Labcorp(LH) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION This section provides Labcorp's unaudited condensed consolidated financial statements and management's analysis of financial condition and results of operations ITEM 1. FINANCIAL STATEMENTS This section presents Labcorp's unaudited condensed consolidated financial statements, including balance sheets, income statements, cash flows, and detailed notes for interim periods Condensed Consolidated Balance Sheets (Unaudited) This statement provides a snapshot of the company's assets, liabilities, and shareholders' equity at specific dates Condensed Consolidated Balance Sheets (Unaudited) | ASSETS (In Millions) | June 30, 2025 | December 31, 2024 | | :-------------------- | :------------ | :---------------- | | Cash and cash equivalents | $647.3 | $1,518.7 | | Accounts receivable, net | 2,120.6 | 1,944.1 | | Total current assets | 4,087.2 | 4,806.5 | | Property, plant, and equipment, net | 3,133.8 | 3,045.4 | | Goodwill, net | 6,551.1 | 6,369.7 | | Total assets | $18,059.9 | $18,379.0 | | LIABILITIES AND SHAREHOLDERS' EQUITY (In Millions) | June 30, 2025 | December 31, 2024 | | :--------------------------------- | :------------ | :---------------- | | Accounts payable | $793.0 | $875.8 | | Short-term borrowings and current portion of long-term debt | 499.6 | 1,000.3 | | Total current liabilities | 2,716.8 | 3,330.2 | | Long-term debt | 5,077.3 | 5,331.2 | | Total liabilities | 9,570.5 | 10,312.5 | | Total shareholders' equity | 8,472.7 | 8,052.2 | | Total liabilities and shareholders' equity | $18,059.9 | $18,379.0 | - Total assets decreased from $18,379.0 million at December 31, 2024, to $18,059.9 million at June 30, 2025. Total liabilities also decreased from $10,312.5 million to $9,570.5 million, while total shareholders' equity increased from $8,052.2 million to $8,472.7 million[11] Condensed Consolidated Statements of Operations (Unaudited) This statement details the company's revenues, expenses, and net earnings over specific reporting periods Condensed Consolidated Statements of Operations (Unaudited) | (In Millions, Except Per Share Data) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Revenues | $3,527.3 | $3,220.9 | $6,872.4 | $6,397.5 | | Gross profit | 1,046.2 | 926.4 | 1,994.2 | 1,823.7 | | Operating income | 394.5 | 294.8 | 720.5 | 616.1 | | Net earnings attributable to Labcorp Holdings Inc. | $237.9 | $205.3 | $450.7 | $433.3 | | Basic earnings per share | $2.85 | $2.44 | $5.40 | $5.15 | | Diluted earnings per share | $2.84 | $2.43 | $5.36 | $5.13 | - For the three months ended June 30, 2025, revenues increased by 9.5% to $3,527.3 million, and net earnings attributable to Labcorp Holdings Inc. rose by 15.9% to $237.9 million compared to the prior year. Diluted EPS increased from $2.43 to $2.84[13] Condensed Consolidated Statements of Comprehensive Earnings (Unaudited) This statement presents net earnings and other comprehensive income or loss, reflecting all changes in equity from non-owner sources Condensed Consolidated Statements of Comprehensive Earnings (Unaudited) | (In Millions) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net earnings | $238.3 | $205.6 | $451.3 | $433.9 | | Other comprehensive earnings (loss), net of tax | 157.0 | (6.6) | 227.0 | (132.7) | | Comprehensive earnings attributable to Labcorp Holdings Inc. | $394.9 | $198.7 | $677.7 | $300.6 | - Comprehensive earnings attributable to Labcorp Holdings Inc. significantly increased to $394.9 million for the three months ended June 30, 2025, from $198.7 million in the prior year, largely driven by positive foreign currency translation adjustments[15] Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) This statement outlines changes in common stock, retained earnings, and accumulated other comprehensive earnings over time Condensed Consolidated Statements of Changes in Shareholders' Equity (Unaudited) | (In Millions) | Common Stock | Additional Paid-in Capital | Retained Earnings | Accumulated Other Comprehensive Earnings (Loss) | Total Shareholders' Equity | | :------------ | :----------- | :------------------------- | :---------------- | :-------------------------------------------- | :------------------------- | | BALANCE AT DECEMBER 31, 2024 | $7.6 | $2.8 | $8,303.4 | $(261.6) | $8,052.2 | | Net earnings attributable to Labcorp Holdings Inc. | — | — | 450.7 | — | 450.7 | | Other comprehensive earnings, net of tax | — | — | — | 227.0 | 227.0 | | Dividends declared | — | — | (120.8) | — | (120.8) | | Purchase of common stock | (0.1) | (64.6) | (135.3) | — | (200.0) | | BALANCE AT JUNE 30, 2025 | $7.5 | $1.8 | $8,498.0 | $(34.6) | $8,472.7 | - Total shareholders' equity increased from $8,052.2 million at December 31, 2024, to $8,472.7 million at June 30, 2025, primarily due to net earnings and other comprehensive earnings, partially offset by dividends declared and common stock repurchases[17] Condensed Consolidated Statements of Cash Flows (Unaudited) This statement summarizes cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (Unaudited) | (In Millions) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $639.1 | $531.3 | | Net cash used for investing activities | (430.1) | (578.1) | | Net cash used for financing activities | (1,107.1) | (221.7) | | Net decrease in Cash and cash equivalents | $(871.4) | $(271.7) | | Cash and cash equivalents at end of period | $647.3 | $265.1 | - Net cash provided by operating activities increased to $639.1 million for the six months ended June 30, 2025, from $531.3 million in the prior year. However, net cash used for financing activities significantly increased to $1,107.1 million, primarily due to debt payments and stock repurchases, resulting in a net decrease in cash and cash equivalents of $871.4 million[20][163] Notes to the Condensed Consolidated Financial Statements (Unaudited) These notes provide essential details and explanations supporting the condensed consolidated financial statements 1. BASIS OF FINANCIAL STATEMENT PRESENTATION This note describes the company's business segments and the accounting principles used for interim financial reporting - Labcorp is a global leader in laboratory services, operating in two segments: Diagnostics Laboratories (Dx) and Biopharma Laboratory Services (BLS). Both segments consistently contributed approximately 78% and 22% of revenues, respectively, for the three and six months ended June 30, 2025, and 2024[22] - The unaudited Condensed Consolidated Financial Statements are prepared in accordance with SEC rules and GAAP for interim reporting, omitting certain disclosures that duplicate the annual 10-K report[23][24] - The One Big Beautiful Bill Act (OBBBA), enacted on July 4, 2025, includes significant changes to federal tax law, but its effects are not reflected in these financial statements as it was enacted after the reporting period. The Company does not currently expect a material impact on its Condensed Consolidated Statement of Operations[27] 2. REVENUES This note details the company's revenue recognition policies and disaggregates revenues by segment, payer, and geographic region Revenues by Segment and Payer/Customer Group (Three Months Ended June 30, 2025 & 2024) | Payer/Customer | North America (2025) | Europe (2025) | Other (2025) | Total (2025) | North America (2024) | Europe (2024) | Other (2024) | Total (2024) | | :--------------- | :------------------- | :------------ | :----------- | :----------- | :------------------- | :------------ | :----------- | :----------- | | Dx Clients | 24 % | — % | — % | 24 % | 24 % | — % | — % | 24 % | | Dx Patients | 10 % | — % | — % | 10 % | 10 % | — % | — % | 10 % | | Dx Medicare/Medicaid | 8 % | — % | — % | 8 % | 8 % | — % | — % | 8 % | | Dx Third party | 36 % | — % | — % | 36 % | 36 % | — % | — % | 36 % | | Total Dx revenues by payer | 78 % | — % | — % | 78 % | 78 % | — % | — % | 78 % | | BLS Pharmaceutical, biotechnology, and medical device companies | 9 % | 9 % | 4 % | 22 % | 9 % | 9 % | 4 % | 22 % | | Total Revenues | 87 % | 9 % | 4 % | 100 % | 87 % | 9 % | 4 % | 100 % | - U.S. revenues constituted the majority of total revenues, accounting for 83.1% ($2,931.6 million) for the three months ended June 30, 2025, and 83.6% ($5,745.4 million) for the six months ended June 30, 2025[29] Accounts Receivable, Unbilled Services, and Unearned Revenue (In Millions) | Item | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | Dx accounts receivable | $1,410.6 | $1,259.3 | | BLS accounts receivable | 750.1 | 729.5 | | Accounts receivable, net | $2,120.6 | $1,944.1 | | Unbilled services | $156.1 | $152.9 | 3. BUSINESS ACQUISITIONS AND DISPOSITIONS This note provides information on recent acquisitions, including goodwill and intangible assets recognized, and planned dispositions - During the first half of 2025, Labcorp acquired several businesses for $63.5 million in cash, recording $57.9 million in tax-deductible goodwill and $46.4 million in identifiable intangible assets[33] - In March 2025, Labcorp closed the acquisition of a 15% minority interest in SYNLAB, a European medical diagnostic services leader, for approximately $151.6 million (€140.4 million), accounted for as an equity method investment[34] - Labcorp announced agreements to acquire select oncology-focused assets from BioReference Health for up to $225.0 million (expected Q2 2025 close) and outreach business assets from Community Health Systems for approximately $195.0 million (expected Q4 2025 close)[35][36] 4. EARNINGS PER SHARE This note reconciles the basic and diluted earnings per share calculations for the reported periods Earnings Per Share Reconciliation (In Millions, Except Per Share Data) | Item | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net earnings attributable to LHI | $237.9 | $205.3 | $450.7 | $433.3 | | Weighted-average common shares outstanding (Basic) | 83.4 | 84.1 | 83.5 | 84.1 | | Dilutive Effect (shares) | 0.5 | 0.2 | 0.6 | 0.4 | | Weighted-average common shares outstanding (Diluted) | 83.9 | 84.3 | 84.1 | 84.5 | | Basic earnings per share | $2.85 | $2.44 | $5.40 | $5.15 | | Diluted earnings per share | $2.84 | $2.43 | $5.36 | $5.13 | - Diluted EPS increased to $2.84 for the three months ended June 30, 2025, from $2.43 in the prior year, and to $5.36 for the six months ended June 30, 2025, from $5.13 in the prior year[41] 5. GOODWILL AND INTANGIBLE ASSETS This note details the carrying amounts and changes in goodwill and identifiable intangible assets by segment Goodwill Carrying Amount (In Millions) | Segment | December 31, 2024 | June 30, 2025 | | :------ | :---------------- | :------------ | | Dx | $5,102.5 | $5,165.9 | | BLS | $1,267.2 | $1,385.2 | | Total | $6,369.7 | $6,551.1 | - Goodwill increased by $181.4 million to $6,551.1 million at June 30, 2025, primarily due to $41.1 million from acquisitions and $140.3 million from foreign currency impact and other adjustments[42] Identifiable Intangible Assets (Net, In Millions) | Intangible Asset Type | December 31, 2024 | June 30, 2025 | | :-------------------- | :---------------- | :------------ | | Customer relationships | $2,574.0 | $2,612.0 | | Patents, licenses, and technology | 242.7 | 226.1 | | Non-compete agreements | 96.3 | 73.0 | | Canadian and other licenses (Indefinite-lived) | 557.5 | 568.7 | | Total intangible assets | $3,488.9 | $3,494.4 | - Amortization of intangible assets increased by 9.7% to $68.3 million for the three months ended June 30, 2025, and by 12.8% to $137.9 million for the six months ended June 30, 2025, reflecting additional amortization from assets acquired after June 30, 2024[44][129][145] 6. DEBT This note provides information on the company's short-term borrowings, long-term debt, and credit facilities Short-term Borrowings and Current Portion of Long-term Debt (In Millions) | Debt Type | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :------------ | :---------------- | | 1.55% senior notes due 2026 | $500.0 | $— | | 3.60% senior notes due 2025 | — | 1,000.0 | | Total Short-term borrowings and current portion of long-term debt | $499.6 | $1,000.3 | Long-term Debt (In Millions) | Debt Type | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :---------------- | | 1.55% senior notes due 2026 | $— | $500.0 | | 3.60% senior notes due 2027 | 600.0 | 600.0 | | AR facility | 525.0 | 300.0 | | Total Long-term debt | $5,077.3 | $5,331.2 | - The Company's senior revolving credit facility was amended on June 27, 2025, providing up to $1,000.0 million, with an option to increase by $500.0 million, expiring in June 2030. As of June 30, 2025, there were no outstanding balances on this facility[46][49] - The accounts receivable securitization facility (AR Facility) was amended on January 31, 2025, increasing the borrowing capacity from $300.0 million to $700.0 million through August 2027. The Company received $225.0 million in loan proceeds under this facility during the first half of 2025[51][52][55] 7. PREFERRED STOCK AND COMMON SHAREHOLDERS' EQUITY This note details changes in common stock, share repurchases, dividends, and accumulated other comprehensive earnings Changes in Common Stock Issued and Outstanding (In Millions) | Item | Six Months Ended June 30, 2025 | | :-------------------------------- | :----------------------------- | | Beginning balance | 83.4 | | Shares issued under employee stock plans | 0.3 | | Shares repurchased | (0.8) | | Ending balance | 82.9 | - During the six months ended June 30, 2025, Labcorp repurchased 0.8 million shares of common stock for a total cost of $200.0 million, at an average price of $246.18 per share. The company has an outstanding authorization to purchase up to $1,080.4 million of common stock[58][165] - Cash dividends of $0.72 per share ($1.44 per share for six months) were declared and paid for the three and six months ended June 30, 2025, totaling $121.5 million for the six-month period[59][166] Accumulated Other Comprehensive Earnings (Loss) (In Millions) | Component | December 31, 2024 | June 30, 2025 | | :-------------------------------- | :---------------- | :------------ | | Foreign Currency Translation Adjustments | $(264.7) | $(38.4) | | Net Benefit Plan Adjustments | 3.1 | 3.8 | | Total Accumulated Other Comprehensive Earnings (Loss) | $(261.6) | $(34.6) | 8. COMMITMENTS AND CONTINGENCIES This note outlines the company's involvement in various legal actions, governmental inquiries, and other contingent liabilities - Labcorp is involved in various legal actions, including class actions, intellectual property disputes, and governmental inquiries related to billing practices and compliance with healthcare regulations. The company maintains an aggregate legal reserve and establishes specific reserves for probable and estimable loss contingencies[63][66] - Significant ongoing legal matters include a Texas Medicaid 'best price' and remuneration lawsuit (appeal pending at Texas Supreme Court), a Florida Consumer Collection Practices Act class action (settlement preliminarily approved), and a patent infringement lawsuit by Ravgen Inc. where a jury awarded $272.0 million in damages, with an additional $100.0 million in enhanced damages and ongoing royalties awarded by the court (Company has filed an appeal)[71][72][81] - The company is also defending against a multidistrict litigation and a shareholder derivative lawsuit related to the 2019 AMCA data security incident, and a class action lawsuit alleging Americans with Disabilities Act violations regarding touchscreen kiosks[75][78][80] 9. FAIR VALUE MEASUREMENTS AND DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES This note describes the company's use of derivative instruments and fair value measurements to manage market risks Fair Value Measurements of Financial Assets and Liabilities (In Millions) | Item | June 30, 2025 (Fair Value) | December 31, 2024 (Fair Value) | | :-------------------------------- | :------------------------- | :----------------------------- | | Noncontrolling interest put | $16.7 | $14.3 | | Cross currency swaps | $291.0 | $142.7 | | Interest rate swaps | $57.3 | $76.8 | | Contingent consideration (Level 3) | $34.8 | $10.8 | - The Company uses derivative financial instruments, including interest rate swaps and cross-currency swaps, to manage interest rate and foreign currency exchange rate exposures. Interest rate swaps are accounted for as fair value hedges, while cross-currency swaps hedge net investments in foreign subsidiaries[100][101][103] - Contingent consideration liabilities, categorized as Level 3, increased from $10.8 million at December 31, 2024, to $34.8 million at June 30, 2025, primarily due to additions from business acquisitions[92][95] 10. SUPPLEMENTAL CASH FLOW INFORMATION This note provides additional details on non-cash investing and financing activities and cash payments for interest and income taxes Supplemental Cash Flow Information (Six Months Ended June 30, In Millions) | Item | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Cash paid for interest | $170.5 | $106.6 | | Cash paid for income taxes, net of refunds | $146.7 | $153.0 | 11. BUSINESS SEGMENT INFORMATION This note presents financial data for the company's Diagnostics Laboratories and Biopharma Laboratory Services segments Segment Revenues and Operating Income (Three Months Ended June 30, In Millions) | Segment | Revenues 2025 | Revenues 2024 | Operating Income 2025 | Operating Income 2024 | | :------ | :------------ | :------------ | :-------------------- | :-------------------- | | Dx | $2,748.8 | $2,524.9 | $482.8 | $441.5 | | BLS | $784.8 | $707.0 | $123.3 | $107.4 | | Total LHI | $3,527.3 | $3,220.9 | $606.1 | $548.9 | Segment Revenues and Operating Income (Six Months Ended June 30, In Millions) | Segment | Revenues 2025 | Revenues 2024 | Operating Income 2025 | Operating Income 2024 | | :------ | :------------ | :------------ | :-------------------- | :-------------------- | | Dx | $5,378.4 | $5,004.6 | $910.3 | $859.4 | | BLS | $1,506.1 | $1,417.9 | $230.2 | $207.3 | | Total LHI | $6,872.4 | $6,397.5 | $1,140.5 | $1,066.7 | - Dx segment operating income increased by 9.3% for the three months and 5.9% for the six months ended June 30, 2025, driven by increased organic demand, despite a slight decrease in operating margin for the six-month period due to the impact from Invitae[137][154] - BLS segment operating income increased by 14.8% for the three months and 11.0% for the six months ended June 30, 2025, with operating margins improving by 50 and 70 basis points, respectively, due to organic demand and operating efficiencies[138][155] ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This section provides management's perspective on Labcorp's financial condition and results of operations, highlighting key performance indicators, revenue drivers, expense trends, and liquidity FORWARD-LOOKING STATEMENTS This section outlines the inherent risks and uncertainties associated with the company's forward-looking statements regarding future performance - The report contains forward-looking statements regarding Labcorp's operations, performance, financial condition, and strategic objectives, subject to various risks and uncertainties[114] - Key risk factors include changes in government and third-party payer regulations, enforcement of anti-fraud and abuse laws, compliance with privacy and security laws, licensing requirements, competition, ability to integrate acquisitions, and potential liabilities from errors or omissions[114][115] - Other risks involve failure to attract and retain personnel, inability to commercialize new technologies, intellectual property challenges, business interruptions from natural disasters or cybersecurity incidents, and impacts from global economic conditions[115] GENERAL This section provides an overview of recent operational changes, including the expiration of the TSA with Fortrea and new legislative impacts Revenue Growth (In Millions) | Period | Revenues 2025 | Revenues 2024 | Increase (%) | Organic Growth (%) | Acquisitions, net of divestitures (%) | Favorable foreign currency translation (%) | | :----- | :------------ | :------------ | :----------- | :----------------- | :------------------------------------ | :--------------------------------------- | | 3 Months Ended June 30 | $3,527.3 | $3,220.9 | 9.5% | 5.4% | 3.5% | 0.6% | | 6 Months Ended June 30 | $6,872.4 | $6,397.5 | 7.4% | 3.7% | 3.6% | 0.1% | - The Transition Services Agreement (TSA) with Fortrea, following the June 30, 2023 Spin-off, expired on June 30, 2025, with all services terminated[121] - The One Big Beautiful Bill Act (OBBBA), enacted July 4, 2025, includes provisions affecting healthcare regulations and federal funding, which Labcorp is currently evaluating for potential business and operational impacts[122] RESULTS OF OPERATIONS This section analyzes the company's revenues, expenses, and operating income, detailing performance drivers and changes over periods Key Financial Performance Indicators (Three Months Ended June 30, In Millions) | Item | 2025 | 2024 | Change (%) | | :------------------------------------------ | :--- | :--- | :--------- | | Revenues | $3,527.3 | $3,220.9 | 9.5% | | Dx Revenues | $2,748.8 | $2,524.9 | 8.9% | | BLS Revenues | $784.8 | $707.0 | 11.0% | | Cost of revenues | $2,481.1 | $2,294.5 | 8.1% | | Cost of revenues as a % of revenues | 70.3% | 71.2% | (0.9)% | | Selling, general, and administrative expenses | $579.3 | $557.8 | 3.8% | | Selling, general, and administrative expenses as a % of revenues | 16.4% | 17.3% | (0.9)% | | Operating income | $394.5 | $294.8 | 33.8% | - Dx revenues increased by 8.9% (4.5% organic, 4.5% acquisitions) for the three months ended June 30, 2025, with total volume up 4.9% (3.4% organic, 1.5% acquisitions). BLS revenues grew by 11.0% (7.8% organic, 3.2% favorable foreign currency)[124][125][126] - Cost of revenues as a percentage of revenues decreased to 70.3% (from 71.2%) and SG&A as a percentage of revenues decreased to 16.4% (from 17.3%) for the three months ended June 30, 2025, reflecting leverage from revenue growth and reduced Spin-off related costs[127][128] - Interest expense increased by 20.0% for the three months and 19.8% for the six months ended June 30, 2025, due to a higher average amount of total debt outstanding[132][149] - Other, net experienced a significant negative change, primarily due to higher investment losses ($31.3 million in Q2 2025 vs. $1.5 million in Q2 2024) and a $22.4 million decrease in transition services fees from Fortrea[134][152] LIQUIDITY AND CAPITAL RESOURCES This section discusses the company's cash flows, debt management, and overall financial flexibility to meet its obligations Cash Flow Summary (Six Months Ended June 30, In Millions) | Cash Flow Activity | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Net cash provided by operating activities | $639.1 | $531.3 | | Net cash used for investing activities | $(430.1) | $(578.1) | | Net cash used for financing activities | $(1,107.1) | $(221.7) | | Net decrease in Cash and cash equivalents | $(871.4) | $(271.7) | | Cash and cash equivalents at end of period | $647.3 | $265.1 | - Operating cash flow increased by $107.8 million to $639.1 million for the six months ended June 30, 2025, driven by higher earnings[160] - Net cash used for investing activities decreased to $430.1 million, primarily due to lower business acquisitions and capital expenditures, partially offset by an equity method investment in SYNLAB[161] - Net cash used for financing activities significantly increased to $1,107.1 million, mainly due to a $1,000.0 million payment of senior notes and a $100.0 million increase in common stock repurchases, partially offset by $225.0 million from the accounts receivable securitization facility[163] - Labcorp maintains compliance with all debt covenants and has sufficient liquidity, including $1,000.0 million available under its revolving credit facility and $1,080.4 million in remaining share repurchase authorization[164][165][176] CRITICAL ACCOUNTING ESTIMATES This section confirms no material changes to the critical accounting estimates previously reported in the annual 10-K - There have been no material changes to the critical accounting estimates reported in the Company's Annual Report on Form 10-K for the year ended December 31, 2024[177] ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK This section details Labcorp's exposure to market risks, primarily foreign currency exchange rates and interest rates, and the strategies employed to manage these risks, including the use of derivative financial instruments Foreign Currency Exchange Rates This section describes the company's exposure to foreign currency fluctuations and its hedging strategies - Approximately 13.4% of Labcorp's revenues for the six months ended June 30, 2025, were denominated in non-USD currencies, primarily Canadian dollar, Swiss franc, euro, and British pound[179] - A hypothetical 10% change in average exchange rates would have impacted income before income taxes by approximately $14.1 million for the six months ended June 30, 2025[179] - The Company uses foreign currency forward contracts and USD to Swiss Franc cross-currency swap agreements (aggregate notional amount of $1,200.0 million) to hedge foreign currency transaction risk and net investment exposure in a Swiss subsidiary[180][181] Interest Rates This section explains how the company manages interest rate risk through debt mix and interest rate swaps - Labcorp manages interest rate risk through a mix of fixed and variable rate debt and uses interest rate swaps, such as fixed-to-variable swaps for its 2.70% senior notes due 2031 (notional value $500.0 million), to hedge against fair value changes in long-term debt[182][184] ITEM 4. CONTROLS AND PROCEDURES This section confirms the effectiveness of Labcorp's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the quarter ended June 30, 2025 Evaluation of Disclosure Controls and Procedures This section confirms the effectiveness of the company's disclosure controls and procedures as assessed by management - Labcorp's management, including the CEO and CFO, concluded that the Company's disclosure controls and procedures were effective as of June 30, 2025[185] Changes in Internal Control Over Financial Reporting This section reports on any material changes in the company's internal control over financial reporting during the quarter - There were no material changes in the Company's internal control over financial reporting during the quarter ended June 30, 2025[186] PART II. OTHER INFORMATION This section covers legal proceedings, risk factors, equity sales, defaults, mine safety, and other relevant disclosures ITEM 1. LEGAL PROCEEDINGS This section refers to the detailed information on Labcorp's legal proceedings and commitments provided in the financial statement notes - For information on legal proceedings, refer to Note 8 Commitments and Contingencies to the Company's Condensed Consolidated Financial Statements[188] ITEM 1A. RISK FACTORS This section states that there have been no material changes to the risk factors previously disclosed in the company's annual report - No material changes have occurred in the risk factors since the Company's Annual Report on Form 10-K for the year ended December 31, 2024[189] ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section details Labcorp's common stock repurchase activities and remaining authorization for future repurchases Common Stock Repurchases (Three Months Ended June 30, 2025, In Millions) | Period | Total Number of Shares Repurchased | Average Price Paid Per Share | Maximum Dollar Value of Shares that May Yet Be Repurchased Under the Program | | :---------------- | :------------------------------- | :--------------------------- | :-------------------------------------------------------------------------- | | May 1 - May 31 | 0.7 | $246.08 | $1,092.0 | | June 1 - June 30 | 0.1 | $247.76 | $1,080.4 | | Total | 0.8 | $246.18 | | - As of June 30, 2025, Labcorp had an outstanding authorization from its Board of Directors to purchase up to $1,080.4 million maximum value of Common Stock, with no expiration date[190] ITEM 3. DEFAULTS UPON SENIOR SECURITIES This section confirms that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[191] ITEM 4. MINE SAFETY DISCLOSURES This section indicates that mine safety disclosures are not applicable to Labcorp's operations - Mine safety disclosures are not applicable to the Company[192] ITEM 5. OTHER INFORMATION This section reports on insider trading arrangements, specifically the adoption of a Rule 10b5-1 trading arrangement by the President and CEO Insider Trading Arrangements (Fiscal Quarter Ended June 30, 2025) | Name and Title | Date Adopted | Character of Trading Agreement | Aggregate Number of Shares of Common Stock to be (Sold) Purchased Pursuant to Trading Agreement | Duration | | :-------------------------------- | :----------- | :----------------------------- | :--------------------------------------------------------------------------------------------- | :----------- | | Adam H. Schechter, President and Chief Executive Officer | May 8, 2025 | Rule 10b5-1 Trading Arrangement | Up to (27,273) | 11/20/2026 | - The reported trading arrangement for Adam H. Schechter permits transactions through November 20, 2026, or until all sales on the respective order entry date are completed, and represents shares previously acquired from equity award vesting events[193] ITEM 6. EXHIBITS This section lists all exhibits filed with the Form 10-Q, including credit agreements, incentive plans, and certifications - Key exhibits include the Fourth Amended and Restated Credit Agreement (June 27, 2025), the 2025 Omnibus Incentive Plan, and the 2025 Employee Stock Purchase Plan[194] - Certifications by the Chief Executive Officer and Chief Financial Officer (pursuant to Rule 13a-14(a) or Rule 15d-14(a) and Section 906 of Sarbanes-Oxley Act) are filed, along with Inline XBRL documents[194]