Risk Factors Update Summary

• Global economy changed to global economic conditions, recession to recessions, and inflation to rate volatility. These changes reflect a more detailed and updated risk assessment.
• The VALID Act was introduced in 2021, not included in the 2022 Consolidated Appropriations Act. If finalized, FDA would phase out enforcement discretion for LDTs.
• Capitated contracts accounted for approximately $332 million in 2022, increasing to $369 million in 2023, representing 3% of revenues. This signifies a significant financial impact.
• The Verifying Accurate, Leading-edge, IVCT Development Act proposed in 2023 could increase risks for companies without FDA clearance.
• Payer policy changes negatively impacted revenue, revenue per requisition, and margins. Limited coding and billing changes were implemented in 2022, with more expected in 2024, affecting revenue streams.
• The EU IVDR established in 2022 could impact the Company's ability to support trials and comply with laws.
• The Further Continuing Appropriations and Other Extensions Act of 2024 further delayed payment reductions for Clinical Diagnostic Laboratory Tests (CDLTs) until 2025, with subsequent years limited to a 15% reduction compared to the previous year. This change impacts revenue stability.
• Failure to meet ESG goals may lead to increased costs, reduced demand, and negative impacts.
• Failure to integrate acquired companies may lead to various risks, including loss of key customers, regulatory problems, and potential liabilities. This highlights operational challenges post-acquisition.
• Legal matters include a $272 million damages award in September 2022 and potential $100 million enhanced damages.
• Increased cybersecurity risks due to remote work and AI tools pose threats to customer data security and operational continuity. These risks could result in financial losses and reputational damage.
• Changes in tax laws could impact the Company's financial position, results of operations, and cash flows.
• Changes in payer regulations or policies may adversely affect the company, with Medicare reimbursement subject to statutory and regulatory reductions. These changes could impact revenue streams and financial performance.
• Liability risks in drug development services may arise from errors, omissions, and professional malpractice.