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, 2023

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 88.6 million shares as of August 3, 2023.

INDEX

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets	2
	June 30, 2023 and December 31, 2022
	Condensed Consolidated Statements of Operations	3
	Three and Six Months Ended June 30, 2023 and 2022
	Condensed Consolidated Statements of Comprehensive Earnings	4
	Three and Six Months Ended June 30, 2023 and 2022
	Condensed Consolidated Statements of Changes in Shareholders’ Equity	5
	Three and Six Months Ended June 30, 2023 and 2022
	Condensed Consolidated Statements of Cash Flows	6
	Six months ended June 30, 2023 and 2022
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33
Item 4.	Controls and Procedures	34

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	35
Item 1A.	Risk Factors	35
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35
Item 5.	Other Information	36
Item 6.	Exhibits	36

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, 2023		December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	1,930.6	$	320.6
Accounts receivable, net	1,904.8		1,785.5
Unbilled services	137.8		211.8
Supplies inventory	487.8		470.6
Prepaid expenses and other	659.9		610.4
Current assets of discontinued operations	—		1,226.1
Total current assets	5,120.9		4,625.0
Property, plant and equipment, net	2,762.1		2,794.1
Goodwill, net	6,182.2		6,123.7
Intangible assets, net	3,154.1		3,123.6
Joint venture partnerships and equity method investments	67.2		65.7
Deferred income taxes	6.4		6.4
Other assets, net	425.8		378.4
Long-term assets of discontinued operations	—		3,038.2
Total assets	$	17,718.7	$	20,155.1
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	713.1	$	852.2
Accrued expenses and other	657.8		787.0
Unearned revenue	349.7		310.6
Short-term operating lease liabilities	154.8		163.8
Short-term finance lease liabilities	6.5		6.0
Short-term borrowings and current portion of long-term debt	301.4		301.3
Current liabilities of discontinued operations	—		657.6
Total current liabilities	2,183.3		3,078.5
Long-term debt, less current portion	5,042.4		5,038.8
Operating lease liabilities	623.5		652.9
Financing lease liabilities	81.7		83.6
Deferred income taxes and other tax liabilities	564.5		543.4
Other liabilities	418.5		401.1
Long-term liabilities of discontinued operations	—		241.3
Total liabilities	8,913.9		10,039.6
Commitments and contingent liabilities
Noncontrolling interest	19.8		18.9
Shareholders’ equity:
Common stock, 88.7 and 88.2 shares outstanding at June 30, 2023, and December 31, 2022, respectively	8.1		8.1
Additional paid-in capital	94.4		—
Retained earnings	8,836.2		10,581.7
Accumulated other comprehensive loss	(153.7)		(493.2)
Total shareholders’ equity	8,785.0		10,096.6
Total liabilities and shareholders’ equity	$	17,718.7	$	20,155.1

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,
	2023		2022		2023		2022
Revenues	$	3,033.7	$	2,923.0	$	6,071.5	$	6,067.5
Cost of revenues	2,191.5		1,980.5		4,379.2		4,042.9
Gross profit	842.2		942.5		1,692.3		2,024.6
Selling, general and administrative expenses	505.8		432.4		963.0		854.4
Amortization of intangibles and other assets	51.5		49.8		104.9		100.0
Goodwill and other asset impairments	2.8		—		5.0		1.2
Restructuring and other charges	15.8		31.5		23.3		35.0
Operating income	266.3		428.8		596.1		1,034.0
Other income (expense):
Interest expense	(49.8)		(42.3)		(100.5)		(84.4)
Equity method income, net	0.9		1.4		(1.2)		4.8
Investment income	4.5		1.7		6.7		2.5
Other, net	(16.9)		(29.5)		(23.8)		(45.2)
Earnings from continuing operations before income taxes	205.0		360.1		477.3		911.7
Provision for income taxes	49.8		92.1		113.7		222.6
Earnings from continuing operations	155.2		268.0		363.6		689.1
Earnings from discontinued operations, net of tax	33.9		90.9		38.8		161.9
Net earnings	189.1		358.9		402.4		851.0
Less: Net earnings attributable to the noncontrolling interest	(0.2)		(0.3)		(0.6)		(0.8)
Net earnings attributable to Laboratory Corporation of America Holdings	$	188.9	$	358.6	$	401.8	$	850.2
Basic earnings per common share:
Basic earnings per common share continuing operations	$	1.75	$	2.90	$	4.10	$	7.43
Basic earnings per common share discontinued operations	$	0.38	$	0.99	$	0.43	$	1.74
Basic earnings per common share	$	2.13	$	3.89	$	4.53	$	9.17
Diluted earnings per common share:
Diluted earnings per common share continuing operations	$	1.74	$	2.89	$	4.08	$	7.38
Diluted earnings per common share discontinued operations	$	0.38	$	0.98	$	0.43	$	1.73
Diluted earnings per common share	$	2.12	$	3.87	$	4.51	$	9.11

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,
	2023		2022		2023		2022
Net earnings	$	189.1	$	358.9	$	402.4	$	851.0
Foreign currency translation adjustments	51.7		(241.1)		99.8		(315.7)
Net benefit plan adjustments	1.1		0.7		2.3		2.9
Other comprehensive earnings (loss) before tax	52.8		(240.4)		102.1		(312.8)
Provision (benefit) for income tax related to items of comprehensive earnings	(0.3)		(0.2)		(0.6)		(0.8)
Other comprehensive earnings (loss), net of tax	52.5		(240.6)		101.5		(313.6)
Comprehensive earnings	241.6		118.3		503.9		537.4
Less: Net earnings attributable to the noncontrolling interest	(0.2)		(0.3)		(0.6)		(0.8)
Comprehensive earnings attributable to Laboratory Corporation of America Holdings	$	241.4	$	118.0	$	503.3	$	536.6

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		Accumulated Other Comprehensive Earnings (Loss)		Total Shareholders’ Equity
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
BALANCE AT DECEMBER 31, 2022	$	8.1	$	—	$	10,581.7	$	(493.2)	$	10,096.6
Net earnings attributable to Laboratory Corporation of America Holdings	—		—		212.9		—		212.9
Other comprehensive earnings (loss), net of tax	—		—		—		49.0		49.0
Dividends declared	—		—		(64.7)		—		(64.7)
Issuance of common stock under employee stock plans	—		27.6		—		—		27.6
Net share settlement tax payments from issuance of stock to employees	—		(20.5)		—		—		(20.5)
Stock compensation	—		40.6		—		—		40.6
BALANCE AT MARCH 31, 2023	$	8.1	$	47.7	$	10,729.9	$	(444.2)	$	10,341.5
Net earnings attributable to Laboratory Corporation of America Holdings	$	—	$	—	$	188.9	$	—	$	188.9
Other comprehensive earnings (loss), net of tax	—		—		—		52.5		52.5
Fortrea Holdings Inc. spin off	—		—		(2,018.1)		238.0		(1,780.1)
Dividends declared	—		—		(64.5)		—		(64.5)
Issuance of common stock under employee stock plans	—		26.8		—		—		26.8
Net share settlement tax payments from issuance of stock to employees	—		(18.2)		—		—		(18.2)
Stock compensation	—		38.1		—		—		38.1
BALANCE AT JUNE 30, 2023	$	8.1	$	94.4	$	8,836.2	$	(153.7)	$	8,785.0

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,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings	$	402.4	$	851.0
Earnings from discontinued operations, net of tax	(38.8)		(161.9)
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	285.0		272.7
Stock compensation	67.3		63.7
Operating lease right-of-use asset expense	85.1		87.6
Goodwill and other asset impairments	5.0		1.2
Deferred income taxes	16.2		(23.9)
Other	3.1		14.5
Change in assets and liabilities (net of effects of acquisitions and divestitures):
Decrease (increase) in accounts receivable	(107.6)		64.6
Decrease (increase) in unbilled services	74.1		(81.6)
Increase in supplies inventory	(16.1)		(35.7)
Increase in prepaid expenses and other	(30.2)		(17.5)
Increase (decrease) in accounts payable	(160.3)		112.5
Increase in unearned revenue	34.8		29.6
Decrease in accrued expenses and other	(272.8)		(272.2)
Net cash provided by continuing operating activities	347.2		904.6
Net cash provided by discontinued operating activities	125.4		23.9
Net cash provided by operating activities	472.6		928.5
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures	(181.5)		(247.4)
Proceeds from sale of assets	0.2		1.1
Proceeds from sale or distribution of investments	—		0.4
Proceeds from exit from swaps	—		3.0
Investments in equity affiliates	(10.4)		(4.7)
Acquisition of businesses, net of cash acquired	(136.9)		(554.9)
Net cash used in continuing investing activities	(328.6)		(802.5)
Net cash used in discontinued investing activities	(24.7)		(13.1)
Net cash used for investing activities	(353.3)		(815.6)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from revolving credit facilities	1,420.9		—
Payments on revolving credit facilities	(1,420.9)		—
Net share settlement tax payments from issuance of stock to employees	(38.7)		(37.4)
Net proceeds from issuance of stock to employees	54.4		19.1
Dividends paid	(129.0)		(66.7)
Purchase of common stock	—		(400.0)
Other	(11.4)		(12.4)
Net cash used in continuing financing activities	(124.7)		(497.4)
Net cash provided by discontinued financing activities	1,609.1		—
Net cash provided by (used in) financing activities	1,484.4		(497.4)
Effect of exchange rate changes on cash and cash equivalents	6.3		(19.4)
Net increase (decrease) in cash and cash equivalents	1,610.0		(403.9)
Cash and cash equivalents at beginning of period	430.0		1,472.7
Less: Cash and cash equivalents of discontinued operations as of beginning of period	$	109.4	$	90.5
Cash and cash equivalents at end of period	$	1,930.6	$	978.3

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 global leader of innovative and comprehensive laboratory service that serves physicians, hospitals, patients and biopharmaceutical clients. The Company provides insights and advances science to improve health and improve lives through its strong diagnostics and drug development laboratory capabilities.

On June 30, 2023 (the Distribution Date), Labcorp completed the previously announced separation (the Separation) of Fortrea Holdings Inc. (Fortrea) from the Company, see Note 2 (Discontinued Operations) to the Condensed Consolidated Financial Statements. The remainder of the Drug Development segment has been renamed as the Biopharma Laboratory Services Segment. All current and historical operating results of Fortrea are presented as Discontinued Operations, net of tax, in the consolidated statement of operations. All historical assets and liabilities of Fortrea are classified as current and long-term assets of discontinued operations and current and long-term liabilities of discontinued operations in the accompanying balance sheet as of December 31, 2022. The spin-off is expected to be treated as tax-free for the Company and its shareholders for U.S. federal income tax purposes.

The Company reports its business in two segments, Diagnostics Laboratories (Dx) and Biopharma Laboratory Services (BLS). For further financial information about these segments, see Note 12 (Business Segment Information) to the Condensed Consolidated Financial Statements. During the three months ended June 30, 2023, Dx and BLS contributed approximately 77% and 23%, respectively, of revenues to the Company. During the six months ended June 30, 2023, Dx and BLS contributed approximately 78% and 22%, 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 Securities and Exchange Commission (SEC) and do not contain certain information included in the Company’s fiscal year 2022 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.

Recent Accounting Pronouncements

On Dec. 14, 2022, the SEC adopted significant amendments to Rule 10b5-1 under the Securities Exchange Act of 1934 and new rules and disclosure requirements associated with 10b5-1 trading plans meant to address the SEC and other industry participants’ views of potential abuses under the current insider trading regime, including “cooling-off” periods for insiders, prohibitions on overlapping plans, certain insider certifications, and other requirements. The final rules became effective for the Company in the second quarter of 2023.

On May 3, 2023, the SEC adopted amendments to the disclosure requirements relating to repurchases of an issuer’s equity securities, including requiring issuers to provide daily repurchase activity on a quarterly basis. These disclosures will be required in the Company's first filing that covers its first full fiscal quarter beginning on or after October 1, 2023.

7

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

On July 26, 2023, the SEC adopted amendments intended to enhance and standardize disclosures related to cybersecurity. The amendments require timely disclosure of material cybersecurity incidents and annual disclosures related to cybersecurity risk management, strategy, and governance. These annual disclosures will be required beginning with annual reports for fiscal years ending after December 15, 2023, or the Company's 2023 Annual Report on Form 10-K.

2.    DISCONTINUED OPERATIONS

A discontinued operation may include a component or a group of components of the Company's operations. A disposal of a component or a group of components is reported in discontinued operations if the disposal represents a strategic shift that has or will have a major effect on the Company's operations and financial results when the following occurs: (1) a component (or group of components) meets the criteria to be classified as held for sale; (2) the component or group of components is disposed of by sale; or (3) the component or group of components is disposed of other than by sale (for example, by abandonment or in a distribution to owners in a spin-off). For any component classified as held for sale or disposed of by sale or other than by sale, qualifying for presentation as a discontinued operation, the Company reports the results of operations of the discontinued operations (including any gain or loss recognized on the disposal or loss recognized on classification as held for sale of a discontinued operation), less applicable income taxes (benefit), as a separate component in the consolidated statement of operations for current and all prior periods presented. The Company also reports assets and liabilities associated with discontinued operations as separate line items on the consolidated balance sheet for prior periods.

The spin-off of Fortrea from Labcorp was achieved through the Company’s pro-rata distribution of 100% of the outstanding shares of Fortrea common stock to holders of record of Labcorp common stock. Each holder of record of Labcorp common stock received one share of Fortrea common stock for every share of Labcorp common stock held at 5:00 p.m., Burlington, North Carolina, time on June 20, 2023, the record date for the distribution.

In June 2023, Fortrea, prior to the Separation and while a subsidiary of the Company, issued $570.0 of 7.500% senior secured notes due 2030 (the Fortrea Notes). As of June 30, 2023, the initial proceeds were held in escrow for release to Fortrea upon satisfaction of certain conditions, including completion of the Separation. The proceeds from the Fortrea Notes were used to fund cash payments of approximately $1,600.0 to the Company in connection with the Separation. The Company does not guarantee the Fortrea Notes following the Separation. Also in June 2023, Fortrea entered into three floating secured overnight financing rate (SOFR) credit facilities totaling $1,520.0. These are comprised of $450.0 Revolver maturing June 30, 2028; $500.0 Term Loan A maturing June 30, 2028; and $570.0 Term Loan B maturing June 30, 2030.

In connection with the spin-off, all outstanding (vested and unvested) share-based awards of the Company held by Fortrea employees were adjusted and converted into awards of Fortrea common stock. In each case, the award was equitably adjusted or converted in a manner intended to preserve the aggregate intrinsic value of the original Company equity award and, other than regarding performance share awards, the terms of the equity awards, such as vesting dates, generally remain substantially the same. These conversions and adjustments did not materially impact the number of Company share-based awards outstanding. In addition, the Company entered into several agreements with Fortrea on or prior to the Distribution Date that, among other things, provide a framework for the Company’s relationship with Fortrea after the spin-off, including a separation and distribution agreement, a tax matters agreement, an employee matters agreement, and a transition services agreement. These agreements contain the key provisions relating to the spin-off, including provisions relating to the principal intercompany transactions required to effect the spin-off, the conditions to the spin-off and provisions governing the relationship between Fortrea and the Company after the spin-off.

Financial Information of Discontinued Operations

Earnings from Discontinued Operations, Net of Tax in the Consolidated Statements of Operations reflect the after-tax results of Fortrea's business and Separation-related fees, and does not include any allocation of general corporate overhead expense or interest expense of the Company.

8

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 table summarizes the significant line items included in Earnings from Discontinued Operations, Net of Tax in the Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022:

	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Revenues	$	766.5	$	773.9	$	1,506.6	$	1,529.0
Cost of revenues	629.1		593.7		1,244.5		1,198.0
Gross profit	137.4		180.2		262.1		331.0
Selling, general and administrative expenses	85.4		53.6		184.1		95.7
Amortization of intangibles and other assets	16.0		16.6		31.9		33.5
Restructuring and other charges	4.1		12.9		3.0		22.0
Operating income	31.9		97.1		43.1		179.8
Other income (expense):
Interest expense	(0.5)		(0.2)		(0.5)		(0.3)
Investment income	0.5		0.3		(1.2)		0.6
Other, net	8.3		19.1		4.2		24.7
Earnings before income taxes	40.2		116.3		45.6		204.8
Provision for income taxes	6.3		25.4		6.8		42.9
Net earnings attributable to Laboratory Corporation of America Holdings	$	33.9	$	90.9	$	38.8	$	161.9

The following table summarizes the carrying value of the significant classes of assets and liabilities classified as discontinued operations as of December 31, 2022:

	December 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	109.4
Accounts receivable, net	436.5
Unbilled services	583.6
Prepaid expenses and other	96.6
Total current assets	1,226.1
Property, plant and equipment, net	162.1
Goodwill, net	1,997.3
Intangible assets, net	823.3
Deferred income taxes	1.2
Other assets, net	54.3
Total assets	$	4,264.3
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	82.6
Accrued expenses and other	281.8
Unearned revenue	271.5
Short-term operating lease liabilities	21.7
Total current liabilities	657.6
Operating lease liabilities	26.8
Deferred income taxes and other tax liabilities	192.8
Other liabilities	21.7
Total liabilities	898.9
Total shareholders’ equity	3,365.4
Total liabilities and shareholders’ equity	$	4,264.3

9

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

3.    REVENUES

The Company's revenues by segment and by payers/customer groups for the three and six months ended June 30, 2023, and 2022, were as follows:

	For the Three Months Ended June 30, 2023								For the Three Months Ended June 30, 2022
	North America		Europe		Other		Total		North America		Europe		Other		Total
Payer/Customer
Dx
Clients	24	%	—	%	—	%	24	%	23	%	—	%	—	%	23	%
Patients	10	%	—	%	—	%	10	%	9	%	—	%	—	%	9	%
Medicare and Medicaid	8	%	—	%	—	%	8	%	8	%	—	%	—	%	8	%
Third party	35	%	—	%	—	%	35	%	37	%	—	%	—	%	37	%
Total Dx revenues by payer	77	%	—	%	—	%	77	%	77	%	—	%	—	%	77	%
BLS
Pharmaceutical, biotechnology and medical device companies	10	%	9	%	4	%	23	%	10	%	9	%	4	%	23	%
Total revenues	87	%	9	%	4	%	100	%	87	%	9	%	4	%	100	%

	For the Six Months Ended June 30, 2023								For the Six Months Ended June 30, 2022
	North America		Europe		Other		Total		North America		Europe		Other		Total
Payer/Customer
Dx
Clients	25	%	—	%	—	%	25	%	22	%	—	%	—	%	22	%
Patients	10	%	—	%	—	%	10	%	7	%	—	%	—	%	7	%
Medicare and Medicaid	8	%	—	%	—	%	8	%	7	%	—	%	—	%	7	%
Third party	35	%	—	%	—	%	35	%	41	%	—	%	—	%	41	%
Total Dx revenues by payer	78	%	—	%	—	%	78	%	77	%	—	%	—	%	77	%
BLS
Pharmaceutical, biotechnology and medical device companies	9	%	9	%	4	%	22	%	10	%	9	%	4	%	23	%
Total revenues	87	%	9	%	4	%	100	%	87	%	9	%	4	%	100	%

Revenues in the U.S. were $2,537.0 (83.6%) and $2,449.5 (83.8%) for the three months ended June 30, 2023, and 2022, respectively, and for the six months ended June 30, 2023, and 2022, were $5,094.4 (83.9%) and $5,061.6 (83.4%), respectively.

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, 2023		December 31, 2022
Dx accounts receivable	$	1,114.4	$	1,046.9
BLS accounts receivable	821.0		769.3
Less BLS allowance for doubtful accounts	(30.6)		(30.7)
Accounts receivable	$	1,904.8	$	1,785.5
Gross unbilled services	$	148.7	$	222.3
Less reserve for unbilled services	(10.9)		(10.5)
Unbilled services	$	137.8	$	211.8
Unearned revenue	$	349.7	$	310.6

Revenues recognized during the period that were included in the unearned revenue balance at the beginning of the period were $20.2 and $21.1 for the three months ended June 30, 2023 and 2022, respectively, and $72.8 and $56.6 for the six months ended June 30, 2023, and 2022, respectively.

10

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

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, 2023, is as follows:

	Accounts Receivable		Unbilled Services		Note and Other Receivables		Total
Balance as of December 31, 2022	$	30.7	$	10.5	$	0.7	$	41.9
Plus, credit loss expense	4.3		—		—		4.3
Less, write offs	(4.4)		0.4		—		(4.0)
Balance as of June 30, 2023	$	30.6	$	10.9	$	0.7	$	42.2

The credit loss expense in the first six months primarily related to the collection risk from several biotech receivable balances in the first quarter.

4.    BUSINESS ACQUISITIONS

During the six months ended June 30, 2023, the Company closed two acquisitions for cash of $136.9 which expanded its presence in the northeastern U.S. and Canada. The preliminary purchase considerations for these acquisitions were allocated under the acquisition method of accounting to the estimated fair market value of the net assets acquired, including approximately $84.1 in identifiable intangible assets. A residual amount of non-tax deductible goodwill of approximately $50.8 was recorded as of June 30, 2023. The amortization period for non-compete agreements and customer list assets acquired from these businesses are 7 and 15 years, respectively. The purchase price allocations for these acquisitions have not been finalized as of June 30, 2023. Had the Company's total 2023 acquisitions been completed as of January 1, 2023, the Company's pro forma results would not have been materially different from those reported.

During the six months ended June 30, 2023, the Company recorded several measurement period adjustments for 2022 acquisitions, relating to final valuations and deferred tax true-ups. The adjustments include the following:

	Measurement Period Adjustments During Six Months Ended June 30, 2023
Cash and cash equivalents	$	0.2
Prepaid expenses and other	0.6
Property, plant and equipment	(1.5)
Goodwill	(29.4)
Intangible assets	19.5
Total assets acquired	$	(10.6)
Accrued expenses and other	(8.3)
Deferred income taxes	(2.3)
Total liabilities acquired	(10.6)
Net assets acquired	$	—

During the six months ended June 30, 2022, the Company acquired several businesses and related assets for approximately $554.9 in cash. The purchase considerations for these acquisitions were allocated under the acquisition method of accounting to the estimated fair market value of the net assets acquired, including approximately $325.3 in identifiable intangible assets and a residual amount of non-tax deductible goodwill of approximately $332.8. The amortization period for intangible assets acquired from this 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:

11

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

Pro Forma Information

Had the Company's total 2022 acquisitions been completed as of January 1, 2022, the Company's pro forma results would have been as follows:

	Three Months Ended June 30,		Six Months Ended June 30,
	2022		2022
Revenues	$	2,961.9	$	6,149.8
Net earnings from continuing operations attributable to Laboratory Corporation of America Holdings	$	270.2	$	690.0

5.    EARNINGS PER SHARE

Basic earnings per share is computed by dividing net earnings attributable to the Company 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.

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,
	2023					2022					2023					2022
	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	$	155.0	88.7	$	1.75	$	267.7	92.3	$	2.90	$	363.0	88.6	$	4.10	$	688.3	92.7	$	7.43
Dilutive effect of employee stock options and awards	—		0.3			—		0.4			—		0.4			—		0.6
Net earnings including impact of dilutive adjustments	$	155.0	89.0	$	1.74	$	267.7	92.7	$	2.89	$	363.0	89.0	$	4.08	$	688.3	93.3	$	7.38

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:

12

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

	Three Months Ended June 30,		Six Months Ended June 30,
	2023	2022	2023	2022
Employee stock options and awards	0.5	0.5	0.4	0.3

6.    GOODWILL AND INTANGIBLE ASSETS

The changes in the carrying amount of goodwill for the six months ended June 30, 2023, are as follows:

	Dx		BLS		Total
	June 30, 2023		June 30, 2023		June 30, 2023
Balance as of December 31, 2022	$	4,533.5	$	1,590.2	$	6,123.7
Goodwill acquired during the period	50.8		—		50.8
Foreign currency impact and other adjustments to goodwill	(16.3)		24.0		7.7
Balance as of June 30, 2023	$	4,568.0	$	1,614.2	$	6,182.2

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.

Although the Company believes that the current assumptions and estimates used in its goodwill analysis are reasonable, supportable, and appropriate, the Company's business could be impacted by unfavorable changes, including those that impact the existing assumptions used in the impairment analysis. Various factors could reasonably be expected to unfavorably impact existing assumptions: primarily a worsening economic environment and protracted economic downturn and related impacts, including delays in revenue from new customers; increases in customer termination activity; or increases in operating costs. Accordingly, there can be no assurance that the estimates and assumptions made for the purposes of the goodwill impairment analysis will prove to be accurate predictions of future performance.

The Company will continue to monitor the financial performance of, and assumptions for, its reporting units. A significant increase in the discount rate, decrease in the revenue and terminal growth rates, decreased operating margin, or substantial reductions in end markets and volume assumptions, could have a negative impact on the estimated fair value of the reporting units. A future impairment charge for goodwill or intangible assets could have a material effect on the Company's consolidated financial position and results of operations.

The components of identifiable intangible assets are as follows:

	June 30, 2023						December 31, 2022
	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Customer relationships	$	3,595.7	$	(1,262.8)	$	2,332.9	$	3,489.9	$	(1,169.6)	$	2,320.3
Patents, licenses and technology	551.9		(258.1)		293.8		520.4		(243.3)		277.1
Non-compete agreements	86.7		(50.5)		36.2		80.1		(46.8)		33.3
Trade name	16.4		(4.6)		11.8		16.4		(3.5)		12.9
Land use right	3.5		(2.4)		1.1		3.5		(2.2)		1.3
Canadian licenses	470.1		—		470.1		468.7		—		468.7
Other	14.2		(6.0)		8.2		14.2		(4.2)		10.0
	4,738.5		(1,584.4)		3,154.1		4,593.2		(1,469.6)		3,123.6

Amortization of intangible assets for the three and six months ended June 30, 2023, and 2022, was $51.5 and $49.8 and $104.9 and $100.0, respectively. The amortization expense for the net carrying amount of intangible assets is estimated to be $107.6 for the remainder of fiscal 2023, $210.8 in fiscal 2024, $201.4 in fiscal 2025, $192.5 in fiscal 2026, $181.1 in fiscal 2027, and $1,675.4 thereafter.

13

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

7.    DEBT

Short-term borrowings and the current portion of long-term debt at June 30, 2023, and December 31, 2022, consisted of the following:

	June 30, 2023		December 31, 2022
4.00% senior notes due 2023	$	300.0	$	300.0
Debt issuance costs	(0.2)		(0.4)
Current portion of note payable	1.6		1.7
Total short-term borrowings and current portion of long-term debt	$	301.4	$	301.3

Long-term debt at June 30, 2023, and December 31, 2022, consisted of the following:

	June 30, 2023		December 31, 2022
2.30% senior notes due 2024	$	400.0	$	400.0
3.25% senior notes due 2024	600.0		600.0
3.60% senior notes due 2025	1,000.0		1,000.0
1.55% senior notes due 2026	500.0		500.0
3.60% senior notes due 2027	600.0		600.0
2.95% senior notes due 2029	650.0		650.0
2.70% senior notes due 2031	421.6		420.3
4.70% senior notes due 2045	900.0		900.0
Debt issuance costs	(30.8)		(33.8)
Note payable	1.6		2.3
Total long-term debt	$	5,042.4	$	5,038.8

During the second quarter of 2021, the Company entered into fixed-to-variable interest rate swap agreements for its 2.70% senior notes due 2031 with an aggregate notional amount of $500.0 and variable interest rates based on three-month LIBOR plus 1.0706% to hedge against changes in the fair value of a portion of the Company's long-term debt. These interest rate swaps are included in other long-term liabilities and deducted from the value of the senior notes with an aggregate fair value of $78.4 at June 30, 2023.

Credit Facilities

The Company maintains a senior revolving credit facility, which was amended and restated on April 30, 2021. It consists of a five-year facility in the principal amount of up to $1,000.0, with the option of increasing the facility by up to an additional $500.0, subject to the agreement of one or more new or existing lenders to provide such additional amounts and certain other customary conditions. The revolving credit facility also provides for a subfacility of up to $100.0 for swing line borrowings and a subfacility of up to $150.0 for issuances of letters of credit. The Company is required to pay a facility fee on the aggregate commitments under the revolving credit facility, at a per annum rate ranging from 0.10% to 0.225%, depending on the Company's debt ratings. The revolving credit facility is permitted to be used for general corporate purposes, including working capital, capital expenditures, funding of share repurchases and certain other payments, acquisitions, and other investments. The revolving credit facility also provides for the issuance of letters of credit without a reduction of the availability of borrowings under the facility. There were no balances outstanding on the Company's current revolving credit facility as of June 30, 2023 and December 31, 2022. As of June 30, 2023, the effective interest rate on the revolving credit facility was 6.17%. The credit facility expires on April 30, 2026.

Under the revolving credit facility, the Company is subject to negative covenants limiting subsidiary indebtedness and certain other covenants typical for investment grade-rated borrowers, and the Company is required to maintain certain leverage ratios. The Company was in compliance with all covenants in the revolving credit facility at June 30, 2023, and expects that it will remain in compliance with its existing debt covenants for the next twelve months.

There were $84.7 in outstanding letters of credit as of June 30, 2023.

8.    PREFERRED STOCK AND COMMON SHAREHOLDERS’ EQUITY

The Company is authorized to issue up to 265.0 shares of common stock, par value $0.10 per share. The Company is authorized to issue up to 30.0 shares of preferred stock, par value $0.10 per share. There were no preferred shares outstanding as of June 30, 2023, and December 31, 2022.

14

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

The changes in common shares issued are summarized below:

	Issued and Outstanding
Common shares at December 31, 2022	88.2
Shares issued under employee stock plans	0.5
Common shares at June 30, 2023	88.7

Share Repurchase Program

As of June 30, 2023, the Company had outstanding authorization from the board of directors to purchase up to $1,531.5 of the Company's common stock.

Dividends

For the six months ended June 30, 2023, the Company paid $129.0 in common stock dividends. On July 13, 2023, the Company announced a cash dividend of $0.72 per share of common stock for the third quarter, or approximately $64.8 in the aggregate. The dividend will be payable on September 8, 2023, to stockholders of record of all issued and outstanding shares of common stock as of the close of business on August 8, 2023. The declaration and payment of any future dividends will be at the discretion of the Company's board of directors.

Accumulated Other Comprehensive Earnings (Loss)

The components of accumulated other comprehensive earnings (loss) are as follows:

	Foreign Currency Translation Adjustments		Net Benefit Plan Adjustments		Accumulated Other Comprehensive Earnings (Loss)
Balance as of December 31, 2022	$	(462.3)	$	(30.9)	$	(493.2)
Fortrea Holdings Inc. spin off	231.6		6.4		238.0
Current year adjustments	99.8		12.5		112.3
Pension settlement charge	—		(7.9)		(7.9)
Amounts reclassified from accumulated other comprehensive income	—		(2.3)		(2.3)
Tax effect of adjustments	—		(0.6)		(0.6)
Balance as of June 30, 2023	$	(130.9)	$	(22.8)	$	(153.7)

9.    COMMITMENTS AND CONTINGENCIES

The Company is involved from time to time in various claims and legal actions, including arbitrations, class actions, and other litigation (including those described in more detail below), arising in the ordinary course of business. Some of these actions involve claims that are substantial in amount. These matters include, but are not limited to, intellectual property disputes, commercial and contract disputes, professional liability claims, employee-related matters, transaction-related disputes, securities and corporate law matters, and inquiries, including subpoenas and other civil investigative demands, from governmental agencies, Medicare or Medicaid payers and MCOs reviewing billing practices or requesting comment on allegations of billing irregularities that are brought to their attention through billing audits or third parties. The Company receives civil investigative demands or other inquiries from various governmental bodies in the ordinary course of its business. Such inquiries can relate to the Company or other parties, including physicians and other health care providers. The Company works cooperatively to respond to appropriate requests for information.

The Company also is named from time to time in suits brought under the qui tam provisions of the False Claims Act and comparable state laws. These suits typically allege that the Company has made false statements and/or certifications in connection with claims for payment from U.S. federal or state healthcare programs. The suits may remain under seal (hence, unknown to the Company) for some time while the government decides whether to intervene on behalf of the qui tam plaintiff. Such claims are an inevitable part of doing business in the healthcare field today.

The Company believes that it is in compliance in all material respects with all statutes, regulations, and other requirements applicable to its commercial laboratory operations and biopharma laboratory services. These industries are, however, subject to extensive regulation, and the courts have not interpreted many of the applicable statutes and regulations. Therefore, the applicable statutes and regulations could be interpreted or applied by a prosecutorial, regulatory, or judicial authority in a manner that would adversely affect the Company. Potential sanctions for violation of these statutes and regulations include significant civil and criminal penalties, fines, the loss of various licenses, certificates and authorizations, additional liabilities from third-party claims, and/or exclusion from participation in government programs.

15

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

Many of the current claims and legal actions against the Company are in preliminary stages, and many of these cases seek an indeterminate amount of damages. The Company records an aggregate legal reserve, which is determined using calculations based on historical loss rates and assessment of trends experienced in settlements and defense costs. In accordance with FASB Accounting Standards Codification Topic 450 “Contingencies,” the Company establishes reserves for judicial, regulatory, and arbitration matters outside the aggregate legal reserve if and when those matters present loss contingencies that are both probable and reasonably estimable and would exceed the aggregate legal reserve. When loss contingencies are not both probable and reasonably estimable, the Company does not establish separate reserves.

The Company is unable to estimate a range of reasonably probable loss for the proceedings described in more detail below in which damages either have not been specified or, in the Company's judgment, are unsupported and/or exaggerated and (i) the proceedings are in early stages, (ii) there is uncertainty as to the outcome of pending appeals or motions, (iii) there are significant factual issues to be resolved, and/or (iv) there are novel legal issues to be presented. For these proceedings, however, the Company does not believe, based on currently available information, that the adverse outcomes are probable and reasonably estimable, and it does not believe they will have a material adverse effect on the Company's financial statements.

The Company has received various subpoenas and other civil investigative demands related to Medicaid billing. In October 2009, the Company received a subpoena from the State of Michigan Department of Attorney General seeking documents related to its billing to Michigan Medicaid. The Company cooperated with this request. In October 2013, the Company received a Civil Investigative Demand from the State of Texas Office of the Attorney General requesting documents related to its billing to Texas Medicaid. The Company cooperated with this request. On October 5, 2018, the Company received a second Civil Investigative Demand from the State of Texas Office of the Attorney General requesting documents related to its billing to Texas Medicaid. The Company cooperated with this request. On January 26, 2021, the Company was notified that a qui tam Petition was pending under seal in the District Court, 250th Judicial District, Travis County, Texas, and that the State of Texas has intervened. On April 14, 2021, the Petition was unsealed. The Petition alleges that the Company submitted claims for reimbursement to Texas Medicaid that were higher than permitted under Texas Medicaid’s alleged “best price” regulations, and that the Company offered remuneration to Texas health care providers in the form of discounted pricing for certain laboratory testing services in exchange for the providers’ referral of Texas Medicaid business to the Company. The Petition seeks actual and double damages and civil penalties, as well as recovery of costs, attorney's fees, and legal expenses. On August 1, 2022, the District Court entered an order granting the Company's Motion for Partial Summary Judgment with respect to the claim that the Company submitted claims for reimbursement to Texas Medicaid that were higher than permitted under Texas Medicaid's alleged “best price” regulations. Plaintiffs filed a Notice of Non-Suit and Motion for Entry of Final Judgment and, on November 11, 2022, the court entered a Judgment. Plaintiffs filed a Notice of Appeal with respect to the court's order granting the Company's Motion for Partial Summary Judgment, referenced above. The Company will vigorously defend the lawsuit.

On August 31, 2015, the Company was served with a putative class action lawsuit, Patty Davis v. Laboratory Corporation of America, et al., filed in the Circuit Court of the Thirteenth Judicial Circuit for Hillsborough County, Florida. The complaint alleges that the Company violated the Florida Consumer Collection Practices Act by billing patients who were collecting benefits under the Workers' Compensation Statutes. The lawsuit seeks injunctive relief and actual and statutory damages, as well as recovery of attorney's fees and legal expenses. In April 2017, the Circuit Court granted the Company’s Motion for Judgment on the Pleadings. The Plaintiff appealed the Circuit Court’s ruling to the Florida Second District Court of Appeal. On October 16, 2019, the Florida Second District Court of Appeal reversed the Circuit Court’s dismissal, but certified a controlling issue of Florida law to the Florida Supreme Court. On February 17, 2020, the Florida Supreme Court accepted jurisdiction of the lawsuit. The court held oral arguments on December 9, 2020. On May 26, 2022, the Florida Supreme Court issued an opinion approving the result of the Florida Second District Court of Appeal in favor of the Plaintiff. The Company will vigorously defend the lawsuit.

On March 10, 2017, the Company was served with a putative class action lawsuit, Victoria Bouffard, et al. v. Laboratory Corporation of America Holdings, filed in the U.S. District Court for the Middle District of North Carolina. The complaint alleges that the Company's patient list prices unlawfully exceed the rates negotiated for the same services with private and public health insurers in violation of various state consumer protection laws. The lawsuit also alleges breach of implied contract or quasi-contract, unjust enrichment, and fraud. The lawsuit seeks statutory, exemplary, and punitive damages, injunctive relief, and recovery of attorney's fees and costs. In May 2017, the Company filed a Motion to Dismiss Plaintiffs' Complaint and Strike Class Allegations; the Motion to Dismiss was granted in March 2018 without prejudice. On October 10, 2017, a second putative class action lawsuit, Sheryl Anderson, et al. v. Laboratory Corporation of America Holdings, was filed in the U.S. District Court for the Middle District of North Carolina. The complaint contained similar allegations and sought similar relief to the Bouffard complaint, and added additional counts regarding state consumer protection laws. On August 10, 2018, the Plaintiffs filed an Amended Complaint, which consolidated the Bouffard and Anderson actions. On September 10, 2018, the Company filed a Motion to Dismiss Plaintiffs' Amended Complaint and Strike Class Allegations. On August 16, 2019, the court entered

16

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

an order granting in part and denying in part the Motion to Dismiss the Amended Complaint, and denying the Motion to Strike the Class Allegations. On August 26, 2021, Plaintiffs filed a Motion for Class Certification. On February 13, 2023, the court entered an order denying Plaintiffs' Motion for Class Certification. On February 27, 2023, Plaintiffs filed a Petition for Permission to Appeal the court’s order with the U.S. Court of Appeals for the Fourth Circuit. On April 5, 2023, the Fourth Circuit denied Plaintiffs’ Petition. On December 29, 2021, a related lawsuit, Nathaniel J. Nolan, et al. v. Laboratory Corporation of America Holdings, was filed in the U.S. District Court for the Middle District of North Carolina. The complaint alleges that the Company's patient acknowledgement of estimated financial responsibility form is misleading. The lawsuit seeks a declaratory judgment under the consumer protection laws of Nevada and Florida that the form is materially misleading and deceptive, an injunction barring the use of the form, damages on behalf of an alleged class, and attorney's fees and expenses. On February 28, 2022, the Company filed a Motion to Dismiss all claims. On February 13, 2023, the court entered an order granting the Company's Motion to Dismiss. On March 13, 2023, Plaintiffs filed a Notice of Appeal. The Company will vigorously defend the lawsuits.

On April 1, 2019, Covance Research Products was served with a Grand Jury Subpoena issued by the Department of Justice (DOJ) in Miami, Florida requiring the production of documents related to the importation into the United States of live non-human primate shipments originating from or transiting through China, Cambodia, and/or Vietnam from April 1, 2014 through March 28, 2019. The Company is cooperating with the DOJ.

On May 14, 2019, Retrieval-Masters Creditors Bureau, Inc. d/b/a American Medical Collection Agency (AMCA), an external collection agency, notified the Company about a security incident AMCA experienced that may have involved certain personal information about some of the Company’s patients (the AMCA Incident). The Company referred patient balances to AMCA only when direct collection efforts were unsuccessful. The Company’s systems were not impacted by the AMCA Incident. Upon learning of the AMCA Incident, the Company promptly stopped sending new collection requests to AMCA and stopped AMCA from continuing to work on any pending collection requests from the Company. AMCA informed the Company that it appeared that an unauthorized user had access to AMCA’s system between August 1, 2018, and March 30, 2019, and that AMCA could not rule out the possibility that personal information on AMCA’s system was at risk during that time period. Information on AMCA’s affected system from the Company may have included name, address, and balance information for the patient and person responsible for payment, along with the patient’s phone number, date of birth, referring physician, and date of service. The Company was later informed by AMCA that health insurance information may have been included for some individuals, and because some insurance carriers utilize the Social Security Number as a subscriber identification number, the Social Security Number for some individuals may also have been affected. No ordered tests, laboratory test results, or diagnostic information from the Company were in the AMCA affected system. The Company notified individuals for whom it had a valid mailing address. For the individuals whose Social Security Number was affected, the notice included an offer to enroll in credit monitoring and identity protection services that was provided free of charge for 24 months.

Twenty-three putative class action lawsuits were filed against the Company related to the AMCA Incident in various U.S. District Courts. Numerous similar lawsuits have been filed against other health care providers who used AMCA. These lawsuits were consolidated into a multidistrict litigation in the District of New Jersey. On November 15, 2019, the Plaintiffs filed a Consolidated Class Action Complaint in the U.S. District Court of New Jersey. The consolidated Complaint generally alleged that the Company did not adequately protect its patients’ data and failed to timely notify those patients of the AMCA Incident. The Complaint asserted various causes of action, including but not limited to negligence, breach of implied contract, unjust enrichment, and the violation of state data protection statutes. The Complaint sought damages on behalf of a class of all affected Company customers. On January 22, 2020, the Company filed Motions to Dismiss all claims. On December 16, 2021, the court granted in part and denied in part the Company's Motion to Dismiss. On March 31, 2022, the Plaintiffs filed an Amended Complaint alleging claims for negligence, negligence per se, breach of confidence, invasion of privacy, and various state statutory claims, including a claim under the California Confidentiality of Medical Information Act. The Company filed a Motion to Dismiss certain claims of the Amended Complaint. On May 5, 2023, the court granted in part and denied in part the Company's Motion to Dismiss. The Company will vigorously defend the remaining claims in the multi-district litigation.

The Company was served with a shareholder derivative lawsuit, Raymond Eugenio, Derivatively on Behalf of Nominal Defendant, Laboratory Corporation of America Holdings v. Lance Berberian, et al., filed in the Court of Chancery of the State of Delaware on April 23, 2020. The complaint asserts derivative claims on the Company’s behalf against the Company’s board of directors and certain executive officers. The complaint generally alleges that the defendants failed to ensure that the Company utilized proper cybersecurity safeguards and failed to implement a sufficient response to data security incidents, including the AMCA Incident. The complaint asserts derivative claims for breach of fiduciary duty and seeks relief including damages, certain disclosures, and certain changes to the Company’s internal governance practices. On June 2, 2020, the Company filed a Motion to Stay the lawsuit due to its overlap with the multi-district litigation referenced above. On July 2,

17

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

2020, the Company filed a Motion to Dismiss. On July 14, 2020, the court entered an order staying the lawsuit pending the resolution of the multi-district litigation. The lawsuit will be vigorously defended.

Certain governmental entities have requested information from the Company related to the AMCA Incident. The Company received a request for information from the Office for Civil Rights (OCR) of the Department of Health and Human Services. On April 28, 2020, OCR notified the Company of the closure of its inquiry. The Company has also received requests from a multi-state group of state Attorneys General and is cooperating with these requests for information.

On January 31, 2020, the Company was served with a putative class action lawsuit, Luke Davis and Julian Vargas, et al. v. Laboratory Corporation of America Holdings, filed in the U.S. District Court for the Central District of California. The lawsuit alleges that visually impaired patients are unable to use the Company's touchscreen kiosks at Company patient service centers in violation of the Americans with Disabilities Act and similar California statutes. The lawsuit seeks statutory damages, injunctive relief, and attorney's fees and costs. On March 20, 2020, the Company filed a Motion to Dismiss Plaintiffs' Complaint and to Strike Class Allegations. In August 2020, the Plaintiffs filed an Amended Complaint. On April 26, 2021, the Plaintiffs and the Company each filed Motions for Summary Judgment and the Plaintiffs filed a Motion for Class Certification. On May 23, 2022, the court entered an order granting Plaintiffs’ Motion for Class Certification. On June 6, 2022, the Company filed a Petition for Permission to Appeal the Order Granting Class Certification with the U.S. Court of Appeals for the Ninth Circuit. On September 22, 2022, the Ninth Circuit granted the Company's Petition for Permission to Appeal the Order Granting Class Certification. The Company will vigorously defend the lawsuit.

On October 16, 2020, Ravgen Inc. filed a patent infringement lawsuit, Ravgen Inc. v. Laboratory Corporation of America Holdings, in the U.S. District Court for the Western District of Texas, alleging infringement of two Ravgen-owned U.S. patents. The lawsuit seeks monetary damages, enhancement of those damages for willfulness, and recovery of attorney’s fees and costs. On September 28, 2022, a jury rendered a verdict in favor of the Plaintiff on the remaining patent at issue, finding that the Company willfully infringed Ravgen's patent, and awarded damages of $272.0. Plaintiff filed post-trial motions seeking enhanced damages of up to $817.0 based on the finding of willfulness, as well as attorney's fees and costs. On May 12, 2023, the court issued an order granting Plaintiff's motion in part and awarding enhanced damages of $100.0. The Company strongly disagrees with the verdict, based on a number of legal factors, and will vigorously defend the lawsuit through the appeal process. On June 4, 2021, the Company also instituted proceedings before the Patent Trial and Appeal Board of the U.S. Patent and Trademark Office challenging the validity of the Ravgen patent at issue in the trial. In November 2022, the Patent Trial and Appeal Board issued a decision upholding the validity of the Ravgen patent, and the Company has filed an appeal of this decision.

On May 14, 2020, the Company was served with a putative class action lawsuit, Jose Bermejo v. Laboratory Corporation of America (Bermejo I) filed in the Superior Court of California, County of Los Angeles Central District, alleging that certain non-exempt California-based employees were not properly compensated for driving time or properly paid wages upon termination of employment. The Plaintiff asserts these actions violate various California Labor Code provisions and Section 17200 of the Business and Professional Code. The lawsuit seeks monetary damages, civil penalties, and recovery of attorney’s fees and costs. On June 15, 2020, the lawsuit was removed to the U.S. District Court for the Central District of California. On June 16, 2020, the Company was served with a Private Attorney General Act lawsuit by the same plaintiff in Jose Bermejo v. Laboratory Corporation of America (Bermejo II), filed in the Superior Court of California, County of Los Angeles Central District, alleging that certain Company practices violated California Labor Code penalty provisions related to unpaid and minimum wages, unpaid overtime, unpaid meal and rest break premiums, untimely payment of wages following separation of employment, failure to maintain accurate pay records, and non-reimbursement of business expenses. The second lawsuit seeks to recover civil penalties and recovery of attorney's fees and costs. On October 28, 2020, the court issued an order staying proceedings in Bermejo II pending resolution of Bermejo I. The second lawsuit seeks to recover civil penalties and recovery of attorney's fees and costs. On February 24, 2022, the parties entered into a Memorandum of Understanding of the terms of a settlement of the Bermejo I and Bermejo II lawsuits and on March 17, 2023, the court issued a preliminary approval of the parties’ settlement agreement of the Bermejo I lawsuit, but the Bermejo II lawsuit settlement is still pending Court approval.

On June 14, 2021, a single plaintiff filed a Private Attorney General Act lawsuit, Becker v. Laboratory Corporation of America, in the Superior Court of California, County of Orange, alleging various violations of the California Labor Code, including that the Plaintiff was not properly compensated for work and overtime hours, not properly paid meal and rest break premiums, not reimbursed for certain business-related expenses, and received inaccurate wage statements. The lawsuit seeks monetary damages, civil penalties, and recovery of attorney’s fees and costs. A settlement of the Bermejo I and Bermejo II lawsuits, if approved by the court, will resolve the Becker lawsuit.

18

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

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

On November 23, 2021, the Company was served with a single plaintiff Private Attorney General Act lawsuit, Poole v. Laboratory Corporation of America, filed in the Superior Court of California, County of Kern, alleging various violations of the California Labor Code, including that Plaintiff was not properly paid wages owed, not properly paid meal and rest break premiums, not reimbursed for certain business related expenses, and other allegations including the untimely payment of wages and receipt of inaccurate wage statements. The lawsuit seeks monetary damages, civil penalties, and recovery of attorney's fees and costs. The case was removed to the U.S. District Court for the Eastern District of California. A settlement of the Bermejo I and Bermejo II lawsuits, if approved by the court, will resolve the portion of the Poole lawsuit relating to service representatives and senior service representatives.

On October 5, 2020, the Company was served with a putative class action lawsuit, Williams v. LabCorp Employer Services, Inc. et al., filed in the Superior Court of California, County of Los Angeles, alleging that certain non-exempt California-based employees were not properly compensated for work and overtime hours, not properly paid meal and rest break premiums, not reimbursed for certain business-related expenses, not properly paid for driving or wait times, and received inaccurate wage statements. The Plaintiff also asserts claims for unfair competition under Section 17200 of the Business and Professional Code. On November 4, 2020, the lawsuit was removed to the U.S. District Court for the Central District of California. The lawsuit seeks monetary damages, liquidated damages, civil penalties, and recovery of attorney's fees and costs. On June 24, 2021, the District Court remanded the case to the Superior Court of California, County of Los Angeles on the grounds that potential damages did not meet the Class Action Fairness Act (CAFA), 28 U.S.C. § 1332(d), jurisdictional threshold. The parties entered into a settlement agreement dated September 9, 2022, which is pending court approval.

On June 7, 2023, the Company was served with a putative class action lawsuit, Connie Howard, Yadira Yazmin Hernandez, and Deborah Reynolds, et al. v. Laboratory Corporation of America, Laboratory Corporation of America Holdings, and Meta Platforms, Inc., filed in the U.S. District Court for the Northern District of California, alleging that the Company’s website includes a tracking code created by Meta, known as the Meta Pixel, that sent information related to Plaintiffs and their online activities to Meta. Plaintiffs assert claims against the Company under California and Pennsylvania law and seek to represent classes of all persons in California, or in Pennsylvania, who allegedly entered search terms into the Company’s website and who used Facebook during a time that Plaintiffs allege the Meta Pixel was active on the Company’s website. Plaintiffs seek an injunction, damages, attorneys’ fees, and costs. The Company will vigorously defend the lawsuit.

On August 14, 2020, the Company was served with a Subpoena Duces Tecum issued by the State of Colorado Office of the Attorney General requiring the production of documents related to urine drug testing in all states. The Company is cooperating with this request.

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

On June 27, 2022, the Company was served with a Subpoena Duces Tecum issued by the DOJ in Boston, Massachusetts requiring the production of documents related to urine drug testing. The Company is cooperating with the DOJ.