Labcorp Holdings (LH) 10-K risk factor changes: FY2019 vs FY2018

[removed: Changes] [added: Changes] in payer regulations or policies (or in the interpretation of current regulations or policies), insurance regulations or approvals, or changes in other laws, regulations or policies in the United States (U.S.), may adversely affect U.S. governmental and third-party coverage or reimbursement for clinical laboratory testing and may have a material adverse effect upon the [removed: Company.][added: Company.]

The first phase of reductions pursuant to the Protecting Access to Medicare Act (PAMA) came into effect on January 1, 2018, and will continue annually subject to certain phase-in limits through [removed: 2023,] [added: 2025,] and without limitations for subsequent periods.

[removed: The] [added: The] Company could face significant monetary damages and penalties and/or exclusion from government programs if it violates anti-fraud and abuse [removed: laws.][added: laws.]

[removed: This risk includes, but is not limited to, the potential that government enforcement] authorities may take a contrary position with respect to the Eliminating Kickbacks in Recovery Act (EKRA), given its recent passage and lack of associated regulations to clarify or add exceptions.

[removed: The] [added: The] Company’s business could be harmed from the loss or suspension of a license or imposition of a fine or penalties under, or future changes in, or interpretations of, the law or regulations of the Clinical Laboratory Improvement Act of 1967, and the Clinical Laboratory Improvement Amendments of 1988 (CLIA), or those of Medicare, Medicaid or other national, state or local agencies in the U.S. and other countries where the Company operates [removed: laboratories.][added: laboratories.]

[removed: U.S.] [added: U.S.] Food and Drug Administration (FDA) regulation of diagnostic products and increased FDA regulation of laboratory-developed tests (LDTs) could result in increased costs and the imposition of fines or penalties, and could have a material adverse effect upon the Company’s [removed: business.][added: business.]

[removed: Failure] [added: Failure] to comply with U.S., state, local or international environmental, health and safety laws and regulations, including the U.S. Occupational Safety and Health Administration Act and the U.S. Needlestick Safety and Prevention Act, could result in fines and penalties and loss of licensure, and have a material adverse effect upon the Company’s [removed: business.][added: business.]

[removed: Failure] [added: Failure] to comply with privacy and 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 [removed: business.][added: business.]

On June 28, 2018, the California legislature passed the California Consumer Privacy Act (CCPA), which [removed: becomes] [added: was] effective January 1, 2020.

The CCPA [removed: creates] [added: created] new transparency requirements and [removed: grants] [added: granted] California residents several new rights with regard their personal information.

The Company [removed: is executing on a plan] [added: implemented processes] to [removed: support] [added: manage] compliance with the CCPA.

In addition, similar data protection regulations addressing access, use, disclosure and transfer of personal data have been enacted or updated in countries where the Company does [removed: business] [added: business, including] in Asia, Latin America, Canada and Europe.

[removed: Failure] [added: 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 [removed: actions.][added: actions.]

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, [removed: storage] [added: storage,] and transmission of customer personal and financial information.

[removed: Discontinuation] [added: Discontinuation] or recalls of existing testing products; failure to develop or acquire licenses for new or improved testing technologies; or the Company’s customers using new technologies to perform their own tests could adversely affect the Company’s [removed: business.][added: business.]

[removed: 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.

[removed: Healthcare] [added: Healthcare] reform and changes to related products (e.g., health insurance exchanges), changes in government payment and reimbursement systems, or changes in payer mix, including an increase in capitated reimbursement mechanisms and evolving delivery models, could have a material adverse effect on the Company's [removed: net] revenues, profitability and cash [removed: flow.][added: flow.]

Increases in the percentage of services billed to government and MCOs could have an adverse effect on the Company’s [removed: net] revenues.

For the year ended December 31, [removed: 2018,] [added: 2019,] such capitated contracts accounted for approximately [removed: $279.3] [added: $298.0] million, or [removed: 4.0%,] [added: 4.3%,] of LCD's revenues.

These issues (particularly payer policy changes) and changes in coverage had a negative impact on revenue, revenue per requisition, and margins and cash flows [added: beginning] in [removed: 2014 through 2018,] [added: 2014,] and are expected to have a continuing negative impact.

Limited coding and billing changes related to other procedure types were implemented in [removed: 2018,] [added: 2018] and [removed: further changes are expected to be implemented in] 2019.

[removed: The] [added: While limited changes are expected to be implemented in 2020, the] Company expects some [removed: continued] delays in [removed: the] pricing and implementation of these new codes.

Some of these programs address commercial laboratory testing broadly, while others are focused on [removed: molecular and] [added: certain types of testing such as molecular,] genetic [added: and toxicology] testing.

[removed: If LCD cannot offset additional reductions in the payments it receives for] its services by reducing costs, increasing test volume, and/or introducing new services and procedures, it could have a material adverse effect on the Company’s [removed: net] revenues, profitability and cash flows.

CMS used that private market data to calculate weighted median prices for each test (based on applicable current procedural technology (CPT) codes) to represent the new CLFS rates beginning in 2018, subject to certain phase-in [removed: limits.][added: limits, which were revised by Congress in 2019.]

The process of data reporting and repricing will be repeated every three years for Clinical Diagnostic Laboratory Tests [removed: (CDLTs).][added: (CDLTs) beginning in 2021.]

[removed: The] [added: Under the current law, the] second data reporting period for CDLTs will occur during the first quarter of [removed: 2020,] [added: 2021 (based on data collected in 2019),] and new CLFS rates for CDLTs will be established based on that data beginning in [removed: 2021,] [added: 2022,] subject to the previously described phase-in limits for [removed: 2021-2023.][added: 2022-2023.]

The third data reporting period for CDLTs will occur during the first quarter of [removed: 2023,] [added: 2024,] and new CLFS rates for CDLTs will be established based on that data beginning in [removed: 2024.][added: 2025.]

For [removed: 2018,] [added: 2019,] the Company realized a net reduction in reimbursement of approximately [removed: $70.0] [added: $107.0] million from all payers affected by the [removed: CLFS.][added: CLFS (approximately $70.0 million in 2018).]

Unless [removed: further] implementation of PAMA is [added: further] delayed or changed, an additional reduction of approximately [removed: $115] [added: $90.0] million is expected for [removed: 2019,] [added: 2020,] from all payers affected by the CLFS.

[removed: Changes] [added: Changes] in government regulation or in practices relating to the biopharmaceutical industry could decrease the need for certain services that Covance Drug Development (CDD) [removed: provides.][added: provides.]

[removed: Failure] [added: Failure] to comply with the regulations of drug regulatory agencies, such as the FDA, the Medicines and Healthcare products Regulatory Agency in the United Kingdom (U.K.), the European Medicines Agency, the [added: National Medical Products Administration in] China [removed: Food and Drug Administration,] [added: (NMPA),] and the Pharmaceuticals and Medical Devices Agency in Japan, could result in sanctions and/or remedies against CDD and have a material adverse effect upon the [removed: Company.][added: Company.]

If CDD does not comply, CDD could potentially be subject to civil, criminal or administrative sanctions and/or remedies, including suspension of its ability to [added: conduct preclinical and clinical studies, and to] import or export to or from certain countries, which could have a material adverse [removed: effect upon the Company.]

Additionally, certain CDD services and activities must conform to current good manufacturing practice [removed: (cGMP),] [added: GMP,] as further described in Item 1 of Part I of this report.

Failure to maintain compliance with GLP, GCP, or [removed: cGMP] [added: GMP] regulations and other applicable requirements of various regulatory agencies could result in warning or untitled letters, fines, unanticipated compliance expenditures, suspension of manufacturing, and civil, criminal or administrative sanctions and/or remedies against CDD, including suspension of its laboratory operations, which could have a material adverse effect upon the Company.

[removed: Increased] [added: Increased] competition, including price competition, could have a material adverse effect on the Company’s revenues and [removed: profitability.][added: profitability.]

CDD’s services have from time to time experienced periods of increased price competition that had an adverse effect on a segment's profitability and consolidated [removed: net] revenues and net income.

[removed: Failure] [added: Failure] to obtain and retain new customers, the loss of existing customers or material contracts, or a reduction in services or tests ordered or specimens submitted by existing customers, or the inability to retain existing and/or create new relationships with health systems could impact the Company’s ability to successfully grow its [removed: business.][added: business.]

In addition, a reduction in tests ordered or specimens submitted by existing customers, a decrease in demand for the Company's services from existing customers, or the loss of existing contracts, without offsetting growth in its customer base, could impact the Company's ability to successfully grow its business and could have a material adverse effect on the Company’s [removed: net] revenues and profitability.

[removed: Continued] [added: Continued] and increased consolidation of MCOs, biopharmaceutical companies, health systems, physicians and other customers could adversely affect the Company's [removed: business.][added: business.]

This risk includes, but is not limited to, the potential that government enforcement

[Index](#s04282097E1045C498119E1E4EA80E727)

On February 20, 2020, the FDA issued a statement with a table of pharmacogenetic associations setting forth certain gene-drug interactions that the agency has determined are supported by the scientific literature to help ensure that claims being made for pharmacogenetic tests are grounded in sound science, thereby reducing the risk of enforcement actions with respect to LDTs offering claims consistent with the table.

The FDA noted that while it is committed to work with Congress on new comprehensive diagnostic oversight reform legislation, it could still take enforcement actions under the current medical device framework regarding diagnostic claims the agency determines not to be sufficiently supported.

Even without issuance of a finalized LDT oversight framework, in light of the April 4, 2019, FDA warning letter issued to Inova Genomics Laboratory related to certain LDTs that Inova offered, as well as the February 2020 pharmacogenetics statement, there may be an increased risk of FDA enforcement actions for laboratory tests offered by companies without FDA clearance or approval.

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In addition, California residents have the right to bring a private right of action in connection with certain types of incidents.

These claims may result in significant liability and potential damages.

[Index](#s04282097E1045C498119E1E4EA80E727)

For example, in connection with the AMCA Incident the Company has incurred, and expects to continue to incur, costs, and the Company is involved in pending and threatened litigation, as well as various government and regulatory inquiries and processes.

For additional information about the AMCA Incident, see Note 16 Commitments and Contingencies to the Consolidated Financial Statements.

The Company depends on third parties to provide services critical to the Company's business, and depends on them to comply with applicable laws and regulations.

Additionally, any breaches of 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.

Third parties that provide services to the Company are subject to similar risks related to security of customer-related information and compliance with U.S., state, local, or international environmental, health and safety, and privacy and security laws and regulations as the Company.

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.

In addition, third parties to whom the Company outsources certain services or functions may process personal data, or other confidential information of the Company.

A breach or attack affecting these third parties could also harm the Company's business, results of operations and reputation.

Increased approval of “waived” test kits could

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If LCD cannot offset additional reductions in the payments it receives for

[Index](#s04282097E1045C498119E1E4EA80E727)

[Index](#s04282097E1045C498119E1E4EA80E727)

effect upon the Company.

[Index](#s04282097E1045C498119E1E4EA80E727)

[Index](#s04282097E1045C498119E1E4EA80E727)

or in the event that the damages and costs exceed CDD's insurance coverage.

CDD may also be required to agree to contract provisions with clinical trial sites or its customers related to the conduct of clinical trials, and CDD could be materially and adversely affected if it were required to indemnify a site or customer against claims pursuant to such contract terms.

| • | Weather; |

[Index](#s04282097E1045C498119E1E4EA80E727)

The same is true for patient-facing staff with specialized training required to perform activities related to specimen collection or clinical research activities.

Changes in key management, or the ability to attract and retain qualified personnel, could lead to strategic and operational challenges and uncertainties, distractions of management from other key initiatives, and inefficiencies and increased costs, any of which could adversely affect the Company’s business, financial condition, results of operations, and cash flows.

[Index](#s04282097E1045C498119E1E4EA80E727)

administrative policies that can further increase patient costs.

The Company has also experienced and expects to continue to experience similar attempts to attack and penetrate the systems of third-party suppliers and vendors to whom the Company has provided data, like the 2019 data breach of Retrieval-Masters Credit Bureau, Inc. d/b/a/ American Medical Collections Agency (AMCA).

The Company has robust information security procedures and other safeguards in place, including evaluating the cybersecurity status of third-party suppliers and vendors that will have access to the Company’s data or information technology systems, which are monitored and routinely tested internally and by external parties.

[Index](#s04282097E1045C498119E1E4EA80E727)

potential liability for the Company, damage the Company’s brand and reputation or otherwise harm the Company’s business.

Operations may be disrupted and adversely impacted by the effects of natural disasters, political crises, public health crises, and other events outside of the Company's control.

Natural disasters, such as adverse weather, fires, earthquakes, power shortages and outages, political crises, such as terrorism, war, political instability, or other conflict, criminal activities, public health crises, such as coronavirus (COVID-19) and disease epidemics and pandemics, and other disruptions or events outside of the Company’s control could negatively affect the Company’s operations.

[Index](#s17B4D0940D675D7FA89D0680B4EFBBDE)

The Company supports the efforts of the American Clinical Laboratory Association (ACLA) to work with Congress on potential legislative reform of PAMA, which if enacted could reduce the negative impact of PAMA as implemented by CMS.

Services performed by LCD’s former nutritional chemistry and food safety business and future developments of point-of-production testing could expose the Company to various risks, including liability for errors and omissions in work conducted for LCD customers.

Until the sale of its Covance Food Solutions (CFS) business effective August 1, 2018, LCD offered a range of product-development and product-integrity services to food and beverage manufacturers and retailers, industry organizations and academic institutions.

These services exposed the Company to many of the same, or similar, risks that are applicable to other business activities of the Company, including with respect to the operations of its facilities and compliance with applicable laws and regulations.

The agricultural, food, beverage and dietary supplement industries face increasing regulatory requirements, including regulations issued under the Food Safety Modernization Act.

With these enhanced requirements on the Company’s customers, there is an increased risk that errors in or omissions from nutritional analysis and food safety tests previously conducted by the Company for its former customers could result in liability for the Company under customer contracts.

LCD is also exploring the possibility of developing point-of-production testing for food safety, and these services could expose the Company to similar risks.

CDD also breeds and sells animals for biomedical research.

set by these laws and regulations in the jurisdictions in which it conducts animal research.

The Company’s revenues and earnings could be adversely affected if a significant number of professionals terminate their relationship with the Company or become unable or unwilling to continue their employment.

Operations may be disrupted and adversely impacted by the effects of natural disasters such as adverse weather and earthquakes, acts of terrorism, or other criminal activities, or disease pandemics.

On December 22, 2017, the U.S. Tax Cuts and Jobs Act (TCJA) was passed into law.

The TCJA has given rise to significant one-time and ongoing changes to the taxes recognized and paid by the Company, and the full impact of the changes may only become fully understood over time.

of a strategic acquisition entails numerous risks, including, among others:

| • | Diversion of management's attention from the day-to-day business of the Company. |

In June 2016, a majority of voters in the U.K. elected to withdraw from the E.U. (often referred to as Brexit) in a national referendum.

Although the referendum was advisory, the current U.K. government is abiding by the referendum and is in negotiations to withdraw from the E.U. in the near future.

The terms of any withdrawal and future relations between the E.U. and the U.K. are not yet determined.

[removed: General][added: General]

During the year ended December 31, [removed: 2018,] [added: 2019,] the Company's revenue grew by [removed: 9.9%,] [added: 2.0%,] driven by [added: growth from] acquisitions of [removed: 7.6%,] [added: 2.3% and] organic growth of [removed: 2.7%, and] [added: 1.6% (which includes] the [removed: benefit of foreign currency translation] [added: negative impact from PAMA] of [removed: 30 basis points,] [added: 0.9%),] partially offset by the [removed: impact from divestitures] [added: disposition] of [removed: (0.7%).][added: businesses of 1.4% and negative foreign currency translation of 0.5%.]

Effective January 1, [removed: 2018,] [added: 2019,] the Company adopted Accounting Standards Codification [removed: ASC 606 Revenue from Contracts with Customers] [added: (ASC) 842 *Leases*] using the [removed: full] [added: modified] retrospective method.

The Company remains on track to deliver $150.0 of net savings from CDD's three-year LaunchPad initiative by the end of [removed: 2020, and $30.0 of cost synergies from the integration of Chiltern by the end of 2019.][added: 2020.]

The Company expects phase II of LCD’s LaunchPad initiative to deliver approximately $200.0 in net savings [removed: over] [added: by] the [removed: next three years,] [added: end of 2021,] while incurring approximately $40.0 in one-time implementation costs.

[removed: The Protecting Access to Medicare Act (PAMA)] [added: PAMA,] which [removed: became law on April 1, 2014, and] went into effect on January 1, 2018, resulted in a net reduction of revenue of approximately [added: $107.0 and] $70.0 in [removed: 2018] [added: 2019 and 2018, respectively] from all payers affected by the Clinical Lab Fee Schedule.

Unless further implementation of PAMA is delayed or changed, an additional reduction of approximately [removed: $115.0] [added: $90.0] is expected for [removed: 2019, from all payers affected by the Clinical Lab Fee Schedule.][added: 2020.]

[removed: Results] [added: Results] of [removed: Operations][added: Operations]

[removed: Years] [added: Years] ended December [removed: 31, 2018, 2017, and 2016][added: 31, 2019 and 2018]

[removed: Revenues][added: Revenues]

| | Years Ended December 31, | | | | | | | | | | [removed: | | Change | | | | |]

| | [removed: 2018 | | | | 2017 | | | | 2016] [added: 2019] | | | | 2018 | | | [added: |] 2017 | | [added: |]

The [removed: 9.9%] [added: 2.0%] increase in [removed: net revenue] [added: revenues] for the year ended December 31, [removed: 2018,] [added: 2019,] as compared with the corresponding period in [removed: 2017] [added: 2018] was [added: primarily] due to growth from acquisitions of [removed: 7.6%,] [added: 2.3%,] organic growth of [removed: 2.7%, and] [added: 1.6% (which includes] the [removed: benefit of] [added: negative impact] from [removed: foreign currency translation] [added: PAMA] of [removed: approximately 0.3%,] [added: 0.9%),] partially offset by [removed: a 0.7% decrease due to divestitures.][added: the disposition of businesses of 1.4% and negative foreign currency translation of 0.5%.]

LCD revenues for the year ended December 31, [removed: 2018,] [added: 2019,] were [removed: $7,030.8, an increase] [added: $7,000.1, a decrease] of [removed: 2.5%] [added: 0.4%] over revenues of [removed: $6,858.2] [added: $7,030.8] in the corresponding period in [removed: 2017.][added: 2018.]

CDD revenues for the year ended December 31, [removed: 2018,] [added: 2019,] were [removed: $4,313.1,] [added: $4,578.1,] an increase of [removed: 25.0%] [added: 6.1%] over revenues of [removed: $3,451.6] [added: $4,313.1] in the corresponding period in [removed: 2017.][added: 2018.]

The increase in [removed: revenue] [added: revenues] was [removed: primarily] due to [removed: acquisitions (including Chiltern),] [added: acquisitions,] which contributed growth of [removed: 17.5%,] [added: 4.1%,] an increase in organic growth of [removed: 6.6% and a favorable impact from] [added: 3.8%, partially offset by negative] foreign currency translation of approximately [removed: 0.9%.][added: 1.2% and a business disposition of 0.6%.]

[removed: LCD revenues] [added: Corporate expenses were $167.3] for the year ended December 31, [removed: 2017, were $6,858.2,] [added: 2019,] an increase of [removed: 8.7%] [added: 15.7%] over [removed: revenues] [added: corporate expenses] of [removed: $6,307.6] [added: $144.6] in the corresponding period [removed: in 2016.][added: of 2018.]

[removed: Cost] [added: Cost] of [removed: Revenues][added: Revenues]

| Cost of revenues as a % of revenues | [removed: 72.0 | | % | | 70.0] [added: 71.9] | | % | | [removed: 70.1] [added: 72.0] | | % | | | | [removed: | | |]

Cost of revenues (primarily laboratory, labor and distribution costs) increased [removed: 13.0%] [added: 1.8%] in [removed: 2018] [added: 2019] as compared with [removed: 2017] [added: 2018] primarily due to acquisitions and organic volume growth.

Labor and testing supplies for the year ended December 31, [removed: 2018,] [added: 2019,] comprise over [removed: 70.7%] [added: 71.3%] of the Company’s cost of revenues.

Cost of revenues has increased over the [removed: three-year] [added: two-year] period ended December 31, [removed: 2018,] [added: 2019,] primarily due to the impact of acquisitions, overall growth in the Company's volume, and increases in merit-based labor costs.

[removed: Selling,] [added: Selling,] General and Administrative [removed: Expenses][added: Expenses]

| Selling, general and administrative expenses | $ | [removed: 1,570.9 | | | $ | 1,499.2] [added: 1,624.5] | | | $ | [removed: 1,345.5 | | | 4.8] [added: 1,570.9] | [removed: %] | | [removed: 11.4] [added: 3.4] | % |

| SG&A as a % of revenues | [removed: 13.9 | | % | | 14.5] [added: 14.1] | | % | | [removed: 14.1] [added: 13.9] | | % | | | | [removed: | | |]

Selling, general and administrative expenses as a percentage of [removed: net] revenues [removed: decreased] [added: increased] to [removed: 13.9%] [added: 14.1%] in [removed: 2018] [added: 2019] compared to [removed: 14.5%] [added: 13.9%] in [removed: 2017.][added: 2018.]

The [removed: decrease] [added: increase] in selling, general and administrative expenses as a percentage of revenues is primarily due to [removed: LaunchPad savings] [added: acquisitions] and [removed: acquisition synergies.][added: cybersecurity investments.]

[removed: The] [added: During 2018, the] Company incurred integration and other costs of $54.7 primarily relating to the Chiltern acquisition and the sale of the [removed: CFS] [added: Covance Food Solutions] business.

The Company also recorded $9.6 in consulting expenses relating to the Chiltern integration and management integration costs along with a special one-time bonus of $31.1 ($6.3 of which was recorded in selling, general and administrative expenses) to its non-bonus eligible employees in recognition of the benefits the Company [removed: is receiving] [added: received] from the passage of the TCJA.

Excluding these charges, selling, general and administrative expenses as a percentage of revenues were [removed: 13.6%] [added: 13.3%] for the year ended December 31, [removed: 2017.][added: 2019.]

[removed: Amortization Expense][added: Amortization Expense]

| Amortization of intangibles and other assets | $ | [removed: 231.7 | | | $ | 216.5] [added: 243.2] | | | $ | [removed: 179.5 | | | 7.0] [added: 231.7] | [removed: %] | | [removed: 20.6] [added: 5.0] | % |

The increase in amortization of intangibles and other assets from [removed: 2016 through] 2018 [added: through 2019] primarily reflects the impact of acquisitions offset by the impact of business dispositions and working capital and earnout adjustments.

[removed: Restructuring] [added: Restructuring] and Other [removed: Special Charges][added: Charges]

| | Years Ended December 31, | | | | | | | | | | [removed: |]

| Restructuring and other [removed: special] charges | $ | [removed: 48.1] [added: 54.6] | | | $ | [removed: 70.9 |] [added: 48.1] | | [removed: $] | [removed: 58.4] [added: 13.5] | [added: %] |

The charges were comprised of $40.3 in severance and other personnel costs and $11.8 in facility-related costs primarily associated with general [removed: integration activities.]

During [removed: 2017,] [added: 2019,] the Company recorded net restructuring charges of [removed: $70.9; $16.8] [added: $54.6; $26.7] within LCD and [removed: $54.1] [added: $27.9] within CDD.

The charges were offset by the reversal of previously established reserves of [removed: $0.5] [added: $1.7] in unused severance and [removed: $4.4] [added: $1.5] in unused facility-related costs.

The charges were comprised of [removed: $30.9 related to] [added: $32.9 in] severance and other personnel costs [removed: along with $33.8] [added: and $24.9] in [added: facility-related] costs [added: primarily] associated with [removed: facility closures.][added: general integration activities.]

On June 3, 2019, the Company's CDD segment completed the acquisition of Envigo's nonclinical contract research services business, expanding CDD's global nonclinical drug development capabilities with additional locations and resources.

Additionally, the Company divested the Covance Research Products (CRP) business, which was a part of the CDD segment, to Envigo.

As part of this sale, CDD entered into a multi-year, renewable supply agreement with Envigo.

The Company paid cash consideration of $601.0, received a floating rate secured note of $110.0, and recorded a loss on the sale of CRP of $12.2.

The Company funded the transaction through a new term loan facility.

During the year ended December 31, 2019, the Company also acquired various other businesses and related assets for approximately $286.4 in cash (net of cash acquired).

The Company is also exposed to risks related to information security arising from the information technology systems and operations of third parites, including thosse of the Company's vendors and partners.

For example, on May 14, 2019, Retrieval-Masters Credit Bureau, Inc. d/b/a/ American Medical Collections Agency (AMCA), an external collection agency, notified the Company about a security incident AMCA experienced that may have involved certain personal information about some of the Company's patients (the AMCA Incident).

The Company referred patient balances to AMCA only when direct collection efforts were unsuccessful.

The Company's systems were not impacted by the AMCA Incident.

Upon learning of the AMCA Incident, the Company promptly stopped sending new collection requests to AMCA and stopped AMCA from continuing to work on any pending collection requests on behalf of the Company.

AMCA informed the Company that it appeared that an unauthorized user had access to AMCA's system between August 1, 2018 and March 30, 2019, and that AMCA could not rule out the possibility that personal

information on AMCA's system was at risk during that time period.

Information on AMCA's affected system from the Company may have included name, address, and balance information for the patient and person responsible for payment, along with the patient's phone number, date of birth, referring physician, and date of service.

The Company was later informed by AMCA that health insurance information may have been included for some individuals, and because some insurance carriers utilize the Social Security Number as a subscriber identification number, the Social Security Number for some individuals may also have been affected.

No ordered tests, laboratory test results, or diagnostic infonnation from the Company were in the AMCA affected system.

The Company notified individuals for whom it had a valid mailing address.

For the individuals whose Social Security Number was affected, the notice included an offer to enroll in credit monitoring and identity protection services that will be provided free of charge for 24 months.

The Company has incurred, and expects to continue to incur, costs related to the AMCA Incident.

In addition, 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 16 Commitments and Contingencies to the Consolidated Financial Statements.

The Company elected the package of practical expedients, which includes not reassessing whether existing contracts contain leases under the new definition of a lease, reassessing the classification of existing leases, and reassessing whether previously capitalized initial direct costs qualify for capitalization under the new standard.

The Company also elected not to separate lease and non-lease components.

The adoption of this standard resulted in the recording of $778.1 of additional operating lease liabilities as of December 31, 2019.

The following tables present the financial measures that management considers to be the most significant indicators of the Company's performance.

For discussion of 2018 results and comparison with 2017 results refer to “Management's Discussion and Analysis of Financial Conditions and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2018.

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | |

| | 2019 | | | | 2018 | | | | Change | |

| LCD | $ | 7,000.1 | | | $ | 7,030.8 | | | (0.4 | )% |

| CDD | 4,578.1 | | | | 4,313.1 | | | | 6.1 | % |

| Intercompany eliminations | (23.4 | | ) | | (10.5 | | ) | | 122.9 | % |

| Total | $ | 11,554.8 | | | $ | 11,333.4 | | | 2.0 | % |

The decline in revenues was due to the negative impact from the disposition of businesses of 1.9% and negative currency translation of 0.1%, partially offset by acquisitions of 1.2% and organic revenue growth of 0.4% which includes the negative impact of lower reimbursement from PAMA of 1.5%.

Excluding pass-throughs, organic revenue grew mid-to-high single digits.

| | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | | | | | | | | |

| | 2019 | | | | 2018 | | | | Change | |

During 2018, the Company divested its Covance Food Solutions business and its forensic testing services business in the United Kingdom (U.K.) and the United States (U.S.) Operating income for the divested businesses was $7.6 for the year ended December 31, 2018.

All financial results and comparisons to financial results in 2017 and 2016 have been restated.

This accounting change increased revenue, lowered earnings, and had no impact on cash flow.

Upon adoption, bad debt expense within the LabCorp Diagnostics (LCD) segment is being classified as a reduction in revenue rather than as a selling, general and administrative expense.

Within the Covance Drug Development (CDD) segment the standard impacts the accounting for changes in the scope of work, investigator fees, measures of progress and sales commissions.

On July 16, 2018, the Company reported that it had detected suspicious activity on its information technology network and was taking steps to respond to and contain the activity.

The activity was subsequently determined to be a new variant of ransomware affecting certain LCD information technology systems.

CDD systems were not directly affected by the ransomware.

As part of its response, the Company promptly took certain systems offline to contain and remove the ransomware from its systems.

The incident temporarily affected test processing and customer access to test results, and also affected certain other information technology systems involved in conducting Company-wide operations.

Operations were returned to normal within a few days of the incident.

As part of its in-depth investigation into this incident, the Company engaged outside security experts and worked with authorities, including law enforcement.

The investigation determined that the ransomware did not and could not transfer patient or client data outside of Company systems and that there was no theft or misuse of patient or client data.

The Company has incurred total expenditures related to addressing this attack of $12.6 in consulting fees and employee overtime during the recovery period following the attack in addition to estimated lost revenue of $9.8.

The Company has insurance coverage for costs resulting from cyber-attacks and has filed a claim for recovery of its losses resulting from this incident.

However, disputes over the extent of insurance coverage for claims are not uncommon and the Company has not recorded any estimated proceeds resulting from this claim.

Furthermore, while the Company has not been the subject of any legal proceedings involving this incident, it is possible that the Company could be the subject of claims from persons alleging they suffered damages from the incident, or actions by governmental authorities.

The Company continues to invest in its technology and training to help protect its information technology systems and operations from cyber-attacks.

[Index](#s17B4D0940D675D7FA89D0680B4EFBBDE)

| | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| LCD | $ | 7,030.8 | | | $ | 6,858.2 | | | $ | 6,307.6 | | | 2.5 | % | | 8.7 | % |

| CDD | 4,313.1 | | | | 3,451.6 | | | | 3,245.8 | | | | 25.0 | % | | 6.3 | % |

| Intercompany eliminations | (10.5 | | ) | | (1.8 | | ) | | (0.5 | | ) | | 483.3 | % | | 260.0 | % |

| Total | $ | 11,333.4 | | | $ | 10,308.0 | | | $ | 9,552.9 | | | 9.9 | % | | 7.9 | % |

The increase in revenues was primarily driven by acquisitions, organic volume (measured by requisitions), partially offset by the impact of the implementation of PAMA and divestitures.

Growth in volume, measured by requisitions, of 3.6%, was due to organic volume growth of 1.8% and acquisition volume growth of 2.0%, partially offset by the impact of divestitures of (0.2%).

Price and mix negatively impacted revenue by (1.0%).

The change in price and mix included the impact of divestitures of (0.9%), lower reimbursement from the implementation of PAMA of (1.0%), other organic price and mix, as well as acquisitions.

The 7.9% increase in revenue for the year ended December 31, 2017, as compared with the corresponding period in 2016 was due to growth from acquisitions of 5.8% and organic growth of 2.1%.

The increase in revenue was the result of acquisitions, organic volume growth (measured by requisitions), price and mix.

Total volume (measured by requisitions) increased by 5.8%, of which organic volume was 2.2% and acquisition volume was 3.6%.

Revenue per requisition increased 2.9%.

CDD revenues for the year ended December 31, 2017, were $3,451.6, an increase of 6.3% over revenues of $3,245.8 in the corresponding period in 2016.

The increase in revenue was primarily due to the acquisition of Chiltern, which contributed growth of 6.1%, an increase in organic growth of 0.4% and an unfavorable impact from foreign currency translation of approximately 0.2%.

| Cost of revenues | $ | 8,157.0 | | | $ | 7,216.2 | | | $ | 6,698.9 | | | 13.0 | % | | 7.7 | % |

The increase in cost of revenues as a percentage of revenues in 2018 as compared to 2017 was primarily due to the timing of acquisitions (Chiltern closed in September 2017) as well as higher costs of revenue for certain acquisitions.

In addition, the Company paid a special one-time bonus of $31.1 ($24.8 of which was recorded in cost of revenues) to its non-bonus eligible employees in recognition of the benefits the Company is receiving from the passage of the U.S. Tax Cuts and Jobs Act (TCJA).

As a direct result of the ransomware attack experienced during July, the Company incurred $6.8 in employee overtime during the recovery period following the attack.

The increase in net cost of revenues in 2018 was negatively impacted by a net increase of 0.2% due to currency fluctuations.

Although, as set forth below, the Company’s zero-coupon subordinated notes [removed: contain] [added: contained] features [removed: that are] [added: were] considered to be embedded derivative instruments, the Company does not hold or issue derivative financial instruments for trading purposes.

[removed: Foreign] [added: Foreign] Currency Exchange [removed: Rates][added: Rates]

Approximately [added: 12.7% and] 13.6% of the Company's revenues for the year ended December 31, [removed: 2018] [added: 2019] and [removed: approximately 10.9% of those for the year ended 2017] [added: 2018, respectively,] were denominated in currencies other than the U.S. [removed: dollar.][added: dollar (USD).]

The Company's financial statements are reported in [removed: U.S. dollars (USD)] [added: USD] and, accordingly, fluctuations in exchange rates will affect the translation of revenues and expenses denominated in foreign currencies into [removed: U.S. dollars] [added: USD] for purposes of reporting the Company's consolidated financial results.

[removed: In both 2018 and 2017, the most significant] currency exchange rate exposures were to the Canadian dollar, Swiss franc, euro and British pound.

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 [removed: U.S. dollars] [added: USD] would have impacted income before income taxes for [removed: 2018] [added: 2019] by approximately [removed: $4.6.][added: $4.3.]

Gross accumulated currency translation adjustments recorded as a separate component of shareholders’ equity were [removed: $(176.6)] [added: $104.4] and [removed: $265.1] [added: $(176.6)] at December 31, [removed: 2018,] [added: 2019,] and [removed: 2017,] [added: 2018,] respectively.

Accordingly, exchange rate fluctuations during this period may affect the Company's profitability with respect to such [added: contracts.]

At December 31, [removed: 2017,] [added: 2019,] the Company had [removed: 26] [added: 34] open foreign exchange forward contracts with various amounts maturing monthly through January [removed: 2018] [added: 2020] with a notional value totaling approximately [removed: $360.5.][added: $369.2.]

The Company is party to [removed: six] USD to Swiss Franc cross-currency swap agreements with an aggregate notional amount of $600.0, maturing in 2022 and 2025, as a hedge against the impact of foreign exchange movements on its net investment in a Swiss Franc functional currency subsidiary.

[removed: Interest Rates][added: Interest Rates]

As of December 31, [removed: 2018,] [added: 2019,] and [removed: 2017,] [added: 2018,] the Company had approximately [removed: $0.0] [added: $375.0] and [removed: $72.0,] [added: $0.0,] respectively, of unhedged variable rate debt under the [removed: 2014] [added: 2019] term loan credit facility and [removed: $527.1] [added: $0.0] and [removed: $750.0,] [added: $527.1,] respectively, under the 2017 term loan credit facility.

Each quarter-point increase or decrease in the variable rate would result in the Company's interest expense changing by approximately [removed: $2.1] [added: $0.9] per year for the Company's unhedged variable rate debt.

During the third quarter of 2013, the Company entered into two fixed-to-variable interest rate swap agreements for its 4.625% Senior Notes due 2020 with an aggregate notional amount of $600.0 and variable interest rates based on one-month London Interbank Offered Rate [removed: (LIBOR)] [added: (LIBOR)] plus 2.298% to hedge against changes in the fair value of a portion of the Company's long-term debt.

In both 2019 and 2018, the most significant

[Index](#s04282097E1045C498119E1E4EA80E727)

The Company exited one of these swap arrangements in December 2019 in connection with the redemption of $187.9 of the 4.625% Senior Notes due 2020 and recorded a gain of $1.6.

On December 19, 2019, the Company redeemed any remaining outstanding zero-coupon subordinated notes due 2021 (the zero-coupon notes) that did not convert.

[Index](#s17B4D0940D675D7FA89D0680B4EFBBDE)

contracts.

The Company’s zero-coupon subordinated notes contain the following two features that are considered to be embedded derivative instruments under authoritative guidance in connection with accounting for derivative instruments and hedging activities:

| | |

| --- | --- |

| 1) | The Company will pay contingent cash interest on the zero-coupon subordinated notes after September 11, 2006, if the average market price of the notes equals 120% or more of the sum of the issue price, accrued original issue discount and contingent additional principal, if any, for a specified measurement period. |

| 2) | Holders may surrender zero-coupon subordinated notes for conversion during any period in which the rating assigned to the zero-coupon subordinated notes by Standard & Poor's Ratings Services is BB- or lower. |

[removed: LABORATORY] [added: LABORATORY] CORPORATION OF AMERICA HOLDINGS AND [removed: SUBSIDIARIES][added: SUBSIDIARIES]

[removed: CONSOLIDATED] [added: CONSOLIDATED] BALANCE [removed: SHEETS][added: SHEETS]

[removed: (In Millions)][added: (In Millions)]

| | December 31, [added: 2019 | | | | December 31,] 2018 | | | | December 31, 2017 | | |

| [removed: ASSETS] [added: ASSETS] | | | | | | | |

| Cash and cash equivalents | $ | [removed: 426.8] [added: 337.5] | | | $ | [removed: 316.6] [added: 426.8] | |

| Accounts receivable | [removed: 1,467.9] [added: 1,543.9] | | | | [removed: 1,531.0] [added: 1,467.9] | | |

| Unbilled services | [removed: 394.4] [added: 481.4] | | | | [removed: 316.5] [added: 394.4] | | |

| Prepaid expenses and other | [removed: 309.0] [added: 373.7] | | | | [removed: 308.8] [added: 309.0] | | |

| Total current assets | [removed: 2,835.4] [added: 2,981.2] | | | | [removed: 2,733.8] [added: 2,835.4] | | |

[removed: | Property, plant and equipment, net | 1,784.7 | | | | 1,706.6 | | |][added: PROPERTY, PLANT AND EQUIPMENT, NET]

| Goodwill, net | [removed: 7,360.3] [added: 7,865.0] | | | | [removed: 7,400.9] [added: 7,360.3] | | |

| Intangible assets, net | [removed: 3,911.1] [added: 4,034.5] | | | | [removed: 4,166.1] [added: 3,911.1] | | |

| Joint venture partnerships and equity method investments | [removed: 60.5] [added: 84.9] | | | | [removed: 58.4] [added: 60.5] | | |

| Deferred income taxes | [removed: 1.7] [added: 8.8] | | | | [removed: 1.9] [added: 1.7] | | |

| Other assets, net | [removed: 231.6] [added: 435.4] | | | | [removed: 217.5] [added: 276.0] | | |

| Total assets | $ | [removed: 16,185.3] [added: 18,046.4] | | | $ | [removed: 16,673.0] [added: 16,185.3] | |

| [removed: LIABILITIES] [added: LIABILITIES] AND SHAREHOLDERS’ [removed: EQUITY] [added: EQUITY] | | | | | | | |

| Accounts payable | $ | [removed: 634.6] [added: 632.3] | | | $ | [removed: 573.9] [added: 634.6] | |

| Accrued expenses and other | [removed: 870.0] [added: 942.4] | | | | [removed: 793.3] [added: 870.0] | | |

| Unearned revenue | [removed: 356.4] [added: 451.0] | | | | [removed: 380.8] [added: 356.4] | | |

| Short-term borrowings and current portion of long-term debt | [removed: 17.9] [added: 415.2] | | | | [removed: 417.5] [added: 10.0] | | |

| Total current liabilities | [removed: 1,878.9] [added: 2,655.8] | | | | [removed: 2,185.7] [added: 1,878.9] | | |

| Long-term debt, less current portion | [removed: 6,041.9] [added: 5,789.8] | | | | [removed: 6,344.6] [added: 5,990.9] | | |

| Deferred income taxes and other tax liabilities | [removed: 940.0] [added: 942.8] | | | | [removed: 875.5] [added: 940.0] | | |

| Other liabilities | [removed: 334.0] [added: 383.2] | | | | [removed: 376.0] [added: 334.0] | | |

| Total liabilities | [removed: 9,194.8] [added: 10,459.3] | | | | [removed: 9,848.1] [added: 9,194.8] | | |

| Noncontrolling interest | [removed: 19.1] [added: 20.1] | | | | [removed: 20.8] [added: 19.1] | | |

| Common stock, [removed: 98.9] [added: 97.2] and [removed: 101.9] [added: 98.9] shares outstanding at December 31, [removed: 2018] [added: 2019] and [removed: 2017,] [added: 2018,] respectively | [removed: 11.7] [added: 9.0] | | | | [removed: 12.0] [added: 11.7] | | |

| Additional paid-in capital | [removed: 1,451.1] [added: 26.8] | | | | [removed: 1,989.8] [added: 1,451.1] | | |

| Retained earnings | [removed: 7,079.8] [added: 7,903.6] | | | | [removed: 6,196.1] [added: 7,079.8] | | |

| Less common stock held in treasury | [removed: (1,108.1] [added: —] | | [removed: )] | | [removed: (1,060.1] [added: (1,108.1] | | ) |

| Accumulated other comprehensive loss | [removed: (463.1] [added: (372.4] | | ) | | [removed: (333.7] [added: (463.1] | | ) |

| Total shareholders’ equity | [removed: 6,971.4] [added: 7,567.0] | | | | [removed: 6,804.1] [added: 6,971.4] | | |

| Total liabilities and shareholders’ equity | $ | [removed: 16,185.3] [added: 18,046.4] | | | $ | [removed: 16,673.0] [added: 16,185.3] | |

[removed: CONSOLIDATED] [added: CONSOLIDATED] STATEMENTS OF [removed: OPERATIONS][added: OPERATIONS]

[removed: (In] [added: (In] Millions, Except Per Share [removed: Data)][added: Data)]

| | [removed: Years] [added: Years] Ended December [removed: 31,] [added: 31,] | | | | | | | | | | |

| | [removed: 2018] [added: 2019] | | | | [removed: 2017] [added: 2018] | | | | [removed: 2016] [added: 2017] | | |

| Revenues | [removed: 11,333.4] [added: $] | [added: 11,554.8] | | | [removed: 10,308.0] [added: $] | [added: 11,333.4] | | | [removed: 9,552.9] [added: $] | [added: 10,308.0] | |

| Supplies inventory | 244.7 | | | | 237.3 | | |

| Short-term operating lease liabilities | 206.5 | | | | — | | |

| Short-term finance lease liabilities | 8.4 | | | | 7.9 | | |

| Operating lease liabilities | 596.6 | | | | — | | |

| Financing lease liabilities | 91.1 | | | | 51.0 | | |

[Index](#s04282097E1045C498119E1E4EA80E727)

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

[Index](#s04282097E1045C498119E1E4EA80E727)

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

(In Millions, Except Per Share Data)

[Index](#s04282097E1045C498119E1E4EA80E727)

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

| Retirement of treasury stock | (2.4 | | ) | | (1,145.8 | | ) | | — | | | | 1,148.2 | | | | — | | | | — | | |

| Purchase of common stock | (0.3 | | ) | | (449.7 | | ) | | — | | | | — | | | | — | | | | (450.0 | | ) |

| BALANCE AT DECEMBER 31, 2019 | $ | 9.0 | | | $ | 26.8 | | | $ | 7,903.6 | | | $ | — | | | $ | (372.4 | ) | | $ | 7,567.0 | |

[Index](#s04282097E1045C498119E1E4EA80E727)

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

(In Millions)

| Loss (gain) on sale of business | 13.2 | | | | (184.9 | | ) | | — | | |

| Operating lease right-of-use asset expense | 194.1 | | | | — | | | | — | | |

| Other | (6.5 | | ) | | 10.8 | | | | 25.8 | | |

| Purchases of investments | (27.5 | | ) | | (22.3 | | ) | | (36.2 | | ) |

| Proceeds from sale of business | — | | | | 658.2 | | | | — | | |

| Other | (25.3 | | ) | | (16.0 | | ) | | (36.5 | | ) |

[Index](#s04282097E1045C498119E1E4EA80E727)

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

1.

During 2019, the Company's CDD segment completed the acquisition of Envigo's nonclinical contract research services business, expanding CDD's global nonclinical drug development capabilities with additional locations and resources.

Additionally, the Company divested the Covance Research Products (CRP) business, which was part of the CDD segment, to Envigo.

As part of this sale, CDD entered into a multi-year, renewable supply agreement with Envigo.

Leases

The Company has elected to utilize the short-term lease exemption and not record leases with initial terms of 12 months or less on the balance sheet.

Comparative periods were not adjusted and are presented in accordance with lease guidance in effect for that period.

Leases with an initial term of 12 months or less are not recorded on the Consolidated Balance Sheets.

Operating lease expense is recognized on a straight-line basis over the lease term.

[Index](#s04282097E1045C498119E1E4EA80E727)

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

Operating lease assets and liabilities are recognized at the commencement date, based on the present value of the future lease payments over the lease term.

| | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- |

| Supplies inventories | 237.3 | | | | 227.2 | | |

| Current assets held for sale | — | | | | 33.7 | | |

| Long-term assets held for sale | — | | | | 387.8 | | |

| Current liabilities held for sale | — | | | | 20.2 | | |

| Long-term liabilities held for sale | — | | | | 66.3 | | |

F-4

[Index](#s17B4D0940D675D7FA89D0680B4EFBBDE)

| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

F-5

| BALANCE AT DECEMBER 31, 2015 | $ | 12.0 | | | $ | 1,974.5 | | | $ | 4,223.7 | | | $ | (978.1 | ) | | $ | (287.0 | ) | | $ | 4,945.1 | |

| Cumulative effect change in accounting principle ASC 606 | — | | | | — | | | | 33.5 | | | | — | | | | — | | | | — | | |

| Issuance of common stock for acquisition consideration | — | | | | — | | | | — | | | | — | | | | — | | | | — | | |

| Income tax benefit from stock options exercised | — | | | | — | | | | — | | | | — | | | | — | | | | — | | |

| (Gain) loss on sale of assets | 6.2 | | | | 1.5 | | | | (9.2 | | ) |

| Gain on disposition of businesses | (184.9 | | ) | | — | | | | — | | |

| Cumulative earnings (in excess) less than distributions from equity method investments | (0.9 | | ) | | 0.5 | | | | 1.2 | | |

| Asset impairment | 5.3 | | | | 23.5 | | | | — | | |

| Proceeds from disposition of businesses | 3.7 | | | | — | | | | — | | |

| Proceeds from sale of held for sale assets | 654.5 | | | | — | | | | — | | |

| Investments in equity affiliates | (22.3 | | ) | | (36.2 | | ) | | (12.5 | | ) |

| Payments on long-term lease obligations | (9.3 | | ) | | (7.7 | | ) | | (8.4 | | ) |

| Noncontrolling interest distributions | (6.4 | | ) | | (1.0 | | ) | | (2.1 | | ) |

| Deferred payments on acquisitions | — | | | | (2.6 | | ) | | (7.6 | | ) |

1.

The Company believes that it generated more revenue from laboratory testing than any other company in the world in 2018.

Revenue from Contracts with Customers

In May 2014, the Financial Accounting Standards Board (FASB) issued the converged standard on revenue recognition with the objective of providing a single, comprehensive model for all contracts with customers to improve comparability in the financial statements of companies reporting using International Financial Reporting Standards (IFRS) and United States (U.S.) Generally Accepted Accounting Principles (GAAP).

The standard contains principles that an entity must apply to determine the measurement of revenue and timing of when it is recognized.

The underlying principle is that an entity must recognize revenue to depict the transfer of goods or services to customers at an amount that the entity expects to be entitled to in exchange for those goods or services.

The Company elected to adopt the standard using the full retrospective approach, which resulted in a recasting of revenue and the related financial statement items for 2016 and 2017.

During transition to the new standard, the Company also elected several practical expedients, as provided by the standard.

Contracts that began and ended within the same annual reporting period were not restated.

Contracts that were completed by December 31, 2017 that had variable consideration were estimated using the transaction price at the date the contract was completed.

The amount of the transaction price allocated to the remaining performance obligations were not disclosed for prior reporting periods.

Contracts that were modified prior to the earliest reporting period were reflected in the earliest reporting period with an aggregate adjustment for prior modifications.

As a result of the new standard, the Company has changed its accounting policies for revenue recognition.

The significant changes under the new standard, and the quantitative impact of these changes, are detailed below.

See Note 16 Commitments and Contingencies to the Consolidated Financial Statements.

The Company is involved from time to time in various claims and legal actions, including arbitrations, class actions, and other litigation (including those described in more detail below), arising in the ordinary course of business.

Some of these actions involve claims that are substantial in amount.

These matters include, but are not limited to, intellectual property disputes; commercial and contract disputes; professional liability; employee-related matters; and inquiries, including subpoenas and other civil investigative demands, from governmental agencies, Medicare or Medicaid payers, managed care organizations (MCOs) reviewing billing practices or requesting comment on allegations of billing irregularities that are brought to their attention through billing audits or third parties.

The Company receives civil investigative demands or other inquiries from various governmental bodies in the ordinary course of its business.

Such inquiries can relate to the Company or other parties, including physicians and other healthcare providers (e.g., physician assistants and nurse practitioners, generally referred to herein as physicians).

The Company works cooperatively to respond to appropriate requests for information.

The Company also is named from time to time in suits brought under the qui tam provisions of the False Claims Act and comparable state laws.

These suits typically allege that the Company has made false statements and/or certifications in connection with claims for payment from U.S., federal or state healthcare programs.

The suits may remain under seal (hence, unknown to the Company) for some time while the government decides whether to intervene on behalf of the qui tam plaintiff.

Such claims are an inevitable part of doing business in the healthcare field today.

The Company believes that it is in compliance in all material respects with all statutes, regulations and other requirements applicable to its commercial laboratory operations and drug development support services.

The healthcare diagnostics and drug development industries are, however, subject to extensive regulation, and the courts have not interpreted many of the applicable statutes and regulations.

Therefore, the applicable statutes and regulations could be interpreted or applied by a prosecutorial, regulatory or judicial authority in a manner that would adversely affect the Company.

Potential sanctions for violation of these statutes and regulations include significant civil and criminal penalties, fines, the loss of various licenses, certificates and authorizations, additional liabilities from third-party claims, and/or exclusion from participation in government programs.

[Index](#s17B4D0940D675D7FA89D0680B4EFBBDE)

Many of the current claims and legal actions against the Company are in preliminary stages, and many of these cases seek an indeterminate amount of damages.

The Company records an aggregate legal reserve, which is determined using calculations based on historical loss rates and assessment of trends experienced in settlements and defense costs.

In accordance with 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.

When loss contingencies are not both probable and estimable, the Company does not establish separate reserves.

The Company is unable to estimate a range of reasonably probable loss for the proceedings described in more detail below in which damages either have not been specified or, in the Company's judgment, are unsupported and/or exaggerated and (i) the proceedings are in early stages; (ii) there is uncertainty as to the outcome of pending appeals or motions; (iii) there are significant factual issues to be resolved; and/or (iv) there are novel legal issues to be presented.

For these proceedings, however, the Company does not believe, based on currently available information, that the outcomes will have a material adverse effect on the Company's financial condition, though the outcomes could be material to the Company's operating results for any particular period, depending, in part, upon the operating results for such period.

As previously reported, the Company responded to an October 2007 subpoena from the U.S. Department of Health & Human Services Office of Inspector General's regional office in New York.

On August 17, 2011, the U.S. District Court for the Southern District of New York unsealed a False Claims Act lawsuit, United States of America ex rel.

NPT Associates v.

Laboratory Corporation of America Holdings, which alleges that the Company offered UnitedHealthcare kickbacks in the form of discounts in return for Medicare business.

The Plaintiff's Third Amended Complaint further alleges that the Company's billing practices violated the False Claims Acts of 14 states and the District of Columbia.

The lawsuit seeks actual and treble damages and civil penalties for each alleged false claim, as well as recovery of costs, attorney's fees, and legal expenses.

Neither the U.S. government nor any state government has intervened in the lawsuit.

The Company's Motion to Dismiss was granted in October 2014 and Plaintiff was granted the right to replead.

On January 11, 2016, Plaintiff filed a motion requesting leave to file an amended complaint under seal and to vacate the briefing schedule for the Company's Motion to Dismiss while the government reviews the amended complaint.

The Court granted the motion and vacated the briefing dates.

Plaintiff then filed the Amended Complaint under seal.

The Company will vigorously defend the lawsuit.

In addition, the Company has received various other subpoenas since 2007 related to Medicaid billing.

In October 2009, the Company received a subpoena from the State of Michigan Department of Attorney General seeking documents related to its billing to Michigan Medicaid.

The Company cooperated with this request.

In October 2013, the Company received a Civil Investigative Demand from the State of Texas Office of the Attorney General requesting documents related to its billing to Texas Medicaid.

On October 5, 2018, the Company received a second Civil Investigative Demand from the State of Texas Office of the Attorney General requesting documents related to its billing to Texas Medicaid.

The Company is cooperating with this request.

On May 2, 2013, the Company was served with a False Claims Act lawsuit, State of Georgia ex rel.

[removed: [Index](#s17B4D0940D675D7FA89D0680B4EFBBDE)][added: Index]

[removed: UNITED STATES][added: UNITED STATES]

[removed: SECURITIES] [added: SECURITIES] AND EXCHANGE [removed: COMMISSION][added: COMMISSION]

[removed: Washington,] [added: Washington,] DC [removed: 20549][added: 20549]

[removed: FORM 10-K][added: FORM 10-K]

[removed: \[X\]] [added: \[☒\]] Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, [removed: 2018][added: 2019]

[removed: \[ \]] [added: \[☐\]] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

[removed: LABORATORY CORPORATION] [added: LABORATORY CORP] OF AMERICA [removed: HOLDINGS][added: HOLDINGS]

| [removed: Delaware] [added: Delaware] | [removed: 13-3757370] | [added: 13-3757370 |]

| (State or other jurisdiction of incorporation or organization) | [added: |] (I.R.S. Employer Identification No.) |

| [removed: 358] [added: 358] South Main [removed: Street,] [added: Street] | | [added: | |]

| [removed: Burlington, North Carolina] [added: Burlington,] | [removed: 27215] [added: North Carolina] | [added: | 27215 |]

| (Address of principal executive offices) | [added: | |] (Zip Code) |

(Registrant's telephone number, including area code) [removed: 336-229-1127][added: 336\-229-1127]

| Title of each class | [added: Trading Symbol] | Name of exchange on which registered |

| Common Stock, $0.10 par value | [added: LH] | New York Stock Exchange |

Yes [removed: \[ \]] [added: \[☐\]] No \[X\].

| Large accelerated filer [removed: \[X\]] | [added: ☒ |] Accelerated filer [removed: \[ \]] | [added: ☐ |]

| Non-accelerated filer [removed: \[ \]] | [added: ☐ |] Smaller reporting company [removed: \[ \]] | [added: ☐ |]

| | [added: |] Emerging growth company [removed: \[ \]] | [added: ☐ |]

As of June 30, [removed: 2018,] [added: 2019,] the aggregate market value of the common stock held by non-affiliates of the registrant was approximately [removed: $17.5] [added: $16.1] billion, based on the closing price on such date of the registrant’s common stock on the New York Stock Exchange.

Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date: [removed: 98.6] [added: 97.3] million shares as of February 26, [removed: 2019.][added: 2020.]

[removed: DOCUMENTS] [added: DOCUMENTS] INCORPORATED BY [removed: REFERENCE][added: REFERENCE]

Portions of the Registrant’s Notice of Annual Meeting and Proxy Statement to be filed no later than 120 days following December 31, [removed: 2018,] [added: 2019,] are incorporated by reference into Part III.

[removed: Index][added: [Index](#s04282097E1045C498119E1E4EA80E727)]

| | | [removed: Page] [added: Page] |

[removed: | | [Part I](#s3DE4028580685168A1852E61498E0BF2) | |][added: PART I]

| Item 1. | [removed: [Business](#s2C4AED0D4A7059BC83FE5CBA52CFC46F)] [added: [Business](#s4C86B3C070B95C69940A1F54E3992C51)] | [removed: [4](#s2C4AED0D4A7059BC83FE5CBA52CFC46F)] [added: [4](#s4C86B3C070B95C69940A1F54E3992C51)] |

[removed: | | [Business Segments](#sA09F19CCCA63533F95E94A106858679A) | [7](#sA09F19CCCA63533F95E94A106858679A) |][added: Business Segments]

| | [LabCorp Diagnostics [removed: Segment](#s17B4D0940D675D7FA89D0680B4EFBBDE)] [added: Segment](#s1CE44551A2E251058C0B6EA5E751438C)] | [removed: [7](#sA3F96FC89DCA504085D1DC2ADAAE1E23)] [added: [7](#s1CE44551A2E251058C0B6EA5E751438C)] |

| | [Covance Drug [removed: Development](#s17B4D0940D675D7FA89D0680B4EFBBDE)] [added: Development Segment](#s1E1EA9901AE056D4AC3391C4FFF50FB1)] | [removed: [15](#sAD9E8F24ED1659C3B2980ABAAA46D39B)] [added: [15](#s1E1EA9901AE056D4AC3391C4FFF50FB1)] |

[removed: | | [Customers](#s9E90E0863EFF5F1E9C9BEEF703ED2B40) | [19](#s9E90E0863EFF5F1E9C9BEEF703ED2B40) |][added: Customers]

[removed: | | [Capital Allocation](#s5E8837E3DEAC50D0A3BED365C2751CB2) | [20](#s5E8837E3DEAC50D0A3BED365C2751CB2) |][added: Capital Allocation]

[removed: | | [Investments] [added: Investments] in Joint Venture [removed: Partnerships](#s8F234F5B84B5553087945FF57801C88E) | [20](#s8F234F5B84B5553087945FF57801C88E) |][added: Partnerships]

[removed: | | [Sales,] [added: Sales,] Marketing and Customer [removed: Service](#s1BE900A9F9C551A49E278D00494AC9B0) | [21](#s1BE900A9F9C551A49E278D00494AC9B0) |][added: Service]

[removed: | | [Information Systems](#s3062CB9C2F0E5EFC9232C47B2F5D0D22) | [21](#s3062CB9C2F0E5EFC9232C47B2F5D0D22) |][added: Information Systems]

[removed: | | [Quality](#s4485823616E153FBBA31C1F71FC72615) | [21](#s4485823616E153FBBA31C1F71FC72615) |][added: Quality]

[removed: | | [Intellectual] [added: Intellectual] Property [removed: Rights](#s1A0DCDDF434651C4A39572ED13035F53) | [23](#s1A0DCDDF434651C4A39572ED13035F53) |][added: Rights]

[removed: | | [Employees](#sF0FCF168579F5FF49B2064B228A340C2) | [23](#sF0FCF168579F5FF49B2064B228A340C2) |][added: Employees]

| | | | |

| --- | --- | --- | --- |

| | | | |

[Index](#s04282097E1045C498119E1E4EA80E727)

| | | | |

| --- | --- | --- | --- |

| | | | |

[Index](#s04282097E1045C498119E1E4EA80E727)

| | [Seasonality](#s56C122123739558E8B2AE554497B0211) | [20](#s3F3F673F99315EBDBEF623B1CE1A7B0C) |

| | [Part II](#s95A8C61B66235C16B7EFF7789945C7EC) | |

| | [Part IV](#s485F145F12885F04B0FAFE72EF447793) | |

[Index](#s04282097E1045C498119E1E4EA80E727)

The Company has also been recognized as a Best Place to Work for LGBTQ Equality with a perfect score from Human Rights Campaign's Corporate Equality Index (CEI), the nation's premier benchmarking survey and report on corporate policies and practices related to LGBTQ workplace equality.

The Company celebrated its 50th anniversary in 2019, marking its transformation from a laboratory in a former hospital in 1969 to a leading global life sciences company today.

Health systems customers continue to express interest in the Company's ability to both reduce their lab testing costs and bring them meaningful clinical research opportunities through the power of the Company's uniquely combined capabilities.

The Company continues to increase CDD site partnerships with U.S.-based health systems and have offered these health systems many meaningful clinical research opportunities.

The two-pronged value proposition continues to gain traction with health system partners.

[Index](#s04282097E1045C498119E1E4EA80E727)

By combining LCD patient population data with CDD's site location tools and protocol design insights, the Company delivers a truly integrated patient-centric approach to recruitment.

Through the LCD portal, patients can consent to release their medical information to CDD to be contacted for opportunities to participate in research including clinical studies, medical device studies and other studies to inform new therapies and better understand patients' needs.

As a result of the powerful combination of LCD and CDD insights and data, the Company has the opportunity to win studies and recruit patients and investigators for trials more efficiently in important therapeutic areas like oncology.

Focus on the Future

In 2019, LabCorp established new data collaborations with more than 30 value-based care organizations including the announcement of a strategic collaboration with New Jersey Primary Care Association (NJPCA) to advance value-based care at 23 community health centers throughout New Jersey.

The project will help NJPCA members achieve value-based care objectives by providing integrated lab and clinical data in a more accessible, comprehensive and secure manner, with a focus on improving outcomes for patients with chronic conditions, such as diabetes and chronic kidney disease.

The platform will be available through LabCorp’s Care Intelligence application, which is supported by HealthEC.

It will allow for population health analyses, showing trends across communities, and for enhanced monitoring of individual patients to understand when intervention is needed and how a patient is responding to treatment.

Through the efforts of a dedicated team, LabCorp also continues to expand its service solutions to support clients in meeting value-based care goals and objectives, and to work with organizations focused directly on value-based care, such as Accountable Care Organizations, Clinically Integrated Networks, Integrated Delivery Networks, Independent Physicians Associations, national provider groups and Federally Qualified Health Centers.

In 2019, LabCorp launched lab-based data reports called Insight Analytics.

These reports support provider organizations in the efficient use of laboratory testing (laboratory stewardship), and the enhanced management of patients with chronic conditions such as diabetes, chronic kidney disease, and cardiovascular disease.

In 2019, the Company introduced an innovative new patient direct offering, streamlining patient recruitment by using LCD data to quickly and effectively contact appropriate candidates for trials through targeting a set of patients likely to qualify for the study based on diagnosis code, test results, and geographic location.

After patients are enrolled, they are then routed to a LCD patient service center (PSC) for testing.

[Index](#s04282097E1045C498119E1E4EA80E727)

In 2019, the Company announced an expansion to its Pixel by LabCorp™ platform, which was first introduced in 2018 with an initial offering of self-collection kits to empower consumers to order and obtain wellness tests in the comfort and privacy of their homes.

The expanded Pixel offering allows consumers to purchase testing online, visit a convenient LCD PSC for specimen collection by a phlebotomist, and receive confidential results through a secure online portal.

The tests are performed in LCD’s laboratories, using the same equipment and processes as the testing that clinicians order for their patients during in-office visits.

The Company also continued its partnership with Walgreens to open comfortable and convenient PSCs inside Walgreens stores.

At the close of 2019, more than 130 LabCorp at Walgreens sites were open or in progress to open in multiple states.

The Company can offer a wide range of highly efficient and integrated lab testing across multiple types of care settings and can simplify information technology structures and interfaces to standardize lab testing and data.

In 2019, the Company announced a collaboration with the Mount Sinai Health System, New York City's largest integrated healthcare delivery system, to establish the Mount Sinai Digital and Artificial Intelligence (AI)-Enabled Pathology Center of Excellence.

The Company, which has implemented the Philips IntelliSite Pathology Solution in four of its laboratories and plans to deploy it to additional laboratories, will use its experience and expertise to lead the integration of digital pathology into clinical practice across Mount Sinai's hospitals.

10-K 1 lh10-k2018.htm 10-K

| | |

| --- | --- |

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 232.405) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.

\[ \].

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

| | [Seasonality](#s5E3059688DA958D785582837FC747F3C) | [20](#s4E6E9CC6BA4A5DD5AB5027831AB3BCD2) |

| | [Part II](#s481FACB312B85F1D905725AD55AED9AA) | |

| | [Part IV](#sD3A302A7D0EA5826BC65277B652D751B) | |

Although portions of its business have an even longer history, the Company identifies its founding in 1969 and will celebrate its 50th anniversary in 2019.

LCD’s patient insights and CDD’s global physician-investigator performance data create a powerful competitive advantage that presents significant long-term growth potential.

As a result, LabCorp can win studies and recruit patients and investigators for trials more efficiently.

The 2017 acquisition of Chiltern International Group, Inc. (Chiltern) further enhanced Covance’s offerings as a major partner serving the top 20 biopharmaceutical segment and expanded the Company’s current offering to include a dedicated focus on the high-growth emerging and mid-market biopharmaceutical segments.

Companion diagnostics are tests that should be used before a patient can be treated with a specific therapeutic to help identify how or if the therapeutic will be effective or if it may cause adverse events.

Complementary diagnostics are not required for determining who should receive the therapeutic, or how it should be used, but can give physicians valuable information about a patient’s potential response to a specific therapeutic or class of therapeutics.

The Company's diversified service offerings also help to balance the impact of changes in the U.S. healthcare

Positioning the Company for the Future

In addition, the Company believes that continued consolidation in healthcare and the Company’s strong relationships with hospitals and health systems will allow LabCorp to provide leading solutions to help improve patient outcomes and reduce healthcare costs as health systems increasingly become the focal point of coordinated patient care.

The healthcare system is in the midst of a complex and iterative transition to value-based care, with increased use of reimbursement models based on quality of care and on patient outcomes, and less reliance on traditional fee-for-services based payments.

The Company is focused on improving efficiency in care delivery, reducing the overall cost of patient care, and using the Company's combination of diagnostic and drug development capabilities to accelerate progress towards more precise and individualized healthcare.

In 2018, LabCorp announced that effective January 1, 2019, it would be an in-network laboratory for Aetna, in addition to extending its existing in-network agreement with UnitedHealthcare.

In November 2018, the Company also extended its agreement with Horizon Blue Cross Blue Shield of New Jersey.

The Company will no longer be the exclusive capitated laboratory for Horizon HMO Members but will continue to be an in-network laboratory for all Horizon members, including HMO members.

For example, the Company is applying its market access call-center capabilities to enroll and engage patients, its patient service centers (PSCs) to provide blood draws and biometric assessments in locations convenient to patients, and its central laboratory services to perform the associated testing.

Patients are increasingly interested in their health and wellness and and they are becoming more influential in their healthcare decision-making, instead of simply reacting to symptoms of disease.

This change requires healthcare providers to increasingly view patients as consumers.

The Company is investing in new tools and technology to create a

differentiated consumer experience through innovations to increase consumer engagement and new channels to enhance consumer convenience and access to LabCorp’s high-quality lab services.

In 2018, the Company announced plans to significantly expand the LabCorp at Walgreens collaboration to at least 600 locations over the next four years, following positive feedback to the initial sites in four states.

Consumers, healthcare providers, and managed care plans have expressed strong interest in this innovative partnership.

LabCorp's and Walgreens complementary healthcare expertise underpins LabCorp at Walgreens, which is uniquely situated to deliver a wide range of personalized, integrated, consumer-facing services over time.

Additional collaboration opportunities with Walgreens are focused on improving the consumer experience and using data integration to enhance product and service offerings.

The Company also launched Pixel by LabCorpSM, a consumer-initiated testing platform that features sample self-collection from the comfort of home and personalized online results.

Consumers can now purchase test packages with home-based sample collection that offer screening for wellness, heart health, diabetes, and colorectal cancer.

Additional test offerings and use cases are planned for the future.

In 2019, the Company also plans to add a consumer-initiated, phlebotomy-based offering to the Pixel platform that will broaden consumer access to the most important and frequently requested tests.

With this added service, consumers are empowered to order tests online and visit LabCorp PSCs for sample collection.

In 2018, the Company completed the rollout of several patient self-service tools to enhance the experience in its PSCs, including self-check-in, improved insurance card recognition technology using machine learning, enhanced mobile applications and upgraded online bill payment.

LCD’s online LabCorp | Patient portal and mobile app offer convenient access to new and historical test results, information about tests, and an option to receive information about clinical trials.

In an effort to further expand consumers’ ability to easily access their health records from any location, the Company announced that it supports Health Records on iPhone®, a service that allows LabCorp patients to access their LabCorp laboratory test results along with other available medical data from multiple providers in the Apple® Health app.

[Index](#s04282097E1045C498119E1E4EA80E727)

[Index](#s17B4D0940D675D7FA89D0680B4EFBBDE)

The table below summarizes certain information as to LCD's principal operating and administrative facilities as of December 31, [removed: 2018.][added: 2019.]

| [removed: Location] [added: Location] | [removed: Nature] [added: Nature] of [removed: Occupancy] [added: Occupancy] |

| [removed: Roseville,] [added: Minneapolis,] Minnesota | Leased |

| [removed: New] York, [removed: New York] [added: United Kingdom] | Leased |

The table below summarizes certain information as to CDD's principal operating and administrative facilities as of December 31, [removed: 2018.][added: 2019.]

[Index](#s04282097E1045C498119E1E4EA80E727)

| Location | Nature of Occupancy |

| Eye, United Kingdom | Owned |

| Huntington, United Kingdom | Owned |

| Shardlow, United Kingdom | Owned |

| Ann Arbor, Michigan | Leased |

| Somerset, New Jersey | Owned |

| Prescott, Arizona | Leased |

| Calabasas, California | Leased |

| Tustin, California | Leased |

| Englewood, Colorado | Leased |

| Hollywood, Florida | Leased |

| Tucker, Georgia | Leased |

| Chicago, Illinois | Leased |

| Itasca, Illinois | Leased |

| Louisville, Kentucky | Leased |

| Lafayette, Louisiana | Owned |

| Santa Fe, New Mexico | Owned |

| Charlotte, North Carolina | Leased |

| Greensboro, North Carolina | Leased |

| McLeansville, North Carolina | Leased |

| Raleigh, North Carolina | Leased |

| Oklahoma City, Oklahoma | Leased |

| Knoxville, Tennessee | Leased |

| Austin, Texas | Leased |

| San Antonio, Texas | Leased |

| Chesapeake, Virginia | Leased |

| Kennewick, Washington | Owned |

| Charleston, West Virginia | Leased |

[Index](#s17B4D0940D675D7FA89D0680B4EFBBDE)

| Cary, North Carolina | Leased |

| Denver, Pennsylvania | Owned |

| Alice, Texas | Owned |

| Cumberland, Virginia | Owned |

[removed: PART II][added: PART II]

[Index](#s04282097E1045C498119E1E4EA80E727)

[Index](#s17B4D0940D675D7FA89D0680B4EFBBDE)

[removed: Market Information][added: Market Information]

[removed: Holders][added: Holders]

On February 26, [removed: 2019,] [added: 2020,] there were approximately [removed: 3,000] [added: 1,038] holders of record of the Common Stock.

[removed: Transfer Agent][added: Transfer Agent]

[removed: Dividends][added: Dividends]

[removed: Common] [added: Common] Stock [removed: Performance][added: Performance]

The graph below shows the cumulative total return assuming an investment of $100 on December 31, [removed: 2013,] [added: 2014,] in each of the Company’s common stock, the Standard & Poor’s, or S&P Composite-500 Stock Index and the S&P 500 healthcare Index, or Peer Group, and assuming that all dividends were reinvested.

[removed: Comparison] [added: Comparison] of Five Year Cumulative Total [removed: Return][added: Return]

| | [removed: 12/2013] [added: 12/2014] | | | | [removed: 12/2014] [added: 12/2015] | | | | [removed: 12/2015] [added: 12/2016] | | | | [removed: 12/2016] [added: 12/2017] | | | | [removed: 12/2017] [added: 12/2018] | | | | [removed: 12/2018] [added: 12/2019] | | |

[removed: ][added: ]

[removed: Issuer] [added: Issuer] Purchases of Equity Securities (all amounts in millions, except per share [removed: amounts)][added: 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, [removed: 2018,] [added: 2019,] by or on behalf of the Company:

At the end of [removed: 2017,] [added: 2018,] the Company had outstanding authorization from the board of directors to purchase up to [removed: $401.4] [added: $443.5] of Company common stock.

At the end of [removed: 2018,] [added: 2019,] the Company had outstanding authorization from [removed: its] [added: the] board of directors to purchase an additional [removed: $443.5] [added: $900.0] of Company common stock.

| Laboratory Corporation of America Holdings | $ | 100.00 | | | $ | 114.59 | | | $ | 118.98 | | | $ | 147.83 | | | $ | 117.11 | | | $ | 156.78 | |

| S&P 500 Index | $ | 100.00 | | | $ | 101.38 | | | $ | 113.51 | | | $ | 138.29 | | | $ | 132.23 | | | $ | 173.86 | |

| S&P 500 Health Care Index | $ | 100.00 | | | $ | 106.89 | | | $ | 104.01 | | | $ | 126.98 | | | $ | 135.19 | | | $ | 163.34 | |

[Index](#s04282097E1045C498119E1E4EA80E727)

| October 1 - October 31 | 0.3 | | | $ | 165.91 | | | 0.3 | | | $ | 900.0 | |

| November 1 - November 30 | — | | | — | | | | — | | | 900.0 | | |

| December 1 - December 31 | — | | | — | | | | — | | | 900.0 | | |

| | 0.3 | | | $ | 165.91 | | | 0.3 | | | | | |

During 2019, the Company purchased 2.9 shares of its common stock at an average price of $154.94 for a total cost of $450.0, of which $100.0 was repurchased prior to the new plan in February 2019.

| Laboratory Corporation of America Holdings | $ | 100.00 | | | $ | 118.09 | | | $ | 135.32 | | | $ | 140.51 | | | $ | 174.58 | | | $ | 138.29 | |

| S&P 500 Index | $ | 100.00 | | | $ | 113.69 | | | $ | 115.26 | | | $ | 129.05 | | | $ | 157.22 | | | $ | 150.33 | |

| S&P 500 Health Care Index | $ | 100.00 | | | $ | 125.34 | | | $ | 133.97 | | | $ | 130.37 | | | $ | 159.15 | | | $ | 169.44 | |

[Index](#s17B4D0940D675D7FA89D0680B4EFBBDE)

| October 1 - October 31 | 0.6 | | | $ | 168.34 | | | 0.6 | | | $ | 744.0 | |

| November 1 - November 30 | 1.1 | | | 163.81 | | | | 1.1 | | | 555.9 | | |

| December 1 - December 31 | 0.8 | | | 143.02 | | | | 0.8 | | | 443.5 | | |

| | 2.5 | | | $ | 158.40 | | | 2.5 | | | | | |

On April 24, 2018, the board authorized an increase in the Company's share repurchase program to a total of $1,000.0.

During 2018, the Company purchased 4.2 shares of its common stock at a total cost of $700.0.

The selected financial data presented below under the captions “Statement of Operations Data” and “Balance Sheet Data” as of and for the five-year period ended December 31, [removed: 2018,] [added: 2019,] are derived from consolidated financial statements of the Company, which have been audited by an independent registered public accounting firm.

| | [removed: Year] [added: Years] Ended December [removed: 31,] [added: 31,] | | | | | | | | | | | | | | | | | | |

| | [removed: (a) 2018] [added: (a) 2019] | | | | [removed: (b)(k) 2017] [added: (b) 2018] | | | | [removed: (c)(k) 2016] [added: (c) 2017] | | | | [removed: (d)(k) 2015] [added: (d) 2016] | | | | [removed: (e)(k) 2014] [added: (e) 2015] | | |

| [removed: Statement] [added: Statement] of Operations [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | |

| [removed: Net revenues] [added: Revenues] | $ | [removed: 11,333.4] [added: 11,554.8] | | | $ | [removed: 10,308.0] [added: 11,333.4] | | | $ | [removed: 9,552.9] [added: 10,308.0] | | | $ | [removed: 8,505.7] [added: 9,552.9] | | | $ | [removed: 6,011.6] [added: 8,505.7] | |

| Gross profit | [removed: 3,176.4] [added: 3,252.5] | | | | [removed: 3,091.8] [added: 3,176.4] | | | | [removed: 2,854.0] [added: 3,091.8] | | | | [removed: 2,903.3] [added: 2,854.0] | | | | [removed: 2,203.1] [added: 2,903.3] | | |

| Operating income [removed: (i)] [added: (h)] | [removed: 1,325.7] [added: 1,330.2] | | | | [removed: 1,305.2] [added: 1,325.7] | | | | [removed: 1,270.6] [added: 1,305.2] | | | | [removed: 996.8] [added: 1,270.6] | | | | [removed: 904.3] [added: 996.8] | | |

| Corporation of America Holdings [removed: (j)] | [removed: 883.7] [added: 823.8] | | | | [removed: 1,227.1] [added: 883.7] | | | | [removed: 711.8] [added: 1,227.1] | | | | [removed: 437.6] [added: 711.8] | | | | [removed: 511.2] [added: 437.6] | | |

| Basic earnings per common share | $ | [removed: 8.71] [added: 8.42] | | | $ | [removed: 11.99] [added: 8.71] | | | $ | [removed: 6.94] [added: 11.99] | | | $ | [removed: 4.43] [added: 6.94] | | | $ | [removed: 6.03] [added: 4.43] | |

| Diluted earnings per common share | $ | [removed: 8.61] [added: 8.35] | | | $ | [removed: 11.81] [added: 8.61] | | | $ | [removed: 6.82] [added: 11.81] | | | $ | [removed: 4.35] [added: 6.82] | | | $ | [removed: 5.91] [added: 4.35] | |

| [added: Basic weighted average common] shares outstanding | [removed: 101.4] [added: 97.9] | | | | [removed: 102.4] [added: 101.4] | | | | [removed: 102.5] [added: 102.4] | | | | [removed: 98.8] [added: 102.5] | | | | [removed: 84.8] [added: 98.8] | | |

| [added: Diluted weighted average common] shares outstanding | [removed: 102.6] [added: 98.6] | | | | [removed: 103.9] [added: 102.6] | | | | [removed: 104.3] [added: 103.9] | | | | [removed: 100.6] [added: 104.3] | | | | [removed: 86.4] [added: 100.6] | | |

| [removed: Balance] [added: Balance] Sheet [removed: Data:] [added: Data:] | | | | | | | | | | | | | | | | | | | |

| [added: Cash and cash equivalents and] short-term investments | $ | [removed: 426.8] [added: 337.5] | | | $ | [removed: 316.6] [added: 426.8] | | | $ | [removed: 433.6] [added: 316.6] | | | $ | [removed: 716.4] [added: 433.6] | | | $ | [removed: 580.0] [added: 716.4] | |

| Goodwill and intangible assets, net [removed: (h)] [added: (g)] | [removed: 11,271.4] [added: 11,899.5] | | | | [removed: 11,567.0] [added: 11,271.4] | | | | [removed: 9,824.9] [added: 11,567.0] | | | | [removed: 9,526.6] [added: 9,824.9] | | | | [removed: 4,575.2] [added: 9,526.6] | | |

| Total assets [added: (g)] (f) | [removed: 16,185.3] [added: 18,046.4] | | | | [removed: 16,673.0] [added: 16,185.3] | | | | [removed: 14,334.8] [added: 16,673.0] | | | | [removed: 14,104.7] [added: 14,334.8] | | | | [removed: 7,262.8] [added: 14,104.7] | | |

| Long-term obligations (f) [removed: (g)] | [removed: 6,059.8] [added: 7,107.6] | | | | [removed: 6,762.1] [added: 6,059.8] | | | | [removed: 5,849.5] [added: 6,762.1] | | | | [removed: 6,364.2] [added: 5,849.5] | | | | [removed: 2,990.8] [added: 6,364.2] | | |

| Total shareholders' equity | [removed: 6,971.4] [added: 7,567.0] | | | | [removed: 6,804.1] [added: 6,971.4] | | | | [removed: 5,518.2] [added: 6,804.1] | | | | [removed: 4,945.1] [added: 5,518.2] | | | | [removed: 2,820.5] [added: 4,945.1] | | |

| [removed: (a)] [added: (b)] | During 2018, the Company recorded net restructuring charges of $48.1. The charges were comprised of $40.3 in severance and other personnel costs and $11.8 in facility-related costs primarily associated with facility closures and general integration initiatives. These charges were offset by the reversal of previously established reserves of $2.0 in unused severance and $2.0 in unused facility-related costs. |

| [removed: (b)] [added: (c)] | During 2017, the Company recorded net restructuring charges of $70.9. The charges were comprised of $36.1 in severance and other personnel costs and $39.9 in facility-related costs primarily associated with facility closures and general integration initiatives. These charges were offset by the reversal of previously established reserves of $0.5 in unused severance and $4.6 in unused facility-related costs. The Company also recognized asset impairment losses of $23.5 [added: related to the termination of software development projects within the Covance Drug Development (CDD) segment and the forgiveness of certain indebtedness for LabCorp Diagnostics (LCD) customers in areas heavily impacted by hurricanes during the third quarter.] |

| [removed: (c)] [added: (d)] | During 2016, the Company recorded net restructuring charges of $58.4. The charges were comprised of $30.9 in severance and other personnel costs and $33.8 in facility-related costs primarily associated with facility closures and general integration initiatives. These charges were offset by the reversal of previously established reserves of $2.8 in unused severance and $3.5 in unused facility-related costs. |

| [removed: (d)] [added: (e)] | During 2015, the Company recorded net restructuring charges of $113.9. The charges were comprised of $59.2 in severance and other personnel costs and $55.8 in facility-related costs primarily associated with facility closures and general integration initiatives. These charges were offset by the reversal of previously established reserves of $1.1 in unused facility-related costs. |

| [removed: (e)] [added: (a)] | During [removed: 2014,] [added: 2019,] the Company recorded net restructuring charges of [removed: $17.8.] [added: $54.6.] The charges were comprised of [removed: $10.5] [added: $32.9] in severance and other personnel costs and [removed: $8.4] [added: $24.9] in facility-related costs primarily associated with facility closures and general integration initiatives. These charges were offset by the reversal of previously established reserves of [removed: $0.4] [added: $1.7] in unused severance and [removed: $0.7] [added: $1.5] in unused facility-related costs. |

| [removed: (h)] [added: (g)] | During 2016, the Company revised the final purchase price allocation for Covance. As a result, an out of period adjustment of $25.6 was recorded to reduce goodwill and increase a deferred tax asset as of December 31, 2015. The Company concluded that the impact of this adjustment was not material to the current or prior periods. |

| [removed: (j)] [added: (h)] | Net earnings attributable to Laboratory Corporation of America Holdings in 2017 includes a provisional net benefit of $519.0 due to the Tax Cuts and Jobs Act (TCJA). For additional information on the TCJA, see Note 14 [added: Income Taxes] to the Consolidated Financial Statements. |

| | | | | | | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | | | | | | |

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| (f) | See Note 5 Leases and Note 12 Debt to the Consolidated Financial Statements. |

This data should be read in conjunction with the accompanying notes, the Company's consolidated financial statements and the related notes thereto, and “Management's Discussion and Analysis of Financial Condition and Results of Operations,” all included elsewhere in this annual report.

| Basic weighted average common | | | | | | | | | | | | | | | | | | | |

| Diluted weighted average common | | | | | | | | | | | | | | | | | | | |

| Cash and cash equivalents, and | | | | | | | | | | | | | | | | | | | |

| | |

| --- | --- |

[Index](#s17B4D0940D675D7FA89D0680B4EFBBDE)

related to the termination of software development projects within the Covance Drug Development (CDD) segment and the forgiveness of certain indebtedness for LabCorp Diagnostics (LCD) customers in areas heavily impacted by hurricanes during the third quarter.

| (f) | During the first quarter of 2016, the Company adopted Accounting Standards Update (ASU 2015-03) Interest-Imputation of Interest: Simplifying the Presentation of Debt Issuance Costs. In accordance with this guidance, unamortized debt issuance costs of $52.8 and $39.0 associated with the Senior Notes and loan obligations have been reclassified from total assets to long-term obligations for fiscal 2015 and 2014, respectively, in the table above. |

| (g) | Long-term obligations primarily include the Company’s zero-coupon convertible subordinated notes, 5.625% Senior Notes due 2015, 3.125% Senior Notes due 2016, 2.20% Senior Notes due 2017, 2.50% Senior Notes due 2018, 4.625% Senior Notes due 2020, 2.625% Senior Notes due 2020, 3.75% Senior Notes due 2022, 3.20% Senior Notes due 2022, 4.00% Senior Notes due 2023, 3.25% Senior Notes due 2024, 3.60% Senior Notes due 2025, 3.60% Senior Notes due 2027, 4.70% Senior Notes due 2045, 2014 term loan, 2017 term loan, revolving credit facility and other long-term obligations. The accreted balance of the zero-coupon convertible subordinated notes was $8.7, $8.8, $42.4, $94.5, and $93.9 at December 31, 2018, 2017, 2016, 2015, and 2014, respectively. The principal balance of the 5.625% Senior Notes was $0.0 at December 31, 2018, 2017, 2016 and 2015 and $250.0 at December 31, 2014. The principal balance of the 3.125% Senior Notes was $0.0 at December 31, 2018, 2017, and 2016 and $325.0 at December 31, 2015 and 2014. The principal balance of the 4.625% Senior Notes was $600.0 at December 31, 2018, 2017, 2016, 2015, and 2014. The aggregate fair value of the fixed-to-variable interest rate swap on the 4.625% Senior Notes was ($3.1) at December 31, 2018, $4.1 at December 31, 2017, $14.6 at December 31, 2016, $21.6 at December 31, 2015, and $18.5 at December 31, 2014. The principal balance of the 2.625% Senior Notes was $500.0 at December 31, 2018, 2017, 2016, and 2015, and was $0.0 for the year 2014. The principal balance of the 2.20% Senior Notes was $0.0 at December 31, 2018 and 2017 and $500.0 at December 31, 2016, 2015, and 2014. The principal balance of the 3.75% Senior Notes was $500.0 at December 31, 2018, 2017, 2016, 2015, and 2014. The principal balance of the 3.20% Senior Notes was $500.0 at December 31, 2018, 2017, 2016 and 2015 and was $0.0 at December 31, 2014. The principal balance of the 2.50% Senior Notes due 2018 was $0.0 at December 31, 2018 and $400.0 for all other years presented. The principal balance of the 4.00% Senior Notes due 2023 was $300.0 at December 31, 2018, 2017, 2016, 2015, and 2014.The principal balances of the 3.60% Senior Notes due 2025 and 4.70% Senior Notes due 2045 were $1,000.0 and $900.0, respectively, at December 31, 2018, 2017, 2016 and 2015 and were each $0.0 at both December 31, 2014. The principal balance of the 3.25% Senior Notes due 2024 was $600.0 at December 31, 2018 and 2017, and $0.0 for all other years presented. The principal balance of the 3.60% notes due 2027 was $600.0 at December 31, 2018 and 2017, and $0.0 for all other years presented. The outstanding balance on the 2014 term loan was $0.0 at December 31, 2018, $72.0 at December 31, 2017, $565.0 at December 31, 2016, $715.0 at December 31, 2015, and $0.0 at December 31, 2014. The outstanding balance on the 2017 term loan was $527.1 at December 31, 2018, $750.0 at December 31, 2017, and $0.0 for all other years presented. The outstanding balance on the revolving credit facility was $0.0 at December 31, 2018, 2017, 2016, 2015, and 2014. The remainder of other long-term obligations consisted primarily of capital leases and mortgages payable with balances of $67.8, $76.8, $71.8, $60.9, and $42.4 at December 31, 2018, 2017, 2016, 2015, and 2014, respectively. Long-term obligations exclude amounts due to affiliates. |

| (i) | The Company changed its financial statement classification for certain gross receipts taxes in 2016, removing these taxes from its provision for income taxes and moving this expense into selling, general and administrative expenses. Certain gross receipts taxes of $6.1, $6.1, and $7.6 were reclassified in 2015, 2014 and 2013, respectively. |

| (k) | The selected financial data for the years ended December 31, 2018, 2017 and 2016 and as of December 31, 2018, 2017 and 2016, reflects the adoption of Accounting Standards Codification 606 Revenue from Contracts with Customers (ASC 606). See Note 1 of the notes to the consolidated financial statements for a summary of adjustments. The select financial data for the years ended December 31, 2015 and 2014 and as of December 31, 2015 and 2014 does not reflect the adoption of ASC 606. |

Information required by this item is incorporated by reference to the [removed: Report] [added: *Report] of Independent Registered Public Accounting [removed: Firm] [added: Firm*] and the consolidated financial statements, related notes and supplementary data.

[removed: Disclosure] [added: Disclosure] Controls and [removed: Procedures][added: Procedures]

[removed: Based upon this evaluation, the Company’s principal executive officer and principal] financial officer concluded that the Company’s disclosure controls and procedures were effective as of the end of the period covered by this annual report.

[removed: Changes] [added: Changes] in Internal Control over Financial [removed: Reporting][added: Reporting]

There have been no changes in the Company’s internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) during the quarter ended December 31, [removed: 2018,] [added: 2019,] that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

[removed: Report] [added: Report] of Management on Internal Control over Financial [removed: Reporting][added: Reporting]

The Company's management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2018.][added: 2019.]

Based on this assessment, the Company's management determined that, as of December 31, [removed: 2018,] [added: 2019,] the Company maintained effective internal control over financial reporting.

PricewaterhouseCoopers LLP, an independent registered public accounting firm, who audited and reported on the consolidated financial statements of the Company included in this annual report, also audited the effectiveness of the Company’s internal control over financial reporting as of December 31, [removed: 2018,] [added: 2019,] as stated in its report, which is included herein immediately preceding the Company’s audited financial statements.

Based upon this evaluation, the Company’s principal executive officer and principal

[Index](#s04282097E1045C498119E1E4EA80E727)

On June 3, 2019, the Company completed the acquisition of Envigo's nonclinical contract research services business.

The Company’s management has extended its oversight and monitoring processes that support internal control over financial reporting to include the acquired Envigo operations.

The Company’s management is continuing to integrate the acquired operations of Envigo's nonclinical contract research services business into the Company’s overall internal control over financial reporting process.

However, management has excluded these operations from its annual assessment of internal controls over financial reporting for the year ending December 31, 2019.

On June 3, 2019, the Company completed the acquisition of Envigo's nonclinical contract research services business.

As a result, management has excluded Envigo from its assessment of internal control over financial reporting.

Envigo is a wholly-owned subsidiary whose total assets and total revenues, excluded from management's assessment, represent 1.3% and 1.1%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2019.

[Index](#s17B4D0940D675D7FA89D0680B4EFBBDE)

[removed: PART III][added: PART III]

[Index](#s04282097E1045C498119E1E4EA80E727)

[removed: Except for] [added: Information concerning] the [removed: information regarding] [added: Company’s Audit Committee, including] the [removed: executive officers] [added: designation of audit committee financial experts] and [removed: directors above, the] information [removed: called for by] [added: regarding compliance with Section 16(a) of the Exchange Act responsive to] this item is incorporated by reference to [removed: information in] the [removed: 2018] [added: Company’s 2020] Proxy Statement under the captions [removed: “Section] [added: Corporate Governance and Section] 16(a) Beneficial Ownership Reporting [removed: Compliance,” “Corporate Governance Policies and Procedures - Code of Conduct and Ethics,” and “Corporate Governance.”][added: Compliance respectively.]

The information required by the item regarding directors is incorporated by reference to the Company’s Definitive Proxy Statement to be filed with the Securities and Exchange Commission in connection with the Annual Meeting of Stockholders to be held in 2020 (the 2020 Proxy Statement) under the caption Election of Directors.

Information regarding executive officers is incorporated by reference to the Company’s 2020 Proxy Statement under the caption Executive Officers.

Information concerning the Company's code of ethics is incorporated by reference to the Company's 2020 Proxy Statement under the caption Corporate Governance Policies and Procedures.

Board of Directors

David P.

King - Mr. King (62) has served as chairman of the board, president, and chief executive officer of the Company since May 6, 2009; prior to that date he served as a director, president, and chief executive officer of the Company since January 1, 2007.

Mr. King served as executive vice president and chief operating officer from December 2005 to January 2007, as executive vice president of Strategic Planning and Corporate Development from January 2004 to December 2005 and originally joined the Company in September 2001 as senior vice president, general counsel, and chief compliance officer.

Prior to joining the Company, he was a partner with Hogan & Hartson LLP (now Hogan Lovells US LLP) in Baltimore, Maryland from 1992 to 2001.

He also sits on the boards of directors of the Seattle Science Foundation, the American Clinical Laboratory Association and PATH, where he has served as board chair since January 2018.

Mr. King is also on the board of trustees of Elon University.

Mr. King also served on the board of directors of Cardinal Health Inc., a public company, from 2011 until 2018.

Mr. King has nearly twenty years’ experience with the Company in a variety of roles of increasing responsibility in corporate operations, strategic planning, and corporate administration.

Mr. King has a deep understanding of the clinical laboratory industry, business strategy, finance, sales and marketing, mergers and acquisitions, risk management and executive management of the Company and its operations.

Kerrii B.

Anderson1,4 - Ms. Anderson (61) has served as a director of the Company since May 17, 2006.

Ms. Anderson was chief executive officer of Wendy’s International Inc., a restaurant operating and franchising company, from April 2006 until September

[Index](#s17B4D0940D675D7FA89D0680B4EFBBDE)

2008, when the company was merged with Triarc.

Ms. Anderson served as executive vice president and chief financial officer of Wendy’s International from 2000 to 2006.

Prior to this position, she was chief financial officer, senior vice president of M/I Schottenstein Homes, Inc. from 1987 to 2000.

Ms. Anderson is currently a director of Abercrombie & Fitch and a member of the Audit Committee.

She also has served as a director and a member of the Compensation Committee and Audit Committee of Worthington Industries, Inc. (NYSE: WOR) since September 2010 and a director and member of the Audit and Finance Committee of Abercrombie & Fitch Co. (NYSE: ANF) since February 2018.

Ms. Anderson serves on the Financial Committee of the Columbus Foundation and on the Board of Trustees, as well as the Chair of the Finance and Audit Committee for Ohio Health.

She serves on the Board of Trustees for Elon University, as well as Chairwoman of the Audit Committee for Elon.

Ms. Anderson served as the chairwoman of the board of Chiquita Brands International Inc. from October 2012 until the Company was sold on January 6, 2015, and was the chair of the Nominating and Corporate Governance Committee and a member of the Audit Committee.

She also was a director of PF Chang’s China Bistro, Inc. from 2010 until June 2012 and Wendy’s International.

from 2006 until September 30, 2008.

Ms. Anderson has a strong record of leadership in operations and strategy.

Ms. Anderson is also an audit committee financial expert as a result of her experience as CEO and CFO of Wendy’s International.

Through her service on other public company boards, Ms. Anderson brings extensive financial, mergers and acquisitions, international, talent management, corporate governance and executive compensation experience to the Company’s board.

Jean-Luc Bélingard2,3 \- Mr. Bélingard (70) has served as a director of the Company since April 28, 1995.

From 2011 to December 2017, Mr. Bélingard served as chairman of bioMérieux, the worldwide leader of the IVD microbiology segment and a non-U.S. public company since 2010.

Mr. Bélingard continues to serve on the board of directors of bioMérieux and as vice president of Institut Mérieux.

Prior to serving as chairman, Mr. Bélingard had served as chief executive officer of bioMérieux from July 2011 to April 2014.

Mr. Bélingard retired as chairman and chief executive officer of Ipsen SA, a diversified French healthcare holding company, on November 22, 2010.

He had served in that position since 2002.

Prior to this position, Mr. Bélingard was chief executive officer from 1999 to 2001 of bioMérieux-Pierre Fabre, a diversified French healthcare holding company, where his responsibilities included the management of that company’s worldwide pharmaceutical and cosmetic business.

From 1990 to 1999, Mr. Bélingard was CEO of Roche Diagnostics and a member of the Hoffman La Roche group Executive Committee.

Mr. Bélingard is a director of the following non-U.S. public companies: Stallergenes Greer (U.K.) since 2011, Transgene SA since 2013, and Lupin Limited (India).

Mr. Bélingard holds directorships at various Institut Mérieux Group companies, in particular at Institut Mérieux, the Group’s parent company.

Mr. Bélingard serves on the advisory board of Laboratoire Pierre Fabre S.A. (France) since 2013, which is owned by The Pierre Fabre Foundation, a government-recognized public organization.

Mr. Bélingard is also a member of the Bill and Melinda Gates Foundation CEO Roundtable.

Mr. Bélingard has been chairman of “FEFIS,” the French Federation of Health Industries (Fédération Française des Industries de Santé), since 2016, and, since January 2017, he has been a member of the Conseil National de l’Industrie (C.N.I.) chaired by the French government.

The information required by this item is incorporated by reference to information in the [removed: 2019] [added: 2020] Proxy Statement under the captions “Executive Compensation” and “Director Compensation.”

See [removed: “Note] [added: Note] 15 [added: Stock Compensation Plans] to the Consolidated Financial [removed: Statements”] [added: Statements] for a discussion of the Company’s Stock Compensation Plans.

Except for the above referenced footnote, the information called for by this item is incorporated by reference to information in the [removed: 2019] [added: 2020] Proxy Statement under the captions “Security Ownership of Certain Beneficial Holders and Management,” “Compensation Discussion and Analysis” and “Executive Compensation.”

The information required by this item is incorporated by reference to information in the [removed: 2019] [added: 2020] Proxy Statement under the captions “Board Independence” and “Related Party Transactions.”

The information required by this item is incorporated by reference to information in the [removed: 2019] [added: 2020] Proxy Statement under the caption “Fees to Independent Registered Public Accounting Firm.”

[removed: PART IV][added: PART IV]

[Index](#s04282097E1045C498119E1E4EA80E727)

[Index](#s17B4D0940D675D7FA89D0680B4EFBBDE)

| | All [removed: other] schedules are omitted as they are inapplicable or the required information is furnished in the Consolidated Financial Statements or notes thereto. |

| 3.1 | [Amended and Restated Certificate of Incorporation of the Company dated May 24, 2001 (incorporated herein by reference to Exhibit 3.1 to the [removed: Company's] [added: Company’s] Registration Statement on Form S-3, filed with the Commission on October 19, 2001, File No. [removed: 333-71896).](http://www.sec.gov/Archives/edgar/data/920148/000095010301501450/oct1901_x0301.txt)] [added: 333-71896).](https://www.sec.gov/Archives/edgar/data/920148/000092014820000011/exhibit31amendedbylaws.htm)] |

| [removed: 3.2] [added: 10.14] | [removed: [Amended] [added: [Laboratory Corporation of America Holdings Amended] and Restated [removed: By-Laws of the Company dated January 4, 2017. *] [added: Master Senior Executive Severance Plan] (incorporated herein by reference to Exhibit [removed: 3.1 of] [added: 10.1 to] the [removed: Company's] [added: Company’s] Quarterly Report on Form 10-Q for the period ended March 31, [removed: 2017).](http://www.sec.gov/Archives/edgar/data/920148/000092014817000044/exhibit31amendedbylawsfinal.htm)] [added: 2009).](http://www.sec.gov/Archives/edgar/data/920148/000092014809000031/ex10_1.htm)] |

| 4.3 | [Indenture, dated as of [removed: October 23, 2006,] [added: November 19, 2010,] between the Company and [removed: The] [added: U.S.] Bank [removed: of New York, as trustee, including the Form of Global Note attached] [added: National Association,] as [removed: Exhibit A thereto] [added: trustee] (incorporated herein by reference to Exhibit 4.1 to the [removed: Company's] [added: Company’s] Current Report on Form 8-K filed on [removed: October 24, 2006).](http://www.sec.gov/Archives/edgar/data/920148/000092014806000213/indenture.htm)] [added: November 19, 2010).](http://www.sec.gov/Archives/edgar/data/920148/000092014810000110/ex_4-1.htm)] |

| 4.4 | [removed: [Indenture,] [added: [Second Supplemental Indenture,] dated as of November 19, 2010, between the Company and U.S. Bank National Association, as [removed: trustee] [added: trustee, including the form of the 2020 Notes] (incorporated herein by reference to Exhibit [removed: 4.1] [added: 4.3] to the [removed: Company's] [added: Company’s] Current Report on Form 8-K filed on November 19, [removed: 2010).](http://www.sec.gov/Archives/edgar/data/920148/000092014810000110/ex_4-1.htm)] [added: 2010).](http://www.sec.gov/Archives/edgar/data/920148/000092014810000110/ex_4-3.htm)] |

| [removed: 4.5] [added: 4.8] | [removed: [Second] [added: [Sixth] Supplemental Indenture, dated as of November [removed: 19, 2010,] [added: 1, 2013,] between the Company and U.S. Bank National Association, as trustee, including the form of the [removed: 2020] [added: 2023] Notes (incorporated herein by reference to Exhibit 4.3 to the [removed: Company's] [added: Company’s] Current Report on Form 8-K filed on November [removed: 19, 2010).](http://www.sec.gov/Archives/edgar/data/920148/000092014810000110/ex_4-3.htm)] [added: 1, 2013).](http://www.sec.gov/Archives/edgar/data/920148/000119312513422088/d619416dex43.htm)] |

| [removed: 4.6] [added: 4.5] | [Third Supplemental Indenture, dated as of August 23, 2012, between the Company and U.S. Bank National Association, as trustee, including the form of the 2017 Notes (incorporated herein by reference to Exhibit 4.2 to the [removed: Company's] [added: Company’s] Current Report on Form 8-K filed on August 23, 2012).](http://www.sec.gov/Archives/edgar/data/920148/000119312512365977/d401488dex42.htm) |

| [removed: 4.7] [added: 4.6] | [Fourth Supplemental Indenture, dated as of August 23, 2012, between the Company and U.S. Bank National Association, as trustee, including the form of the 2022 Notes (incorporated herein by reference to Exhibit 4.3 to the [removed: Company's] [added: Company’s] Current Report on Form 8-K filed on August 23, 2012).](http://www.sec.gov/Archives/edgar/data/920148/000119312512365977/d401488dex43.htm) |

| [removed: 4.8] [added: 4.7] | [Fifth Supplemental Indenture, dated as of November 1, 2013, between the Company and U.S. Bank National Association, as trustee, including the form of the 2018 Notes (incorporated herein by reference to Exhibit 4.2 to the [removed: Company's] [added: Company’s] Current Report on Form 8-K filed on November 1, 2013).](http://www.sec.gov/Archives/edgar/data/920148/000119312513422088/d619416dex42.htm) |

| [removed: 4.9] [added: 4.16] | [removed: [Sixth] [added: [Fourteenth] Supplemental Indenture, dated as of November [removed: 1, 2013,] [added: 25, 2019,] between the Company and U.S. Bank National Association, as trustee, including the form of the [removed: 2023] [added: 2029] Notes (incorporated herein by reference to Exhibit 4.3 to the Company's Current Report on Form 8-K filed on November [removed: 1, 2013).](http://www.sec.gov/Archives/edgar/data/920148/000119312513422088/d619416dex43.htm)] [added: 25, 2019).](http://www.sec.gov/Archives/edgar/data/920148/000119312519300013/d839349dex43.htm)] |

| [removed: 4.10] [added: 4.9] | [Seventh Supplemental Indenture, dated as of January 30, 2015, between the Company and U.S. Bank National Association, as trustee, including the form of the 2020 Notes (incorporated herein by reference to Exhibit 4.2 to the [removed: Company's] [added: Company’s] Current Report on Form 8-K filed on January 30, 2015).](http://www.sec.gov/Archives/edgar/data/920148/000119312515026832/d860928dex42.htm) |

| [removed: 4.11] [added: 4.1] | [Eighth Supplemental Indenture, dated as of January 30, 2015, between the Company and U.S. Bank National Association, as trustee, including the form of the 2022 Notes (incorporated herein by reference to Exhibit 4.3 to the [removed: Company's] [added: Company’s] Current Report on Form 8-K filed on January 30, 2015).](http://www.sec.gov/Archives/edgar/data/920148/000119312515026832/d860928dex43.htm) |

| [removed: 4.12] [added: 4.11] | [Ninth Supplemental Indenture, dated as of January 30, 2015, between the Company and U.S. Bank National Association, as trustee, including the form of the 2025 Notes (incorporated herein by reference to Exhibit 4.4 to the [removed: Company's] [added: Company’s] Current Report on Form 8-K filed on January 30, 2015).](http://www.sec.gov/Archives/edgar/data/920148/000119312515026832/d860928dex44.htm) |

| [removed: 4.13] [added: 4.12] | [Tenth Supplemental Indenture, dated as of January 30, 2015, between the Company and U.S. Bank National Association, as trustee, including the form of the 2045 Notes (incorporated herein by reference to Exhibit 4.5 to the [removed: Company's] [added: Company’s] Current Report on Form 8-K filed on January 30, 2015).](http://www.sec.gov/Archives/edgar/data/920148/000119312515026832/d860928dex45.htm) |

| [removed: 4.14] [added: 4.13] | [Eleventh Supplemental Indenture, dated as of August 22, 2017, between the Company and U.S. Bank National Association, as trustee, including the form of the 2024 Notes (incorporated by reference to Exhibit 4.2 to the [removed: Company's] [added: Company’s] Current Report on Form 8-K filed on August 22, [removed: 2017)](http://www.sec.gov/Archives/edgar/data/920148/000119312517264395/d427802dex42.htm)] [added: 2017).](http://www.sec.gov/Archives/edgar/data/920148/000119312517264395/d427802dex42.htm)] |

| [removed: 4.15] [added: 4.14] | [Twelfth Supplemental Indenture, dated as of August 22, 2017, between the Company and U.S. Bank National Association, as trustee, including the form of the 2027 Notes (incorporated by reference to Exhibit 4.3 to the [removed: Company's] [added: Company’s] Current Report on Form 8-K filed on August 22, [removed: 2017)](http://www.sec.gov/Archives/edgar/data/920148/000119312517264395/d427802dex43.htm)] [added: 2017).](http://www.sec.gov/Archives/edgar/data/920148/000119312517264395/d427802dex43.htm)] |

| [removed: 10.1] [added: 10.1] | National Health Laboratories Incorporated Pension Equalization Plan (incorporated herein by reference to the [removed: Company's] [added: Company’s] Annual Report on Form 10-K for the fiscal year ended December 31, 1992). |

| [removed: 10.2] [added: 10.2] | [Laboratory Corporation of America Holdings amended and restated new Pension Equalization Plan (incorporated herein by reference to Exhibit 10.1 to the [removed: Company's] [added: Company’s] Quarterly Report on Form 10-Q for the period ended September 30, 2004).](http://www.sec.gov/Archives/edgar/data/920148/000092014804000191/ex10-1_pepplan.htm) |

| [removed: 10.3] [added: 10.3] | [First Amendment to the Laboratory Corporation of America Holdings amended and restated new Pension Equalization Plan (incorporated herein by reference to Exhibit 10.2 to the [removed: Company's] [added: Company’s] Quarterly Report on Form 10-Q for the period ended September 30, 2004).](http://www.sec.gov/Archives/edgar/data/920148/000092014804000191/ex10-2_pepamend.htm) |

| [removed: 10.4] [added: 10.4] | [Second Amendment to the Laboratory Corporation of America Holdings amended and restated new Pension Equalization Plan. (incorporated herein by reference to Exhibit 10.4 to the [removed: Company's] [added: Company’s] Annual Report on Form 10-K for the fiscal year ended December 31, 2004).](http://www.sec.gov/Archives/edgar/data/920148/000092014805000049/pepamend2_10-4.htm) |

| [removed: 10.7] [added: 10.5] | [Laboratory Corporation of America Holdings Senior Executive Transition Policy (incorporated herein by reference to Exhibit 10.1 to the [removed: Company's] [added: Company’s] Quarterly Report on Form 10-Q for the period ended June 30, 2004).](http://www.sec.gov/Archives/edgar/data/920148/000092014804000150/seniorexectranspolicy.txt) |

| [removed: 10.8] [added: 10.21] | [Laboratory Corporation of America Holdings [removed: 1995] [added: 2016 Employee] Stock [added: Purchase] Plan [removed: for Non-Employee Directors] (incorporated [removed: herein] by reference [added: herein to] Exhibit [removed: 4.c] [added: 10.2] to the [removed: Company's Registration Statement] [added: Company’s Current Report] on Form [removed: S-8,] [added: 8-K] filed [removed: with the Commission] on [removed: September 26, 1995, File No. 33-62913).](http://www.sec.gov/Archives/edgar/data/920148/0000950103-95-000332.txt)] [added: May 16, 2016).](http://www.sec.gov/Archives/edgar/data/920148/000119312516591935/d169343dex102.htm)] |

| [removed: 10.9] [added: 10.12] | [removed: [First Amendment to Laboratory] [added: [Laboratory] Corporation of America Holdings [removed: 1995] [added: 2008] Stock [added: Incentive] Plan [removed: for Non-Employee Directors] (incorporated herein by reference to Annex [removed: II] [added: III] to the [removed: Company's] [added: Company’s] Definitive Proxy Statement on Schedule [removed: 14A,] [added: 14A] filed [removed: with the Commission] on [removed: June 6, 1997).](http://www.sec.gov/Archives/edgar/data/920148/0000950130-97-002717.txt)] [added: March 25, 2008).](http://www.sec.gov/Archives/edgar/data/920148/000119312508064635/ddef14a.htm)] |

| [removed: 10.11] [added: 10.13] | [removed: [Laboratory] [added: [Amendment to Laboratory] Corporation of America Holdings [removed: Amended and Restated 1999] [added: 2008] Stock Incentive Plan (incorporated herein by reference to [removed: Annex I] [added: Exhibit 10.2] to the [removed: Company's Definitive Proxy Statement] [added: Company’s Current Report] on [removed: Schedule 14A] [added: Form 8-K] filed [removed: with the Commission] on May [removed: 3, 1999).](http://www.sec.gov/Archives/edgar/data/920148/0000950130-99-002564.txt)] [added: 7, 2008).](http://www.sec.gov/Archives/edgar/data/920148/000092014808000150/exhibit10-2.htm)] |