Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [X] No [  ].  

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes [  ] No [X].  

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes [X] No [  ].

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes [X] No [  ].

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.              Yes ☒ No [  ].    

         

As of June 30, 2020,2021, the aggregate market value of the common stock held by non-affiliates of the registrant was approximately $15.2$24.8 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: 97.693.4 million shares as of February 24, 2021.2022.

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K into which the document is incorporated:

Risks Related to Regulatory and Compliance Matters

Risks Related to the Company’s Business

Risks Related to Financial Matters

Risks Related to Technology and Cybersecurity

Risks Related to Legal Matters

FORWARD-LOOKING STATEMENTS

In this Annual Report, the Company makes, and from time to time may otherwise make in its public filings, press releases and discussions by Company management, forward-looking statements concerning the Company’s operations, performance and financial condition, as well as its strategic objectives. Some of these forward-looking statements relate to future events and expectations and can be identified by the use of forward-looking words such as “believes”, “expects”, “may”, “will”, “should”, “seeks”, “approximately”, “intends”, “plans”, “estimates”, or “anticipates” or the negative of those words or other comparable terminology. Such forward-looking statements speak only as of the time they are made and are subject to various risks and uncertainties and the Company claims the protection afforded by the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual results could differ materially from those currently anticipated due to a number of factors in addition to those discussed elsewhere herein, including in the “Summary of Material Risks” above and in the “Risk Factors” section of this Annual Report, and in the Company’s other public filings, press releases, and discussions with Company management, including:

5. EvaluatePursue Opportunities with Short- and Execute onLong-Term and High-Growth OpportunitiesPotential

The Company has been intensely focused on supporting the fight against COVID-19 since the earliest stages of the pandemic.pandemic, and it continues to play a substantial role in ongoing response efforts.

Diagnostic Testing and Clinical Trial Leadership

In tandem with the first confirmed cases,2021, the Company began preparationsfurther expanded access to testing for COVID-19 and aided pharmaceutical companies in the development of critical COVID-19 vaccines and therapies by harnessing its diagnostic and drug development capabilities.

The Company has steadily increasedmaintained its ability to quickly scale-up COVID-19 testPCR testing capacity from several thousand PCR tests per daythroughout the year, even during periods of reduced demand. In doing so, the Company was able to immediately and effectively respond to surges in early March to 275,000 per day by the end of 2020.positive cases and testing needs. The Company performed over 31approximately 30 million COVID-19 PCR tests and nearly 4 million antibody tests in 2020.2021, and since the start of the pandemic has performed approximately 61.5 million COVID-19 PCR tests and 8 million antibody tests.

As a result,In addition, the Company developed anCompany's expertise and understanding of COVID-19, that leddeveloped through its diagnostic offerings, has allowed it to it becomingbecome a leader in supporting clinical trials of potentialCOVID-19 treatments and vaccines for the virus.vaccines. By the end of 2020,2021, the Company had won approximately 440700 COVID-19 trial and study opportunities, ranging from small, nonclinical programs to late-stage clinical trials.

The Company believes it has a strong track record of deploying capital to investments that enhance the Company's business and return capital to shareholders.

During 2020,2021, the Company invested $267.6$496.9 million in strategic business acquisitions. The acquisitions have expanded the Company’s service offerings, expanded its customer and revenue mix, and strengthened and broadened the scope of its geographic presence. The Company continues to evaluate acquisition opportunities that leverage the Company’s core

During 2020,2021, the Company purchased 0.6repurchased 5.2 million shares of its common stock at an average price of $178.85$282.05 for a total cost of $100.0 million. After making these purchases$1,668.5 million, which included $1,000.0 million paid in the first quarter,respect of an Accelerated Share Repurchase (ASR) program for which the Company temporarily suspended its share repurchase program as a partreceived 80% of the fiscal measures it took in response toshares calculated at the uncertaintyprice at the inception of the COVID-19 pandemic, to preserve liquidity and financial flexibility. The Company reinstated its share repurchase program in the fourth quarter but made no additional purchases in 2020.ASR Agreements. At the end of 2020,2021, the Company had a remainingoutstanding authorization with no expiration datefrom the Board to purchase an additional $800.0 million$1,631.5 of Company common stock. The repurchase authorization has no expiration date.

During 2020,2021, capital expenditures were $381.7 million and the$460.4 million. The Company also repaid $412.2$1,000.0 million of its Senior Notes along with $375.0 million of the outstanding 2019 Term Loan, and also issued $1,000.0 million of new Senior Notes. The Company expects capital expenditures in 20212022 to be approximately 4.0% of revenues, primarily in connection with projects to support growth in the Company's core businesses, facility expansion and updates, projects related to both ongoing andits new LaunchPad initiatives,initiative, and further acquisition integration initiatives.

The Company will continue to evaluate all opportunities for strategic deployment of capital in light of market conditions.

The Company experiences seasonality across its business. For example, testing volume generally declines during the year-end holiday period and other major holidays and can also decline due to inclement weather or natural disasters. Declines in testing volume reduce revenues, operating margins and cash flows. Operations are also impacted by changes in the global economy, exchange rate fluctuations, political and regulatory changes, the progress of ongoing studies and the startup of new studies, as well as the level of expenditures made by the biopharmaceutical industrypharmaceutical, biotechnology and medical device industries in R&D. In 2020, asAs discussed in more detail elsewhere in Item 1, COVID-19 had significant impact onimpacted the Company.Company in 2021. This impact included both the effect of the Company’s response to the virus through its testing and drug development services, andas well as the effect of COVID-19 on the global economy and how that affected demand for the Company’s non-COVID-19 services.

In 2020,2021, approximately 10.7%15.3% of the Company's revenues were billed in currencies other than the U.S. dollar, with the Swiss franc, British pound, Canadian dollar, and the euro representing the largest components of its currency exposure. Given the seasonality and changing economic factors impacting the business, comparison of the results for successive quarters may not accurately reflect trends or results for the full year.

The Company experienced growth across all key financial metrics in 2020.2021.

The Company reports its business in two segments, Dx and DD. In 2020,2021, Dx and DD contributed 65%64% and 35%36%, respectively, of revenues to the Company, and in 20192020 contributed 60%65% and 40%35%, respectively. Nearly all of Dx’s revenues are generated in the U.S., with a smaller portion in Canada and a relatively small amount in the rest of the world. DD’s revenues are nearly evenly split between the U.S. and the rest of the world, with approximately 49%48% derived from the U.S. and approximately 51%52% from other countries. Although this allocation of revenues provides some protection from economic shifts in any one country, it is still heavily tilted towards the U.S. As a result, the Company continues to actively explore new and expanded business opportunities outside the U.S. to further diversify its sources of revenues. The Company's revenues by segment payers/customer groups and by geography for the years ended December 31, 2021, 2020 2019 and 20182019 are as follows:

Effect of U.S. Market Changes on the Clinical Laboratory Business

The American Clinical Laboratory Association (ACLA) has filed a federal civil action challenging the legal basis for the data collection methodology CMS used to derive the data from which the median prices were calculated. Since the initial data

collection, CMS has revised its PAMA regulations to increase the number of hospital outreach labs that will be required to report private market data in future collections. Reports by the U.S. Government Accountability Office (GAO) and, the HHS Office of Inspector General (OIG), and the Medicare Payment Advisory Commission (MedPAC) on PAMA implementation have identified certain instances of actual or potential increased Medicare expenditures under PAMA, thatas well as potential alternative methodologies for data collection under PAMA, which could result in further efforts to amend PAMA by Congress.

ACLA continues to work with Congress on potential legislative reform of PAMA, which if adopted could reduce the negative impact of PAMA as currently implemented by CMS. Under the Laboratory Access for Beneficiaries (LAB) Act, the Medicare Payment Advisory Commission isMedPAC was required to conduct a study and make recommendations to Congress on ways to improve data collection, reporting, and rate setting under PAMA to achieve, in a less burdensome manner, CLFS rates that accurately and fairly reflect private market rates. MedPAC's June 2021 report to Congress included an analysis of potential statistical sampling methodologies that could accomplish that objective, and ACLA has incorporated the concept in PAMA reform proposals to Congress. The Company supports the ongoing efforts to prevent or lessen the negative impact of the changes to the CLFS pursuant to PAMA, and the full impact of those efforts, and what the long-term effect will be on the CLFS rates is not yet known.

In addition to reductions in test reimbursement, the Company also anticipates potential declines in test volumes as a result of increased controls over the utilization of laboratory services by Medicare, Medicaid, and other third-party payers, particularly MCOs. MCOs are implementing, directly or through third parties, various types of laboratory benefit management programs, which may include lab networks, utilization management tools (such as prior authorization and/or prior notification), and claims edits, which impact coverage and reimbursement of clinical laboratory tests. Some of these programs address clinical laboratory testing broadly, while others are focused on certain types of testing, including molecular, genetic and toxicology testing. In addition, continued movement by patients into consumer-driven health plans may have an impact on the utilization of laboratory testing. Test volumes in 2022 could also decline compared to 2021 and 2020 if demand for SARS-CoV-2 testing declines.

Despite the overall negative market changes regarding reimbursement discussed above, Dxthe Company believes that the volume of clinical laboratory testing is positively influenced by several factors, including the expansion of Medicaid, managed care, and private insurance exchanges. In addition, Dxthe Company believes that increased knowledge of the human genome and continued innovation in laboratory medicine will continue to foster greater appreciation of the value of gene-based diagnostic assays. Additional factors that may lead to future volume growth include an increase in the number and types of tests that are readily available (due to advances in technology and increased cost efficiencies) for the diagnosis of disease, and the general aging of the U.S. population. DxPeriodic infectious disease outbreaks such as the SARS-CoV-2 virus also have the potential to generate additional testing volume in the future. The Company also believes that it and other large, independent clinical laboratory testing companies will be able to increase their share of the overall clinical laboratory testing market due to a number of market factors, primarily related to a continued drive to improve outcomes and reduce costs across the healthcare system.system, including but not limited to greater price transparency required under new “surprise billing” laws and regulations requiring

disclosure of hospital charges. Dx believes that its enhanced and growing esoteric menu of tests, leading position with companion diagnostics, broad geographic footprint, and operating efficiency provide a strong platform for growth.

The Company's futureCompany’s success is dependentdepends on its continued capabilitiessustained ability to recruit,attract, develop, and retain a highly specialized and highly skilled global workforce, andworkforce. Management believes that the Company believes that it has good working relationships with its employees. The Company's 72,400 employeesEmployees are globally dispersed, with 77%75% in the U.S. and Canada, 10%12% in the Asia, region, 13% in Europe, the EMEA region,Middle East, and Africa, and less than 1% in Latin America. Of the Latin American region. The Company'sCompany’s global workforce, is 61% in the Dx segment and 39% in the DD segment, with 90% full-time,of employees are full time, and 10% part-time. Approximately 3.6%are part time. Four percent of the Company'sLabcorp’s global workforce is employed under a collective bargaining agreement. To manage fluctuations in volumeDepending on business demand and other business demands,the talent-hiring environment, Labcorp supplements up to 12% of its workforce with contingent workers.

The challenges of 2021, felt globally, also presented the Company uses contingent laborwith significant challenges in acquiring and retaining talent. Despite these obstacles, Labcorp’s global workforce increased by more than 4%. The majority of Labcorp's hires are sourced through an internal talent acquisition team. In addition, the Company continues to supplementgrow its workforce by approximately 10%.through mergers and acquisitions. The Company implemented significant investments to retain talent and enable the organization to meet the business needs for growth, which are discussed further in the section below on “Compensation and Benefits.”

Throughout the pandemic, a significant portion of the Company'sLabcorp’s employees have been working diligently to serve patients and customers. To meet the increased demands of the pandemic, the Company increased its global workforce by 12.5% during

The social unrest and unique impact of the pandemic around the world in 2020 provided the Company an opportunity to refocus efforts to further improve its diversity profile for the benefit of employees, patients, and customers. The Company appointedhas a new Chief Diversity and Inclusion Officer (CDIO), who reports dually to the Chief Executive Officer (CEO) and Chief Human Resources Officer (CHRO). The CDIO also provides periodic reports to the Compensation and Human Capital Committee(D&I) strategic framework, with three overarching pillars of the Board of Directors.

CompensationThe Company has also implemented opportunities for greater engagement between employees and Benefitsmanagement, including quarterly town halls that are held virtually and open to all employees, interaction with front-line employees on visits to the Company facilities, and town halls with employees in business units. In early 2022, the Company initiated a Voice of the Employee Survey.

As the Company'sCompany’s business becomes increasingly complex, global, mobile, and technology-enabled, it recognizesdynamic, the importance of havingCompany believes that its compensation and benefits programs that provide sufficient flexibilitymust be competitive and flexible to attract and retain the specialized and skilledcaliber of talent needed to continue to move the business forward. In 2021, the Company faced unique challenges to growing and maintaining its global workforce. The Company believes that its ability to expand the workforce in 2021 evidences that the Company's compensation and benefit strategies are market competitive and support the business needs to attract and retain talent.

The Company continually monitors market activity and employee movement within and outside of the core life sciences industry to maintain competitiveness, given the dynamic business environment and labor market challenges it faces.

Labcorp’s employees met the unique challenges faced by patients and clients as the COVID-19 pandemic continued in a dynamic life sciences industry.2021. The Company invested more than $120 million to recognize and reward our global workforce, with particular focus placed on frontline workers. These investments included:

The Company also made over $8 millioncontinued investing in broad, off-cycle wage rate adjustments, primarily tothe health and wellness of its global workforce, with particular emphasis on improving its U.S. non-exempthealth benefits program for employees. The Company’s efforts on this front included:

The Company continually educates its workforce on health issues of importance. For example, the Company provided a series of videos throughout 2021 from its medical experts covering the facts, safety, and effectiveness of the COVID-19 vaccines. Further, the Company has also provides U.S. employeesprioritized continuous education on the importance of mental well-being, through communications and resources made available to all employees. The Company believes that its investments in compensation and wellness are crucial to maintaining competitive positioning and a $300 fitness reimbursement to encourage healthy lifestyles.productive and engaged workforce.

Labcorp's curriculum has three primary focus areas: regulatory training, technical training, and professional development. Regulatory training is required by laws and regulations for the Company to operate in certain areas within the life sciences industry is heavily regulated,and in certain jurisdictions. Technical training and professional development enable the DxCompany to compete more effectively in the life sciences industry.

The Company maintains an extensive library of over 46,000 courses that are available virtually within its global learning management system. In 2021, Labcorp employees completed over 3.2 million hours of training, primarily consisting of regulatory and DD segments require a significant investment in technical training to prepare their workforces to meet the necessary standards to run and manage business operations. Across the enterprise considerable attention is focused on employee skills training.

Labcorp also invests in training for the professional development of its talent, and to retain itsin retaining our best employees for future opportunities in the Company.internal opportunities. In 2020, 3,5002021, employees attended professional development webinars consisting of 7,000completed more than 65,000 hours of professional development. To strengthen leadership capabilities,

The nature of the Dx and DDCompany's business segments requires employees to work directly with patients handle, processand animals. This includes the handling, processing, and testing of human or test humananimal specimens on a daily basis. As a result, the health and safety of the Company's employees is a primary concern. Theconcern, the Company has established numerous employee health and safety protocols, including engineering and administrative controls, policies, procedures, processes, and controls, including providing personaltraining to minimize the potential for, and the severity of, work-related injuries and illnesses.

While COVID-19 presented continued challenges, the Company minimized the impact on staff and operations through careful planning and consistent global implementation of precautionary measures. These measures included additional cleaning and sanitization, social distancing, the use of protective equipment (PPE) to protect our employees. During the pandemic, the Company supplied more than 250 million units of PPE to employees, including personal clothsuch as facemasks, for each employee, N95 respirators, and ear-loop masks, gloves, face shields and disposable lab coats.respirators, the increased utilization of work from home, and leveraging video and communications technology.

Employee Giving

The COVID-19 crisis left many communities and individuals facing health challenges and financial crisis. ThroughLabcorp Charitable Foundation, a private, charitable 501(c)(3) organization established by the Company, invested in more than 70 programs in 2021 that align with the Company’s strategic mission to improve health and improve lives. The Foundation’s funding supports the focus areas of health, education, and community across the globe.

Annually, U.S. annualcolleagues have the opportunity to automatically direct a portion of each paycheck to one or more of six selected charities through the Employee Giving Campaign, donations helped to supportCampaign: the American Cancer Society, American Heart Association, American Diabetes Association, American Red Cross Disaster Relief,(Disaster Relief), United Way, and the National Urban League. The National Urban League was added based on feedback from the Company's employees requesting a charity focused on social and economic justice. The Company and its employees focused their efforts on helping the underserved in 2020 by donating to local food pantries and shelters, by supporting educational programs aimed at helpingEmployee contributions support these charities to provide studentsneeded services in their local communities and teachers withacross the resourcesnation.

The Company's global colleagues also support the local communities where they needed duringlive and work. For example, as India endured a second, severe wave of positive COVID-19 cases, Labcorp’s India Crisis Management Team helped 2,398 employees and their families get vaccinated. Additionally, in celebration of Earth Day, Labcorp colleagues in China took an active part in the pandemic and supporting a numberAmerican Chamber of patient assistance programs aimed at helping the underserved whileCommerce Shanghai Annual E-waste Drive, in which employees donated personal electronics that they received care. In addition, the Company established the Labcorp Charitable Foundation which supports the Company’s strategic mission of improving health and improving lives with contributions focused on health and welfare, education and community.no longer use. The donated equipment was distributed to schools throughout rural communities in China to improve access to technology.

The Company provides its services to a broad range of customers across Dx and DD. The primary customer groups serviced by the Company include:

The Company offers its services through a sales force focused on serving the specific needs of customers in different market segments. The Company's sales force is responsible for both new sales and for customer retention and relationship building.

For Dx, these market segments generally include primary care, women's health, specialty medicine (e.g., infectious diseases, endocrinology, gastroenterology, and rheumatology), oncology, ACOs, and hospitals and health systems, with different representatives focused on each segment to better understand and respond to the unique needs of each clinical area. DD’sThe DD global sales organization provides customer coverage across the biopharmaceutical industrypharmaceutical, biotechnology, and medical device industries for services including lead optimization, preclinical safety assessment, analytical services, clinical trials, central laboratories, biomarkers, and companion diagnostics, market access and technology solutions. As part of itsthe Company's ongoing strategic priority to maximize the powervalue of the combined,its unique leadership in both diagnostics and drug development, sales representatives from each business segment work together on outreach to potential customers of each business, including hospitals and health systems that may purchase testing and participate in clinical trials, or biopharmaceuticalpharmaceutical, biotechnology or medical device companies whose studies may benefit from use of Dx’s specialty testing or network of PSCs.

 Drug development services companies like DD are also referred to as CROs and typically derive substantially all of their revenue from research and development (R&D), as well as marketing expenditures, of the biopharmaceutical industry.pharmaceutical, biotechnology and medical device industries.

The drug development industry has many participants ranging from hundreds of small providers to a limited number of large CROs with global capabilities. DD competes against these small and large CROs, as well as in-house departments of biopharmaceutical,pharmaceutical, biotechnology, medical device and diagnostic companies, and to a lesser extent, selected academic research centers, universities and teaching hospitals.

DD believes that customers selecting a CRO often consider the following factors, all of which the Company believes it competes favorably in:

Dx and DD have comprehensive quality systems and processes appropriate for their respective businesses. The Company's quality programs are overseen by Dx's National Office of Quality, DD’s Global Regulatory Compliance and Quality Assurance Unit, DD's clinical trial services global vendor management department, DD's central laboratory services expanded laboratory management services department, and the Company's global supply chain management department and project management staff. The Company has procedures for monitoring its internal performance, as well as that of its vendors, suppliers, and other key stakeholders. In addition, various groups and departments within the Company provide oversight to monitor and control

vendor products and performance, and play an essential role in the Company’s approach to quality through improvements in processes and automation.

Virtually all facets of the Company’s services are subject to quality programs and procedures, including accuracy and reproducibility of tests; turnaround time; customer service; data integrity; patient satisfaction; and billing. The Company’s quality program includesprograms include measures that compare current performance against desired performance goals to monitor critical aspects of service to its customers and patients. This includes licensing, credentialing, training and competency of professional and technical staff, and internal auditing. In addition to the Company's own quality programs, the Company’s laboratories, facilities and processes are subject to on-site regulatory agency inspections and accreditation evaluations, in addition to surveys and proficiency testing, by local or national government agencies; independent external accrediting programs; and inspections and audits by customers.

The Company is committed to developing and commercializing technology-enabled solutions to support its operations and provide better care. The Company operates standard platforms for its core business services and its financial and reporting systems. These standard systems provide consistency within workflows and information as well as a high level of system availability, security, and stability. The primary laboratory systems include standardized support for molecular diagnostics, digital pathology and enhanced specialty laboratory solutions. The Company's centralized information systems are responsible for tremendous operational efficiencies, enabling the Company to achieve consistent, structured, and standardized operating results and superioreffective patient care.

In addition, the information systems used by Dx and DD each offer proprietary and industry-leading information systems, which are discussed in more detail in the sections dedicated to each of those segments.

The Company relies on a combination of patents, trademarks, copyrights, trade secrets, and nondisclosure and non-competition agreements to establish and protect its proprietary technology. The Company has filed and obtained numerous patents in the U.S. and abroad, and regularly files patent applications, when appropriate, to establish and protect its proprietary technology. Occasionally, the Company also licenses U.S. and non-U.S. patents, patent applications, technology, trade secrets, know-how, copyrights or trademarks owned by others. The Company believes, however, that no single patent, technology, trademark, intellectual property asset or license is material to its business as a whole.

Parties may file claims asserting that the Company's technologies infringe on their intellectual property. The Company cannot predict whether parties will assert such claims against it, or whether those claims will harm its business. If the Company is forced to defend against such claims, the Company could face costly litigation and diversion of management’s attention and resources. As result of such disputes, the Company may have to develop costly non-infringing technology or enter into licensing agreements. These agreements, if necessary, may require financial or other terms that could have an adverse effect on the Company's business and financial condition.

Because the Company operates in a number of distinct environments and in a variety of locations worldwide, it is subject to numerous, and sometimes overlapping, regulatory requirements. Both the clinical laboratory industry and the drug development business are subject to significant governmental regulation at the national, state and local levels. As described below, these regulations concern licensure and operation of clinical laboratories, claim submission and reimbursement for laboratory services, healthcare fraud and abuse, drug development services, security and confidentiality of health information, quality, and environmental and occupational safety.

Virtually all clinical laboratories operating in the U.S. must be certified by the federal government or by a federally approved accreditation agency. In most cases, that certification is regulated by CMS through CLIA, which requires that applicable clinical laboratories meet quality assurance, quality control, and personnel standards. Laboratories also must undergo

proficiency testing and are subject to inspections. Clinical laboratories in locations other than the U.S. are generally subject to comparable regulation in their respective jurisdictions.

FDA and Other Regulatory Agency Laws and Regulations

DD’s laboratory facilities and Dx's clinical laboratory facilities that perform testing in support of clinical trials, must conform to a range of standards and regulations, including good laboratory practice (GLP) and good clinical practice (GCP), good manufacturing practice (cGMP), human subject protection and investigational product exemption regulations, and quality system regulation (QSR) requirements, as applicable. The preclinical and clinical studies that the Company conducts are subject to periodic inspections by the FDA as well as other regulatory agencies in the jurisdictions outside the U.S. in which the Company operates, which may include, without limitation, the Medicines and Healthcare products Regulatory Agency (MHRA) in the U.K., the European Medicines Agency, the National Medical Products Administration in China, and the Pharmaceuticals and Medical Devices Agency in Japan, to determine compliance with GLP and GCP as well as other

applicable standards and regulations. If a regulatory agency determines during an inspection that the Company’s equipment, facilities, laboratories, operations, or processes do not comply with applicable regulations and GLP and/or GCP standards, the regulatory agency may issue a formal notice, which may be followed by a warning letter if observations are not addressed satisfactorily. Noncompliance may result in, among other things, unanticipated compliance expenditures, or the regulatory agency seeking civil, criminal or administrative sanctions and/or remedies against the Company, including suspension of its operations.

Additionally, certain DD services and activities, such as chemistry, manufacturing, and controls (CMC) services and manufacturing of investigational medicinal products for use in certain Phase I studies managed by DD, must conform to cGMP. DD is subject to periodic inspections by the FDA and the MHRA, as well as other regulatory agencies in the jurisdictions outside the U.S. in which the Company operates, in order to assess, among other things, cGMP compliance. If a regulatory agency identifies deficiencies during an inspection, it may issue a formal notice, which may be followed by a warning letter if observations are not addressed satisfactorily. Failure to maintain compliance with cGMP regulations and other applicable requirements of various regulatory agencies could result in, among other things, fines, warnings or untitled letters, unanticipated compliance expenditures, suspension of manufacturing, enforcement actions, product seizures or recalls, injunctions, or criminal prosecution.

Many pathology services performed by Dx are reimbursed by Medicare under the PFS. The PFS assigns relative value units to each procedure or service, and a conversion factor is applied to calculate the reimbursement. The PFS is also subject to adjustment on an annual basis. Such adjustments can impact both the conversion factor and relative value units. The Sustainable Growth Rate (SGR), the formula previously used to calculate the fee schedule conversion factor, would have resulted in significant decreases in payment for most physician services for each year since 2003. However, Congress intervened repeatedly to prevent these payment reductions, and the conversion factor was increased or frozen for the subsequent year. The Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) permanently replaced the SGR formula and transitioned PFS reimbursement to a value-based payment system. MACRA retroactively avoided a 21.2% reduction in PFS reimbursement that had been scheduled for April 1, 2015, and provided for PFS conversion factor increases of 0.5% from July 1, 2015 to December 31, 2015, and 0.5% in each of years 2016-2019, followed by no updates for 2020-2025, and updates that vary based on participation in alternative payment models in subsequent years. These changes to the conversion factor may be offset by reductions to the relative value units, as was the case with the 2016 PFS reductions. For 2022, Congress increased the conversion factor by 3.0% over the amount announced in the final rule, instead of allowing a 3.75% reduction to take effect. Approximately 0.4% of Dx's revenue is reimbursed under the PFS.

On December 12, 2018, HHS issued a request for information (RFI) seeking input from the public on how the HIPAA regulations and the Privacy Rule, in particular, could be modified to amend existing, or impose additional, obligations relating to the processing of PHI. Subsequent to the RFI, on January 21, 2021, HHS published a notice of proposed rulemaking (NPRM) containing potential modifications to the Privacy Rule addressing standards that may impede the transition to value-based

healthcare and strengthen individuals' rights to access their health care.information. The public comment period for the NPRM was closed on May 6, 2021. The Company is monitoring the NPRM process. If modifications to the Privacy Rule are adopted, they may impact the Company's compliance obligations under HIPAA.

The administrative simplification provisions of HIPAA mandate the adoption of standard unique identifiers for healthcare providers. The intent of these provisions is to improve the efficiency and effectiveness of the electronic transmission of health information. The National Provider Identifier Rule requires that all HIPAA-covered healthcare providers, whether they are individuals or organizations, must obtain an NPI to identify themselves in standard HIPAA transactions. NPI replaces the unique provider identification number and other provider numbers previously assigned by payers and other entities for the purpose of identifying healthcare providers in standard electronic transactions. The Company believes that it is in compliance with the HIPAA National Provider Identifier Rule in all material respects.

The Health Plan Identifier (HPID) was a unique identifier designed to furnish a standard way to identify health plans in electronic transactions. CMS published the final rule adopting the HPID for health plans required by HIPAA on September 12, 2012. Effective October 31, 2014, CMS announced a delay, until further notice, in enforcement of regulations pertaining to health plan enumeration and use of the HPID in HIPAA transactions adopted in the HPID final rule. On October 28, 2019, CMS published a final rule rescinding the adopted standard unique HPID and implementation specifications and requirements for its use and other entity identifier and implementation specifications for its use, effective December 27, 2019. This delay remains in effect. The Company will continue to monitor future developments related to the HPID and respond accordingly.

Effective August 14, 2020, the Substance Abuse and Mental Health Services Administration of HHS (SAMHSA) announced the finalization of proposed changes to the Confidentiality of Substance Use Disorder Patient Records regulation, 42 Code of Federal Regulations Part 2. This regulation protects the confidentiality of patient records relating to the identity, diagnosis, prognosis, or treatment that are maintained in connection with the performance of any federally assisted program or activity relating to substance use disorder education, prevention, training, treatment, rehabilitation, or research. Under the regulation, patient identifying information may only be released with the individual’s written consent, subject to certain limited exceptions. The latest changes to this regulation seek to better facilitate care coordination, while maintaining more stringent confidentiality of substance use disorder information. The Company adopted changes to its policies and procedures necessary for compliance.

efforts and compliance risks. For example, the ACA established an obligation to report and refund overpayments from Medicare or Medicaid within 60 days of identification (whether or not paid through any fault of the recipient); failure to comply with this requirement can give rise to additional liability under the False Claims Act and Civil Monetary Penalties statute. 

In addition to the Anti-Kickback Statute, in October 2018, the U.S. enacted the Eliminating Kickbacks in Recovery Act of 2018 (EKRA), as part of the Substance Use-Disorder Prevention that Promotes Opioid Recovery and Treatment for Patients and Communities Act (SUPPORT Act). EKRA is an all-payer anti-kickback law that makes it a criminal offense to pay any remuneration to induce referrals to, or in exchange for, patients using the services of a recovery home, a substance use clinical treatment facility, or laboratory. Although it appears that EKRA was intended to reach patient brokering and similar arrangements to induce patronage of substance use recovery and treatment, the language in EKRA is broadly written. As drafted, an EKRA prohibition on incentive compensation to sales employees is inconsistent with the federal anti-kickback statute and regulations, which permit payment of employee incentive compensation, a practice that is common in the industry. Significantly, EKRA permits the U.S. Department of Justice to issue regulations clarifying EKRA’s exceptions or adding additional exceptions, but such regulations have not yet been issued.issued, and there is no additional DOJ or other government guidance to indicate how and to what extent it will be applied and enforced in the industry. The Company is working through its trade association to address the scope of EKRA and is seeking clarification or correction.

In December 2020, the OIG and CMS published final rules to amend the regulations implementing the Anti-Kickback Statute and the Stark Law, respectively. The amendments arewere primarily intended to alleviate perceived impediments to coordinated care and value-based compensation arrangements through new safe harbors to the Anti-Kickback Statute and new exceptions to the Stark Law, and have varying degrees of applicability to laboratories. The CMS final rule incorporates laboratories and permits support for value-based arrangements, under certain conditions for purposes of the Stark Law. However, the OIG final rule generally excludes laboratories from protection under the Anti-Kickback Statute safe harbors for

value-based arrangements.

Environment, Health, and Safety

In 2021, the Company further expanded access to testing for COVID-19 and aided pharmaceutical companies in the development of critical COVID-19 vaccines and therapies by harnessing its diagnostic and drug development capabilities.