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 June 30, 2022

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 (§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 90.4 million shares as of July 29, 2022.

INDEX

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets	2
	June 30, 2022 and December 31, 2021
	Condensed Consolidated Statements of Operations	3
	Three and six months ended June 30, 2022 and 2021
	Condensed Consolidated Statements of Comprehensive Earnings	4
	Three and six months ended June 30, 2022 and 2021
	Condensed Consolidated Statements of Changes in Shareholders’ Equity	5
	Three and six months ended June 30, 2022 and 2021
	Condensed Consolidated Statements of Cash Flows	6
	Six months ended June 30, 2022 and 2021
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	21
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30
Item 4.	Controls and Procedures	31

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	32
Item 1A.	Risk Factors	32
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	33
Item 5.	Other Information	33
Item 6.	Exhibits	33

1

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions)

(unaudited)

	June 30, 2022		December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	1,068.8	$	1,472.7
Accounts receivable, net	2,216.4		2,261.5
Unbilled services	827.4		716.8
Supplies inventory	436.3		401.4
Prepaid expenses and other	481.9		478.1
Total current assets	5,030.8		5,330.5
Property, plant and equipment, net	2,870.2		2,815.4
Goodwill, net	8,114.0		7,958.9
Intangible assets, net	3,864.9		3,735.5
Joint venture partnerships and equity method investments	57.7		60.9
Deferred income taxes	28.7		21.6
Other assets, net	436.8		462.6
Total assets	$	20,403.1	$	20,385.4
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	754.7	$	621.3
Accrued expenses and other	1,139.8		1,404.1
Unearned revenue	544.2		558.5
Short-term operating lease liabilities	192.1		187.0
Short-term finance lease liabilities	10.5		10.5
Short-term borrowings and current portion of long-term debt	1.6		1.5
Total current liabilities	2,642.9		2,782.9
Long-term debt, less current portion	5,360.3		5,416.5
Operating lease liabilities	669.4		642.5
Financing lease liabilities	81.9		84.6
Deferred income taxes and other tax liabilities	743.4		762.9
Other liabilities	484.5		402.0
Total liabilities	9,982.4		10,091.4
Commitments and contingent liabilities
Noncontrolling interest	20.0		20.6
Shareholders’ equity:
Common stock, 91.0 and 93.1 shares outstanding at June 30, 2022, and December 31, 2021, respectively	8.3		8.5
Additional paid-in capital	—		—
Retained earnings	10,897.9		10,456.8
Accumulated other comprehensive loss	(505.5)		(191.9)
Total shareholders’ equity	10,400.7		10,273.4
Total liabilities and shareholders’ equity	$	20,403.1	$	20,385.4

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

2

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(unaudited)

	Three Months Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Revenues	$	3,696.9	$	3,840.7	$	7,596.5	$	8,002.2
Cost of revenues	2,574.2		2,575.9		5,240.9		5,138.4
Gross profit	1,122.7		1,264.8		2,355.6		2,863.8
Selling, general and administrative expenses	486.0		458.7		950.1		888.5
Amortization of intangibles and other assets	66.4		92.4		133.5		184.5
Goodwill and other asset impairments	—		—		1.2		—
Restructuring and other charges	44.4		9.6		57.0		28.8
Operating income	525.9		704.1		1,213.8		1,762.0
Other income (expense):
Interest expense	(42.5)		(78.3)		(84.7)		(126.8)
Equity method income, net	1.4		8.0		4.8		12.5
Investment income	2.0		2.7		3.1		5.1
Other, net	(10.4)		14.1		(20.5)		19.6
Earnings before income taxes	476.4		650.6		1,116.5		1,672.4
Provision for income taxes	117.5		182.6		265.5		434.3
Net earnings	358.9		468.0		851.0		1,238.1
Less: Net earnings attributable to the noncontrolling interest	(0.3)		(0.6)		(0.8)		(1.1)
Net earnings attributable to Laboratory Corporation of America Holdings	$	358.6	$	467.4	$	850.2	$	1,237.0
Basic earnings per common share	$	3.89	$	4.80	$	9.17	$	12.69
Diluted earnings per common share	$	3.87	$	4.76	$	9.11	$	12.58

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 June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
Net earnings	$	358.9	$	468.0	$	851.0	$	1,238.1
Foreign currency translation adjustments	(241.1)		43.8		(315.7)		(23.0)
Net benefit plan adjustments	0.7		2.1		2.9		5.1
Other comprehensive earnings before tax	(240.4)		45.9		(312.8)		(17.9)
Provision (benefit) for income tax related to items of comprehensive earnings	(0.2)		(0.6)		(0.8)		(1.4)
Other comprehensive earnings (loss), net of tax	(240.6)		45.3		(313.6)		(19.3)
Comprehensive earnings	118.3		513.3		537.4		1,218.8
Less: Net earnings attributable to the noncontrolling interest	(0.3)		(0.6)		(0.8)		(1.1)
Comprehensive earnings attributable to Laboratory Corporation of America Holdings	$	118.0	$	512.7	$	536.6	$	1,217.7

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		Accumulated Other Comprehensive Earnings (Loss)		Total Shareholders’ Equity
BALANCE AT DECEMBER 31, 2020	$	9.0	$	110.3	$	9,402.3	$	(161.9)	$	9,359.7
Net earnings attributable to Laboratory Corporation of America Holdings	—		—		769.6		—		769.6
Other comprehensive earnings (loss), net of tax	—		—		—		(64.6)		(64.6)
Issuance of common stock under employee stock plans	—		24.7		—		—		24.7
Net share settlement tax payments from issuance of stock to employees	—		(28.1)		—		—		(28.1)
Stock compensation	—		28.7		—		—		28.7
Purchase of common stock	—		(68.5)		—		—		(68.5)
BALANCE AT MARCH 31, 2021	$	9.0	$	67.1	$	10,171.9	$	(226.5)	$	10,021.5
Net earnings attributable to Laboratory Corporation of America Holdings	—		—		467.4		—		467.4
Other comprehensive earnings (loss), net of tax	—		—		—		45.3		45.3
Issuance of common stock under employee stock plans	—		1.9		—		—		1.9
Net share settlement tax payments from issuance of stock to employees	—		(14.9)		—		—		(14.9)
Stock compensation	—		23.9		—		—		23.9
Purchase of common stock	(0.1)		(78.0)		(221.9)		—		(300.0)
BALANCE AT JUNE 30, 2021	$	8.9	$	—	$	10,417.4	$	(181.2)	$	10,245.1
BALANCE AT DECEMBER 31, 2021	$	8.5	$	—	$	10,456.8	$	(191.9)	$	10,273.4
Net earnings attributable to Laboratory Corporation of America Holdings	—		—		491.6		—		491.6
Other comprehensive earnings (loss), net of tax	—		—		—		(73.0)		(73.0)
Issuance of common stock under employee stock plans	—		18.2		—		—		18.2
Net share settlement tax payments from issuance of stock to employees	—		(27.3)		—		—		(27.3)
Stock compensation	—		38.2		—		—		38.2
BALANCE AT MARCH 31, 2022	$	8.5	$	29.1	$	10,948.4	$	(264.9)	$	10,721.1
Net earnings attributable to Laboratory Corporation of America Holdings	—		—		358.6		—		358.6
Other comprehensive earnings (loss), net of tax	—		—		—		(240.6)		(240.6)
Dividends declared	—		—		(68.6)		—		(68.6)
Issuance of common stock under employee stock plans	—		0.9		—		—		0.9
Net share settlement tax payments from issuance of stock to employees	—		(10.1)		—		—		(10.1)
Stock compensation	—		39.4		—		—		39.4
Purchase of common stock	(0.2)		(59.3)		(340.5)		—		(400.0)
BALANCE AT JUNE 30, 2022	$	8.3	$	—	$	10,897.9	$	(505.5)	$	10,400.7

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)

	Six Months Ended June 30,
	2022		2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	851.0	$	1,238.1
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	320.6		371.0
Stock compensation	77.6		52.6
Operating lease right-of-use asset expense	97.7		96.3
Goodwill and other asset impairments	1.2		—
Deferred income taxes	(35.5)		(85.5)
Other	3.7		2.3
Change in assets and liabilities (net of effects of acquisitions and divestitures):
Decrease in accounts receivable	21.4		265.0
Increase in unbilled services	(123.9)		(100.3)
Increase in supplies inventory	(35.7)		(17.5)
Increase in prepaid expenses and other	(25.9)		(31.0)
Increase (decrease) in accounts payable	131.9		(44.3)
Increase (decrease) in unearned revenue	(6.2)		37.7
Decrease in accrued expenses and other	(349.4)		(139.6)
Net cash provided by operating activities	928.5		1,644.8
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(260.5)		(192.6)
Proceeds from sale of assets	1.1		2.7
Proceeds from sale of business	—		13.1
Proceeds from sale or distribution of investments	0.4		—
Proceeds from exit from swaps	3.0		—
Investments in equity affiliates	(4.7)		(11.9)
Acquisition of businesses, net of cash acquired	(554.9)		(34.1)
Net cash used for investing activities	(815.6)		(222.8)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from senior note offerings	—		1,000.0
Payments on senior notes	—		(1,000.0)
Payments on term loan	—		(375.0)
Net share settlement tax payments from issuance of stock to employees	(37.4)		(43.0)
Net proceeds from issuance of stock to employees	19.1		26.6
Dividends paid	(66.7)		—
Purchase of common stock	(400.0)		(368.5)
Other	(12.4)		(15.6)
Net cash used for financing activities	(497.4)		(775.5)
Effect of exchange rate changes on cash and cash equivalents	(19.4)		(4.1)
Net increase (decrease) in cash and cash equivalents	(403.9)		642.4
Cash and cash equivalents at beginning of period	1,472.7		1,320.8
Cash and cash equivalents at end of period	$	1,068.8	$	1,963.2

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 (Labcorp® or the Company) is a leading global life sciences company that provides vital information to help doctors, hospitals, pharmaceutical companies, researchers, and patients make clear and confident decisions. By leveraging its strong diagnostics and drug development capabilities, the Company provides insights and accelerates innovations to improve health and improve lives.

The Company reports its business in two segments, Labcorp Diagnostics (Dx) and Labcorp Drug Development (DD). For further financial information about these segments, see Note 11 (Business Segment Information) to the Condensed Consolidated Financial Statements. During the three months ended June 30, 2022, Dx and DD contributed approximately 61% and 39%, respectively, of revenues to the Company. During the six months ended June 30, 2022, Dx and DD contributed approximately 62% and 38%, 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 (loss).”

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 fiscal year 2021 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 Accounting Guidance

In October 2021, the Financial Accounting Standards Board (FASB) issued a new accounting standard, Accounting Standards Update 2021-08, to improve the accounting for acquired revenue contracts with customers in a business combination. The Company early adopted this standard effective January 1, 2022. The adoption of this standard did not have a material impact on the consolidated financial statements.

7

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

2.    REVENUES

The Company's revenues by segment and by payers/customer groups for the three and six months ended June 30, 2022, and 2021, were as follows:

	For the Three Months Ended June 30, 2022								For the Three Months Ended June 30, 2021
	North America		Europe		Other		Total		North America		Europe		Other		Total
Payer/Customer
Dx
Clients	18	%	—	%	—	%	18	%	17	%	—	%	—	%	17	%
Patients	7	%	—	%	—	%	7	%	7	%	—	%	—	%	7	%
Medicare and Medicaid	6	%	—	%	—	%	6	%	6	%	—	%	—	%	6	%
Third party	30	%	—	%	—	%	30	%	31	%	—	%	—	%	31	%
Total Dx revenues by payer	61	%	—	%	—	%	61	%	61	%	—	%	—	%	61	%
DD
Pharmaceutical, biotechnology and medical device companies	19	%	13	%	7	%	39	%	23	%	12	%	4	%	39	%
Total revenues	80	%	13	%	7	%	100	%	84	%	12	%	4	%	100	%

	For the Six Months Ended June 30, 2022								For the Six Months Ended June 30, 2021
	North America		Europe		Other		Total		North America		Europe		Other		Total
Payer/Customer
Dx
Clients	17	%	—	%	—	%	17	%	18	%	—	%	—	%	18	%
Patients	7	%	—	%	—	%	7	%	6	%	—	%	—	%	6	%
Medicare and Medicaid	6	%	—	%	—	%	6	%	6	%	—	%	—	%	6	%
Third party	32	%	—	%	—	%	32	%	33	%	—	%	—	%	33	%
Total Dx revenues by payer	62	%	—	%	—	%	62	%	63	%	—	%	—	%	63	%
DD
Pharmaceutical, biotechnology and medical device companies	18	%	13	%	7	%	38	%	22	%	11	%	4	%	37	%
Total revenues	80	%	13	%	7	%	100	%	85	%	11	%	4	%	100	%

Revenues in the U.S. were $2,856.9 (77.3%) and $3,091.3 (80.5%) for the three months ended June 30, 2022, and 2021, respectively, and for the six months ended June 30, 2022, and 2021, were $5,857.5 (77.1%) and $6,537.4 (81.7%), respectively.

DD Contract costs

DD incurs costs to fulfill contracts with customers. Contract fulfillment costs include software implementation costs and setup costs for certain market access solutions.

	June 30, 2022		December 31, 2021
Sales commission assets	$	40.2	$	36.2
Deferred contract fulfillment costs	15.0		14.4
Total	$	55.2	$	50.6

Amortization related to sales commission assets and associated payroll taxes for the three months ended June 30, 2022, and 2021, was $8.7 and $6.4, respectively, and for the six months ended June 30, 2022, and 2021, was $15.9 and $13.3, respectively. Amortization related to deferred contract fulfillment costs for the three months ended June 30, 2022, and 2021, was $2.9 and $3.0, respectively, and was $6.0 and $6.5, respectively, for the six months ended June 30, 2022, and 2021.

8

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Accounts Receivable, Unbilled Services and Unearned Revenue

The following table provides information about accounts receivable, unbilled services, and unearned revenue from contracts with customers:

	June 30, 2022		December 31, 2021
Dx accounts receivable	$	1,066.4	$	1,193.8
DD accounts receivable	1,171.3		1,089.2
Less DD allowance for doubtful accounts	(21.3)		(21.5)
Accounts receivable	$	2,216.4	$	2,261.5
Gross unbilled services	$	838.8	$	730.8
Less reserve for unbilled services	(11.4)		(14.0)
Unbilled services	$	827.4	$	716.8
Unearned revenue	$	544.2	$	558.5

Revenues recognized during the period that were included in the unearned revenue balance at the beginning of the period were $233.6 and $233.0 for the six months ended June 30, 2022, and 2021, respectively.

Credit Loss Rollforward

The Company estimates future expected losses on accounts receivable, unbilled services and notes receivable over the remaining collection period of the instrument. The rollforward for the allowance for credit losses for the six months ended June 30, 2022, is as follows:

	Accounts Receivable		Unbilled Services		Note and Other Receivables		Total
Balance as of December 31, 2021	$	21.5	$	13.9	$	0.7	$	36.1
Plus, credit loss expense	3.0		—		—		3.0
Less, write offs	(3.2)		(2.5)		—		(5.7)
Balance as of June 30, 2022	$	21.3	$	11.4	$	0.7	$	33.4

Performance Obligations Under Long-Term Contracts

Long-term contracts at the Company consist primarily of fully managed clinical studies within DD. The amount of existing performance obligations unsatisfied under such long-term contracts were $6,132.6 and $5,616.6 as of June 30, 2022, and 2021, respectively. The Company expects to recognize revenue over the remaining contract term of the individual projects, with contract terms generally ranging from 1 to 8 years.

Within DD, revenues of $37.4 and $12.2 were recognized during the three months ended June 30, 2022 and 2021, respectively, and revenues of $69.1 and $28.7 were recognized during the six months ended June 30, 2022 and 2021, respectively, from performance obligations that were satisfied in previous periods. This revenue primarily relates to adjustments related to changes in scope in full service clinical studies, and to a lesser extent, changes in estimates.

3.    BUSINESS ACQUISITIONS

During the six months ended June 30, 2022, the Company acquired several businesses and related assets for approximately $554.9 in cash. The purchase consideration for these acquisitions has been allocated under the acquisition method of accounting to the estimated fair market value of the net assets acquired, including approximately $325.3 in identifiable intangible assets and a residual amount of non-tax deductible goodwill of approximately $332.8. The amortization periods for intangible assets acquired from the businesses range from 5 to 15 years for customer relationships and non-compete agreements. These acquisitions were made primarily to complement and accelerate the Company’s existing liquid biopsy capabilities and enhance the Company's diagnostic footprint and capabilities. The preliminary valuation of acquired assets and assumed liabilities, include the following:

9

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

	Amounts Acquired During Six Months Ended June 30, 2022
Accounts receivable	$	4.1
Unbilled services	2.9
Inventories	2.6
Prepaid expenses and other	1.2
Property, plant and equipment	10.0
Goodwill	332.8
Intangible assets	325.3
Other assets	0.8
Total assets acquired	$	679.7
Accounts payable	4.1
Accrued expenses and other	24.1
Unearned revenue	3.3
Deferred income taxes	17.1
Other liabilities	76.2
Total liabilities acquired	124.8
Net assets acquired	$	554.9

The purchase price allocation for several transactions are still preliminary and subject to change. The areas of the purchase price allocation that are not yet finalized relate primarily to contingent purchase price valuation, intangible assets, goodwill, and the impact of finalizing deferred taxes. Accordingly, adjustments may be made as additional information is obtained about the facts and circumstances that existed as of the valuation date. Any adjustments will be recorded in the period in which they are identified.

During the six months ended June 30, 2021, the Company acquired a business and related assets for approximately $34.1 in cash. The purchase consideration for the acquisition in the six months ended June 30, 2021, has been allocated under the acquisition method of accounting to the estimated fair market value of the net assets acquired, including approximately $17.6 in identifiable intangible assets and a residual amount of non-tax deductible goodwill of approximately $15.6. The amortization periods for intangible assets acquired from the business range from 5 to 15 years for customer relationships and non-compete agreements. The acquisition was made primarily to expand the Company's services for hospitals and health system laboratories. The excess of the fair value of the consideration conveyed over the fair value of the net assets acquired was recorded as goodwill. The goodwill reflects the Company's expectations to utilize the acquired business' workforce and established relationships and the benefits of being able to leverage operational efficiencies with favorable growth opportunities in these markets.

4.    EARNINGS PER SHARE

Basic earnings per share is computed by dividing net earnings attributable to Laboratory Corporation of America Holdings by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net earnings including the impact of dilutive adjustments by the weighted average number of common shares outstanding plus potentially dilutive shares, as if they had been issued at the earlier of the date of issuance or the beginning of the period presented. Potentially dilutive common shares result primarily from the Company’s outstanding stock options, restricted stock awards, restricted stock units, and performance share awards.

10

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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

	Three Months Ended June 30,										Six Months Ended June 30,
	2022					2021					2022					2021
	Earnings		Shares	Per Share Amount		Earnings		Shares	Per Share Amount		Earnings		Shares	Per Share Amount		Earnings		Shares	Per Share Amount
Basic earnings per share:
Net earnings	$	358.6	92.3	$	3.89	$	467.4	97.4	$	4.80	$	850.2	92.7	$	9.17	$	1,237.0	97.5	$	12.69
Dilutive effect of employee stock options and awards	—		0.4			—		0.8			—		0.6			—		0.8
Net earnings including impact of dilutive adjustments	$	358.6	92.7	$	3.87	$	467.4	98.2	$	4.76	$	850.2	93.3	$	9.11	$	1,237.0	98.4	$	12.58

Diluted earnings per share represent the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. These potential shares include dilutive stock options and unissued restricted stock awards. The following table summarizes the potential common shares not included in the computation of diluted earnings per share because their impact would have been antidilutive:

	Three Months Ended June 30,		Six Months Ended June 30,
	2022	2021	2022	2021
Employee stock options and awards	0.5	0.1	0.3	0.1

5.    GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the six months ended June 30, 2022, are as follows:

	Dx		DD		Total
Balance as of December 31, 2021	$	4,046.2	$	3,912.7	$	7,958.9
Goodwill acquired during the period	189.7		143.1		332.8
Foreign currency impact and other adjustments to goodwill	(50.7)		(127.0)		(177.7)
Balance as of June 30, 2022	$	4,185.2	$	3,928.8	$	8,114.0

The Company assesses goodwill and indefinite-lived intangibles for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company recognizes an impairment charge for the amount by which the reporting unit's carrying amount exceeds its fair value.

The components of identifiable intangible assets are as follows:

	June 30, 2022						December 31, 2021
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	$	4,293.3	$	(1,437.9)	$	2,855.4	$	4,336.0	$	(1,362.1)	$	2,973.9
Patents, licenses and technology	755.2		(284.8)		470.4		484.6		(267.4)		217.2
Non-compete agreements	79.1