10-Q 1 lh-20210930.htm 10-Q lh-20210930
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549
FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______ to  ______

Commission File Number   1-11353
LABORATORY CORPORATION OF AMERICA HOLDINGS
(Exact name of registrant as specified in its charter)
Delaware13-3757370
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
358 South Main Street 
Burlington,North Carolina27215
(Address of principal executive offices)(Zip Code)

(Registrant's telephone number, including area code) 336-229-1127
Securities registered pursuant to Section 12(b) of the Exchange Act.

Title of Each Class            Trading Symbol            Name of exchange on which registered
Common Stock, $0.10 par value        LH                New York Stock Exchange

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 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 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.
Large accelerated filerAccelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No .

The number of shares outstanding of the issuer's common stock is 95.7 million shares as of November 1, 2021.



INDEX


PART I. FINANCIAL INFORMATION

Item 1.
  
 
 September 30, 2021 and December 31, 2020
  
 
 Three and nine months ended September 30, 2021 and 2020
  
Three and nine months ended September 30, 2021 and 2020
 
 Three and nine months ended September 30, 2021 and 2020
  
 
 Nine months ended September 30, 2021 and 2020
  
 
  
Item 2.
  
Item 3.
  
Item 4.

PART II. OTHER INFORMATION

1

PART I – FINANCIAL INFORMATION

Item 1. Financial Statements (unaudited)

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions)
(unaudited)
September 30,
2021
December 31,
2020
ASSETS  
Current assets:  
Cash and cash equivalents$2,036.5 $1,320.8 
Accounts receivable, net 2,335.4 2,479.8 
Unbilled services719.6 536.8 
Supplies inventory410.7 423.2 
Prepaid expenses and other518.3 364.8 
Total current assets6,020.5 5,125.4 
Property, plant and equipment, net2,692.2 2,729.6 
Goodwill, net7,906.8 7,751.5 
Intangible assets, net3,755.1 3,961.1 
Joint venture partnerships and equity method investments62.1 73.5 
Deferred income taxes23.8 20.6 
Other assets, net406.0 410.0 
Total assets$20,866.5 $20,071.7 
LIABILITIES AND SHAREHOLDERS’ EQUITY  
Current liabilities:  
Accounts payable$669.4 $638.9 
Accrued expenses and other1,423.8 1,357.7 
Unearned revenue593.9 506.5 
Short-term operating lease liabilities189.1 192.0 
Short-term finance lease liabilities10.6 6.7 
Short-term borrowings and current portion of long-term debt1.6 376.7 
Total current liabilities2,888.4 3,078.5 
Long-term debt, less current portion5,417.2 5,419.0 
Operating lease liabilities631.0 677.6 
Financing lease liabilities86.0 84.4 
Deferred income taxes and other tax liabilities804.8 905.4 
Other liabilities494.0 526.4 
Total liabilities10,321.4 10,691.3 
Commitments and contingent liabilities
Noncontrolling interest20.6 20.7 
Shareholders’ equity:  
Common stock, 95.8 and 97.5 shares outstanding at September 30, 2021, and December 31, 2020, respectively8.8 9.0 
Additional paid-in capital 110.3 
Retained earnings10,786.6 9,402.3 
Accumulated other comprehensive loss(270.9)(161.9)
Total shareholders’ equity10,524.5 9,359.7 
Total liabilities and shareholders’ equity$20,866.5 $20,071.7 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
2

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share data)
(unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Revenues$4,062.6 $3,896.1 $12,064.8 $9,488.7 
Cost of revenues2,677.1 2,336.7 7,815.5 6,440.8 
Gross profit1,385.5 1,559.4 4,249.3 3,047.9 
Selling, general and administrative expenses519.9 419.5 1,408.4 1,211.3 
Amortization of intangibles and other assets92.2 62.2 276.7 184.6 
Goodwill and other asset impairments 23.5  460.9 
Restructuring and other charges6.5 7.1 35.3 38.9 
Operating income766.9 1,047.1 2,528.9 1,152.2 
Other income (expense):
Interest expense(42.2)(51.4)(169.0)(159.1)
Equity method income (loss), net8.4 3.0 20.9 (1.8)
Investment income3.2 2.6 8.3 7.7 
Other, net31.9 (54.2)51.5 (22.6)
Earnings before income taxes768.2 947.1 2,440.6 976.4 
Provision for income taxes180.4 243.4 614.7 358.0 
Net earnings587.8 703.7 1,825.9 618.4 
Less: Net earnings attributable to the noncontrolling interest(0.5)(0.3)(1.6)(0.6)
Net earnings attributable to Laboratory Corporation of America Holdings$587.3 $703.4 $1,824.3 $617.8 
Basic earnings per common share$6.10 $7.22 $18.79 $6.35 
Diluted earnings per common share$6.05 $7.17 $18.63 $6.31 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
3

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE EARNINGS
(in millions, except per share data)
(unaudited)

Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
Net earnings$587.8 $703.7 $1,825.9 $618.4 
Foreign currency translation adjustments(91.6)132.9 (114.6)52.4 
Net benefit plan adjustments2.6 2.1 7.7 7.5 
Other comprehensive earnings before tax(89.0)135.0 (106.9)59.9 
Provision (benefit) for income tax related to items of comprehensive earnings(0.7)(0.6)(2.1)(2.1)
Other comprehensive earnings (loss), net of tax(89.7)134.4 (109.0)57.8 
Comprehensive earnings498.1 838.1 1,716.9 676.2 
Less: Net earnings attributable to the noncontrolling interest(0.5)(0.3)(1.6)(0.6)
Comprehensive earnings attributable to Laboratory Corporation of America Holdings$497.6 $837.8 $1,715.3 $675.6 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS’ EQUITY
(in millions)
(unaudited)
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Earnings (Loss)
Total
Shareholders’
Equity
BALANCE AT DECEMBER 31, 2019$9.0 $26.8 $7,903.6 $(372.4)$7,567.0 
Adoption of credit loss accounting standard  (7.0) (7.0)
Net loss attributable to Laboratory Corporation of America Holdings  (317.2) (317.2)
Other comprehensive earnings (loss), net of tax   (145.5)(145.5)
Issuance of common stock under employee stock plans 26.9   26.9 
Net share settlement tax payments from issuance of stock to employees (22.0)  (22.0)
Stock compensation 17.9   17.9 
Purchase of common stock (49.6)(50.4) (100.0)
BALANCE AT MARCH 31, 2020$9.0 $ $7,529.0 $(517.9)$7,020.1 
Net earnings attributable to Laboratory Corporation of America Holdings  231.6  231.6 
Other comprehensive earnings (loss), net of tax   68.9 68.9 
Issuance of common stock under employee stock plans 1.8   1.8 
Net share settlement tax payments from issuance of stock to employees (9.5)  (9.5)
Stock compensation 39.8   39.8 
BALANCE AT JUNE 30, 2020$9.0 $32.1 $7,760.6 $(449.0)$7,352.7 
Net earnings attributable to Laboratory Corporation of America Holdings  703.4  703.4 
Other comprehensive earnings (loss), net of tax   134.4 134.4 
Issuance of common stock under employee stock plans 21.9   21.9 
Net share settlement tax payments from issuance of stock to employees (0.5)  (0.5)
Stock compensation 27.2   27.2 
BALANCE AT SEPTEMBER 30, 2020$9.0 $80.7 $8,464.0 $(314.6)$8,239.1 
BALANCE AT DECEMBER 31, 2020$9.0 $110.3 $9,402.3 $(161.9)$9,359.7 
Net earnings attributable to Laboratory Corporation of America Holdings  769.6  769.6 
Other comprehensive earnings (loss), net of tax   (64.6)(64.6)
Issuance of common stock under employee stock plans 24.7   24.7 
Net share settlement tax payments from issuance of stock to employees (28.1)  (28.1)
Stock compensation 28.7   28.7 
Purchase of common stock (68.5)  (68.5)
BALANCE AT MARCH 31, 2021$9.0 $67.1 $10,171.9 $(226.5)$10,021.5 
Net earnings attributable to Laboratory Corporation of America Holdings  467.4  467.4 
Other comprehensive earnings (loss), net of tax   45.3 45.3 
Issuance of common stock under employee stock plans 1.9   1.9 
Net share settlement tax payments from issuance of stock to employees (14.9)  (14.9)
Stock compensation 23.9   23.9 
Purchase of common stock(0.1)(78.0)(221.9) (300.0)
BALANCE AT JUNE 30, 2021$8.9 $ $10,417.4 $(181.2)$10,245.1 
Net earnings attributable to Laboratory Corporation of America Holdings  587.3  587.3 
Other comprehensive earnings (loss), net of tax   (89.7)(89.7)
Issuance of common stock under employee stock plans 24.2   24.2 
Net share settlement tax payments from issuance of stock to employees (1.4)  (1.4)
Stock compensation 59.0   59.0 
Purchase of common stock(0.1)(81.8)(218.1) (300.0)
BALANCE AT SEPTEMBER 30, 2021$8.8 $ $10,786.6 $(270.9)$10,524.5 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
5

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in millions)
(unaudited)
Nine Months Ended September 30,
 20212020
CASH FLOWS FROM OPERATING ACTIVITIES:  
Net earnings$1,825.9 $618.4 
Adjustments to reconcile net earnings to net cash provided by operating activities:  
Depreciation and amortization557.1 440.8 
Stock compensation111.6 84.9 
Operating lease right-of-use asset expense145.3 150.7 
Goodwill and other asset impairments 460.9 
Deferred income taxes(102.0)(48.5)
Other(41.0)55.2 
Change in assets and liabilities (net of effects of acquisitions and divestitures):  
(Increase) decrease in accounts receivable135.6 (546.9)
Increase in unbilled services(185.9)(117.8)
Increase in supplies inventory(6.5)(147.5)
(Increase) decrease in prepaid expenses and other(72.4)26.1 
Increase in accounts payable34.6 17.3 
Increase in unearned revenue83.8 44.1 
Increase (decrease) in accrued expenses and other(74.0)323.0 
Net cash provided by operating activities2,412.1 1,360.7 
CASH FLOWS FROM INVESTING ACTIVITIES:  
Capital expenditures(310.4)(282.3)
Proceeds from sale of assets3.5 1.1 
Proceeds from sale of business12.4  
Proceeds from sale or distribution of investments10.4 1.0 
Proceeds from exit from swaps 3.1 
Investments in equity affiliates(20.0)(29.3)
Acquisition of businesses, net of cash acquired(326.0)(208.8)
Net cash used for investing activities(630.1)(515.2)
CASH FLOWS FROM FINANCING ACTIVITIES:  
Proceeds from senior note offerings1,000.0  
Payments on senior notes(1,000.0)(412.2)
Payments on term loan(375.0) 
Proceeds from revolving credit facilities 151.7 
Payments on revolving credit facilities (151.7)
Net share settlement tax payments from issuance of stock to employees(44.4)(32.0)
Net proceeds from issuance of stock to employees50.8 50.6 
Purchase of common stock(668.5)(100.0)
Other(20.1)(22.8)
Net cash used for financing activities(1,057.2)(516.4)
Effect of exchange rate changes on cash and cash equivalents(9.1)0.6 
Net increase in cash and cash equivalents715.7 329.7 
Cash and cash equivalents at beginning of period1,320.8 337.5 
Cash and cash equivalents at end of period$2,036.5 $667.2 

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.
6

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars and shares in millions, except per share data)

1.      BASIS OF FINANCIAL STATEMENT PRESENTATION
Laboratory Corporation of America® Holdings (Labcorp® or the Company) is a leading global life sciences company that provides vital information to help doctors, hospitals, pharmaceutical companies, researchers, and patients make clear and confident decisions. By leveraging its strong diagnostics and drug development capabilities, the Company provides insights and accelerates innovations to improve health and improve lives.
The Company reports its business in two segments, Labcorp Diagnostics (Dx) and Labcorp Drug Development (DD). For further financial information about these segments, see Note 14 Business Segment Information to the Condensed Consolidated Financial Statements. During the three months ended September 30, 2021, Dx and DD contributed approximately 64% and 36% respectively, of revenues to the Company. During the nine months ended September 30, 2021, Dx and DD contributed approximately 64% and 36% respectively, of revenues to the Company.
The condensed consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries for which it exercises control. Long-term investments in affiliated companies in which the Company exercises significant influence, but which it does not control, are accounted for using the equity method. Investments in which the Company does not exercise significant influence (generally, when the Company has an investment of less than 20.0% and no representation on the investee's board of directors) are accounted for at fair value, or at cost minus impairment adjusted for observable price changes in orderly transactions for an identical or similar investment of the same issuer for those investments that do not have readily determinable fair values. All significant inter-company transactions and accounts have been eliminated. The Company does not have any significant variable interest entities or special purpose entities whose financial results are not included in the condensed consolidated financial statements.
The financial statements of the Company's operating foreign subsidiaries are measured using the local currency as the functional currency. Assets and liabilities are translated at exchange rates as of the balance sheet date. Revenues and expenses are translated at average monthly exchange rates prevailing during the period. Resulting translation adjustments are included in “Accumulated other comprehensive income (loss).”
The accompanying condensed consolidated financial statements of the Company are unaudited. In the opinion of management, all adjustments necessary for a fair statement of results of operations, cash flows, and financial position have been made. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. Interim results are not necessarily indicative of results for a full year. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by generally accepted accounting principles.
The condensed consolidated financial statements and notes are presented in accordance with the rules and regulations of the United States (U.S.) Securities and Exchange Commission (SEC) and do not contain certain information included in the Company’s fiscal year 2020 Annual Report on Form 10-K (Annual Report). Therefore, these interim statements should be read in conjunction with the consolidated financial statements and notes thereto contained in the Company’s Annual Report.




















7

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars and shares in millions, except per share data)
2.      REVENUES
The Company's revenues by segment and by payers/customer groups for the three and nine months ended September 30, 2021, and 2020, were as follows:
For the Three Months Ended September 30, 2021For the Three Months Ended September 30, 2020
North AmericaEuropeOtherTotalNorth AmericaEuropeOtherTotal
Payer/Customer
Dx
   Clients17 % % %17 %22 % % %22 %
   Patients6 % % %6 %5 % % %5 %
   Medicare and Medicaid6 % % %6 %7 % % %7 %
   Third-party35 % % %35 %34 % % %34 %
Total Dx revenues by payer64 % % %64 %68 % % %68 %
DD
   Biopharmaceutical and medical device companies22 %10 %4 %36 %16 %10 %6 %32 %
Total revenues86 %10 %4 %100 %84 %10 %6 %100 %
For the Nine Months Ended September 30, 2021For the Nine Months Ended September 30, 2020
North AmericaEuropeOtherTotalNorth AmericaEuropeOtherTotal
Payer/Customer
Dx
   Clients18 % % %18 %20 % % %20 %
   Patients6 % % %6 %6 % % %6 %
   Medicare and Medicaid6 % % %6 %7 % % %7 %
   Third-party34 % % %34 %30 % % %30 %
Total Dx revenues by payer64 % % %64 %63 % % %63 %
DD
   Biopharmaceutical and medical device companies22 %10 %4 %36 %18 %12 %7 %37 %
Total revenues86 %10 %4 %100 %81 %12 %7 %100 %
Revenues in the U.S. were $3,352.7 (82.5%) and $3,198.8 (82.1%) for the three months ended September 30, 2021, and 2020, respectively, and for the nine months ended September 30, 2021, and 2020, were $9,926.7 (82.3%) and $7,505.9 (79.1%), respectively.
Contract costs
DD incurs sales commissions in the process of obtaining contracts with customers. Sales commissions that are payable upon contract award are recognized as assets and amortized over the expected contract term, along with related payroll tax expense. The amortization of commission expense is based on the weighted average contract duration for all commissionable awards in the respective business in which the commission expense is paid, which approximates the period over which goods and services are transferred to the customer. The amortization period of sales commissions ranges from approximately 1 to 5 years, depending on the business. For businesses that enter into primarily short-term contracts, the Company applies the practical expedient, which allows costs to obtain a contract to be expensed when incurred if the amortization period of the assets that would otherwise have been recognized is one year or less. Amortization of assets from sales commissions is included in selling, general, and administrative expense.
DD incurs costs to fulfill contracts with customers. Contract fulfillment costs include software implementation costs and setup costs for certain market access solutions. These costs are recognized as assets and amortized over the expected term of the contract to which the implementation relates, which is the period over which services are expected to be provided to the customer. This period typically ranges from 2 to 5 years. Amortization of deferred contract fulfillment costs is included in cost of goods sold.
8

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars and shares in millions, except per share data)
September 30, 2021December 31, 2020
Sales commission assets$36.6 $32.6 
Deferred contract fulfillment costs14.3 12.6 
Total$50.9 $45.2 
Amortization related to sales commission assets and associated payroll taxes for the three months ended September 30, 2021, and 2020, was $7.1 and $6.0, respectively and for the nine months ended September 30, 2021, and 2020, was $20.4 and $16.8, respectively. Amortization related to deferred contract fulfillment costs for the three months ended September 30, 2021, and 2020, was $3.5 and $2.3, respectively, and was $10.0 and $7.6, respectively, for the nine months ended September 30, 2021, and 2020.
Receivables, Unbilled Services and Unearned Revenue
Unbilled services are comprised primarily of unbilled receivables, but also include contract assets. A contract asset is recorded when a right to payment has been earned for work performed, but billing and payment for that work is determined by certain contractual milestones, whereas unbilled receivables are billable upon the passage of time. While the Company attempts to negotiate terms that provide for billing and payment of services prior or in close proximity to the provision of services, this is not always possible and there are fluctuations in the level of unbilled services and unearned revenue from period to period. The following table provides information about receivables, unbilled services, and unearned revenue (contract liabilities) from contracts with customers which primarily exist within DD.
September 30, 2021December 31, 2020
Receivables, which are included in accounts receivable$1,098.6 $1,001.5 
Unbilled services730.2 548.1 
Unearned revenue574.3 492.2 
Revenues recognized during the period, that were included in the unearned revenue balance at the beginning of the period were $267.6 and $237.2 for the nine months ended September 30, 2021, and 2020, respectively.
Credit Loss Rollforward
The Company estimates future expected losses on accounts receivable, unbilled services and notes receivable over the remaining collection period of the instrument. The rollforward for the allowance for credit losses for the nine months ended September 30, 2021 is as follows:
For the Nine Months Ended September 30, 2021
Accounts ReceivableUnbilled ServicesNote and Other ReceivablesTotal
Balance as of December 31, 2020$22.1 $11.3 $5.7 $39.1 
Plus, credit loss expense0.7   0.7 
Less, write offs4.5 0.1  4.6 
Balance as of September 30, 2021$18.3 $11.2 $5.7 $35.2 
Performance Obligations Under Long-Term Contracts
Long-term contracts at the Company consist primarily of fully managed clinical studies within DD. The amount of existing performance obligations under such long-term contracts unsatisfied as of September 30, 2021, was $5,412.8. The Company expects to recognize revenue over the remaining contract term of the individual projects, with contract terms generally ranging from 1 to 8 years.
Within DD, revenues of $10.1 and $31.1 were recognized during the three months ended September 30, 2021 and 2020, respectively, and revenues of $38.9 and $44.8 were recognized during the nine months ended September 30, 2021 and 2020, respectively, from performance obligations that were satisfied in previous periods. This revenue primarily relates to adjustments related to changes in scope in full service clinical studies, and to a lesser extent, changes in estimates.
3.     BUSINESS ACQUISITIONS AND DISPOSITIONS
During the nine months ended September 30, 2021, the Company acquired several businesses and related assets for approximately $326.0 in cash within Dx. The purchase considerations for these acquisitions in the nine months ended September 30, 2021, have been allocated under the acquisition method of accounting to the estimated fair market value of the net assets acquired, including approximately $142.5 in identifiable intangible assets and a residual amount of non-tax deductible goodwill of approximately $219.2. The amortization periods for intangible assets acquired from these businesses range from 5
9

LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(dollars and shares in millions, except per share data)
to 15 years for customer relationships, non-compete agreements, technology and trade names. These acquisitions were made primarily to expand the Company's services for hospitals and health system laboratories and acquire testing technology. The excess of the fair value of the consideration conveyed over the fair value of the net assets acquired was recorded as goodwill. The goodwill reflects the Company's expectations to utilize the acquired business' workforce and established relationships and the benefits of being able to leverage operational efficiencies with favorable growth opportunities in these markets. In addition, during the nine months ended September 30, 2021, the Company sold certain assets within DD with proceeds of $12.4 and a loss of $6.1 recorded in Other, net on the Condensed Consolidated Statement of Operations.
The purchase price allocation for several third quarter transactions are still preliminary and subject to change. The areas of the purchase price allocation that are not yet finalized relate primarily to intangible assets, goodwill, and the impact of finalizing deferred taxes. Accordingly, adjustments may be made as additional information is obtained about the facts and circumstances that existed as of the valuation date. Any adjustments will be recorded in the period in which they are identified.
4.      EARNINGS PER SHARE
Basic earnings per share is computed by dividing net earnings attributable to Laboratory Corporation of America Holdings by the weighted average number of common shares outstanding. Diluted earnings per share is computed by dividing net earnings including the impact of dilutive adjustments by the weighted average number of common shares outstanding plus potentially dilutive shares, as if they had been issued at the earlier of the date of issuance or the beginning of the period presented. Potentially dilutive common shares result primarily from the Company’s outstanding stock options, restricted stock awards, restricted stock units, and performance share awards.
The following represents a reconciliation of basic earnings per share to diluted earnings per share:
 Three Months Ended September 30,Nine Months Ended September 30,
 2021202020212020
EarningsShares Per Share AmountEarningsShares Per Share AmountEarningsShares Per Share AmountEarningsShares Per Share Amount
Basic earnings per share:            
Net earnings$587.3 96.3 $6.10 $703.4 97.4 $7.22 $1,824.3 97.1 $18.79 $617.8 97.3 $