UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C.  20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2020

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to  ______

Commission file number   1-11353

LABORATORY CORPORATION OF AMERICA HOLDINGS

(Exact name of registrant as specified in its charter)

Delaware	13-3757370
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

358 South Main Street
Burlington,	North Carolina	27215
(Address of principal executive offices)		(Zip Code)

(Registrant's telephone number, including area code) 336-229-1127

Securities registered pursuant to Section 12(b) of the Exchange Act.

Title of Each Class            Trading Symbol            Name of exchange on which registered

Common Stock, $0.10 par value        LH                New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (paragraph 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒.

The number of shares outstanding of the issuer's common stock is 97.4 million shares as of October 28, 2020.

INDEX

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets	2
	September 30, 2020 and December 31, 2019
	Condensed Consolidated Statements of Operations	3
	Three and nine months ended September 30, 2020 and 2019
	Condensed Consolidated Statements of Comprehensive Earnings	4
	Three and nine months ended September 30, 2020 and 2019
	Condensed Consolidated Statements of Changes in Shareholders’ Equity	5
	Three and nine months ended September 30, 2020 and 2019
	Condensed Consolidated Statements of Cash Flows	6
	Nine months ended September 30, 2020 and 2019
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	38
Item 4.	Controls and Procedures	39

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	40
Item 1A.	Risk Factors	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 5.	Other Information	42
Item 6.	Exhibits	42

1

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)

(unaudited)

	September 30, 2020		December 31, 2019
ASSETS
Current assets:
Cash and cash equivalents	$	667.2	$	337.5
Accounts receivable, net of allowance for doubtful accounts of $26.6 and $19.0 as of September 30, 2020, and December 31, 2019, respectively	2,095.2		1,543.9
Unbilled services	603.5		481.4
Supplies inventory	392.5		244.7
Prepaid expenses and other	327.2		373.7
Total current assets	4,085.6		2,981.2
Property, plant and equipment, net	2,608.6		2,636.6
Goodwill, net	7,613.8		7,865.0
Intangible assets, net	3,920.5		4,034.5
Joint venture partnerships and equity method investments	70.7		84.9
Deferred income taxes	3.4		8.8
Other assets, net	437.0		435.4
Total assets	$	18,739.6	$	18,046.4
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	639.5	$	632.3
Accrued expenses and other	1,297.8		942.4
Unearned revenue	494.8		451.0
Short-term operating lease liabilities	193.8		206.5
Short-term finance lease liabilities	7.4		8.4
Short-term borrowings and current portion of long-term debt	376.6		415.2
Total current liabilities	3,009.9		2,655.8
Long-term debt, less current portion	5,417.3		5,789.8
Operating lease liabilities	602.4		596.6
Financing lease liabilities	86.3		91.1
Deferred income taxes and other tax liabilities	891.5		942.8
Other liabilities	473.2		383.2
Total liabilities	10,480.6		10,459.3
Commitments and contingent liabilities
Noncontrolling interest	19.9		20.1
Shareholders’ equity:
Common stock, 97.4 and 97.2 shares outstanding at September 30, 2020, and December 31, 2019, respectively	9.0		9.0
Additional paid-in capital	80.7		26.8
Retained earnings	8,464.0		7,903.6
Accumulated other comprehensive loss	(314.6)		(372.4)
Total shareholders’ equity	8,239.1		7,567.0
Total liabilities and shareholders’ equity	$	18,739.6	$	18,046.4

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

2

co LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Revenues	$	3,896.1	$	2,928.5	$	9,488.7	$	8,601.4
Cost of revenues	2,336.7		2,111.2		6,440.8		6,169.6
Gross profit	1,559.4		817.3		3,047.9		2,431.8
Selling, general and administrative expenses	419.5		401.5		1,211.3		1,210.6
Amortization of intangibles and other assets	62.2		61.7		184.6		179.0
Goodwill and other asset impairments	23.5		—		460.9		—
Restructuring and other charges	7.1		14.2		38.9		48.4
Operating income	1,047.1		339.9		1,152.2		993.8
Other income (expense):
Interest expense	(51.4)		(60.5)		(159.1)		(176.3)
Equity method income (loss), net	3.0		2.4		(1.8)		7.9
Investment income	2.6		2.9		7.7		4.8
Other, net	(54.2)		2.7		(22.6)		(18.2)
Earnings before income taxes	947.1		287.4		976.4		812.0
Provision for income taxes	243.4		66.4		358.0		214.4
Net earnings	703.7		221.0		618.4		597.6
Less: Net earnings attributable to the noncontrolling interest	(0.3)		(0.3)		(0.6)		(0.9)
Net earnings attributable to Laboratory Corporation of America Holdings	$	703.4	$	220.7	$	617.8	$	596.7
Basic earnings per common share	$	7.22	$	2.26	$	6.35	$	6.08
Diluted earnings per common share	$	7.17	$	2.25	$	6.31	$	6.04

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

3

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS

(in millions, except per share data)

(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net earnings	$	703.7	$	221.0	$	618.4	$	597.6
Foreign currency translation adjustments	132.9		(92.6)		52.4		(45.4)
Net benefit plan adjustments	2.1		3.2		7.5		8.7
Other comprehensive earnings (loss) before tax	135.0		(89.4)		59.9		(36.7)
Benefit for income tax related to items of comprehensive earnings	(0.6)		(0.9)		(2.1)		(2.4)
Other comprehensive earnings (loss), net of tax	134.4		(90.3)		57.8		(39.1)
Comprehensive earnings	838.1		130.7		676.2		558.5
Less: Net earnings attributable to the noncontrolling interest	(0.3)		(0.3)		(0.6)		(0.9)
Comprehensive earnings attributable to Laboratory Corporation of America Holdings	$	837.8	$	130.4	$	675.6	$	557.6

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

4

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN

SHAREHOLDERS’ EQUITY

(in millions)

(unaudited)

	Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock		Accumulated Other Comprehensive Earnings (Loss)		Total Shareholders’ Equity
BALANCE AT DECEMBER 31, 2018	$	11.7	$	1,451.1	$	7,079.8	$	(1,108.1)	$	(463.1)	$	6,971.4
Net earnings attributable to Laboratory Corporation of America Holdings	—		—		185.6		—		—		185.6
Other comprehensive earnings, net of tax	—		—		—		—		23.6		23.6
Issuance of common stock under employee stock plans	—		24.7		—		—		—		24.7
Net share settlement tax payments from issuance of stock to employees	—		—		—		(19.4)		—		(19.4)
Stock compensation	—		25.5		—		—		—		25.5
Purchase of common stock	(0.1)		(100.0)		—		—		—		(100.1)
BALANCE AT MARCH 31, 2019	$	11.6	$	1,401.3	$	7,265.4	$	(1,127.5)	$	(439.5)	$	7,111.3
Net earnings attributable to Laboratory Corporation of America Holdings	—		—		190.4		—		—		190.4
Other comprehensive earnings, net of tax	—		—		—		—		27.6		27.6
Issuance of common stock under employee stock plans	—		9.2		—		—		—		9.2
Net share settlement tax payments from issuance of stock to employees	—		—		—		(20.7)		—		(20.7)
Stock compensation	—		26.5		—		—		—		26.5
Retirement of treasury stock	(2.4)		(1,145.8)		—		1,148.2		—		—
Purchase of common stock	(0.1)		(199.8)		—		—		—		(199.9)
BALANCE AT JUNE 30, 2019	$	9.1	$	91.4	$	7,455.8	$	—	$	(411.9)	$	7,144.4
Net earnings attributable to Laboratory Corporation of America Holdings	—		—		220.7		—		—		220.7
Other comprehensive loss, net of tax	—		—		—		—		(90.3)		(90.3)
Issuance of common stock under employee stock plans	—		25.1		—		—		—		25.1
Net share settlement tax payments from issuance of stock to employees	—		(0.3)		—		—		—		(0.3)
Stock compensation	—		31.5		—		—		—		31.5
Purchase of common stock	(0.1)		(99.9)		—		—		—		(100.0)
BALANCE AT SEPTEMBER 30, 2019	$	9.0	$	47.8	$	7,676.5	$	—	$	(502.2)	$	7,231.1
BALANCE AT DECEMBER 31, 2019	$	9.0	$	26.8	$	7,903.6	$	—	$	(372.4)	$	7,567.0
Adoption of credit loss accounting standard	—		—		(7.0)		—		—		(7.0)
Net earnings (loss) attributable to Laboratory Corporation of America Holdings	—		—		(317.2)		—		—		(317.2)
Other comprehensive earnings (loss), net of tax	—		—		—		—		(145.5)		(145.5)
Issuance of common stock under employee stock plans	—		26.9		—		—		—		26.9
Net share settlement tax payments from issuance of stock to employees	—		(22.0)		—		—		—		(22.0)
Stock compensation	—		17.9		—		—		—		17.9
Purchase of common stock	—		(49.6)		(50.4)		—		—		(100.0)
BALANCE AT MARCH 31, 2020	$	9.0	$	—	$	7,529.0	$	—	$	(517.9)	$	7,020.1
Net earnings attributable to Laboratory Corporation of America Holdings	—		—		231.6		—		—		231.6
Other comprehensive earnings, net of tax	—		—		—		—		68.9		68.9
Issuance of common stock under employee stock plans	—		1.8		—		—		—		1.8
Net share settlement tax payments from issuance of stock to employees	—		(9.5)		—		—		—		(9.5)
Stock compensation	—		39.8		—		—		—		39.8
BALANCE AT JUNE 30, 2020	$	9.0	$	32.1	$	7,760.6	$	—	$	(449.0)	$	7,352.7
Net earnings attributable to Laboratory Corporation of America Holdings	$	—	$	—	$	703.4	$	—	$	—	$	703.4
Other comprehensive earnings, net of tax	—		—		—		—		134.4		134.4
Issuance of common stock under employee stock plans	—		21.9		—		—		—		21.9
Net share settlement tax payments from issuance of stock to employees	—		(0.5)		—		—		—		(0.5)
Stock compensation	—		27.2		—		—		—		27.2
BALANCE AT SEPTEMBER 30, 2020	$	9.0	$	80.7	$	8,464.0	$	—	$	(314.6)	$	8,239.1

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

5

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

(unaudited)

	Nine Months Ended September 30,
	2020		2019
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	618.4	$	597.6
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	440.8		421.4
Stock compensation	84.9		83.5
Operating lease right-of-use asset expense	150.7		144.1
Goodwill and other asset impairments	460.9		—
Deferred income taxes	(48.5)		23.3
Other	55.2		12.5
Change in assets and liabilities (net of effects of acquisitions and divestitures):
Increase in accounts receivable	(546.9)		(144.3)
Increase in unbilled services	(117.8)		(59.5)
Increase in supplies inventory	(147.5)		(14.5)
Decrease in prepaid expenses and other	26.1		5.8
(Decrease) increase in accounts payable	17.3		(28.2)
(Decrease) increase in unearned revenue	44.1		(1.0)
(Decrease) increase in accrued expenses and other	323.0		(165.8)
Net cash provided by operating activities	1,360.7		874.9
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(282.3)		(272.0)
Proceeds from sale of assets	1.1		5.8
Proceeds from sale or distribution of investments	1.0		9.4
Proceeds from exit from swaps	3.1		—
Investments in equity affiliates	(29.3)		(21.3)
Acquisition of businesses, net of cash acquired	(208.8)		(852.9)
Net cash used for investing activities	(515.2)		(1,131.0)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from term loan	—		850.0
Payments on term loan	—		(250.0)
Proceeds from revolving credit facilities	151.7		473.0
Payments on revolving credit facilities	(151.7)		(473.0)
Payments on senior notes	(412.2)		—
Net share settlement tax payments from issuance of stock to employees	(32.0)		(40.4)
Net proceeds from issuance of stock to employees	50.6		59.0
Purchase of common stock	(100.0)		(400.0)
Other	(22.8)		(21.9)
Net cash provided by (used for) financing activities	(516.4)		196.7
Effect of exchange rate changes on cash and cash equivalents	0.6		(6.3)
Net increase (decrease) in cash and cash equivalents	329.7		(65.7)
Cash and cash equivalents at beginning of period	337.5		426.8
Cash and cash equivalents at end of period	$	667.2	$	361.1

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

6

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

1.      BASIS OF FINANCIAL STATEMENT PRESENTATION

Laboratory Corporation of America® Holdings together with its subsidiaries (the Company) is a leading global life sciences company that is deeply integrated in guiding patient care, providing comprehensive clinical laboratory and end-to-end drug development services. The Company’s mission is to improve health and improve lives by delivering world-class diagnostic solutions, bringing innovative medicines to patients faster and using technology to provide better care. The Company serves a broad range of customers, including managed care organizations (MCOs), biopharmaceutical and medical device companies, governmental agencies, physicians and other health care providers (e.g., physician assistants and nurse practitioners, generally referred to herein as physicians), hospitals and health systems, employers, patients and consumers, contract research organizations (CROs), and independent clinical laboratories.

The Company reports its business in two segments, LabCorp Diagnostics (LCD) and Covance Drug Development (CDD). For further financial information about these segments, see Note 15 Business Segment Information to the Condensed Consolidated Financial Statements. During the three months ended September 30, 2020, LCD and CDD contributed approximately 68% and 32% respectively, of revenues to the Company. During the nine months ended September 30, 2020, LCD and CDD contributed approximately 63% and 37%, respectively, of revenues to the Company.

The condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries for which it exercises control. Long-term investments in affiliated companies in which the Company exercises significant influence, but which it does not control, are accounted for using the equity method. Investments in which the Company does not exercise significant influence (generally, when the Company has an investment of less than 20.0% and no representation on the investee's board of directors) are accounted for at fair value or at cost minus impairment adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer for those investments that do not have readily determinable fair values. All significant inter-company transactions and accounts have been eliminated. The Company does not have any significant variable interest entities or special purpose entities whose financial results are not included in the condensed consolidated financial statements.

The financial statements of the Company's operating foreign subsidiaries are measured using the local currency as the functional currency. Assets and liabilities are translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average monthly exchange rates prevailing during the period. Resulting translation adjustments are included in “Accumulated other comprehensive income.”

The accompanying condensed consolidated financial statements of the Company are unaudited. In the opinion of management, all adjustments necessary for a fair statement of results of operations, cash flows, and financial position have been made. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. Interim results are not necessarily indicative of results for a full year. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles.

The condensed consolidated financial statements and notes are presented in accordance with the rules and regulations of the United States (U.S.) Securities and Exchange Commission (SEC) and do not contain certain information included in the Company’s 2019 Annual Report on Form 10-K (Annual Report). Therefore, these interim statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report.

Recently Adopted Guidance

In June 2016, the FASB issued a new accounting standard intended to provide financial statement users with more decision-useful information about expected credit losses and other commitments to extend credit held by the reporting entity. The standard replaces the incurred loss impairment methodology in current generally accepted accounting principles (GAAP) with one that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The Company recorded an opening retained earnings adjustment of $7.0 with the adoption of this standard on January 1, 2020.

In August 2018, the FASB issued a new accounting standard to reduce, modify, and add to the disclosure requirements on fair value measurements. The Company adopted this standard effective January 1, 2020. The adoption of this standard did not have a material impact on the consolidated financial statements.

In August 2018, the FASB issued a new accounting standard to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred

7

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

to develop or obtain internal-use software. The Company adopted this standard effective January 1, 2020. The adoption of this standard did not have a material impact on the consolidated financial statements.

New Accounting Pronouncements

In August 2018, the FASB issued a new accounting standard to reduce, modify, and add to the disclosure requirements on defined benefit pension and other postretirement plans. The standard is effective on January 1, 2021, with early adoption permitted. The adoption of this standard is not expected to have a material impact on the consolidated financial statements.

In December 2019, the FASB issued a new accounting standard to simplify accounting for income taxes and remove, modify, and add to the disclosure requirements of income taxes. The standard is effective January 1, 2021, with early adoption permitted. The adoption of this standard is not expected to have a material impact on the consolidated financial statements.

In January 2020, the FASB issued a new accounting standard to clarify the interaction of the accounting for equity securities and investments accounted for under the equity method of accounting and the accounting for certain forward contracts and purchased options. The standard is effective January 1, 2021. The adoption of this standard is not expected to have a material impact on the consolidated financial statements.

In March 2020, the FASB issued a new accounting standard to provide optional expedients and exceptions if certain conditions are met for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform. The expedients and exceptions in the standard are effective between March 12, 2020, and December 31, 2022. The Company did not elect to apply any of the expedients or exceptions for the period ended September 30, 2020, and is currently evaluating the impact this new standard will have on the consolidated financial statements.

In August 2020, the FASB issued a new accounting standard to address issues identified as a result of the complexity associated with applying generally accepted accounting principles for convertible instruments and contracts in an entity's own equity. The standard is effective January 1, 2022, with early adoption permitted. The Company is evaluating the impact this new standard will have on the consolidated financial statements.

Novel Coronavirus (COVID-19) Financial Statement Impact

In March 2020, COVID-19 was declared a pandemic. COVID-19 has had and continues to have an extensive impact on the global health and economic environments. During the nine months ended September 30, 2020, the Company recorded goodwill and other asset impairment charges of $437.4, as a result of the negative financial impact of COVID-19 during the first quarter of 2020. See Note 6 Goodwill and Intangible Assets for a discussion of goodwill and intangible asset impairment and Note 2 Revenues for a discussion of credit losses and additional price concessions. The Company also impaired certain of the Company's investments by a total of $25.4 during the nine months ended September 30, 2020, due to the impact of COVID-19; $7.1 was included in Equity method earnings (loss), net during the three months ended March 31, 2020, and $13.1 and $5.2 were included in Other, net during the three months ended March 31, 2020, and June 30, 2020, respectively.

In April 2020, the Company received cash payments of approximately $55.9 from the Public Health and Social Services Emergency Fund for provider relief that was appropriated by Congress to the Department of Health and Human Services (HHS) in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act Provider Relief Funds). Upon receiving and satisfying the terms and conditions associated with the distributed funds, the Company accounted for the transaction by applying the guidance in ASC 450-30 Gain Contingencies, and recorded these funds in Other, net non-operating income in the Consolidated Statement of Operations as of June 30, 2020. In August 2020, the Company received an additional $76.2 in CARES Act Provider Relief Funds. As the Company's Diagnostic business demonstrated recovery and demand for COVID-19 testing increased, the Company determined that the negative financial impact of COVID-19 which the CARES Act Provider Relief Funds were designed to address no longer applied to the Company. As a result, the Company derecognized the income associated with the $55.9 received during the second quarter as a change in estimate and did not recognize any income related to the cash payment of $76.2 received in the third quarter. The Company plans to return the CARES Act Provider Relief Funds to the government in the fourth quarter of 2020 and has recorded a liability of $132.1 in Accrued expenses and other as of September 30, 2020.

Use of Estimates

The extent to which the COVID-19 pandemic has and will impact the Company’s business and financial results depend on numerous evolving factors including, but not limited to: the magnitude and duration of the COVID-19 pandemic, the impact to worldwide macroeconomic conditions including interest rates, employment rates and health insurance coverage, the speed of the anticipated recovery, and governmental and business reactions to the pandemic. The Company assessed certain accounting matters that generally require consideration of forecasted financial information in context with the information reasonably available to the Company and the unknown future impacts of COVID-19 as of September 30, 2020, and through the date of this

8

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

report. The accounting matters assessed included, but were not limited to, the Company’s implicit price concessions and credit losses, equity investments, notes receivable and the carrying value of goodwill and other long-lived assets. The Company’s future assessment of the magnitude and duration of COVID-19, as well as other factors, could result in additional material impacts to the Company’s consolidated financial statements in future reporting periods.

2.      REVENUES

The Company's revenues by segment payers/customer groups for the three and nine months ended September 30, 2020, and 2019, were as follows:

	For the Three Months Ended September 30, 2020
	U.S.		Canada		United Kingdom		Switzerland		Other Europe		Other		Total
Payer/Customer
LCD
Clients	21	%	1	%	—	%	—	%	—	%	—	%	22	%
Patients	5	%	—	%	—	%	—	%	—	%	—	%	5	%
Medicare and Medicaid	7	%	—	%	—	%	—	%	—	%	—	%	7	%
Third-party	33	%	1	%	—	%	—	%	—	%	—	%	34	%
Total LCD revenues by payer	66	%	2	%	—	%	—	%	—	%	—	%	68	%
CDD
Biopharmaceutical and medical device companies	16	%	—	%	4	%	4	%	2	%	6	%	32	%
Total revenues	82	%	2	%	4	%	4	%	2	%	6	%	100	%

	For the Three Months Ended September 30, 2019
	U.S.		Canada		United Kingdom		Switzerland		Other Europe		Other		Total
Payer/Customer
LCD
Clients	16	%	1	%	—	%	—	%	—	%	—	%	17	%
Patients	8	%	—	%	—	%	—	%	—	%	—	%	8	%
Medicare and Medicaid	8	%	—	%	—	%	—	%	—	%	—	%	8	%
Third-party	25	%	2	%	—	%	—	%	—	%	—	%	27	%
Total LCD revenues by payer	57	%	3	%	—	%	—	%	—	%	—	%	60	%
CDD
Biopharmaceutical and medical device companies	21	%	—	%	5	%	4	%	3	%	7	%	40	%
Total revenues	78	%	3	%	5	%	4	%	3	%	7	%	100	%

9

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

	For the Nine Months Ended September 30, 2020
	U.S.		Canada		United Kingdom		Switzerland		Other Europe		Other	Total
Payer/Customer
LCD
Clients	19	%	1	%	—	%	—	%	—	%