LABCORP HOLDINGS INC. (LH) Risk Factors

Recent key developments

Concrete developments — dated events, named agreements and instruments, legal proceedings — that LABCORP HOLDINGS INC. surfaced in its latest filing.

• PAMA has already reduced Medicare reimbursement rates for many tests, and further reductions are expected, although rate reductions are frozen for 2026 and capped at 15% per year for 2027-2029.2026
• Since January 1, 2021, the Company has invested net cash of approximately $3.8 billion in strategic business acquisitions.January 1, 2021
• At December 31, 2025, outstanding senior notes totaled $5.2 billion in aggregate principal, with $500.0 million payable within the next 12 months.December 31, 2025
• The Company is party to credit agreements relating to a $1.0 billion revolving credit facility subject to negative financial covenants limiting subsidiary indebtedness and certain other covenants typical for investment-grade-rated borrowers.
• The Company is required to maintain a leverage ratio within certain limits.
• The Company is party to a limited number of collective bargaining agreements with various labor unions in the U.S.
• Under PAMA, phased reductions to Medicare reimbursement for clinical diagnostic laboratory tests began on January 1, 2018, were frozen for 2026, will resume in 2027, and will be capped in 2027-2029, with potential for further reductions thereafter.January 1, 2018
• On April 29, 2024, the FDA issued a final rule asserting authority to regulate LDTs as medical devices; legal challenges led to its recission.April 29, 2024
• In October 2020, Ravgen Inc. filed a patent infringement lawsuit against the Company alleging infringement of two Ravgen-owned U.S. patents. In September 2022, a jury rendered a verdict in favor of Ravgen and awarded damages of $272.0 million. In May 2023, the court awarded additional enhanced damages of $100.0 million. In January 2025, the court awarded post-verdict supplemental damages of $2.6 million and an ongoing royalty of $100 per test.October 2020
• The AMCA Incident, a data and cybersecurity incident involving a third party, resulted in costs, pending and threatened litigation, and regulatory inquiries.
• The Company enters into fixed-price and capped fee-for-service contracts.
• BLS contracts may be terminated or reduced in scope for reasons such as safety issues, undesired product results, insufficient clinical trial or investigator enrollment, customer decisions to halt development, or failure to perform contractual obligations.
• To preserve tax-free treatment under Sections 355 and 368(a)(1)(D) related to the Spin-off, the Company may be limited in pursuing certain transactions, and a 50% or greater change in ownership within two years may trigger corporate-level gain.
• The Company is subject to the EU In Vitro Diagnostic Regulation (IVDR), which imposes classification, quality, and safety standards.