BUSINESS ACQUISITIONS

During the year ended December 31, 2016, the Company acquired various laboratories and related assets for approximately $548.6 in cash (net of cash acquired).

The Company completed the acquisition of Sequenom, Inc., a market leader in non-invasive prenatal testing, women's health and reproductive genetics on September 7, 2016 through a cash tender offer for $2.40 per share, or a transaction price of $249.1, net of cash received, and acquired $130.0 of debt. The Sequenom purchase consideration has been allocated to the estimated fair market value of the net assets acquired, including approximately $146.6 in identifiable intangible assets (primarily customer relationships, technology, and trade names) with weighted-average useful lives of approximately 14.6 years; $45.1 in deferred tax liabilities (relating to identifiable intangible assets); and a residual amount of non-tax deductible goodwill of approximately $206.0. While the purchase price allocation is substantially complete, it is still preliminary and subject to change. The areas of the purchase price allocation that are not yet finalized relate primarily to the impact of finalizing deferred taxes and goodwill. Accordingly, adjustments may be made as additional information is obtained about the facts and circumstances that existed as of the valuation date. The Company expects the purchase price allocation to be finalized during the second half of 2017. Any adjustments will be recorded in the period in which they were identified.

The Company also acquired various other laboratories and related assets for approximately $299.5 in cash (net of cash acquired). The purchase consideration for these acquisitions has been allocated to the estimated fair market value of the net assets acquired, including approximately $126.2 in identifiable intangible assets (primarily customer relationships) and a residual amount of goodwill of approximately $192.3. These acquisitions were made primarily to extend the Company's geographic reach in important market areas and/or enhance the Company's scientific differentiation and esoteric testing capabilities. While the purchase price allocation for one of the fourth quarter acquisitions is substantially complete, it is still preliminary and subject to change. The areas of the purchase price allocation that are not yet finalized relate primarily to the intangible assets, goodwill and the impact of finalizing deferred taxes. Accordingly, adjustments may be made as additional information is obtained about the facts and circumstances that existed as of the valuation date. The Company expects the purchase price allocation to be finalized during the first half of 2017. Any adjustments will be recorded in the period in which they were identified.

On January 9, 2017, the Company entered into a definitive agreement to purchase select operating assets of the outreach laboratory operations of a healthcare system in the Northeast. In addition, on February 23, 2017, the Company announced that it has signed a definitive agreement to purchase a premier medical reference laboratory and healthcare solutions company.

On February 19, 2015 (Acquisition Date), the Company completed its acquisition (Acquisition) of Covance Inc. (Covance), a leading drug development services company and a leader in nutritional analysis, for $6,150.7. The Company issued debt and common stock to fund the Acquisition. Covance stockholders received $75.76 in cash and 0.2686 shares of the Company's common stock for each share of Covance common stock they owned. The Company financed the Acquisition with $3,900.0 of debt, 15.3 shares of its common stock and $488.2 of available cash, $400.0 of which was derived from a bridge term loan credit facility. On January 30, 2015, the Company issued $2,900.0 in debt securities, consisting of $500.0 aggregate principal amount of 2.625% Senior Notes due 2020, $500.0 aggregate principal amount of 3.20% Senior Notes due 2022, $1,000.0 aggregate principal amount of 3.60% Senior Notes due 2025 and $900.0 aggregate principal amount of 4.70% Senior Notes due 2045 (together, the Acquisition Notes). The Company also entered into a $1,000.0 term loan facility which was advanced in full on the Acquisition Date. The term loan credit facility will mature five years after the closing date of the Acquisition and may be prepaid without penalty.

The valuation of acquired assets and assumed liabilities at the Acquisition Date include the following:



Consideration Transferred
Stock consideration						$	1,762.5
Cash consideration						4,388.2
						$	6,150.7

	Preliminary		Measurement Period Adjustments			Final
Net Assets Acquired
Cash and cash equivalents	$	780.8	$	—		$	780.8
Accounts receivable	334.8		—			334.8
Unbilled services	138.7		—			138.7
Inventories	51.9		—			51.9
Prepaid expenses and other	261.4		86.5			347.9
Deferred income taxes	34.4		87.1			121.5
Property, plant and equipment	844.2		174.0			1,018.2
Goodwill	3,176.1		(108.0		)	3,068.1
Customer relationships	1,917.2		(86.9		)	1,830.3
Trade names and trademarks	289.4		(18.9		)	270.5
Land use right	4.9		(4.9		)	—
Technology	—		74.5			74.5
Favorable leases	—		5.5			5.5
Other assets	15.2		(3.2		)	12.0
Total assets acquired	7,849.0		205.7			8,054.7
Accounts payable	190.8		—			190.8
Accrued expenses and other	280.8		26.1			306.9
Unearned revenue	168.0		—			168.0
Deferred income taxes	730.2		149.1			879.3
Senior notes	250.0		—			250.0
Other liabilities	78.5		30.5			109.0
Total liabilities acquired	1,698.3		205.7			1,904.0
Net assets acquired	$	6,150.7	$	—		$	6,150.7

The amortization periods for intangible assets acquired are 28 years for customer relationships, 15 years for trade names and trademarks, 10 years for technology, and 8 years for favorable leases. The Company recorded certain measurement period adjustments and certain classifications of expenses, including items associated with the allocation of stock compensation, from cost of revenue to selling, general and administrative expenses.

The Acquisition contributed $2,209.7 and $167.2 of revenue and operating income, respectively, during the year ended December 31, 2015.

Unaudited Pro Forma Information

The Company completed the Acquisition on February 19, 2015. Had the Acquisition been completed as of the beginning of 2014, the Company's pro forma results for 2015 would have been as follows:



	Year Ended December 31, 2015
Total revenues	$	9,033.3
Operating income	1,117.2
Net income	547.5
Earnings per share:
Basic	$	5.05
Diluted	$	5.03

During the year ended December 31, 2015, the Company also acquired various other laboratories and related assets for approximately $128.4 in cash (net of cash acquired). These acquisitions were made primarily to extend the Company's geographic reach in important market areas and/or enhance the Company's scientific differentiation and esoteric testing capabilities. The purchase consideration for these acquisitions has been allocated to the estimated fair market value of the net assets acquired, including approximately $17.4 in identifiable intangible assets (primarily customer relationships and non-compete agreements) and a residual amount of goodwill of approximately $68.4.

On November 20, 2014, the Company completed its acquisition of LipoScience, Inc. (LipoScience), a provider of specialized cardiovascular diagnostic laboratory tests based on nuclear magnetic resonance (NMR) technology, for a purchase price of $5.25 per share or a transaction value of $67.9 (net of cash acquired).

The LipoScience purchase consideration was allocated to the estimated fair market value of the net assets acquired, including approximately $27.2 in identifiable intangible assets (primarily non-tax deductible customer relationships, technology and trade names and trademarks) with weighted-average useful lives of approximately 19.5 years; $9.4 in deferred tax liabilities (relating to identifiable intangible assets); and a residual amount of non-tax deductible goodwill of approximately $17.4.

During the year ended December 31, 2014, the Company also acquired various other laboratories and related assets for approximately $91.5 in cash (net of cash acquired). These acquisitions were made primarily to extend the Company's geographic reach in important market areas and/or enhance the Company's scientific differentiation and esoteric testing capabilities.

Contingent consideration liabilities associated with the Company's business acquisitions are recorded at fair value based upon the estimated probability assessment of the earn-out criteria. Changes in the fair value of contingent consideration liabilities are recognized in earnings until the arrangement is settled.