10-Q

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 quarterly period ended September 30, 2000

Commission file number: 0-16946

LabOne, Inc.

10101 Renner Blvd.

Lenexa, Kansas 66219

(913) 888-1770

Incorporated in Missouri

I.R.S. Employer Identification Number: 43-1039532

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 /X/    No /  /

Number of shares outstanding of only class of Registrant's common stock, $.01 par value, as of October 31, 2000 - 10,715,349 net of 2,334,671 shares held as treasury stock.

LabOne, Inc.

Form 10-Q for the Third Quarter, 2000

Table of Contents

PART I.   FINANCIAL INFORMATION

ITEM 1.   Financial Statements:

ITEM 2.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

ITEM 3.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

PART II.   OTHER INFORMATION

PART I. FINANCIAL INFORMATION

ITEM 1 - Financial Statements

LabOne, Inc. and Subsidiaries

Consolidated Balance Sheets

		September 30,	December 31,
		2000	1999
ASSETS
Current assets:
Cash and cash equivalents	$	1,605,796	2,983,644
Accounts receivable - trade, net of allowance for doubtful
accounts of $3,479,097 in 2000 and $1,981,285 in 1999		30,431,093	26,331,960
Income taxes receivable		1,560,943	1,643,520
Inventories		3,007,548	3,186,853
Prepaid expenses and other current assets		4,731,856	1,772,884
Deferred income taxes		1,925,439	1,328,027
Total current assets		43,262,675	37,246,888
Property, plant and equipment		87,475,127	80,910,886
Less accumulated depreciation		42,424,856	38,106,948
Net property, plant and equipment		45,050,271	42,803,938
Other assets:
Intangible assets, net of accumulated amortization		35,383,103	37,868,921
Bond issue costs, net of accumulated amortization of
$36,392 in 2000 and $23,291 in 1999		155,755	168,856
Deferred income taxes - noncurrent		-	93,326
Deposits and other assets		250,755	260,795
Total assets	$	124,102,559	118,442,724
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	11,945,467	11,852,403
Accrued payroll and benefits		4,668,642	2,793,721
Other accrued expenses		1,505,592	727,241
Other current liabilities		197,265	551,146
Notes payable		81,250	-
Current portion of long-term debt		1,878,253	1,873,577
Total current liabilities		20,276,469	17,798,088
Deferred income taxes - noncurrent		679,467	-
Long-term payable		1,360,000	1,360,000
Long-term debt		35,408,099	28,255,139
Total liabilities		57,724,035	47,413,227
Stockholders' equity:
Preferred stock, $.01 par value per share; 3,000,000
shares authorized, none issued		-	-
Common stock, $.01 par value per share; 40,000,000
shares authorized, 13,050,020 shares issued		130,500	130,500
Additional paid-in capital		31,734,954	32,035,445
Equity adjustment from foreign currency translation		(753,764)	(750,115)
Retained earnings		70,897,637	69,758,872
		102,009,327	101,174,702
Less treasury stock of 2,334,671 shares in 2000 and
1,516,527 shares in 1999		35,630,803	30,145,205
Total stockholders' equity		66,378,524	71,029,497
Total liabilities and stockholders' equity	$	124,102,559	118,442,724

See accompanying notes to consolidated financial statements and management's
discussion and analysis of financial condition and results of operations.

LabOne, Inc. and Subsidiaries

Consolidated Statements of Earnings

		Three months ended			Nine months ended
		September 30,			September 30,
		2000	1999		2000	1999
Sales	$	43,626,533	28,814,326	$	123,368,602	84,714,563
Cost of sales
Cost of sales expenses		29,086,601	16,518,209		80,317,835	48,018,785
Depreciation expense		596,269	584,004		1,729,335	1,738,729
Total cost of sales		29,682,870	17,102,213		82,047,170	49,757,514
Gross profit		13,943,663	11,712,113		41,321,432	34,957,049
Selling, general and administrative
Selling, general and administrative expenses		9,953,722	8,398,233		30,005,574	24,283,162
Depreciation expense		1,093,831	812,698		3,031,637	2,116,480
Amortization expense		1,045,001	847,498		3,128,422	2,208,018
Total selling, general and administrative		12,092,554	10,058,429		36,165,633	28,607,660
Earnings from operations		1,851,109	1,653,684		5,155,799	6,349,389
Interest expense		(673,127)	(357,906)		(1,771,272)	(947,528)
Interest income and other		18,340	49,665		58,738	305,250
Earnings before income taxes		1,196,322	1,345,443		3,443,265	5,707,111
Income tax expense		838,795	729,782		2,304,500	2,624,933
Earnings before minority interest		357,527	615,661		1,138,765	3,082,178
Minority interest		-	92,362		-	766,375
Net earnings	$	357,527	523,299	$	1,138,765	2,315,803
Basic and diluted earnings per common share	$	0.03	0.05	$	0.10	0.23
Dividends per common share	$	-	0.18	$	-	0.58
Basic weighted average common shares outstanding		10,715,349	10,750,955		10,918,612	10,076,481
Effect of dilutive securities - stock options		8,522	7,114		2,830	15,947
Diluted weighted average common shares outstanding		10,723,871	10,758,069		10,921,442	10,092,428

See accompanying notes to consolidated financial statements and management's
discussion and analysis of financial condition and results of operations.

LabOne, Inc. and Subsidiaries

Consolidated Statement of Stockholders' Equity

Nine Months Ended September 30, 2000

				Accumulated
			Additional	other			Total
		Common	paid-in	comprehensive	Retained	Treasury	stockholders'	Comprehensive
		stock	capital	income	earnings	stock	equity	income
Balance at December 31, 1999	$	130,500	32,035,445	(750,115)	69,758,872	(30,145,205)	71,029,497
Comprehensive income:
Net earnings					1,138,765		1,138,765	1,138,765
Equity adjustment from
foreign currency translation				(3,649)			(3,649)	(3,649)
Comprehensive income								1,135,116
Directors' stock issued (23,287 shares)			(300,491)			462,895	162,404
Purchase of 841,431 common
shares for treasury stock						(5,948,493)	(5,948,493)
Balance at September 30, 2000	$	130,500	31,734,954	(753,764)	70,897,637	(35,630,803)	66,378,524

See accompanying notes to consolidated financial statements and management's
discussion and analysis of financial condition and results of operations.

LabOne, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

		Nine months ended September 30,
		2000	1999
Cash provided by (used for) operations:
Net earnings	$	1,138,765	2,315,803
Adjustments to reconcile net earnings
to net cash provided by operations:
Depreciation and amortization		7,909,315	6,083,145
Earnings applicable to minority interests		-	766,375
Provision for loss on accounts receivable		1,802,789	1,984,330
Loss (gain) on disposal of property and equipment		2,364	(785,319)
Directors' stock compensation		162,404	-
Provision for deferred taxes		175,514	2,526,309
Changes in:
Accounts receivable		(5,901,922)	(4,303,691)
Income taxes receivable		82,577	(2,094,051)
Inventories		179,305	708,895
Prepaid expenses and other current assets		(2,958,972)	(212,042)
Accounts payable		93,064	(2,885,228)
Accrued payroll and benefits		1,874,921	(729,790)
Other accrued expenses		778,351	107,003
Other current liabilities		(353,881)	9,309
Net cash provided by operations		4,984,594	3,491,048
Cash provided by (used for) investment transactions:
Property, plant and equipment, net		(7,009,599)	(4,892,513)
Acquisition of intangible assets, net		(642,604)	(16,561)
Acquisition of minority interest		-	(12,581,740)
Other		10,040	43,687
Net cash used for investment transactions		(7,642,163)	(17,447,127)
Cash provided by (used for) financing transactions:
Purchase of treasury stock		(5,948,493)	(1,601)
Dividends paid to minority interest		-	(935,730)
Line of credit, net		9,000,000	9,000,000
Payments on long-term debt		(1,849,183)	(1,859,115)
Notes payable		81,250	-
Cash dividends		-	(5,969,491)
Net cash provided by financing transactions		1,283,574	234,063
Effect of foreign currency translation		(3,853)	57,280
Net decrease in cash and cash equivalents		(1,377,848)	(13,664,736)
Cash and cash equivalents - beginning of period		2,983,644	15,223,336
Cash and cash equivalents - end of period	$	1,605,796	1,558,600
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest	$	1,724,840	951,348
Income taxes	$	2,427,906	2,251,466

See accompanying notes to consolidated financial statements and management's
discussion and analysis of financial condition and results of operations.

LabOne, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

September 30, 2000 and 1999

The accompanying consolidated financial statements include the accounts of LabOne, Inc. and its wholly-owned subsidiaries Lab One Canada Inc., Systematic Business Services, Inc. (SBSI) and ExamOne World Wide, Inc. (ExamOne). All significant intercompany transactions have been eliminated in consolidation.

The financial information furnished herein as of September 30, 2000 and for the periods ended September 30, 2000 and 1999 is unaudited; however, in the opinion of management, it reflects all adjustments, consisting of normal recurring adjustments, which are necessary to fairly state the Company's financial position, the results of its operations and cash flows. The balance sheet information as of December 31, 1999 has been derived from the audited financial statements as of that date. The financial statements have been prepared in conformity with generally accepted accounting principles appropriate in the circumstances, and included in the financial statements are certain amounts based on management's estimates and judgments.

The financial information herein is not necessarily representative of a full year's operations because levels of sales, capital additions and other factors fluctuate throughout the year. These same considerations apply to all year-to-year comparisons. See the Company's Annual Report on Form 10-K for the year ended December 31, 1999, for additional information not required by this Quarterly Report on Form 10-Q.

On August 10, 1999, the former LabOne, Inc. was merged into its parent corporation, Lab Holdings, Inc. The combined company's name was then changed to LabOne, Inc. The merger provisions included a 3 for 2 stock split for all Lab Holdings common shares. The Company paid $12.6 million, including transaction costs, to complete the merger and purchase 0.8 million shares of LabOne stock. The remaining minority 1.8 million shares of former LabOne stock were exchanged on a one for one basis for the combined company stock. The transaction was recorded under purchase accounting and resulted in $24.4 million in goodwill which is being amortized over 20 years.

Effective November 5, 1999, LabOne acquired World Wide Health Services, Inc. and World Wide Health Services of New Jersey, a provider of specimen collection and paramedical examination services to life and health insurers. These subsidiaries are operated under the name ExamOne World Wide and are included in the insurance services division of LabOne. This addition allows LabOne to expand the services it offers to its insurance industry clients.

Forward Looking Statements

This Quarterly report on Form 10-Q may contain "forward-looking statements," including, but not limited to: projections of revenues, income or loss, capital expenditures, statements of plans and objectives, statements of future economic performance and statements of assumptions underlying such statements. Forward-looking statements involve known and unknown risks and uncertainties. Many factors could cause actual results to differ materially from those that may be expressed or implied in such forward-looking statements, including, but not limited to, the volume and pricing of laboratory tests performed by the Company, the extent of market acceptance of the Company's testing services in the healthcare and substance abuse testing industries, intense competition, the loss of one or more significant customers, general economic conditions and other factors detailed from time to time in the Company's reports and registration statements filed with the Securities and Exchange Commission, including the Cautionary Statement filed as Exhibit 99 to the Company's Annual Report on Form 10-K for the year ended December 31, 1999.

Business Segment Information

The company operates in three lines of business: insurance services, healthcare and substance abuse testing. The following table presents selected financial information for each segment:

		Three Months Ended September 30,			Nine Months Ended September 30,
		2000	1999		2000	1999
Sales:
Insurance	$	26,132,055	17,894,206	$	79,784,547	53,952,222
Healthcare		9,758,886	6,329,240		25,524,985	18,022,464
Substance abuse testing		7,735,592	4,590,880		18,059,070	12,739,877
Total sales	$	43,626,533	28,814,326	$	123,368,602	84,714,563
Operating income (loss):
Insurance	$	2,387,731	3,258,506	$	8,585,293	11,068,050
Healthcare		(183,667)	(844,000)		(1,456,819)	(3,111,734)
Substance abuse testing		442,063	(26,833)		345,796	(317,506)
General corporate expense		(795,019)	(733,989)		(2,318,471)	(1,289,421)
Total earnings from operations		1,851,108	1,653,684		5,155,799	6,349,389
Other expense		(654,786)	(308,241)		(1,712,534)	(642,278)
Earnings before income taxes	$	1,196,322	1,345,443	$	3,443,265	5,707,111

The Company's new facility was completed in early 1999, and the portions of the building identifiable to each segment have been allocated to those segments. Effective the second quarter, 1999, the associated depreciation expenses have been charged to the segments and are included in the operating income or loss information stated above. The insurance segment operating income for 2000 includes intersegment charges of $2.9 million year to date from the healthcare segment primarily for hepatitis and other miscellaneous medical testing and $0.9 million from the SAT segment for drug screening and confirmations. Indirect expenses are allocated to the operational segments based on the relative revenue of each segment on a monthly basis. General corporate expense represents unallocated expenses, principally the amortization of goodwill resulting from the merger and acquisitions. There were no other material changes in assets or in the basis of segmentation or measurement of segment operating income or loss.

Contingencies

The Comptroller of the State of Texas has conducted an audit of LabOne for sales and use tax compliance for the years 1991 through 1997 and contends that LabOne's insurance laboratory services are taxable under the Texas tax code. The Texas Comptroller originally issued a tax audit assessment, including interest and penalties, of approximately $1.9 million. The Company filed a petition for redetermination arguing that its services do not fit within the definition of insurance services under the Texas code. The assessment was reduced to only include sales of services for applicants who were residents of Texas. LabOne paid the revised assessment of $521,000 under protest in 2000 and is petitioning the Court for recovery of these amounts.

New Accounting Pronouncements

LabOne implemented the Financial Accounting Standards Board Interpretation No. 44, Accounting for Certain Transactions Involving Stock Compensation effective July 1, 2000. Application of this interpretation will not have a significant impact on the Company's financial position or results of operations.

ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

RESULTS OF OPERATIONS

SELECTED FINANCIAL DATA

		Three months ended September 30,		% Inc.		Nine months ended September 30,		% Inc.
		2000	1999	(Dec)		2000	1999	(Dec)
Sales	$	43,626,533	28,814,326	51%	$	123,368,602	84,714,563	46%
Net earnings		357,527	523,299	(32%)		1,138,765	2,315,803	(51%)
Diluted earnings per
common share	$	0.03	0.05		$	0.10	0.23
Cash dividends per
common share	$	0.00	0.18		$	0.00	0.58

The Company provides high-quality laboratory testing services to insurance companies, managed care organizations, physicians and employers.

LabOne provides risk-appraisal laboratory services to the insurance industry. The tests performed by the Company are specifically designed to assist an insurance company in objectively evaluating the mortality and morbidity risks posed by policy applicants. The majority of the testing is performed on specimens of individual life insurance policy applicants. The Company also provides testing services on specimens of individuals applying for individual and group medical and disability policies. Through its subsidiaries, SBSI and ExamOne, the Company provides paramedical services, telephone inspections, motor vehicle reports, attending physician statements, and claims investigation services to life and health insurers nationwide.

LabOne's services to the healthcare industry involve clinical testing to aid in the diagnosis and treatment of patients. LabOne operates only one highly automated and centralized laboratory, which the Company believes has significant economic advantages over other conventional laboratory competitors. LabOne markets its clinical testing services to the payers of healthcare (insurance companies and self-insured groups) and physicians. The Company does this through exclusive arrangements with managed care organizations and through Lab Cardâ, a Laboratory Benefits Management (LBM) program.

LabOne is certified by the Substance Abuse and Mental Health Services Administration (SAMHSA) to perform substance abuse testing services for federally regulated employers and is currently marketing these services to both regulated and nonregulated employers. The Company's rapid turnaround times and multiple testing options help clients reduce downtime for affected employees and meet mandated drug screening guidelines.

THIRD QUARTER ANALYSIS

Net sales increased 51% in the third quarter 2000 to $43.6 million from $28.8 million in the third quarter 1999. The increase of $14.8 million is due to increases in insurance services revenue of $8.2 million, healthcare laboratory revenue of $3.4 million and substance abuse testing (SAT) revenue of $3.2 million.

The insurance services division revenue increased $8.2 million due to the addition of ExamOne revenue and growth in information services revenue. ExamOne contributed $7.2 million of revenue for the quarter. Insurance laboratory testing revenue increased $0.2 million or 2%. The total number of insurance applicants tested in the third quarter 2000 increased by 2% as compared to the same quarter last year due primarily to an increase in oral fluid applicants. Average revenue per applicant decreased slightly. Kit and container revenue decreased $0.1 million due to lower volumes of kits sold, partially offset by higher average kit prices. Non laboratory insurance services revenue increased $0.9 million primarily due to growth in SBSI services.

During the third quarter, healthcare revenue increased to $9.8 million as compared to $6.3 million in the prior year due to increased testing volumes and a 2% increase in average revenue per patient. SAT revenue increased from $4.6 million in 1999 to $7.7 million in 2000 primarily due to an increase in testing volumes as compared to last year.

Cost of sales increased $12.6 million or 74% in the third quarter 2000 as compared to the prior year, due primarily to increases in outside services including paramed collections and physician statement fees, payroll, lab and kit supplies, and postage expense. Paramedical services increased primarily due to the expansion of ExamOne. Payroll, postage, and lab and kit supplies increased due to the additional specimen volume in the laboratory testing segments. Insurance cost of sales, including the above mentioned factors, increased from $9.7 million in the third quarter 1999 to $17.8 million in 2000. Healthcare cost of sales were $6.3 million as compared to $4.2 million in the third quarter 1999, and SAT cost of sales were $5.7 million as compared to $3.2 million in the third quarter 1999.

As a result of the above factors, gross profit for the quarter increased $2.2 million or 19% from $11.7 million in 1999 to $13.9 million in 2000. Healthcare gross profit increased $1.4 million on an increase in revenue of $3.4 million. SAT gross profit increased $0.7 million on an increase in revenue of $3.1 million. Insurance gross profit increased $0.2 million to $8.4 million in the third quarter.

Selling, general and administrative expenses increased $2.0 million (20%) in the third quarter 2000 as compared to the prior year due primarily to increases in payroll, depreciation, amortization and Lab Card production expenses. Depreciation increased $0.3 million and amortization expense increased $0.2 million. Healthcare overhead expenditures, including allocations, were $3.7 million as compared to $3.0 million in 1999. SAT expenditures, including allocations, were $1.6 million as compared to $1.4 million last year. Insurance overhead expenditures, including allocations, increased from $4.9 million in the third quarter 1999 to $6.0 million in 2000, primarily due to the acquisition of ExamOne.

Operating income increased from $1.7 million in the third quarter 1999 to $1.9 million in 2000. The healthcare segment improved $0.7 million to an operating loss of $0.2 million on an allocated basis. The SAT segment improved $0.5 million from an operating loss of $27,000 in the third quarter 1999 to a gain of $0.4 million in 2000 on an allocated basis. The insurance segment operating income, including SBSI and ExamOne, declined $0.9 million on an allocated basis.

Non operating expense increased $0.3 million primarily due to additional interest expense resulting from additional debt incurred to complete the 1999 merger and to finance the stock repurchase program. The effective income tax rate increased from 54% in 1999 to 70% in 2000 primarily due to an increase in nondeductible amortization expense.

The combined effect of the above factors resulted in net earnings of $0.4 million or $0.03 per share in the third quarter 2000 as compared to $0.5 million or $0.05 per share in the same period last year. The weighted average number of shares outstanding in the third quarter of 2000 and 1999 were 10,723,871 and 10,758,069, respectively. The August 1999 merger of LabOne, Inc. and Lab Holdings, Inc. resulted in an increase of 1.8 million shares, offset by year to date repurchases of 0.8 million shares.

YEAR-TO-DATE ANALYSIS

Revenue in the nine month period ended September 30, 2000 was $123.4 million as compared to $84.7 million in the same period last year. The increase of $38.7 million or 46% is due to increases in insurance revenue of $25.9 million, healthcare revenue of $7.5 million and SAT revenue of $5.3 million.

Insurance revenue increased from $54.0 million to $79.8 million year to date primarily due to the addition of ExamOne revenue of $19.8 million and SBSI revenue growth of $4.7 million. The total number of laboratory tested insurance applicants in the nine month period increased by 2% as compared to the last year while the average revenue per applicant declined 1%. Kit and container revenue increased $1.2 million due primarily to an increase in the number of kits sold and an increase in the full blood kit pricing.

Healthcare laboratory revenue increased 42% from $18.0 million during the first nine months of 1999 to $25.5 million for the same period in 2000 primarily due to increased testing volumes. SAT revenue increased 42% from $12.7 million in 1999 to $18.1 million in 2000 due to an increase in testing volumes, partially offset by lower revenue per specimen.

Cost of sales increased $32.3 million year to date as compared to the prior year. This increase is due primarily to increases in paramedical services, payroll expenses, kit and lab supplies, insurance information services and inbound freight. Insurance cost of sales increased from $28.4 million to $52.1 million in 2000. Healthcare cost of sales were $16.9 million as compared to $12.2 million during the first nine months of 1999, and SAT cost of sales were $13.0 million compared to $9.2 million in 1999.

Gross profit for the first nine months increased from $35.0 million in 1999 to $41.3 million in 2000. Insurance gross profit, including ExamOne and SBSI, increased $2.1 million. Healthcare gross profit increased $2.8 million, and SAT gross profit increased $1.5 million.

Selling, general and administrative expenses increased $7.6 million (26%) in the nine month period ended September 30, 2000 as compared to the prior year due to the addition of ExamOne, gains on sale of the former laboratory and administrative facilities in 1999, and increases in depreciation and amortization expense. Fully allocated healthcare expenditures were $10.1 million as compared to $8.9 million in 1999, and fully allocated SAT expenses were $4.7 million in 2000 as compared to $3.8 million in 1999. Fully allocated insurance overhead expenditures increased from $14.5 million to $19.1 million in 2000, primarily due to the acquisition of ExamOne.

Operating income decreased from $6.3 million in the first nine months of 1999 to $5.2 million in 2000. The insurance segment, including allocations, had operating income of $8.6 million as compared to $11.1 million in the first nine months last year. On a fully allocated basis, the healthcare segment had an operating loss of $1.5 million for the nine month period ended September 30, 2000 as compared to an operating loss of $3.1 million in 1999. The SAT segment, including allocations, had operating income of $0.3 million in 2000 as compared to an operating loss of $0.3 million in 1999. Unallocated operating expenses for the corporate segment were $2.3 million for the first nine months related to corporate and merger expenses as compared to unallocated operating expenses of $1.3 million in 1999 which included gains on sale of the former laboratory and administrative facilities of $0.9 million.

Net interest expense increased $1.1 million in the first nine months of 2000 due to increased borrowings. The effective income tax rate increased from 46% in 1999 to 67% in 2000 primarily due to nondeductible amortization expense.

The combined effect of the above factors resulted in net earnings of $1.1 million or $0.10 per share in the nine month period ended September 30, 2000 as compared to $2.3 million or $0.23 per share in the same period last year. The weighted average number of shares outstanding in the first nine months of 2000 and 1999 were 10,921,442 and 10,092,428, respectively. The August 1999 merger of LabOne, Inc. and Lab Holdings, Inc. resulted in an increase of 1.8 million shares, offset by year to date repurchases of 0.8 million shares.

FINANCIAL POSITION, LIQUIDITY AND CAPITAL RESOURCES

LabOne's working capital position increased by $3.5 million to $23.0 million at September 30, 2000 from $19.4 million at December 31, 1999. This increase is primarily due to working capital provided by operations and net borrowings exceeding capital additions and treasury stock repurchases.

Net additions to property, plant and equipment in the first nine months of 2000 were $7.0 million primarily due to investment in information systems infrastructure and SAT laboratory growth. Additions in 1999, excluding the sale of the former administrative and laboratory facilities, were $8.4 million, primarily related to construction and fixtures for the new facility.

Net long-term debt increased $3.2 million during the quarter, with borrowings on the line of credit increasing to $21 million and the outstanding balance of the industrial revenue bond being reduced to $16.3 million. The total line of credit available is $25 million. The current interest rate, plus financing fees, on the line of credit is approximately 7.4% and is based on a 30 day LIBOR rate. Interest on the bond is based on a taxable seven-day variable rate and is currently approximately 7.4%. The Company expects to repay the bond over the remaining nine years at $1.85 million per year plus interest.

During the third quarter 2000, the Company did not repurchase any shares of common stock. The total number of shares of LabOne stock held in treasury at September 30, 2000 was approximately 2.3 million at a total cost of $35.6 million or $15.26 per share.

At September 30, 2000, LabOne had total cash and investments of $1.6 million as compared to $3.0 million at December 31, 1999. The Company expects to fund operations from a combination of cash flows from operations, cash reserves and short term borrowings.

ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

A foreign currency risk exposure exists due to billing Canadian subsidiary revenue in Canadian dollars and the direct laboratory expenses associated with this revenue being incurred in US dollars. This exposure is not considered to be material. Any future material Canadian currency fluctuations against the US$ could result in a decision to hedge future foreign currency cash flows, or to increase Canadian prices.

An interest rate risk exposure exists due to LabOne's liability of $16 million in industrial revenue bonds and $21 million line of credit borrowings. Interest expense incurred on these credit facilities is based on short-term rates which may fluctuate in the future. The interest rate, including all associated borrowing costs, is approximately 7.4% per annum as of November 1, 2000.

PART II. OTHER INFORMATION

Item 6. - Exhibits and Reports on Form 8-K

   (a)  Exhibits

10.  LabOne, Inc. 2000 Stock Purchase Loan Program

27.  Financial Data Schedule - as filed electronically by the Registrant in conjunction with this third quarter 2000 Form 10-Q.

   (b)  Reports on Form 8-K

None

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

LabOne, Inc.

Date:  November 10, 2000	By /s/ John W. McCarty John W. McCarty Executive V.P. and Chief Financial Officer
Date:  November 10, 2000	By /s/ Kurt E. Gruenbacher Kurt E. Gruenbacher V.P. Finance, Chief Accounting Officer and Treasurer

EX-10

LABONE, INC.

2000 STOCK PURCHASE LOAN PROGRAM

1. Program

The LabOne, Inc. 2000 Stock Purchase Loan Program (the "Program") provides for the extension of loans ("Loans") to certain officers of LabOne, Inc. ("LabOne") and its subsidiaries (the " Company") to purchase shares of common stock of LabOne ("Common Stock").

2. Purpose.

The purpose of the Program is to further the earnings of the Company by: (a) assisting the Company in attracting, retaining and motivating officers of high caliber and potential and (b) enabling such officers to increase their ownership of Common Stock by financing their purchases, thereby better aligning their interests with the interests of the shareholders of LabOne.

3. Eligibility.

Officers of the Company who are designated by the Board of Directors as "Executive Officers" for purposes of Section 16 of the Securities Exchange Act of 1934 shall be eligible to receive Loans under the Program.

4. Administration.

(a) The Compensation Committee of the Board of Directors (the "Committee") shall administer the Program. The Committee shall have full and final power and authority to administer and interpret the Program. In addition to such general power and authority, and subject to the provisions of the Program, the Committee shall have full and final authority to: (i) determine the amounts to be loaned to any such Executive Officer, (ii) determine the terms and conditions of Loans under the Program and the terms and conditions of any agreement or instrument evidencing a Loan, (iii) authorize the sale of shares of Common Stock pursuant to Loans granted under the Program, (iv) interpret, construe and administer the Program and any instrument or agreement relating to or evidencing a Loan under the Program, (v) establish, amend, suspend or waive rules and guidelines relating to the Program and Loans hereunder, (vi) correct any defect, supply any omission and reconcile any inconsistency in the Program and (vii) make any other determination or take any other action that it deems necessary or desirable for administration of the Program or any Loan hereunder.

(b) Decisions of the Committee shall be final, binding and conclusive on all persons, including the Company and any person receiving a Loan. The Committee may hold meetings and otherwise take action in the manner permitted under applicable provisions of the Articles of Incorporation and By-laws of LabOne, resolutions of the Board of Directors and state and federal law. No member of the Committee shall be liable for any action or determination made in good faith with respect to the Program or any Loan under the Program.

5. Maximum and Minimum Loan Amounts.

The maximum aggregate amount of Loans under the Program to all Executive Officers of the Company as a group shall be an amount sufficient to enable them to purchase 25,000 shares of Common Stock; provided, however, that in no event shall (a) the amount loaned by the Company under the Program during any calendar quarter exceed $200,000 or (b) the amount of Loans under the Program outstanding at any time exceed $500,000. The maximum amount of Loans under the Program to any individual Executive Officer of the Company shall be an amount sufficient to enable such individual to purchase 5,000 shares of Common Stock. The minimum amount of Loans under the program to any individual Executive Officer of the Company shall be an amount sufficient to enable such individual to purchase 1,000 shares of Common Stock.

6. Purchase of Shares of Common Stock

(a) Shares of Common Stock may be purchased with the proceeds of Loans in the open market or directly from LabOne, as determined by the Committee in its sole discretion. Any shares of Common Stock sold by LabOne pursuant to the Program shall be sold (i) from its treasury shares and (ii) at a price per share equal to the last sale price reported on the Nasdaq National Market on the trading day immediately prior to the day the Loan is granted, as reported in the Wall Street Journal, or the last bid price so reported if there are no reported sales on such trading day.

(b) The Company may place on any certificate representing shares of Common Stock acquired pursuant to the Program any legend deemed desirable by LabOne's counsel to comply with federal and state securities laws and to disclose the restrictions, if any, on the disposition of such shares imposed by the Committee.

7. Terms of Loans.

Each Loan made under the Program shall be evidenced by a collateral note executed and delivered to LabOne by the Executive Officer of the Company receiving the Loan (the "Participant"), substantially in the form attached hereto as Exhibit A (the "Note"). The Note evidencing a Loan shall comply in all respects with the provisions of the Program and must be executed by the Participant before the Loan is funded. Each Participant shall be required to execute and deliver such other documents and instruments as determined by the Committee in its sole discretion. Each Loan shall be subject to the following terms and conditions:

1. Full Recourse Loan. The Participant shall be personally liable for the repayment in full of all principal and interest on the Loan.
2. Interest Rate. Each Loan shall provide for the payment of interest at an annual rate equal to the prime rate as of the date the Note is issued, as determined by the Committee, provided that the interest rate shall not be less than the applicable federal rate, as determined under Section 1274(d) of the Internal Revenue Code, at the time the Loan is made.
3. Repayment of Principal and Interest. Each Loan shall provide that, commencing the calendar month after the month in which the Loan is funded and the Note is issued, the Participant shall pay biweekly, commencing on the first pay period in that month and continuing on each pay period thereafter, by means of automatic payroll deductions, in one hundred thirty (130) equal installments including principal and interest in accordance with the amortization schedule to be annexed to the Note, the outstanding principal balance of the Loan and all accrued interest thereon. Also, upon the maturity date of the Note, the Company shall have the right to offset the outstanding principal and accrued interest under the Loan against any compensation owing to the Participant, including but not limited to any salary payments, severance payments and benefits, accrued vacation pay, business expense reimbursements and any other payments due the Company by the Participant under the Employment Agreement between the Company and the Participant; provided, however, that any outstanding principal and accrued interest remaining after any such offset shall remain immediately due and payable.
4. Collateral. Each Loan shall be secured by (i) the shares of Common Stock acquired with the proceeds of the Loan and (ii) all other assets of the Participant held as collateral by the Company pursuant to any other agreement entered into between the Participant and the Company. LabOne will hold possession of any certificates representing the Common Stock pledged as collateral until the Loan is paid in full.
5. Maturity Date. The outstanding principal and accrued interest of each Loan shall become due and fully payable on the first to occur of the following events:
1. Termination of employment of the Participant for any reason other than death;
2. 180 days after the death of the Participant;
3. The fifth anniversary of the date the Note is issued; or
4. Such other events as are specified in the Note (any one of which shall be the "maturity date").
8. Restrictions on Transfer of Common Stock.

The Participant shall be prohibited from selling or otherwise disposing of the shares of Common Stock acquired with the Loan for a period of one (1) year following the date of their purchase by the Participant. At the time a Loan is made, the Committee may impose additional restrictions on a Participant's ability to sell, encumber or otherwise dispose of the shares of Common Stock acquired with the Loan.

9. Amendment of Terms of Outstanding Loans.

At any time, the Committee may, in its sole discretion, and subject to such conditions as it may impose or authorize, extend the time for repayment of any Loan, forgive the repayment of any or all of the principal and/or interest of any Loan or amend or modify any other terms and provisions of any Loan, provided that a change to a Loan shall not, without the consent of the Participant, adversely affect a Participant's rights under such Loan.

10. Miscellaneous.

(a) No term of the Program shall be construed to confer on any Participant the right to continue in the employ of the Company for any period of time or to restrict the right of the Company to terminate or change the terms of any Participant's employment with the Company at any time, including without limitation any Participant's position or rate of compensation.

(b) The recipient of any Loan shall have no rights as a shareholder with respect thereto unless and until certificates for shares of Common Stock are delivered to the recipient, and the receipt of shares of Common Stock shall confer no retroactive right to dividends.

(c) No right or interest of any Participant in any Loan or in the Program shall be assignable or transferable, except by will or the laws of descent and distribution.

(d) The Program shall be governed by, and shall be construed, enforced and administered in accordance with, the laws of the State of Missouri, except to the extent that such laws may be superseded by any Federal law.

11. Termination, Modification.

If not sooner terminated by the Board of Directors of LabOne, the Program shall terminate at the close of business on September 30, 2010. The Board of Directors may amend or terminate the Program at any time and from time to time in such respects as it deems advisable. An amendment or termination of the Program shall not, without the consent of the Participant, adversely affect the Participant's rights under a previously granted Loan.

EXHIBIT A

FORM OF COLLATERAL NOTE

Date: ____________         Principal Amount $____________

FOR VALUE RECEIVED, the undersigned, __________________ (the "Maker") promises to pay to the order of LabOne, Inc., a Missouri corporation (the "Company"), on the dates specified below, the principal sum of _________________________ ($____________), and to pay interest on the principal amount of this Note outstanding from time to time at the rate of _____% per annum. Interest shall be calculated on a daily basis (computed on the actual number of days elapsed over a year of 360 days).

Commencing the calendar month after the month in which this Note was originally issued by Maker to the Company, Maker shall pay bi-weekly, commencing on the first pay period in that month and continuing on each pay period thereafter, by means of automatic payroll deduction, in one hundred thirty (130) equal installments including principal and interest in accordance with the amortization schedule attached to this Note as Annex A, the outstanding principal balance of this Note and all accrued interest thereon.

All payments of principal and interest shall be in lawful money of the United States of America and made at the principal office of the Company located at 10101 Renner Road, Lenexa, Kansas or at such other place as the holder hereof may designate in writing. All payments made under this Note shall be applied first to the payment of any costs, fees or expenses due under this Note, second to the payment of accrued and unpaid interest hereon, and third and finally, to the reduction of the outstanding principal balance of this Note.

The principal amount of this Note is payable in full upon the earliest to occur of: (i) termination of Maker's employment with the Company and its subsidiaries for any reason other than death; (ii) 180 days after the death of Maker; or (iii) the fifth anniversary date of the date the Note is issued. Unpaid accrued interest on this Note shall be payable in full on the same date as the principal amount becomes payable.

This Note may be prepaid in full at any time or in part from time to time without penalty. The Maker hereby waives presentment, demand for payment, notice of dishonor, protest and notice of protest, notice of acceleration, any and all other notices and demands in connection with this Note, and any defense by reason of extension of time for payment or other indulgence granted by the holder hereof.

The following events shall constitute an Event of Default hereunder:

(a) if any installment of principal and interest on this Note shall not be paid when due;

(b) if Maker defaults in any payment of principal or interest on any other obligation for money borrowed beyond any period of grace provided with respect thereto, or defaults in any material respect in the performance of any other agreement, term or condition contained in any material agreement under which any such obligation is created (or if any other default under any such material agreement shall occur and be continuing), if the effect of any such default is to cause, or permit the holder or holders of any such obligation (or a trustee on behalf of such holder or holders) to cause, such obligation to become due prior to its stated maturity;

(c) if Maker defaults in any material respect in the performance of any agreement, term or condition set forth in any agreement between Maker and the Company, including, but not limited to, any other note, any employment agreement and any confidentiality or non-competition agreement;

(d) if an order, judgment or decree is entered adjudicating Maker bankrupt or insolvent; or Maker shall commence any case, proceeding or other action relating to Maker in bankruptcy or seeking reorganization, liquidation, dissolution, winding-up, arrangement, composition or readjustment of Maker's debts, or for any other relief, under any bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement, composition, readjustment of debt or other similar act or law of any jurisdiction, domestic or foreign, now or hereafter existing; or if Maker shall apply for a receiver, custodian or trustee of Maker or for all or a substantial part of the property of Maker; or if Maker shall make an assignment for the benefit of creditors; or if Maker shall be unable to, or shall admit in writing the inability to, pay the debts of Maker as they become due; or if Maker shall become insolvent; or if Maker shall take any action indicating Maker's consent to, approval of, or acquiescence in, or in furtherance of, any of the foregoing; or

(e) if any case, proceeding or other action against Maker shall be commenced in bankruptcy or seeking reorganization, liquidation, dissolution, winding-up arrangement, composition or readjustment of its debts, or any other relief, under any bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement, composition, readjustment of debt or other similar act or law of any jurisdiction, domestic or foreign, now or hereafter existing; or if a receiver, custodian or trustee of Maker or for all or a substantial part of the properties of Maker shall be appointed; or if a warrant of attachment, execution or distraint, or similar process, shall be issued against any substantial part of the property of Maker; and if in each such case such condition shall continue for a period of 30 days with being dismissed or discharged.