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What changed in Labcorp's 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Labcorp's 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+528 added−587 removedSource: 10-K (2025-02-25) vs 10-K (2024-02-26)

Top changes in Labcorp's 2024 10-K

528 paragraphs added · 587 removed · 427 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

230 edited+57 added−51 removed123 unchanged
Biggest changeINCOME TAXES The sources of income before taxes, classified between domestic and foreign entities, are as follows: 2023 2022 2021 Domestic $ 504.0 $ 1,097.9 $ 2,455.0 Foreign 64.9 139.5 432.6 Total pre-tax income $ 568.9 $ 1,237.4 $ 2,887.6 F-30 Index LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in millions, except per share data) The components of income tax expense attributable to continuing operations are as follows: Years Ended December 31, 2023 2022 2021 Current tax expense: Federal $ 183.1 $ 150.8 $ 500.0 State 38.9 25.4 156.5 Foreign 44.6 34.0 71.9 $ 266.6 $ 210.2 $ 728.4 Deferred tax expense/(benefit): Federal $ (63.1) $ 15.8 $ (36.7) State (31.6) 0.6 (9.0) Foreign 16.6 7.3 7.3 (78.1) 23.7 (38.4) Total income tax expense $ 188.5 $ 233.9 $ 690.0 The effective tax rates on earnings before income taxes are reconciled to statutory U.S. income tax rates as follows: Years Ended December 31, 2023 2022 2021 Statutory U.S. rate 21.0 % 21.0 % 21.0 % State and local income taxes, net of U.S. federal income tax effect 4.0 4.2 3.9 Foreign earnings taxed at lower rates than the statutory U.S. rate (2.2) (0.7) (0.7) Tax credits (3.8) (5.4) (0.1) Impairment of assets 10.8 3.7 — Limitation of officer compensation 1.7 1.2 0.3 Worthless stock loss (2.6) — — Deferred tax adjustments 2.7 (2.4) (0.1) Other 1.5 (2.7) (0.4) Effective rate 33.1 % 18.9 % 23.9 % The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows: December 31, 2023 December 31, 2022 Deferred tax assets: Accounts receivable $ 27.9 $ 19.4 Employee compensation and benefits 81.7 96.5 Operating lease liability 191.4 182.6 Acquisition and restructuring reserves 9.2 7.0 Capitalized R&D costs 142.9 44.1 Tax loss carryforwards 246.9 241.9 Other 95.1 95.1 Total gross deferred tax assets 795.1 686.6 Less: valuation allowance (150.2) (151.3) Deferred tax assets, net of valuation allowance $ 644.9 $ 535.3 Deferred tax liabilities: Right of use asset $ (175.3) $ (170.2) Intangible assets (614.8) (605.1) Property, plant and equipment (163.5) (166.5) Other (66.2) (62.7) Total gross deferred tax liabilities $ (1,019.8) $ (1,004.5) Net deferred tax liabilities $ (374.9) $ (469.2) F-31 Index LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in millions, except per share data) The table below provides a rollforward of the valuation allowance: December 31, 2023 December 31, 2022 December 31, 2021 Beginning balance $ 151.3 $ 149.2 $ 167.6 Movements charged to expense (8.9) 10.2 6.8 Reductions and other adjustments 7.8 (8.1) (25.2) Ending balance $ 150.2 $ 151.3 $ 149.2 The Company has U.S. federal tax loss carryforwards of approximately $127.0, which expire periodically through 2037, as well as post-2017 carryforwards of $179.1 that are limited to 80% of taxable income and have an indefinite carryforward period.
Biggest changeAND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in millions, except per share data) The components of income tax expense attributable to continuing operations are as follows: Year Ended December 31, 2024 2023 2022 Current tax expense: Federal $ 125.9 $ 183.1 $ 150.8 State 46.2 38.9 25.4 Foreign 60.4 44.6 34.0 $ 232.5 $ 266.6 $ 210.2 Deferred tax (benefit) expense: Federal $ (6.3) $ (63.1) $ 15.8 State (11.1) (31.6) 0.6 Foreign (2.7) 16.6 7.3 (20.1) (78.1) 23.7 Total income tax expense $ 212.4 $ 188.5 $ 233.9 The effective tax rates on earnings before income taxes are reconciled to statutory U.S. income tax rates as follows: Year Ended December 31, 2024 2023 2022 Statutory U.S. rate 21.0 % 21.0 % 21.0 % State and local income taxes, net of U.S. federal income tax effect 2.8 4.0 4.2 Foreign earnings taxed at lower rates than the statutory U.S. rate (1.7) (2.2) (0.7) Tax credits (2.5) (3.8) (5.4) Impairment of assets — 10.8 3.7 Limitation of officer compensation 0.7 1.7 1.2 Worthless stock loss — (2.6) — Deferred tax adjustments 0.9 4.6 (2.6) Remeasurement of deferred taxes 1.3 (1.1) (0.1) Change in valuation allowance (2.4) (1.6) 0.2 Other 2.0 2.3 (2.6) Effective rate 22.1 % 33.1 % 18.9 % The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows: December 31, 2024 2023 Deferred tax assets: Accounts receivable $ 33.7 $ 27.9 Employee compensation and benefits 70.8 81.7 Operating lease liability 199.3 191.4 Acquisition and restructuring reserves 8.9 9.2 Capitalized research and design costs 194.7 142.9 Tax loss carryforwards 224.0 246.9 Other 108.6 95.1 Total gross deferred tax assets 840.0 795.1 Less: valuation allowance (127.2) (150.2) Deferred tax assets, net of valuation allowance $ 712.8 $ 644.9 Deferred tax liabilities: Right of use asset $ (181.6) $ (175.3) Intangible assets (626.7) (614.8) Property, plant and equipment (177.7) (163.5) Other (71.7) (66.2) Total gross deferred tax liabilities $ (1,057.7) $ (1,019.8) Net deferred tax liabilities $ (344.9) $ (374.9) F-30 Index LABCORP HOLDINGS INC.
Reimbursable Out-of-Pocket Expenses BLS pays on behalf of its customers certain out-of-pocket costs for which the Company is reimbursed at cost, without mark-up or profit. Out-of-pocket costs paid by BLS are reflected in cost of revenues, while the reimbursements received are reflected in revenues in the consolidated statements of operations.
Reimbursable Out-of-Pocket Expenses BLS pays on behalf of its customers certain out-of-pocket costs for which the Company is reimbursed at cost, without mark-up or profit. Out-of-pocket costs paid by BLS are reflected in Cost of revenues in the Consolidated Statements of Operations, while the reimbursements received are reflected in Revenues in the Consolidated Statements of Operations.
Professional Liability The Company is self-insured (up to certain limits) for professional liability claims arising in the normal course of business, generally related to the testing and reporting of laboratory test results. The Company estimates a liability that represents the ultimate exposure for aggregate losses below those limits.
Professional Liability The Company is self-insured (up to certain limits) for professional liability claims arising in the normal course of business, generally related to laboratory testing and reporting of test results. The Company estimates a liability that represents the ultimate exposure for aggregate losses below those limits.
A performance share grant in 2022 represents a three-year award opportunity for the period of 2022-2024 and, if earned, vests fully (to the extent earned) in the first quarter of 2025.
A performance share grant in 2022 represents a three-year award opportunity for the period 2022-2024, and if earned, vests fully (to the extent earned) in the first quarter of 2025.
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.
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.
The preliminary valuation of acquired assets and assumed liabilities, include the following: Jefferson Health Enzo BioChem Providence Health and Services - Oregon Tufts Medicine Legacy Other Business Acquisitions Measurement Period Adjustments Amounts Acquired During the Year Ended December 31, 2023 Accounts receivable $ — $ (2.8) $ — $ — $ — $ 2.0 $ 0.2 $ (0.6) Inventories — — 1.3 — — — — 1.3 Prepaid expenses and other — 0.4 — — 0.2 0.3 0.6 1.5 Property, plant and equipment — — 4.7 — 3.3 6.5 (1.5) 13.0 Goodwill 50.8 54.1 50.7 73.8 49.0 18.5 (29.4) 267.5 Intangible assets 57.2 61.1 57.2 83.2 55.2 26.9 19.5 360.3 Other assets 2.2 — — — — 17.9 — 20.1 Total assets acquired 110.2 112.8 113.9 157.0 107.7 72.1 (10.6) 663.1 Accounts payable — — — — — 1.2 — 1.2 Accrued expenses and other — — 3.9 — — 1.2 (8.3) (3.2) Deferred income taxes — — — — — — (2.3) (2.3) Other liabilities — — — — — (4.1) — (4.1) Total liabilities acquired — — 3.9 — — (1.7) (10.6) (8.4) Net assets acquired $ 110.2 $ 112.8 $ 110.0 $ 157.0 $ 107.7 $ 73.8 $ — $ 671.5 Unaudited Pro Forma Information for 2023 Acquisitions Had the aggregate of the Company's 2023 acquisitions been completed as of January 1, 2022, the Company's pro forma results would have been as follows: Years Ended December 31, 2023 2022 Revenues $ 12,350.1 $ 12,126.3 Earnings from continuing operations 397.2 1,030.3 2022 During the year ended December 31, 2022, the Company acquired various businesses and related assets for approximately $1,164.0 in cash (net of cash acquired).
The preliminary valuation of acquired assets and assumed liabilities, include the following: Jefferson Health Enzo BioChem Providence Health and Services - Oregon Tufts Medicine Legacy Other Business Acquisitions Measurement Period Adjustments Amounts Acquired During the Year Ended December 31, 2023 Accounts receivable $ — $ (2.8) $ — $ — $ — $ 2.0 $ 0.2 $ (0.6) Inventories — — 1.3 — — — — 1.3 Prepaid expenses and other — 0.4 — — 0.2 0.3 0.6 1.5 Property, plant and equipment — — 4.7 — 3.3 6.5 (1.5) 13.0 Goodwill 50.8 54.1 50.7 73.8 49.0 18.5 (29.4) 267.5 Intangible assets 57.2 61.1 57.2 83.2 55.2 26.9 19.5 360.3 Other assets 2.2 — — — — 17.9 — 20.1 Total assets acquired 110.2 112.8 113.9 157.0 107.7 72.1 (10.6) 663.1 Accounts payable — — — — — 1.2 — 1.2 Accrued expenses and other — — 3.9 — — 1.2 (8.3) (3.2) Deferred income taxes — — — — — — (2.3) (2.3) Other liabilities — — — — — (4.1) — (4.1) Total liabilities acquired — — 3.9 — — (1.7) (10.6) (8.4) Net assets acquired $ 110.2 $ 112.8 $ 110.0 $ 157.0 $ 107.7 $ 73.8 $ — $ 671.5 Unaudited Pro Forma Information for 2023 Acquisitions Had the aggregate of the Company’s 2023 acquisitions been completed at January 1, 2022, the Company’s pro forma results would have been as follows: Year Ended December 31, 2023 2022 Revenues $ 12,350.1 $ 12,126.3 Earnings from continuing operations $ 397.2 $ 1,030.3 2022 During the year ended December 31, 2022, the Company acquired various businesses and related assets for approximately $1,164.0 in cash (net of cash acquired).
All significant inter-Company transactions and accounts have been eliminated. The Company does not have any variable interest entities or special purpose entities whose financial results are not included in the consolidated financial statements. The financial statements of the Company's operating foreign subsidiaries are measured using the local currency as the functional currency.
All significant inter-Company transactions and accounts have been eliminated. The Company does not have any variable interest entities or special purpose entities whose financial results are not included in these Consolidated Financial Statements. The financial statements of the Company’s operating foreign subsidiaries are measured using the local currency as the functional currency.
Changes in the fair value of the cross-currency swaps are charged or credited through accumulated other comprehensive income in the Consolidated Balance Sheet until the hedged item is recognized in earnings. The cumulative amount of the fair value hedging adjustments are recognized as currency translation within the Consolidated Statements of Comprehensive Earnings.
Changes in the fair value of the cross-currency swaps are charged or credited through Accumulated other comprehensive income in the Consolidated Balance Sheet until the hedged item is recognized in earnings. The cumulative amount of the fair value hedging adjustments are recognized as Foreign currency translation adjustments within the Consolidated Statements of Comprehensive Earnings.
These derivative financial instruments are accounted for as fair value hedges that increase or decrease the value of the Senior Notes with the offset being recorded as a component of other long-term assets or liabilities, as applicable.
These derivative financial instruments are accounted for as fair value hedges that increase or decrease the value of the Company’s senior notes with the offset being recorded as a component of other long-term assets or liabilities, as applicable.
Credit Loss Rollforward BLS estimates future expected losses on accounts receivable, unbilled services and notes receivable over the remaining collection period of the instrument.
Credit Loss Rollforward BLS estimates future expected losses on accounts receivable and unbilled services over the remaining collection period of the instrument.
BUSINESS SEGMENT INFORMATION The following table is a summary of segment information for the years ended December 31, 2023, 2022, and 2021. The “management approach” has been used to present the following segment information. This approach is based upon the way the management of the Company organizes segments within an enterprise for making operating decisions and assessing performance.
BUSINESS SEGMENT INFORMATION The following table is a summary of segment information for the years ended December 31, 2024, 2023, and 2022. The “management approach” has been used to present the following segment information. This approach is based upon the way the management of the Company organizes segments within an enterprise for making operating decisions and assessing performance.
Generally, client sales are recorded on a fee-for-service basis at Dx’s client list price, less any negotiated discount. A portion of client billing is for laboratory management services, collection kits and other non-testing services or products. In these cases, revenue is recognized when services are rendered or delivered.
Generally, client sales are recorded on a fee-for-service basis at Dx’s client list price, less any negotiated discount. A portion of client billing is for laboratory management services, collection kits and other non-testing offerings. In these cases, revenue is recognized when services are rendered or delivered.
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 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 sought monetary damages, enhancement of those damages for willfulness, and recovery of attorney’s fees and costs.
For volume-based contracts the contract value is entirely variable and revenue is recognized as the specific product or service is completed. For services billed based on time and materials, revenue is recognized using the right to invoice practical expedient. Contracts are often modified to account for changes in contract specifications and requirements.
For volume-based contracts, the contract value is entirely variable, and revenue is recognized as the specific service is completed. For services billed based on time and materials, revenue is recognized using the right to invoice practical expedient. Contracts are often modified to account for changes in contract specifications and requirements.
BLS Revenues BLS revenue is generally recognized over time, as the services are delivered to the customer, based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided.
BLS Revenues BLS revenue is generally recognized over time, as the services are delivered to the customer, based on the extent of progress towards completion of the performance obligation. The selection of the method to measure progress towards completion requires judgment and is based on the nature of the services to be provided.
Plans Year ended December 31, 2023 2022 2021 2023 2022 2021 Discount rate 5.5 % 2.8 % 2.4 % 4.0 % 2.1 % 1.1 % Salary increases N/A N/A N/A 2.0 % 2.0 % 2.0 % Expected long term rate of return 6.0 % 4.5 % 6.0 % 5.3 % 3.6 % 3.1 % Cash balance interest credit rate 4.0 % 4.0 % 4.0 % N/A N/A N/A A one percentage point decrease or increase in the discount rate would have resulted in a respective increase or decrease in 2023 retirement plan expense of $0.4 for the U.S.
Plans Year Ended December 31, 2024 2023 2022 2024 2023 2022 Discount rate 5.1 % 5.5 % 2.8 % 3.7 % 4.0 % 2.1 % Salary increases N/A N/A N/A 2.0 % 2.0 % 2.0 % Expected long term rate of return 6.0 % 6.0 % 4.5 % 4.1 % 5.3 % 3.6 % Cash balance interest credit rate 4.0 % 4.0 % 4.0 % N/A N/A N/A A one percentage point decrease or increase in the discount rate would have resulted in a respective increase or decrease in 2024 retirement plan expense of $0.2 for the U.S.
The Company targets funding the minimum required contributions but may make additional contributions into the pension plans in 2024, depending upon factors such as how the funded status of those plans change or to reduce the administrative costs of the plan.
The Company targets funding the minimum required contributions but may make additional contributions into the pension plans in 2025, depending upon factors such as how the funded status of those plans change or to reduce the administrative costs of the plan.
During the years ended December 31, 2023, 2022 and 2021, the Company recognized $0.0, $0.8 and $0.0, respectively, in interest and penalties expense, which was offset by a benefit from reversing previous accruals for interest and penalties of $1.8, $0.0 and $1.1, respectively.
During the years ended December 31, 2024, 2023, and 2022, the Company recognized $0.1, $0.0 and $0.8, respectively, in interest and penalties expense, which was offset by a benefit from reversing previous accruals for interest and penalties of $0.0, $1.8 and $0.0, respectively.
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 year. Resulting translation adjustments are included in “Accumulated other comprehensive income.” On June 30, 2023, the Company completed the separation (spin-off) of Fortrea Holdings Inc.
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 year. Resulting translation adjustments are included in Accumulated other comprehensive income. On June 30, 2023, the Company completed the separation (Spin-off) of Fortrea Holdings Inc.
Translation adjustments are accumulated in a separate component of shareholders’ equity in the consolidated balance sheets and are included in the determination of comprehensive income in the consolidated statements of comprehensive earnings and consolidated statements of changes in shareholders’ equity. Transaction gains and losses are included in the determination of net income in the consolidated statements of operations.
Translation adjustments are accumulated in a separate component of Shareholders’ equity in the Consolidated Balance Sheets and are included in the determination of comprehensive earnings in the Consolidated Statements of Comprehensive Earnings and Consolidated Statements of Changes in Shareholders’ Equity. Transaction gains and losses are included in the determination of Net earnings in the Consolidated Statements of Operations. 2.
When the Company repurchases shares of Common Stock, the amount paid to repurchase the shares in excess of the par or stated value is allocated to additional paid-in-capital unless subject to limitation or the balance in additional paid-in-capital is exhausted. Remaining amounts are recognized as a reduction in retained earnings.
When the Company repurchases shares of Common Stock, the amount paid to repurchase the shares in excess of the par or stated value is allocated to Additional paid-in-capital unless subject to limitation or the balance in Additional paid-in-capital is exhausted. Remaining amounts are recognized as a reduction in Retained earnings in the Company’s Consolidated Balance Sheets.
Preliminary Ascension Healthcare Other Acquisitions Measurement Period Adjustments Amounts Acquired During Year Ended December 31, 2022 Accounts receivable $ 4.1 $ — $ (1.3) $ (2.3) $ 0.5 Unbilled services 2.9 — — (3.2) (0.3) Inventories 2.5 24.6 — — 27.1 Prepaid expenses and other 1.2 0.4 0.3 — 1.9 Property, plant and equipment 9.9 43.5 0.1 — 53.5 Deferred income taxes 17.5 — — 15.2 32.7 Goodwill 346.8 125.0 126.7 (40.4) 558.1 Intangible assets 136.6 233.2 172.5 30.4 572.7 Other assets 12.5 — 2.3 (2.3) 12.5 Total assets acquired 534.0 426.7 300.6 (2.6) 1,258.7 Accounts payable 3.8 — — (0.1) 3.7 Accrued expenses and other 57.3 — 15.4 0.1 72.8 Unearned revenue 3.3 — — (2.6) 0.7 Lease liabilities — 2.9 — — 2.9 Other liabilities 14.6 — — — 14.6 Total liabilities acquired 79.0 2.9 15.4 (2.6) 94.7 Net assets acquired $ 455.0 $ 423.8 $ 285.2 $ — $ 1,164.0 Unaudited Pro Forma Information for 2022 Acquisitions Had the aggregate of the Company's 2022 acquisitions been completed as of January 1, 2021, the Company's pro forma results would have been as follows: Years Ended December 31, 2022 2021 Revenues $ 11,984.7 $ 13,325.7 Earnings from continuing operations 1,006.8 2,182.4 2021 During the year ended December 31, 2021, the Company acquired various businesses and related assets for approximately $496.9 in cash (net of cash acquired).
Preliminary Ascension Healthcare Other Acquisitions Measurement Period Adjustments Amounts Acquired During Year Ended December 31, 2022 Accounts receivable $ 4.1 $ — $ (1.3) $ (2.3) $ 0.5 Unbilled services 2.9 — — (3.2) (0.3) Inventories 2.5 24.6 — — 27.1 Prepaid expenses and other 1.2 0.4 0.3 — 1.9 Property, plant and equipment 9.9 43.5 0.1 — 53.5 Deferred income taxes 17.5 — — 15.2 32.7 Goodwill 346.8 125.0 126.7 (40.4) 558.1 Intangible assets 136.6 233.2 172.5 30.4 572.7 Other assets 12.5 — 2.3 (2.3) 12.5 Total assets acquired 534.0 426.7 300.6 (2.6) 1,258.7 Accounts payable 3.8 — — (0.1) 3.7 Accrued expenses and other 57.3 — 15.4 0.1 72.8 Unearned revenue 3.3 — — (2.6) 0.7 Lease liabilities — 2.9 — — 2.9 Other liabilities 14.6 — — — 14.6 Total liabilities acquired 79.0 2.9 15.4 (2.6) 94.7 Net assets acquired $ 455.0 $ 423.8 $ 285.2 $ — $ 1,164.0 Unaudited Pro Forma Information for 2022 Acquisitions Had the aggregate of the Company’s 2022 acquisitions been completed at January 1, 2021, the Company’s pro forma results would have been as follows: Year Ended December 31, 2022 2021 Revenues $ 11,984.7 $ 13,325.7 Earnings from continuing operations $ 1,006.8 $ 2,182.4 5.
Such value is recognized as an expense over the service period, net of estimated forfeitures and the Company's determination of whether it is probable that the performance targets will be achieved. At the end of each reporting period, the Company reassesses the probability of achieving performance targets.
Such value is recognized as an expense over the service period and the Company’s determination of whether it is probable that the performance targets will be achieved. At the end of each reporting period, the Company reassesses the probability of achieving performance targets.
The liability is based on assumptions and factors for known and incurred but not reported claims, including the frequency and payment trends of historical claims. Leases All leases with a lease term greater than 12 months, regardless of lease type classification, are recorded as an obligation on the balance sheet with a corresponding right-of-use asset.
The liability is based on assumptions and factors for known and incurred but not reported claims, including the frequency and payment trends of historical claims. Leases All leases with a lease term greater than 12 months are recorded as an obligation on the balance sheet with a corresponding right-of-use (ROU) asset.
A one percentage point increase or decrease in the expected return on plan assets would have resulted in a corresponding change in 2023 pension expense of $3.1 for the Non-U.S. Plans. The salary increase assumptions are used to estimate the annual rate at which pay of plan participants will grow.
A one percentage point increase or decrease in the expected return on plan assets would have resulted in a corresponding change in 2024 pension expense of $3.4 for the Non-U.S. Plans. The salary increase assumptions are used to estimate the annual rate at which pay of plan participants will grow.
Plans Year ended December 31, 2023 2022 2023 2022 Discount rate 5.1 % 5.5 % 4.3 % 4.8 % Salary increases N/A N/A 2.0 % 2.0 % The discount rate is determined using the weighted-average yields on high-quality fixed income securities that have maturities consistent with the timing of benefit payments.
Plans Year Ended December 31, 2024 2023 2024 2023 Discount rate 5.6 % 5.1 % 5.2 % 4.3 % Salary increases N/A N/A 2.0 % 2.0 % The discount rate is determined using the weighted-average yields on high-quality fixed income securities that have maturities consistent with the timing of benefit payments.
Target allocation percentages are established at an asset class level by plan fiduciaries. Target allocation ranges are guidelines, not limitations, and occasionally plan fiduciaries will approve allocations above or below a target range. The weighted average asset allocation of the plan assets as of December 31, 2023, by asset category is as follows: December 31, 2023 U.S. Plans Non-U.S.
Target allocation percentages are established at an asset class level by plan fiduciaries. Target allocation ranges are guidelines, not limitations, and occasionally plan fiduciaries will approve allocations above or below a target range. The allocation of the plan assets by asset category is as follows: December 31, 2024 U.S. Plans Non-U.S.
Fair Value Measurement of Level 3 Pension Assets Annuities Balance at January 1, 2022 $ 81.3 Actual return on plan assets (31.2) Balance at December 31, 2022 50.1 Actual return on plan assets 2.7 Balance at December 31, 2023 $ 52.8 Investment Policies Plan fiduciaries of various plans set investment policies and strategies, based on consultation with professional advisors, and oversee investment allocation, which includes selecting investment managers and setting long-term strategic targets.
Fair Value Measurement of Level 3 Pension Assets Annuities Balance at January 1, 2023 $ 50.1 Actual return on plan assets 2.7 Balance at December 31, 2023 52.8 Actual return on plan assets (7.0) Balance at December 31, 2024 $ 45.8 Investment Policies Plan fiduciaries of various plans set investment policies and strategies, based on consultation with professional advisors, and oversee investment allocation, which includes selecting investment managers and setting long-term strategic targets.
The utilization of tax loss carryforwards is limited due to change of ownership rules; however, at this time, the Company expects to fully utilize substantially all U.S. federal tax loss carryforwards with the exception of approximately $8.4 for which a full valuation allowance has been provided.
The utilization of tax loss carryforwards is limited due to change of ownership rules; however, at this time, the Company expects to fully utilize substantially all U.S. federal tax loss carryforwards with the exception of approximately $1.9 for which a full valuation allowance has been provided.
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.
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.
Plans. A one percentage point decrease or increase in the discount rate would have resulted in a respective increase or decrease in 2023 retirement plan expense of $0.7 for the Non-U.S. Plans. Weighted average assumptions used to determine net periodic benefit obligations are as follows: U. S. Plans Non-U.S.
Plans. A one percentage point decrease or increase in the discount rate would have resulted in a respective increase or decrease in 2024 retirement plan expense of $0.6 for the Non-U.S. Plans. Weighted-average assumptions used to determine net periodic benefit obligations are as follows: U.S. Plans Non-U.S.
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.
COMMITMENTS AND CONTINGENCIES The Company (and/or its subsidiaries and affiliates) 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.
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.
In accordance with Financial Accounting Standards Board (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.
The following assumed benefit payments under the Company's post-retirement benefit plan, which reflect expected future service, as appropriate, and which were used in the calculation of projected benefit obligations, are expected to be paid as follows: 2024 $ 0.6 2025 0.5 2026 0.4 2027 0.3 2028 0.3 Years 2029 and thereafter 1.0 Deferred Compensation Plan The Company has Deferred Compensation Plans (DCP) under which certain of its executives may elect to defer up to 100.0% of their annual cash incentive pay and/or up to 50.0% of their annual base salary and/or eligible commissions subject to annual limits established by the U.S. government.
The following assumed benefit payments under the Company’s post-retirement benefit plan, which reflect expected future service, as appropriate, and which were used in the calculation of projected benefit obligations, are expected to be paid as follows: December 31, 2024 2025 $ 0.5 2026 $ 0.4 2027 $ 0.3 2028 $ 0.3 2029 $ 0.3 Years 2030 to 2034 $ 0.9 Deferred Compensation Plan The Company has Deferred Compensation Plans (DCP) under which certain of its executives may elect to defer up to 100.0% of their annual cash incentive pay and/or up to 50.0% of their annual base salary and/or eligible commissions subject to annual limits established by the U.S. government.
Pillar Two legislation arising from the Organisation for Economic Co-operation and Development’s base erosion and profit shifting initiative has been enacted or substantively enacted in certain jurisdictions the Company operates. The legislation will be effective for the Company’s financial year beginning January 1, 2024.
Pillar Two legislation arising from the Organisation for Economic Co-operation and Development’s base erosion and profit shifting initiative has been enacted or substantively enacted in certain jurisdictions in which the Company operates. The legislation was effective for the Company’s financial year beginning January 1, 2024.
Amortization begins once the underlying system is substantially complete and ready for its intended use. Goodwill and Indefinite-lived Intangibles The Company assesses goodwill and indefinite-lived intangibles, which are not amortized, for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.
Amortization begins once the underlying system is substantially complete and ready for its intended use. Goodwill and Indefinite-lived Intangible Assets The Company assesses goodwill and indefinite-lived intangible assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.
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 September 28, 2022, a jury rendered a verdict in favor of the Plaintiff on the sole asserted patent 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.
(Fortrea), formerly the Company’s Clinical Development and Commercialization Services (CDCS) business, into a separate, publicly-traded company. All current and historical operating results of Fortrea are presented as Discontinued Operations, net of tax, in the consolidated statement of operations.
(Fortrea), formerly the Company’s Clinical Development and Commercialization Services (CDCS) business, into a separate, publicly traded company. All current and historical operating results of Fortrea are presented as Earnings from discontinued operations, net of tax, in the Consolidated Statements of Operations.
The total cash and cash equivalent balances that exceeded the balances insured by the Federal Deposit Insurance Commission, were approximately $534.7 and $428.1 at December 31, 2023, and 2022, respectively. Substantially all of the Company’s accounts receivable are with companies in the healthcare or pharmaceutical industry and individuals.
The total Cash and cash equivalent balances that exceeded the balances insured by the Federal Deposit Insurance Commission, were approximately $1,516.0 and $534.7 at December 31, 2024, and 2023, respectively. Substantially all of the Company’s accounts receivable are with companies in the healthcare or pharmaceutical industry and individuals.
RESTRUCTURING AND OTHER CHARGES During 2023, the Company recorded net restructuring charges of $49.1. The charges were comprised of $33.4 in severance and other personnel costs, $22.3 in facility-related costs primarily associated with general integration activities. The charges were offset by the reversal of a previously established liability of $1.7 in unused severance and $4.9 in unused facility-related costs.
The charges were comprised of $33.4 in severance and other personnel costs and $22.3 in facility-related costs primarily associated with general integration activities. The charges were offset by the reversal of a previously established liability of $1.7 in unused severance and $4.9 in unused facility-related costs. During 2022, the Company recorded net restructuring charges of $54.0.
In the qualitative assessment, the Company considers relevant events and circumstances for each reporting unit, including (i) current year results, (ii) financial performance versus management’s annual and five-year strategic plans, (iii) changes in the reporting unit carrying value since prior year, (iv) industry and market conditions in which the reporting unit operates, (v) macroeconomic conditions, including discount rate changes, and (vi) changes in products or services offered by the reporting unit.
In the qualitative assessment, the Company considers relevant events and circumstances for each reporting unit, including (i) current year results, (ii) financial performance versus management’s annual and five-year strategic plans, (iii) changes in the reporting unit carrying value since prior year, (iv) industry and market conditions in which the reporting unit operates, (v) macroeconomic conditions, including discount rate changes, and (vi) changes in offerings provided by the reporting unit.
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 December 31, 2023 and 2022.
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 at December 31, 2024, and 2023.
That cost is expected to be recognized over a weighted average period of 1.9 years and will be included in cost of revenues and selling, general and administrative expenses. Employee Stock Purchase Plan Under the 2016 Employee Stock Purchase Plan, the Company is authorized to issue 1.8 shares of Common Stock.
That cost is expected to be recognized over a weighted-average period of 1.7 years and will be included in Cost of revenues and Selling, general and administrative expenses in the Consolidated Statements of Operations. Employee Stock Purchase Plan Under the 2016 Employee Stock Purchase Plan, the Company is authorized to issue 1.8 shares of Common Stock.
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Interest Rate Swap 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 SOFR (changed from LIBOR to SOFR during 2023) plus 1.0706%.
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES Interest Rate Swap 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 Secured Overnight Financing Rate (SOFR), which changed from London Interbank Offered Rate (LIBOR) to SOFR during 2023, plus 1.0706%.
In addition to diagnostic testing along with occupational and wellness testing for employers and forensic DNA analysis, Dx also offered a range of other testing services. Within the Dx segment, a majority of the revenue transactions initiated when Dx receives a requisition order to perform a diagnostic test.
In addition to diagnostic testing along with occupational and wellness testing for employers and forensic deoxyribonucleic acid analysis, Dx also offered a range of other testing services. Within the Dx segment, a majority of the revenue transactions initiated when Dx receives a requisition form to perform a diagnostic test.
Plans Year ended December 31, 2023 2022 2021 2023 2022 2021 Service cost for benefits earned $ 3.9 $ 2.8 $ 3.9 1.4 2.4 2.2 Interest cost on benefit obligation 12.3 9.1 8.3 15.2 9.1 7.2 Expected return on plan assets (11.6) (12.9) (17.3) (16.7) (15.8) (14.3) Net amortization and deferral 4.5 4.6 10.0 0.1 0.8 1.9 Settlements 10.9 4.1 3.7 — (1.1) — Defined-benefit plan costs $ 20.0 $ 7.7 $ 8.6 — (4.6) (3.0) Service costs are the only component of net periodic benefit costs recorded within Operating income.
Plans Year Ended December 31, 2024 2023 2022 2024 2023 2022 Service cost for benefits earned $ 3.7 $ 3.9 $ 2.8 $ 1.5 $ 1.4 $ 2.4 Interest cost on benefit obligation 11.1 12.3 9.1 14.7 15.2 9.1 Expected return on plan assets (11.0) (11.6) (12.9) (16.0) (16.7) (15.8) Net amortization and deferral 3.3 4.5 4.6 0.5 0.1 0.8 Settlements — 10.9 4.1 — — (1.1) Defined-benefit plan costs $ 7.1 $ 20.0 $ 7.7 $ 0.7 $ — $ (4.6) Service costs are the only component of net periodic benefit costs recorded within Operating income in the Company’s Consolidated Statements of Operations.
The change in the unrecognized loss will change amortization cost in upcoming periods. A one percentage point increase or decrease in the expected return on plan assets would have resulted in a corresponding change in 2023 pension expense of $2.2 for the U.S. Plans.
The change in the unrecognized loss will change amortization cost in upcoming periods. A one percentage point increase or decrease in the expected return on plan assets would have resulted in a corresponding change in 2024 pension expense of $1.8 for the U.S. Plans.
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.
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's revenue by segment payers/customer groups for the years ended December 31, 2023, 2022 and 2021 is as follows: For the Year Ended December 31, 2023 For the Year Ended December 31, 2022 For the Year Ended December 31, 2021 North America Europe Other Total North America Europe Other Total North America Europe Other Total Payer/Customer Dx Clients 24 % — % — % 24 % 22 % — % — % 22 % 21 % — % — % 21 % Patients 9 % — % — % 9 % 8 % — % — % 8 % 7 % — % — % 7 % Medicare and Medicaid 8 % — % — % 8 % 8 % — % — % 8 % 8 % — % — % 8 % Third party 36 % — % — % 36 % 39 % — % — % 39 % 42 % — % — % 42 % Total Dx revenues by payer 77 % — % — % 77 % 77 % — % — % 77 % 78 % — % — % 78 % BLS Pharmaceutical, biotechnology and medical device companies 10 % 9 % 4 % 23 % 10 % 9 % 4 % 23 % 10 % 9 % 3 % 22 % Total revenues 87 % 9 % 4 % 100 % 87 % 9 % 4 % 100 % 88 % 9 % 3 % 100 % Revenues in the U.S. were $10,177.7 (83.7%), $9,930.3 (83.7%) and $10,981.2 (83.6%) for the years ended December 31, 2023, 2022, and 2021.
The Company’s revenue by segment payers/customer groups is as follows: Year Ended December 31, 2024 Year Ended December 31, 2023 Year Ended December 31, 2022 North America Europe Other Total North America Europe Other Total North America Europe Other Total Payer/Customer Dx Clients 24 % — % — % 24 % 24 % — % — % 24 % 22 % — % — % 22 % Patients 10 % — % — % 10 % 9 % — % — % 9 % 8 % — % — % 8 % Medicare and Medicaid 8 % — % — % 8 % 8 % — % — % 8 % 8 % — % — % 8 % Third party 36 % — % — % 36 % 36 % — % — % 36 % 39 % — % — % 39 % Total Dx revenues by payer 78 % — % — % 78 % 77 % — % — % 77 % 77 % — % — % 77 % BLS Pharmaceutical, biotechnology and medical device companies 9 % 9 % 4 % 22 % 10 % 9 % 4 % 23 % 10 % 9 % 4 % 23 % Total revenues 87 % 9 % 4 % 100 % 87 % 9 % 4 % 100 % 87 % 9 % 4 % 100 % Revenues in the U.S. were $10,858.3 (83.5%), $10,177.7 (83.7%), and $9,930.3 (83.7%) for the years ended December 31, 2024, 2023, and 2022.
The following is a description of the current revenue recognition policies of the Company: Dx Revenues Dx is an independent clinical laboratory business. It offers a comprehensive menu of frequently requested and specialty diagnostic tests through an integrated network of primary and specialty laboratories across the U.S.
The following is a description of the current revenue recognition policies of the Company: Dx Revenues Dx offers a comprehensive menu of frequently requested and specialty diagnostic tests through an integrated network of primary and specialty laboratories across the U.S.
A performance share grant in 2021 represents a three-year award opportunity for the period 2021-2023, and if earned, vests fully (to the extent earned) in the first quarter of 2024.
A performance share grant in 2024 represents a three-year award opportunity for the period of 2024-2026 and, if earned, vests fully (to the extent earned) in the first quarter of 2027.
Significant estimates include implicit price concessions, revenue estimates, the allowances for doubtful accounts, deferred tax assets, fair values of acquired assets and assumed liabilities in business combinations, fair value of goodwill and indefinite-lived intangible assets, amortization lives for acquired intangible assets, and accruals for self-insurance reserves, litigation reserves and pensions. Actual results could differ from those estimates.
Significant estimates include implicit price concessions, revenue estimates, the allowance for credit losses, deferred tax assets, fair values of acquired assets and assumed liabilities in business combinations, fair value of goodwill and indefinite-lived intangible assets, amortization lives for acquired intangible assets, and accruals for self-insurance reserves, litigation reserves and pensions. Actual results could materially differ from those estimates.
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 spin-off-related fees, and do not include any allocation of general corporate overhead expense or interest expense of the Company.
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 Spin-off-related fees, and do not include any allocation of general corporate overhead expense or interest expense of the Company. F-15 Index LABCORP HOLDINGS INC.
The Company has foreign tax loss carryforwards of $117.2, the majority of which have indefinite carryforward periods, but a valuation allowance of $7.9 has been provided for jurisdictions where the future tax benefits of the attributes are not more likely than not to be realized.
The Company has foreign tax loss carryforwards of $108.5, the majority of which have indefinite carryforward periods, but a valuation allowance of $7.8 has been provided for jurisdictions where the future tax benefits of the attributes are not more likely than not to be realized.
The estimated benefit payments, which were used in the calculation of projected benefit obligations, are expected to be paid as follows: U. S. Plans Non-U. S.
At December 31, 2024, the estimated benefit payments, which were used in the calculation of projected benefit obligations, are expected to be paid as follows: December 31, 2024 U.S. Plans Non-U.S.
The U.K. pension plan was closed to new entrants and the accrual of service credits for one plan as of December 31, 2002, and the accrual of service credits for the other plan as of December 31, 2019. The German plan was closed to new entrants on December 31, 2009 but participants continue to accrue service credits.
The United Kingdom (UK) pension plan was closed to new entrants and the accrual of service credits for one plan as of December 31, 2002, and the accrual of service credits for the other plan as of December 31, 2019. The German plan was closed to new entrants on December 31, 2009, but participants continue to accrue service credits.
F-38 Index LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in millions, except per share data) 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.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in millions, except per share data) 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 responded to the DOJ.
The exercise of these options is at the Company's discretion and the Company evaluates each renewal option to determine if it is reasonably possible to be exercised and should be included in the accounting lease term. See Note 5 Leases to the Consolidated Financial Statements. Income Taxes The Company accounts for income taxes utilizing the asset and liability method.
The exercise of these options is at the Company’s discretion and the Company evaluates each renewal option to determine if it is reasonably possible to be exercised and should be included in the accounting lease term. Income Taxes The Company accounts for income taxes utilizing the asset and liability method.
It is anticipated that the amount of the unrecognized income tax benefits will decrease by $0.2 within the next 12 months due to statute of limitation lapses; however, these changes are not expected to have a significant impact on the results of operations, cash flows or the financial position of the Company.
It is anticipated that the amount of the unrecognized income tax benefits will decrease by $10.4 within the next 12 months due to statute of limitation lapses and the conclusion of various examinations; however, these changes are not expected to have a significant impact on the results of operations, cash flows, or the financial position of the Company.
A summary of the changes in the accumulated post-retirement benefit obligation follows: 2023 2022 Balance at January 1 $ 3.9 $ 5.2 Interest cost on benefit obligation 0.2 0.1 Actuarial loss (0.2) (0.9) Benefits paid (0.3) (0.5) Balance at December 31 $ 3.6 $ 3.9 Recorded as: Accrued expenses and other $ 0.6 $ 0.6 Other liabilities 3.0 3.3 $ 3.6 $ 3.9 The weighted-average discount rates used in the calculation of the accumulated post-retirement benefit obligation were 5.1% and 5.5% as of December 31, 2023, and 2022, respectively.
A summary of the changes in the accumulated post-retirement benefit obligation follows: Year Ended December 31, 2024 2023 Beginning balance $ 3.6 $ 3.9 Interest cost on benefit obligation 0.2 0.2 Actuarial loss (0.2) (0.2) Benefits paid (0.4) (0.3) Ending balance $ 3.2 $ 3.6 Recorded as: Accrued expenses and other $ 0.5 $ 0.6 Other liabilities 2.7 3.0 $ 3.2 $ 3.6 The weighted-average discount rates used in the calculation of the accumulated post-retirement benefit obligation were 5.6% and 5.1% at December 31, 2024, and 2023, respectively.
The F-42 Index LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in millions, except per share data) primary strategic investment objectives are balancing investment risk and return and monitoring the plan’s liquidity position in order to meet the near-term benefit payment and other cash needs.
The F-41 Index LABCORP HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in millions, except per share data) primary strategic investment objectives are balancing investment risk and return and monitoring the plan’s liquidity position in order to meet the near-term benefit payment and other cash needs.
The Company was in compliance with all covenants in its term loans and the revolving credit facility at December 31, 2023, and expects that it will remain in compliance with its existing debt covenants for the next twelve months. There were $91.3 in outstanding letters of credit as of December 31, 2023.
The Company was in compliance with all covenants in its term loans and the revolving credit facility at December 31, 2024, and expects that it will remain in compliance with its existing debt covenants for the next twelve months. There were $102.7 in outstanding letters of credit at December 31, 2024.
For 2023, 2022, and 2021, total restricted stock, restricted stock unit, and performance share compensation expense was $111.1, $97.7 and $114.6, respectively.
For 2024, 2023, and 2022, total restricted stock, restricted stock unit, and performance share compensation expense was $96.6, $111.1, and $97.7, respectively.
Total expense, for the years ended December 31, 2023, 2022, and 2021, was $167.6, $128.2 and $111.2, respectively. Defined Benefit Pension Plans The Company sponsors both funded and unfunded defined benefit pension plans which provide benefits based on various criteria such as years of service and salary.
Total expense relating to the 401K Plans for the years ended December 31, 2024, 2023, and 2022 was $153.5, $167.6, and $128.2, respectively. Defined Benefit Pension Plans The Company sponsors both funded and unfunded defined benefit pension plans which provide benefits based on various criteria such as years of service and salary.
If the rate of growth assumed increases, the size of the pension obligations will increase, as will the amount recorded in Accumulated other comprehensive income (loss) in the Company's Consolidated Statement of Financial Position and amortized into earnings in subsequent periods.
If the rate of growth assumed increases, the size of the pension obligations will increase, as will the amount recorded in Accumulated other comprehensive loss in the Company’s Consolidated Balance Sheets and amortized into earnings in subsequent periods.
Accumulated Other Comprehensive Earnings The components of accumulated other comprehensive earnings are as follows: Foreign Currency Translation Adjustments Net Benefit Plan Adjustments Accumulated Other Comprehensive Earnings Balance at December 31, 2021 $ (125.9) $ (66.0) $ (191.9) Current year adjustments (335.5) 52.5 (283.0) Pension settlement charge — (3.1) (3.1) Amounts reclassified from accumulated other comprehensive earnings (a) (0.9) (4.6) (5.5) Tax effect of adjustments — (9.7) (9.7) Balance at December 31, 2022 $ (462.3) $ (30.9) $ (493.2) Fortrea Holdings Inc. spin 231.6 6.4 238.0 Current year adjustments 183.1 30.1 213.2 Pension settlement charge — (10.9) (10.9) Amounts reclassified from accumulated other comprehensive earnings (a) — (4.6) (4.6) Tax effect of adjustments — (1.8) (1.8) Balance at December 31, 2023 $ (47.6) $ (11.7) $ (59.3) (a) The amortization of prior service cost is included in the computation of net periodic benefit cost.
Accumulated Other Comprehensive Earnings The components of Accumulated other comprehensive earnings are as follows: Foreign Currency Translation Adjustments Net Benefit Plan Adjustments Accumulated Other Comprehensive Earnings Balance at December 31, 2022 $ (462.3) $ (30.9) $ (493.2) Fortrea Holdings Inc. spin-off 231.6 6.4 238.0 Current year adjustments 183.1 30.1 213.2 Pension settlement charge — (10.9) (10.9) Amounts reclassified from Accumulated other comprehensive earnings (a) — (4.6) (4.6) Tax effect of adjustments — (1.8) (1.8) Balance at December 31, 2023 $ (47.6) $ (11.7) $ (59.3) Current year adjustments (217.1) (2.6) (219.7) Amounts reclassified from Accumulated other comprehensive earnings (a) — 23.3 23.3 Tax effect of adjustments — (5.9) (5.9) Balance at December 31, 2024 $ (264.7) $ 3.1 $ (261.6) (a) The amortization of prior service cost is included in the computation of net periodic benefit cost. 13.
The Company's inventory reserve balance was $66.1 and $23.3, as of December 31, 2023 and 2022, respectively. Property, Plant and Equipment Property, plant and equipment are recorded at cost. Depreciation and amortization expense is computed on all classes of assets based on their estimated useful lives, as indicated below, using the straight-line method.
The Company’s inventory reserve balance was $43.8 and $66.1, as of December 31, 2024, and 2023, respectively. Property, Plant and Equipment, Net Property, plant and equipment are recorded at cost. Depreciation and amortization expense is computed on all classes of assets based on their estimated useful lives using the straight-line method.
If the recognition threshold is met, the Company recognizes a tax benefit measured at the largest amount of the tax benefit that the Company believes is greater than 50% likely to be realized. The Company records interest and penalties in income tax expense.
If the recognition threshold is met, the Company recognizes a tax benefit measured at the largest amount of the tax benefit that the Company believes is greater than 50% likely to be realized. The Company records interest and penalties in Provision for income taxes in the Consolidated Statements of Operations.
FAIR VALUE MEASUREMENTS The Company’s population of financial assets and liabilities subject to fair value measurements as of December 31, 2023, and 2022 were as follows: Fair Value Measurements as of December 31, 2023 Balance Sheet Classification Fair Value as of December 31, 2023 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Noncontrolling interest put Noncontrolling interest $ 15.5 $ — $ 15.5 $ — Cross currency swaps Accrued expenses and other/Other liabilities 109.0 — 109.0 — Interest rate swaps Other liabilities, net 69.6 — 69.6 — Cash surrender value of life insurance policies Other assets, net 95.4 — 95.4 — Deferred compensation asset Other assets, net 21.1 — 21.1 — Deferred compensation liability Other liabilities 107.4 — 107.4 — Contingent consideration Accrued expenses and other/Other liabilities 66.1 — — 66.1 Fair Value Measurements as of December 31, 2022 Balance Sheet Classification Fair Value as of December 31, 2022 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Noncontrolling interest put Noncontrolling interest $ 15.0 $ — $ 15.0 $ — Cross currency swaps Other liabilities, net 45.7 — 45.7 — Interest rate swaps Other liabilities 79.7 — 79.7 — Cash surrender value of life insurance policies Other assets, net 100.7 — 100.7 — Deferred compensation liability Other liabilities 96.9 — 96.9 — Contingent consideration Accrued expenses and other/Other liabilities 77.4 — — 77.4 Fair Value Measurement of Level 3 Liabilities Contingent Consideration Balance at January 1, 2022 $ 21.9 Addition 68.3 Cash payments and adjustments (12.8) Balance at December 31, 2022 77.4 Cash payments and adjustments (11.3) Balance at December 31, 2023 $ 66.1 The Company has a noncontrolling interest put related to its Ontario subsidiary that has been classified as mezzanine equity in the Company’s consolidated balance sheets.
FAIR VALUE MEASUREMENTS The Company’s population of financial assets and liabilities subject to fair value measurements were as follows: Fair Value Measurements at December 31, 2024 Consolidated Balance Sheets Classification Fair Value at December 31, 2024 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Noncontrolling interest put Noncontrolling interest $ 14.3 $ — $ 14.3 $ — Cross currency swaps Accrued expenses and other/Other liabilities $ 142.7 $ — $ 142.7 $ — Interest rate swaps Other liabilities $ 76.8 $ — $ 76.8 $ — Cash surrender value of life insurance policies Other assets, net $ 102.1 $ — $ 102.1 $ — Deferred compensation asset Other assets, net $ 35.7 $ — $ 35.7 $ — Deferred compensation liability Other liabilities $ 132.5 $ — $ 132.5 $ — Contingent consideration Accrued expenses and other/Other liabilities $ 10.8 $ — $ — $ 10.8 Fair Value Measurements at December 31, 2023 Consolidated Balance Sheets Classification Fair Value at December 31, 2023 Using Fair Value Hierarchy Level 1 Level 2 Level 3 Noncontrolling interest put Noncontrolling interest $ 15.5 $ — $ 15.5 $ — Cross currency swaps Accrued expenses and other/Other liabilities $ 109.0 $ — $ 109.0 $ — Interest rate swaps Other liabilities $ 69.6 $ — $ 69.6 $ — Cash surrender value of life insurance policies Other assets, net $ 95.4 $ — $ 95.4 $ — Deferred compensation asset Other assets, net $ 21.1 $ — $ 21.1 $ — Deferred compensation liability Other liabilities $ 107.4 $ — $ 107.4 $ — Contingent consideration Accrued expenses and other/Other liabilities $ 66.1 $ — $ — $ 66.1 Fair Value Measurement of Level 3 Liabilities Contingent Consideration Balance at January 1, 2023 $ 77.4 Cash payments and adjustments (11.3) Balance at December 31, 2023 66.1 Cash payments and adjustments (55.3) Balance at December 31, 2024 $ 10.8 The Company has a noncontrolling interest put related to its Ontario subsidiary that has been classified as mezzanine equity in the Company’s Consolidated Balance Sheets.
Plans 2024 $ 21.8 $ 16.4 2025 22.4 16.2 2026 21.6 17.6 2027 20.8 18.0 2028 21.1 18.3 Years 2029 to 2033 92.2 97.8 Post-employment Retiree Health and Welfare Plan The Company sponsors a post-employment retiree health and welfare plan for the benefit of eligible employees at certain U.S. subsidiaries who retire after satisfying service and age requirements.
Plans 2025 $ 21.9 $ 15.9 2026 $ 21.6 $ 17.1 2027 $ 21.1 $ 17.4 2028 $ 20.8 $ 17.9 2029 $ 20.0 $ 18.6 Years 2030 to 2034 $ 88.2 $ 97.0 Post-employment Retiree Health and Welfare Plan The Company sponsors a post-employment retiree health and welfare plan for the benefit of eligible employees at certain U.S. subsidiaries who retire after satisfying service and age requirements.
The U.K. and German plans are aggregated for disclosure as the Non-U.S. Plans. F-39 Index LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in millions, except per share data) Net Periodic Benefit Costs The components of the net periodic benefit costs for the defined benefit pension plans are as follows: U. S.
The UK and German plans are aggregated for disclosure as the Non-U.S. Plans. F-38 Index LABCORP HOLDINGS INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in millions, except per share data) Net Periodic Benefit Costs The components of the net periodic benefit costs for the defined benefit pension plans are as follows: U. S. Plans Non-U.S.
On September 22, 2022, the Ninth Circuit granted the Company's Petition for Permission to Appeal the Order Granting Class Certification. On February 8, 2024, the Ninth Circuit affirmed the trial court’s decision to certify both a California damages class and a nationwide injunctive class. The Company will vigorously seek rehearing and further appeal if necessary.
On September 22, 2022, the Ninth Circuit granted the Company’s Petition for Permission to Appeal the Order Granting Class Certification. On February 8, 2024, the Ninth Circuit affirmed the trial court’s decision to certify both a California damages class and a nationwide injunctive class.
F-11 Index LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in millions, except per share data) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods.
AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Dollars and shares in millions, except per share data) Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles in the United States (U.S.), requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods.
Intangible Assets Intangible assets with finite lives are amortized on a straight-line basis over the expected periods to be benefited, as set forth in the table below, such as legal life for patents and technology and contractual lives for non-compete agreements.
Intangible Assets, Net Intangible assets with finite lives are amortized on a straight-line basis over the expected periods to be benefited such as legal life for patents and technology, contractual lives for non-compete agreements and customer relationships.
For the year ended December 31, 2023, the Company recognized a partial plan settlement charge of $10.9 as a component of Other, net. The amounts recognized in accumulated other comprehensive earnings are as follows: U. S. Plans Non-U.S.
For the year ended December 31, 2023, the Company recognized a partial plan settlement charge of $10.9 as a component of Other, net in the Company’s Consolidated Statements of Operations. The amounts recognized in Accumulated other comprehensive loss in the Company’s Consolidated Balance Sheets are as follows: U. S. Plans Non-U.S.
Retirements, sales and other disposals of assets are recorded by removing the cost and accumulated depreciation from the related accounts with any resulting gain or loss reflected in the consolidated statements of operations.
Expenditures for repairs and maintenance are charged to operations as incurred. Retirements, sales, and other disposals of assets are recorded by removing the cost and accumulated depreciation from the related accounts with any resulting gain or loss reflected in the Consolidated Statements of Operations.
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.
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.
During 2022, the Company recorded net restructuring charges of $54.0. The charges were comprised of $24.8 in severance and other personnel costs and $31.1 in facility-related costs primarily associated with general integration activities. The charges were offset by the reversal of a previously established liability of $1.4 in unused severance and $0.5 in unused facility-related costs.
The charges were comprised of $43.0 in severance and other personnel costs and $5.9 in facility-related costs primarily associated with general integration activities. The charges were offset by the reversal of a previously established liability of $2.5 in unused severance and $0.4 in unused facility-related costs. During 2023, the Company recorded net restructuring charges of $49.1.
Plans Equity securities 13.0% to 25.5 % 25.0% to 35.0% Debt securities 67.0% to 87.0 % 35.0% to 45.0% Annuities — % to — % 10.0% to 20.0% Real estate 0.5 % to 4.3 % —% to 10.0% Other — % to 5.0 % 10.0% to 25.0% Pension Funding and Cash Flows The Company expects to make approximately $16.8 in required contributions to its defined benefit pension plans during 2024.
Plans Equity securities 13.0 % to 25.5 % 10.0% to 20.0% Debt securities 67.0 % to 87.0 % 60.0% to 70.0% Annuities — % to — % 10.0% to 20.0% Real estate 0.5 % to 4.3 % —% to 5.0% Other — % to 5.0 % —% to 5.0% Pension Funding and Cash Flows The Company expects to make approximately $18.6 in required contributions to its defined benefit pension plans during 2025.
Among other things, the Amended Complaint contains allegations that in addition to the Meta Pixel, the Company's website uses Google Analytics and other online tracking technologies. On October 11, 2023, the Company filed a Motion to Dismiss the Amended Complaint. The Company will vigorously defend the lawsuit.
Among other things, the Amended Complaint contains allegations that in addition to the Meta Pixel, the Company’s website uses Google Analytics and other online tracking technologies. On October 11, 2023, the Company filed a Motion to Dismiss the Amended Complaint. On September 27, 2024, the Court denied the Motion to Dismiss the Amended Complaint.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeFailure of the Company or its third-party service providers to comply with privacy and data security laws and regulations could result in fines, penalties and damage to the Company’s reputation with customers and have a material adverse effect upon the Company’s business. 43 Index If the Company and its third-party service providers do not comply with existing or new laws and regulations related to protecting the privacy and security of personal or health information, it could be subject to monetary fines, civil penalties, litigation, or criminal sanctions.
Biggest changeIf the Company and its third-party service providers do not comply with existing or new laws and regulations related to protecting the privacy and security of personal or health information, it could be subject to monetary fines, civil penalties, litigation, or criminal sanctions. In the U.S., the Health Insurance Portability and Accountability Act of 1996, the U.S.
Furthermore, the successful closing and integration of a strategic acquisition entails numerous risks, including, among others: • failure to obtain regulatory clearance, including due to antitrust concerns; • loss of key customers or employees as a result of the acquisition; • difficulty in consolidating redundant facilities and infrastructure and in standardizing information and other systems; • unidentified regulatory problems at the acquired company or business; 37 Index • failure to maintain the quality of services that such companies or businesses have historically provided; • unanticipated costs and other liabilities; • potential liabilities related to litigation related to the acquired company or business, or from its prior owners; • failure to timely identify and remediate noncompliant activities of the acquired company or business; • potential periodic impairment of goodwill and intangible assets acquired; • coordination of geographically separated facilities and workforces; and • the potential disruption of the Company's ongoing business and diversion of management's resources.
Furthermore, the successful closing and integration of a strategic acquisition entails numerous risks, including, among others: • failure to obtain regulatory clearance, including due to antitrust concerns; • loss of key customers or employees as a result of the acquisition; • difficulty in consolidating redundant facilities and infrastructure and in standardizing information and other systems; • unidentified regulatory problems at the acquired company or business; • failure to maintain the quality of services that such companies or businesses have historically provided; • unanticipated costs and other liabilities; • potential liabilities related to litigation related to the acquired company or business, or from its prior owners; • failure to timely identify and remediate noncompliant activities of the acquired company or business; • potential periodic impairment of goodwill and intangible assets acquired; • coordination of geographically separated facilities and workforces; and • the potential disruption of the Company’s ongoing business and diversion of management’s resources.
For example, in October 2020, Ravgen Inc. filed a patent infringement lawsuit against the Company alleging infringement of two Ravgen-owned U.S. patents. In September 2022, a jury rendered a verdict in favor of Ravgen on the remaining patent at issue and awarded damages of $272 million.
For example, in October 2020, Ravgen Inc. filed a patent infringement lawsuit against the Company alleging infringement of two Ravgen-owned U.S. patents. In September 2022, a jury rendered a verdict in favor of Ravgen on the remaining patent at issue and awarded damages of $272.0 million.
The regulations establish a complex framework on a variety of subjects, including: • the circumstances under which the use and disclosure of PHI are permitted or required without a specific authorization by the patient, including, but not limited to, treatment purposes, activities to obtain payments for the Company’s services, and its healthcare operations activities; • a patient’s rights to access, amend and receive an accounting of certain disclosures of PHI; • the content of notices of privacy practices for PHI; • administrative, technical and physical safeguards required of entities that use or receive PHI; and • the protection of computing systems maintaining electronic PHI.
The regulations establish a complex framework on a variety of subjects, including: 38 Index • the circumstances under which the use and disclosure of PHI are permitted or required without a specific authorization by the patient, including, but not limited to, treatment purposes, activities to obtain payments for the Company’s services, and its healthcare operations activities; • a patient’s rights to access, amend and receive an accounting of certain disclosures of PHI; • the content of notices of privacy practices for PHI; • administrative, technical and physical safeguards required of entities that use or receive PHI; and • the protection of computing systems maintaining electronic PHI.
Outside parties may also attempt to fraudulently induce employees to take actions, including the release of confidential or sensitive information or to make fraudulent payments through illegal electronic spamming, phishing, spear phishing, or other tactics.
Outside parties may also attempt to fraudulently induce employees to take actions, including the release of confidential or sensitive information or to make fraudulent payments through illegal electronic spamming, phishing, spear phishing, and other tactics.
In addition, the Company may be adversely affected by other risks of operations in foreign countries, including, but not limited to: changes in reimbursement by foreign governments for services provided by the Company; compliance with export controls and trade regulations; changes in tax policies or other foreign laws; compliance with foreign labor and employee relations laws and regulations; restrictions on currency repatriation; judicial systems that less strictly enforce contractual rights; countries that do not have clear or well-established laws and regulations concerning issues relating to commercial laboratory testing or drug development services; countries that provide less protection for intellectual property rights; and procedures and actions affecting approval, production, pricing, reimbursement and marketing of products and services.
In addition, the Company may be adversely affected by other risks of operations in foreign countries, including, but not limited to: changes in reimbursement by foreign governments for services provided by the Company; compliance with export controls and trade regulations; changes in tax policies or other foreign laws; compliance with foreign labor and employee relations laws and regulations; restrictions on currency repatriation; judicial systems that less strictly enforce contractual rights; countries that do not have clear or well-established laws and regulations concerning issues relating to commercial laboratory testing or drug development services; countries that provide less protection for intellectual property rights; and procedures and actions affecting approval, production, pricing, reimbursement and marketing of its offerings.
Further reductions due to changes in policy regarding coverage of tests or other requirements for payment, such as prior authorization, diagnosis code and other claims edits, may be implemented from time to time. Medicare reimbursement for pathology services performed by Dx, which are paid for under the PFS, is also subject to statutory and regulatory reduction.
Further reductions due to changes in policy regarding coverage of tests or other requirements for payment, such as prior authorization, diagnosis code and other claims edits, may be implemented from time to time. Medicare reimbursement for pathology services performed by Dx, which are paid 37 Index for under the PFS, is also subject to statutory and regulatory reduction.
The Company’s failure to meet governmental requirements under these regulations, including those relating to billing practices and financial relationships with physicians, hospitals, and health systems, and others could lead to civil and criminal penalties, exclusion from participation in Medicare and Medicaid and possible prohibitions or restrictions on the use of its laboratories.
The Company’s failure to meet governmental requirements under these regulations, including those relating to billing practices and financial relationships with physicians, hospitals, and health systems, biopharmaceutical manufacturers, and others could lead to civil and criminal penalties, exclusion from participation in Medicare and Medicaid and possible prohibitions or restrictions on the use of its laboratories.
Cancellations may occur for a variety of reasons, including: • failure of products to satisfy safety requirements; • unexpected or undesired results of the products; • insufficient clinical trial subject enrollment; • insufficient investigator recruitment; • a customer's decision to terminate the development of a product or to end a particular study; and • BLS’s failure to perform its duties properly under the contract.
Cancellations may 33 Index occur for a variety of reasons, including: • failure of products to satisfy safety requirements; • unexpected or undesired results of the products; • insufficient clinical trial subject enrollment; • insufficient investigator recruitment; • a customer’s decision to terminate the development of a product or to end a particular study; and • BLS’s failure to perform its duties properly under the contract.
As previously discussed in Item 1 of Part I of this Annual Report, the Company is subject to licensing and regulation under laws and regulations relating to the protection of the environment and human health and safety, including laws and regulations relating to the handling, transportation and disposal of medical specimens, infectious and hazardous waste and radioactive 46 Index materials, as well as regulations relating to the safety and health of laboratory employees.
As previously discussed in Item 1 of Part I of this Annual Report, the Company is subject to licensing and regulation under laws and regulations relating to the protection of the environment and human health and safety, including laws and regulations relating to the handling, transportation and disposal of medical specimens, infectious and hazardous waste and radioactive materials, as well as regulations relating to the safety and health of laboratory employees.
The Company’s level of indebtedness and debt service requirements could adversely affect its business. In particular, it could increase the Company’s vulnerability to sustained, adverse macroeconomic weakness, limit its ability to obtain further financing or refinance existing debt at maturity, and limit its ability to pursue certain operational and strategic opportunities, including large acquisitions.
The Company’s level of indebtedness and debt service requirements could adversely affect its business. In particular, it 34 Index could increase the Company’s vulnerability to sustained, adverse macroeconomic weakness, limit its ability to obtain further financing or refinance existing debt at maturity, and limit its ability to pursue certain operational and strategic opportunities, including large acquisitions.
Legal actions can result in substantial monetary damages as well as damage to the Company’s reputation with customers, which could have a material adverse effect upon its business. The failure to successfully obtain, maintain, and enforce intellectual property rights and defend against challenges to the Company’s intellectual property rights could adversely affect the Company.
Legal actions can result in 41 Index substantial monetary damages as well as damage to the Company’s reputation with customers, which could have a material adverse effect upon its business. The failure to successfully obtain, maintain, and enforce intellectual property rights and defend against challenges to the Company’s intellectual property rights could adversely affect the Company.
Diagnostics Laboratories' (Dx) testing services are billed to MCOs, Medicare, Medicaid, physicians and physician groups, hospitals, patients, and employer groups. Most testing services are billed to a party other than the physician or other authorized person who ordered the test. Increases in the percentage of services billed to government and MCOs could have an adverse effect on the Company’s revenues.
Dx testing services are billed to MCOs, Medicare, Medicaid, physicians and physician groups, hospitals, patients, and employer groups. Most testing services are billed to a party other than the physician or other authorized person who ordered the test. Increases in the percentage of services billed to government and MCOs could have an adverse effect on the Company’s revenues.
Further, international operations could subject the Company to additional expenses that the Company may not fully anticipate, including those related to enhanced time and resources 44 Index necessary to comply with foreign laws and regulations, difficulty in collecting accounts receivable and longer collection periods, and difficulties and costs of staffing and managing foreign operations.
Further, international operations could subject the Company to additional expenses that the Company may not fully anticipate, including those related to enhanced time and resources necessary to comply with foreign laws and regulations, difficulty in collecting accounts receivable and longer collection periods, and difficulties and costs of staffing and managing foreign operations.
The Company operates in parts of the world where corruption may be common and where anti-corruption laws may conflict to some degree with local customs and practices. The Company maintains an anti-corruption program including policies, procedures, training and safeguards in the engagement and management of third parties acting on the Company’s behalf.
The Company operates in parts of the world where corruption may be common and where anti-corruption laws may conflict to some degree with local customs and practices. The Company maintains an anti-corruption 39 Index program including policies, procedures, training and safeguards in the engagement and management of third parties acting on the Company’s behalf.
BLS may also be required to agree to contract provisions with clinical site selection or its customers related to the conduct of clinical trials, and BLS could be materially and adversely affected if it were required to indemnify a site or customer against claims pursuant to such contract terms.
BLS may also be required to agree to contract provisions with clinical site selection or its customers related to the conduct of clinical trials, and BLS could 42 Index be materially and adversely affected if it were required to indemnify a site or customer against claims pursuant to such contract terms.
Any failure by third parties to comply with applicable laws, or any failure of third parties to provide services more generally, could have a material impact on the Company, whether because of the loss of the ability to 42 Index receive services from the third parties, legal liability of the Company for the actions or inactions of third parties, or otherwise.
Any failure by third parties to comply with applicable laws, or any failure of third parties to provide services more generally, could have a material impact on the Company, whether because of the loss of the ability to receive services from the third parties, legal liability of the Company for the actions or inactions of third parties, or otherwise.
The AWA establishes facility standards regarding several aspects of animal welfare, including housing, ventilation, lighting, feeding and watering, handling, 45 Index veterinary care, and recordkeeping. Similar laws and regulations apply in other jurisdictions in which BLS conducts animal research, including the UK, EU, and China.
The AWA establishes facility standards regarding several aspects of animal welfare, including housing, ventilation, lighting, feeding and watering, handling, veterinary care, and recordkeeping. Similar laws and regulations apply in other jurisdictions in which BLS conducts animal research, including the UK, EU, and China.
The Company’s success in maintaining a leadership position in genomic and other advanced testing technologies will depend, in part, on its ability to develop, acquire or license new and improved technologies on favorable terms and to obtain appropriate coverage and reimbursement for these technologies.
The Company’s success in maintaining a leadership position in genomic and other advanced testing technologies will depend, in part, on its ability to develop, acquire or license new and improved technologies on favorable terms and to obtain 31 Index appropriate coverage and reimbursement for these technologies.
A failure to establish, update, or perform in accordance with those systems or processes could adversely affect the Company’s business 38 Index operations, resulting in the loss of customers, loss or suspension of licensure or certifications, imposition of sanctions or other penalties, damage to the Company’s reputation, or other adverse effects.
A failure to establish, update, or perform in accordance with those systems or processes could adversely affect the Company’s business operations, resulting in the loss of customers, loss or suspension of licensure or certifications, imposition of sanctions or other penalties, damage to the Company’s reputation, or other adverse effects.
Current FDA regulation of the Company’s diagnostic products and the potential for future increased regulation of the Company’s LDTs in the future could result in increased costs and administrative and legal actions for noncompliance, including warning letters, fines, penalties, product suspensions, product recalls, injunctions, and other civil and criminal sanctions, and could impair the development and commercialization of new tests, which could have a material adverse effect upon the Company.
Current FDA regulation of the Company’s diagnostic offerings and the potential for future increased regulation of the Company’s LDTs could result in increased costs and administrative and legal actions for noncompliance, including warning letters, fines, penalties, suspensions, recalls, injunctions, and other civil and criminal sanctions, and could impair the development and commercialization of new tests, which could have a material adverse effect upon the Company.
Manufacturers of laboratory equipment and test kits could seek to increase their sales by marketing point-of-care laboratory equipment to physicians and by selling test kits approved for home or physician office use to both physicians and patients.
Manufacturers of laboratory equipment and test kits could seek to increase their sales by marketing point-of-care laboratory equipment to physicians and by selling test kits approved by regulatory agencies for home or physician office use to both physicians and patients.
Anti-corruption laws in the countries where the Company conducts business, including the FCPA, U.K. Bribery Act, and similar laws in other jurisdictions, prohibit companies and their intermediaries from engaging in bribery including improperly offering, promising, paying or authorizing the giving of anything of value to individuals or entities for the purpose of corruptly obtaining or retaining business.
Anti-corruption laws in the countries where the Company conducts business, including the FCPA, UK Bribery Act, and similar laws in other jurisdictions, prohibit companies and their intermediaries from engaging in bribery including improperly offering, promising, paying or authorizing the giving of anything of value to individuals or entities for the purpose of corruptly obtaining or retaining business.
To avoid realizing such taxable gain, the Company may be restricted or limited in its capital-raising or in the strategic transactions that it elects to pursue during such time period. The recently completed spin-off of Fortrea may not achieve the intended results. On June 30, 2023, the Company completed the previously announced spin-off of Fortrea Holdings Inc. (Fortrea).
To avoid realizing such taxable gain, the Company may be restricted or limited in its capital-raising or in the strategic transactions that it elects to pursue during such time period. The spin-off of Fortrea may not achieve the intended results. On June 30, 2023, the Company completed the previously announced spin-off of Fortrea.
BLS’s revenues depend greatly on the expenditures made by the pharmaceutical, biotechnology and medical device industries in R&D. In some instances, these companies are reliant on their ability to raise capital in order to fund their R&D projects. These companies are also reliant on reimbursement for their products from government programs and commercial payers.
BLS’s revenues depend greatly on the expenditures made by the pharmaceutical, biotechnology and medical device industries in R&D. In some instances, these companies are reliant on their ability to raise capital in order to fund their R&D projects. These companies may be reliant on reimbursement for their products from government programs and commercial payers.
Many of the Company’s services, products and processes rely on intellectual property, including patents, copyrights, trademarks, and trade secrets. In some cases, that intellectual property is owned by another party and licensed to the Company, sometimes exclusively. The value of the Company’s intellectual property relies in part on the Company’s ability to maintain its proprietary rights to such intellectual property.
Many of the Company’s offerings and processes rely on intellectual property, including patents, copyrights, trademarks, and trade secrets. In some cases, that intellectual property is owned by another party and licensed to the Company, sometimes exclusively. The value of the Company’s intellectual property relies in part on the Company’s ability to maintain its proprietary rights to such intellectual property.
In addition, BLS’s services periodically experience periods of increased price competition that may have an adverse effect on the segment’s profitability and consolidated revenues and net income.
In addition, BLS’s services periodically experience periods of increased price competition that may have an adverse effect on the segment’s profitability and consolidated revenues and net earnings.
A compromise in the Company’s security systems, or those of the Company's third-party service providers and vendors, that results in customer personal information being obtained by unauthorized persons, or the Company’s or a third party's failure to comply with security requirements for financial transactions, including security standards for payment cards (e.g., the Payment Card Industry Data Security Standard), could adversely affect the Company’s reputation with its customers and others, as well as the Company’s results of operations, financial condition and liquidity.
A compromise of the Company’s systems, or those of the Company's third-party service providers and vendors, that results in customer personal information being obtained or altered by unauthorized persons, or the Company’s third party's failure to comply with security requirements, including but not limited to security standards for payment cards (e.g., the Payment Card Industry Data Security Standard), could adversely affect the Company’s reputation with its customers and others, as well as the Company’s results of operations, financial condition and liquidity.
Any of these disruptions or incidents could have a material adverse effect on the Company’s business, regulatory compliance, financial condition and results of operations.
Any of these incidents could have a material adverse effect on the Company’s business, regulatory compliance, financial condition, reputation, and/or results of operations.
Regulation of diagnostics products in jurisdictions outside the U.S. in which the Company operates may impact laboratory testing offered by the Company in both Dx and BLS.
Regulation of diagnostics offerings in jurisdictions outside the U.S. in which the Company operates may impact laboratory testing offered by the Company in both Dx and BLS.
Failure to comply with the regulations of pharmaceutical and medical device regulatory agencies, such as the FDA, the Medicines and Healthcare Products Regulatory Agency in the United Kingdom, the European Medicines Agency, the National Medical Products Administration in China (NMPA), and the Pharmaceuticals and Medical Devices Agency in Japan, could result in fines, penalties, and sanctions against BLS and have a material adverse effect upon the Company.
Failure to comply with the regulations of pharmaceutical and medical device regulators, such as the FDA, the Medicines and Healthcare products Regulatory Agency in the United Kingdom, the European Union, the European Medicines Agency, the National Medical Products Administration in China, and the Pharmaceuticals and Medical Devices Agency in Japan, could result in fines, penalties, and sanctions against BLS and have a material adverse effect upon the Company.
Disruption of supply and services has impacted and could continue to impact or have a material adverse effect on the Company’s business. A failure to identify and successfully close and integrate strategic acquisition targets could have a material adverse effect on the Company's business objectives and its revenues and profitability.
Disruption of supply and services has impacted and could continue to impact or have a material adverse effect on the Company’s business. A failure to identify suitable acquisition targets and successfully close and integrate acquisitions could have a material adverse effect on the Company’s business objectives and its revenues and profitability.
Adverse effects resulting from the failure to successfully obtain, maintain, and enforce intellectual property rights and defend against challenges to the Company's intellectual property rights could include the Company having to abandon, alter and/or delay the deployment of products, services or processes that rely on such intellectual property; having to procure and pay 47 Index for licenses from the holders of intellectual property rights that the Company seeks to use, having to pay damages, fines, court costs and attorney's fees in connection with intellectual property litigation, and reputational damage.
Adverse effects resulting from the failure to successfully obtain, maintain, and enforce intellectual property rights and defend against challenges to the Company’s intellectual property rights could include the Company having to abandon, alter and/or delay the deployment of offerings or processes that rely on such intellectual property; having to procure and pay for licenses from the holders of intellectual property rights that the Company seeks to use, having to pay damages, fines, court costs and attorney’s fees in connection with intellectual property litigation, and reputational damage.
Increased approval of “waived” test kits could lead to increased testing by physicians in their offices or by patients at home, which could affect the Company’s market for laboratory testing services and negatively impact its revenues.
Increased approval and use of such test kits could lead to increased testing by physicians in their offices or by patients at home, which could affect the Company’s market for laboratory testing services and negatively impact its revenues.
Health Information Technology for Economic and Clinical Health (HITECH) Act, and their implementing privacy and security regulations (collectively, HIPAA) establish comprehensive standards with respect to the use and disclosure of protected health information (PHI), by covered entities as well as their "business associates" as defined in HIPAA, in addition to setting standards to protect the confidentiality, integrity and security of PHI.
Health Information Technology for Economic and Clinical Health (HITECH) Act, and their implementing privacy and security regulations (collectively, HIPAA) establish comprehensive standards with respect to the use and disclosure of protected health information (PHI), by covered entities as well as their “business associates” as defined in HIPAA, in addition to setting standards to protect the confidentiality, integrity and security of PHI.
The Company’s level of indebtedness and debt service requirements could adversely affect the Company’s liquidity, results of operations and business. At December 31, 2023, indebtedness on the Company's outstanding Senior Notes totaled approximately $4.2 billion in aggregate principal, of which $1.0 billion is payable within the next 12 months.
The Company’s level of indebtedness and debt service requirements could adversely affect the Company’s liquidity, results of operations and business. At December 31, 2024, indebtedness on the Company’s outstanding senior notes totaled approximately $6.2 billion in aggregate principal, of which $1.0 billion is payable within the next 12 months.
While limited changes are expected to be implemented in 2024, the Company typically expects some delays in pricing and reimbursement as new codes are introduced. The Company expects the efforts to impose reduced reimbursement, more stringent payment policies, and utilization and cost controls by government and other payers to continue.
In 2024, limited coding and billing changes were implemented. While limited changes are expected to be implemented in 2025, the Company typically expects some delays in pricing and reimbursement as new codes are introduced. The Company expects the efforts to impose reduced reimbursement, more stringent payment policies, and utilization and cost controls by government and other payers to continue.
Dx’s point-of-care testing devices are subject to regulation by the FDA. LDTs developed by high complexity clinical laboratories are currently generally offered as services to health care providers under the CLIA regulatory framework administered by CMS, without the requirement for FDA clearance or approval.
Dx’s point-of-care testing devices are subject to regulation by the FDA. Historically, LDTs developed by high complexity clinical laboratories have been generally offered as services to health care providers under the CLIA regulatory framework administered by CMS, without the requirement for FDA clearance or approval.
The Company has also experienced and expects to continue to experience similar attempts to penetrate the systems of third-party suppliers and vendors to whom the Company has provided data, like the 2019 AMCA data breach.
The Company has also experienced and expects to continue to experience similar attempts by threat actors to penetrate the systems of third-party suppliers and vendors to whom the Company has provided data, like the 2019 AMCA data breach.
However, the outcome and its ultimate impact on the Company’s business is difficult to predict at this time.
However, the outcome and its ultimate impact on the Company’s business remain difficult to predict at this time.
To the extent applicable, newer laws like the California Consumer Privacy Act (“CCPA”) as amended by the California Privacy Rights Act (“CPRA”), the Washington My Health My Data Act, and similar consumer privacy laws in other states, may impose additional obligations on the Company.
To the extent applicable, newer laws like the California Consumer Privacy Act (CCPA) as amended by the California Privacy Rights Act (CPRA), the Washington My Health My Data Act, and similar consumer privacy laws in other states, may impose additional obligations on the Company.
Since 2019, the Company has invested net cash of approximately $3.5 billion in strategic business acquisitions. However, the Company cannot assure that it will be able to identify acquisition targets that are attractive to the Company or that are of a large enough size to have a meaningful impact on the Company's operating results.
Since January 1, 2020, the Company has invested net cash of approximately $3.4 billion in strategic business acquisitions. However, the Company cannot assure that it will be able to identify acquisition targets that are attractive to the Company or that are of a large enough size to have a meaningful impact on the Company’s operating results.
In addition, the Company may experience system failures or interruptions as it integrates the information technology systems of newly acquired businesses.
In addition, the Company may experience system failures, or interruptions, including cybersecurity incidents, as it integrates the information technology systems of newly acquired businesses.
The FDA has regulatory responsibility for instruments, test kits, reagents and other devices used by clinical laboratories. The FDA enforces laws and regulations that govern the development, testing, manufacturing, performance, labeling, advertising, marketing, distribution, and surveillance of diagnostic products, and it regularly inspects and reviews the manufacturing processes and product performance of diagnostic products.
The FDA has regulatory responsibility for instruments, test kits, reagents and other devices used by clinical laboratories. The FDA enforces laws and regulations that govern the development, testing, manufacturing, performance, labeling, advertising, 40 Index marketing, distribution, and surveillance of diagnostics, and it regularly inspects and reviews the manufacturing processes and performance of diagnostics.
In addition, if the Company is unable to license new or improved technologies to expand its esoteric testing operations, its testing methods may become outdated when compared with the Company’s competition, and testing volume and revenue may be materially and adversely affected.
In addition, if the Company is unable to license new or improved technologies to expand its esoteric testing operations, its testing methods may become outdated and testing volume and revenue may be materially and adversely affected.
The Company’s operations and customer relationships depend, in part, on the continued performance of its information technology systems. A failure of the network or data-gathering procedures could impede the processing of data, delivery of databases and services, customer orders and day-to-day management of the business and could result in the corruption or loss of data.
The Company’s operations and customer relationships depend, in part, on the continued performance of its information technology systems. An information technology or process failure could impede the processing of data, delivery of data and services, customer orders, and day-to-day management of the business, and could result in the corruption or loss of data.
Despite network security measures and other precautions the Company has taken, including the development of disaster recovery plans, its information technology systems are potentially vulnerable to physical or electronic break-ins, computer viruses, fire, natural disaster, power loss, telecommunications failures, cybersecurity incidents and similar disruptions, and there may not be adequate protections, mitigation plans or redundant facilities available in the event of such system failures.
Despite security measures and other precautions the Company has taken, including the development of contingency and disaster recovery plans, its information technology systems are potentially vulnerable to physical break-ins, fire, natural disaster, power loss, telecommunications failures, cybersecurity incidents and similar disruptions, and there may not be adequate protections, mitigation, backups, and/or redundant facilities available in the event these threats are realized.
Such system failures could require the 41 Index Company to transfer operations to an alternative provider of services, which could result in delays in the delivery of products and services to customers.
Such system failures could require the Company to transfer operations to an alternative provider of services, which could result in delays in the delivery of offerings to customers and other operations.
Increased competition, including price competition, could have an adverse effect on the Company’s revenues and profitability. As further described in Item 1 of Part I of this Annual Report, both Dx and BLS operate in competitive industries. The commercial laboratory business is intensely competitive both in terms of price and service.
Increased competition, including price competition, could have an adverse effect on the Company’s revenues and profitability. As further described in Item 1 and Item 1A of Part I of this Annual Report, both Dx and BLS operate in competitive industries.
The Company’s operations are dependent upon ongoing demand for diagnostic testing and drug development services by 33 Index patients, physicians, hospitals, MCOs, pharmaceutical, biotechnology and medical device companies and others.
The Company’s operations are dependent upon ongoing demand for diagnostic testing and biopharma laboratory services by patients, physicians, hospitals, MCOs, pharmaceutical, biotechnology and medical device companies and others.
The Company’s ability to engage in certain transactions could be limited or restricted in order to preserve, for U.S. federal income tax purposes, the tax-free qualification of the Fortrea spin-off and certain related transactions under Sections 355 and 40 Index 368(a)(1)(D) of the Internal Revenue Code.
The Company might not be able to engage in certain desirable capital-raising or strategic transactions. The Company’s ability to engage in certain transactions could be limited or restricted in order to preserve, for U.S. federal income tax purposes, the tax-free qualification of the Fortrea spin-off and certain related transactions under Sections 355 and 368(a)(1)(D) of the Internal Revenue Code.
Cybersecurity incidents and unauthorized access to the Company's or its customers’ data could harm the Company’s reputation and adversely affect its business. The Company has experienced and expects to continue to experience attempts by computer programmers and hackers to penetrate the Company’s layered cybersecurity controls, like the 2018 ransomware attack.
Cybersecurity incidents and unauthorized access to the Company's or its customers’ data could harm the Company’s reputation and adversely affect its business. The Company has previously experienced and expects to continue to experience attempts by unauthorized parties to compromise the Company’s cybersecurity controls, like the 2018 ransomware attack.
Laboratories bill many different payers, including doctors, patients, hundreds of insurance companies, Medicare, Medicaid, and employer groups, all of which have different billing requirements.
Laboratories bill many different payers, including doctors, patients, health plans, Medicare, Medicaid, and employer groups, all of which have different billing requirements.
Operations may be disrupted and adversely impacted by the effects of adverse weather, natural disasters, geopolitical events, public health crises, hostilities or acts of terrorism, acts of vandalism, disruption to supply chains, inaccessibility of natural resources, and other events beyond the Company's control.
Operations may be disrupted and adversely impacted by events beyond the Company’s control, including natural disasters, adverse weather, geopolitical events, public health crises, acts of terrorism, disruption to supply chain, and inaccessibility of natural resources.
This could also impact the cost and availability of cyber insurance to the Company. Cybersecurity incidents affecting the Company’s or third parties' security measures and the unauthorized dissemination of personal, proprietary or confidential information about the Company or its customers or other third parties could expose customers’ private information.
Cybersecurity incidents affecting the Company’s or third parties' security measures and the unauthorized dissemination of personal, proprietary or confidential information about the Company or its customers or other third parties could expose customers’ private information.
Although BLS' contracts often entitle the Company to receive the costs of winding down the terminated projects, as well as all fees earned up to the time of termination, the loss, reduction in scope or delay of a large contract or the loss, delay or conclusion of multiple contracts could materially adversely affect BLS.
Although BLS’s contracts typically entitle the Company to receive all fees earned up to the time of termination, and often also the costs of winding down the terminated projects, the loss, reduction in scope or delay of large or multiple contracts could materially adversely affect BLS.
The Company has implemented policies and procedures designed to comply with the HIPAA privacy and security requirements as applicable. The privacy and security regulations establish a “floor” and do not supersede state laws that are more stringent. Therefore, the Company is required to comply with both additional federal privacy and security regulations and varying state privacy and security laws.
The privacy and security regulations establish a “floor” and do not supersede state laws that are more stringent. Therefore, the Company is required to comply with both additional federal privacy and security regulations and varying state privacy and security laws.
The Company, or its customers' sensitive, proprietary, or confidential information could be leaked, disclosed, or revealed as a result of or in connection with employees' or vendors' use of generative AI technologies.
The Company also faces potential risks from the use of AI and machine learning tools. The Company, or its customers' sensitive, proprietary, or confidential information could be leaked, disclosed, or revealed as a result of or in connection with employees' or vendors' use of generative AI technologies.
The Company bears the financial risk if these contracts are underpriced or if contract costs exceed estimates. Such underpricing or significant cost overruns could have an adverse effect on the Company's business, results of operations, financial condition, and cash flows.
The Company bears the financial risk if these contracts are underpriced or if contract costs exceed estimates. Such underpricing or significant cost overruns could have an adverse effect on the Company’s business, results of operations, financial condition, and cash flows. Many of BLS’s contracts may be terminated or reduced in scope either immediately or upon notice.
There can be no assurance that BLS will be able to maintain sufficient insurance coverage on acceptable terms.
There can be no assurance that BLS will be able to maintain sufficient insurance coverage on acceptable terms. Item 1B. UNRESOLVED STAFF COMMENTS None.
The Company's international operations could subject it to additional risks and expenses that could adversely impact the business or results of operations. The Company's international operations expose it to risks from potential failure to comply with foreign laws and regulations that differ from those under which the Company operates in the U.S.
The Company’s international operations expose it to risks from potential failure to comply with foreign laws and regulations that differ from those under which the Company operates in the U.S.
In 2014, Congress passed PAMA, requiring Medicare to change the way payment rates are calculated for tests paid under the CLFS, and to base the payment on the weighted median of rates paid by private payers.
In 2014, Congress passed PAMA, requiring Medicare to change the way payment rates are calculated for tests paid under the CLFS, and to base the payment on the weighted median of rates paid by private payers. Pursuant to PAMA, reimbursement rates for many clinical laboratory tests provided under Medicare were reduced from 2018 through 2020.
Measures to regulate healthcare delivery in general, and clinical laboratories in particular, have resulted in reduced prices, added costs and decreased test utilization for the commercial laboratory industry by increasing complexity and adding new regulatory and administrative requirements. Pursuant to legislation passed in late 2003, the percentage of Medicare beneficiaries enrolled in Managed Medicare plans has increased.
Measures to regulate healthcare delivery in general, and clinical laboratories in particular, have resulted in reduced prices, added costs and decreased test utilization for the commercial laboratory industry by increasing complexity and adding new regulatory and administrative requirements.
Increased levels of remote access create additional opportunities for cybercriminals to exploit vulnerabilities, and employees may be more susceptible to phishing and social engineering attempts. In addition, technological resources may become strained due to the number of remote users. The Company also faces potential cybersecurity risks from the use of artificial intelligence and machine learning (AI) tools.
Increased levels of remote access create additional opportunities for cybercriminals to exploit vulnerabilities, and employees may be more susceptible to phishing and social engineering attempts. In addition, technological resources may become strained due to the number of remote users.
In May 2023, a judge awarded Ravgen additional enhanced damages in the amount of $100 million. 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.
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 addition, the Company depends upon the secure transmission of confidential information over public networks, including information permitting cashless payments. The Company also works with third-party service providers and vendors that provide technology systems and services that are used in connection with the receipt, storage, and transmission of customer personal and financial information.
The Company also works with third-party service providers and vendors that provide technology systems and services that are used in connection with the receipt, storage, transmission, and processing of customer personal and financial information.
For example, the EU's General Data Protection Regulation (GDPR), which took effect May 25, 2018, created a range of compliance obligations for subject companies and imposes penalties for noncompliance of up to the greater of €20 million or 4% of worldwide revenue for the most serious breaches of data protection obligations.
For example, the EU’s General Data Protection Regulation (GDPR) includes compliance obligations for subject companies and imposes penalties for noncompliance of up to the greater of €20 million or 4% of worldwide revenue for the most serious breaches of data protection obligations, and similar obligations exist under the UK GDPR.
A material increase in Dx’s days sales outstanding level could have an adverse effect on the Company's business, including potentially increasing its bad debt rate and decreasing its cash flows.
A material increase in Dx’s days sales outstanding level, which could be caused by multiple reasons due to the complexity of billing for laboratory services, could have an adverse effect on the Company’s business, including potentially increasing its bad debt rate and decreasing its cash flows.
If the Company does not meet the evolving and varied ESG expectations of its investors, customers and other stakeholders, the Company could experience reduced demand for its products, loss of customers, and other negative impacts on the Company’s business and results of operations.
If the Company does not meet the evolving and varied preferences and requirements of governmental authorities and others on these matters, the Company could experience reduced demand for its offerings, loss of customers, and other negative impacts on the Company’s business and results of operations.
In addition, advances in technology may lead to the development of more cost-effective technologies, such as point-of-care testing equipment that can be operated by physicians or other healthcare providers (including physician assistants, nurse practitioners, and certified nurse midwives, generally referred to herein as physicians) in their offices or by patients themselves without requiring the services of freestanding clinical laboratories.
In addition, advances in technology may lead to the development of more technologies, such as point-of-care testing equipment, that can be operated by healthcare providers in their offices or by patients themselves without requiring the services of commercial laboratories.
The Company’s uses of financial instruments to limit its exposure to interest rate and currency exchange fluctuations could expose it to risks and financial losses that may adversely affect the Company’s financial condition, liquidity and results of operations. 39 Index To limit the Company’s exposure to interest rate fluctuations and currency exchange fluctuations, it has entered into, and in the future may enter into for these or other purposes, financial swaps, or hedging arrangements, with various financial counterparties.
To limit the Company’s exposure to interest rate fluctuations and currency exchange fluctuations, it has entered into, and in the future may enter into for these or other purposes, financial swaps, or hedging arrangements, with various financial counterparties.
In addition, similar data protection regulations addressing access, use, disclosure and transfer of personal data have been enacted or updated in regions where the Company does business, including in Asia, Latin America, and Europe. The Company expects to make changes to its business practices and to incur additional costs associated with compliance with these evolving and complex regulations.
In addition, similar data protection regulations addressing access, use, disclosure and transfer of personal data have been enacted or updated in regions where the Company does business, including in Asia, Latin America, and other parts of Europe.
Similarly, application of artificial intelligence to testing could reduce demand for the Company's services, or competitors could adopt use of these technologies and derive benefits from them sooner than the Company. Currently, most commercial laboratory testing is categorized as high or moderate complexity, and thereby is subject to extensive and costly regulation under CLIA.
Similarly, application of artificial intelligence to testing could reduce demand for the Company’s services, or competitors could adopt use of these technologies and derive benefits from them sooner than the Company.
A portion of the managed care fee-for-service revenues is collectible from patients in the form of deductibles, coinsurance and copayments. As patient cost-sharing has been increasing, the Company's collections may be adversely impacted. In addition, Medicare and Medicaid and private insurers have increased their efforts to control the cost, utilization and delivery of healthcare services, including commercial laboratory services.
As patient cost-sharing continues to increase, the Company’s collections may be adversely impacted. In addition, Medicare and Medicaid and private insurers have increased their efforts to control the cost, utilization and delivery of healthcare services, including commercial laboratory services.
This focus on ESG concerns may lead to new requirements that could result in increased costs associated with developing, manufacturing, and distributing the Company’s services and products.
This focus on these concerns may lead to new requirements that could result in increased costs associated with developing, manufacturing, and distributing the Company’s offerings. The Company’s ability to compete could also be affected by changing preferences and requirements on these matters and the Company’s ability to meet them.
The spin-off poses risks and challenges that could impact the Company’s business, including, but not limited to, the failure to achieve the intended benefits from the spin-off, the failure to receive tax- free treatment for U.S. federal income purposes, and potential exposure to unexpected claims, liabilities, or costs under the Company’s agreements with Fortrea in connection with the spin-off.
The Spin-off poses risks and challenges that could impact the Company’s business, including, but not limited to, the failure to receive tax-free treatment for U.S. federal income purposes, and potential exposure to unexpected claims, liabilities, or costs under the Company’s agreements with Fortrea in connection with the Spin-off. 35 Index Risks Related to Technology and Cybersecurity Failure to maintain the security of customer-related information or compliance with security requirements could damage the Company’s reputation with customers, cause it to incur substantial additional costs and become subject to litigation and enforcement actions.
Environmental, social and governance (ESG) matters and the perception of the Company’s activities in these areas by stakeholders may impact the Company’s business and reputation. Governmental authorities, non-governmental organizations, customers, investors, external stakeholders, and employees are increasingly sensitive to ESG concerns, such as diversity and inclusion, climate change, water use, recyclability or recoverability of packaging, and plastic waste.
Views on matters relating to corporate responsibility and governance and the perception of the Company’s activities in these areas by stakeholders may impact the Company’s business and reputation. Governmental authorities, non-governmental organizations, customers, investors, external stakeholders, and employees are sensitive to matters of corporate responsibility and governance, such as environmental sustainability.
Additionally, any cybersecurity incidents affecting the information technology systems of third parties could have a material adverse effect on the Company's operations. The Company depends on third parties to provide services critical to the Company's business, including supplies, ground and air transport of clinical and diagnostic testing supplies and specimens, research products, and people, among other services.
The Company depends on third parties to provide services critical to the Company's business, including supplies, ground and air transport of clinical and diagnostic testing supplies and specimens, research products, and people, among other services and depends on them to comply with applicable laws and regulations.
Risks Related to the Company's Business Including Global Economic and Sociopolitical Factors General or macro-economic factors in the U.S. and globally may have a material adverse effect upon the Company, and significant fluctuations in global economic conditions and an increase in the costs of goods and services could negatively impact testing volumes, drug development services, cash collections, profitability, and the availability and cost of credit.
Risks Related to the Company’s Business and Operations Including Global Economic and Geopolitical Factors General or macro-economic factors and significant fluctuations in economic conditions in the U.S. and globally may have a material adverse effect upon the Company.
However, because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and often are not recognized until launched against a target, the Company may be unable to anticipate all of these techniques or to implement adequate preventive measures.
The Company has implemented a formal cybersecurity program; however, because the techniques used by threat actors to obtain unauthorized access, disable or degrade service, or sabotage systems continue to evolve (and often are not recognized until launched against a target), the Company may be unable to anticipate and/or implement appropriate controls needed to 36 Index protect against these evolving threats.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeThe IR Plan is reviewed, tested, and updated under the leadership of the Company’s Chief Information and Technology Officer (CITO) and Chief Information Risk Officer (CIRO). The Company’s cybersecurity team also provides enterprise-wide cybersecurity training for employees to maintain and continuously improve the Company’s mitigation against human-driven risk.
Biggest changeThe Company’s cybersecurity team also provides enterprise-wide cybersecurity training for employees to maintain and continuously improve the Company’s mitigation against human-driven risk. Cybersecurity training is conducted annually, in addition to periodic simulations and exercises to test the efficacy of this training, and expanded training is required for specific roles.
This group includes a cybersecurity operations team that is responsible for the information technology security monitoring and incident response activities, the latter covering the response coordination to cybersecurity incidents under the leadership and pursuant to the direction of the CIRO. OIS also oversees the Company’s cybersecurity training program for employees. 50 Index
This group includes a cybersecurity operations team that is responsible for the information technology security monitoring and incident response activities, the latter covering the response coordination to cybersecurity incidents under the leadership and pursuant to the direction of the CIRO. OIS also oversees the Company’s cybersecurity training program for employees. 44 Index
“Risk Factors” of this Annual Report, which disclosures are incorporated by reference herein. In July 2018, the Company experienced a ransomware incident which affected certain Dx information technology systems. The incident also temporarily affected certain other information technology systems involved in conducting Company-wide operations.
“Risk Factors” of this Annual Report, which disclosures are incorporated by reference herein. 43 Index In July 2018, the Company experienced a ransomware incident which affected certain Dx information technology systems. The incident also temporarily affected certain other information technology systems involved in conducting Company-wide operations.
Cybersecurity Incident Impact The Company describes whether and how risks from identified cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect it, including its business and operating results, financial condition, and impact on the Company’s reputation and customer relationships, under the Summary of Material Risks section of this Annual Report, and under the “Risks Related to Technology and Cybersecurity” heading and subheadings thereunder in Part I, Item 1A.
Cybersecurity Incident Impact The Company describes whether and how risks from identified cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect it, including its business and operating results, financial condition, and impact on the Company’s reputation and customer relationships under the “Risks Related to Technology and Cybersecurity” heading and subheadings thereunder in Part I, Item 1A.
The CITO has more than 30 years of experience working in information technology-related roles and is a member of the Company’s executive leadership team and reports to the Chief Executive Officer. Prior to joining the Company, the CITO held various chief information officer roles with global companies.
The CITO has more than 15 years of experience working in information technology-related roles and is a member of the Company’s executive leadership team and reports to the Chief Executive Officer. Prior to joining the Company, the CITO held various leadership positions with global companies. The CIRO, under the direction of the CITO, is responsible for overseeing the OIS.
Mitigation of identified threats and vulnerabilities may be delayed. The Company has implemented an Incident Response Plan (IR Plan), which is aligned to its overall crisis management program. The IR Plan provides a framework for responding to and managing cybersecurity incidents.
The Company has implemented an Incident Response Plan (IR Plan), which is aligned to its overall crisis management program. The IR Plan provides a framework for responding to and managing cybersecurity incidents.
The CIRO, under the direction of the CITO, is responsible for overseeing the OIS. In this role, the CIRO oversees the cyber risk management function, which identifies cybersecurity threats, assesses cybersecurity risks, and supports the CITO and the Company in managing such risks.
In this role, the CIRO oversees the cyber risk management function, which identifies cybersecurity threats, assesses cybersecurity risks, and supports the CITO and the Company in managing such risks.
Consistent with business requirements, components of the Company’s information technology and controls are assessed by independent third parties against various frameworks and standards. With the assistance of these frameworks and standards, the Company assesses risks from cybersecurity threats, monitors its information systems for potential vulnerabilities, and assesses those systems pursuant to the Company’s cybersecurity policies, control standards, and control procedures.
With the assistance of these frameworks and standards, the Company assesses risks from cybersecurity threats, monitors its information systems for potential vulnerabilities, assesses those systems pursuant to the Company’s cybersecurity policies, control standards, and control procedures, and implements appropriate mitigation measures. Mitigation of identified threats and vulnerabilities may be delayed.
Engagement with External Cybersecurity Professionals The Company engages with third parties to assess the effectiveness of, and assist with, its cybersecurity risk and response systems and processes.
Engagement with External Cybersecurity Professionals The Company engages with third parties to assess the effectiveness of, and assist with, its cybersecurity risk and response systems and processes. These third parties include cybersecurity assessors, consultants, and professionals who help identify, verify, and validate cybersecurity risks and support mitigation or incident response plans as needed.
The IR Plan identifies applicable requirements for incident response, outlines processes for any applicable reporting, as well as provides protocols for incident evaluation, processes for notification and internal escalation of information to the Company’s senior management, and the Board and/or appropriate Board committees, as applicable.
The IR Plan outlines incident response requirements, reporting processes, protocols for incident evaluation, and procedures for notifying and escalating information to the Company’s senior management, and the Board and/or appropriate Board committees, as applicable. The IR Plan is reviewed, tested, and updated under the leadership of the Company’s Chief Information and Technology Officer (CITO) and Chief Information Risk Officer (CIRO).
The Company is involved in pending and threatened litigation related to the AMCA Incident, as well as various government and regulatory inquiries and processes.
The Company is involved in pending and threatened litigation related to the AMCA Incident, as well as various government and regulatory inquiries and processes. For additional information about the AMCA Incident, see Note 15 Commitments and Contingencies to the Consolidated Financial Statements “Cybersecurity" and “Risk Factors - Risks Related to Technology and Cybersecurity”.
For additional information about the AMCA Incident, see Note 15 Commitments and Contingencies to the Consolidated Financial Statements “Cybersecurity" and “Risk Factors - Risks Related to Technology and Cybersecurity”. 49 Index Governance The Company’s board of directors has oversight responsibility for the Company’s enterprise risk management process and it delegates oversight responsibility for certain significant functional areas of risk management to the board’s committees.
Governance The Company’s board of directors has oversight responsibility for the Company’s enterprise risk management process and it delegates oversight responsibility for certain significant functional areas of risk management to the board’s committees.
Removed
These third parties include cybersecurity assessors, consultants, and other cybersecurity professionals who assist in the identification, verification, and validation of cybersecurity risks, as well as support associated mitigation or incident response plans when necessary.
Added
The Company has implemented a formal cybersecurity program aligned to the Secure Controls Framework (SCF), a cybersecurity and privacy framework that consolidates and maps controls across multiple regulations, standards, and best practices. The Company’s program includes the evaluation of the cybersecurity posture of third-party suppliers and vendors that have access to the Company’s data or information technology systems.
Added
Consistent with business requirements, components of the Company’s information technology and controls are assessed by independent third parties against various frameworks and standards.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. PROPERTIES The Company's corporate headquarters are located in Burlington, North Carolina, and include facilities that are both owned and leased. Labcorp Diagnostics (Dx) operates through a network of patient service centers, branches, rapid response laboratories, primary laboratories, and specialty laboratories.
Biggest changeItem 2. PROPERTIES The Company’s corporate headquarters are located in Burlington, North Carolina, and include facilities that are both owned and leased. Dx operates through a network of patient service centers, branches, rapid response laboratories, primary laboratories, and specialty laboratories. The table below summarizes certain information as to Dx’s principal operating and administrative facilities at December 31, 2024.
Location Nature of Occupancy Primary Facilities: Birmingham, Alabama Leased Phoenix, Arizona Owned Los Angeles, California Leased Monrovia, California Leased San Diego, California Leased San Francisco, California Leased Shelton, Connecticut Leased Tampa, Florida Leased South Bend, Indiana Leased Wichita, Kansas Leased Baltimore, Maryland Leased Westborough, Massachusetts Leased Troy, Michigan Leased St.
Location Nature of Occupancy Primary Facilities: Birmingham, Alabama Leased Phoenix, Arizona Owned Los Angeles, California Leased Monrovia, California Leased San Diego, California Leased San Francisco, California (2) Leased Shelton, Connecticut Leased Tampa, Florida Leased South Bend, Indiana Leased Wichita, Kansas Leased Baltimore, Maryland Leased Holyoke, Massachusetts Leased Westborough, Massachusetts Leased Troy, Michigan Leased St.
LEGAL PROCEEDINGS See Note 15 Commitments and Contingencies to the Consolidated Financial Statements. Item 4. MINE SAFETY DISCLOSURES Not applicable. 52 Index PART II
LEGAL PROCEEDINGS See Note 15 Commitments and Contingencies to the Consolidated Financial Statements. Item 4. MINE SAFETY DISCLOSURES Not applicable. 46 Index PART II
Paul, Minnesota Owned Raritan, New Jersey Owned Burlington, North Carolina (5) Owned/Leased Research Triangle Park, North Carolina (3) Leased Dublin, Ohio Owned Tulsa, Oklahoma Leased Brentwood, Tennessee Leased Dallas, Texas Leased Houston, Texas Leased Herndon, Virginia Leased Seattle, Washington Leased Spokane, Washington (2) Leased Oak Creek, Wisconsin Leased 51 Index Biopharma Laboratory Services (BLS) operates on a global scale.
Paul, Minnesota Owned Raritan, New Jersey Owned Burlington, North Carolina (5) Owned/Leased Research Triangle Park, North Carolina (3) Leased Dublin, Ohio Owned Tulsa, Oklahoma Leased Brentwood, Tennessee Leased Dallas, Texas Leased Houston, Texas Leased Herndon, Virginia Leased Seattle, Washington Leased Spokane, Washington (2) Leased Oak Creek, Wisconsin Leased 45 Index BLS operates on a global scale.
The table below summarizes certain information as to BLS's principal operating and administrative facilities as of December 31, 2023.
The table below summarizes certain information as to BLS’s principal operating and administrative facilities at December 31, 2024.
Removed
The table below summarizes certain information as to Dx's principal operating and administrative facilities as of December 31, 2023.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeComparison of Cumulative Total Return 12/2018 12/2019 12/2020 12/2021 12/2022 12/2023 Laboratory Corporation of America Holdings $ 100.00 $ 133.88 $ 161.09 $ 248.66 $ 187.97 $ 213.97 S&P 500 Index $ 100.00 $ 131.49 $ 155.68 $ 200.37 $ 164.08 $ 207.21 S&P 500 Health Care Index $ 100.00 $ 120.82 $ 137.07 $ 172.89 $ 169.51 $ 173.00 53 Index Issuer Purchases of Equity Securities (all amounts in millions, except per share amounts) The following table sets forth information with respect to purchases of shares of the Company’s Common Stock made during the quarter ended December 31, 2023, by or on behalf of the Company: Total Number of Shares Repurchased Average Price Paid Per Share Total Number of Shares Repurchased as Part of Publicly Announced Program Maximum Dollar Value of Shares that May Yet Be Repurchased Under the Program October 1 - October 31 — $ — — $ 531.5 November 1 - November 30 — — — 531.5 December 1 - December 31 1.1 206.85 1.1 530.4 1.1 $ 206.85 1.1 $ 530.4 During the year ended December 31, 2023, the Company purchased 4.8 shares of its Common Stock at an average price per share of $206.85 for a total cost of $1,000.0.
Biggest changeComparison of Cumulative Total Return 12/2019 12/2020 12/2021 12/2022 12/2023 12/2024 Labcorp Holdings Inc. $ 100.00 $ 120.32 $ 185.74 $ 140.40 $ 159.82 $ 163.37 S&P 500 Index $ 100.00 $ 118.40 $ 152.39 $ 124.79 $ 157.59 $ 197.02 S&P 500 Health Care Index $ 100.00 $ 113.45 $ 143.09 $ 140.29 $ 143.18 $ 146.87 Issuer Purchases of Equity Securities (all amounts in millions, except per share amounts) The following table sets forth information with respect to purchases of shares of the Company’s Common Stock made during the quarter ended December 31, 2024, by or on behalf of the Company: Total Number of Shares Repurchased Average Price Paid Per Share Total Number of Shares Repurchased as Part of Publicly Announced Program Maximum Dollar Value of Shares that May Yet Be Repurchased Under the Program October 1 - October 31 — $ — — $ 1,355.4 November 1 - November 30 0.3 $ 240.63 0.3 $ 1,280.4 December 1 - December 31 — $ — — $ 1,280.4 0.3 $ 240.63 0.3 During the year ended December 31, 2024, the Company purchased 1.1 shares of its Common Stock at an average price per share of $219.57 for a total cost of $250.1.
(Fortrea) to the Company's shareholders, pursuant to which Fortrea became an independent company, is treated as a non-taxable cash dividend of $33.11 per share, an amount equal to the opening price of Fortrea Common Stock when it began trading on June 20, 2023, that was deemed reinvested in the Company’s Common Stock at the closing price on June 20, 2023.
For the purpose of this graph, the distribution of 100% of the outstanding Common Stock of Fortrea to the Company’s shareholders, pursuant to which Fortrea became an independent company, is treated as a non-taxable cash dividend of $33.11 per share, an amount equal to the opening price of Fortrea common stock when it began trading on June 20, 2023, that was deemed reinvested in the Company’s Common Stock at the closing price on June 20, 2023.
The Company’s ability to pay dividends is primarily dependent on earnings from operations, the adequacy of capital and the availability of liquid assets for distribution. For the year ended December 31, 2023, the Company paid $254.0 million in Common Stock dividends.
The Company’s ability to pay dividends is primarily dependent on earnings from operations, the adequacy of capital and the availability of liquid assets for distribution. For the year ended December 31, 2024, the Company paid $243.1 million in Common Stock dividends.
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company's common stock, par value $0.10 per share, or Common Stock, trades on the New York Stock Exchange or NYSE under the symbol “LH.” Holders On February 23, 2024, there were approximately 1,188 holders of record of the Common Stock.
Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Company’s common stock, par value $0.10 per share, or Common Stock, trades on the New York Stock Exchange or NYSE under the symbol “LH”. Holders On February 24, 2025, there were approximately 1,038 holders of record of the Common Stock.
Common Stock Performance The graph below shows the cumulative total return assuming an investment of $100 on December 31, 2018, in each of the Company’s Common Stock, the Standard & Poor’s, or S&P 500 Index and the S&P 500 Health Care Index, and assuming that all dividends were reinvested.
There can be no assurance that the Company will continue to pay quarterly cash dividends at the current rate or at all. 47 Index Common Stock Performance The graph below shows the cumulative total return assuming an investment of $100 on December 31, 2019, in each of the Company’s Common Stock, the Standard & Poor’s, (S&P) 500 Index and the S&P 500 Health Care Index, and assuming that all dividends were reinvested.
The Company expects common dividend declarations, if made, to occur in January, April, July, and October with payment dates in March, June, September and December, and are subject to Board approval. There can be no assurance that the Company will continue to pay quarterly cash dividends at the current rate or at all.
The Company expects common dividend declarations, if made, to occur in January, April, July, and October with payment dates in March, June, September and December, and are subject to Board approval.
At the end of 2023, the Company had outstanding authorization from the Board to purchase up to $530.4 of the Company's Common Stock. The repurchase authorization has no expiration date. During the year ended December 31, 2022, the Company purchased 4.7 shares of its Common Stock at an average price per share of $233.48 for a total cost of $1,100.0.
During the year ended December 31, 2023, the Company purchased 4.8 shares of its Common Stock at an average price per share of $206.85 for a total cost of $1,000.0. 48 Index Item 6. [RESERVED]
Removed
For the purpose of this graph, the distribution of 100% of the outstanding Common Stock of Fortrea Holdings Inc.
Added
At the end of 2024, the Company had outstanding authorization from its Board to purchase up to $1,280.4 maximum value of the Company’s Common Stock. The repurchase authorization has no expiration date.
Removed
When the Company repurchases shares, the amount paid to repurchase the shares in excess of the par or stated value is allocated to additional paid-in-capital unless subject to limitation or the balance in additional paid-in-capital is exhausted. Remaining amounts are recognized as a reduction in retained earnings. Item 6. SELECTED FINANCIAL DATA Not applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeYears Ended December 31, Change 2023 2022 2021 2023 2022 Dx segment operating income $ 1,591.3 $ 2,025.5 $ 3,205.6 (21.4) % (36.8) % Dx segment operating margin 16.9 % 22.0 % 30.9 % (5.1) % (8.9) % BLS segment operating income 396.3 389.1 501.0 1.8 % (22.3) % BLS segment operating margin 14.3 % 14.4 % 17.5 % (0.1) % (3.1) % Segment operating income 1,987.6 2,414.6 3,706.6 (17.7) % (34.9) % General corporate and unallocated expenses (644.1) (468.8) (404.5) 37.4 % 15.9 % Amortization of intangibles and other assets (219.8) (193.6) (229.5) 13.5 % (15.6) % Restructuring and other charges (49.1) (54.0) (24.0) (9.1) % 125.0 % Goodwill and other asset impairments (349.0) (261.7) — 33.4 % 100.0 % Total operating income $ 725.6 $ 1,436.5 $ 3,048.6 (49.5) % (52.9) % Dx operating income was $1,591.3 for the year ended December 31, 2023, a decrease of 21.4% over operating income of $2,025.5 in the corresponding period of 2022, and Dx operating margin decreased 510 basis points year-over-year.
Biggest changeOperating Results by Segment Year Ended December 31, 2024 2023 Change Dx segment operating income $ 1,606.3 $ 1,591.3 0.9 % Dx segment operating margin 15.8 % 16.9 % (1.1) % BLS segment operating income 458.9 396.3 15.8 % BLS segment operating margin 15.7 % 14.3 % 1.4 % Segment operating income 2,065.2 1,987.6 3.9 % General corporate and unallocated expenses (670.8) (644.1) 4.1 % Amortization of intangibles and other assets (256.4) (219.8) 16.7 % Restructuring and other charges (46.0) (49.1) (6.3) % Goodwill and other asset impairments (5.3) (349.0) (98.5) % Total operating income $ 1,086.7 $ 725.6 49.8 % 51 Index Dx operating income was $1,606.3 for the year ended December 31, 2024, an increase of 0.9% over operating income of $1,591.3 in the corresponding period of 2023, and Dx operating margin decreased 110 basis points year-over-year.
For businesses that enter primarily short-term contracts, BLS applies the practical expedient which allows costs to obtain a contract to be expensed when incurred if the amortization period of the assets that would otherwise have been recognized is one year or less. Amortization of assets from sales commissions is included in selling, general, and administrative expense.
For businesses that enter into primarily short-term contracts, BLS applies the practical expedient, which allows costs to obtain a contract to be expensed when incurred if the amortization period of the assets that would otherwise have been recognized is one year or less. Amortization of assets from sales commissions is included in selling, general, and administrative expense.
Estimated fair values were based on various valuation methodologies, including an income approach using primarily discounted cash flow techniques for the customer relationships intangible assets. The aforementioned income methods utilize management's estimates of future operating results and cash flows discounted using a weighted-average cost of capital that reflects market participant assumptions.
Estimated fair values are based on various valuation methodologies, including an income approach using primarily discounted cash flow techniques for the customer relationships intangible assets. The aforementioned income methods utilize management’s estimates of future operating results and cash flows discounted using a weighted-average cost of capital that reflects market participant assumptions.
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. It is possible that the Company's conclusions regarding impairment or recoverability of goodwill or intangible assets in any reporting unit could change in future periods.
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. It is possible that the Company’s conclusions regarding impairment or recoverability of goodwill or indefinite-lived intangible assets in any reporting unit could change in future periods.
Generally, client revenues are recorded on a fee-for-service basis at Dx’s client list price, less any negotiated discount. A portion of client billing is for laboratory management services, collection kits and other non-testing services or products. In these cases, revenue is recognized when services are rendered or delivered.
Generally, client revenues are recorded on a fee-for-service basis at Dx’s client list price, less any negotiated discount. A portion of client billing is for laboratory management services, collection kits and other non-testing offerings. In these cases, revenue is recognized when services are rendered or delivered.
Anticipated 62 Index write-offs are recorded as adjustments to revenue at an amount considered necessary to record the segment's revenue at its net realizable value. In addition to contractual discounts, other adjustments including anticipated payer denials and other external factors that could affect the collectability of its receivables are considered when determining revenue and the net receivable amount.
Anticipated write-offs are recorded as adjustments to revenue at an amount considered necessary to record the segment’s revenue at its net realizable value. In addition to contractual discounts, other adjustments including anticipated payer denials and other external factors that could affect the collectability of its receivables are considered when determining revenue and the net receivable amount.
Although the Company believes that the current assumptions and estimates used in its goodwill analysis are reasonable, supportable, and appropriate, continued efforts to maintain or improve the performance of these businesses could be impacted by unfavorable or unforeseen changes which could impact the existing assumptions used in the impairment analysis.
Although the Company believes that the current assumptions and estimates used in its goodwill analysis are reasonable, supportable, and appropriate, continued efforts to maintain or improve the performance of these businesses could be impacted 57 Index by unfavorable or unforeseen changes which could impact the existing assumptions used in the impairment analysis.
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 estimable and would exceed the aggregate legal reserve.
In accordance with Financial Accounting Standards Board (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 estimable and would exceed the aggregate legal reserve.
For volume-based contracts the contract value is entirely variable and revenue is recognized as the specific product or service is completed. For services billed based on time and materials, revenue is recognized using the right to invoice practical expedient. Contracts are often modified to account for changes in contract specifications and requirements.
For volume-based contracts, the contract value is entirely variable, and revenue is recognized as the specific service is completed. For services billed based on time and materials, revenue is recognized using the right to invoice practical expedient. Contracts are often modified to account for changes in contract specifications and requirements.
Potential sanctions for violation of these 65 Index 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.
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.
The Company does not recognize a tax benefit, unless the Company concludes that it is more likely than not that the benefit will be sustained on audit by the taxing authority based solely on the technical merits of the associated tax position.
The Company does not recognize a tax benefit, unless the Company concludes that it is more likely than not that the benefit will be sustained on audit by the taxing authority based solely 56 Index on the technical merits of the associated tax position.
Goodwill and Indefinite-Lived Assets 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.
Goodwill and Indefinite-Lived Intangible Assets The Company assesses goodwill and indefinite-lived intangible assets for impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable.
Forecasts of individual reporting unit cash flows involve management's estimates and assumptions regarding: • Annual cash flows, on a debt-free basis, arising from future revenues and profitability, changes in working capital, capital spending and income taxes for at least a five-year forecast period. 64 Index • A terminal growth rate for years beyond the forecast period.
Forecasts of individual reporting unit cash flows involve management’s estimates and assumptions regarding: • Annual cash flows, on a debt-free basis, arising from future revenues and profitability, working capital changes, capital spending and income taxes for at least a five-year forecast period. • A terminal growth rate for years beyond the forecast period.
Third-party reimbursement is also received through capitation agreements with MCOs and independent physician associations (IPAs). Under capitated agreements, revenue is recognized based on a negotiated per-member, per-month payment for an agreed upon menu of tests, or based upon the proportionate share earned by Dx from a capitation pool.
Third-party reimbursement is also received through capitation agreements with MCOs and IPAs. Under capitated agreements, revenue is recognized based on a negotiated per-member, per-month payment for an agreed upon menu of tests, or based upon the proportionate share earned by Dx from a capitation pool.
The selection of the method to measure progress towards completion requires judgment and is based on the nature of the products or services to be provided. The majority of BLS's contracts contain a single performance obligation, as BLS provides a significant service of integrating all promises in the contract and the promises are highly interdependent and interrelated with one another.
The selection of the method to measure progress towards completion requires judgment and is based on the nature of the services to be provided. The majority of BLS’s contracts contain a single 55 Index performance obligation, as BLS provides a significant service of integrating all promises in the contract and the promises are highly interdependent and interrelated with one another.
There can be no assurance that the estimates and assumptions used in the Company's goodwill and intangible asset impairment testing performed as of the beginning of the fourth quarter of 2023 will prove to be accurate predictions of the future, if, for example, (i) the businesses do not perform as projected, (ii) overall economic conditions in 2023 or future years vary from current assumptions (including changes in discount rates), (iii) business conditions or strategies for a specific reporting unit change from current assumptions, including loss of major customers, (iv) investors require higher rates of return on equity investments in the marketplace or (v) enterprise values of comparable publicly traded companies, or actual sales transactions of comparable companies, were to decline, resulting in lower multiples of revenues and EBITDA.
There can be no assurance that the estimates and assumptions used in the Company’s goodwill and indefinite-lived intangible asset impairment testing performed as of the beginning of the fourth quarter of 2024 will prove to be accurate predictions of the future, if, for example, (i) the businesses do not perform as projected, (ii) overall economic conditions in 2024 or future years vary from current assumptions (including changes in discount rates), (iii) business conditions or strategies for a specific reporting unit change from current assumptions, including loss of major customers, (iv) investors require higher rates of return on equity investments in the marketplace, or (v) enterprise values of comparable publicly traded companies, or actual sales transactions of comparable companies, were to decline, resulting in lower multiples of revenues and earnings before interest, taxes, depreciation, and amortization.
In the qualitative assessment, the Company considers relevant events and circumstances for each reporting unit, including (i) current year results, (ii) financial performance versus management’s annual and five-year strategic plans, (iii) changes in the reporting unit carrying value since prior year, (iv) industry and market conditions in which the reporting unit operates, (v) macroeconomic conditions, including discount rate changes, and (vi) changes in products or services offered by the reporting unit.
In the qualitative assessment, the Company considers relevant events and circumstances for each reporting unit, including (i) current year results, (ii) financial performance versus management’s annual and five-year strategic plans, (iii) changes in the reporting unit carrying value since prior year, (iv) industry and market conditions in which the reporting unit operates, (v) macroeconomic conditions, including discount rate changes, and (vi) changes in offerings provided by the reporting unit.
Cash and cash equivalents consist of highly liquid instruments, such as time deposits and other money market investments, which have original maturities of three months or less. Cash Flows from Operating Activities During the year ended December 31, 2023, the Company's continuing operations provided $1,202.3 of cash as compared to $1,764.8 in 2022 and $2,846.3 in 2021.
Cash and cash equivalents consist of highly liquid instruments, such as time deposits and other money market investments, which have original maturities of three months or less. Cash Flows from Operating Activities During the year ended December 31, 2024, the Company’s continuing operations provided $1,585.8 of cash as compared to $1,202.3 in 2023.
The excess of the fair value of the consideration conveyed over the fair value of the assets acquired was recorded as goodwill.
The excess of the fair value of the consideration conveyed over the fair value of the assets acquired are recorded as goodwill.
The goodwill reflects management's expectations of the ability to gain access to and penetrate the acquired entities' historical patient base and the benefits of being able to leverage operational efficiencies with favorable growth opportunities based on positive demographic trends in the market. Income Taxes The Company accounts for income taxes utilizing the asset and liability method.
The goodwill reflects management’s expectations of the ability to gain access to the acquired entities’ historical patient base and the benefits of being able to leverage operational efficiencies with favorable growth opportunities based on positive industry and market conditions. Income Taxes The Company accounts for income taxes utilizing the asset and liability method.
Liquidity, Capital Resources and Financial Position The Company's strong cash-generating capability and financial condition typically have provided ready access to capital markets. The Company's principal source of liquidity is operating cash flow, supplemented by proceeds from debt offerings.
LIQUIDITY AND CAPITAL RESOURCES (dollars and shares in millions) The Company’s strong cash-generating capability and financial condition typically have provided ready access to capital markets. The Company’s principal source of liquidity is operating cash flow, supplemented by proceeds from debt offerings.
All current and historical operating results of Fortrea are presented as Discontinued Operations, net of tax, in the consolidated statement of operations. The spin-off is expected to be treated as tax-free for the Company and its shareholders for U.S. federal income tax purposes.
All historical operating results of Fortrea are presented as Earnings from discontinued operations, net of tax, in the Company’s Consolidated Statements of Operations. 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 dividend will be payable on March 13, 2024, to stockholders of record of all issued and outstanding shares of Common Stock as of the close of business on February 27, 2024. The declaration and payment of any future dividends will be at the discretion of the Company's board of directors.
The dividend will be payable on March 12, 2025, to stockholders of record of all issued and outstanding shares of Common Stock at the close of business on February 27, 2025. The declaration and payment of any future dividends will be at the discretion of the Company’s Board.
As a result of the spin-off of Fortrea, the Company recast segment results to exclude the historical results of the CDCS business for all periods presented. The remaining operations of the previously reported Drug Development segment has been renamed the Biopharma Laboratory Services segment.
As a result of the separation of Fortrea, the Company recast segment results to exclude the historical results of the CDCS business for all periods presented. The remaining operations of the previously reported Drug Development segment have been renamed the Biopharma Laboratory Services (BLS) segment.
Business Combinations The Company accounts for business combination transactions under the acquisition method of accounting and reported the results of operations of the acquired entities from its respective date of acquisition. Assets acquired were recorded at their 63 Index estimated fair values as of the acquisition date.
Business Combinations The Company accounts for business combination transactions under the acquisition method of accounting and reports the results of operations of the acquired entities from its respective date of acquisition. Assets acquired are recorded at their estimated fair values as of the acquisition date.
If the recognition threshold is met, the Company recognizes a tax benefit measured at the largest amount of the tax benefit that the Company believes is greater than 50% likely to be realized. The Company records interest and penalties in income tax expense.
If the recognition threshold is met, the Company recognizes a tax benefit measured at the largest amount of the tax benefit that the Company believes is greater than 50% likely to be realized. The Company records interest and penalties in Provision for income taxes in the Consolidated Statements of Operations.
The contractual value of the noncontrolling interest put in the Company's Ontario subsidiary totaled $15.5 and $15.0 at December 31, 2023, and 2022, respectively, and has been classified as mezzanine equity in the Company's consolidated balance sheet.
The contractual value of the noncontrolling interest put in the Company’s Ontario subsidiary totaled $14.3 and $15.5 at December 31, 2024, and 2023, respectively, and has been classified as mezzanine equity in the Company’s Consolidated Balance Sheets.
The 2.5% increase in revenues for the year ended December 31, 2023, as compared to the corresponding period in 2022 was due to acquisitions, net of divestitures of 1.7%, organic revenue of 0.6%, and favorable foreign currency translation of 0.2%.
The 7.0% increase in revenues for the year ended December 31, 2024, as compared to the corresponding period in 2023, was primarily due to organic revenue of 3.9%, acquisitions, net of divestitures of 2.8%, and favorable foreign currency translation of 0.2%.
The change was primarily due to demand growth and LaunchPad savings, partially offset by higher personnel expense and non-human primate (NHP) related constraints. General corporate expenses are comprised primarily of administrative services such as executive management, human resources, legal, finance, corporate affairs, and information technology.
The increase was primarily due to organic growth and LaunchPad savings, partially offset by higher personnel costs. General corporate expenses are comprised primarily of administrative services such as executive management, human resources, legal, finance, corporate affairs, and information technology.
Under the Company's 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.
Under the Company’s credit facilities and indentures relating to the Company’s senior notes, the Company is subject to negative covenants limiting subsidiary indebtedness and certain other covenants typical for investment grade-rated borrowers, and with respect to the credit facilities, the Company is required to maintain certain leverage ratios.
Cash Flows from Financing Activities Net cash used in continuing financing activities for the year ended December 31, 2023 was $1,559.0 compared to cash used in continuing financing activities of $1,322.2 for the year ended December 31, 2022.
Cash Flows from Financing Activities Net cash provided by continuing financing activities for the year ended December 31, 2024, was $779.9 compared to cash used in continuing financing activities of $1,559.0 for the year ended December 31, 2023.
Total volume, measured by requisitions, decreased by 7.5% as organic volume decreased by 8.4% and acquisition volume contributed growth of 0.8%. Organic volume was impacted by a 10.4% decrease in COVID-19 Testing, partially offset by a 2.0% increase in Base Business.
Total volume, measured by requisitions, increased by 5.3% as acquisitions, net of divestitures, volume contributed growth of 2.7%, and organic volume increased by 2.6%. Organic volume was impacted by a 3.3% increase in the Base Business, partially offset by a 0.8% decrease in COVID-19 Testing.
Results of Operations The following tables present the financial measures that management considers to be the most significant indicators of the Company's performance.
RESULTS OF OPERATIONS (dollars in millions) The following tables present the financial measures that management considers to be the most significant indicators of the Company ’ s performance.
Based upon the results of the qualitative and quantitative assessments, the Company concluded that the fair values of its domestic Dx, CTTS and Canadian reporting units, as of October 1, 2023, were greater than the carrying values.
Based upon the results of the quantitative assessments, the Company concluded that the fair values of each of its reporting units, as of October 1, 2024, were greater than the carrying values.
The charges were adjusted by the reversal of previously established liability of $1.4 in unused severance and $0.5 in unused facility-related costs. During 2021, the Company recorded net restructuring charges of $24.0. The charges were comprised of $12.4 in severance and other personnel costs, $12.0 in facility-related costs primarily associated with general integration activities.
The charges were adjusted by the reversal of previously established liability of $2.5 in unused severance and $0.4 in unused facility-related costs. For the year ended December 31, 2023, the Company recorded net restructuring charges of $49.1. The charges were comprised of $33.4 in severance and other personnel costs and $22.3 in facility-related costs primarily associated with general integration activities.
For the year ended December 31, 2023, the Company paid $254.0 in Common Stock dividends. On January 12, 2024, the Company announced a cash dividend of $0.72 per share of Common Stock for the first quarter, or approximately $61.5 in the aggregate.
The repurchase authorization has no expiration date. For the year ended December 31, 2024, the Company paid $243.1 in Common Stock dividends. On January 8, 2025, the Company announced a cash dividend of $0.72 per share of Common Stock for the first quarter, or approximately $61.0 in the aggregate.
This increase in cost of revenues as a percentage of revenues was primarily due to a reduction in higher margin COVID-19 Testing, higher personnel expenses, and other inflationary costs, partially offset by organic Base Business growth and LaunchPad savings.
This decrease in cost of revenues as a percentage of revenues was primarily due to higher organic demand and LaunchPad savings, partially offset by higher personnel costs and lower COVID-19 Testing.
Cash Flows from Investing Activities Net cash used by continuing investing activities for the year ended December 31, 2023 was $1,146.8 as compared to net cash used by continuing investing activities of $1,599.6 for the year ended December 31, 2022 and $845.7 for the year ended December 31, 2021.
Cash Flows from Investing Activities Net cash used for continuing investing activities for the year ended December 31, 2024, was $1,366.8 as compared to $1,146.8 for the year ended December 31, 2023.
Restructuring and Other Charges Years Ended December 31, Change 2023 2022 2021 2023 2022 Restructuring and other charges $ 49.1 $ 54.0 $ 24.0 (9.1) % 125.0 % During 2023, the Company recorded net restructuring charges of $49.1. The charges were comprised of $33.4 in severance and other personnel costs, $22.3 in facility-related costs primarily associated with general integration activities.
Restructuring and Other Charges Year Ended December 31, 2024 2023 Change Restructuring and other charges $ 46.0 $ 49.1 (6.3) % For the year ended December 31, 2024, the Company recorded net restructuring charges of $46.0. The charges were comprised of $43.0 in severance and other personnel costs, and $5.9 in facility-related costs primarily associated with general integration activities.
Price/mix increased by 1.7% due to higher Base Business of 5.9%, partially offset by lower COVID-19 Testing of 3.8%, unfavorable foreign currency translation of 0.2%, and acquisitions of (0.2%). BLS revenues for the year ended December 31, 2023, were $2,774.2, an increase of 2.9% over revenues of $2,697.3 in the corresponding period in 2022.
Price/mix increased by 2.5% due to organic Base Business growth of 2.1% and acquisitions, net of divestitures, of 1.0%, partially offset by a decrease in COVID-19 Testing of 0.5%. BLS revenues for the year ended December 31, 2024, were $2,922.6, an increase of 5.3% over revenues of $2,774.2 in the corresponding period in 2023.
The increase in selling, general and administrative expenses as a percentage of revenues is primarily due to a reduction in 56 Index COVID-19 Testing revenues, spin-off-related costs and higher personnel expenses, partially offset by the impact of the Ascension Management Services Agreement.
The increase in selling, general and administrative expenses as a percentage of revenues is primarily due to higher personnel costs, a reduction in COVID-19 Testing revenues, and the impact from the Invitae transaction, partially offset by LaunchPad savings and demand.
Corporate expenses were $644.1 for the year ended December 31, 2023, an increase of 37.4% over corporate expenses of $468.8 in the corresponding period of 2022, primarily due to spin-off transaction costs, personnel costs, bonus allocation, and research and development costs.
Corporate expenses were $670.8 for the year ended December 31, 2024, an increase of 4.1% over corporate expenses of $644.1 in the corresponding period of 2023, primarily due to higher costs related to acquisitions and personnel.
Other Commercial Commitments As of December 31, 2023, the Company provided letters of credit aggregating approximately $91.3, primarily in connection with certain insurance programs which are renewed annually.
At December 31, 2024, the Company had provided letters of credit aggregating approximately $102.7, primarily in connection with certain insurance programs which are renewed annually.
Critical Accounting Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods. 61 Index While the Company believes these estimates are reasonable and consistent, they are by their very nature estimates of amounts that will depend on future events.
CRITICAL ACCOUNTING ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles in the U.S., requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reported periods.
The increase was due to acquisitions of 2.3% and higher organic revenue of 0.2%, partially offset by unfavorable foreign currency translation of 0.2%. The 0.2% increase in organic revenue was due to a 10.7% contribution from organic Base Business, partially offset by a 10.5% decrease in COVID-19 Testing.
The increase was due to organic revenue of 4.1% and acquisitions, net of divestitures of 3.7%. The 4.1% increase in organic revenue was due to a 5.4% contribution from organic Base Business, partially offset by a 1.3% decrease in COVID-19 Testing. Total Base Business growth compared to the Base Business in the prior year was 9.2%.
Revenues are distributed among four payer portfolios - clients, patients, Medicare and Medicaid and third party. Dx considers negotiated discounts and anticipated adjustments, including historical collection experience for the payer portfolio, when revenues are recorded.
The Dx segment also enters into lab management agreements which have monthly and non-testing-based fees which are recognized each month as the services are provided. Revenues are distributed among four payer portfolios —clients, patients, Medicare and Medicaid, and third party. Dx considers negotiated discounts and anticipated adjustments, including historical collection experience for the payer portfolio, when revenues are recorded.
Selling, General and Administrative Expenses Years Ended December 31, Change 2023 2022 2021 2023 2022 Selling, general and administrative expenses $ 2,021.4 $ 1,763.1 $ 1,690.3 14.7 % 4.3 % SG&A as a % of revenues 16.6 % 14.9 % 12.9 % Selling, general and administrative expenses as a percentage of revenues increased to 16.6% in 2023 compared to 14.9% in 2022.
Selling, General and Administrative Expenses Year Ended December 31, 2024 2023 Change Selling, general and administrative expenses $ 2,230.0 $ 2,021.4 10.3 % SG&A as a % of revenues 17.1 % 16.6 % Selling, general and administrative expenses as a percentage of revenues increased to 17.1% for the year ended December 31, 2024, as compared to 16.6% for the corresponding period in 2023.
The Company expects capital expenditures in 2024 to be approximately 3.5% of revenues, primarily in connection with projects to support growth in the Company's core businesses, facility updates, projects related to LaunchPad, and further acquisition integration initiatives.
The Company expects this level of spending to remain consistent in 2025, primarily in connection with projects to support growth in the Company’s core businesses, facility expansion and updates, projects related to its LaunchPad initiative, and further acquisition integration initiatives.
Other, Net Years Ended December 31, Change 2023 2022 2021 2023 2022 Other, net $ 15.5 $ (32.2) $ 15.5 (148.1) % (307.7) % The change in Other, net for the year ended December 31, 2023, as compared to the year ended December 31, 2022, was primarily due to $46.1 of transition services fees charged to Fortrea related to administrative and information technology systems support.
Other, Net Year Ended December 31, 2024 2023 Change Other, net $ 60.2 $ 15.5 288.4 % Other, net for the year ended December 31, 2024, was primarily due to $80.0 of transition services fees charged to Fortrea related to administrative and IT systems support.
The Company's senior unsecured revolving credit facility is further discussed in Note 11 Debt to the Company's Consolidated Financial Statements. 59 Index In summary the Company's cash flows were as follows: For the Year Ended December 31, 2023 2022 2021 Net cash provided by continuing operating activities $ 1,202.3 $ 1,764.8 $ 2,846.3 Net cash used for continuing investing activities (1,146.8) (1,599.6) (845.7) Net cash used for continuing financing activities (1,559.0) (1,322.2) (2,065.8) Effect of exchange rate on changes in cash and cash equivalents 9.9 (24.2) (7.3) Net cash impact from discontinued operations 1,600.4 138.5 224.4 Net change in cash and cash equivalents $ 106.8 $ (1,042.7) $ 151.9 Cash and Cash Equivalents Cash and cash equivalents at December 31, 2023 and 2022 totaled $536.8 and $320.6, respectively.
In summary the Company’s cash flows were as follows: Year Ended December 31, 2024 2023 Net cash provided by continuing operating activities $ 1,585.8 $ 1,202.3 Net cash used for continuing investing activities (1,366.8) (1,146.8) Net cash provided by (used for) continuing financing activities 779.9 (1,559.0) Effect of exchange rate on changes in cash and cash equivalents (17.0) 9.9 Net cash impact from discontinued operations — 1,600.4 Net change in cash and cash equivalents $ 981.9 $ 106.8 Cash and Cash Equivalents Cash and cash equivalents at December 31, 2024, and 2023 totaled $1,518.7 and $536.8, respectively.
Goodwill and Other Asset Impairments Years Ended December 31, Change 2023 2022 2021 2023 2022 Goodwill and other asset impairments $ 349.0 $ 261.7 $ — 33.4 % — % The 2023 impairment charges were primarily comprised of $333.6 of goodwill impairment for the Early Development reporting unit, which is part of the BLS segment.
The impairment charges for the year ended December 31, 2023, were primarily comprised of $333.6 of goodwill impairment for the ED reporting unit, which is part of the BLS segment.
Income Tax Expense Years Ended December 31, 2023 2022 2021 Income tax expense $ 188.5 $ 233.9 $ 690.0 Income tax expense as a % of income before tax 33.1 % 18.9 % 23.9 % The increase in effective tax rate as compared with the prior year is primarily attributable to the unfavorable impact of current year goodwill impairment of the early development reporting unit.
Provision for Income Taxes Year Ended December 31, 2024 2023 Income tax expense $ 212.4 $ 188.5 Income tax expense as a % of income before tax 22.1 % 33.1 % The decrease in effective tax rate as compared with the prior year is primarily attributable to the unfavorable impact of the prior year goodwill impairment of the ED reporting unit, while no goodwill impairment was recognized during the year ended December 31, 2024.
The decrease was primarily due to lower organic revenue of 12.1% and unfavorable foreign currency translation of 0.1%, partially offset by acquisitions of 1.1%. The 12.1% decrease in organic revenue was due to a 15.6% decrease in COVID-19 Testing, partially offset by a 3.4% increase in organic Base Business.
The 3.9% increase in organic revenue was due to a 4.9% increase in the Company’s organic Base Business (Base Business includes the Company’s business operations except for COVID-19 Testing), partially offset by a 1.0% decrease in COVID-19 Testing. The Company defines organic growth as the increase in revenue excluding the year over year impact of acquisitions, divestitures, and currency.
BLS operating income was $396.3 for the year ended December 31, 2023, an increase of 1.8% from operating income of $389.1 in the corresponding period of 2022, and BLS operating margin decreased 10 basis points year over year.
The decrease in operating margin was primarily due to higher personnel costs, partially offset by organic demand. BLS operating income was $458.9 for the year ended December 31, 2024, an increase of 15.8% from operating income of $396.3 in the corresponding period of 2023, and BLS operating margin increased 140 basis points year over year.
Years ended December 31, 2023, 2022, and 2021 Revenues Years Ended December 31, Change 2023 2022 2021 2023 2022 Dx $ 9,415.1 $ 9,203.5 $ 10,363.6 2.3 % (11.2) % BLS 2,774.2 2,697.3 2,860.7 2.9 % (5.7) % Intercompany eliminations (27.7) (36.9) (88.2) (24.9) % (58.2) % Total $ 12,161.6 $ 11,863.9 $ 13,136.1 2.5 % (9.7) % The 2.5% increase in revenues for the year ended December 31, 2023, as compared to the corresponding period in 2022 was due to acquisitions, net of divestitures of 1.7%, organic revenue of 0.6%, and favorable foreign currency translation of 0.2%.
Revenues Year Ended December 31, 2024 2023 Change Dx $ 10,144.3 $ 9,415.1 7.7 % BLS 2,922.6 2,774.2 5.3 % Intercompany eliminations and other (58.0) (27.7) 109.4 % Total $ 13,008.9 $ 12,161.6 7.0 % Dx revenues for the year ended December 31, 2024, were $10,144.3, an increase of 7.7% compared to revenues of $9,415.1 in the corresponding period in 2023.
Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (all amounts in millions, except per share amounts or as otherwise noted) General During the year ended December 31, 2023, the Company's revenues from continuing operations were $12.2 billion, an increase of 2.5% from $11.9 billion in 2022.
Item 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL (dollars in millions) For the year ended December 31, 2024, the Company’s revenues were $13,008.9, an increase of 7.0% from $12,161.6 for the corresponding period in 2023.
Equity method income, net represents the Company's ownership share in joint venture partnerships along with equity investments in other companies in the health care industry. The decrease in income for 2022 as compared with the corresponding period in 2021 was primarily due to the decreased profitability of the Company's joint ventures in 2022.
Equity Method Income, Net Year Ended December 31, 2024 2023 Change Equity method income, net $ (1.4) $ (1.4) — % Equity method income, net represents the Company’s ownership share in joint venture partnerships along with equity investments in other companies in the health care industry, which remained flat in the year ended December 31, 2024, as compared with the corresponding period in 2023.
Capital expenditures were $453.6, $429.3, and $421.5 for the years ended December 31, 2023, 2022, and 2021, respectively. Capital expenditures in 2023 were 3.7% of revenues, primarily in connection with projects to support growth in the Company's core businesses.
Capital expenditures in 2024 were 3.8% of revenues, primarily in connection with projects to support growth in the Company’s core businesses.
Revenue Recognition Dx Within the Dx segment, a revenue transaction is initiated when Dx receives a requisition order to perform a diagnostic test. The information provided on the requisition form is used to determine the party that will be billed for the testing performed and the expected reimbursement.
The information provided on the requisition form is used to determine the party that will be billed for the testing performed and the expected reimbursement. Dx recognizes revenue and satisfies its performance obligation for services rendered when the testing process is complete, and the associated results are reported.
Management performed its annual goodwill and intangible asset impairment testing as of the beginning of the fourth quarter of 2023.
Management performed its annual goodwill and indefinite-lived intangible asset impairment testing as of the beginning of the fourth quarter of 2024. The Company elected to perform a quantitative assessment for goodwill and indefinite-lived intangible assets for each of its reporting units.
The Company defines organic growth as the increase in revenue excluding the year over year impact of acquisitions, divestitures, and currency. Acquisition and divestiture impact is considered for a twelve-month period following the close of each transaction. On June 30, 2023, the Company completed the previously announced spin-off of Fortrea from the Company.
Acquisition and divestiture impact is considered for a twelve-month period following the close of each transaction. Separation of Fortrea Holdings Inc. On June 30, 2023, Labcorp completed the previously announced separation (Spin-off) of its former Clinical Development and Commercialization Services (CDCS) business into Fortrea.
The $562.5 decrease in cash provided from operations in 2023 as compared with the corresponding 2022 period was primarily due to l ower COVID-19 Testing earnings, spin-off related items and higher working capital, partially offset by increased Base Business earnings.
The $383.5 increase in cash provided from operations in 2024, as compared with the corresponding 2023 period, was primarily due to higher cash earnings and favorable working capital requirements.
Amortization of Intangibles and Other Assets Years Ended December 31, Change 2023 2022 2021 2023 2022 Amortization of intangibles and other assets $ 219.8 $ 193.6 $ 229.5 13.5 % (15.6) % The increase in amortization of intangibles and other assets for the year ended December 31, 2023 is primarily due to the impact of acquisitions.
Amortization of Intangibles and Other Assets Year Ended December 31, 2024 2023 Change Amortization of intangibles and other assets $ 256.4 $ 219.8 16.7 % The increase in amortization of intangibles and other assets primarily reflects additional amortization for assets acquired subsequent to December 31, 2023.
The $753.9 increase in net cash used by investing activities for the year ended December 31, 2022 as compared to the year ended December 31, 2021, was primarily due to a year over year increase of $667.1 in cash paid for acquisitions and a year over year decrease in proceeds from sale of $85.9.
The increase in net cash used for investing activities for the year ended December 31, 2024 as compared to the year ended December 31, 2023, was primarily due to an increase in business acquisitions and higher capital expenditures. Capital expenditures were $489.9 and $453.6 for the years ended December 31, 2024, and 2023, respectively.
Cost of Revenues Years Ended December 31, Change 2023 2022 2021 2023 2022 Cost of revenues $ 8,796.7 $ 8,155.0 $ 8,143.7 7.9 % 0.1 % Cost of revenues as a % of revenues 72.3 % 68.7 % 62.0 % Cost of revenues increased 7.9% in 2023 as compared with 2022 and increased as a percentage of revenues to 72.3% in 2023 as compared to 68.7% in 2022.
The increase in revenues was primarily due to organic growth of 4.3% and favorable foreign currency translation of 1.1%. 49 Index Cost of Revenues Year Ended December 31, 2024 2023 Change Cost of revenues $ 9,384.5 $ 8,796.7 6.7 % Cost of revenues as a % of revenues 72.1 % 72.3 % Cost of revenues increased 6.7% for the year ended December 31, 2024, as compared with corresponding period in 2023, and decreased as a percentage of revenues to 72.1% for the year ended December 31, 2024, as compared to 72.3% for corresponding period in 2023.
Accordingly, actual results could differ from these estimates. The Company’s Audit Committee periodically reviews the Company’s significant accounting policies. The Company’s critical accounting policies arise in conjunction with the following: • Revenue recognition; • Business combinations; • Income taxes; • Goodwill and indefinite-lived assets; and • Legal contingencies.
The Company’s critical accounting policies arise in conjunction with the following: • Revenue recognition; • Business combinations; • Income taxes; • Goodwill and indefinite-lived assets; and • Legal contingencies. 54 Index Revenue Recognition Dx Within the Dx segment, a revenue transaction is initiated when Dx receives a requisition form to perform a diagnostic test.
The Company was in compliance with all covenants under the revolving credit facility at December 31, 2023, and expects that it will remain in compliance with its existing debt covenants for the next twelve months. During 2023, the Company repurchased 4.8 shares of its Common Stock at an average price per share of $206.85 for a total cost of $1,000.0.
The Company was in compliance with all covenants under the credit facilities and the indentures related to the Company’s outstanding senior notes as of December 31, 2024. The Company expects that it will remain in compliance with all covenants associated with its existing debt obligations for the next twelve months.
Credit Ratings The Company’s investment grade debt ratings from Moody’s and Standard & Poor's (S&P) contribute to its ability to access capital markets. Off-Balance Sheet Arrangements The Company does not have transactions or relationships with “special purpose” entities, and the Company does not have any off-balance sheet financing other than normal operating leases and letters of credit.
Credit Ratings The investment grade debt ratings from Moody’s and S&P contribute to the Company’s ability to access capital markets.
Interest Expense Years Ended December 31, Change 2023 2022 2021 2023 2022 Interest expense $ 199.6 $ 179.8 $ 211.8 11.0 % (15.1) % The increase in interest expense for 2023 as compared with the corresponding period in 2022 is primarily due to the increased interest rates on variable rate debt and higher borrowings under the Credit Facility.
The charges were adjusted by the reversal of previously established liability of $1.7 in unused severance and $4.9 in unused facility-related costs. 50 Index Interest Expense Year Ended December 31, 2024 2023 Change Interest expense $ 208.3 $ 199.6 4.4 % The increase in interest expense for the year ended December 31, 2024, as compared with the corresponding period in 2023 is primarily due to higher borrowings under its revolving credit facility, senior notes, and the new accounts receivable securitization facility.
Impairment charges for the year ended December 31, 2022 included $260.0 of goodwill impairment for the Early Development reporting unit and the impairment of a technology intangible asset. There were no goodwill and other asset impairments for the year ended December 31, 2021.
Goodwill and Other Asset Impairments Years Ended December 31, 2024 2023 Change Goodwill and other asset impairments $ 5.3 $ 349.0 (98.5) % The impairment charges for the year ended December 31, 2024, were primarily due to the decommissioning of an information system and a robotic asset.
This movement in cash within financing activities for 2023, as compared to 2022, was primarily a result of $1,000.0 of share repurchases and $300.0 in senior note repayments in 2023 compared to $1,100.0 of share repurchases in 2022 and the commencement of quarterly dividend payments in the second quarter of 2022.
This movement in cash within financing activities for 2024, as compared to 2023, was primarily due to $2,000.0 of proceeds from new debt securities and $300.0 of proceeds from the new accounts receivable facility described below, partially offset by $1,000.0 of payments towards the Company’s senior notes, $250.1 of share repurchases, and $243.1 of dividends paid, compared to $1,000.0 of share repurchases and $300.0 of payments towards the Company’s senior notes, and $254.0 of dividends paid in 2023. 52 Index On September 23, 2024, LCAH (the Issuer) entered into a base indenture with U.S.
Removed
The 0.6% increase in organic revenue was due to an 8.7% increase in the 54 Company's organic Base Business (Base Business includes the Company's business operations except for COVID-19 PCR and antibody testing (COVID-19 Testing)), partially offset by an 8.1% decrease in COVID-19 Testing.
Added
For discussion of 2023 results and comparison with 2022 results refer to “ Management ’ s Discussion and Analysis of Financial Conditions and Results of Operations ” in the Company ’ s Annual Report on Form 10-K for the year ended December 31, 2023 .
Removed
The spin-off of Fortrea was achieved through the Company’s pro-rata distribution of 100% of the outstanding shares of Fortrea Common Stock to holders of record of Labcorp Common Stock.
Added
The costs to provide these services are included in operating income, but the service fees are included in other income. In addition, the Company recorded a $6.4 gain related to the divestiture of Beacon Laboratory Benefit Solutions, Inc. This income was partially offset by foreign currency transaction losses of $15.3 and an $11.4 loss on investments.
Removed
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.
Added
Other, net for the year ended December 31, 2023, was primarily due to $46.1 of transition services fees charged to Fortrea related to administrative and IT systems support, partially offset by pension plan settlement charges of $10.9 and a $4.8 loss on investments.
Removed
In June 2023, Fortrea, prior to the spin-off and while a subsidiary of the Company, issued $570.0 of 7.500% senior secured notes due 2030 (the Fortrea Notes). The proceeds from the Fortrea Notes were used to fund cash payments of approximately $1,600.0 to the Company in connection with the spin-off.
Added
The Company’s senior unsecured revolving credit facility is further discussed in Note 11 Debt to the Company’s Consolidated Financial Statements.
Removed
The Company does not guarantee the Fortrea Notes following the spin-off. Also in June 2023, Fortrea Holdings Inc. 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.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeThe Company is party to USD to Swiss Franc cross-currency swap agreements with a notional amount of $600.0, maturing in 2024 and 2025, as a hedge against the impact of foreign exchange movements on its net investment in its Swiss Franc functional currency subsidiary. Interest Rates Some of the Company's debt is subject to interest at variable rates.
Biggest changeThe Company is a party to USD to Swiss Franc cross-currency swap agreements with an aggregate notional amount of $1,200.0, $300.0 maturing in 2029, $300.0 maturing in 2031 and $600.0 maturing in 2034, as a hedge against the impact of foreign exchange movements on its net investment in a Swiss Franc functional currency subsidiary.
The Company's financial statements are reported in USD and, accordingly, fluctuations in exchange rates will affect the translation of revenues and expenses denominated in foreign currencies into USD for purposes of reporting the Company's consolidated financial results. In both 2023 and 2022, the most significant currency exchange rate exposures were to the Canadian dollar, Swiss franc, euro and British pound.
The Company’s Consolidated Financial Statements are reported in USD and, accordingly, fluctuations in exchange rates will affect the translation of revenues and expenses denominated in foreign currencies into USD for purposes of reporting the Company’s consolidated financial results. In 2024 and 2023, the most significant currency exchange rate exposures were to the Canadian Dollar, Swiss Franc, Euro, and British Pound.
As a result, fluctuations in interest rates affect the Company's financial results. The Company attempts to manage interest rate risk and overall borrowing costs through an appropriate mix of fixed and variable rate debt including the utilization of derivative financial instruments, primarily interest rate swaps.
Interest Rates Some of the Company’s debt is subject to interest at variable rates. As a result, fluctuations in interest rates affect the Company’s financial results. The Company attempts to manage interest rate risk and overall borrowing costs through an appropriate mix of fixed and variable rate debt, including the utilization of derivative financial instruments, primarily interest rate swaps.
The Company does not hold or issue derivative financial instruments for trading purposes. Foreign Currency Exchange Rates Approximately 12.9% and 13.8% of the Company's revenues for the year ended December 31, 2023 and 2022, respectively, were denominated in currencies other than the U.S. dollar (USD).
The Company does not hold or issue derivative financial instruments for trading purposes. 58 Index Foreign Currency Exchange Rates Approximately 13.7% and 12.9% of the Company’s revenues for the year ended December 31, 2024, and 2023, respectively, were denominated in currencies other than the U.S. dollar (USD).
Excluding the impacts from any outstanding or future hedging transactions, a hypothetical change of 10% in average exchange rates used to translate all foreign currencies to USD would have impacted income before income taxes for 2023 by approximately $24.1.
Excluding the impacts from any outstanding or future hedging transactions, a hypothetical change of 10% in average exchange rates used to translate all foreign currencies to USD would have impacted income before income taxes for 2024 by approximately $27.4.
In May, 2021, to hedge against changes in the fair value portion of the Company's long-term debt, the Company entered into fixed-to-variable interest rate swap agreements for the 2.70% senior notes due 2031 with an aggregate notional value of $500.0 and variable interest rates based on three-month LIBOR (changed to SOFR in 2023) plus 1.0706%. 66 Index
In May 2021, to hedge against changes in the fair value portion of the Company’s long-term debt, the Company entered into fixed-to-variable interest rate swap agreements for the 2.70% senior notes due 2031 with an aggregate notional value of $500.0 and variable interest rates based on three-month London Interbank Offered Rate (LIBOR), which changed to Secured Overnight Financing Rate (SOFR) in 2023, plus 1.0706%.
Gross accumulated currency translation adjustments recorded as a separate component of shareholders’ equity were $183.1 and $(336.4) at December 31, 2023, and 2022, respectively. The Company does not have significant operations in countries in which the economy is considered to be highly inflationary.
Accumulated currency translation adjustments recorded as a separate component of Shareholders’ equity were $(217.1) and $183.1 for the years ended December 31, 2024, and 2023, respectively. The Company does not have significant operations in countries in which the economy is considered to be highly inflationary.
At December 31, 2023, the Company had 9 open foreign exchange forward contracts with various amounts maturing monthly through January 2024 with a notional value totaling approximately $305.8. At December 31, 2022, the Company had 27 open foreign exchange forward contracts with various amounts maturing monthly through January 2023 with a notional value totaling approximately $629.5.
At December 31, 2024, the Company had 12 open foreign exchange forward contracts with various amounts maturing monthly through January 2025 with a notional value totaling approximately $302.4. At December 31, 2023, the Company had 9 open foreign exchange forward contracts with various amounts maturing monthly through January 2024 with a notional value totaling approximately $305.8.

Other LH 10-K year-over-year comparisons