sharing, and new methods to establish and adjust fees.

The most significant of these developments was the Protecting Access to Medicare Act (PAMA), which became law on April 1, 2014, and which went into effect on January 1, 2018.

The most significant of these developments was the Protecting Access to Medicare Act (PAMA).

Beginning in 2018, under PAMA, the Centers for Medicare and Medicaid Services (CMS) of the U.S.

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PAMA resulted in a net reduction in reimbursement revenue of approximately $245.0 million between 2018-2020 from all payers affected by the CLFS.

Due to enactment of the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) passed by Congress on March 27, 2020, the Medicare reimbursement cuts that would have occurred under PAMA in 2021 were delayed by one year.

In 2021, Dx realized an increase of approximately $0.3 million in PFS revenue as a result of the provisions included in the Omnibus Appropriations and Coronavirus Relief Package.

In 2021, Dx realized an additional increase of approximately $5.8 million in aggregate Medicare reimbursement associated with the suspension of sequestration through December of 2021, as a result of provisions included in the Omnibus Appropriations and Coronavirus Relief Package that were extended as a result of an Act to Prevent Across-the-Board Direct Spending Cuts.

On December 10, 2021, President Biden signed into law the Protecting Medicare and American Farmers from Sequester Cuts Act, which delayed by one additional year the data reporting requirements and Medicare reimbursement cuts that would have occurred under PAMA in 2022, resulting in a 0% update to the CLFS in 2022.

In 2022, Dx realized a decrease of approximately $0.4 million in PFS revenue driven by reductions in reimbursement for flow cytometry procedures and a decrease of approximately $10.0 million in aggregate Medicare reimbursement associated with the phased in reinstitution of sequestration as a result of provisions included in the Protecting Medicare and American Farmers from Sequester Cuts Act.

The Protecting Medicare and American Farmers from Sequester Cuts Act also included mitigations to several other non-PAMA Medicare cuts in addition to delaying Medicare reimbursement cuts under PAMA.

It delayed the 4% Medicare cuts that would otherwise have occurred in 2022 under statutory “pay-as-you-go,” or PAYGO, rules to offset the cost of the American Rescue Plan Act by one year.

In addition, it delayed the resumption of the 2% Medicare sequestration until April 1, 2022, and reduced to 0.75% the previous 3.75% reduction to PFS reimbursement that was scheduled for 2022.

To offset the cost, the Medicare sequestration was increased to 2.25% for January through June of 2030, and to 3.0% for July through December 2030.

On December 29, 2022, President Biden signed into law the Consolidated Appropriations Act, 2023, which delayed by one additional year the data reporting requirements and Medicare reimbursement cuts that would have occurred under PAMA in 2023, resulting in a 0% update to the CLFS for 2023.

The Consolidated Appropriations Act, 2023 also included mitigations to several other non-PAMA Medicare cuts in addition to delaying Medicare reimbursement cuts under PAMA.

It delayed until 2025 the 4% Medicare cuts that would otherwise have been effective January 1, 2023 under PAYGO rules.

In addition, it mitigated PFS cuts in 2023 and 2024 to by 2.5% and 1.25%, respectively, that would otherwise have been a decrease of 4.47% in 2023 based on the conversation factor put forward in the 2023 Medicare PFS Final Rule.

To offset the cost, it extended the 2% Medicare sequestration through the first six months of 2032 and set the sequestration percentage at 2% in fiscal years 2030 and 2031.

On November 16, 2023, President Biden signed into law the Further Continuing Appropriations and Other Extensions Act, which delayed by one additional year the data reporting requirements and Medicare reimbursement cuts that would have occurred under PAMA in 2024, resulting in a 0% update to the CLFS for 2024.

In 2024, Dx anticipates a net PFS revenue decrease of approximately 0.7% ($1.0 million) from the 2024 Medicare PFS Final Rule, driven by a 3.4% decrease to the PFS conversion factor along with changes in relative value units (RVUs) for PFS procedures.

The blood draw rate change was not mentioned in the 2024 Medicare PFS Final Rule, however the rate did receive a consumer price index adjustment resulting in an increase from $8.57 to $8.83 or approximately 3%.

Congress is considering legislation that would mitigate these cuts if enacted.

Since 2021, the implementation of additional PAMA reporting and reimbursement changes have been delayed each year by legislators.

Pursuant to PAMA as amended, for 2026 through 2028, a CLFS test price cannot be reduced by more than 15.0% per year (excluding non-PAMA reimbursement changes).

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CLFS rates for Advanced Diagnostic Laboratory Tests will be updated annually.

Unless implementation of PAMA is further delayed or changed, additional reductions in reimbursements of $100.0 million are expected for 2026 from all payers affected by the CLFS.

The American Clinical Laboratory Association (ACLA) filed a federal civil action in 2017 challenging the legal basis for the data collection methodology CMS used to derive the data from which the median prices were calculated.

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House of Representatives on March 29, 2023.

ACLA is considering amendments and alternatives to SALSA that remain under evaluation.

The Company supports the ongoing efforts to prevent or lessen the negative impact of the changes to the CLFS pursuant to PAMA, and the full impact of those efforts, but what the long-term effect will be on the CLFS rates is not yet known.

Further healthcare reform could occur in 2024, including changes to the Patient Protection and Affordable Care Act (ACA) and Medicare reform, as well as administrative requirements that may continue to affect coverage, reimbursement, and utilization of laboratory services in ways that are currently unpredictable.

Further healthcare reform could occur in 2025, including changes to the Patient Protection and Affordable Care Act (ACA) and Medicare and Medicaid reform, as well as administrative requirements that may continue to affect coverage, reimbursement, and utilization of laboratory services in ways that are currently unpredictable.

In addition, market-based changes have affected and will continue to affect the clinical laboratory business.

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In addition, continued movement by patients into consumer-driven health plans may have an impact on the utilization of laboratory testing.

types of tests that are readily available (due to advances in technology and increased cost efficiencies) for the diagnosis of disease, and the general aging of the U.S.

Helping to balance the overall negative market changes regarding reimbursement discussed above, the Company believes that the volume of clinical laboratory testing is positively influenced by several factors, including an increase in the number and types of tests that are readily available (due to advances in technology and increased cost efficiencies) for the diagnosis of disease, and the general aging of the U.S.

Periodic infectious disease outbreaks such as the SARS-CoV-2 virus also have the potential to generate additional testing volume in the future and enhance stakeholders’ appreciation for the value of laboratory testing in combating future potential outbreaks.

Dx believes that its enhanced and growing menu of tests, focus on high-potential clinical areas, leading position with companion diagnostics, broad geographic footprint, and operating efficiency make it well positioned for growth due to a number of market factors, primarily related to a continued drive to improve outcomes and reduce costs across the healthcare system, including but not limited to greater price transparency required under “surprise billing” laws and regulations requiring disclosure of hospital charges.

Dx believes that its enhanced and growing menu of tests, focus on high-potential clinical areas, leading position with CDx, broad geographic footprint, and operating efficiency make it well positioned for growth due to a number of market factors, primarily related to a continued drive to improve outcomes and reduce costs across the healthcare system, including but not limited to greater price transparency required under “surprise billing” laws and regulations requiring disclosure of hospital charges.

Biopharma Laboratory Services Segment

During 2023, the BLS segment generated $ 2,774.2 million in total revenue and $ 396.3 million in segment operating income, resulting in an operating margin of 14.3%.

During 2024, the BLS segment generated $2,922.6 million in revenues and $458.9 million in segment operating income, resulting in an operating margin of 15.7%.

In Millions Year Ended December 31,

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BLS segment operating income $ 458.9 $ 396.3

BLS provides drug development, medical device and companion diagnostic development solutions from early-stage research to clinical development, along with support for crop protection and chemical testing, through its Early Development Research Laboratories and Central Laboratory Services businesses.

BLS provides drug development, medical device and CDx development solutions from early-stage research to clinical development, along with support for crop protection and chemical testing, through its ED and Central Laboratory Services businesses.

Its customers are comprised of pharmaceutical, biotechnology, medical device, and diagnostic companies across the world.

With a global network of operations, BLS offers deep expertise in early development and clinical trials in each therapeutic area.

BLS had provided support for 84% of the new drugs and therapeutic products approved in 2023 by the FDA, including 77% of those specific to oncology, 68% of those submitted by biotechnology compa nies, and 96% of those submitted by leading and large pharmaceutical companies.

Through its industry-leading central laboratory business, it supports clinical trial a ctivity in approximately 100 countries.

BLS had provided support for more than 75% of the new drugs and therapeutic products approved in 2024 by the FDA, including 86% of those specific to oncology, 74% of those submitted by biotechnology companies, and 80% of those submitted by leading and large pharmaceutical companies.

Through its industry-leading central laboratory business, it supports clinical trial a ctivity in approximately 100 cou ntries.

Service Key Features

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• Operates world’s largest automated clinical trial sample collection kit production lines that enable kits to be produced with 5.5 sigma precision

• Six ISO 15189-certified laboratories

• 6 ISO 15189-certified laboratories

Technology Solutions Proprietary digital tools and services providing customers with greater access to key insights and results, enhanced transparency, quality, and speed of clinical trial patient recruitment, resulting in reduced costs and increased market potential for customers:

• Metrics and benchmarking applications for monitoring patient recruitment at clinical site selection, protocol design, and optimization

• Metrics and benchmarking applications for monitoring patient recruitment for clinical site selection, protocol design, and optimization

• Ability to communicate with patients in the U.S.

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The Company’s culture centers around its mission to improve health and improve lives.

The Company's more than 67,000 employees located across 17 countries are essential to the Company’s ability to innovate and advance science and technology to empower patients, providers, and pharmaceutical companies to make clear and confident decisions.

The Company’s nearly 70,000 employees located across 17 countries are essential to the Company’s ability to innovate and advance science and technology to empower patients, providers, and pharmaceutical companies to make clear and confident decisions.

Engaging the collective expertise and passion of its employees across the globe is vital to achieving the Company’s mission, which permeates its performance-driven, collaborative, inclusive, customer-centered, and inquisitive culture.

Workforce Demographics

With the completion of the spin-off of Fortrea, nearly 20,000 employees moved from the Company to Fortrea.

All workforce information presented here is for the Company only as of December 31, 2023, unless otherwise noted.

The Company’s global talent is core to its ability to innovate and meet a wide range of patient and customer needs.

The Company’s employees are globally dispersed, with 89% in the U.S.

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Of the Company’s global workforce, 87% of employees are full time, and 13% are part time.

About 2.0% of this global workforce is employed under a collective bargaining agreement.

Approximately 71% of the Company’s employees globally are women.

Of the U.S.-based employees, approximately 52% of the team are people of color.

About 2.5% of the Company’s global workforce is employed under a collective bargaining agreement.

Depending on business demand and the availability of talent, the Company supplements up to 8% of its workforce with contingent workers.

The Company sources the majority of its talent through its internal talent acquisition team.

In 2024, the Company made investments in its talent to support retention and enable the Company’s growth.

For the third consecutive year, hiring outpaced voluntary attrition, both globally and in the U.S.

The chart below shows hiring and voluntary attrition in 2023 as a percentage of total Company employees.

Retention initiatives are discussed further in the section below on “Compensation and Benefits.”

Inclusion, Diversity and Belonging

The Company's diverse, global talent is core to its ability to innovate and meet patient and customer needs.

The Company believes that the diversity of its employees and its inclusive programs contribute to a healthy, productive, and respectful work environment.

Workforce Diversity Profile:

The Company's 2023 Inclusion, Diversity and Belonging (ID&B) strategic framework had three overarching pillars of focus:

empowering inclusive leadership;

developing and sustaining a diverse talent pipeline;

and creating an environment for engagement across the Company and in the communities in which it operates.

The Company’s strategy is designed as a continuing journey to sustain a highly inclusive environment consistent with the changing dynamics of the global workforce.

In 2023, the Company continued to take steps to foster a more inclusive environment and strengthen its culture.

Highlights include:

• shared quarterly diversity updates with senior leaders and progress on ID&B plans by senior leader to focus on inclusion and diversity within each business;

• held monthly meetings of the Company's ID&B advisory council, consisting of a cross section of leaders to learn about, and be advocates for, the Company's ID&B initiatives;

• deployed anti-harassment training to employees around the world;

• continued the global rollout of unconscious bias training program to all new Company leaders.

More than 640 participated in 2023;

• continued the deployment of mentoring, including a formal mentoring initiative that includes a Reverse Diverse Mentoring program that received the Gold Award in the category of Best Advance in Mentoring to Develop Diverse Leaders from the Brandon Hall Group in 2021;

• continued offerings of leadership development programs for women in senior management through the vice president level, and the second annual virtual women's summit for executive women leaders;

• continued to offer opportunities for greater engagement between employees and management, including quarterly global town halls, which are held virtually and are open to all employees, interactions with front-line employees on visits to the Company's facilities, and in-person town halls with employees in select business units;

• developed and introduced the Company's employee value proposition, Embrace Possibilities Change Lives, intended to guide its people strategy, including programs and offerings to attract, retain, and develop talent and to enhance employee engagement;

• continued global expansion of Employee Resource Groups (ERGs).

ERGs are led by employee volunteers and are important resources to foster cross- connections, encourage belonging, support career development, and champion employee voices.

The Company now has eight unique ERGs with 100 local chapters.

For the fourth consecutive year, hiring outpaced voluntary attrition, both globally and in the U.S.

Talent Initiatives

The Company’s talent initiatives support the development of inclusive leadership and culture, enhancing the team member experience, and supporting community engagement and patient focus.

Highlights for 2024 include:

• Launch of a listening strategy, including measuring employee experience, inclusion, and well-being;

• Supporting our Employee Resource Groups (ERGs), which are created and led by employee volunteers and open to all employees.

ERGs are important resources to foster cross-connections, encourage belonging, support career development, and champion employee voices.

The Company now has nine unique ERGs – with 118 local chapters across eight countries (United States, Belgium, China, Switzerland, Germany, India, Singapore, and United Kingdom)

with 7,900 participating employees, representing a growth of 43% participation compared to the year prior.

Each ERG has executive sponsorship from senior leadership;

• celebration of different cultures, constituencies, and observances throughout the year.

Encouraged all employees to participate in Global Diversity Awareness Month by volunteering in their local communities.

For 2024, the Company updated its ID&B strategy and defined three focal pillars:

Inclusive Leadership and Culture, Team Member Experience, and Community Engagement and Patient Focus.

The governance structure will also evolve to include an Executive Council led by the Company's CEO, along with expansion of the ID&B advisory council.

The Company operates in a complex, global, and dynamic life sciences industry and believes that its compensation and benefits programs must be competitive and flexible to attract and retain the caliber of talent needed for the sustained growth and success of the business.

The Company regularly monitors market activity and employee movement within and outside of the life sciences industry to maintain competitiveness.

In 2023, the Company invested more than $20 million in special bonuses to more than 28,000 non-executive employees globally in patient and client-facing roles to recognize employee commitment and contributions throughout the COVID-19 pandemic.

In addition, the Company awarded $96 million in annual merit increases to recognize its talent and foster pay competitiveness in the market.

Employee Wellbeing

The Company believes that its investments in compensation and employee wellbeing are crucial to maintaining competitive positioning and a productive, engaged workforce.

The Company fulfills its commitment to employee wellbeing by investing in a variety of tools and resources to support its employees’ physical, emotional, and financial well-being.

Whether it is through zero-cost telehealth visits for medical, dermatological, and behavioral treatment as part of the Company's medical plans in the U.S., employer matching 401(k) contributions and financial wellness workshops, or custom stress management strategies for teams around the world through its Healthy Huddles program, the Company continues to offer various ways for employees to focus on their wellbeing.

The Company also understands the continuing urgency around mental wellbeing and the importance of providing resources to support employees and their families.

In 2023, the Company expanded its wellbeing strategy to include a dedicated U.S.

mental wellbeing specialist who oversees all mental wellbeing initiatives.

Mental Health First Aid Training was completed by 425 of the Company's Human Resources and top leaders at the Company, and the program will expand to others in 2024.

Sixty-six virtual sessions, called Healthy Huddles, were leveraged by leaders for their teams across the globe, with sessions such as guided meditations and stretch breaks.

In partnership with employee assistance program (EAP) providers, the Company recognized World Mental Health Day in October 2023 with events and education throughout the whole month, including a global panel event featuring employees who shared their personal stories and struggles.

An additional 32 live mental wellbeing educational webinars were shared worldwide, to help reduce stigma and enhance awareness.

The addition of free behavioral health services via telemedicine led to a significant increase in utilization for U.S.

members of the Company's medical plans.

• Recognition of locally relevant celebrations of cultural events reflecting the breadth of different cultures, constituencies, and observances throughout the year;

• Continued deployment of anti-harassment training to employees around the world;

• Continued support of mentoring programs, including a formal mentoring initiative;

• Continued opportunities for greater engagement between employees and management, including quarterly global town halls, which are held virtually and are open to all employees, interactions with front-line employees on visits to the Company’s facilities, and in-person town halls with employees across business units and functions;

• Harmonization of the U.S.

paid holiday policy to now recognize six company-designated holidays and one floating holiday – providing a more consistent and inclusive experience for eligible U.S.

non-exempt employees.

By offering the flexibility of a floating holiday, the Company aims to better accommodate the unique needs, beliefs, and backgrounds of our workforce;

• Received several awards, such as Silver Military Friendly Award, Best Place to Work for Disability Inclusion, and Forbes’ Best Places to Work for Diversity.

The Company operates in a complex, global, and dynamic healthcare industry and believes that its compensation and benefits programs are comprehensive and flexible to attract and retain the caliber of talent needed for the sustained growth and success of the business.

The Company regularly monitors market activity and employee movement within and outside of the healthcare industry to maintain competitiveness.

In 2024, the Company awarded $93 million in annual merit increases to recognize its talent and foster pay competitiveness in the market.

Employee Well-being

The Company believes that its investments in compensation and employee well-being are crucial to maintaining comprehensive positioning and a productive, engaged workforce.

The Company fulfills its commitment to employee well-being by investing in a variety of holistic tools and resources to support its employees’ physical, emotional, and financial well-being.

In early 2024, the Company re-launched its wellness program making it more inclusive of both domestic and international employees.

This new program, called “Best You”, translates easily into the different languages of our international employees and can be tailored to local needs by “Best You Champions” that are present in most countries where the Company has in-office employees.

The Company is integrating Best You into the fabric of our company worldwide.

The Company has outreach programs to support its ERGs and other groups in providing wellness support to members.

In support of Best You, the Company continues to offer zero-cost telehealth and implemented free virtual Primary care visits for medical, dermatological, and behavioral treatment as part of its medical plans in the U.S., employer matching 401(k) contributions, financial wellness workshops, and custom stress management strategies for teams around the world.

The Company also understands the importance of providing mental health resources to support employees and their families.

In 2024, the Company implemented a global employee assistance program (EAP) solution to support employee mental health across the globe.

In addition, a suite of People Leader Mental Health Trainings was expanded to further support employees.

Best You wellbeing breaks were leveraged by leaders for their teams across the globe, with sessions such as guided meditations and stretch breaks.

In partnership with EAP providers, the Company recognized World Kindness Day in November 2024 with events and education throughout the whole month, including videos from our executive leadership team educating and supporting a culture of Kindness, which also helps build an inclusive culture committed to the Company’s mission and strategy.

Additional efforts in support of employee wellbeing include:

• Reducing the cost of monthly medical insurance contributions by $240 per year for approximately 19,000 employees in the U.S.

• Reducing the cost of monthly medical insurance contributions by $240 per year for more than 17,500 employees in the U.S.

earning less than $50,000 per year who participate in Company medical plans;

• Shifting the focus for annual wellness screenings to a more wholistic approach that emphasizes the importance of identifying metabolic conditions that can increase the risk of heart attack, stroke, and diabetes.

Over 30,000 U.S.

employees and their covered spouses and domestic partners received medical plan contribution discounts of up to $4,560;

• Providing up to $1,000 in health reimbursement account contributions, available to approximately 31,000 employees and their spouses or domestic partners to encourage health and wellness education and activities;

• Reimbursing up to $300 in fitness-related expenses for approximately 15,000 employees across the U.S.

• Offering free annual wellness screenings for U.S.

employees and covered spouses/domestic partners focusing on identifying metabolic conditions that can increase the risk of heart attack, stroke and diabetes.

Nearly 28,000 U.S.

employees and their covered spouses completed the no-cost screening and earned an annual medical plan contribution discount of up to $4,560;

• Providing up to $1,000 in health reimbursement arrangement and health savings account contributions, available to approximately 31,000 employees and their spouses or domestic partners to encourage health and wellness education and activities;

• Reimbursing up to $300 in fitness-related expenses for more than 13,000 employees across the U.S.

• Providing free ColoFit TM kits to over 5,000 employees to enhance colon cancer awareness and screenings;

• Offering Weight Watchers at no cost to employees and adding Weight Watchers Clinic access to support weight health with more than 7,400 employees actively engaged;

• Expanding $0 MDLIVE services to include Virtual Primary Care alongside Urgent Care, Behavioral Health, and Dermatology for U.S.

medical plan participants.

The Company’s No Charge Laboratory Testing program enables eligible U.S.

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Additionally, the Company offers global initiatives to encourage sustainable transportation through programs such as discounted transportation vouchers, reduced-cost bicycle leases, and mileage reimbursement for bicycle commuters, with benefits varying by country.

To enable its employees to establish ownership in the Company, the Company offers an Employee Stock Purchase Plan (ESPP) that allows U.S.

employees to purchase Common Stock at a 15% discount.

The plan was extended to an additional 5,000 employees in Canada and the U.K.

in 2022 and 2023 to foster broader employee participation in the plan.

Over 10,000 employees took advantage of the ESPP in 2023.

To enable its employees to establish ownership in the Company, the Company offers an employee stock purchase plan that permits substantially all U.S., Canada, and United Kingdom employees to purchase Common Stock at a 15% discount.

Development and Training

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Through these learning and development opportunities, the Company encourages learning, growth, and innovation to deliver better patient care and new solutions for its customers.

The Company provides professional skills training and role specific training, along with formal and informal mentoring, job rotations, and opportunities for temporary assignments.

The Company provides professional skills training and role specific training, along with formal and informal mentoring and job rotations.

The Company onboards and develops new hires through extensive training provided by a dedicated team of technical skill trainers with different departments and functions.

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• Completed over 1.1 million hours of training, primarily consisting of regulatory and technical training;

• Offered mentoring programs that 2,400 employees participated in as either mentors or mentees, the largest number of participants to date in the program’s 15-year history;

• Offered mentoring programs that nearly 2,800 employees participated in as either mentors or mentees;

• Completed more than 15,000 hours of professional development.

As a leader in science, the Company has almost 12,000 science-based jobs and leverages several internal scientific forums to help scientists at all levels of experience continuously learn, innovate, and advance the healthcare industry.

From scientific councils to a Molecular Tumor Board to Science Micro Bites, those in scientific roles are staying current in their fields of study, sharing their knowledge with others, and helping to expand the skills and experience of their colleagues.

An example of scientific employees sharing knowledge and experience is the Lab Exchange Program that was launched in 2023.

Through this program, colleagues in technical positions in our BLS and Dx labs are able to experience a two-week domestic or international assignment at one of five host site labs from the other business segment to which they normally are assigned, during which they are immersed in learning the processes and technologies used at that site.

This helps encourage collaboration across business segments, and exposes both the employees participating in the program and the laboratory staff at their host site with greater knowledge of and exposure to the Company's full scope of laboratory operations.

The Company’s ongoing investment in the development of its people stems from a continuing commitment to build a stronger, more diverse team.

In addition to traditional tuition reimbursement, over the past three years, Labcorp Education Advantage has actively supported employees in their pursuit of higher education by covering tuition costs for healthcare or life science degree programs that contribute to their career advancement within the Company.

Through these forums, those in scientific roles are staying current in their fields of study, sharing their knowledge with others, and helping to expand the skills and experience of their colleagues.

The Company’s ongoing investment in the development of its people stems from a continuing commitment to build a highly talented team.

In addition to traditional tuition reimbursement, over the past four years Labcorp Education Advantage has actively supported employees in their pursuit of higher education by covering tuition costs for healthcare or life science degree programs that contribute to their career advancement within the Company.

To date, more than 1,800 employees have benefited from this initiative, while also avoiding student loan debt.

Company Recognition for Focus on Employee Development

The Company was once again a proud recipient of the 2023 Princess Royal Training Awards (U.K.), honoring the work done through apprenticeship programs and initiatives to develop leaders.

The 2023 award recognized the Company's partnership with the University of Leeds to provide a master's course in Biopharmaceutical Development.

The Princess Royal Training Awards are offered to employers in the United Kingdom who can prove that their outstanding training and skills development programs have resulted in exceptional benefits for their business.

The Company was also ranked #1 in the Medical Care Facilities Sector and #35 out of all Fortune 500 companies surveyed in the 2023 American Opportunity Index.

A joint project from the Burning Glass Institute, the Harvard Business School Project on Managing the Future of Work, and the Schultz Family Foundation, the index uses independent data to measure how well Fortune 500 companies drive economic mobility and positive career advancement for their employees.

The Company aspires to create a workplace where employees can grow and discover more while advancing their career.

To assist with creating a pipeline of future medical lab scientists to support its customers, the Company established the Labcorp School of Medical Laboratory Sciences.

The National Accrediting Agency of Clinical Laboratory Sciences approved the Company’s application, which allowed the Company to host an inaugural class of students as part of its accreditation process.

In September 2024, five students across three U.S.

sites joined the inaugural class.

The Company is providing training to students tuition free to support them in obtaining certification for technical careers that are in high demand.

Students have the option to work in the Company’s laboratories outside of school hours.

Health and Safety

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As the health and safety of employees is a primary concern, the Company has established numerous employee health and safety protocols, including engineering and administrative controls, policies, procedures, processes, and training to minimize the potential for, and the severity of, work-related injuries and illnesses.

In 2023, the Company reduced its work-related injury rate per 100 employees 13.6% over 2022.

The Company's maintained work-related lost work injury rate per 100 employees increased by 25% over 2022, to 0.5%.

In 2024, the Company reduced its work-related injury rate per 100 employees by 14.2% and its work-related lost work injury rate per 100 employees by 24.7%.

The Company completed a Corporate EHS Audit on 11 significant laboratory facilities, allowing it to assess locations against common expectations and performance criteria.

The Company also completed nearly 120,000 safety training sessions covering topics that included bloodborne pathogen, chemical safety, and employee health and safety general awareness.

As previously reported, the Company modified the audit format in response to COVID-19 so that it could be effectively performed virtually, with the added benefit of reducing audit travel-related greenhouse gas emissions.

Community Engagement

The Labcorp Charitable Foundation, a private, charitable 501(c)(3) organization established by the Company, invested in more than 140 programs in 2023 that align with the Company’s strategic mission to improve health and improve lives in the areas of health, education, and community across the globe.

The Foundation supports efforts to increase access to health services and create equitable opportunities for underserved populations across the globe.

Colleagues around the globe are invited to participate in the Company’s annual Employee Giving Campaign.

Through the campaign, colleagues had the opportunity to donate to one or more of seven selected charities:

the American Cancer Society, American Heart Association, American Diabetes Association, American Red Cross (Disaster Relief), United Way, the National Urban League, and Project HOPE.

Employee contributions support these charities to provide needed services in their local communities and around the globe.

The Labcorp Charitable Foundation offers a match opportunity for contributions made through the campaign.

In addition, the Company's employees took advantage of opportunities to support charitable causes and make a positive impact in their communities.

For example, in honor of the life and legacy of Dr.

Martin Luther King, Jr., colleagues participated in the “Cards of Encouragement” campaign, a global initiative to lift the spirits of hospitalized children and their families.

With the help of Cards for Hospitalized Kids, close to 8,000 cards were distributed to children and their families staying at Ronald McDonald Houses or receiving treatment at nonprofit children’s hospitals.

The Labcorp Charitable Foundation made a financial donation to the 39 supported charities.

The Company's global colleagues also support the local communities where they live and work.

In observation of Childhood Cancer Awareness Month, Company colleagues in Geneva, Switzerland supported ARFEC (Association Romande des Familles d’Enfants atteints d’un Cancer) to benefit hospitalized children and their families through toy drives, the creation and sale of a calendar, and participation in the Geneva 20-kilometer race.

Dynacare, a Company subsidiary based in Canada, teamed up with Diabetes Canada to organize the #Dyncare4Diabetes campaign for the second consecutive year.

The campaign raised awareness of diabetes and provides accessible and free testing for at risk individuals.

In addition to offering free hemoglobin A1C testing at all Dynacare laboratory locations across the Greater Toronto Area and at mobile community clinics, Dynacare donated 50 cents to Diabetes Canada for every individual that participated in the campaign, up to a total of $25,000.

Labcorp fosters a culture of giving back beyond the scope of day-to-day tasks.

The Access for All initiative leads community engagement efforts of Labcorp and its employees to make a positive impact across the globe.

The Labcorp Charitable Foundation extends Labcorp’s commitment to Access for All by investing in programs in communities across the globe in the areas of health, education and community.

In 2024, colleagues continued to support the Company’s global Employee Giving Campaign.

Through the campaign, colleagues are able to collectively support the following charities:

American Cancer Society, American Heart Association, American Diabetes Association, American Red Cross, United Way, National Urban League, Project HOPE, and new in 2024 to expand Labcorp’s global reach, the International Committee of the Red Cross.

These agencies align with Labcorp’s mission to improve health and improve lives by leading the way in healthcare research, providing services to benefit the underserved, and supporting those affected by disaster.

Additionally, The Labcorp Charitable Foundation offers a match opportunity for contributions made through the campaign.

Labcorp, its employees and The Labcorp Charitable Foundation are committed to expanding access to healthcare, education, housing, and community support through strategic philanthropy and volunteerism.

The Company’s initiatives address social determinants of health while fostering science, technology, engineering, and math education, particularly in underserved communities.

By investing in the well-being of those Labcorp serves, the Company helps build stronger communities, remove barriers to healthcare and create opportunities for success.

Throughout the year, whether through financial grants or employee volunteerism, the Company is focused on providing Access for All.

Labcorp’s employees assisted in building homes, collecting food, serving meals, and providing essential items to help in underserved communities.

The Company financially supported patient assistance programs and community education programs to help improve health of the patients it serves.

Dynacare, a Labcorp company committed to Canada’s health and wellness, continued their efforts to raise awareness about type 2 diabetes and provide testing to those that need it most.

During Diabetes Awareness Month, Dynacare partnered with Diabetes Canada to organize five mobile clinics in communities that are most at risk of developing diabetes.

Continuing efforts to make a positive impact, colleagues from across the globe teamed up to serve their communities through the Healthy Communities Contest.

This contest ran for three months and encouraged Labcorp employees to unite in acts of kindness to advance Access for All through volunteerism.

In return, three teams were selected for their chosen charity to receive a grant from The Labcorp Charitable Foundation.

The Labcorp Charitable Foundation, a private, charitable 501(c)(3) organization established and supported by the Company, invested in more than 200 programs in 2024 that align with the Company’s strategic mission to improve health and improve lives by supporting efforts that increase access to health services, particularly for underserved populations across the globe.

Through a partnership with Project HOPE, the Labcorp Charitable Foundation supported a rural health program in China to increase access to pediatric and cancer care services.

The Labcorp Charitable Foundation remained committed to providing relief to communities in need following disaster through support of the American Red Cross Disaster Responder Program.

This ongoing commitment supports enables the American Red Cross to provide individual emergency assistance, disaster preparedness, food, shelter and relief items, health and emotional support, and community recovery leading up to and following a disaster or crisis.

The Foundation also matched employee donations made to qualified health and humanitarian organizations.

Additionally, in response to the devastation caused by storms such as Hurricanes Helene and Milton along the U.S.

East Coast, Labcorp employees mobilized to raise funds, organize donation drives and directly assist impacted communities.

In 2024, Labcorp continued to empower its employees to serve as agents of positive change, aligning their personal values with the Company's mission of enhancing health, through two signature employee engagement programs.

Double Your Donation offers a 1:1 match by The Labcorp Charitable Foundation for Labcorp employee donations to qualifying non-profit organizations.

Dollars for Doers encourages Labcorp employees to support their communities through volunteer service by offering a monetary donation from The Labcorp Charitable Foundation in recognition of their volunteer or board service to eligible non-profit organizations.

The Company provides its services to a broad range of customers across Dx and BLS.

The primary customer groups serviced by the Company include:

• Payers - Health Plans and Employers.

• Payers - Health Plans .

The Company serves many health plans, including MCOs, employer plans, and other health insurance providers, each of which operates on a national, regional, or local basis.

In certain locations, health plans may delegate to independent physician associations (IPAs) or other alternative delivery systems (e.g., ACOs) the ability to negotiate for services on behalf of certain members.

• Pharmaceutical, Biotechnology, Medical Device, and Diagnostics Companies.

The Company provides services to hundreds of pharmaceutical, biotechnology, medical device, and diagnostics companies, ranging from the world's largest multi-nationals to emerging, small and mid-market companies.

• Pharmaceutical, Biotechnology, Medical Device, and Diagnostics Companies and Contract Research Organizations (CROs) .

The Company provides services to hundreds of pharmaceutical, biotechnology, medical device, and diagnostics companies and CROs ranging from the world’s largest multi-nationals to emerging, small and mid-market companies.

• Physicians, Large Provider Organizations, and Other Healthcare Providers .

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• Other Customers .

The Company serves a broad range of other customers, incl uding, but not limited to, governmental agencies, employers, patients and consumers, contract research organizations (CROs), crop protection and chemical companies, academic institutions, independent clinical laboratories, and retailers.

The Company serves a broad range of other customers, including, but not limited to, governmental agencies, employers, patients and consumers, crop protection and chemical companies, academic institutions, independent clinical laboratories, and retailers.

Sales, Marketing, and Customer Service

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These include clinical areas, such as primary care, oncology, women’s health, autoimmune diseases, neurology, infectious diseases, endocrinology, gastroenterology, rheumatology and other specialties;

payers, such as ACOs, MCOs, and employers;

and customers, such as physicians and physician organizations and hospitals and health systems.

The BLS global sales organization provides customer coverage across the pharmaceutical, biotechnology, and medical device industries for services including lead optimization, preclinical safety assessment, analytical services, clinical trials, central laboratories, biomarkers, companion diagnostics, and technology solutions.

As part of the Company's ongoing strategic priority to maximize the value of its unique leadership in both diagnostics and drug development, sales representatives from each business segment work together on outreach to potential customers of both businesses, including hospitals and health systems that may purchase testing and participate in clinical trials, or pharmaceutical, biotechnology, or medical device companies whose studies may benefit from use of Dx’s specialty testing, companion diagnostics, and network of PSCs.

payers, such as ACOs, MCOs, and employers, and customers, such as physicians and physician organizations, and hospitals and health systems.

The BLS global sales organization provides customer coverage across the pharmaceutical, biotechnology, and medical device industries for services including lead optimization, preclinical safety assessment, analytical services, clinical trial enablement through data insights, central laboratory services, biomarker testing, CDx, and technology solutions.

As part of the Company’s ongoing strategic priority to maximize the value of its unique leadership in both diagnostics and biopharma laboratory services, sales representatives from each business segment work together on outreach to potential customers of both businesses, including hospitals and health systems that may purchase testing and participate in clinical trials, or pharmaceutical, biotechnology, or medical device companies whose studies may benefit from use of Dx’s specialty testing, companion diagnostics, and network of PSCs.

Market Opportunity

The Company believes that in 2024 , the U.S.

clinical laboratory testing industry generated revenues of more than $80 billion.

clinical laboratory testing industry generated reven ues of more than $80 billion.

The clinical laboratory industry consists primarily of three types of providers:

hospital-based laboratories, physician-office laboratories, and independent clinical and anatomical pathology laboratories, such as those operated by Dx.

The clinical laboratory business is intensely competitive, and the Company believes that both competition and consolidation in the clinical laboratory business will continue.

CMS has estimated that, as of February 2024, there were nearly 320,000 clinical laboratories of all types, including approximately 9,200 hospital-based laboratories, just under 123,000 physician-office laboratories, and 9,063 independent clinical and anatomic pathology laboratories in the U.S.

Dx competes with all of those laboratories.

The clinical laboratory business is int ensely competitive, and the Company believes that both competition and consolidation in the clinical laboratory business will continue.

CMS has estimated that, as of March 2024 (the most recent data available as of the filing of this report), there were nearly 320,000 clinical laboratories of all types, including approximately 9,200 hospital-based laboratories, just under 123,000 physician-office laboratories, and approximately 8,500 independent clinical and anatomic pathology laboratories in the U.S.

Dx co mpetes with all of those laboratories.

In addition, an increasing number of health syst em laboratories have been expanding their operations and business, resulting in greater competition for testing from physicians within those systems and from unaffiliated physicians in the health system laboratories’ service areas.

Dx believes that the selection of a laboratory is primarily based on the following factors, all of which the Company believes it competes favorably in:

Dx believes that the selection of a laboratory is primarily based on the following factors, all of which the Company believes Dx competes favorably in:

• brand strength and reputation;

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Drug development services businesses like BLS typically derive most of their revenue from R&D, as well as marketing expenditures, of the pharmaceutical, biotechnology, and medical device industries.

Outsourcing of R&D services to CROs and other service providers has increased in the past, and is expected to continue increasing in the future.

Increasing pressures to improve return on investment, to increase R&D productivity, to stay abreast of scientific advances and to comply with stringent government regulations and attempts to reduce and control the price of

prescription drugs have all contributed to this outsourcing which provides clients with flexibility in aligning resources to demand.

Outsourcing of R&D services to CROs and other service providers remains integral to the drug development process.

The pharmaceutical market will continue to feel the pressure to improve return on investment, increase R&D productivity, stay abreast of scientific advancements and comply with stringent government regulations and attempts to reduce and control the price of prescription drugs, all supporting the outsourcing model.

In the face of mounting complexity, the investment and amount of time required to develop new products are significant and have been increasing.

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BLS competes against these small and large businesses, as well as in-house departments of pharmaceutical, biotechnology, medical device, and diagnostic companies, and to a lesser extent, selected academic research centers, universities, and teaching hospitals.

BLS believes that customers selecting a drug development partner often consider the following factors, all of which the Company believes it competes favorably in:

BLS believes that the selection of a drug development partner is primarily based on the following factors, all of which the Company believes it competes favorably in:

• reputation for quality and regulatory compliance;

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• quality of facilities;

• quality of relationships, including investigator and patient;

• ability to manage large-scale clinical trials both domestically and internationally;

• quality of relationships;

• size and scale;

• ability to support decentralized clinical trials;

• ability to develop companion diagnostics;

• ability to develop CDx;

• access to talent.

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The Company has procedures for monitoring its internal performance, as well as that of its vendors, suppliers, and other key stakeholders.

In addition, various groups and departments within the Company provide oversight to monitor and control vendor products and performance, and play an essential role in the Company’s approach to quality through improvements in processes and automation.

In addition, various groups and

departments within the Company provide oversight to monitor and control vendor products and performance and play an essential role in the Company’s approach to quality through improvements in processes and automation.

Virtually all facets of the Company’s services are subject to quality programs and procedures, including accuracy and reproducibility of tests, turnaround time, customer service, marketing communications, data integrity, patient satisfaction, and billing.

The Company’s quality programs include measures that compare current performance against desired performance goals to monitor critical aspects of service to its customers and patients.

This includes licensing, credentialing, training, and competency assessment of professional and technical staff, and internal auditing.

In addition to the Company's own quality programs, the Company’s laboratories, facilities and processes are subject to on-site regulatory agency inspections and accreditation evaluations, in addition to surveys and proficiency testing, by local or national government agencies, independent external accrediting programs, and inspections and audits by customers.

Thirty-three of the Company's laboratories have received ISO 15189, ISO 13485 and/or ISO 141791 accreditation, demonstrating that they meet international standards for quality and technical competence.

This includes licensing, credentialing, training, competency assessments of professional and technical staff, and internal auditing.

In addition to the Company’s own quality programs, the Company’s laboratories, facilities, and processes are subject to on-site regulatory agency inspections and accreditation evaluations, surveys and proficiency testing by local or national government agencies and independent external accrediting programs, and inspections and audits by customers.

Thirty-five of the Company’s laboratories have received ISO 15189, ISO 17025, ISO 13485 and/or ISO 14791 accreditation, demonstrating that they meet international standards for quality and technical competence.

Information Systems

The Company is committed to developing and commercializing technology-enabled solutions to support its operations and provide better care.

The Company is committed to developing and commercializing technology-enabled solutions it believes will support its operations and provide better care.

The Company operates standard platforms for its core business services and its financial and reporting systems.

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The Company’s cybersecurity processes and systems are discussed in more detail under “Cybersecurity” in Item 1C.

For several years the Company has deployed artificial intelligence and machine learning tools (AI) to supplement its existing data analysis projects and support greater efficiency in its operations.

The Company is currently evaluating and testing various further applications of AI, while also implementing policies and processes to provide appropriate governance over the use of AI by the Company.

For several years the Company has deployed AI and machine learning tools to supplement its existing data analysis projects and support greater efficiency in its operations.

The Company is currently evaluating and testing various additional applications of AI and machine learning tools, while also implementing policies and processes to provide appropriate oversight over the use of AI and machine learning tools by the Company.

Intellectual Property Rights

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Occasionally, the Company also licenses U.S.

patents, patent applications, technology, trade secrets, know-how, copyrights or trademarks owned by others.

patents, patent applications, technology, trade secrets, know-how, copyrights, and trademarks owned by others.

The Company believes, however, that no single patent, technology, trademark, intellectual property asset, or license is material to its business as a whole.

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Regulation and Reimbursement

Because the Company operates in a number of distinct environments and in a variety of locations worldwide, it is subject to numerous, and sometimes overlapping, regulatory requirements.

Both the clinical laboratory and the drug development businesses are subject to significant governmental regulation at the international, national, state and local levels.

As described below, these regulations concern licensure and operation of clinical laboratories, claims submission and reimbursement for laboratory services, healthcare fraud and abuse, drug development services, security and confidentiality of health information, quality, and environmental and occupational safety.

Because the Company operates in multiple distinct environments and in a variety of locations worldwide, it is subject to numerous, and sometimes overlapping, regulatory requirements.

Both the clinical laboratory and the biopharma laboratory businesses are subject to significant governmental regulation at the international, national, state, and local levels.

As described below, these regulations concern licensure and operation of clinical laboratories, claims submission and reimbursement for laboratory services, healthcare fraud and abuse, biopharma laboratory services, security and confidentiality of health information, quality, and environmental and occupational safety.

Regulation of Clinical Laboratories

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must be certified by the federal government or by a federally approved accreditation agency.

In most cases, that certification is regulated by CMS through CLIA, which requires that applicable clinical laboratories meet quality assurance, quality control, and personnel standards.

In most cases, that certification is regulated by CMS through the Clinical Laboratory Improvement Act of 1967 and the Clinical Laboratory Improvement Amendments of 1988 (CLIA), which requires that applicable clinical laboratories meet quality assurance, quality control, and personnel standards.

Laboratories also must undergo proficiency testing and are subject to inspections.

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The Company’s remaining smaller testing sites hold CLIA certificates to perform moderate-complexity testing or a certificate of waiver.

The sanctions for failure to comply with CLIA requirements include suspension, revocation, or limitation of a laboratory's CLIA certificate, which is necessary to conduct business;

cancellation or suspension of the laboratory's approval to receive Medicare and/or Medicaid reimbursement;

as well as significant fines and/or criminal penalties.

The sanctions for failure to comply with CLIA requirements include suspension, revocation, or limitation of a laboratory’s CLIA certificate, which is necessary to conduct business, cancellation or suspension of the laboratory’s approval to receive Medicare and/or Medicaid reimbursement, as well as significant fines and/or criminal penalties.

The loss or suspension of a CLIA certification, imposition of a fine or other penalties, or future changes in the CLIA law or regulations (or interpretation of the law or regulations) could have a material adverse effect on the Company.

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FDA and Other Regulatory Agency Laws and Regulations

Various regulatory agencies, including CMS and the FDA in the U.S., regulate the development, testing, manufacturing, labeling, advertising, marketing, distribution, storage, import, export, performance, and surveillance of diagnostic and therapeutic products and services, including certain products and services offered by the Company and the development of therapeutic products that comprise the majority of BLS’s business.

The FDA and other regulatory agencies periodically inspect and review the manufacturing processes and product performance of diagnostic and therapeutic products, while CMS, certain state programs, and accreditation entities inspect and review the facilities, personnel, and procedures of clinical laboratories and their laboratory operations.

Various regulatory agencies, including CMS and the FDA in the U.S., regulate the development, testing, manufacturing, labeling, advertising, marketing, distribution, storage, import, export, performance, and surveillance of diagnostic and therapeutic offerings, including certain offerings provided by the Company and the development of therapeutic products that comprise the majority of BLS’s business.

The FDA and other regulatory agencies periodically inspect and review the manufacturing processes and performance of diagnostic and therapeutic products, while CMS, certain state programs, and accreditation entities inspect and review the facilities, personnel, and procedures of clinical laboratories and their laboratory operations.

The FDA and other regulatory agencies also periodically inspect test facilities that perform tests on samples from preclinical studies and on human subjects enrolled in such clinical studies of drugs, biologics, and medical devices.

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On September 29, 2023, the FDA released a proposed rule to regulate LDTs as medical devices, which was formally published in the Federal Register on October 3, 2023.

The proposed rule seeks to make explicit that in vitro diagnostic products (IVDs) are devices under the Federal Food, Drug and Cosmetic Act, including when the manufacturer of the IVD is a clinical laboratory.

In conjunction with this proposed rule and issuance of new regulations, the FDA is proposing a policy by which FDA would phase out its general enforcement discretion approach for LDTs over a period of four years after the publication of a final rule so that LDTs manufactured by a clinical laboratory would, over the transition period, fall under the existing enforcement approach as for IVDs.

The proposed rule would not grandfather existing tests or exempt academic medical centers or small laboratories, but the FDA has requested public comments on whether it should include those features in a final rule.

ACLA disputes FDA’s assertion that LDTs are medical devices, and filed comments in December 2023 opposing the proposed rule and urging its withdrawal based on both policy and legal grounds.

In December 2023, the Company also filed comments opposing the proposed rule and urging its withdrawal for the reasons set forth in ACLA’s comments.

Both ACLA and the Company have urged FDA to continue working with Congress and stakeholders toward enactment of appropriate legislation instead of pursuing device regulation of LDTs through a proposed rulemaking.

The proposed rule sought to make explicit that in vitro diagnostic products (IVDs) are devices under the Federal Food, Drug and Cosmetic Act, including when the manufacturer of the IVD is a clinical laboratory.

In conjunction with this proposed rule and issuance of new regulations, the FDA proposed a policy by which the FDA would phase out its general enforcement discretion approach for LDTs over a period of four years after the publication of a final rule so that LDTs manufactured by a clinical laboratory would, over the transition period, fall under the existing enforcement approach for IVDs.

The proposed rule would not grandfather existing tests or exempt academic medical centers or small laboratories, but the FDA requested public comments on whether it should include those features in a final rule.

ACLA disputes FDA’s assertion that LDTs are medical devices and filed comments in December 2023 opposing the proposed rule and urging its withdrawal for the reasons set forth in ACLA’s comments.

Both ACLA and the Company have urged FDA

to continue working with Congress and stakeholders toward enactment of appropriate legislation instead of pursuing device regulation of LDTs through rulemaking.

On May 6, 2024, the FDA published a final rule adopting its proposal to regulate LDTs as medical devices over a four-year phase-in period, but with certain changes related to ongoing enforcement discretion for certain categories of LDTs.

The final rule became effective on July 5, 2024, and in the absence of a successful legal challenge, the first phase of compliance obligations will begin on May 6, 2025.

Most notably, under the final rule, the FDA intends to exercise enforcement discretion and generally not enforce premarket review and most quality system requirements (except for records requirements) for tests currently marketed as LDTs that were first marketed prior to the issuance of the final rule, as long as they are not significantly modified;

intends to exercise enforcement discretion and generally not enforce premarket review and most quality system requirements (except for records requirements) for LDTs offered by a laboratory integrated within a healthcare system to meet an unmet need of patients receiving care within the same healthcare system;

intends to exercise enforcement discretion and generally not enforce premarket review requirements for tests that are approved by the New York State Clinical Laboratory Evaluation Program (NYS CLEP);

and intends to exercise enforcement discretion and generally not enforce premarket review requirements for certain modifications made to 510(k)-cleared and de novo classified tests by CLIA-certified, high-complexity laboratories, even if that 510(k) clearance or classification is held by a different manufacturer.

However, the FDA noted that it could change these enforcement discretion policies at any time in the future.

The Company expects to be in material compliance with the final rule at applicable compliance dates if the final rule remains in force.

On May 29, 2024, ACLA and its member company, HealthTrackRx, filed a civil action in the U.,S.

District Court for the Eastern District of Texas against the Secretary of the HHS seeking to overturn the final rule on grounds that HHS (and by delegation, FDA) lacks jurisdiction to regulate LDTs as medical devices and that even if such jurisdiction exists, the rule is unlawfully arbitrary and capricious.

A similar civil action filed by the Association for Molecular Pathology has been consolidated with the ACLA action.

On November 21, 2024, ACLA submitted a formal request to the transition team for then President-elect Donald Trump to announce a policy of non-enforcement of the final rule together with a notice of intent to rescind the rule through notice and comment rulemaking.

Discussions with Congress and other stakeholders on potential legislative alternatives to the final rule are ongoing.

There are similar national and regional regulatory agencies and regulations in the jurisdictions outside of the U.S.

in which the Company operates.

For example, the European Union In Vitro Diagnostics Regulation, which became applicable May 26, 2022, established a new legislative framework for in vitro diagnostic devices including a rule-based classification and quality and safety standards.

In addition, both Switzerland and the United Kingdom are implementing new legislative frameworks similar to the EU IVDR.

For example, the European Union (EU) Medical Device Regulation (EU MDR) which became applicable on May 26, 2021, and the In Vitro Diagnostics Regulation (IVDR), which became applicable on May 26, 2022, established a new legislative framework for medical devices and in vitro diagnostic devices (IVDs), including a rule-based classification and quality and safety standards.

In contrast to the former Regulation, the IVDR also applies to IVDs used in diagnostic and therapeutic services provided outside the EU to patients based in the EU.

After the new EU MDR and IVDR had come into force, it soon emerged that the transitional periods originally specified therein were not sufficiently long and were extended for the MDR up to December 31, 2028, and up to December 31, 2029, depending on the risk class of the device.

BLS’s laboratory facilities and Dx’s clinical laboratory facilities that perform testing services in support of preclinical studies and clinical trials must conform to a range of standards and regulations, including good laboratory practice (GLP) and good clinical practice (GCP), current good manufacturing practice (cGMP), human subject protection and investigational product exemption regulations, and quality system regulation (QSR) requirements, as applicable.

The preclinical and clinical testing intended to support applications for research or marketing, and the studies that the Company conducts, are subject to periodic inspections by the FDA, as well as other regulatory agencies in the jurisdictions outside the U.S.

in which the Company operates, which may include, without limitation, the Medicines and Healthcare products Regulatory Agency (MHRA) in the U.K., the European Medicines Agency, the National Medical Products Administration in China, and the Pharmaceuticals and Medical Devices Agency in Japan, to determine compliance with GLP, GCP, and cGMP, as well as other applicable standards and regulations.

If a regulatory agency determines during an inspection that the Company’s equipment, facilities, laboratories, operations, or processes do not comply with applicable regulations and GLP, GCP and/or cGMP standards, the regulatory agency may issue a formal notice (e.g., FDA Form 483), which may be followed by a warning letter or other enforcement actions if observations are not addressed satisfactorily.

Noncompliance may result in, among other things, unanticipated compliance expenditures, the regulatory agency seeking civil, criminal or administrative sanctions and/or remedies against the Company, including suspension of its operations, and related customer contractual claims and other liabilities.

The preclinical and clinical testing intended to support applications for research or marketing, and the studies that the Company conducts, are subject to periodic inspections by the FDA, as well as other pharmaceutical and medical device regulators in the jurisdictions outside the U.S.

in which the Company operates, which may include, without limitation, the Medicines and Healthcare products Regulatory Agency (MHRA) in the United Kingdom (UK), the European Union, the European Medicines Agency, the National Medical Products Administration in China, and the Pharmaceuticals and Medical Devices Agency in Japan, to determine compliance with GLP, GCP, and cGMP, as well as other applicable standards and regulations.

If a regulatory agency determines during an inspection that the Company’s equipment, facilities, laboratories, operations, or processes do not comply with applicable regulations and GLP, GCP and/or cGMP standards, the regulatory agency may issue a formal notice (e.g., Form FDA 483), which may be followed by a warning letter or other enforcement actions if observations are not addressed satisfactorily.

Noncompliance may result in, among other things, unanticipated compliance expenditures, the regulatory agency seeking civil, criminal or administrative sanctions, and/or other remedies against the Company, including suspension of its operations, and related customer contractual claims and other liabilities.

The FDA Modernization Act 2.0 was enacted in December 2022 as Section 3209 of the Consolidated Appropriations Act, 2023.

This Act amended Section 505 of the Federal Food, Drug and Cosmetic Act to clarify the methods manufacturers and sponsors can use to investigate the safety and efficacy of a drug or the toxicity of a biosimilar biologic product to include tests on animals, as well as certain tests that are not performed on animals.

Specifically, the Act replaces a statutory reference to “tests on animals” as a viable option for preclinical testing with a reference to “nonclinical tests”, which includes animal testing, cell-based assays, microphysiological systems, or bioprinted or computer models.

Specifically, the Act replaces a statutory reference to “tests on animals” as a viable option for preclinical testing with a reference to “nonclinical tests”, which includes animal testing,

cell-based assays, microphysiological systems, or bioprinted or computer models.

The Act does not eliminate animal testing or require the use of non-animal models.

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Failure to maintain compliance with cGMP regulations and other applicable requirements of various regulatory agencies could result in, among other things, fines, warnings or untitled letters, unanticipated compliance expenditures, suspension of manufacturing, enforcement actions, product seizures or recalls, injunctions, or criminal prosecution.

Some Dx products are regulated by the FDA and other similar national regulatory agencies as medical devices.

Some Dx offerings are regulated as medical devices by the FDA and other similar national regulatory agencies in jurisdictions outside the U.S.

in which the Company operates.

The FDA defines a medical device in part as an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article which is intended for the diagnosis of disease or other conditions or in the cure, mitigation, treatment, or prevention of disease in man.

FDA regulates the development, testing, manufacturing, marketing, post‑market surveillance, distribution, advertising, and labeling of products classified as medical devices separate from clinical diagnostic testing services offered under CLIA requirements.

FDA regulatory requirements include:

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the Reports of Corrections and Removals regulations, which require manufacturers to report certain recalls and field actions to the FDA;, and other post-market requirements.

On January 31, 2024, the FDA issued a final rule amending the device current good manufacturing practice (CGMP) requirements of the QSR to incorporate by reference the quality management system requirements of the international standard specific for medical device quality management systems set by the International Organization for Standardization (ISO), ISO 13485:2016.

The revised regulation is now referred to as the Quality Management System Regulation (QMSR).The FDA has determined that the requirements in ISO 13485 are substantially similar to the requirements of the former QSR regulation, but the final rule establishes additional requirements that clarify certain expectations and certain concepts used in ISO 13485 to avoid inconsistencies with other applicable FDA requirements.

The FDA will begin to enforce the QMSR requirements on the effective date, February 2, 2026.

To ensure compliance with regulatory requirements, medical device manufacturers are subject to market surveillance and periodic, pre-scheduled and unannounced inspections by the FDA.

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The AWA establishes facility standards regarding several aspects of animal welfare, including housing, ventilation, lighting, feeding and watering, handling, veterinary care, and recordkeeping.

BLS complies with licensing and registration requirement standards set by the USDA and similar agencies in foreign jurisdictions such as the European Union, the U.K., and China for the care and use of regulated species.

BLS complies with licensing and registration requirement standards set by the USDA and similar agencies in foreign jurisdictions such as the European Union, the UK, and China for the care and use of regulated species.

If the USDA determines that BLS’s equipment, facilities, laboratories, or processes do not comply with applicable AWA standards, it may issue an inspection report documenting the deficiencies and setting deadlines for any required corrective actions.

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In addition, certain of BLS’s animal-related activities may be subject to regulation by the U.S.

Centers for Disease Control and Prevention (CDC), the Office of Laboratory Animal Welfare of the National Institutes of Health, the U.S.

Centers for Disease Control and Prevention, the Office of Laboratory Animal Welfare of the National Institutes of Health, the U.S.

Fish and Wildlife Service, and similar organizations in other jurisdictions in which the Company operates.

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In 2024, Dx derived approximately 10.5% of its revenue directly from traditional Medicare and Medicaid programs.

In addition, Dx's other commercial laboratory testing business that is not directly related to Medicare or Medicaid nevertheless depends significantly on continued participation in these programs and in other government healthcare programs, in part

because customers often want a single laboratory to perform all of their testing services.

In addition, Dx’s other commercial laboratory testing business that is not directly related to Medicare or Medicaid nevertheless depends significantly on continued participation in these programs and in other government healthcare programs, in part because customers often want a single laboratory to perform all of their testing services.

In recent years, both governmental and private-sector payers have made efforts to contain or reduce healthcare costs, including for clinical laboratory services.

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The Company, which may act as a HIPAA covered entity in certain circumstances, believes that it is in compliance in all material respects with each of the HIPAA Rules identified above.

Health Information Technology for Economic and Clinical Health Act (HITECH), which was enacted in February 2009, with regulations effective on September 23, 2013, strengthened and expanded the HIPAA Privacy and Security Rules and their restrictions on use and disclosure of protected health information (PHI).

Health Information Technology for Economic and Clinical Health Act (HITECH) strengthened and expanded the HIPAA Privacy and Security Rules and their restrictions on use and disclosure of protected health information (PHI).

HITECH includes, but is not limited to, prohibitions on exchanging PHI for remuneration and additional restrictions on the use of PHI for marketing.

HITECH also imposes a number of Privacy Rule requirements and a majority of Security Rule provisions directly on business associates that were previously only directly applicable to covered entities.

Moreover, HITECH requires covered entities to provide notice to individuals, HHS, and, as applicable, the media when unsecured PHI is breached, as that term is defined by HITECH.

Moreover, HITECH requires covered

entities to provide notice to individuals, HHS, and, as applicable, the media when unsecured PHI is breached, as that term is defined by HITECH.

Business associates are similarly required to notify covered entities of a breach.

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On February 6, 2014, CMS and HHS published final regulations that amended the HIPAA Privacy Rule to provide individuals (or their personal representatives) with the right to receive copies of their test reports from laboratories subject to HIPAA, or to request that copies of their test reports be transmitted to designated third parties.

On December 12, 2018, HHS issued a request for information (RFI) seeking input from the public on how the HIPAA regulations and the HIPAA Privacy Rule, in particular, could be modified to amend existing, or impose additional, obligations relating to the processing of PHI.

Subsequent to the RFI, on January 21, 2021, HHS published a notice of proposed rulemaking (NPRM) containing potential modifications to the HIPAA Privacy Rule addressing standards that may impede the transition to value-based healthcare and strengthen individuals' rights to access their health information.

The public comment period for the NPRM was closed on May 6, 2021.

On April 12, 2023, HHS published a NPRM containing potential modifications to the HIPAA Privacy Rule addressing the use or disclosure of PHI in relation to the provision of reproductive health care pursuant to Executive Order 14076.

The public comment period for the NPRM was closed on June 16, 2023.

On April 22, 2024, HHS issued a final rulemaking containing modifications to the HIPAA Privacy Rule to address the use or disclosure of PHI in relation to the provision of reproductive health care.

The Company will implement appropriate processes to manage compliance with these changes as applicable.

On December 27, 2024, HHS published a notice of proposed rulemaking (NPRM) containing potential modifications to the HIPAA Security Rule addressing prescriptive requirements for administrative, physical, and technical safeguards in response to increased cybersecurity incidents in the health care industry.

The public comment period for the NPRM is expected to close on March 7, 2025.

The Company is monitoring the NPRM process.

If modifications to the HIPAA Privacy Rule are adopted, they may impact the Company's compliance obligations under HIPAA.

If modifications to the HIPAA Security Rule are adopted, they may impact the Company’s compliance obligations under HIPAA.

The administrative simplification provisions of HIPAA mandate the adoption of standard unique identifiers for healthcare providers.

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The Information Blocking Rules provide for civil monetary penalties for noncompliance by healthcare information technology vendors and, separately, “appropriate disincentives” for noncompliance by healthcare providers.

The Company believes that it is in compliance in all material respects with the requirements of the Information Blocking Rules.

In addition to the regulations described above, numerous other data protection, privacy and similar laws govern the confidentiality, security, use, and disclosure of personal information, as well as breach notification responsibilities.

These laws vary by jurisdiction, but they most commonly regulate or restrict the collection, use, and disclosure of medical and financial information and other personal information.

In the U.S., the Federal Trade Commission (FTC) has authority to regulate unfair or deceptive acts or practices, including with respect to data privacy and security.

In the U.S., the Federal Trade Commission has authority to regulate unfair or deceptive acts or practices, including with respect to data privacy and security.

If the Company’s public statements about collection, use, or disclosure of personal information are perceived to be inconsistent with the Company’s actual practices, the Company may face accusations of unfairness or deception under the Federal Trade Commission Act of 1914 or state law equivalents.

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Under the regulation, patient identifying information may only be released with the individual’s written consent, subject to certain limited exceptions.

The latest changes to this regulation seek to better facilitate care coordination, while maintaining more stringent confidentiality of substance use disorder

The latest changes to this regulation seek to better facilitate care coordination, while maintaining more stringent confidentiality of substance use disorder information.

The Company adopted changes to its policies and procedures necessary for compliance.

Congress and state legislatures also have been implementing new legislation relating to privacy and data protection.

Congress and state legislatures also have been adopting legislation relating to privacy and data protection.

For example, on June 28, 2018, the California legislature passed the California Consumer Privacy Act (CCPA), which became effective January 1, 2020.

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In addition, in November 2020, California voters approved the California Privacy Rights Act (CPRA) ballot initiative, which introduced significant amendments to the CCPA and established and funded a dedicated California privacy regulator, the California Privacy Protection Agency (CPPA).

The amendments to the CCPA introduced by the CPRA went into effect on January 1, 2023, and new implementing regulations are expected to be introduced by the CPPA.

The amendments to the CCPA introduced by the CPRA went into effect on January 1, 2023.

Implementing regulations have been introduced by the CPPA and additional regulations are anticipated.

Failure to comply with the CCPA may result in, among other things, significant civil penalties and injunctive relief, or potential statutory or actual damages.

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These claims may result in significant liability and potential damages.

Other states have passed legislation similar to the CCPA, including Virginia, Colorado, Connecticut, Utah, Tennessee, Oregon, Montana, Iowa, Delaware, Texas and Indiana.

These laws generally mirror the principles and requirements of the CCPA;

however, these laws do not provide for a private right of action.

Additionally, Washington and Nevada have passed legislation specific to consumer health data, both of which come into effect on March 31, 2024.

The Company continues to assess the impact of these laws on the Company’s business, and the Company is implementing and will prepare to implement appropriate processes to manage compliance with these laws as they become effective and more guidance is provided.

The European Union General Data Protection Regulation (GDPR) became effective May 25, 2018, replacing Directive 95/46/EC.

The GDPR established requirements applicable to the use and transfer of personal data and imposes penalties for noncompliance of up to the greater of €20 million or 4% of worldwide revenue.

The GDPR, as well as the U.K.'s implementation -- the U.K.

General Data Protection Regulation -- requires transparency with regard to the means and purposes of processing of personal data, collection of consent to process personal data in certain circumstances, the ability to provide records of processing upon request by a supervisory authority or data controller, implementation of appropriate technical and organizational measures to maintain security of personal data, notification of personal data breaches to supervisory authorities, data controllers, and individuals within expedient time frames, and performance of data protection impact assessments for certain processing activities.

Other states have passed legislation similar to the CCPA that generally mirror the principles and requirements of the CCPA;

however, some of these laws do not provide for a private right of action.

Additionally, Connecticut, Washington and Nevada have passed legislation specific to consumer health data.

The Company has developed appropriate processes to manage compliance with these laws as applicable.

The EU General Data Protection Regulation (GDPR) establishes requirements applicable to the use and transfer of personal data and imposes penalties for noncompliance of up to the greater of €20 million or 4% of worldwide revenue.

The GDPR, as well as the UK’s implementation -- the UK General Data Protection Regulation -- requires transparency with regard to the means and purposes of processing of personal data, collection of consent to process personal data in certain circumstances, the ability to provide records of processing upon request by a supervisory authority or data controller, implementation of appropriate technical and organizational measures to maintain security of personal data, notification of personal data breaches to supervisory authorities, data controllers, and individuals within expedient time frames, and performance of data protection impact assessments for certain processing activities.

The GDPR also provides individual data subjects with certain rights, where applicable, including the right of access, the right to rectification, the right to be forgotten, the right to restrict or object to processing, and the right to data portability.

The GDPR requires that personal data may only be transferred outside of the European Union to a country that offers an adequate level of data protection under standards set by the European Union, or where such transfer is otherwise pursuant to a legal framework approved by the European Union.

On July 16, 2020, the Court of Justice of the European Union released its decision in Data Protection Commission v.

Facebook Ireland Limited, Maximillian Schrems (Schrems II) , which invalidated the EU-U.S.

Privacy Shield as a legal framework for the transfer of personal data outside of the European Union, and suggesting additional safeguards for the use of Standard Contractual Clauses (SCCs) as a legal framework for the transfer of personal data outside of the European Union.

The GDPR requires that personal data may only be transferred outside of the EU to a country that offers an adequate level of data protection under standards set by the EU, or where such transfer is otherwise pursuant to a legal framework approved by the EU.

On July 16, 2020, the Court of Justice of the EU released its decision in Data Protection Commission v.

Facebook Ireland Limited, (Schrems II), which invalidated the EU-U.S.

Privacy Shield as a legal framework for the transfer of personal data outside of the EU, and suggesting additional safeguards for the use of Standard Contractual Clauses (SCCs) as a legal framework for the transfer of personal data outside of the EU.

On June 4, 2021, the European Commission release updated SCCs, which, in part, adopted many of the additional safeguards highlighted in the Schrems II decision.

Companies using SCCs for the transfer of personal data outside of the European Union are required to use the new SCCs for new transfers of personal data as of September 27, 2021, and for all transfers of personal data as of December 27, 2022.

Companies using SCCs for the transfer of personal data outside of the EU are required to use the new SCCs or an alternate approved form of data transfers.

The Company has established processes and frameworks to manage compliance with the GDPR and other global privacy and data protection requirements, and to manage preparation for future enacted regulations.

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Failure to comply with these regulations may result in, among other things, civil, criminal and contractual liability, fines, regulatory sanctions, and damage to the Company’s reputation.

Potential government regulation related to AI use and ethics may also increase compliance costs and impact operations as the Company continues to develop, test, adopt, and maintain AI within the Company's operations and in its products and services.

The rapid evolution of AI, and potential government regulation, will require the application of resources to allow the Company to implement AI appropriately in order to minimize unintended, harmful impact, including from the exposure of Company or third-party information or the Company relying on flawed AI outputs.

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Historically, the clinical laboratory industry has been the focus of major governmental enforcement initiatives.

government's enforcement efforts have been conducted under statutory authorities such as those contained in HIPAA, which includes several provisions related to fraud and abuse enforcement, including the establishment of a program to coordinate and fund U.S., state and local law enforcement efforts, and in the Deficit Reduction Act of 2005, which included requirements directed at Medicaid fraud, including increased spending on enforcement and financial incentives for states to adopt false claims act provisions similar to the U.S.

government’s enforcement efforts have been conducted under statutory authorities such as those contained in HIPAA, which includes several provisions related to fraud and abuse enforcement, including the establishment of a program to coordinate and fund U.S., state and local law enforcement efforts, and in the Deficit

Reduction Act of 2005, which included requirements directed at Medicaid fraud, including increased spending on enforcement and financial incentives for states to adopt false claims act provisions similar to the U.S.

False Claims Act.

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From time to time, the OIG issues alerts and other guidance on certain practices in the healthcare industry that implicate the Anti-Kickback Statute or other fraud and abuse laws.

OIG Special Fraud Alerts and Advisory Opinions relevant to the Company set forth a number of practices allegedly engaged in by some clinical laboratories and healthcare providers that raise issues under the U.S.

OIG Special Fraud Alerts and Advisory Opinions relevant to the Company set forth a number of practices allegedly engaged in by some clinical laboratories, healthcare providers, and biopharmaceutical manufacturers that raise issues under the U.S.

fraud and abuse laws, including the Anti-Kickback Statute.

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(ix) remuneration provided to physicians and other health care professionals by pharmaceutical and medical device companies in connection with company-sponsored speaker programs;

and (x) arrangements between telemedicine companies and healthcare professionals that result in the fraudulent ordering or prescribing of medically unnecessary services, including prescription drugs, durable medical equipment, and clinical laboratory testing.

(x) arrangements between telemedicine companies and healthcare professionals that result in the fraudulent ordering or prescribing of medically unnecessary services, including prescription drugs, durable medical equipment, and clinical laboratory testing;

and (xi) the provision of free genetic and other testing sponsored by biopharmaceutical manufacturers for use in making diagnostic or other clinical decisions related to use of the manufacturers’ products.

In addition to the Anti-Kickback Statute, in October 2018, the U.S.

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(ii) payments by physicians to a laboratory for clinical laboratory services;

(iii) ancillary services (including laboratory

services) provided within the referring physician's own office, if certain criteria are satisfied;

(iii) ancillary services (including laboratory services) provided within the referring physician’s own office, if certain criteria are satisfied;

(iv) physician investment in a company whose stock is traded on a public exchange and has stockholder equity exceeding $75.0 million;

and (v) certain space and equipment rental arrangements that are set at a fair market value rate and satisfy other requirements.

and (v) certain space

and equipment rental arrangements that are set at a fair market value rate and satisfy other requirements.

Many states have their own self-referral laws as well, which in some cases apply to all patient referrals, not just government reimbursement programs.

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This is a reduction in the number of factors that were previously considered and a revision of some previous factors.

Environment, Health, and Safety

Environment, Health, Safety, and Sustainability

The Company is subject to licensing and requirements under laws and regulations relating to the protection of the environment and employee health and safety.

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The Company is committed to reducing its carbon footprint.

The Company participates in the Carbon Development Project and the EcoVadis sustainable procurement rating processes.

In 2023, the Company's greenhouse gas emission reduction science-based targets were accepted by the Science Based Targets initiative (SBTi).

Energy-saving measures at Company facilities include for example, installation of energy efficient boilers, chillers, ventilation systems, and LED lighting, engaging in waste-to-energy disposition, and reducing waste going to landfills.

The Company is also committed to reducing the fuel use of its courier fleet, and in 2023 the Company added nearly 190 hybrid vehicles to its fleet, to help achieve its goals of reducing fuel use.

The Company participates in the CDP and the EcoVadis sustainable procurement rating processes.

In 2023, the Company’s greenhouse gas emission (GHG) reduction science-based targets were accepted by the Science Based Targets initiative, and the Company has committed to reducing Scope 1 and 2 GHG emissions 42% and Scope 3 GHG emissions by 25% by year end 2030, versus a 2020 baseline.

Energy-saving measures at Company facilities include for example, installation of energy efficient boilers, chillers, ventilation systems, and light-emitting diode lighting, and engaging in waste-to-energy disposition.

The Company is committed

to reducing the fuel use of its courier fleet, and in 2024 the Company added nearly 469 hybrid vehicles to its fleet, to help achieve its goals of reducing fuel use.

Funding for these and similar projects continued through 2024 and is expected to continue through 2027.

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The compliance program demonstrates the Company’s commitment to conducting business at the highest standards of ethical conduct and integrity.

The Company seeks to conduct its business in compliance with all statutes, regulations, and other requirements applicable to its clinical laboratory operations and drug development business.

The clinical laboratory industry and drug development industries are, however, subject to extensive regulation, and many of these statutes and regulations have not been interpreted by the courts.

The Company seeks to conduct its business in compliance with all statutes, regulations, and other requirements applicable to its clinical laboratory operations and biopharma laboratory services business.

The clinical laboratory industry and biopharma laboratory services industries are, however, subject to extensive regulation, and many of these statutes and regulations have not been interpreted by the courts.

In addition, the applicability or interpretation of statutes and regulations may not be clear in light of emerging changes in clinical testing science, healthcare technology, and healthcare organizations.

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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 1. Business