Labcorp Holdings (LH) Financial History

The Company expects the efforts to impose reduced reimbursement, more stringent payment policies, and utilization and cost controls by government and other payers to continue.

While BLS endeavors to include in its contracts provisions entitling it to be indemnified and entitling it to a limitation of liability, these provisions are not always successfully obtained and, even if obtained, do…

U.S.

The Company has faced, and may continue to face, challenges relating to intellectual property rights.

The Company is currently and may continue to be subject in the ordinary course of business to legal actions related to, among other things, intellectual property disputes, contract disputes, data and privacy issues, p…

Adverse results in material litigation matters could have a material adverse effect on the Company’s business.

U.S.

BLS’s preclinical services utilize animals in preclinical testing of the safety and efficacy of drugs and devices.

Increased regulations and restrictions on the import of research animals, limitations of supply of research animals, and actions of animal rights activists may have an adverse effect on the operations of BLS or the Co…

Failure to comply with the regulations of pharmaceutical and medical device regulators, such as the FDA, the Medicines and Healthcare products Regulatory Agency in the U.K., the EU, the European Medicines Agency, the…

Anti-corruption laws in the countries where the Company conducts business, including the FCPA, U.K.

The use of AI and machine learning tools in the Company’s operations and the services of third-parties may introduce risks that could adversely affect the Company’s business, financial condition, and reputation.

Failure in the information technology systems of the Company or its vendors and other third-party service providers, or newly acquired businesses, or delays or failures in the development and implementation of new sys…

The Company collects, stores, transmits, and processes personal and financial information, and works with third-party service providers in connection with such data processing activities.

To preserve, for U.S.

The Company might not be able to engage in certain desirable capital raising or strategic transactions as a result of the Spin-off and may not achieve its intended results.

The Company maintains the majority of its cash and cash equivalents in accounts with major U.S.

The Company’s results of operations may vary significantly from quarter to quarter and are influenced by factors over which the Company has little control, such as:

At December 31, 2025, the indebtedness on the Company’s outstanding senior notes totaled $5.2 billion in aggregate principal, of which $500.0 million is payable within the next 12 months.

To limit the Company’s exposure to interest rate and currency exchange fluctuations, the Company enters into financial swaps and hedging arrangements, with various counterparties.

The Company operates internationally and BLS derives a significant portion of its revenues from non-U.S.

BLS’s revenues depend on R&D spending by companies in the pharmaceutical, biotechnology and medical device industries.

Billing for laboratory services is a complex process due to varying billing requirements across different payers, including physicians, patients, health plans, Medicare, and Medicaid.

The Company has quality control systems and processes to support the performance and delivery of its services.

In addition, as health systems acquire physician practices, maintaining strong relationships with hospital-based systems and integrated delivery networks is increasingly important to the Company’s business.

Changes or disruption in services, supplies, or transportation provided by third parties have impacted, and could in the future materially impact, the Company’s operations and business.

In addition, advances in technology may lead to the development of more technologies, such as point-of-care testing equipment, that can be operated by healthcare providers in their offices or by patients themselves wi…

The commercial laboratory industry is subject to changing technology and the introduction of new and improved test offerings.

Failure to develop or acquire licenses for new or improved testing technologies, or the Company’s customers using new technologies to replace offerings currently provided by the Company could adversely affect its busi…

The Company’s growth depends on attracting new customers and business partners while retaining existing relationships.

As further described in Item 1 and Item 1A of Part I of this Annual Report, both Dx and BLS operate in highly competitive industries and selection of a commercial laboratory or a drug development partner is based on a…

An inability to attract, retain, and develop experienced and qualified personnel, including personnel in key roles and critical positions, and increased personnel costs, could adversely affect the Company’s business.

Operations may be disrupted and adversely impacted by events beyond the Company’s control, including natural disasters, adverse weather, geopolitical events, public health crises, supply chain disruptions, and inacces…

The Company’s business depends on sustained demand for diagnostic testing and biopharma laboratory services by patients, physicians, hospitals, MCOs, CROs, pharmaceutical, biotechnology, medical device companies, and…

General or macro-economic factors and significant fluctuations in economic conditions in the U.S.

Risks Related to the Company’s Business and Operations

be materially and adversely affected if it were required to indemnify a site or customer against claims pursuant to such contract terms.

Adverse effects resulting from the failure to successfully obtain, maintain, and enforce intellectual property rights and defend against challenges to the Company’s intellectual property rights could include the Compa…

Many of the Company’s offerings and processes rely on intellectual property, including patents, copyrights, trademarks, and trade secrets.

substantial monetary damages as well as damage to the Company’s reputation with customers, which could have a material adverse effect upon its business.

Regulation of diagnostics offerings in jurisdictions outside the U.S.

Current FDA regulation of the Company’s diagnostic offerings and the potential for future increased regulation of the Company’s LDTs could result in increased costs and administrative and legal actions for noncomplian…

Historically, LDTs developed by high complexity clinical laboratories have been generally offered as services to health care providers under the CLIA regulatory framework administered by CMS, without the requirement f…

marketing, distribution, and surveillance of diagnostics, and it regularly inspects and reviews the manufacturing processes and performance of diagnostics.

The FDA has regulatory responsibility for instruments, test kits, reagents and other devices used by clinical laboratories.

The conduct of animal research at BLS’s facilities must be in compliance with applicable laws and regulations in the jurisdictions in which those activities are conducted.

It is important that research products be free of diseases, including infectious diseases.

Additionally, certain BLS services and activities must conform to current good manufacturing practice (cGMP), as further described in Item 1 of Part I of this Annual Report.

The operation of BLS’s preclinical laboratory facilities and central laboratory operations must conform to good laboratory practice (GLP) and good clinical practice (GCP), as applicable, as well as all other applicabl…

program including policies, procedures, training and safeguards in the engagement and management of third parties acting on the Company’s behalf.

The Company’s international operations expose it to risks from potential failure to comply with foreign laws and regulations that differ from those under which the Company operates in the U.S.

The Company may be required to make changes to its business practices and to incur additional costs associated with compliance with these evolving and complex regulations.

The Company may also be required to comply with the data privacy and security laws of other countries in which it operates or with which it transfers and receives data.

In addition to the existing requirements under HIPAA, HHS issued an NPRM regarding revising the HIPAA Security Rule, which, if adopted, would impose increased requirements on regulated entities such as the Company.

•the protection of computing systems maintaining electronic PHI.

•administrative, technical and physical safeguards required of entities that use or receive PHI; and

•the content of notices of privacy practices for PHI;

•a patient’s rights to access, amend and receive an accounting of certain disclosures of PHI;

•the circumstances under which the use and disclosure of PHI are permitted or required without a specific authorization by the patient, including, but not limited to, treatment purposes, activities to obtain payments…

HIPAA restricts the Company’s ability to use or disclose PHI, without patient authorization, for purposes other than payment, treatment or healthcare operations (as defined by HIPAA), except for disclosures for variou…

In the U.S., the Health Insurance Portability and Accountability Act of 1996, the U.S.

If the Company and its third-party service providers do not comply with existing or new laws and regulations related to protecting the privacy and security of personal or health information, it could be subject to mon…

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’s business.

The commercial laboratory testing industry is subject to extensive U.S.

The Company is subject to extensive government regulation at the federal, state, and local levels in the U.S.

for under the PFS, is also subject to statutory and regulatory reduction.

U.S.

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

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, a…

Any cybersecurity incidents affecting the information technology systems of third parties that provide services to the Company could have a material adverse effect on the Company's operations.

The Company and its third parties leverage AI and machine learning tools to increase productivity and innovation.

In addition, the Company faces increased cybersecurity risks due to the number of employees that continue to work remotely, which remains at levels higher than prior to the COVID-19 pandemic as a result of changes in…

protect against these evolving threats.

The Company has implemented a formal cybersecurity program; however, because the techniques used by threat actors to obtain unauthorized access, disable or degrade service, or sabotage systems continue to evolve (and…

The Company has previously experienced and expects to continue to experience attempts by unauthorized parties to compromise the Company’s cybersecurity controls, like the 2018 ransomware attack.

The Company’s operations and customer relationships depend, in part, on the continued performance of its information technology systems.

On June 30, 2023, the Company completed the previously announced spin-off of Fortrea.

The spin-off of Fortrea may not achieve the intended results.

The Company’s quarterly operating results may vary.

The Company may also enter into additional transactions or credit facilities, including other long-term debt, which may increase its indebtedness and result in additional restrictions upon the business.

could increase the Company’s vulnerability to sustained, adverse macroeconomic weakness, limit its ability to obtain further financing or refinance existing debt at maturity, and limit its ability to pursue certain op…

The Company’s level of indebtedness and debt service requirements could adversely affect its business.

BLS’s revenues depend greatly on the expenditures made by the pharmaceutical, biotechnology and medical device industries in R&D.

Although BLS’s contracts typically entitle the Company to receive all fees earned up to the time of termination, and often also the costs of winding down the terminated projects, the loss, reduction in scope or delay…

•BLS’s failure to perform its duties properly under the contract.

•a customer’s decision to terminate the development of a product or to end a particular study; and

•insufficient investigator recruitment;

•insufficient clinical trial subject enrollment;

•unexpected or undesired results of the products;

•failure of products to satisfy safety requirements;

occur for a variety of reasons, including:

Many of BLS’s contracts may be terminated or reduced in scope either immediately or upon notice.

The Company has many contracts that are structured as fixed-price for fixed-contracted services or fee-for-service with a cap.

Many healthcare companies and providers, including pharmaceutical, biotechnology and medical device companies, health systems, and physician practices are consolidating through mergers, acquisitions, joint ventures, a…

The Company depends on third parties to provide supplies and services critical to the Company’s business.

The commercial laboratory industry is subject to changing technology and the introduction of new and improved test offerings.

From time to time, manufacturers discontinue or recall reagents, test kits, or instruments used by the Company to perform laboratory testing.

BLS assists pharmaceutical, biotechnology, and medical device companies in navigating the regulatory approval process.

The Company has periodically experienced delays in the pricing and implementation of coding and billing changes among various payers, including Medicaid, Medicare and commercial carriers.

In addition, Medicare and Medicaid and private insurers have increased their efforts to control the cost, utilization and delivery of healthcare services, including commercial laboratory services.