LabCorp 2015 Annual Report Download - page 32

Index
or specimens submitted by existing customers, a decrease in demand for the CDD's services from existing clients, or the loss of existing contracts, without
offsetting growth in its customer base, could impact the Company's ability to successfully grow its business and could have a material adverse impact on the
Company’s net revenues and profitability. The Company competes primarily on the basis of the quality of services, reporting and information systems,
reputation in the medical community and the drug development industry, the pricing of services and ability to employ qualified personnel. The Company's
failure to successfully compete on any of these factors could result in the loss of customers and a reduction in the Company's ability to expand its customer
base.
In addition, as the broader healthcare industry trend of consolidation continues, including the acquisition of physician practices by health systems,
relationships with hospital-based health systems and integrated delivery networks are becoming more important. LCD has a well-established base of
relationships with those systems and networks, including collaborative agreements. LCD's inability to retain its existing relationships with those provider
systems and networks and to create new relationships could impact its ability to successfully grow its business.


Many healthcare companies and providers, including MCOs, pharmaceutical companies, health systems and physician practices are consolidating
through mergers, acquisitions, joint ventures and other types of transactions and collaborations. As the healthcare industry consolidates, competition to
provide goods and services may become more intense. This competition and increased customer bargaining power may adversely affect the price and
volume of the Company’s services.
                    

LCD offers a range of product-development and product-integrity services to food and beverage manufacturers and retailers, industry organizations and
academic institutions. LCD expects to expand its nutritional chemistry and food safety business by leveraging the Company’s expertise in microbiology and
its infrastructure to enable testing to be performed close to the food source. LCD also is exploring the possibility of developing point of care testing for food
safety. These business offerings and opportunities expose the Company to many of the same, or similar, risks that are applicable to other business activities
of the Company, including with respect to the operations of its facilities and the application of applicable laws and regulations. The agricultural, food,
beverage and dietary supplement industries are continuing to gain attention of governments and regulators around the world, and regulations and applicable
laws have increased in recent years. For example, the Company’s customers will be subject to new nutrition labeling regulations and new food
manufacturing requirements, including regulations issued under the Food Safety Modernization Act (FSMA). With these enhanced requirements on the
Company’s clients, there is an increased risk that errors in or omissions from nutritional analysis and food safety tests conducted by the Company for its
clients could result in liability for the Company under client contracts. If LCD determines to further expand its nutritional chemistry and food safety testing
business in the future beyond what is currently anticipated, LCD could become subject to additional standards and regulations, including under the FSMA,
and could face additional liabilities resulting from new and pending regulatory and other legal decisions.


The Company depends on third parties to provide services critical to the Company’s business. The Company's laboratories and certain of the Company's
other businesses are heavily reliant on air travel for transport of clinical trial and diagnostic testing supplies and specimens, research products, and people,
and a significant disruption to the air travel system, or the Company's access to it, could have a material adverse effect on the Company's business. CDD
depends on a limited number of suppliers for certain services and for certain animal populations. Disruptions to the continued supply of these services,
products or animal populations may arise from export/import restrictions or embargoes, political or economic instability, adverse weather, natural disaster or
other causes. Disruption of supply could have a material adverse effect on the Company’s business.

Many of the Company’s facilities would be difficult to replace in a short period of time. Any event that causes a disruption of the operation of these
facilities might impact the Company's ability to provide service to customers and, therefore, could have a material adverse effect on the Company's financial
condition, results of operations and cash flows.
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