10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For fiscal year ended December 31, 2004

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

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act:

Common stock, $0.01 par value
(Title of Class)
The above securities are registered on the NASDAQ National Market

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 [  ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [X]

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).

Yes [X]    No [  ]

Approximate aggregate market value of voting common equity held by non-affiliates of Registrant: $540,000,000 (based on closing price as of June 30, 2004, of $31.78). The non-inclusion of shares held by directors, executive officers and any beneficial owners of more than 10% of the outstanding stock shall not be deemed to constitute an admission that such persons are affiliates of the Registrant within the meaning of the Securities Exchange Act of 1934.

Number of shares outstanding of the only class of Registrant's common stock as of February 28, 2005: $0.01 par value common - 17,262,498 shares.

Documents Incorporated by Reference
Portions of the Registrant's Proxy Statement to be filed by April 30, 2005, are incorporated by reference into Part III. Such Proxy Statement, except for portions thereof that have been specifically incorporated by reference, shall not be deemed filed as part of this report on Form 10-K.

LabOne, Inc.

Form 10-K for the fiscal year ended December 31, 2004

Table of Contents

      PART I.

ITEM 1.   Business

ITEM 2.   Properties

ITEM 3.   Legal Proceedings

ITEM 4.   Submission of Matters to a Vote of Security Holders

      PART II.

ITEM 5.   Market for Registrant's Common Equity and Related Stockholder Matters

ITEM 6.   Selected Financial Data

ITEM 7.   Management's Discussion and Analysis of Financial Condition and Results of Operations

ITEM 7A.   Quantitative and Qualitative Disclosures about Market Risk

ITEM 8.   Financial Statements and Supplementary Data

ITEM 9.   Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

ITEM 9A.   Controls and Procedures

ITEM 9B.   Other Information

ITEM 10.   Directors and Executive Officers of the Registrant

ITEM 11.   Executive Compensation

ITEM 12.   Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

ITEM 13.   Certain Relationships and Related Transactions

ITEM 14.   Principal Accountant Fees and Services

      PART IV.

ITEM 15.   Exhibits and Financial Statement Schedules

Forward Looking Statements

This Annual report on Form 10-K and the documents incorporated by reference may contain "forward-looking statements," including, but not limited to, statements of plans and objectives, statements of future economic performance and statements of assumptions underlying such statements, and statements of the Company's or management's intentions, hopes, beliefs, expectations or predictions of the future. Forward-looking statements can often be identified by the use of forward-looking terminology, such as "could," "should," "will," "will be," "intended," "continue," "believe," "may," "hope," "anticipate," "goal," "forecast," "plan," "estimate" or variations thereof. Forward-looking statements are not guarantees of future performance or results. Forward-looking statements are based on estimates, forecasts and assumptions involving risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed or implied in such forward-looking statements. The uncertainties, risks and assumptions referred to above include, but are not limited to, those described under "Factors Affecting Future Performance" in Item 7. All forward-looking statements, whether written or oral, are expressly qualified by these cautionary statements and any other cautionary statements that may accompany such forward-looking statements. In addition, except to fulfill obligations under applicable securities laws, the Company disclaims any obligation to update any forward-looking statements.

PART I

ITEM 1. BUSINESS

LabOne, Inc., a Missouri corporation, is a diagnostic services provider. The services and information LabOne and its subsidiaries provide include: risk assessment information services for the insurance industry; diagnostic healthcare testing; and substance abuse testing services and related employee qualification products. LabOne's strategy for growth is to (a) continue organic growth in all business segments by maintaining a superior level of service at competitive prices, improved marketing and expanded service offerings to clients; (b) expand managed care relationships; (c) acquire additional laboratory testing and other related businesses; (d) maintain existing competitive advantages of strategically located centralized laboratory facilities , logistics, service and quality levels, and insurance relationships and service offerings; and (e) expand electronic data connectivity capabilities with clients.

LabOne, Inc. and its subsidiaries are hereinafter collectively referred to as either LabOne or the Company. The Company's website can be found on the internet at www.LabOne.com. The Company's annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports are available free through the Company's website as soon as reasonably practicable after such reports and amendments are filed with the SEC, generally on the same day. These documents may also be found at the SEC's website at www.sec.gov.

Overview

LabOne's risk assessment services comprise underwriting support services to the life insurance industry including teleunderwriting, specimen collection and paramedical examinations, laboratory testing, and other insurance risk assessment services including medical record retrieval, motor vehicle reports, inspections and credit checks. The laboratory tests performed and data gathered 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, but also includes specimens of individuals applying for individual and group medical and disability policies.

LabOne's clinical services include laboratory testing services for the healthcare industry as an aid in the diagnosis and treatment of patients. LabOne operates highly automated and centralized laboratory facilities, which the Company believes has significant economic advantages over other laboratory competitors. LabOne markets its healthcare services to managed care companies, insurance companies, self-insured groups, hospitals and physicians and provides management services for hospital based laboratories.

LabOne's clinical services also include substance abuse testing ("SAT") provided to employers to support their drug free workplace programs. LabOne is certified by the Substance Abuse and Mental Health Services Administration ("SAMHSA") to perform substance abuse testing services for federally regulated employers and currently markets these services throughout the country to both regulated and nonregulated employers. Additionally, the Company can provide background checks, social security number verification and other pre-employment data required by employers. The Company's rapid turnaround times and multiple testing options help clients structure programs that best meet their needs, reduce downtime for affected employees and meet mandated drug screening guidelines.

Segment Information

The following table summarizes the Company's revenues from services provided to the risk assessment services and clinical segments:

	Year ended December 31,
	2004		2003		2002
	(in thousands)
Revenues:
Risk assessment services
Insurance laboratory	$  86,859	19%	$   88,818	26%	$  93,892	31%
Paramedical services	102,720	22%	85,363	25%	74,235	25%
Other insurance services	71,493	15%	56,554	16%	41,869	14%
Total risk assessment services	261,072	56%	230,735	67%	209,996	70%
Clinical
Healthcare services	166,732	36%	88,455	26%	60,906	20%
Substance abuse testing	40,432	9%	26,830	8%	27,244	9%
Total clinical	207,164	44%	115,285	33%	88,150	30%
Total	$ 468,236	100%	$ 346,020	100%	$ 298,146	100%

(See Notes to Consolidated Financial Statements for operating
earnings and identifiable assets by segment.)

Services Provided by the Company

Risk Assessment Services:

Life insurance companies require an objective means of evaluating the insurance risk posed by policy applicants in order to establish the appropriate level of premium payments or to determine whether to issue a policy. Because decisions of this type are based on statistical probabilities of mortality and morbidity, insurance companies generally require quantitative data reflecting the applicant's general health. LabOne utilizes standardized specimen collection, medical questionnaires and laboratory testing, tailored to the needs of the insurance industry and reported in a uniform format. This information provides insurance companies with a consistent and efficient means of evaluating the mortality and morbidity risks posed by policy applicants.

The Company's involvement in the life insurance underwriting process often begins when LabOne personnel use the Company's proprietary teleunderwriting software to conduct telephone interviews with new life insurance policy applicants. In addition to a call management component, this software contains scripted medical and financial questions, with appropriate reflex question abilities, that can be customized for each insurance company client. Additionally, this system is electronically linked to the Company's national network of paramedical examiner offices for the scheduling of exams and the transmittal of forms to be signed by the insurance applicant at the time of paramedical examination. Use of the teleunderwriting software will improve turnaround time for processing an applicant and may reduce the need for an insurance company to later request an applicant's medical records.

Following the completion of an individual's application for life insurance, the Company's subsidiary, ExamOne World Wide, Inc. ("ExamOne") may be contacted to arrange for collection of a blood and/or urine specimen. Paramedical examiners collect specimens from individual insurance applicants and perform paramedical examinations using custom-designed collection kits and containers. Insurance agents also collect oral fluid or urine specimens using LabOne's kits. These kits and containers are delivered to LabOne's laboratory via overnight delivery services or mail, bar coded for identification and tested according to each insurance company's specifications.

LabOne's insurance laboratory testing services consist of certain specimen profiles that provide insurance companies with specific information that may indicate liver or kidney disorders, diabetes, the risk of cardiovascular disease, bacterial or viral infections and other health risks. The Company also offers tests to detect the presence of antibodies to the human immunodeficiency virus ("HIV"). Standardized laboratory testing can verify responses on a policy application to such questions as whether the applicant is a user of tobacco products, certain controlled substances or certain prescription drugs.

LabOne assists with administering and tracking data on applicants during the information gathering process. The Company can obtain medical records or attending physician statements so underwriters can review the complete medical history of applicants. Additional applicant information in the form of inspection reports can be gathered quickly and cost-effectively either by telephone or in the field. Motor vehicle reports are ordered automatically based on insurance company specifications or on demand by the underwriter. The Company can collect, process and provide imaged reports of these various pieces of information electronically through LabOne NET® directly to the insurance company's underwriting department.

CaseView, LabOne's proprietary requirements management software, allows underwriters to order laboratory testing and other services, check the status of those requests, review results electronically, request add-on tests or services based on the results and to manage the underwriting services they order through LabOne and its subsidiaries. The Company also offers CaseOne®, a service that provides a single source solution for underwriting requirements management for insurance clients.

Clinical Services:

Healthcare laboratory tests are generally requested by physicians to diagnose, determine treatment and monitor diseases and other medical conditions through the detection of substances in blood and other specimens. Healthcare laboratory testing can be generally categorized as either clinical testing, which is performed on bodily fluids including blood and urine, or anatomic pathology testing, which is performed on tissue and cellular specimens. The most frequently requested tests include blood chemistry analyses, urinalyses, blood cell counts, Pap smears and infectious disease tests. Tests not performed at LabOne are sent out for testing, and the results of these outsourced tests are transmitted into the Company's computer system for reporting along with the results of testing completed by LabOne.

LabOne has several exclusive and non-exclusive arrangements with managed care organizations. With these arrangements, the managed care organizations may direct testing for their members through LabOne. In conjunction with many of these agreements, LabOne provides utilization and disease management reporting to the managed care organizations.

LabOne also provides management services to hospital based laboratories to assist in improving their technology and operational efficiency while reducing costs and improving quality of care.

The Company developed and provides the Lab Card® program as a method of marketing outpatient laboratory services directly to payors such as self-insured groups and insurance companies. It uses a unique benefit design that shares the cost savings with the patient and the payor by creating an incentive for the patient to direct laboratory work to LabOne. The patient generally incurs no out-of-pocket expense when the Lab Card is used, and the insurance company or self-insured group receives substantial savings on its laboratory charges.

Substance abuse testing and related employment services products are principally marketed to large employers, third party administrators ("TPAs") and occupational health providers for employment purposes. The acquisition of the Salt Lake City based Northwest Toxicology Laboratory in March 2004 expanded the Company's specimen testing capabilities to now encompass urine, oral fluid, blood and hair, and expanded the potential customer base to include medical professional state licensing agencies, court ordered testing and esoteric drug reference accounts. Both the Lenexa and Salt Lake City laboratories are SAMHSA certified, enabling the Company to offer substance abuse testing services to federal agencies and federally regulated industries. The Company's expansive logistic capabilities allow the laboratories to provide fast turn-around-time for results nationally. Results can be electronically transmitted to clients via computer interface, secure web site (Member Solutions), printer, fax machine, automat ed voice response or proprietary data software management system (LabLink and RMS).

Operations

LabOne operates major laboratory facilities in Lenexa, Kansas and Cincinnati, Ohio, supported by smaller specialized laboratory facilities in Hays, Kansas and Salt Lake City, Utah. LabOne's principal operation is located in Lenexa, Kansas, where it operates a highly automated and centralized laboratory. The Company is constructing a state-of-the-art laboratory facility in Cincinnati, Ohio. The new facility is expected to improve efficiencies in the Cincinnati operations, shorten turn-around times for specimens from certain portions of the eastern time zone, provide a base for expansion of healthcare services into targeted areas, and increase business continuity capabilities. The Company anticipates that construction will be completed during the second quarter of 2005 allowing for occupancy in early July 2005. The Company has continued all Cincinnati-based testing operations with the exception of certain toxicology and immunology tests, which are directed to LabOne's facility in Lenexa. The Company in tends to consolidate routine and esoteric laboratory testing in its core facilities while maintaining anatomic pathology and rapid response capabilities, as well as customer service, on a regional basis.

The Company's operations are designed to facilitate the testing of a large number of specimens and to report the results to clients, generally within 24 hours of receipt of the specimens. The Company has internally developed, custom-designed laboratory and business processing systems. This centralized network system provides an automated link between LabOne's testing equipment, data processing equipment and clients' computer systems thus providing clients with the ability to customize their initial testing and follow-up testing requirements to best meet their needs.

At many physician office clients, LabOne uses proprietary and non-proprietary technologies to facilitate secure electronic transmission of laboratory orders and results. The Company's connectivity solutions are often interfaced directly into a physician's practice management system to retrieve patient demographics from the physician's systems for transmission to the laboratory with the test order. These demographic interfaces streamline data entry for the physician offices and the laboratory, and allow LabOne to mandate that a physician office provides specific information necessary for billing. After testing, LabOne transmits results in a variety of formats to devices ranging from fax machines and dedicated printers to electronic medical reporting systems.

As a result of the significant number of tests it has performed over the past several years, LabOne has compiled and maintains a large statistical database of test results. These summary statistics are useful to the actuarial and underwriting departments of an insurance client in comparing that client's test results to the results obtained by the Company's entire client base. Company-specific and industry-wide reports are frequently distributed to clients on subjects such as coronary risk analysis, cholesterol and drugs of abuse. Additionally, the Company's statistical engineering department is capable of creating customized reports to assist managed care entities with required reporting, disease management and utilization tracking to help manage healthcare costs.

The Company considers the confidentiality of its test results and other personal data processed to be of primary importance and has established procedures to ensure that this information remains secure, in compliance with statutory regulations.

Substantially all of the test supplies and products used by the Company in conducting its testing are commercially purchased or internally developed and most, but not all, are available from multiple sources. Any interruption in the availability of test supplies or other products used by the Company to collect and test specimens could have an adverse impact on the Company's business.

Regulation

LabOne's business is subject to significant federal and state regulation. Changes in laws and regulations, including laws and regulations establishing reimbursement for laboratory services under government programs such as Medicare and Medicaid, could significantly increase the costs of doing business or limit revenues and have an adverse impact on the Company's results.

LabOne is licensed under the Clinical Laboratory Improvement Amendments of 1988 ("CLIA") and maintains additional licenses in all states where such licenses are required. LabOne is certified by the College of American Pathologists. LabOne's Lenexa and Salt Lake City laboratories are certified by SAMHSA to perform testing to detect drugs of abuse in federal employees and in workers governed by federal regulations. The Company is subject to federal and state regulation relating to the handling and disposal of medical waste and hazardous waste and federal regulation by the Food and Drug Administration, the Occupational Safety and Health Administration related to workplace safety and several agencies related to the transportation of laboratory specimens. The loss of any of these licenses or certifications by the Company, or the failure of the Company to maintain compliance with federal and state requirements, could have an adverse impact on the Company's business.

Congress enacted the Health Insurance Portability and Accountability Act of 1996 ("HIPAA"). Pursuant to HIPAA, LabOne maintains administrative, technical and physical safeguards to protect the security and confidentiality of Protected Health Information against unauthorized use or disclosure. LabOne's compliance committee and security and privacy officers consistently monitor the Company's compliance with these requirements.

Compliance Program; Quality Improvement

LabOne's Regulatory Affairs department oversees quality programs to ensure that accurate and reliable test results are released to clients. This is accomplished by incorporating both internal and external quality improvement programs in each area of the laboratory. In addition, quality improvement specialists share the responsibility with all LabOne employees of an ongoing commitment to quality and safety in all laboratory operations. Internal quality and educational programs are designed to identify opportunities for improving laboratory services and to meet all required safety, training and education issues. These programs monitor the reliability and confidentiality of test results and other information.

Procedure manuals in all areas of the laboratory are developed and written to help maintain uniformity and accuracy and follow regulatory guidelines. Tests on control samples with known results are performed frequently to maintain and verify accuracy in the testing process. Complete documentation provides record keeping for employee reference and meets regulatory requirements. An assessment of safety equipment, procedures and processes is performed and documented on a monthly basis. New employees complete an extensive training program that covers bloodborne pathogens, chemical hygiene, fire and electrical safety, employee health and confidentiality. Annual training is provided for all employees.

The Superblind® Program was started in 1989. This unique program, involving pseudo accounts established only to the knowledge of the LabOne Quality Improvement department, allows LabOne to challenge quality from the time the account is set up through final billing. Changes in reference ranges, remarks, report formats or new tests can be reviewed before "going live." Monthly, approximately 500 sample kits representing pseudo patients, donors and/or applicants are submitted with a minimum of 15 indicators each. This challenges the system at least 7,500 times per month.

LabOne testing facilities participates in proficiency testing programs as required by state and federal licensing and accrediting agencies. These programs complement LabOne's internal quality control and verify that the performance of each test is in line with other laboratories performing the same analysis. Agencies that license LabOne require participation in proficiency testing for every test performed in its laboratory, if available. Three times a year, blind samples are sent to laboratories. The samples' expected values are unknown to the laboratories. They are tested and the results are returned to the proficiency testing provider. The results are then compared to other laboratory results using the same method/reagent/instrument. The final evaluation results are distributed to the laboratory and to regulatory agencies. Approximately 7,500 proficiency tests were performed last year.

To ensure maximum quality, ExamOne follows set operating procedures and guidelines that define quality standards for field personnel. The ExamOne Quality Assurance Department assesses predefined standards by performing routine audits. Additionally, personnel who are independent of ExamOne operations periodically evaluate each corporate and affiliate office using an extensive checklist which includes multiple questions relating to the facility, exam/specimen collection areas, safety, professionalism and examiner competency. All offices are expected to score above average in each category. Any office that receives an unacceptable score must provide a plan of action within 60 days. A summary of office evaluations is reported to the LabOne Board Audit Committee on a quarterly basis.

LabOne has appointed a Corporate Chief Compliance Officer, Compliance Officers at each of its Cincinnati and Hays laboratories, and co-compliance officers representing corporate privacy, corporate security, operations, pathology, legal, human resources, regulatory affairs, billing, sales, finance, administration and information systems and technology functions within LabOne. Additionally, the Company has developed the LabOne Compliance Program, based on the Model Compliance Plan recommended by the Office of Inspector General of the Department of Health and Human Services, to monitor compliance with federally-funded programs where LabOne seeks reimbursement for laboratory testing services. Compliance training is provided to all employees at initial hire and annually thereafter. The Chief Compliance Officer in conjunction with the general counsel, communicates compliance activities to the Board Audit Committee on a quarterly basis.

Sales and Marketing

LabOne's client base consists of insurance companies, managed care organizations, TPAs, government agencies, physician practices, hospitals and employers, primarily in North America. The Company believes that its ability to provide prompt and accurate results on a cost-effective basis and its responsiveness to customer needs have been important factors in servicing existing business.

In 2000, LabOne became the national account manager under a ten year agreement for State Farm Insurance Companies ("State Farm"). As account manager, LabOne is responsible for procurement of services for teleunderwriting, collection and testing of specimens from State Farm's life and health insurance applicants. Under these arrangements, total revenue recognized by the Company from State Farm for the years ended December 31, 2004, 2003 and 2002 represented 8%, 10% and 12%, respectively, of total revenue. The percentage has declined due to the overall growth in LabOne's total sales. The loss of the State Farm account would have a material adverse effect on the Company's results.

All of the Company's sales representatives for the risk assessment market have significant business experience in the insurance and paramedical industry or clinical laboratory-related fields. These representatives call on major clients several times each year, usually meeting with a medical director or vice president of underwriting. An important part of the Company's marketing effort is directed toward providing its existing clients and prospects with information pertaining to the benefits of, and trends in, laboratory testing, applicant interviews and other medical information gathering. The Company's sales representatives and its senior management also attend and sponsor insurance industry underwriters' and medical directors' meetings.

The Company's sales representatives for clinical healthcare services are experienced in clinical laboratory-related fields, and each currently works in a specific geographic area. Marketing efforts are directed at insurance carriers, employers, TPAs, physician practices, hospitals and other organizations nationwide.

Marketing for substance abuse testing is primarily directed at Fortune 1000 companies, occupational health clinics and TPAs. The Company's strategy is to offer consistent, quality services, nationwide, at competitive prices. The Company's marketing focuses on LabOne's ability to offer multiple reporting methods, next-flight-out options, dedicated client service representatives and rapid reporting of results. The clinical SAT business is sensitive to economic conditions and levels of new employment.

Competition

The Company believes that the risk assessment services market in the United States and Canada is approximately a $1 billion industry. The Company serves approximately 25% of this market. The primary competition in the market includes Hooper Holmes, Inc. and Examination Management Services, Inc. In this market, LabOne has developed long-term client relationships and a reputation for providing quality services at competitive prices tailored specifically to the insurance industry's needs. The Company continues to develop innovative data management services and technological solutions that differentiate its products from competitors. These services and solutions enable LabOne's clients to expedite the underwriting and claims processes, saving time and reducing underwriting costs.

The Company believes that the laboratory testing segment of the clinical market is approximately a $40 billion industry, which is highly fragmented and very competitive. The Company faces competition from numerous independent clinical laboratories and hospital-owned or physician-owned laboratories. Two of the Company's competitors are significantly larger and have substantially greater financial resources than LabOne. The Company has established a solid client base through the use of Lab Card® and arrangements with managed care entities to provide laboratory services and information reporting.

LabOne competes in the employment substance abuse testing segment nationwide. There are currently 47 laboratories certified by SAMHSA including the Lenexa and Salt Lake City locations operated by LabOne. Two major clinical chains, which collectively perform the majority of the substance abuse testing, are the Company's major competitors. The Company's focus is fast turnaround with high-quality, low-cost service, with a strategic position of offering oral fluid based drug screening. The acquisition of the Northwest Toxicology operations in 2004 resulted in additional urine and oral fluid testing volumes being directed to LabOne's Lenexa laboratory, and increased the Company's capabilities to include drugs of abuse testing in blood, expanded specimen validity testing, medical professional and other esoteric drug testing.

Foreign Markets

The Company derives revenues from risk assessment services, including laboratory testing and paramedical examinations, marketed to life insurance clients insuring residents of foreign countries. Substantially all of these services are provided in Canada, but the Company also receives specimens for laboratory testing from insurance applicants in Mexico and other foreign countries. The laboratory testing on these specimens is performed primarily in the United States. Total revenues from these sales were $21.0 million in 2004, $14.1 million in 2003 and $12.1 million in 2002, or approximately 4% of the Company's total revenues in each of these years. The Company does not maintain any significant long-lived assets in foreign countries.

Employees

The Company has approximately 3,100 employees, including 200 part-time employees. None of the Company's employees are represented by a labor union. The Company believes its relations with employees are good.

ITEM 2. PROPERTIES

The Company's principal operations are located on 54 acres of land in Lenexa, Kansas, approximately 15 miles from Kansas City, Missouri. Its 268,000 square foot, custom-designed facility houses the Company's primary laboratory, administrative and warehouse functions. The facility is owned by the Company and financed through industrial revenue bonds issued by the City of Lenexa, Kansas. The laboratory has certain enhancements that improve the efficiency of operations. All automated testing equipment requiring purified water is linked directly to a centralized water-purification system. Over 50,000 square feet of raised flooring allows laboratory instruments and computer systems to be arranged or moved quickly and easily. The security system includes proximity card readers to control access and a ceiling detector system to prevent unauthorized access. In addition, three diesel generators and a UPS battery system are on-line in the event of electrical power shortage. These back-up power sources allow specimen testing and data processing to continue until full power is restored, thus assuring LabOne's clients of continuous laboratory operation.

The Company leases two laboratories and office space in Hays, Kansas. These leases expire in 2006 and 2007. LabOne leases 47 specimen collection sites located in Missouri, Kansas, Texas, Ohio, Kentucky and Tennessee. The company also leases warehouse space in Lenexa, Kansas. This lease expires in 2009, but may be terminated at the Company's option in 2005. Lab One Canada Inc. leases office space in Ontario Canada, which is used for sales and client services. This lease expires in 2005. Additionally, Lab One Canada Inc. leases space in Quebec, Canada for assembly and distribution of specimen collection kits for Canadian insurance testing and insurance applicant interviews. This lease expires in 2005. LabOne leases a facility in Lee's Summit, Missouri, under lease until 2011, to perform teleunderwriting interviews and medical records retrievals. The Company also leases space in Earth City, Missouri used to provide medical records retrievals. ExamOne has a five-year lease expi ring in 2005 for a facility used as office space in Voorhees, New Jersey. The Company is in the process of moving these operations to a new facility, also in Voorhees, New Jersey, which is leased until 2010. ExamOne has a lease expiring in 2006 for a facility used as office space in Toronto, Canada. Additionally, ExamOne leases 58 locations across the United States and Canada as regional paramedical offices.

In connection with the acquisition of the core laboratory operations of the Health Alliance, the Company leases space from the Health Alliance. The Company is currently building a state-of-the-art 136,000 square foot laboratory facility in Cincinnati, Ohio. The Company anticipates that construction will be completed during the second quarter of 2005 for occupancy in early July 2005.

In conjunction with the acquisition of the assets of Northwest Toxicology, the Company leases space in Salt Lake City, Utah. The lease expires in 2009.

ITEM 3. LEGAL PROCEEDINGS

As previously reported in LabOne's 2001 Annual Report on Form 10-K, the Comptroller of the State of Texas conducted audits of LabOne for sales and use tax compliance for the years 1991 through 1999 and contended that LabOne's insurance laboratory services are taxable under the Texas tax code. LabOne paid the assessments under protest and petitioned the Texas state courts for recovery of the amounts paid. The litigation was settled in January 2005. The settlement stipulated that Texas would retain the amounts paid under protest by LabOne and that Texas would waive any right to assess sales or use taxes against LabOne subsidiaries SBSI and ExamOne for periods prior to January 1, 2004. Total cost of sales in 2004 benefited $0.5 million from the recovery of Texas sales and use taxes accrued during these periods.

In the normal course of business, LabOne was the subject of certain lawsuits pending as of December 31, 2004. Although LabOne cannot predict the outcome of such proceedings or any other claims made against it, management believes that the ultimate resolution of these claims will not have a material adverse impact on the Company's financial position, results of operations or cash flows.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Registrant's common stock trades on The NASDAQ Stock Market® under the symbol LABS. As of February 18, 2005, outstanding shares were held by approximately 8,800 shareholders either directly or in street name.

The Company did not pay a dividend on its common stock during 2004 or 2003. The Board of Directors will review the dividend policy on a periodic basis, but presently has no plans to pay a dividend in the near future. Additionally, the Company's line of credit includes a covenant restricting the payment of dividends on the Company's common stock.

The following are the high and low prices of LabOne's common stock for each quarter of 2004 and 2003:

	2004		2003
	High	Low	High	Low
1st Quarter	$ 36.24	$ 27.42	$ 20.86	$ 17.38
2nd Quarter	34.14	27.87	22.55	17.79
3rd Quarter	32.47	26.27	25.24	19.91
4th Quarter	33.00	28.81	32.50	21.04

(c) In 2000, the Company's Board of Directors authorized a share repurchase program to purchase up to $10 million of LabOne common stock. The program does not have an expiration date. During 2000, the Company repurchased 841,000 shares of common stock at an average price of $7.07 per share for a total of $5.9 million. The Company has not repurchased any shares of common stock since 2000. Approximately $4.1 million remains available for future treasury stock purchases under the share repurchase program.

ITEM 6. SELECTED FINANCIAL DATA

The following table summarizes certain selected financial data regarding the Company. This information should be read in conjunction with ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS and ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The balance sheet data as of December 31, 2004, 2003, 2002, 2001 and 2000 and the statement of operations data for each of the years in the five-year period ended December 31, 2004, have been derived from the Company's Audited Consolidated Financial Statements.

	Years Ended December 31,
	2004	2003	2002	2001	2000
	(in thousands, except per share amounts)
Sales	$ 468,236	$ 346,020	$ 298,146	$ 233,887	$ 169,151
Operating earnings	45,127	35,549	28,431	4,259	3,742
Net earnings (loss)	26,724	20,732	14,840	(1,043)	(524)
Diluted earnings (loss) per common share	$     1.53	$     1.23	$     0.91	$    (0.18)	$    (0.05)
Total assets	$ 343,222	$ 237,622	$ 216,691	$ 188,792	$ 127,979
Long term debt	111,549	56,094	63,051	55,833	38,677
Stockholders' equity	179,967	145,701	120,059	101,591	64,711

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of the Company's financial condition and results of operations should be read in conjunction with the accompanying financial statements and the related notes. This discussion may contain forward-looking statements. Please see "Forward-Looking Statements" and "Factors Affecting the Company's Future Performance" for a discussion of some, but not all, of the uncertainties, risks and assumptions associated with these statements.

RESULTS OF OPERATIONS

	Year ended December 31,
	2004		2003		2002
	(in thousands)
Revenues:
Risk assessment services
Insurance laboratory	$  86,859	19%	$   88,818	26%	$  93,892	31%
Paramedical services	102,720	22%	85,363	25%	74,235	25%
Other insurance services	71,493	15%	56,554	16%	41,869	14%
Total risk assessment services	261,072	56%	230,735	67%	209,996	70%
Clinical
Healthcare services	166,732	36%	88,455	26%	60,906	20%
Substance abuse testing	40,432	9%	26,830	8%	27,244	9%
Total clinical	207,164	44%	115,285	33%	88,150	30%
Total	$ 468,236	100%	$ 346,020	100%	$ 298,146	100%
Total laboratory services revenue	$ 294,023		$ 204,103		$ 182,042
Operating earnings (loss):	(in thousands)
Risk assessment services
Insurance laboratory	$  36,007		$  38,993		$  37,790
Paramedical services	11,478		8,437		5,678
Other insurance services	10,214		5,275		3,744
Risk assessment sales group	(6,672)		(5,368)		(6,228)
Total risk assessment services	51,027		47,337		40,984
Clinical
Healthcare services	27,989		17,862		11,893
Substance abuse testing	7,355		4,558		3,575
Total clinical	35,344		22,420		15,468
General corporate expenses	(41,244)		(34,208)		(28,021)
Total operating earnings	$ 45,127		$ 35,549		$ 28,431
Volumes:	(in thousands)
Risk assessment services (applicants)
Insurance laboratory	5,050		5,165		5,610
Paramedical services	1,329		1,124		985
Clinical (requisitions)
Healthcare specimens	4,461		2,518		1,839
Substance abuse testing	3,208		2,221		2,276

2004 Compared to 2003

Revenue for the year ended December 31, 2004, was $468.2 million compared to $346.0 million in 2003. The increase of $122.2 million, or 35%, was due to increases in clinical healthcare revenue of $78.3 million, risk assessment revenue of $30.3 million and clinical SAT revenue of $13.6 million. Risk assessment revenue increased to $261.1 million from $230.7 million in 2003 due primarily to increases of $17.4 million in paramedical services and $14.9 million in other insurance services, partially offset by a decrease in insurance laboratory services of $2.0 million. Paramedical services revenue increased due to an increase in the number of paramedical exams performed for new and existing customer accounts and the acquisition of a Canadian paramedical service provider in April 2004. Other insurance services increased due to growth in teleunderwriting, medical records retrieval services and motor vehicle reports. Insurance laboratory revenue decreased 2% due to a decline in the total number of insura nce applicants tested by the Company and a decrease in the average revenue per applicant. The number of insurance applicants tested decreased due to net accounts lost to competition and fewer applicants tested for existing accounts. Healthcare services revenue increased to $166.7 million in 2004 from $88.5 million in 2003 due to a 77% increase in testing volumes and a 6% increase in the average revenue per patient. The acquisition of the laboratory operations of the Health Alliance in January 2004 accounted for 67% of the revenue increase, and increased sales to new and existing healthcare customers accounted for 22% of the revenue increase. SAT revenue increased to $40.4 million in 2004 from $26.8 million in 2003. The acquisition of Northwest Toxicology in March 2004 accounted for 38% of the increase, and growth in organic substance abuse testing revenues accounted for 12% of the increase. Total laboratory services revenue from risk assessment and clinical was $294.0 million as compared to $204.1 mill ion in 2003.

Cost of sales increased $83.3 million, or 35%, for the year compared to the prior year. This increase was primarily due to the acquisitions of the laboratory operations of the Health Alliance and Northwest Toxicology, and increases in paramedical services, payroll and medical records. Risk assessment cost of sales increased to $189.7 million compared to $166.0 million during 2003 due to the growth of paramedical examinations performed, medical records retrieval services and teleunderwriting , partially offset by the decrease in laboratory specimen volumes and savings on inbound freight expenses. Clinical healthcare cost of sales increased to $102.9 million compared to $51.9 million during 2003 due to the acquisition of the laboratory operations of the Health Alliance and increased specimen volumes. Clinical SAT cost of sales increased to $27.8 million compared to $19.2 million during 2003 due to the acquisition of Northwest Toxicology and an increase in the number of specimens tested.

As a result of the above factors, gross profit increased $38.9 million, or 36%, to $147.9 million in 2004 from $108.9 million in 2003. Risk assessment gross profit increased $6.7 million, or 10%, to $71.4 million in 2004 from $64.7 million in 2003. Clinical healthcare gross profit increased $27.3 million, or 75%, to $63.9 million in 2004 from $36.5 million in 2003. Clinical SAT gross profit increased $5.0 million, or 65%, to $12.6 million in 2004 from $7.6 million in 2003.

Selling, general and administrative ("SGA") expenses increased $29.4 million, or 40%, in 2004 compared to 2003 primarily due to the acquisitions of the laboratory operations of the Health Alliance and Northwest Toxicology, and increases in payroll, bad debt, accounting fees, insurance and amortization expenses. Excluding the acquisitions, payroll expenses increased $7.2 million, or 18%, due to increased headcount related to IT initiatives and clinical sales efforts. Bad debt expense increased in conjunction with the increase in revenue. Risk assessment SGA increased to $20.4 million compared to $17.4 million in 2003 due to amortization and payroll expenses. Clinical healthcare SGA increased to $35.9 million compared to $18.7 million in 2003 due to the acquisition of the laboratory operations of the Health Alliance and increases in payroll and bad debt expenses. Clinical SAT SGA increased to $5.3 million in 2004 from $3.1 million due to the acquisition of Northwest Toxicology. Corporate SGA increased t o $41.2 million from $34.2 million in 2003 due to increases in payroll, costs associated with compliance with Sarbanes-Oxley requirements including audit expenses, and depreciation.

Operating income increased 27% to $45.1 million in 2004 from $35.5 million in 2003. Risk assessment services had operating income of $51.0 million compared to $47.4 million in 2003. Clinical healthcare services operating income increased to $28.0 million in 2004 from $17.9 million in 2003. Clinical SAT operating income increased to $7.4 million in 2004 from $4.6 million in 2003. Corporate operating expenses for the year were $41.2 million compared to $34.2 million in 2003.

Nonoperating expense increased to $4.7 million in 2004 compared to $2.8 million in 2003, primarily due to increased interest expense. Interest expense increased from 2003 due to the issuance of $103.5 million of 3.5% Convertible Senior Debentures used primarily to reduce borrowings under the Company's credit facility. The effective tax rate for 2004 declined to 34% compared to 37% in 2003 principally due to the elimination of a valuation allowance on the Company's Kansas state tax credits of $1.2 million which are now expected to be fully realized, and a $0.4 million adjustment related to foreign and state taxes.

The combined effect of the above factors resulted in net income of $26.7 million, or $1.53 per diluted share, compared to net income of $20.7 million, or $1.23 per diluted share, in 2003.

2003 Compared to 2002

Revenue for the year ended December 31, 2003, was $346.0 million compared to $298.1 million in 2002. The increase of $47.9 million, or 16%, was due to increases in clinical healthcare revenue of $27.5 million and risk assessment revenue of $20.7 million, partially offset by a decrease in clinical SAT revenue of $0.4 million. Risk assessment revenue increased to $230.7 million from $210.0 million in 2002 due primarily to increases of $14.7 million of other insurance services and $11.1 million in paramedical services, partially offset by a decrease in insurance laboratory services of $5.1 million. Other insurance services increased due to growth in medical records retrieval services and teleunderwriting. Paramedical services revenue increased due to an increase in the number of paramedical exams performed from the addition of new customer accounts. Insurance laboratory revenue decreased 6% due to a decline in the total number of insurance applicants tested by the Company, partially offset by an inc rease in the average revenue per applicant. The number of insurance applicants tested decreased due to accounts lost as a result of pricing competition. Healthcare services revenue increased to $88.5 million in 2003 from $60.9 million in 2002 due to a 37% increase in testing volumes and a 6% increase in the average revenue per patient. Increased sales to new and existing healthcare customers accounted for 28% of the revenue increase, and the acquisition of Central Plains Laboratories, L.L.C. ("CPL") in December 2002 accounted for 17% of the revenue increase. SAT revenue decreased to $26.8 million in 2003 from $27.2 million in 2002 primarily due to a 2% decrease in testing volumes. Total laboratory services revenue from risk assessment and clinical was $204.1 million as compared to $182.0 million in 2002.

Cost of sales increased $31.2 million, or 15%, for the year compared to the prior year. This increase is primarily due to increases in paramedical services, payroll, material costs, medical records and motor vehicle reports. Risk assessment cost of sales increased to $166.0 million compared to $151.7 million during 2002 due to the growth of medical records retrieval services, paramedical examinations performed and teleunderwriting interviews, partially offset by the decrease in laboratory specimen volumes. Clinical healthcare cost of sales increased to $51.9 million compared to $33.7 million during 2002 due to increased specimen volumes. Clinical SAT cost of sales decreased to $19.2 million compared to $20.4 million during 2002 due to cost savings on material costs and payroll, and lower specimen volumes.

As a result of the above factors, gross profit increased $16.6 million, or 18%, to $108.9 million in 2003 from $92.3 million in 2002. Risk assessment gross profit increased $6.5 million, or 11%, to $64.7 million in 2003. Clinical healthcare gross profit improved $9.4 million to $36.5 million in 2003 from $27.1 million in 2002. Clinical SAT gross profit increased $0.7 million to $7.6 million in 2003 from $6.9 million last year.

Selling, general and administrative expenses increased $9.5 million, or 15%, in 2003 compared to 2002 primarily due to increases in payroll, consulting for software implementations, insurance, bad debt and amortization expenses. Payroll expenses increased $3.7 million, or 10%, due to increased headcount. Bad debt expense increased in conjunction with the increase in revenue. Risk assessment SGA increased to $17.4 million compared to $17.2 million in 2002 due to amortization and consulting expenses, partially offset by a decrease in payroll. Clinical healthcare SGA increased to $18.7 million compared to $15.3 million in 2002 due to an increase in payroll and bad debt expenses. Clinical SAT SGA decreased to $3.1 million in 2003 from $3.3 million. Corporate SGA increased to $34.2 million from $28.0 million in 2002 due to increases in payroll, insurance, consulting and audit expenses.

Operating income increased 25% to $35.5 million in 2003 from $28.4 million in 2002. Risk assessment services had operating income of $47.4 million compared to $41.0 million in 2002. Clinical healthcare services operating income increased to $17.9 million in 2003 from $11.9 million in 2002. Clinical SAT operating income improved to $4.6 million in 2003 from $3.6 million in 2002. Corporate operating expenses for the year were $34.2 million compared to $28.0 million in 2002.

Nonoperating expense decreased $1.3 million in 2003 compared to 2002, primarily due to decreased interest expense. Interest expense decreased from 2002 primarily due to refinancing the Company's subordinated debt through borrowings under the Company's line of credit. The effective tax rate during 2003 was 37% compared to 39% in 2002.

The combined effect of the above factors resulted in net income of $20.7 million, or $1.23 per diluted share, compared to net income of $14.8 million, or $0.91 per diluted share, in 2002.

TRENDS

Risk Assessment Segment

The risk assessment services market continues to be highly competitive. The primary focus of the competition has been on lower pricing and expansion of services to compete with those offered by the Company. LabOne plans to maintain its focus on its long-standing commitment to customer service, providing quality products and services at competitive prices and developing innovative data management services and technological solutions that offer customers faster sources of reliable underwriting information and differentiate LabOne from its competitors.

The Company anticipates that during 2005 insurance laboratory volumes will decrease as compared to 2004 due to competition and fewer insurance applications for existing accounts. Downward pressures on insurance laboratory pricing are expected to be offset at least in part by an increase in average selling price due to an expansion of the number and types of tests performed per applicant. The Company anticipates that life insurance companies will continue to outsource other services such as case management and teleunderwriting, and revenues from these services are anticipated to increase during 2005. The Company should be uniquely positioned to capitalize on these anticipated trends.

Revenue from paramedical services increased $17.4 million in 2004 due to organic growth and the acquisition of a Canadian paramedical service provider in April 2004. The Company anticipates that organic growth will continue during 2005 although at a slower pace. Paramedical services historically return a lower gross margin than LabOne's other business segments. In most cases, a substantial percentage of the revenue from a specimen collection is paid to a contractor who owns and operates an independent local office that arranges for the collection. If this revenue grows as a percentage of total LabOne revenue, its lower gross margins will add to the total profitability of LabOne but will reduce the average gross profit percentage of revenue. Gross margins from paramedical services are anticipated to improve modestly as the number of Company owned locations increases.

Clinical Segment

In clinical healthcare, the Company serves approximately 800,000 managed care members under exclusive managed care outpatient laboratory service arrangements. The Company continues to add network approvals for healthcare plans in focused regional physician markets to increase penetration. Managed care organizations, and the physicians who are under their contracts, continue to choose LabOne for its quality controlled testing, disease management data capabilities and responsive customer service and support.

Development of new clinical tests and proprietary methodologies for use by healthcare providers continues to expand. Recent discoveries or potential technology breakthroughs could enable rapid acceleration of this development and subsequent demand for these tests. These tests are often characterized by higher processing costs or limited access through specific laboratories. LabOne's response to this trend has been to internalize methodologies for these tests, thus lowering costs, and to seek adequate reimbursement for these tests from payors and clients. The ability of outside firms to advance new tests and create demand for them, offset by the Company's ability to successfully limit the expense impact of such tests and to be adequately reimbursed, may pressure clinical healthcare gross margins in the future. Alternatively, LabOne's responsive strategy may create advantages over smaller, less equipped competition.

LabOne continues to develop methods to internalize testing formerly referenced to esoteric laboratories. Additionally, internal cytology and anatomic pathology capacity has been added, which will reduce LabOne's dependence on commercial providers for these services and reduce costs. The integration of purchased laboratories, including the core laboratory operations of the Health Alliance and Northwest Toxicology, will increase testing volumes at the Lenexa facility, improving capacity utilization and generating improved incremental margins on transferred testing.

In conjunction with the acquisition of the laboratory operations of the Health Alliance, LabOne began providing management services to hospital based laboratories to assist in improving their technology and operational efficiency while reducing costs and improving quality of care. Revenue attributable to these services was $8.8 million in 2004. Revenues are based on actual costs plus an agreed upon margin.

The Company continues to market the Lab Card® Program to physician practices and managed care companies. Membership in the Lab Card Program is approximately 3.3 million members.

The number of SAMHSA certified laboratories continues to decrease as the laboratory industry continues to consolidate primarily through acquisition. There are currently 47 SAMHSA certified laboratories, including the Company's Lenexa and Salt Lake City laboratories. Total test volume in the employment market is directly impacted by national economic conditions and the resulting employment hiring patterns which are anticipated to continue their recent improvements.

LIQUIDITY AND CAPITAL RESOURCES

LabOne's working capital position increased to $73.7 million as of December 31, 2004, from $48.1 million as of December 31, 2003. This increase is due to increased cash balances resulting from the issuance of the over-allotment of convertible debentures during the third quarter and cash flow from operations. Accounts receivable grew to $73.0 million as of December 31, 2004, from $57.9 million as of December 31, 2003, due to the increase in revenue. Total cash and cash equivalents as of December 31, 2004, were $24.1 million compared to $4.7 million as of December 31, 2003. Management expects to be able to fund operations from a combination of cash flow from operations and borrowings under its credit facility.

During 2004, the Company spent $60.5 million on acquisitions and $24.5 million for capital expenditures. Acquisitions for 2004 included $43.9 million for the core laboratory operations of the Health Alliance and $12.2 million for Northwest Toxicology. Capital expenditures for 2004 were principally construction expenses for the Cincinnati laboratory, software and data processing equipment. During 2003, the Company spent $13.3 million on acquisitions and $9.7 million for capital expenditures. Acquisitions for 2003 included ScanTech Solutions, L.L.C. for $5.9 million, the insurance testing laboratory of MetLife, Inc. for $5.1 million and $2.2 million for three paramedical affiliates. During 2002, the Company spent $17.2 million on acquisitions and $8.0 million for capital expenditures. Acquisitions for 2002 included CPL for $12.1 million and $4.6 million for several paramedical affiliates.

During June 2004, the Company issued $90 million of 3.50% convertible senior debentures due June 15, 2034 in a private placement to qualified institutional buyers pursuant to Rule 144A under the Securities Act of 1933. During July 2004, the initial purchasers exercised their option to purchase an additional $13.5 million of the debentures. The debentures may be converted, under certain circumstances, into a combination of cash and common stock of the Company at an initial conversion rate of 25.4463 shares of common stock per $1,000 principal amount of debentures, which is equivalent to a conversion price of $39.30 per share of common stock, subject to certain adjustments. Holders may convert the debentures if the price of the common stock during a designated period of time exceeds 130% of the conversion price. Holders also may convert the debentures if during a designated period of time the trading price per debenture is less than 98% of the product of the closing sale price of the common stock and th e conversion rate then in effect, if the debentures are called for redemption, or if certain specified corporate transactions occur. Upon conversion, the Company will deliver cash equal to the lesser of the aggregate principal amount of debentures to be converted and the conversion obligation, and common stock in respect of the remainder, if any, of the conversion obligation. If certain corporate transactions occur on or prior to June 15, 2009, the conversion rate will be increased for the debentures converted by a number of additional shares of common stock based on the date the corporate transaction is effective and the price paid per share of the common stock in the corporate transaction. In no event will the total number of shares of common stock issuable upon conversion exceed 34.3525 per $1,000 principal amount of debentures or 2,633,692 shares of common stock, whichever is less, and subject to applicable adjustments. The Company may not redeem the debentures prior to June 20, 2009. Holders of the debentures may require the Company to repurchase some or all of the debentures at par value on June 15, 2011, 2014 and 2024 and upon certain specified corporate transactions. The Company used net proceeds of $100.1 million from the offering to reduce borrowings under its credit facility and for general corporate purposes. The foregoing description of the 3.5% convertible senior debentures due June 15, 2034 is qualified in its entirety by reference to Amendment No.1 to Form S-3 Registration Statement filed with the SEC on November 12, 2004.

Interest on the industrial revenue bonds issued to finance the construction of the Company's Lenexa facility is based on a taxable seven-day variable rate which, including letter of credit and remarketing fees, was approximately 3.5% as of February 1, 2005. The outstanding balance on the bonds was $9.0 million as of December 31, 2004 and the bonds mature over the next five years in increments of $1.8 million per year.

The Company has a $175 million revolving credit agreement due August 11, 2009 with a syndicate of banks with JPMorgan Chase Bank, as administrative agent and collateral agent, and Wachovia Bank, N.A., as syndication agent. The credit facility includes commitments from JPMorgan Chase Bank, Wachovia Bank, NA, Wells Fargo Bank, N.A., Bank of America, N.A., U.S. Bank N.A., LaSalle Bank, N.A., UBS Loan Finance LLC, National City Bank of Kentucky, The Northern Trust Company, and Commerce Bank, N.A. As of December 31, 2004, approximately $0.8 million was outstanding under the credit facility and, based upon applicable financial covenants, approximately $74.8 million of the remaining $174.2 million was available for borrowing. In general, borrowings under the credit facility may be repaid at any time without penalty. The credit facility requires a commitment fee ranging from 0.375% to 0.5% on the unused portion of the commitment depending upon the ratio of the Company's total indebtedness to consolidated earnin gs before interest, taxes, depreciation and amortization (EBITDA) for the most recent four consecutive fiscal quarters.

Borrowings under the credit facility bear interest at the Company's option at either the Eurodollar rate or the alternate base rate. Interest accrues with respect to the Company's Eurodollar rate borrowings at a rate equal to (a) the rate for dollar deposits with a comparable maturity by reference to the British Bankers' Association Interest Settlement Rates, plus (b) a margin ranging from 1.25% to 2.00%, depending upon the ratio of the Company's total consolidated indebtedness to consolidated EBITDA for the most recent four consecutive fiscal quarters. Interest accrues with respect to the Company's alternate base rate borrowings at a rate equal to (i) the greater of JPMorgan Chase Bank's "prime rate" and the federal funds effective rate published by the Federal Reserve Bank of New York plus 0.5%, plus (ii) a margin ranging from 0.25% to 1.00%, depending upon the ratio of the Company's total consolidated indebtedness to consolidated EBITDA for the most recent four consecutive fiscal quarters. A t December 31, 2004 the interest rate applicable to borrowings under the credit facility was 4.2%.

The credit facility is secured by a lien on substantially all of the Company's assets excluding the Company's Lenexa, Kansas laboratory. Under the terms of the credit facility, the Company must comply with certain financial covenants. A leverage covenant requires that the ratio of total indebtedness to the sum of four consecutive fiscal quarters of consolidated EBITDA, as defined, be less than 3.00 times. An interest coverage covenant requires that the ratio of the sum of four consecutive quarters of consolidated EBITDA be at least 4.0 times the net interest expense, as defined, for those quarters. Other covenants limit annual cash capital expenditures to 30% of consolidated EBITDA and require the maintenance of a certain level of consolidated net worth. As of December 31, 2004, the Company was in compliance with all financial covenants related to the credit facility.

The following table summarizes certain contractual obligations as of December 31, 2004:

		Payments due by period
Contractual obligations	Total	Less than   1 year	1-3 years	4-5 years	After 5 years
	(in thousands)
Long-term debt	$113,474	$  1,905	$  3,640	$  4,429	$103,500
Capital lease obligations	42	20	16	6	—
Operating leases	13,304	4,299	4,866	2,621	1,518
Purchase obligations	10,513	10,513	—	—	—
Total contractual obligations	$137,333	$  16,737	$    8,522	$    7,056	$105,018

RECENT ACCOUNTING DEVELOPMENTS

In December 2004, the FASB issued SFAS 123R which requires the measurement of all employee share-based payments to employees, including grants of employee stock options, using a fair-value-based method and the recording of such expense in the consolidated statements of income. The accounting provisions of SFAS 123R are effective for reporting periods beginning after June 15, 2005. The pro forma disclosures previously permitted under SFAS 123 no longer will be an alternative to financial statement recognition. Had the Company applied the fair-value based method for all outstanding and unvested options in 2004, reported diluted earnings per share would have been lower by $0.09 for the year.

In September, 2004, the Emerging Issues Task Force of the Financial Accounting Standards Board (the "EITF") reached a conclusion on EITF Issue No. 04-8 "The Effect of Contingently Convertible Debt on Diluted Earnings Per Share." Contingently convertible debt instruments ("Co-Cos") are subject to the if-converted method under SFAS No. 128, "Earnings Per Share" (SFAS No. 128), regardless of whether a stock price-related conversion contingency included in the instrument has been met. Under prior interpretations of SFAS No. 128, issuers of Co-Cos exclude the potential common shares underlying the Co-Cos from the calculation of diluted earnings per share until the market price or other contingency is met. The effective date of EITF 04-8 is for periods ending after December 15, 2004. The Company accounts for the debentures in accordance with the EITF. As of December 31, 2004, there was no dilutive effect of conversion of the debentures as the market price of LabOne comm on stock was below the conversion price, and the par value of the debentures would be settled in cash. The Company does not anticipate that the adoption of this consensus will have a material impact on the consolidated statements of operations.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with generally accepted accounting principles requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

While many operational aspects are subject to complex federal, state and local regulations, the accounting for LabOne's business is generally straightforward. The Company recognizes revenues for its services when those services are provided to the customer. Revenues related to clinical healthcare billings include adjustments for revenue disallowances estimated at the time the revenue is recorded. These revenue disallowances represent contractual adjustments which reflect the difference between gross charges billed and the amounts that third-party payers such as managed care organizations are contractually required to pay for laboratory services.

Allowance for Doubtful Accounts

The estimate of the allowance for doubtful accounts involves a standardized monthly review of the collectibility of receivables based on contractual obligations and the aging of accounts receivable. Contractual agreements, historical collection patterns and payor reimbursement experience are integral in the estimation of the allowance for doubtful accounts. In addition, the current state of billing functions is assessed in order to identify any known collection or reimbursement issues in order to assess the impact, if any, on reserve estimates, which involve judgment. Adjustments to the reserve for contractual agreements are reported as a reduction in revenues. Other adjustments are recorded to bad debt expense within selling, general and administrative expenses. The collection and reserves processes, along with monitoring billing processes, helps to reduce the risk associated with material revisions to estimates resulting from adverse changes in collection and reimbursement experience and billing fun ctions.

Software Developed for Internal Use

Certain internal and external costs incurred in connection with developing or obtaining software for internal use are capitalized in accordance with the American Institute of Certified Public Accountants' Statement of Position 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. These capitalized costs are included in property, plant and equipment and are subject to amortization over their estimated useful lives beginning when the software project is put in service. The Company periodically reviews the estimated remaining useful lives and carrying values of its capitalized software and makes adjustments if necessary.

Goodwill and Intangible Assets

The Company allocates the purchase price of acquired businesses in accordance with SFAS No. 141, Business Combinations. A portion of the purchase price is assigned to each individual asset acquired on the basis of its fair value. Intangible assets are recognized as assets apart from goodwill if they arise from contractual or other legal rights. If intangible assets do not arise from contractual or other legal rights, they are recognized as assets apart from goodwill only if they are capable of being separated from the acquired entity and sold, transferred, licensed, rented or exchanged. Intangible assets recognized apart from goodwill have a determinable life and are amortized accordingly. The excess of the purchase price over the sum of the amounts assigned to the tangible assets and any separately recognized intangible assets acquired less liabilities assumed is recognized as goodwill.

The Company annually evaluates the recoverability and measures the potential impairment of goodwill under SFAS 142, Goodwill and Other Intangible Assets. The impairment test is a two-step process that begins with the estimation of the fair value of the reporting units to determine if any impairment exists. The second step measures the amount of the impairment, if any. The estimate of fair value considers publicly available information regarding the market capitalization of the Company, as well as the financial projections and future prospects of business, including growth opportunities and likely operational improvements, and comparable sales prices, if available. To assess potential impairment, the estimate of fair value for the Company is compared to the carrying value of the net assets of the reporting units. If the book value of the consolidated net assets is greater than the estimate of fair value, the Company then proceeds to the second step to measure the impairment, if any. The second step compares the implied fair value of goodwill with its carrying value. The implied fair value is determined by allocating the fair value of the reporting unit to all of the assets and liabilities of that unit as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the purchase price paid to acquire the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to its assets and liabilities is the implied fair value of goodwill. If the carrying amount of the reporting unit's goodwill is greater than its implied fair value, an impairment loss will be recognized in the amount of the excess. The Company believes its estimation methods are reasonable and reflective of common valuation practices.

FACTORS AFFECTING THE COMPANY'S FUTURE PERFORMANCE

Investing in shares of LabOne common stock involves a risk of loss. Set forth below and elsewhere in this Report and in other documents the Company files with the Securities and Exchange Commission are risks and uncertainties that could cause the Company's actual results to differ materially from the results contemplated by the forward-looking statements contained in this Report and other public statements made by the Company.

If LabOne cannot effectively implement its growth strategy, this would materially adversely affect business and results of operations.

LabOne's growth strategy assumes it will expand managed care relationships and acquire additional laboratory testing or other related businesses. LabOne cannot assure that it will be able to obtain additional network approvals or identify laboratory testing or other related service companies to acquire or otherwise negotiate acceptable terms with respect to any transaction.

Integration of acquired businesses may be more difficult than anticipated and may not result in anticipated benefits.

LabOne may have difficulty integrating acquired businesses with existing operations, retaining key customers or vendors or retaining key personnel of the acquired businesses. The acquisition and integration of acquired businesses require the dedication of significant management resources that could adversely affect business activities or customer service. LabOne has not fully completed the integration of the operations of the Health Alliance and Northwest Toxicology, and LabOne may not be able to realize all or any of the benefits expected to result from such integration, either in monetary terms or in a timely manner.

A material delay in the commencement of operations in the new Cincinnati facility would adversely affect results of operations.

LabOne anticipates that it will begin operations in its new Cincinnati facility in early July 2005. Any construction or other cause of material delay in the commencement of operations in the new Cincinnati facility would adversely affect results of operations.

LabOne's use of equity securities to make strategic acquisitions or alliances may be dilutive to existing equity holders.

To facilitate our acquisition of businesses or strategic alliances, LabOne may issue equity securities, including common stock. These issuances could be dilutive to existing shareholders.

Many of LabOne's customer and payor contracts are terminable at will or on short notice for any reason.

LabOne derives a significant portion of revenue from services contracts and contracts with managed care payors. Many contracts are terminable at will or on short notice by customers and payors. LabOne's other contracts may be terminated or are subject to significant penalties if performance standards are not met. Competition, interruption or deterioration in services or a change in management or ownership of a customer or payor could result in a customer's decision to stop using LabOne's services in whole or in part or to a payor's decision to terminate LabOne's in-network status. Termination of these contracts could also indirectly result in loss of a large base of physicians in an area, which could adversely affect our results of operations and financial condition.

Lower prices offered by competitors may undercut LabOne's competitive advantages and reduce profits.

Some competitors in the life insurance risk assessment business are offering lower prices. If these competitors continue to reduce prices and customers refuse to pay higher prices for our services, revenues and/or profits may be reduced. Increased competition from other providers of risk assessment, laboratory testing or other related services may materially harm LabOne's business and results of operations.

LabOne has numerous competitors, including two larger national laboratory companies with significantly greater financial and technical resources.

These national laboratory companies have national and regional contracts with managed care networks, some on an exclusive basis. They also have exclusive arrangements for the distribution of certain esoteric tests applicable to the clinical market. The strategies and other efforts of competitors, if successful, may erode LabOne's customer base, limit its access to users and payors of laboratory services, reduce its existing and future sources of revenue and access to local and regional markets, and cause LabOne to reduce prices or increase marketing and other costs of doing business, each of which could have a material adverse effect on business and results of operations.

Any adverse change in the number and types of tests ordered by life insurance companies could reduce profits.

Currently, LabOne's largest and most profitable business segment is providing risk assessment services to the life insurance industry. The level of demand for these services is influenced by a number of factors, including:

o   the number of life insurance applications underwritten,
o   the policy amount thresholds at which insurance companies order testing and other services,
o   the type and costs of tests and other services requested,
o   testing and specimen collection innovations, and
o   the extent to which insurance companies may create in-house testing facilities and provide in-house underwriting services.

These factors are beyond LabOne's control. Any adverse change in life insurance industry demand for testing or other services provided by LabOne could significantly reduce profits.

Efforts by managed-care organizations, Medicare, Medicaid, insurance companies and other payors to reduce the cost and utilization of health care services could adversely effect results of operations.

If these efforts, which include ongoing efforts to reform the TennCare Program from which LabOne directly and indirectly derives significant revenues, result in reductions in the price or use of health care services, including LabOne's laboratory testing or other services, this could adversely affect results of clinical laboratory operations.

LabOne's substance abuse testing business is sensitive to general economic conditions and levels of hiring and employment.

The marketing of substance abuse testing services is primarily directed at Fortune 1000 companies, occupational health clinics and TPAs. This substance abuse testing business is sensitive to general economic conditions and levels of hiring and employment.

Impairment of goodwill on LabOne's books could depress the stock price.

As of December 31, 2004, LabOne had $137.7 million of goodwill, including $23.6 million from the merger with Lab Holdings, Inc. in 1999, recorded on its balance sheet. If this goodwill is impaired in the future, LabOne would be required to take a non-cash charge to earnings. This could depress the market price of LabOne stock if investors focus on net earnings as opposed to other financial measures.

The failure to provide accurate laboratory test results and other data or follow accepted procedures may result in claims that may not be covered by insurance.

Clients rely on the accuracy of LabOne's testing and other services to make significant insurance, treatment and employment decisions. In addition, federal and state laws regulate the disclosure of specimen testing results and other nonpublic personal information. If LabOne does not provide accurate test results using accepted scientific methods, or does not provide other data accurately, LabOne could incur significant liability. LabOne has insurance to cover these types of claims, but cannot assure that this coverage is adequate or will continue to be available at reasonable prices.

Business could be harmed by disruptions in express delivery services.

LabOne generally relies on express couriers to transport specimens to its laboratories quickly and safely. A disruption in these couriers' businesses resulting from a labor dispute, natural disaster, malicious human act or other event could harm business and results of operations.

The development of more attractive on-site rapid assay tests may reduce demand for laboratory testing services.

LabOne serves customers through laboratory-based testing facilities. Although there are on-site rapid assay testing products available in the marketplace, rapid assays have not achieved broad market acceptance due to the high cost of such assays, liability concerns, regulatory limitations, less accurate testing results and the absence of a broad testing menu. If more competitive assays become available, such products could be substituted for laboratory-based testing and have an adverse impact on business and results of operations.

Business and results of operations could be adversely affected if LabOne's primary testing facility in Lenexa, Kansas or any of its other testing facilities are temporarily shut down or severely damaged because of a natural disaster, telecommunications failure or other serious event.

LabOne carries business interruption insurance to compensate for losses that might occur, but cannot provide assurance that this insurance coverage will be enough to compensate for damages resulting from any such disruption to business.

LabOne's organizational documents and other agreements contain restrictions that might prevent a takeover or change in management.

Provisions of LabOne's articles of incorporation and by-laws might have the effect of discouraging a potential acquirer from attempting a takeover on terms that some shareholders might favor, reducing the opportunity for shareholders to sell shares at a premium over then-prevailing market prices and preventing or frustrating attempts to replace or remove current management. These provisions include:

o   a fair price provision,
o   a requirement that the board of directors be classified,
o   the authorization of a "blank check" preferred stock to be issued at the discretion of the board of directors, and
o   a requirement that LabOne receives advance notice of shareholder nominees for director and shareholder proposals.

In addition, LabOne has a shareholder rights plan, which grants shareholders other than the acquiring person the right to purchase common stock at one-half of market price if any person becomes the beneficial owner of 15% or more of the outstanding shares of common stock, subject to exceptions set forth in the plan.

LabOne is dependent on its ability to attract and retain management and operations personnel.

LabOne's success is dependent upon its ability to attract and retain qualified and experienced management and operations personnel. There can be no assurance that LabOne will be able to attract and retain key personnel in the future. Any failure by LabOne to attract and retain qualified personnel may have a material adverse effect on results of operations. LabOne's current Chief Financial Officer, John W. McCarty, has announced his intention to resign effective April 30, 2005. LabOne is currently engaged in a search for a successor and has retained an executive search firm to assist in the search.

Failure to timely or accurately bill for services could have a material adverse impact on net revenues and bad debt expense.

Billing for laboratory services is extremely complicated. LabOne provides testing services to a broad range of health care providers. Depending on the billing arrangement and applicable law, LabOne must bill various payors, such as patients, insurance companies, Medicare, Medicaid, doctors and employer groups, all of which have different billing requirements. Additionally, auditing for compliance with applicable laws and regulations as well as internal compliance policies and procedures add further complexity to the billing process. Among many other factors complicating billing are:

o   pricing differences between LabOne's fee schedules and the reimbursement rates of the payors;
o   disputes with payors as to which party is responsible for payment; and
o   disparity in coverage and information requirements among various carriers.

LabOne incurs significant additional costs as a result of its participation in Medicare and Medicaid programs, as billing and reimbursement for clinical laboratory testing is subject to considerable and complex federal and state regulations. These additional costs include those related to: (1) complexity added to billing processes; (2) training and education of employees and customers; (3) compliance and legal costs; and (4) costs related to, among other factors, medical necessity denials and advanced beneficiary notices. Compliance with applicable laws and regulations, as well as internal compliance policies and procedures, adds further complexity and costs to the billing process. Changes in laws and regulations could negatively impact LabOne's ability to bill clients. The Center for Medicare and Medicaid Services, or CMS (formerly the Health Care Financing Administration), establishes procedures and continuously evaluates and implements changes in the reimbursement process.

Missing or incorrect information on requisitions adds complexity to and slows the billing process, creates backlogs of unbilled requisitions, and generally increases the aging of accounts receivable. When all issues relating to the missing or incorrect information are not resolved in a timely manner, the related receivables are written off to the allowance for doubtful accounts.

Compliance with the HIPAA "standard transactions" regulations, security regulations and privacy regulations may increase our costs.

Pursuant to HIPAA, the Secretary of the Department of Health and Human Services, or HHS, has issued final regulations designed to improve the efficiency and effectiveness of the health care system by facilitating the electronic exchange of information in certain financial and administrative transactions while protecting the privacy and security of the information exchanged. Three principal regulations have been issued in final form: standards for electronic transactions, security regulations and privacy regulations.

The regulations on electronic transactions, which LabOne refers to as the transaction standards, establish uniform standards for electronic transactions and code sets, including the electronic transactions and code sets used for claims, remittance advices, enrollment and eligibility. The HIPAA transaction standards are complex, and certain components of the regulations may be subject to differences in interpretation by payers. As a result of inconsistent application and interpretation of transaction standards by payors, or LabOne's inability to obtain certain billing information not usually provided by physicians, LabOne could face increased costs and complexity, a temporary disruption in receipt of revenue, and ongoing reductions in reimbursements and net revenues.

The final HIPAA security regulations, which establish detailed requirements for safeguarding electronic patient information, were published on February 20, 2003 and became effective on April 21, 2003, although health care providers have until April 20, 2005 to comply with these regulations. LabOne expects that it will comply with the standards and implementation specifications of the security regulations by the compliance deadline.

The HIPAA privacy regulations, which fully came into effect in April 2003, establish comprehensive federal standards with respect to the uses and disclosures of protected health information by health plans, health care providers and health care clearinghouses. LabOne has implemented the HIPAA privacy regulations, as required by law.

Compliance with the HIPAA requirements may require significant capital and personnel resources from all health care organizations. While LabOne believes its total costs to comply with HIPAA will not be material to operations or cash flow, additional customer requirements resulting from different interpretations of the current regulations could impose significant additional costs.

Failure in LabOne's information technology systems, including failures resulting from systems conversions, could significantly increase turnaround time and otherwise disrupt operations, which could reduce LabOne's customer base and result in lost net revenues.

Information systems are used extensively in virtually all aspects of LabOne's business, including laboratory testing, billing, customer service, logistics and management of medical data. LabOne's success depends, in part, on the continued and uninterrupted performance of its information technology, or IT, systems. Computer systems are vulnerable to damage from a variety of sources, including telecommunications or network failures, malicious human acts and natural disasters. Moreover, despite network security measures, some servers are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems. During the third quarter of 2004, LabOne's internal auditors identified a reportable condition in the design and operation of general computer controls related to program changes and access security. The condition was not considered a material weakness. LabOne believes that these issues concerning program changes and access security have been remediated. Des pite the precautionary measures LabOne has taken to prevent unanticipated problems that could affect IT systems, sustained or repeated system failures that interrupt LabOne's ability to process test orders, deliver test results or perform tests in a timely manner or breaches of LabOne's network security could adversely affect its reputation and result in a loss of customers and net revenues.

FDA regulation of laboratory/developed testing could lead to increased costs and delay in introducing new tests.

The FDA has regulatory responsibility over instruments, test kits, reagents and other devices used by clinical laboratories. In the past, the FDA has claimed regulatory authority over laboratory-developed tests, but has exercised enforcement discretion in not regulating tests performed by high complexity CLIA-certified laboratories. If in the future the FDA were to increase its regulation of the reagents used in laboratory-developed testing, it could lead to substantial business interruption and increased costs and delays in introducing new tests.

If LabOne fails to comply with applicable laws and regulations, it could suffer fines and penalties, be required to make significant changes to operations and lose material licenses.

LabOne is subject to extensive and frequently changing federal, state and local laws and regulations. LabOne is licensed under CLIA, and it is certified by SAMHSA to perform testing to detect drug use in federal employees and in workers governed by federal regulations. Legislative provisions relating to health care fraud and abuse give federal enforcement personnel substantial funding, powers and remedies to pursue suspected fraud and abuse. While LabOne believes that it is in material compliance with applicable laws, many of the regulations applicable to LabOne, including those relating to billing and reimbursement of tests and those relating to relationships with physicians and hospitals, are vague or indefinite and have not been interpreted by the courts. They may be interpreted or applied by a prosecutorial, regulatory or judicial authority in a manner that could require LabOne to make changes in operations, including billing practices. If LabOne fails to comply with applicable laws and regul ations, it could suffer civil and criminal fines and penalties, including the loss of licenses or its ability to participate in Medicare, Medicaid and other federal and state health care programs.

LabOne's tests and business processes may infringe on the intellectual property rights of others, which could cause it to engage in costly litigation, pay substantial damages or quit selling certain of its tests.

While LabOne uses commercially reasonable efforts to license technology, intellectual property and systems not owned or developed by it, other companies or individuals, including competitors, may obtain patents or other property rights that would prevent, limit or interfere with LabOne's ability to develop, perform or sell its tests or operate its business. As a result, LabOne may be involved in intellectual property litigation and may be found to infringe on the proprietary rights of others, which could force LabOne to do one or more of the following:

o   cease developing, performing or selling products or services that incorporate the challenged intellectual property;
o   obtain and pay for licenses from the holder of the infringed intellectual property right;
o   redesign or reengineer tests;
o   change business processes; or
o   pay substantial damages, court costs and attorneys' fees, including potentially increased damages for any infringement held to be willful.

Patents generally are not issued until several years after an application is filed. The possibility that, before a patent is issued to a third party, LabOne may be performing a test or other activity covered by the patent is not a defense to an infringement claim. Thus, even tests that LabOne develops could become the subject of infringement claims if a third party obtains a patent covering those tests.

Infringement and other intellectual property claims, regardless of their merit, can be expensive and time-consuming to litigate. In addition, any requirement to reengineer LabOne's tests or change its business processes could substantially increase costs, force an interruption in product sales or delay new test releases.

Changes in securities laws and regulations have increased costs and could diminish profitability.

LabOne is subject to significant new regulatory requirements regarding public disclosure, corporate governance and compliance practices. These new legal requirements include the Sarbanes-Oxley Act of 2002 ("SOX"), together with new rules implemented by the SEC and NASDAQ. These additional rules and regulations have increased legal, accounting and compliance costs. For example, during 2004 LabOne incurred substantial costs and expended significant resources to comply with the new regulations promulgated under Section 404 of the Sarbanes-Oxley Act of 2002 regarding internal controls over financial reporting. Section 404 requires management to report on the effectiveness of internal controls over financial reporting and requires LabOne's independent registered public accounting firm to attest to this report. If LabOne is not able to meet the requirements of Section 404 of SOX, or if LabOne or its directors or officers are not in compliance with securities laws or SEC or NASDAQ rules, LabOne ma y incur further costs and spend further management time to meet the requirements and may also suffer adverse effects as a result of such failure.

Conversion of LabOne's debentures may cause LabOne to seek financing on unfavorable terms and may be dilutive to existing stockholders.

Upon conversion of its outstanding debentures, LabOne will deliver cash equal to the lesser of the aggregate principal amount of debentures to be converted and its conversion obligation, and common stock in respect of the remainder, if any, of its conversion obligation. Accordingly, upon conversion of the debentures, as at their maturity or upon a repurchase request under their terms, a substantial cash payment will be due. If LabOne has maximized its borrowing under its credit facility or incurred other substantial obligations, it may not have sufficient funds on hand or available through existing borrowing facilities to meet its obligations under the debentures. Additional financing may not be available to LabOne on terms favorable to it, if at all, and could result in an event of default with respect to the debentures. If LabOne issues common stock upon conversion of the debentures, the conversion of some or all of the debentures will dilute the ownership interests of existing stockholders. In add ition, if a conversion of the debentures results from certain corporate transactions that occur on or prior to June 15, 2009, LabOne will increase the conversion rate on debentures converted in connection with such corporate transaction by a number of additional shares of common stock. The number of such additional shares of common stock will be determined based on the date on which the corporate transaction becomes effective and the price paid per share of LabOne's common stock in the corporate transaction. Any sales in the public market of the common stock issuable upon such conversion could adversely affect prevailing market prices of LabOne's common stock. In addition, the existence of the debentures may encourage short selling by market participants because the conversion of the debentures could depress the price of LabOne's common stock.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Market risk exists due to the Company's fixed rate convertible senior debentures. The table below provides information regarding interest rate risk related to fixed-rate debt as of December 31, 2004. The fair value of the Company's convertible senior debentures due June 15, 2034 has been calculated based on the quoted market prices at December 31, 2004. The market price for the convertible senior debentures reflects the combination of debt and the conversion option component of the convertible instrument (see footnote 5 of notes to consolidated financial statements).

	Book value	Fair value
Convertible senior debentures (in thousands)	$103,500	$113,850
Interest rate	3.50%

A foreign currency risk exposure exists due to sales in Canada 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.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

CONSOLIDATED FINANCIAL STATEMENTS:

Consolidated Balance Sheets, December 31, 2004 and 2003

Consolidated Statements of Operations, Years Ended
    December 31, 2004, 2003 and 2002

Consolidated Statements of Stockholders' Equity and Comprehensive Income,
    Years Ended December 31, 2004, 2003 and 2002

Consolidated Statements of Cash Flows, Years Ended
    December 31, 2004, 2003 and 2002

Notes to Consolidated Financial Statements

SCHEDULE:

Schedule II - Valuation and qualifying accounts

All other schedules are omitted because they are not applicable, not required or the information is included in the Consolidated Financial Statements or the notes thereto.

REPORTS OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

LabOne, Inc. and Subsidiaries
Consolidated Balance Sheets
December 31, 2004 and 2003
(in thousands, except share and per share data)

Assets	2004	2003
Current assets:
Cash and cash equivalents	$  24,070	$    4,651
Accounts receivable, net of allowance for doubtful         accounts of $4,594 in 2004 and $6,123 in 2003	73,027	57,928
Inventories	7,473	5,472
Prepaid expenses and other current assets	6,506	5,202
Deferred income taxes	5,556	4,990
Total current assets	116,632	78,243
Property, plant and equipment, net	62,860	47,405
Goodwill	138,163	99,103
Intangible assets, net	20,860	11,345
Other long-term assets	4,707	1,526
Total assets	$ 343,222	$ 237,622
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$   20,467	$   13,617
Accrued payroll and benefits	17,131	11,769
Other accrued expenses	3,381	2,787
Current portion of long-term debt	1,925	2,014
Total current liabilities	42,904	30,187
Deferred income taxes	8,694	5,619
Long-term debt	111,549	56,094
Other	108	21
Total liabilities	163,255	91,921
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value per share. Authorized         40,000,000 shares; issued 18,027,729 shares	180	180
Additional paid-in capital	87,027	84,066
Retained earnings	102,974	76,250
Accumulated other comprehensive loss	(94)	(245)
Treasury stock of 796,260 shares in 2004 and         1,144,840 shares in 2003, at cost	(10,120)	(14,550)
Total stockholders' equity	179,967	145,701
Total liabilities and stockholders' equity	$ 343,222	$ 237,622

See accompanying notes to consolidated financial statements.

LabOne, Inc. and Subsidiaries
Consolidated Statements of Operations
December 31, 2004, 2003 and 2002
(in thousands, except per share data)

	2004	2003	2002
Sales	$ 468,236	$ 346,020	$ 298,146
Cost of sales:
Cost of sales expense	313,607	232,602	201,840
Depreciation and amortization	6,736	4,473	3,991
Total cost of sales	320,343	237,075	205,831
Gross profit	147,893	108,945	92,315
Selling, general and administrative:
Selling, general and administrative expenses	92,394	66,832	58,409
Depreciation and amortization	10,372	6,564	5,475
Total selling, general and administrative	102,766	73,396	63,884
Operating earnings	45,127	35,549	28,431
Other income (expenses):
Interest income	228	117	300
Interest expense	(5,144)	(3,017)	(4,486)
Other, net	224	56	20
Total other expense, net	(4,692)	(2,844)	(4,166)
Earnings before income taxes	40,435	32,705	24,265
Provision for income taxes	13,711	11,973	9,425
Net earnings	$  26,724	$  20,732	$  14,840
Preferred stock dividends	$         —	$   (2,699)	$   (2,932)
Net earnings available to common shareholders	$  26,724	$  18,033	$  11,908
Earnings per common share:
Basic	$      1.56	$      1.44	$      1.04
Diluted	$      1.53	$      1.23	$      0.91
Weighted average common shares outstanding:
Basic	17,079	12,476	11,453
Diluted	17,478	16,893	16,237

See accompanying notes to consolidated financial statements.

LabOne, Inc. and Subsidiaries
Consolidated Statements of Stockholders' Equity and Comprehensive Income
December 31, 2004, 2003 and 2002
(in thousands, except share data)

	Preferred     stock	Common      stock	Additional   paid-in  capital	Retained    earnings	Accumulated other comprehensive  income (loss)	Treasury    stock	Comprehensive     income	Total stockholders'   equity
Balance as of December 31, 2001	$ 35,933	$ 130	$ 53,924	$ 46,309	$ (870)	$ (33,836)		$ 101,590
Comprehensive income:
Net earnings	—	—	—	14,840	—	—	$ 14,840	14,840
Adjustment from foreign currency translation	—	—	—	—	3	—	3	3
Comprehensive income							$ 14,843
Preferred stock dividends payable in kind	2,932	—	—	(2,932)	—	—		—
Stock options exercised (661,491 shares)	—	—	(5,068)	—	—	13,149		8,081
Tax benefit from exercise of stock options	—	—	2,485	—	—	—		2,485
Warrants exercised (250,000 shares)	—	—	(2,477)	—	—	4,970		2,493
Directors' stock compensation (872 shares)	—	—	2	—	—	17		19
Purchase of treasury stock (422,391 shares)	—	—	—	—	—	(9,452)		(9,452)
Balance as of December 31, 2002	38,865	130	48,866	58,217	(867)	(25,152)		120,059
Comprehensive income:
Net earnings	—	—	—	20,732	—	—	$ 20,732	20,732
Adjustment from foreign currency translation	—	—	—	—	622	—	622	622
Comprehensive income							$ 21,354
Preferred stock dividends payable in kind	2,699	—	—	(2,699)	—	—		—
Conversion of preferred stock (41,564 shares) to common stock (4,995,753 shares)	(41,564)	50	41,295	—	—	219		—
Stock options exercised (321,938 shares)	—	—	(168)	—	—	4,999		4,831
Tax benefit from exercise of stock options	—	—	992	—	—	—		992
Warrants exercised (350,000 shares)	—	—	(6,919)	—	—	6,923		4
Directors' stock compensation (875 shares)	—	—	—	—	—	17		17
Purchase of treasury stock (79,670 shares)	—	—	—	—	—	(1,556)		(1,556)
Balance as of December 31, 2003	—	180	84,066	76,250	(245)	(14,550)		145,701
Comprehensive income:
Net earnings	—	—	—	26,724	—	—	$ 26,724	26,724
Adjustment from foreign currency translation	—	—	—	—	151	—	151	151
Comprehensive income							$ 26,875
Stock options exercised (346,922 shares)	—	—	503	—	—	4,409		4,912
Tax benefit from exercise of stock options	—	—	2,303	—	—	—		2,303
Stock-based compensation	—	—	126	—	—	—		126
Directors' stock compensation (1,658 shares)	—	—	29	—	—	21		50
Balance as of December 31, 2004	$          —	$  180	$ 87,027	$102,974	$   (94)	$ (10,120)		$179,967

See accompanying notes to consolidated financial statements.

LabOne, Inc. and Subsidiaries
Consolidated Statements of Cash Flows
December 31, 2004, 2003 and 2002
(in thousands)

	2004	2003	2002
Cash flows from operating activities:
Net earnings (loss)	$ 26,724	$ 20,732	$ 14,840
Adjustments to reconcile net earnings to net cash    provided by operating activities:
Depreciation and amortization	18,249	11,892	9,812
Provision for loss on accounts receivable	9,171	6,250	5,638
Income tax benefit from exercise of stock options	2,303	992	2,485
Deferred income taxes	2,512	(96)	127
Stock-based compensation	126	—	—
Directors' stock compensation	50	17	19
(Gain) loss on sale of property, plant and equipment	113	(8)	(29)
Changes in assets and liabilities, net of effects of acquisitions:
Accounts and notes receivable	(21,004)	(14,371)	(10,064)
Inventories	(612)	(733)	(54)
Prepaid expenses and other current assets	(1,149)	(961)	101
Accounts payable	6,290	(2,187)	193
Accrued payroll and benefits	5,362	2,621	145
Other accrued expenses	373	(359)	(1,469)
Other	30	65	(585)
Net cash provided by operating activities	48,538	23,854	21,159
Cash flows from investing activities:
Capital expenditures	(24,489)	(9,719)	(8,031)
Acquisitions of businesses	(60,518)	(13,273)	(17,244)
Proceeds from sale of property, plant and equipment	50	59	57
Acquisition of patents and trademarks	(43)	(912)	—
Purchase of investment	—	—	(250)
Net cash used in investing activities	(85,000)	(23,845)	(25,468)
Cash flows from financing activities:
Net proceeds (payments) on line of credit	(46,253)	(5,000)	24,000
Net proceeds from issuance of convertible debentures	100,119	—	—
Payments on subordinated debt	—	—	(15,000)
Debt issue costs	(858)	(207)	(1,726)
Payments on other long-term debt	(2,006)	(2,020)	(1,923)
Proceeds from exercise of stock options	4,912	4,831	8,081
Purchase of treasury stock	—	(1,556)	(9,452)
Proceeds from the exercise of stock warrants	—	4	2,493
Net cash provided by (used in) financing activities	55,914	(3,948)	6,473
Effect of foreign currency translation on cash	(33)	482	(6)
Net increase (decrease) in cash and cash equivalents	19,419	(3,457)	2,158
Cash and cash equivalents at beginning of year	4,651	8,108	5,950
Cash and cash equivalents at end of year	$ 24,070	$  4,651	$   8,108
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Income taxes	$   9,726	$ 12,666	$   7,038
Interest	4,130	2,116	4,553
Supplemental schedule of non-cash investing    and financing activities:
Preferred stock dividends payable in kind	$        —	$   2,699	$   2,932
Details of acquisitions:
Fair value of assets acquired	$ 61,343	$ 14,484	$ 19,344
Liabilities assumed	(825)	(1,211)	(1,612)
Liabilities issued	—	—	(488)
Cash paid for acquisitions	$ 60,518	$ 13,273	$ 17,244

See accompanying notes to consolidated financial statements.

LABONE, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2004, 2003 and 2002

(1) Summary of Significant Accounting Policies

Description of Business

LabOne, Inc. ("LabOne" or the "Company") is a diagnostic services provider. The services and information LabOne and its subsidiaries provide include: risk assessment information services for the insurance industry; diagnostic healthcare testing; and substance abuse testing services and related employee qualification products.

Principles of Consolidation

The consolidated financial statements include the accounts of LabOne and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation.

Use of Estimates in the Preparation of Consolidated Financial Statements

The preparation of consolidated financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Revenue Recognition

The Company recognizes revenues for its services when those services are provided to the customer. Revenues related to clinical healthcare billings include adjustments for revenue disallowances estimated at the time the revenue is recorded. These revenue disallowances represent contractual adjustments which reflect the difference between gross charges billed and the amounts that third-party payers such as managed care organizations are contractually required to pay for laboratory services.

Concentration of Business Risk

One risk assessment customer comprised 8%, 10% and 12% of total sales for 2004, 2003 and 2002, respectively. The Company has a contract with this customer for a ten-year period ending in 2010 that the customer may terminate prior to expiration if the Company encounters service level failures that materially impact the services provided.

Disclosures about Fair Value of Financial Instruments

Fair value of cash and cash equivalents, receivables and payables approximates carrying value due to the short-term nature of these instruments.

Cash and Cash Equivalents

Cash and cash equivalents consist of demand deposits in banks, marketable securities with maturities of three months or less, money market investments and overnight investments that are stated at cost, which approximates market value.

Accounts Receivable

Accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company's best estimate of the amount of probable credit losses in the Company's existing accounts receivable. The estimate of the allowance for doubtful accounts involves a standardized monthly review of the collectibility of receivables based on contractual obligations and the aging of accounts receivable. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers.

Inventories

Inventories consist of laboratory supplies, completed specimen collection kits for sale to clients and various materials used in the assembly of specimen collection kits. Inventory is valued at the lower of cost (first-in, first-out) or market.

Property, Plant and Equipment

Additions to property, plant and equipment are recorded at cost, which includes interest capitalized during construction. Facilities leased pursuant to revenue bond financing transactions are accounted for as purchases, with the cost of the leased property included in property, plant and equipment and the related obligation included in long-term debt.

Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets as follows:

Building	30 years
Laboratory equipment	3 - 5 years
Data processing equipment and software	3 - 6 years
Office and transportation equipment	5 - 7 years
Leasehold improvements	Shorter of 5 years or life of lease

Software Developed for Internal Use

Certain internal and external costs incurred in connection with developing or obtaining software for internal use are capitalized in accordance with the American Institute of Certified Public Accountants' Statement of Position 98-1, Accounting for the Costs of Computer Software Developed or Obtained for Internal Use. These capitalized costs are included in property, plant and equipment and are subject to amortization over their estimated useful lives, beginning when the software project is put in service. The Company periodically reviews the estimated remaining useful lives and carrying values of its capitalized software and makes adjustments if necessary.

Cost of Borrowings

Costs directly related to the issuance of debt are deferred and amortized over the period the debt is expected to be outstanding using the interest method. Unamortized costs of $3,989,000 and $883,000 as of December 31, 2004 and 2003, respectively, are included in other long-term assets.

Goodwill and Other Intangible Assets

Goodwill represents the excess of costs over fair value of net assets of businesses acquired. The Company applies the provisions of Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible Assets. Goodwill and intangible assets acquired in a purchase business combination and determined to have an indefinite useful life are not amortized, but instead tested for impairment at least annually in accordance with the provisions of SFAS No. 142. In addition, SFAS No. 142 requires that intangible assets with estimable useful lives be amortized over their useful lives to their estimated residual values and reviewed for impairment in accordance with SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets.

SFAS No. 142 requires the Company to perform an annual assessment of whether there is an indication that goodwill is impaired. To accomplish this, the Company is required to identify its reporting units and determine the carrying value of each reporting unit by assigning the assets and liabilities, including the existing goodwill and intangible assets, to those reporting units. The Company is required to determine the fair value of each reporting unit and compare it to the carrying amount of the reporting unit. The fair value of the reporting units exceeded the carrying amount based on the Company's analysis and the Company was not required to recognize an impairment loss in 2004, 2003 or 2002.

Impairment of Long-lived Assets

In accordance with SFAS No. 144, long-lived assets, such as property, plant and equipment, and purchased intangibles subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of the asset exceeds the fair value of the asset.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

Stock Option Plans

The Company applies the intrinsic-value based method of accounting prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, and related interpretations including FASB Interpretation No. 44, Accounting for Certain Transactions involving Stock Compensation, an interpretation of APB Opinion No. 25, to account for its fixed-plan stock options. Under this method, compensation expense is recorded on the date of grant only if the current market price of the underlying stock exceeds the exercise price. SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure, an amendment of FASB Statement No 123, established accounting and disclosure requirements using a fair-value based method of accounting for stock-based employee compensation plans. As allowed by SFAS No. 123, as amended by SFAS No. 148, the Company has elected to continue to apply the intrinsic-value based method of accounting described above and has adopted only the disclosure requirements of SFAS No. 123.

The following table illustrates the effect on net earnings if the fair-value based method had been applied to all outstanding and unvested options in each period.

	2004	2003	2002
	(in thousands, except per share data)
Net earnings, as reported	$ 26,724	$ 20,732	$ 14,840
Deduct total stock-based employee compensation       expense determined under fair-value based    method for all stock options, net of tax	(1,612)	(1,485)	(1,211)
Pro forma net earnings	$ 25,112	$ 19,247	$ 13,629
Basic earnings per share:
As reported	$ 1.56	$ 1.44	$ 1.04
Pro forma	$ 1.47	$ 1.33	$ 0.93
Diluted earnings per share:
As reported	$ 1.53	$ 1.23	$ 0.91
Pro forma	$ 1.44	$ 1.14	$ 0.84

The weighted average per share fair value of stock options granted during 2004, 2003 and 2002 was $12.80, $11.20 and $10.87, respectively, on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions:

	2004	2003	2002
Expected dividend yield	0.0%	0.0%	0.0%
Risk-free interest rate	2.3%	1.4%	4.1%
Expected volatility factor	39.8%	53.9%	55.4%
Expected life (years)	5.8	4.4	5.5

Earnings Per Share

Basic earnings per share is computed using net earnings available to common shareholders divided by the weighted average number of common shares outstanding. Diluted earnings per share includes the effects of outstanding stock options and common shares issuable upon conversion of convertible preferred stock and convertible senior debentures, if dilutive. In addition, the related preferred stock dividends are added back to income since they would not be paid if the preferred stock were converted to common stock. There was no dilutive effect of conversion of the debentures as the market price of LabOne common stock was below the conversion price, and the par value of the debentures would be settled in cash. Subject to adjustment under certain circumstances as described in the terms of the convertible debentures, the conversion obligation is generally based upon the product of the conversion rate then in effect (25.4463 as of December 31, 2004) and the closing price of LabOne common stock over the me asurement period. Should the debentures become convertible under the terms of the conversion rights with a stock price of $51.09 (130% of the conversion price) over the measurement period, the conversion obligation would be approximately $1,300 (25.4463 x $51.09), and the settlement upon conversion would consist of $1,000 cash and 5.87 shares ($300/$51.09) of common stock, per $1,000 principal amount of debentures converted, assuming none of the adjustment provisions in the debenture applied to such calculation.

The following table reconciles the weighted average common shares used in the basic earnings per share calculation and the weighted average common shares and common share equivalents used in the diluted earnings per share calculation:

	2004	2003	2002
	(in thousands)
Weighted average common shares for basic      earnings per share	17,079	12,476	11,453
Dilutive effect of employee stock options	399	300	290
Dilutive effect of common shares issuable      upon conversion of preferred stock	—	4,117	4,494
Weighted average common shares for dilutive earnings per share	17,478	16,893	16,237

Recently Issued and Adopted Accounting Standards

In December 2004, the FASB issued SFAS 123R which requires the measurement of all employee share-based payments to employees, including grants of employee stock options, using a fair-value-based method and the recording of such expense in the consolidated statements of income. The accounting provisions of SFAS 123R are effective for reporting periods beginning after June 15, 2005. The pro forma disclosures previously permitted under SFAS 123 no longer will be an alternative to financial statement recognition.

In September, 2004, the Emerging Issues Task Force of the Financial Accounting Standards Board (the "EITF") reached a conclusion on EITF Issue No. 04-8 "The Effect of Contingently Convertible Debt on Diluted Earnings Per Share." Contingently convertible debt instruments ("Co-Cos") are subject to the if-converted method under SFAS No. 128, "Earnings Per Share" (SFAS No. 128), regardless of whether a stock price-related conversion contingency included in the instrument has been met. Under prior interpretations of SFAS No. 128, issuers of Co-Cos exclude the potential common shares underlying the Co-Cos from the calculation of diluted earnings per share until the market price or other contingency is met. The effective date of EITF 04-8 is for periods ending after December 15, 2004. The Company accounts for the debentures in accordance with the EITF. As of December 31, 2004, there was no dilutive effect of conversion of the debentures as the market price of LabOne comm on stock was below the conversion price, and the par value of the debentures would be settled in cash.

Reclassifications

Certain amounts in the prior year consolidated financial statements have been reclassified to conform to the current year presentation.

(2) Acquisitions

2004 Acquisitions

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed for businesses acquired during 2004:

	Laboratory   Operations of The Health Alliance	Northwest   Toxicology	Paramedical   Service Providers
	(in thousands)
Current assets	$   1,614	$   2,718	$      778
Property, plant and equipment	2,932	812	222
Goodwill	29,490	7,506	1,562
Intangible assets:
Non compete and non solicitation agreements	1,200	300	76
Customer contract	3,500	—	—
Customer relationships	5,200	950	1,994
Other long-term assets	—	11	5
Total assets acquired	43,936	12,297	4,637
Current liabilities	—	22	762
Current portion of long-term debt	—	34	—
Total liabilities assumed	—	56	762
Net assets acquired	$ 43,936	$ 12,241	$   3,875

Laboratory Operations of The Health Alliance

On January 4, 2004, the Company acquired, for cash, substantially all of the assets associated with the core laboratory operations of The Health Alliance of Greater Cincinnati (the "Health Alliance") for $43,936,000, including transaction and other costs of $1,586,000. The core laboratory operations acquired provide outreach laboratory testing services for physicians in the Greater Cincinnati area and reference laboratory for the six hospitals affiliated with the Health Alliance. In connection with the acquisition, the Company entered into a long-term service agreement for the Company to provide reference testing for the Health Alliance hospitals and management of their six immediate response laboratories.

Goodwill of $29,490,000, including workforce in place, was assigned to the clinical - healthcare services segment and is expected to be deductible for tax purposes. The amortization periods for the intangible assets acquired are: non compete and non solicitation agreement - 10.0 years; customer contract - 5.0 years; and customer relationships - 10.0 years.

Northwest Toxicology

On March 1, 2004, the Company acquired, for cash, substantially all of the net assets of the drug testing division, Northwest Toxicology, from NWT Inc. for $12,241,000, which included transaction costs of $82,000 and the purchase of $2,662,000 in net working capital. The acquisition resulted in additional urine and oral fluid testing volumes directed to LabOne's Lenexa, Kansas laboratory, and furthers the Company's capabilities to include drugs of abuse testing in blood, expanded specimen validity testing, medical professional and other esoteric drug testing.

Goodwill of $7,506,000, including workforce in place, was assigned to the clinical - substance abuse testing segment and is expected to be deductible for tax purposes. The amortization periods for the intangible assets acquired are: non compete and non solicitation agreement - 10.0 years and customer relationships - 10.0 years.

Paramedical Service Providers

During 2004, the Company acquired, for cash, five paramedical service provider companies in the United States and one paramedical service provider company in Canada. The acquired businesses provide paramedical examinations that are used to assist life insurance companies in objectively evaluating the mortality and morbidity risks posed by policy applicants.

Goodwill of $1,562,000 was assigned to the risk assessment services segment and is expected to be deductible for tax purposes. The weighted average amortization periods for the non compete and non solicitation agreements and customer relationships are 10.0 years and 8.7 years, respectively.

2003 Acquisitions

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed for businesses acquired during 2003:

	ScanTech	Lab   Acquisition	Paramedical   Service Providers
	(in thousands)
Current assets	$   1,411	$        —	$          5
Property, plant and equipment	498	280	112
Goodwill	—	800	1,828
Intangible assets:
Non compete and non solicitation agreements	100	—	160
Customer contracts	5,000	4,000	—
Customer relationships	143	—	68
Total assets acquired	7,152	5,080	2,173
Current liabilities	1,149	—	—
Long-term debt	62	—	—
Total liabilities assumed	1,211	—	—
Net assets acquired	$   5,941	$   5,080	$   2,173

ScanTech

On August 6, 2003, the Company acquired, for cash, ScanTech Solutions, L.L.C. ("ScanTech") from Protective Life Corporation. ScanTech is a leading provider of medical record retrieval services to life insurance carriers in the United States. In connection with the acquisition, the Company entered into long-term agreements to provide certain Protective Life affiliates with teleunderwriting, paramedical examination, laboratory testing and medical record retrieval services.

The amortization periods for the intangible assets acquired are: non compete and non solicitation agreement - 5.0 years; customer contract - 5.0 years; and customer relationships - 5.0 years.

Lab Acquisition

On October 10, 2003, the Company acquired, for cash, the insurance testing laboratory of MetLife, Inc. In connection with the acquisition, the Company entered into a long-term agreement to provide laboratory testing services to MetLife, Inc. and its affiliated entities.

Goodwill of $800,000 was assigned to the risk assessment services segment. The amortization period for the customer contract is 6.0 years.

Paramedical Service Providers

During 2003, the Company acquired, for cash, three paramedical service companies in the United States. The acquired businesses provide paramedical examinations that are used to assist life insurance companies in objectively evaluating the mortality and morbidity risks posed by policy applicants.

Goodwill of $1,828,000 was assigned to the risk assessment services segment. The weighted average amortization periods for the non compete and non solicitation agreements and customer relationships are 4.9 years and 5.0 years, respectively.

2002 Acquisitions

The following table summarizes the estimated fair value of the assets acquired and liabilities assumed for businesses acquired during 2002:

	Central Plains	Paramedical Service
	Laboratories	Providers
	(in thousands)
Current assets	$   2,385	$          5
Property, plant and equipment	787	147
Goodwill	9,371	4,830
Intangible assets:
Non compete and non solicitation agreements	600	119
Customer contract	1,000	—
Customer relationships	100	—
Total assets acquired	14,243	5,101
Current liabilities	1,217	12
Deferred income taxes	383	—
Total liabilities assumed	1,600	12
Net assets acquired	$ 12,643	$   5,089
Consideration:
Cash	$ 12,643	$   4,601
Notes payable	—	488
Total	$ 12,643	$   5,089

Central Plains Laboratories

On December 1, 2002, the Company acquired Central Plains Laboratories, L.L.C. ("CPL") located in Hays, Kansas. HMC Services Corporation owned a 70% limited liability company interest and PCS Laboratory Services Group, Inc. ("PCS") owned a 30% limited liability company interest in CPL, constituting all of the issued and outstanding ownership interests of CPL. Pursuant to the Stock and Limited Liability Company Interest Purchase Agreement, the Company purchased all of the issued and outstanding shares of common stock of HMC Services Corporation from Hays Medical Center and purchased the remaining 30% limited liability company interest in CPL from PCS. The purchase price was $12,584,000 and transaction costs were $59,000. As a result of the transaction, CPL became a wholly owned subsidiary of the Company.

Goodwill of $9,371,000 was assigned to the clinical - healthcare services segment. The weighted average amortization periods for the intangible assets acquired are: non compete and non solicitation agreement - 6.7 years; customer contract - 5.0 years; and customer relationships - 10.0 years.

The agreement also provides for the payment of contingent consideration during each of the following two years based on a percentage of earnings before interest, taxes, depreciation and amortization of CPL, as defined. The 2004 and 2003 contingent consideration was $255,000 and $127,000, respectively, and has been recorded as additional goodwill.

CPL owns two laboratory facilities, a clinical laboratory facility and an anatomic pathology laboratory facility. Hays Medical Center has the right to repurchase the assets of the facilities (both individually or combined) if either (1) the Laboratory Services Agreement between CPL and Hays Medical Center is terminated due to certain events or (2) at any time after December 1, 2004. The purchase price for the assets is an amount equal to the net book value of the tangible assets of the facility on the day prior to the closing of the sale.

Paramedical Service Providers

During 2002, the Company acquired ten paramedical service companies in the United States. The acquired businesses provide paramedical examinations that are used to assist life insurance companies in objectively evaluating the mortality and morbidity risks posed by policy applicants.

Goodwill of $4,830,000 was assigned to the risk assessment services segment. The weighted average amortization periods for the non compete and non solicitation agreements are 4.6 years.

All of the above acquisitions have been accounted for under the purchase method and, accordingly, the operating results of the acquired companies have been included in the consolidated statements of operations from the dates of acquisition. Certain of these acquisitions are subject to contingent payment agreements which will be recorded when earned. Supplemental pro forma information for these acquisitions is not included, as such business combinations are not material individually or in the aggregate.

(3) Property, Plant and Equipment

Property, plant and equipment consist of the following:

	2004	2003
	(in thousands)
Land	$    2,576	$    2,576
Building	29,343	28,966
Laboratory equipment	22,528	24,699
Data processing equipment and software	56,808	42,510
Office and transportation equipment	16,629	14,199
Leasehold improvements	2,156	1,840
Construction in progress	12,122	1,839
	142,162	116,629
Less accumulated depreciation and amortization	79,302	69,224
	$   62,860	$   47,405

(4) Goodwill and Other Intangible Assets

Goodwill

The changes in the carrying amount of goodwill for 2004 and 2003 are as follows:

	Risk   assessment     services	Clinical -   Healthcare     services	Clinical -   Substance     abuse testing	Total
	(in thousands)
Balance as of December 31, 2002	$ 86,938	$   9,371	$      —	$ 96,309
Acquisitions	2,628	—	—	2,628
Purchase accounting adjustments	(67)	130	—	63
Foreign currency translation adjustments	103	—	—	103
Balance as of December 31, 2003	89,602	9,501	—	99,103
Acquisitions	1,562	29,490	7,506	38,558
Additional consideration paid	142	255	—	397
Foreign currency translation adjustments	105	—	—	105
Balance as of December 31, 2004	$ 91,411	$ 39,246	$   7,506	$138,163

The amount of goodwill acquired during 2004 and 2003 that is subject to deductible amortization for income tax purposes is $38,558,000 and $2,628,000, respectively.

Other Intangible Assets

Other intangible assets consist of the following:

	December 31, 2004			December 31, 2003
	Weighted average   amortization   period	Gross  carrying amount	Accumulated   amortization	Gross  carrying amount	Accumulated amortization
		(in thousands)
Amortizing intangible assets:
Non compete and non       solicitation agreements	7.7 years	$   3,170	$     690	$   1,303	$     402
Customer contracts	5.3 years	13,500	3,311	10,000	745
Customer relationships	9.8 years	8,052	689	310	23
Acquired patents and trademarks	8.1 years	955	127	912	10
		$ 25,677	$  4,817	$ 12,525	$  1,180

Aggregate amortization expense for amortizable intangible assets for 2004, 2003 and 2002 was $3,936,000, $1,004,000 and $195,000, respectively. Estimated amortization expense for the next five years is: $3,975,000 in 2005, $3,950,000 in 2006, $3,906,000 in 2007, $3,129,000 in 2008 and $1,664,000 in 2009.

(5) Long-term Debt

Long-term debt consists of the following:

	2004	2003
	(in thousands)
3.5% convertible senior debentures	$ 103,500	$         —
Taxable industrial revenue bonds, Series 1998A, principal     payable annually in equal installments through September     1, 2009, interest payable monthly at a rate adjusted     weekly based on short-term United States treasury     obligations (3.3% as of December 31, 2004), secured     by the Company's Lenexa, Kansas laboratory facility     and an irrevocable bank letter of credit	9,000	10,800
Line of credit, variable interest rate (4.2% as of December 31,     2004), principal due August 11, 2009.	829	47,000
Other	187	359
Total long-term debt	113,516	58,159
Less:
Current portion	1,925	2,014
Unamortized discount	42	51
Long-term debt, net	$111,549	$ 56,094

During 2004, the Company issued $103,500,000 of 3.50% convertible senior debentures due June 15, 2034. The debentures may be converted, under certain circumstances, into a combination of cash and common stock of the Company at an initial rate equivalent to a conversion price of $39.30 per share of common stock, subject to certain adjustments. Holders may convert the debentures if the common stock price exceeds 130% of the conversion price for 20 trading days in the 30 trading day period ending on the last trading day of the preceding fiscal quarter. Upon conversion, the Company will deliver cash equal to the lesser of the aggregate principal amount of debentures to be converted and the conversion obligation, and common stock in respect of the remainder, if any, of the conversion obligation. The Company may not redeem the debentures prior to June 20, 2009. Holders of the debentures may require the Company to repurchase some or all of the debentures on June 15, 2011, 2014 and 2024 and upon certain specified corporate transactions. The fair value of the convertible senior debentures was $113.8 million compared to the carrying value of $103.5 million at December 31, 2004. Fair value has been determined based on the quoted market price.

The Company maintains a $175 million credit agreement co-arranged by JPMorgan Chase Bank and Wachovia Securities along with other participating banks. The credit agreement is secured by substantially all assets excluding the Company's Lenexa, Kansas laboratory facility. The line of credit bears interest at a variable rate and requires a commitment fee of 0.5% on the unused portion of the commitment. The interest rate and commitment fee are based on a leverage ratio for the Company, as defined in the agreement. The line of credit is due on August 11, 2009. Based on covenants, $74.8 million was available for borrowing as of December 31, 2004.

Under the terms of the agreement, the Company must limit capital expenditures and maintain a certain level of consolidated net worth and certain other financial ratios. As of December 31, 2004, the Company was in compliance with all financial covenants related to the line of credit.

Aggregate maturities of long-term debt as of December 31, 2004 are as follows:

	Convertible	Bonds	Line of
	debentures	payable	credit	Other	Total
	(in thousands)
2005	$        —	$   1,800	$        —	$   125	$   1,925
2006	—	1,800	—	48	1,848
2007	—	1,800	—	14	1,814
2008	—	1,800	—	—	1,800
2009	—	1,800	829	—	2,629
Thereafter	103,500	—	—	—	103,500
	$103,500	$ 9,000	$   829	$   187	$113,516

(6) Stockholders' Equity

Preferred Stock

In 2001, the Company sold a total of $50,000,000 in preferred stock and subordinated debt to Welsh, Carson, Anderson & Stowe ("WCAS") pursuant to a Securities Purchase Agreement. The Company issued $35,000,000 of convertible preferred stock and $15,000,000 of 11% subordinated debt to WCAS in exchange for $50,000,000 in cash. During 2002, the subordinated debt was refinanced from borrowings on the Company's line of credit.

The $35,000,000 of preferred stock consisted of two distinct series of stock in the original issuance: 14,000 shares of Series B-1 convertible preferred stock, par value of $1,000 per share, accruing paid-in-kind dividends at 8%; and 21,000 shares of Series B-2 preferred stock, par value $1,000, accruing paid-in-kind dividends at 18%. Upon shareholder approval, which occurred on January 31, 2002, the Series B-2 preferred stock was retroactively converted into Series B-1 convertible preferred stock with paid-in-kind dividends accruing at the Series B-1 rate of 8% beginning September 1, 2001.

The 35,000 shares of Series B-1 convertible preferred stock, plus accreted paid-in-kind dividends, was convertible into LabOne common stock at any time at the holder's option until August 31, 2008 at the rate of $8.32 per common share. During the third and fourth quarters of 2003, all outstanding shares of Series B-1 convertible preferred stock, plus accreted paid-in-kind dividends, were converted into 4,995,753 shares of LabOne common stock.

Stock Warrants

In addition to the issuance of B-1 convertible preferred stock in 2001, the Company issued 350,000 warrants with a strike price of $0.01 to the holders of the B-1 preferred stock. The warrants were exercisable immediately. The market price at the date of the grant was $9.25, resulting in an intrinsic value of $9.24 per warrant. These warrants were exercised in 2003.

Rights Plan

LabOne has a shareholder rights plan, which grants shareholders other than the acquiring person the right to purchase common stock at one-half of the market price if any person becomes the beneficial owner of 15% or more of the outstanding shares of common stock, subject to exceptions set forth in the plan.

Stock Compensation

The Company has long-term incentive plans, which provide for granting awards, including stock options, to officers, directors and employees for shares of LabOne common stock. The Company has granted certain stock options which entitle the grantee to purchase shares for a price equal to the fair market value at date of grant with option terms of up to ten years. The stock options generally vest ratably over five years subject to early vesting upon the occurrence of defined events. As of December 31, 2004, there were 1,808,297 additional shares available for grant under the plans.

A summary of the Company's stock option plans as of December 31, 2004, 2003 and 2002 and changes during the years then ended is presented below:

	2004		2003		2002
Fixed options	Number of   shares	Weighted average exercise   price	Number of   shares	Weighted average exercise   price	Number of   shares	Weighted average exercise   price
Outstanding at beginning of year	1,749,090	$ 18.03	1,910,509	$ 16.91	1,557,140	$ 12.54
Granted	517,280	31.30	184,992	24.36	1,052,197	20.13
Exercised	(346,922)	14.16	(321,938)	15.01	(661,491)	12.22
Forfeited	(139,041)	24.56	(24,473)	18.57	(37,337)	8.44
Outstanding at end of year	1,780,407	$ 22.13	1,749,090	$ 18.03	1,910,509	$ 16.91
Options exercisable at year-end	790,563	$ 16.92	912,404	$ 14.72	985,931	$ 13.51

The following table summarizes information about stock options as of December 31, 2004:

	Options outstanding			Options exercisable
		Weighted
		average	Weighted		Weighted
Range of	Number	remaining	average		average
exercise	out-	contractual	exercise	Number	exercise
prices	standing	life (years)	price	exercisable	price
$ 5.75 - $ 7.70	172,886	5.6	$    7.06	172,886	$    7.06
$ 9.38 - $ 9.38	5,000	4.6	9.38	5,000	9.38
$ 11.63 - $ 12.22	42,600	3.1	11.97	42,600	11.97
$ 14.38 - $ 17.81	484,966	5.6	16.47	300,734	16.84
$ 18.95 - $ 24.15	488,321	7.4	23.80	230,989	23.59
$ 26.41 - $ 29.61	155,354	9.0	28.55	38,354	28.33
$ 30.15 - $ 31.65	431,280	9.5	31.47	—	—
	1,780,407	7.3	$  22.13	790,563	$  16.92

(7) Income Taxes

The components of earnings before income taxes are as follows:

	2004	2003	2002
	(in thousands)
Domestic	$ 37,646	$ 30,054	$ 24,592
Foreign	2,789	2,651	(327)
Total	$ 40,435	$ 32,705	$ 24,265

The components of current and deferred income taxes are as follows:

	2004	2003	2002
	(in thousands)
Current:
Federal	$   9,229	$ 10,604	$   8,285
State	1,122	585	1,003
Foreign	848	880	10
Total current	11,199	12,069	9,298
Deferred:
Federal	4,112	(83)	113
State	(1,513)	(22)	(3)
Foreign	(87)	9	17
Total deferred	2,512	(96)	127
	$ 13,711	$ 11,973	$   9,425

Total income taxes differ from the amounts computed by applying the federal statutory income tax rate of 35% to earnings before income taxes for the following items:

	2004	2003	2002
	(in thousands)
Application of statutory income tax rate	$ 14,152	$ 11,447	$   8,493
Goodwill amortization	(12)	(12)	(8)
Changes in valuation allowance	—	77	(173)
Foreign taxes, net	(195)	(39)	141
State income taxes, net	(254)	365	650
Other, net	20	135	322
	$ 13,711	$ 11,973	$   9,425

The tax effects of temporary differences that create significant portions of the deferred tax assets and deferred tax liabilities are as follows:

	2004	2003
	(in thousands)
Deferred current income tax assets (liabilities):
Accrued vacation	$ 1,113	$    811
Accrued expenses not deducted for tax	630	1,186
Allowance for doubtful accounts	3,248	2,899
State income tax credits, net of federal tax	650	—
Other items	(85)	94
Total deferred current income tax assets	5,556	4,990
Deferred noncurrent tax assets (liabilities):
Depreciation and amortization, including capitalized software	(7,702)	(3,990)
Goodwill and other intangibles	(1,675)	(401)
Other items	(84)	(1,228)
State income tax credits, net of federal tax	1,321	1,874
	(8,140)	(3,745)
Valuation allowance - state income tax credits, net of federal tax	(554)	(1,874)
Total deferred noncurrent tax liabilities, net	(8,694)	(5,619)
Total deferred income tax, net	$(3,138)	$   (629)

In conjunction with building its laboratory facility in Lenexa, Kansas, the Company applied and was certified for the Kansas High Performance Incentive Program ("HPIP") tax credit. In order to utilize these HPIP credits against Kansas income tax, the Company must be recertified annually by the Kansas Department of Commerce (KDC). The credit may only be used to offset Kansas income tax generated by operation of the Lenexa, Kansas facility. The credit, if unused, may be carried forward for a period of ten years, provided the Company continues to meet the annual recertification requirements. In the fourth quarter of 2004, the KDC and the Company entered into an agreement stipulating that the Company could utilize the 1999 and 2002 HPIP credits as originally earned. This agreement allowed the Company to remove the valuation allowance against these credits during fourth quarter, 2004.

On its Kansas income tax returns, the Company used the Kansas HPIP tax credit to offset Kansas income tax of $819,000 (estimated), $1,084,000 and $466,000 during 2004, 2003 and 2002, respectively. The Company's available Kansas HPIP tax credit for 2004 and 2003, respectively, net of the current year's estimated usage, was $3,033,000 and $2,883,000 with a valuation allowance of $852,000 and $2,883,000.

In conjunction with the construction of its laboratory facility in Cincinnati, Ohio, the Company has entered into tax credit agreements with both the State of Ohio and the City of Cincinnati. The term of these tax credit agreements extends from 2006-2015 and grants the Company state and local income tax credits based on wages paid to new hires at the new laboratory facility. The Company also has entered into a ten-year property tax exemption agreement with the City of Cincinnati for certain real and personal property taxes generated by the new construction and equipment purchased for use in that facility. In January, 2005, The Company received approval for a $500,000 grant from the State of Ohio to be applied to purchases of new equipment at the facility.

The Company has not recognized a deferred tax liability for temporary differences between the basis in its investment in its Canadian subsidiaries and the U.S. federal income tax basis thereof. Relying on the APB-23 exception, the Company deems these investments, and temporary differences thereon, as essentially permanent in duration. Should the Company repatriate the $5,800,000 of undistributed earnings of these subsidiaries, the US and Canadian tax liability that would be accrued, but not currently recognized in the financial statements, is approximately $435,000. The tax is composed of $289,000 Canadian withholding tax and $146,000 in state income taxes. The Company anticipates that the U.S. federal income tax of $3,400,000 would be fully offset by foreign tax credits. At this time, the Company does not plan to utilize the temporary dividends received deduction on repatriated foreign earnings that is part of the American Jobs Creation Act of 2004.

(8) Benefit Plans

The Company maintains a money purchase pension plan for all employees who have completed six months of service and have attained age twenty and one-half years. The plan is a defined contribution plan under which the Company contributes a percentage of a participant's annual compensation. The Company's contributions, net of forfeitures, to the plan were $6,331,000, $4,265,000 and $4,252,000 for 2004, 2003 and 2002, respectively.

The Company has a profit sharing (401(k)) plan for all employees who have completed six months of service and a minimum of five hundred hours of service and have attained the age of twenty and one-half years. The Company contributes on behalf of each participant an amount equal to 50% of the participant's annual contributions, but not in excess of 5% of the participant's annual compensation. The Company's contributions are invested in LabOne common stock. The Company's contributions, net of forfeitures, to the plan were $2,573,000, $1,620,000 and $1,568,000 for 2004, 2003 and 2002, respectively.

(9) Business Segment Information

The Company operates principally in two lines of business: risk assessment services, which is segregated into insurance laboratory, paramedical services and other insurance services, and clinical, which is segregated into healthcare services and substance abuse testing. Risk assessment services includes laboratory testing on policy applicants and specimen collection and paramedical examinations for life insurance companies. Risk assessment also includes other insurance services to the life insurance industry including teleunderwriting, telephone inspections, motor vehicle reports and medical record retrieval. Clinical includes laboratory testing services for the healthcare industry as an aid in the diagnosis and treatment of patients. The Company markets its clinical testing services to managed care companies, insurance companies, self-insured groups, hospitals and physicians. Clinical also includes substance abuse testing provided to employers to support their drug free workplace programs. The Compan y is certified by the Substance Abuse and Mental Health Services Administration to perform substance abuse testing for federally regulated employers and currently markets these services throughout the country to both regulated and nonregulated employers.

Operating earnings (loss) of each segment is computed as sales less directly identifiable expenses. In computing operating earnings (loss) of the segments, none of the following items have been allocated: general corporate expenses such as administrative, management and information systems expenses; amortization of acquired identifiable intangible assets not associated with a specific segment; or total other expenses. General corporate assets are principally cash, fixed assets and goodwill not identified with a specific segment. The accounting policies of the segments are the same as those of the Company as set forth in Note 1.

Following is a summary of segment information as of and for the years ended December 31, 2004, 2003, and 2002:

	2004	2003	2002
	(in thousands)
Sales:
Risk assessment services:
Insurance laboratory	$ 86,859	$ 88,818	$ 93,892
Paramedical services	102,720	85,363	74,235
Other insurance services	71,493	56,554	41,869
Total risk assessment services	261,072	230,735	209,996
Clinical:
Healthcare services	166,732	88,455	60,906
Substance abuse testing	40,432	26,830	27,244
Total clinical	207,164	115,285	88,150
Total	$ 468,236	$ 346,020	$ 298,146
	2004	2003	2002
	(in thousands)
Operating earnings (loss):
Risk assessment services:
Insurance laboratory	$ 36,007	$ 38,993	$ 37,790
Paramedical services	11,478	8,437	5,678
Other insurance services	10,214	5,275	3,744
Risk assessment sales group	(6,672)	(5,368)	(6,228)
Total risk assessment services	51,027	47,337	40,984
Clinical:
Healthcare services	27,989	17,862	11,893
Substance abuse testing	7,355	4,558	3,575
Total clinical	35,344	22,420	15,468
General corporate expenses	(41,244)	(34,208)	(28,021)
Total other expense, net	(4,692)	(2,844)	(4,166)
Earnings before income taxes	40,435	32,705	24,265
Provision for income taxes	13,711	11,973	9,425
Net earnings	$    26,724	$    20,732	$    14,840
	2004	2003	2002
	(in thousands)
Identifiable assets:
Risk assessment services	$ 154,241	$ 133,812	$ 119,914
Clinical:
Healthcare services	88,051	37,101	28,004
Substance abuse testing	23,857	10,731	10,504
Total clinical	111,908	47,832	38,508
General corporate assets	77,073	55,978	58,269
Total identifiable assets	$ 343,222	$ 237,622	$ 216,691
	2004	2003	2002
	(in thousands)
Capital expenditures:
Risk assessment services:
Insurance laboratory	$ 1,339	$ 1,128	$    373
Paramedical services	854	287	209
Other insurance services	902	778	2,781
Risk assessment sales group	162	21	13
Total risk assessment services	3,257	2,214	3,376
Clinical:
Healthcare services	10,640	1,635	252
Substance abuse testing	1,668	290	584
Total clinical	12,308	1,925	836
General corporate	8,924	5,580	3,819
Total capital expenditures	$24,489	$  9,719	$  8,031
Depreciation and amortization:
Risk assessment services:
Insurance laboratory	$ 3,627	$ 2,140	$ 1,430
Paramedical services	1,161	811	604
Other insurance services	1,383	1,655	1,505
Risk assessment sales group	94	63	72
Total risk assessment services	6,265	4,669	3,611
Clinical:
Healthcare services	5,291	1,957	1,166
Substance abuse testing	1,048	924	1,052
Total clinical	6,339	2,881	2,218
General corporate	4,504	3,487	3,538
Total depreciation and amortization	$17,108	$11,037	$  9,367

(10) Commitments and Contingencies

Litigation

The Company is a party to various claims or lawsuits related to services performed in the ordinary course of the Company's activities. The Company's management and legal counsel anticipate potential claims resulting from such matters that would not be covered by insurance and have appropriately provided for these claims in the consolidated financial statements. The Company believes that the ultimate resolution of these matters will not materially affect the consolidated financial statements of the Company.

Leases

The Company has several noncancelable operating leases, primarily for land and building, and other commitments that expire through 2012. Rental expense for these operating leases during 2004, 2003 and 2002 amounted to $5,875,000, $4,114,000 and $3,288,000, respectively.

Future minimum lease payments and other commitments under these agreements as of December 31, 2004 are:

	(in thousands)
2005	$   4,299
2006	2,881
2007	1,985
2008	1,435
2009	1,186
2010 and thereafter	1,518
	$ 13,304

On August 10, 1999, the former LabOne, Inc. was merged into its parent corporation, Lab Holdings, Inc. (formerly Seafield Capital Corporation, formerly BMA Corporation) upon the approval of the shareholders of both companies. The combined company's name was then changed to LabOne, Inc. Prior to the merger, Lab Holdings, Inc. was subject to contingent obligations under leases and other instruments incurred in connection with real estate activities and other operations of its predecessor, BMA Corporation. The management of LabOne has assessed the risk related to the probability of default by third parties regarding its continuing obligations under certain land leases with two Hawaiian trusts relating to approximately 2.3 acres of land upon which the Hyatt Regency Waikiki Hotel is built and a land lease for a parking garage in Reno, Nevada.

The Hawaii obligations arise out of certain land leases and subleases that were entered into by Business Men's Assurance Company of America ("BMAA"), a subsidiary of BMA Corporation, and Bankers Life of Nebraska (now known as Ameritas Life) as tenants in common (jointly and severally liable - collectively the "Original Obligors") in connection with the development of the Hyatt Regency Waikiki Hotel. In the years following the initial leases, the improvements (hotel and convention center) were sold and re-sold to third parties. In connection with these sales, the land was subleased to the purchasing party. While the sublessee assumed all obligations, the Original Obligors and the subsequent obligors were not released by the land owners. During 1990, in connection with the sale of BMAA, Lab Holdings, Inc. gave an indemnity to the purchaser, Generali-Assicurazioni Generali S.p.A., against liabilities that may arise from the subject leases. Also during 1990, Lab Holdings, Inc. transferred its right title and interest to the subject leases to Scout Development Corporation ("Scout"), a subsidiary of Syntroleum Corporation. Scout assumed all of the liability and indemnified Lab Holdings, Inc. In the event that the Hyatt Regency Waikiki Hotel should fail to pay its rent and real estate taxes on the subject land, this default could trigger liability for LabOne, Scout and Ameritas Life. This liability is not recorded in the Company's balance sheets since the contingent liability is considered remote.

The current rent payments for the subject leases are $0.8 million per year plus real estate taxes of approximately $1.6 million for the most recent year available. The lease amount is fixed until the year 2006 at which time the lease calls for a negotiated increase. The formula for the increase is the product of the fair market value of the land times the market rate of return for similar land. The market rate of return to be used in the calculation has a floor of seven percent and the resulting base rent cannot decrease from the prior period. Based on current market values, the Company projects that in 2007, the annual lease obligations for the subject parcels would be approximately $5.8 million. There are subsequent renegotiations in 2017, 2027 and 2037 subject to the same formula. This lease expires in 2047. The Company believes the leasehold improvements are significantly more valuable than the lease obligations. In the event of default by the property owner, the risk of this lease would be shared wi th Scout and Ameritas Life.

The Company, through its predecessor Lab Holdings, Inc., is a lessee of a land lease for a parking garage in Reno, Nevada. The lease was assigned to Scout in August 1990. Lab Holdings, Inc. was not released from the land lease by the landowner. The property was sold in 2000. Minimum annual lease payments for the land lease are $0.3 million, adjusted for the Consumer Price Index, plus real estate taxes and insurance. The land lease expires in August 2023. Should the property owner default on its obligations under the land lease, Scout would have rights to claim the parking garage and sell the asset. Should Scout default on its obligations, LabOne would be obligated for the land lease payments. Management of the Company believes that the sale of the asset and the assignment of the land lease would cover the contingent liability exposure for this lease, and as such, no liability is recorded on the Company's balance sheet.

(11) Quarterly Financial Data (Unaudited)

A summary of unaudited quarterly results of operations for 2004 and 2003 is as follows:

	Three months ended
	March 31	June 30	September 30	December 31
	(in thousands, except per share data)
2004:
Sales	$112,825	$117,483	$117,839	$120,090
Gross profit	35,207	36,876	37,001	38,809
Earnings before income taxes	9,474	10,075	10,286	10,601
Net earnings	5,880	6,287	6,615	7,943
Basic earnings per share	$  0.35	$  0.37	$  0.39	$  0.46
Diluted earnings per share	$  0.34	$  0.36	$  0.38	$  0.45
2003:
Sales	$ 81,928	$ 83,963	$ 88,115	$ 92,014
Gross profit	25,838	26,876	27,952	28,279
Earnings before income taxes	7,278	7,931	8,540	8,956
Net earnings	4,551	5,045	5,387	5,749
Basic earnings per share	$  0.32	$  0.36	$  0.39	$  0.37
Diluted earnings per share	$  0.27	$  0.30	$  0.32	$  0.33

					Schedule II
LabOne, Inc. and Subsidiaries
Valuation and Qualifying Accounts
Years ended December 31, 2004, 2003 and 2002
Description	Balance at beginning of year	Additions- charged to selling, general and administrative expenses	Charged to other accounts (1)	Deductions- uncollectible accounts	Balance at end of year
	(in thousands)
Allowance for doubtful accounts:
Year ended December 31, 2004	$ 6,123	$ 9,171	$ (1,631)	$ 9,069	$ 4,594
Year ended December 31, 2003	5,081	6,250	3	5,211	6,123
Year ended December 31, 2002	3,249	5,638	216	4,022	5,081
(1) For the year ended December 31, 2004, $1,658 was allocated from the allowance for doubtful accounts to the reserve for contractual adjustments.
See accompanying report of independent registered public accounting firm.

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

LabOne, Inc.:

We have audited the accompanying consolidated balance sheets of LabOne, Inc. and subsidiaries (the Company) as of December 31, 2004 and 2003, and the related consolidated statements of operations, stockholders' equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2004. In connection with our audits of the consolidated financial statements, we also have audited financial statement schedule of valuation and qualifying accounts. These consolidated financial statements and financial statement schedule are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements and financial statement schedule based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of LabOne, Inc. and subsidiaries as of December 31, 2004 and 2003, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles. Also in our opinion, the related financial statement schedule, when considered in relation to the basic consolidated financial statements taken as a whole, presents fairly, in all material respects, the information set forth therein.

We also have audited, in accordance with the standards of the PCAOB, the effectiveness of LabOne's internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 11, 2005 expressed an unqualified opinion on management's assessment of, and the effective operation of, internal control over financial reporting.

/s/ KPMG LLP

Kansas City, Missouri
March 11, 2005

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholders

LabOne, Inc.:

We have audited management's assessment, included in the accompanying Management's Report on Internal Control over Financial Reporting that LabOne, Inc. (the Company) maintained effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). LabOne, Inc.'s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express an opinion on management's assessment and an opinion on the effectiveness of the Company's internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, evaluating management's assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company 's assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, management's assessment that LabOne, Inc. maintained effective internal control over financial reporting as of December 31, 2004, is fairly stated, in all material respects, based on criteria established in Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Also, in our opinion, LabOne, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, 2004, based on criteria established in Internal Control-Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

LabOne, Inc. acquired the laboratory operations of The Health Alliance of Greater Cincinnati (Health Alliance) and a drug testing division of NWT, Inc. (Northwest Toxicology) during 2004. Management excluded from its assessment of the effectiveness of LabOne, Inc.'s internal control over financial reporting as of December 31, 2004, Health Alliance's and Northwest Toxicology's internal control over financial reporting associated with total assets of $71.7 million and total revenues of $69.5 million included in the consolidated financial statements of LabOne, Inc. and subsidiaries as of and for the year ended December 31, 2004. Our audit of internal control over financial reporting of LabOne, Inc. also excluded an evaluation of the internal control over financial reporting of the laboratory operations of the Health Alliance and Northwest Toxicology.

We also have audited, in accordance with the standards of the PCAOB, the consolidated balance sheets of LabOne, Inc. and subsidiaries as of December 31, 2004 and 2003, and the related consolidated statements of operations, stockholders' equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2004, and our report dated March 11, 2005 expressed an unqualified opinion on those consolidated financial statements.

/s/ KPMG LLP

Kansas City, Missouri
March 11, 2005

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

None

ITEM 9A. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company maintains disclosure controls and procedures that are designed for information required to be disclosed in the Company's reports filed pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange Act"), to be recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms. Disclosure controls and procedures also are designed for such information to be accumulated and communicated to the Company's management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met.

Management of the Company, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of the Company's disclosure controls and procedures (as defined in the Exchange Act Rule 13a-15(e)) as of December 31, 2004. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company's disclosure controls and procedures were effective as of December 31, 2004 to provide reasonable assurance that the control system's objectives would be met.

Management's Report on Internal Control Over Financial Reporting

The Company's management is responsible for establishing and maintaining an adequate system of internal control over financial reporting, as defined in the Exchange Act Rule 13a-15(f). The Company's management conducted an evaluation of the Company's internal control over financial reporting based on the framework established by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework. Based on its evaluation, management concluded that, as of December 31, 2004, the Company's internal control over financial reporting was effective. Management's assessment of the effectiveness of the Company's internal control over financial reporting as of December 31, 2004, has been audited by KPMG LLP, an independent registered public accounting firm, as stated in their report which is included herein.

LabOne acquired the laboratory operations of The Health Alliance of Greater Cincinnati (Health Alliance) and a drug testing division of NWT, Inc. (Northwest Toxicology) during 2004. Management excluded from its assessment of the effectiveness of internal control over financial reporting as of December 31, 2004, the Company's internal control over financial reporting related to the laboratory operations of the Health Alliance and Northwest Toxicology associated with total assets of $71.7 million and total revenues of $69.5 million included in the Company's consolidated financial statements as of and for the year ended December 31, 2004.

Changes in Internal Control Over Financial Reporting

Except as noted below, there were no changes in the Company's internal controls over financial reporting during the fourth quarter of fiscal 2004 that materially affected, or that are reasonably likely to materially affect, the Company's internal control over financial reporting.

As previously reported, during the third quarter of 2004, the Company's internal auditors identified a reportable condition in the design and operation of general computer controls related to program changes and access security. The condition was not considered a material weakness. The Company believes it has addressed and remediated the issues identified concerning program changes and access security.

ITEM 9B. OTHER INFORMATION

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information included under the captions entitled "Election of Directors" and "Management of LabOne" in the Company's definitive proxy statement to be filed with the Commission pursuant to Regulation 14A with respect to its annual meeting of stockholders to be held May 26, 2005, is incorporated into Item 10 by reference.

ITEM 11. EXECUTIVE COMPENSATION

The information included under the caption entitled "Executive Compensation" in the Company's definitive proxy statement to be filed with the Commission pursuant to Regulation 14A with respect to its annual meeting of stockholders to be held May 26, 2005, is incorporated into Item 11 by reference, except the information contained in the Proxy Statement under the captions "Compensation Committee Report on Executive Compensation" and "Comparison of Five Year Cumulative Total Return Among LabOne, NASDAQ Composite Index and Peer Group" is not incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information included under the captions entitled "Security Ownership of Management," "Security Ownership of Certain Beneficial Owners" and "Equity Compensation Plan Information" in the Company's definitive proxy statement to be filed with the Commission pursuant to Regulation 14A with respect to its annual meeting of stockholders to be held May 26, 2005, is incorporated into Item 12 by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information included under the caption entitled "Certain Relationships and Related Transactions" in the Company's definitive proxy statement to be filed with the Commission pursuant to Regulation 14A with respect to its annual meeting of stockholders to be held May 26, 2005, is incorporated into Item 13 by reference.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The information included under the caption entitled "Audit and Non-audit Fees" in the Company's definitive proxy statement to be filed with the Commission pursuant to Regulation 14A with respect to its annual meeting of stockholders to be held May 26, 2005, is incorporated into Item 14 by reference.

PART IV

ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Documents filed as part of this Form 10-K.

Financial Statements and Financial Statement Schedules: See Item 8, "Financial Statements and Supplementary Data," for a list of financial statements.

Exhibits required by Item 601 of Regulation S-K

2.1*	Distribution Agreement, dated December 20, 1996, between the Registrant and Syntroleum Corporation (formerly SLH Corporation) - attached as Exhibit 2(a) to Syntroleum Corporation's Form 10/A (Amendment No. 1) dated February 4, 1997 (File No. 0-21911).
2.2*	Blanket Assignment, Bill of Sale, Deed and Assumption Agreement, dated as of February 28, 1997, between the Registrant and Syntroleum Corporation (formerly SLH Corporation) - attached as Exhibit 2(b) to Syntroleum Corporation's Form 10/A (Amendment No. 1) dated February 4, 1997 (File No. 0-21911).
2.3*	Agreement and Plan of Merger by and between Lab Holdings, Inc. and LabOne, Inc., dated March 7, 1999 - attached as Appendix A to the Joint Proxy Statement/Prospectus filed as a part of the Registrant's Registration Statement on Form S-4, filed July 2, 1999 (File No. 333-76131).
2.4*	Asset Purchase Agreement dated November 28, 2003 by and between LabOne, Inc. and the Health Alliance, for itself and on behalf of certain affiliated entities identified therein, including Amendment No. 1 to the Purchase Agreement dated December 31, 2003 -- attached as exhibit 2.1 to the Registrant's Current Report on Form 8-K filed January 20, 2004.
2.5*	Amendment No. 2 to the Purchase Agreement between LabOne, Inc. and the Health Alliance -- attached as exhibit 2.6 to the Registrant's Annual Report on Form 10-K filed March 12, 2004.
3.1*	Amended Articles of Incorporation - attached as Exhibit B to Appendix A to the Joint Proxy Statement/Prospectus filed as a part of the Registrant's Registration Statement on Form S-4, filed July 2, 1999 (File No. 333-76131).
3.2*	Certificate of Designations, Preferences, Qualifications and Rights of Series A Preferred Stock, dated February 11, 2000 - attached as Exhibit 3.2 to Annual Report on Form 10-K of LabOne, Inc., a Missouri corporation, for the year ended December 31, 1999.
3.3	Amended and Restated Bylaws
4.1*	Trust Indenture dated as of September 1, 1998, between the City of Lenexa, Kansas and Intrust Bank, N.A. related to the issuance of Taxable Industrial Revenue Bonds for the LabOne, Inc. Facility Project - attached as Exhibit 4.1 to the Quarterly Report on Form 10-Q of LabOne, Inc., a Delaware corporation, for the quarter ended September 30, 1998 (File No. 0-15975).
4.2*	Lease Agreement dated as of September 1, 1998, between the City of Lenexa, Kansas and LabOne, Inc. related to the Trust Indenture - attached as Exhibit 4.2 to the Quarterly Report on Form 10-Q of LabOne, Inc., a Delaware corporation, for the quarter ended September 30, 1998 (File No. 0-15975).
4.3*	Reimbursement Agreement dated as of September 1, 1998, between LabOne, Inc. and Commerce Bank, N.A. - attached as Exhibit 4.3 to the Quarterly Report on Form 10-Q of LabOne, Inc., a Delaware corporation, for the quarter ended September 30, 1998 (File No. 0-15975).
4.4*	Amended and Restated Credit Agreement dated August 11, 2004 between LabOne and JPMorgan Chase Bank and Wachovia Bank, National Association -- attached as exhibit 4.1 to the Registrant's Current Report on Form 8-K filed August 12, 2004.
4.5*	Rights Agreement and attached exhibits A, B and C, dated as of February 11, 2000, between the Registrant and American Stock Transfer & Trust Company, - attached as Exhibit 4.1 to the Registrant's Form 8-K Current Report, filed February 14, 2000.
4.6*	Amendment No. 1 to Rights Agreement dated August 31, 2001 between LabOne, Inc. and American Stock Transfer & Trust Company - attached as exhibit 4.6 to the Registrant's Form 8-K Current Report, filed October 5, 2001.
4.7*	Indenture dated as of June 25, 2004, between LabOne, Inc., and Wells Fargo Bank, NA related to the issuance of 3.5% Convertible Senior Debentures -- attached as exhibit 4.1 to the Registrant's Current Report on Form 8-K filed June 28, 2004.
4.8*	Registration rights agreement dated June 25, 2004, between LabOne, Inc., and J. P. Morgan Securities Inc. and Banc of America Securities LLC.-- attached as exhibit 4.3 to the Registrant's Current Report on Form 8-K filed June 28, 2004.
10.1*	Form of Indemnification Agreement entered into between the Company and its directors and the following officers: W. Thomas Grant, II; John W. McCarty; Michael J. Asselta; Joseph C. Benage; Troy L. Hartman; Patrick James; Kent McAllister; Gregg R. Sadler; and Philip A. Spencer. Certain former directors and officers of the Company may also have rights under the Indemnification Agreement pertaining to actions taken while such persons were directors or officers of the Company. - attached as Exhibit 10.10 to the Annual Report on Form 10-K of LabOne, Inc. for the year ended December 31, 1999.
10.2*	Form of Option Agreement with Directors under the Directors' Stock Option Plan, as amended - attached as Exhibit 10.5 to the Registrant's Form 10-Q for the quarter ended September 30, 1998. ***
10.3*	1987 Long-Term Incentive Plan of LabOne, Inc., approved May 16, 1991, with amendments adopted May 21, 1993 and November 9, 1993 - attached as Exhibit 10.21 to Registrant's Annual Report on Form 10-K for the year ended December 31, 1993. **
10.4*	Amendment to 1987 Long-Term Incentive Plan of LabOne, Inc., effective February 10, 1995 - attached as Exhibit 10.31 to the Registrant's Annual Report on Form 10-K for year ended December 31, 1995. **
10.5*	Amendment to 1987 Long-Term Incentive Plan of LabOne, Inc., effective May 9, 1997 - attached as Exhibit 10.5 to the Annual Report on Form 10-K of LabOne, Inc., a Delaware corporation, for the year ended December 31, 1997 (File No. 0-15975). **
10.6*	1997 Long Term Incentive Plan of LabOne, Inc. - attached as Exhibit 10.1 to the Quarterly Report on Form 10-Q of LabOne, Inc., a Delaware corporation, for the quarter ended June 30, 1998 (File No. 0-15975). **
10.7*	Form of Stock Option Agreement pursuant to the LabOne 1997 Long-Term Incentive Plan - attached as Exhibit 10.2 to the Quarterly Report on Form 10-Q of LabOne, Inc., a Delaware corporation, for the quarter ended June 30, 1998 (File No. 0-15975). **
10.8*	LabOne 2001 Long-Term Incentive Plan, as amended - attached as Appendix A to the Proxy Statement of LabOne, Inc. filed April 17, 2002.**
10.9*	Form of Stock Option Agreements pursuant to the LabOne 2001 Long-Term Incentive Plan - attached as Exhibit 10.8 to the Annual Report on Form 10-K of LabOne, Inc. for the year ended December 31, 2001.**
10.10*	LabOne, Inc. 2000 Stock Purchase Loan Program - attached as Exhibit 10 to the Quarterly Report on Form 10-Q of LabOne, Inc. for the quarter ended September 30, 2000. **
10.11*	LabOne 2005 Incentive Plan-- attached as exhibit 10.1 to the Registrant's Current Report on Form 8-K filed January 20, 2005. **
10.12*	Employment Agreement between LabOne, Inc. and W. Thomas Grant II, dated February 11, 2000 - attached as Exhibit 10.18 to the Annual Report on Form 10-K of LabOne, Inc., a Missouri corporation, for the year ended December 31. 2000. **
10.13*	Employment Agreement between LabOne, Inc. and John W. McCarty - attached as Exhibit 10 to the Quarterly Report on Form 10-Q of LabOne, Inc., a Missouri corporation, for the quarter ended March 31, 2000. **
10.14*	Employment Agreement between LabOne, Inc. and Gregg R. Sadler - attached as Exhibit 10.14 to the Annual Report on Form 10-K of LabOne, Inc., a Delaware corporation, for the year ended December 31, 1993 (File No. 0-15975). **
10.15*	Amendment to Employment Agreement between LabOne, Inc. and Gregg R. Sadler - attached as Exhibit 10.13 to the Annual Report on Form 10-K of LabOne, Inc., a Delaware corporation, for the year ended December 31, 1995 (File No. 0-15975). **
10.16*	Employment Agreement between LabOne, Inc. and Joseph C. Benage, dated May 11, 2001 - attached as Exhibit 10.16 to the Annual Report on Form 10-K of LabOne, Inc. for the year ended December 31. 2001. **
10.17	Employment Agreement between LabOne, Inc. and Kent McAllister, dated November 8, 2004. **
10.18	Employment Agreement between LabOne, Inc. and Michael J. Asselta, dated May 11, 2001. **
10.19*	Employment Agreement between LabOne, Inc. and Philip A. Spencer dated November 1, 2003 - attached as Exhibit 10.2 to the Quarterly Report on Form 10-Q of LabOne, Inc. for the period ended September 30, 2004. **
10.20*	Employment Agreement between LabOne, Inc. and L. Patrick James, M.D. dated November 19, 2003 - attached as Exhibit 10.3 to the Quarterly Report on Form 10-Q of LabOne, Inc. for the period ended September 30, 2004. **
10.21*	Amendment to Stock Option Agreements between the Registrant and John W. McCarty dated September 2, 2004 - attached as Exhibit 10.1 to the Quarterly Report on Form 10-Q of LabOne, Inc. for the period ended September 30, 2004. **
10.22*	Transition Services Agreement between the Registrant and John W. McCarty, dated September 2, 2004 - attached as exhibit 10.1 to the Registrant's Form 8-K Current Report, filed September 3, 2004. **
10.23*	First Amendment to Transition Services Agreement between the Registrant and John W. McCarty, dated March 1, 2005 - attached as exhibit 10.1 to the Registrant's Form 8-K Current Report, filed March 3, 2005. **
10.24*	Consulting Services Agreement between the Registrant and John W. McCarty, dated March 1, 2005 - attached as exhibit 10.2 to the Registrant's Form 8-K Current Report, filed March 3, 2005. **
10.25*	Lease Agreement dated as of November 28, 2001, between Townsend Summit LLC and LabOne, Inc. - attached as Exhibit 10.1 to the Quarterly Report on Form 10-Q of LabOne, Inc. for the quarter ended March 31, 2002.
21	Subsidiaries of Registrant
23	Consent of Independent Registered Public Accounting Firm
24	Powers of Attorney.
31.1	Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of Chief Executive Officer Pursuant to 18 U.S.C. 'SS' 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, which is accompanying this Annual Report on Form 10-K and is not treated as filed in reliance on Section 601(b)(32) of Regulation S-K.
32.2	Certification of Chief Financial Officer Pursuant to 18 U.S.C. 'SS' 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, which is accompanying this Annual Report on Form 10-K and is not treated as filed in reliance on Section 601(b)(32) of Regulation S-K.

* Incorporated by reference pursuant to Rule 12b-23
** Management Compensatory Plan
*** Non-Management Director Compensatory Plan

These exhibits may be obtained by stockholders of Registrant upon written
request to LabOne, Inc., 10101 Renner Blvd., Lenexa, KS 66219.

Signatures

Pursuant to the requirements of Section 13 of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

LabOne, Inc.

By:	/s/ John W. McCarty	By:	/s/ W. Thomas Grant II
	John W. McCarty		W. Thomas Grant II
Title:	Executive V.P. and Chief		Chairman of the Board, President
	Financial Officer		and Chief Executive Officer
Date:	March 15, 2005	Date:	March 15, 2005

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant on March 15, 2005 in the capacities indicated.

By:	/s/ W. Thomas Grant II	By:	/s/ John W. McCarty
	W. Thomas Grant II		John W. McCarty
Title:	Chairman of the Board, President	Title:	Executive V.P. and Chief
	and Chief Executive Officer		Financial Officer
By:	*/s/ Jill L. Force	By:	*/s/ John P. Mascotte
	Jill L. Force		John P. Mascotte
Title:	Director	Title:	Director
By:	*/s/ James R. Seward	By:	*/s/ John E. Walker
	James R. Seward		John E. Walker
Title:	Director	Title:	Director
		*By:	/s/ Joseph C. Benage
			Joseph C. Benage
			Attorney-in-fact

EX-3

Exhibit 3.3

AMENDED AND RESTATED

BYLAWS

OF

LABONE, INC.

ARTICLE I - SHAREHOLDERS

Section 1 - Place of Meetings. All meetings of the shareholders shall be held at the principal office of the corporation in Missouri, except such meetings as the Board of Directors, to the extent permissible by law, expressly determines shall be held elsewhere, in which case such meetings may, be held, upon notice thereof as hereinafter provided, at such other place or places, within or without the State of Missouri, as the Board of Directors shall have determined, and as shall be stated in such notice, and, unless specifically, prohibited by law, any meeting may be held at any place and time, and for any purpose, if consented to in writing by all the shareholders entitled to vote thereat.

Section 2 - Annual Meetings. An annual meeting of the shareholders to elect directors and to transact such other business as may properly be brought before the meeting shall be held each year on a date to be determined by the Board of Directors at its meeting to be held in February of each year.

Section 3 - Special Meetings. Special meetings of the shareholders may be called by the chairman of the board, by the president, by the secretary, by the Board of Directors, or by any officer directed to do so by the Board of Directors. Shareholders' requests for a special meeting shall be in writing and shall state the nature of the business desired to be transacted and shall comply with Article VI of these Bylaws. The "call"and the "notice" of any such meeting shall be deemed to be synonymous.

Section 4 - Notice. Written or printed notice of each meeting of the shareholders, whether annual or special, stating the place, day and hour of the meeting and, in case of a special meeting, the purpose or purposes thereof, shall be delivered or given to each shareholder entitled to vote thereat, either personally or by mail, not less than ten (10) days or more than fifty (50) days prior to the meeting unless, as to a particular matter, other or further notice shall be given. In addition to such written or printed notice, published notice shall be given if (and in the manner) then required by law.

Any notice of a shareholders' meeting sent by mail shall be deemed to be delivered when deposited in the United States mail with postage thereon prepaid addressed to the shareholder at his address as it appears on the records of the corporation.

Section 5 - Presiding Officials. Every meeting of the shareholders, for whatever object, shall be convened and presided over by either the president, the chairman of the board or, in their absence, by any vice president. The officer presiding over any such meeting shall have the authority on his own motion to adjourn the meeting from time to time.

Section 6 - Business at Annual Meetings. No business may be transacted at an annual meeting of shareholders, other than business that is either (i) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (ii) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof) or (iii) otherwise properly brought before the annual meeting by any shareholder of record of the corporation who is entitled to vote at such meeting and who complies with the notice procedures set forth in Article VI of these Bylaws. Any business to be brought before the annual meeting by any shareholder must also be a proper matter for shareholder action.

Section 7 - Business which may be Transacted at Special Meetings. Business transacted at all special meetings shall be confined to the purposes stated in the notice of such meeting.

Section 8 - Quorum of Shareholders. Except as otherwise provided by law or by the Articles of Incorporation, a majority of the outstanding shares entitled to vote at any meeting represented in person or by proxy shall constitute a quorum at a meeting of the shareholders, but less than a quorum shall have the right successively to adjourn the meeting to a specified date not longer than ninety (90) days after such adjournment, and no notice need be given of such adjournment to shareholders not present at the meeting.

Section 9 - Voting of Shareholders. Subject to the right to elect directors by cumulative voting, and except as otherwise provided by the Articles of Incorporation, each shareholder shall be entitled to one vote for each share of stock having voting power held by such shareholder, and may vote such shares in person or by proxy.

If the Board of Directors does not close the transfer books or set a record date for the determination of the shareholders entitled to notice of, and to vote at, a meeting of shareholders, only the shareholders of record at the close of business on the twentieth day preceding the date of the meeting shall be entitled to notice of, and to vote at, the meeting and any adjournment of the meeting.

Section 10 - Registered Shareholders - Exceptions - Stock Ownership Presumed. The corporation shall be entitled to treat the holders of the shares of stock of the corporation, as recorded in the stock record or transfer books of the corporation, as the holders of record and as the holders and owners in fact thereof and, accordingly, the corporation shall not be required to recognize any equitable or other claim to or interest in any such shares on the part of any other person, firm, partnership, corporation or association, whether or not the corporation shall have express or other notice thereof, except as is otherwise expressly required by law, and the term shareholder as used in these Bylaws means one who is a holder of record of shares of the corporation.

ARTICLE II - DIRECTORS

Section 1 - Directors - Number and Vacancies. Unless and until changed by the Board of Directors as hereinafter provided, the number of directors to constitute the Board of Directors shall be the same number as that provided in the Articles of Incorporation. The Board of Directors, to the extent permitted by law, shall have the power to change the number of directors from time to time provided that any notice required by law of any such change is duly given. Directors need not be shareholders unless the Articles of Incorporation at any time so provide.

Vacancies on the Board of Directors shall be filled for the unexpired term by a majority of the remaining directors, or, if they are unable to do so, by vote of a majority of shareholders at an annual or special meeting.

No director shall be removed from his office as a director by vote or other action of shareholders or otherwise unless the director to be removed has been convicted of a felony by a court of competent jurisdiction and such conviction is no longer subject to direct appeal or unless the director to be removed has been adjudged to be liable for negligence or misconduct in the performance of his duty to the corporation by a court of competent jurisdiction and such adjudication is no longer subject to direct appeal.

Section 2 - Directors - Classification. The Board of Directors shall be divided into three classes so that there shall be an annual election for such number or proportion of directors as may be found upon dividing the entire number of directors by the number of years composing a term; provided, however, that at the first meeting of the shareholders of the corporation following the adoption of this amended bylaw, approximately one-third of the directors, to be known as "Class A", shall be elected for a term of office, such term of such Class expiring at the next following annual meeting of the shareholders; approximately one-third of the directors, to be known as "Class B", shall be elected for a term of office, such term of such Class expiring at the second following annual meeting of the shareholders; and approximately one-third of the directors, to be known as "Class C", shall be elected for a term of office, such term of such Class expiring at the third following annual meeting. If the number of direct ors is not evenly divisible into three classes, the Board of Directors shall determine which of the three classes shall have a number of members differing from the other two classes. At each subsequent annual meeting of shareholders, the successors to the Class of directors whose terms shall expire at that meeting shall be elected to hold office for a term expiring at the third succeeding annual meeting of shareholders. If the number of directors is changed, any newly created directorship or any decrease in directorships shall be apportioned among the classes so as to make all classes as nearly equal in number as possible; provided, that no decrease in the Board shall shorten the term of any incumbent director.

A director elected by the Board to fill a vacancy shall hold office for the unexpired portion of the term of the director whose place he has been elected to fill, which term may extend beyond the next succeeding annual meeting of shareholders following the election of such director.

Section 3 - Directors - Employment Qualifications. "Inside director" shall be defined as any director who is also at that time an employee of the corporation, or any subsidiary thereof. The term of office of any person serving as an "inside director" shall cease immediately upon termination of employment with the corporation and all subsidiaries thereof for any reason.

Section 4 - Powers of the Board. The property and business of the corporation shall be controlled and managed by the directors, acting as a Board. The Board shall have and is vested with all and unlimited powers and authorities, except as may be expressly limited by law, the Articles of Incorporation or these Bylaws, to do or cause to be done any and all lawful things for and in behalf of the corporation, to exercise or cause to be exercised any or all of its powers, privileges, and franchises, and to seek the effectuation of its objects and purposes.

Section 5 - Regular Meetings. Regular meetings of the Board of Directors shall be held following the adjournment of the Annual Meeting of the Shareholders on the same date and in the months of February, August and November of each year; provided, however, that at any regular meeting, special meeting or by action taken by written consent of all Directors, severally or collectively, without a meeting, the Board of Directors may set a date in some other month for the next succeeding regular meeting. The regular meetings shall be at a time set by notice mailed or telegraphed to each director at least two days prior thereto. Notice of any regular meeting of the Board of Directors may be waived in writing or by telegram before or after the meeting and attendance of a director at a meeting shall be deemed a waiver of notice except where a director attends a meeting for the express purpose of objecting to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular meeting of the Board of Directors need be specified in the notice or waiver of notice of a meeting. Any business may be transacted at a regular meeting.

Section 6 - Special Meetings. Special meetings of the Board of Directors shall be held at such time and place as is specified in the notice of such meeting and shall be called by the chairman of the board, the president, the secretary, any vice president, or a majority of the entire Board of Directors. Notice of any such meeting shall be given personally or by mail or telegram to each member of the Board at least two hours prior to the scheduled time of the meeting, but such notice may be waived in writing or by telegram either before or after the meeting, and attendance at the meeting by any director shall be deemed a waiver of such notice.

Special meetings of the Board of Directors may be held by means of telephone conferences or equipment of similar communications by means of which all directors participating in the meeting can hear each other. Participating in a meeting by telephone or similar communications equipment shall constitute presence in person at the special meeting, except where a director participates in a meeting for the sole purpose of objecting to the transaction of any business on the ground that the special meeting is not lawfully convened or called.

Section 7 - Quorum. A majority of the full Board of Directors shall constitute a quorum for the transaction of business, but less than a quorum may adjourn from time to time until a quorum is obtained. The act of the majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors.

Section 8 - Action without a Meeting. If all the directors severally or collectively consent in writing to any action to be taken by the directors, such consents shall have the same force and effect as a unanimous vote of the directors at a meeting duly held. The secretary shall file such consents with the minutes of the meetings of the Board of Directors.

Section 9 - Consulting Directors. The Board of Directors may appoint to the office of consulting director any person whose abilities and interest in the corporation, in the opinion of the Board, qualify him to render service to the Board. Such consulting directors may receive notice of and attend meetings of the Board of Directors, shall have no vote in the affairs of the corporation and shall not be counted for the purposes of determining a quorum or majority of the Board for any purpose. Such consulting directors shall serve in an advisory capacity to the Board of Directors only and no action of the Board shall be invalid because of the failure of any such consulting director to receive notice of or to attend any meeting of the Board or to be informed of or to approve of any action taken by the Board of Directors.

Section 10 - Executive Committee. The Board of Directors may, by resolution or resolutions adopted by a majority of the whole Board of Directors, designate an executive committee, such committee to consist of two or more directors of the corporation, which committee, to the extent provided in said resolution or resolutions, shall have and may exercise all of the authority of the Board of Directors in the management of the corporation; provided, however, that the designation of such committee and the delegation thereto of authority shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility imposed upon it or him by law.

The executive committee shall keep regular minutes of its proceedings, which minutes shall be recorded in the minutes of the corporation. The secretary or an assistant secretary of the corporation may act as secretary for the committee if the committee so requests.

Section 11 - Other Committees. The Board of Directors shall appoint an Audit Committee and fix its duties, and may from time to time appoint and fix the duties of such additional committees as they, in their discretion, shall deem necessary or advisable for the proper operation of the corporation, including a committee or committees which shall have authority to approve salaries and increases in salaries for elected officers of the corporation.

Section 12 - Compensation of Directors and Committee Members. Each director, as such, shall be entitled to receive reimbursement for his reasonable expenses incurred in attending meetings of the Board of Directors or any committee thereof or otherwise in connection with his attention to the affairs of the corporation. In addition, each director, who is not at the time a regularly compensated officer or employee of the corporation or any of its subsidiaries, shall be entitled to such fee for his services as a director (and if a member of any committee of the Board of Directors, such fee for his services as such member) as may be fixed from time to time by the Board of Directors. Such fees may be fixed both for meetings attended and on an annual basis, or either thereof, and may be payable currently or deferred. Nothing herein contained shall be construed to preclude any director or committee member from serving the corporation or any of its subsidiaries in any other capacity and receiving compensation ther efor.

ARTICLE III - OFFICERS

Section 1 - Officers - Who shall Constitute. The officers of the corporation shall be a chairman of the board, a president, one or more vice presidents, a secretary and a treasurer. The Board shall elect or appoint a president and secretary at its annual meeting held after each annual meeting of the shareholders. The Board then, or from time to time, may also elect or appoint one or more of the other prescribed officers or any other officers as it shall deem advisable, but need not elect or appoint any officers other than a president and a secretary. The Board may, if it desires, further identify or describe any one or more of such officers.

The officers of the corporation need not be members of the Board of Directors. Any two or more offices may be held by the same person, except the office of president and secretary.

An officer shall be deemed qualified when he enters upon the duties of the office to which he has been elected or appointed and furnishes any bond required by the Board; but the Board may also require of such person his written acceptance and promise faithfully to discharge the duties of such office.

Section 2 - Term of Office. Each officer of the corporation shall hold his office at the pleasure of the Board of Directors or for such other period as the Board may specify at the time of his election or appointment or until his death, resignation or removal by the Board, whichever first occurs. In any event, the term of office of each officer of the corporation holding his office at the pleasure of the Board shall terminate at the annual meeting of the Board next succeeding his election or appointment and at which any officer of the corporation is elected or appointed, unless the Board provides otherwise at the time of his election or appointment.

Section 3 - Removal. Any officer or agent elected or appointed by the Board of Directors, and any employee, may be removed or discharged by the Board whenever in its judgment the best interests of the corporation would be served thereby, but such removal shall be without prejudice to the contract rights, if any, of the person so removed.

Section 4 - Salaries and Compensation. Salaries and compensation of all elected or appointed officers and of all employees of the corporation shall be fixed, increased or decreased by the Board of Directors, but this power (except as to the salary or compensation of the chairman of the board and the president) may, unless prohibited by law, be delegated by the Board to the chairman of the board, the president, a committee or such other officer or officers as the Board may find convenient to so empower.

Section 5 - Delegation of Authority to Hire, Discharge and Designate Duties. The Board may, from time to time, delegate to the chairman of the board, the president or other officer or executive employees of the corporation, authority to hire, discharge and fix and modify the duties, salary or other compensation of employees of the corporation under their jurisdiction, and the Board may delegate to such officer or executive employee similar authority with respect to obtaining and retaining for the corporation the services of attorneys, accountants and other experts.

Section 6 - The Chairman of the Board. If a chairman of the board be elected or appointed, he shall, except as otherwise provided for in these Bylaws, preside at all meetings of the directors at which he may be present and shall have such other duties, powers and authority as may be prescribed elsewhere in these Bylaws. The Board of Directors may delegate such other authority and assign such additional duties to the chairman of the board, other than those conferred by law exclusively upon the president as it may from time to time determine, and, to the extent permissible by law, the Board may designate the chairman of the board as the chief executive officer of the corporation under these Bylaws, or it may, from time to time, divide the responsibilities, duties and authority for the general control and management of the corporation's business and affairs between the chairman of the board and the president.

Section 7 - The President. Unless the Board otherwise provides, the president shall be the chief executive officer of the corporation with such general executive powers and duties of supervision and management as are usually vested in the office of the chief executive officer of a corporation and he shall carry into effect all directions and resolutions of the Board. Except as otherwise provided for in these Bylaws, the president shall preside at all meetings of the shareholders. In the absence of the chairman of the board, or if there be no chairman of the board, the president also shall preside at all meetings of the Board of Directors.

The president may execute all bonds, notes, debentures, mortgages, and other contracts requiring a seal, under the seal of the corporation, and may cause the seal to be affixed thereto, and may also execute any and all other instruments for and in the name of the corporation.

Unless the Board otherwise provides, the president, or any person designated in writing by him, may (i) attend meetings of shareholders of other corporations to represent this corporation thereat and to vote or take action with respect to the shares of any such corporation owned by this corporation in such manner as he or his designee may determine, and (ii) execute and deliver waivers of notice and proxies for and in the name of the corporation with respect to any such shares owned by this corporation.

He shall, unless the Board otherwise provides, be ex officio a member of all standing committees.

If a chairman of the board be elected or appointed and designated as the chief executive officer of the corporation, as provided in these Bylaws, the president shall perform such duties as may be specifically delegated to him by the Board of Directors and as are conferred by law exclusively upon him, and in the absence, disability or inability to act of the chairman of the board, the president shall perform the duties and exercise the powers of the chairman of the board.

Section 8 - Vice Presidents. The vice presidents in the order of their seniority, as determined by the Board, shall, in the absence, disability or inability to act of the president, perform the duties and exercise the powers of the president, and shall perform such other duties as the Board of Directors shall from time to time prescribe.

Section 9 - The Secretary and Assistant Secretaries. The secretary shall attend all meetings of the shareholders, and shall record or cause to be recorded all votes taken and the minutes of all proceedings in a minute book of the corporation to be kept for that purpose. He shall perform like duties for the executive and other standing committees when purpose. He shall perform like duties for the executive and other standing committees when requested by the Board or any such committee to do so.

He shall see that all books, records, lists and information, or duplicates required to be maintained at the principal office for the transaction of the business of the corporation in Missouri, or elsewhere, are so maintained.

He shall keep in safe custody the seal of the corporation, and when duly authorized to do so, shall affix the same to any instrument requiring it, and when so affixed, he shall attest the same by his signature.

He shall perform such other duties and have such other authority as may be prescribed elsewhere in these Bylaws or from time to time by the Board of Directors or the chief executive officer of the corporation, under whose direct supervision he shall be.

He shall have the general duties, powers and responsibilities of a secretary of the corporation.

Any assistant secretary, in the absence, disability or inability to act of the secretary, may perform the duties and exercise the powers of the secretary, and shall perform such other duties and have such other authority as the Board of Directors may, from time to time, prescribe.

Section 10 - The Treasurer and Assistant Treasurers. The treasurer shall have responsibility for the safekeeping of the funds and securities of the corporation, shall keep or cause response to be kept full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall keep, or cause to be kept, all other books of account and accounting records of the corporation. He shall deposit or cause to be deposited all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the board of directors or by any officers of the corporation to whom such authority has been granted by the Board of Directors,

He shall disburse, or permit to be disbursed, the funds of the corporation as may be ordered, or authorized generally, by the Board, and shall render to the chief executive officer of the corporation and the directors whenever they may require it, an account of all his transactions as treasurer and of those under his jurisdiction, and of the financial condition of the corporation.

He shall perform such other duties and shall have such other responsibility and authority as may be prescribed elsewhere in these Bylaws or from time to time by the Board of Directors.

He shall have the general duties, powers and responsibility of a treasurer of a corporation, and shall, unless otherwise provided by the Board, be the chief financial and accounting officer of the corporation.

Any assistant treasurer, in the absence, disability or inability to act of the treasurer, may perform the duties and exercise the powers of the treasurer, and shall perform such other duties and have such other authority as the Board of Directors may, from time to time, prescribe.

Section 11 - Duties of Officers may be Delegated. If any officer of the corporation be absent or unable to act, or for any other reason that the Board may deem sufficient, the Board may delegate, for the time being, some or all of the functions, duties, powers and responsibilities of any officer to any other officer, or to any other agent or employee of the corporation or other responsible person, provided a majority of the whole Board of Directors concurs therein.

ARTICLE IV

INDEMNIFICATION AND LIABILITY OF

DIRECTORS, OFFICERS AND EMPLOYEES

Section 1 - Indemnification. A. Each person who is or was a director, officer or employee of the corporation or is or was serving at the request of the corporation as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise (including the heirs, executors, administrators or estate of such person) shall be indemnified by the corporation as of right to the full extent permitted or authorized by the laws of the State of Missouri, as now in effect and as hereafter amended, against any liability, judgment fine, amount paid in settlement, cost and expense (including attorneys' fees) asserted or threatened against and incurred by such person in his capacity as or arising out of his status as a director, officer, or employee of the corporation or, if serving at the request of the corporation, as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise. The indemnification provided by this Bylaw provision shall not be exclusive of any other rights to which those indemnified may be entitled under any other bylaw or under any agreement, vote of shareholders or disinterested directors or otherwise, and shall not limit in any way any right which the corporation may have to make different or further indemnifications with respect to the same or different persons or classes of persons.

B. Without limiting the foregoing, the corporation is authorized to enter into an agreement with any person who is a director, officer or employee of the corporation, or is serving at the request of the corporation as a non-employee director of another corporation, partnership, joint venture, trust or other enterprise, providing indemnification for such person against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement that result from any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, including any action by or in the right of the corporation, that arises by reason of the fact that such person is or was a director, officer or employee of the corporation, or, if not a director, officer or employee of the corporation, is or was serving at the request of the corporation as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise, or as a non-employee d irector of another corporation, partnership, joint venture, trust or other enterprise, to the full extent allowed by law, whether or not such indemnification would otherwise be provided for in this Bylaw, except that no such agreement shall indemnify any person from or on account of such person's conduct which was finally adjudged to have been knowingly fraudulent deliberately dishonest or willful misconduct.

C. For the purposes of Section 1B of Article IV, any person who is a director, officer or employee of the corporation who shall serve as a director, officer or employee of another corporation, partnership joint venture, trust or other enterprise, more than 50% of the voting stock of which is owned by the corporation, and any other person who shall serve as a non-employee director of. another corporation, partnership, joint venture, trust or other enterprise, more than 50% of the voting of stock of which is owned by the corporation, shall be deemed to be serving in such capacity at the request of the corporation, unless the Board of Directors of the corporation shall determine otherwise. In all other instances where any person shall serve as a director or officer of another corporation, joint venture, trust or other enterprise of which the corporation is or was a shareholder or creditor, or in which it is or was otherwise interested, if it is not otherwise established that such person is or was serving as such director or officer at the request of the corporation, the Board of Directors of the corporation may determine whether such service is or was at the request of the corporation, and it shall not be necessary to show any actual or prior request for such service. A person is a "non-employee director" of a corporation, partnership, joint venture, trust or other enterprise if he or she is a director, but not an employee of such corporation, partnership, joint venture, trust or other enterprise.

Section 2 - Insurance. The corporation may purchase and maintain insurance on behalf of any person who is or was a director, officer or employee of the corporation, or is or was serving at the request of the corporation as a director, officer or employee of another corporation, partnership, joint venture, trust or other enterprise, against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liability under the provisions of these Bylaws.

Section 3 - Liability. No person shall be liable to the corporation for any loss, damage, liability or expense suffered by it on account of any action taken or omitted to be taken by him as a director, officer or employee of the corporation or of any other corporation which he serves as a director, officer or employee at the request of the corporation, if such person (i) exercised the same degree of care and skill as a prudent man would have exercised under the circumstances in the conduct of his own affairs, or (ii) took or omitted to take such action in reliance upon advice of counsel for the corporation, or for such other corporation, or upon statements made or information furnished by directors, officers, employees, or agents of the corporation. or of such other corporation which he had no reasonable grounds to disbelieve.

ARTICLE V - CAPITAL STOCK

Section 1 - Issuance of Certificates. Shares of the capital stock of the corporation may be represented by entry on the stock record or transfer books of the corporation and need not be represented by certificates. When shares of stock of the corporation are represented by certificates, such certificates shall be numbered, shall be in such form as may be prescribed by the Board of Directors in conformity with law, and shall be entered in the stock books of the corporation as they are issued. Such entries shall show the name and address of the person, firm, partnership, corporation or association to whom each certificate is issued. Each certificate shall have printed, typed or written thereon the name of the person, firm, partnership, corporation or association to whom it is issued and the number of shares represented thereby. It shall be signed by at least one of either the Chairman of the Board, the President or a Vice President and also by one of either the Secretary or an Assistant Secretary or the Treasurer or an Assistant Treasurer of the corporation, and shall be sealed with the seal of the corporation, which seal may be facsimile, engraved or printed. If the corporation has a transfer agent or a transfer clerk who signs such certificates, the signatures of the Chairman of the Board or any of the officers above mentioned may be facsimile, engraved or printed. In case the Chairman of the Board or any officer who has signed or whose facsimile signature has been placed upon any such certificate shall have ceased to hold the position or office specified on the certificate before such certificate is issued, such certificate may nevertheless be issued by the corporation with the same effect as if the individual held the position or office at the date of its issue.

Section 2 - Transfers of Shares - Transfer Agent -Registrar. Transfers of shares of stock shall be made on the stock record or transfer books of the corporation only by the person named in the stock certificate, or by his attorney lawfully constituted in writing, and upon surrender of the certificate therefor. The stock record book and other transfer records shall be in the possession of the secretary or of a transfer agent or transfer clerk for the corporation. The corporation, by resolution of the Board, may from time to time, appoint a transfer agent or transfer clerk, and, if desired, a registrar, under such arrangements and upon such terms and conditions as the Board deems advisable, but until and unless the Board appoints some other person, firm or corporation as its transfer agent or transfer clerk (and upon the revocation of any such appointment, thereafter until a new appointment is similarly made), the secretary of the corporation shall be the transfer agent or transfer clerk of the corporation without the necessity of any formal action of the Board, and the secretary, or any person designated by him, shall perform all of the duties thereof.

Section 3 - Lost Certificates. In case of the loss or destruction of any certificate for shares of stock of the corporation, another may be issued in its place upon proof of such loss or destruction and upon the giving of a satisfactory bond of indemnity to the corporation and the transfer agent and registrar of such stock, if any, in such sum as the Board of Directors may provide; provided, however, that a new certificate may be issued without requiring a bond when, in the judgment of the Board, it is proper so to do.

Section 4 - Regulations. The Board of Directors shall have power and authority to make all such rules and regulations as it may deem expedient concerning the issue, transfer, conversion and registration of and all other rights pertaining to certificates for shares of stock of the corporation, not inconsistent with the laws of Missouri, the Articles of Incorporation or these Bylaws.

ARTICLE VI

ADVANCE NOTICE OF SHAREHOLDER NOMINATIONS

AND SHAREHOLDER PROPOSALS

Section 1 - Who May Nominate. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the corporation at any meeting of shareholders at which directors are to be elected. Nominations of persons for election to the Board of Directors may be made at any such meeting of shareholders (i) by or at the direction of the Board of Director (or any duly authorized committee thereof) or (ii) by any shareholder of record of the corporation who would be entitled to vote in the election of directors at such meeting held on the date of such shareholder's nomination and who complies with the notice procedures set forth in Section 2. If such shareholder ceases to be a shareholder entitled to vote for elections of directors prior to the record date for the meeting at which the nomination would arise, the nomination shall be deemed to be withdrawn.

Section 2 - Shareholder Nominations. If a shareholder proposes to nominate one or more candidates for election as directors at a meeting of shareholders at which directors are to be elected, the shareholder must give timely notice thereof in proper written form to the Secretary of the corporation, in addition to complying with any other applicable requirements. To be timely, the shareholder's notice must be delivered to the Secretary at the principal executive offices of the corporation not less than ninety days prior to the date scheduled for such meeting; provided, however, that if notice or public announcement of the scheduled date of the meeting is not given or made at least one hundred (100) days prior to the date scheduled for the meeting, such shareholder's notice must be so delivered to the Secretary not more than ten (10) days following the day on which such notice of meeting was mailed or such public announcement was made, whichever is earlier. In no event shall the postponement, deferral or adj ournment of a shareholders' meeting commence a new time period for the giving of notice by a shareholder as described above. For purposes of this Section, "public announcement" shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press or comparable national news service or in a document publicly filed by the corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the Exchange Act.

To be in proper written form, a shareholder's notice to the Secretary must set forth (i) as to each person whom the shareholder proposes to nominate for election as a director (A) the name, age, business address and residence address of the person, (B) the principal occupation or employment of the person, (C) the class and number of shares of capital stock of the corporation that are owned beneficially and owned of record by the person and (D) any other information concerning the person that would be required to be disclosed in a proxy statement or other filings in connection with the solicitation of proxies for the election of such person as a director under Section 14 of the Securities Exchange Act of 1934, as amended from time to time (the "Exchange Act"), and the rules and regulations promulgated thereunder; and (ii) as to the shareholder giving , the notice (A) the name and address, as they appear on the corporation's books, of such shareholder, (B) the name and address of the beneficial owner, if an y, on whose behalf the nomination(s) are made, (C) the class and number of shares of capital stock of the corporation that are owned beneficially and owned of record by such shareholder and any such beneficial owner, (D) a description of all arrangements or understandings between such shareholder or beneficial owner and each proposed nominee or any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such shareholder and (E) any other information relating to such shareholder or beneficial owner that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for the election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected.

Section 3 - Shareholder Proposals. If a shareholder proposes to bring business before an annual meeting of shareholders, the shareholder must give timely notice thereof in proper written form to the Secretary of the corporation, in addition to complying with any other applicable requirements. To be timely, a shareholder's notice must be delivered to the Secretary at the principal executive offices of the corporation within the period specified in Section 2 of this Article. In no event shall the postponement, deferral or adjournment of a shareholders' meeting commence a new time period for the giving of notice by a shareholder. To be in proper written form, a shareholder's notice to the Secretary must set forth (i) a brief description of the proposal desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, (ii) the name and address, as they appear on the corporation's books, of such shareholder, (iii) the name and address of the beneficial owner, if any, on whose behalf of proposal is made, (iv) the class and number of shares of capital stock of the corporation that are owned beneficially and owned of record by such shareholder and any such beneficial owner, (v) a description of all arrangements or understandings between such shareholder or beneficial owner and any other person or persons (including their names) in connection with the proposal of such business by such shareholder, (vi) a description of any material financial or other interest of such shareholder or beneficial owner in such proposal and (vii) any other information that would be required to be disclosed in a proxy statement soliciting proxies for approval of the proposal pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder.

Section 4 - Additional Information. The Board of Directors, or a designated committee thereof, may reject any shareholder's nomination or shareholder's proposal which is not timely made in accordance with the provisions of this Article VI. If the Board of Directors, or a designated committee thereof, determines that the information provided in a shareholder's notice does not comply with the requirements of this Article VI in any material respect, the Secretary of the corporation shall notify the shareholder of the deficiency. The shareholder shall have an opportunity to cure the deficiency by providing additional information to the Secretary within five (5) days from the date such deficiency notice is given to the shareholder, or such shorter time as may reasonably be deemed appropriate by the Board or committee. If the deficiency is not cured within such period, or if the Board of Directors or such committee determines that the additional information provided by the shareholder, together with the informa tion previously provided, does not satisfy the requirements of this Article VI in any material respect, then the Board of Directors or committee may reject such shareholder's notice.

Section 5 - Determinations. Notwithstanding the procedures set forth in
Section 4 of this Article hereof, if the Board of Directors or any committee thereof does not make a determination as to whether a shareholder's notice complies with the provisions of this Article VI, the presiding officer of the meeting shall make the determination and declare at the meeting whether the shareholder has so complied. If the presiding officer determines that the shareholder has not so complied, then unless the presiding officer in his or her sole and absolute discretion waives such noncompliance, the presiding officer shall declare at the meeting that the shareholder's nomination or proposal was not properly made and the defective nomination or shareholder proposal shall be disregarded.

ARTICLE VII - GENERAL

Section 1 - Fixing of Capital - Transfers of Surplus. Except as may be specifically otherwise provided in the Articles of Incorporation, the Board of Directors is expressly empowered to exercise all authority conferred upon it or the corporation by any law or statute, and in conformity therewith, relative to:

A. the determination of what part of the consideration received for shares of the corporation shall be stated capital;

B. increasing stated capital;

C. transferring surplus to stated capital;

D. the consideration to be received by the corporation for its shares; and

E. all similar or related matters

provided that any concurrent action or consent by or of the corporation and its shareholders required to be taken or given pursuant to law, shall be duly taken or given in connection therewith.

Section 2 - Dividends. Dividends upon the outstanding shares of the corporation, subject to the provisions of the Articles of Incorporation and of any applicable law, may be declared by the Board of Directors at any meeting. Dividends may be paid in cash, in property, or in shares of the corporations stock.

Liquidating dividends or dividends representing a distribution of paid-in surplus or a return of capital shall be made only when and in the manner permitted by law.

Section 3 - Checks. All checks and similar instruments for the payment of money shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. If no such designation is made, and unless and until the Board otherwise provides, the president and secretary or the president and treasurer, shall have power to sign all such instruments for, in behalf and in the name of the corporation which are executed or made in the ordinary course of the corporation's business.

Section 4 - Records. The corporation shall cause to be maintained either at its principal place of business or at the offices of a duly appointed stock transfer agent and registrar, books in which shall be recorded the number of its shares subscribed, the names of the owners of its shares, the numbers owned of record by them, respectively, the amount of shares paid, and by whom, and the transfer of said shares with the date of transfer. The corporation shall also keep at its principal place of business records indicating the amount of its assets and liabilities and the names and places of residence of its officers, and from time to time such other or additional records, statements, lists and information as may be required by law, including shareholders' lists.

Section 5 - Inspection of Records. A shareholder, if he be entitled and demands to inspect the records of the corporation pursuant to any statutory or other legal right, shall be privileged to inspect such records only during the usual and customary hours of business and in such manner as will not unduly interfere with the regular conduct of the business of the corporation. A shareholder may delegate his right of inspection to a certified public accountant on the condition, to be enforced at the option of the corporation, that the shareholder and accountant agree with the corporation to furnish to the corporation promptly a true and correct copy of each report with respect to such inspection made by such accountant. No shareholder shall use, permit to be used or acquiesce in the use by others of any information so obtained to the competitive detriment of the corporation, nor shall he furnish or permit to be furnished any information so obtained to any competitor or prospective competitor of the corporatio n. The corporation, as a condition precedent to any shareholder's inspection of the records of the corporation, may require the shareholder to indemnify the corporation, in such manner and for such amount as may be determined by the Board of Directors, against any loss or damage which may be suffered by it arising out of or resulting from any unauthorized disclosure made or permitted to be made by such shareholder of information obtained in the course of such inspection.

Section 6 - Corporate Seal. The corporate seal shall have inscribed thereon the name of the corporation and the words: Corporate Seal - Missouri. Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced.

Section 7 - Amendments. The Bylaws of the corporation may, from time to time, be suspended, repealed, amended or altered, or new Bylaws may be adopted, in the manner provided in the Articles of Incorporation.

EX-10

Exhibit 10.17

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Agreement"), made and entered into as of the 8^th day of November, 2004, by and between LabOne, Inc., a Missouri corporation ("LabOne"), and Kent McAllister, ("Employee").

WITNESSETH:

WHEREAS, LabOne and its affiliates provide clinical laboratory testing, substance abuse laboratory testing, insurance risk assessment and related information management services ("LabOne Business");

WHEREAS, in accordance with the terms and provisions of this Agreement, LabOne desires to employ Employee to obtain the benefit of his substantial knowledge of and experience in management of information technology for the benefit of its LabOne Business, and Employee desires to be employed by LabOne; and

WHEREAS, LabOne and Employee agree that the restrictive covenants and confidentiality agreements contained in this Agreement are essential to the growth and stability of the LabOne Business, and to the continuing viability of the LabOne Business in the event the employment of Employee is terminated;

NOW, THEREFORE, in consideration of LabOne's agreement to employ Employee and the mutual promises herein contained, the parties hereto agree as follows:

1. Employment. LabOne hereby agrees to employ Employee, and Employee hereby agrees to accept such employment and to perform his duties and obligations hereunder, in accordance with the terms and conditions hereinafter set forth.

2. Term. The term of Employee's employment pursuant to this Agreement shall commence on November 8, 2004, and shall continue for a period of two (2) years thereafter ("Base Term"), or until terminated in accordance with the provisions of Section 12 hereof.

3. Duties and Responsibilities. Employee shall serve as Senior Vice President and Chief Information Officer and, subject to the approval of the LabOne Board of Directors, as Executive Vice President and Chief Information Officer. In such capacities, Employee will have responsibility for leadership, management and oversight of information technology at LabOne, will provide strategic insight and direction on such matters to the executive management of LabOne, and will serve as a resource for the internal and external customers who rely on information technology for operational and business development success. Employee shall report directly to the Chief Operating Officer, shall serve in such other management capacities as the President, Chief Operating Officer, or Board of Directors of LabOne may from time to time prescribe, shall perform all duties and responsibilities incidental to such positions, and shall cooperate fully with the Board of Directors and executive officers of LabOne. Employee shall devote his complete loyalty to LabOne and its affiliates and all of his business time, attention and energy to the performance of the foregoing duties and responsibilities.

4. Base Salary. During the term of Employee's employment pursuant to this Agreement, LabOne shall pay Employee an annual base salary of $210,000.00, or such other amount, as may from time to time be determined by LabOne, paid bi-weekly in arrears.

5. Stock Option. Subject to the approval of the Executive Compensation Committee of the Board of Directors of LabOne, Employee is granted under the LabOne 2001 Long-Term Incentive Plan ("the Plan") a non-qualified stock option for thirty five thousand (35,000) shares of common stock of LabOne, at an exercise price equal to the Closing Price (as defined in Section 1.6.7 of the Plan) of the common stock on the business day immediately prior to the day the Executive Compensation Committee of LabOne approves the issuance of the stock option. Said stock option shall be subject to the terms and conditions of, and the execution by Employee of, a Stock Option Agreement in substantially the form currently used for grants to other officers under the Plan.

6. Incentive Bonuses and Other Benefits.

(a) Sign-On Bonus. LabOne shall pay Employee twenty thousand dollars ($20,000) on or before December 1, 2004 in conjunction with his commencement of Employment with LabOne. In the event Employee is terminated for cause or voluntarily terminates employment with LabOne within the Base Term of the Agreement, Employee promptly shall reimburse LabOne for said $20,000.

(b) Annual Incentive Compensation. Commencing in 2005, Employee shall be eligible to participate in LabOne's annual incentive compensation program, as the same is maintained from time to time, at a potential incentive level equal to 50% of Employee's base salary.

(c) Other Fringe Benefits. Employee shall be entitled to participate, after applicable eligibility periods, in such fringe benefit and incentive programs as LabOne may make available from time to time to its executive officers generally, including medical and dental insurance coverage, long-term disability insurance, pension plan, matching 401K contributions, section 125 cafeteria plan, group term life insurance, and annually four (4) weeks paid vacation which if unused may not be carried over to subsequent years.

(d) Car Allowance. Employee shall be entitled to a car allowance of $300 per calendar month.

7. Inventions. For purposes of this paragraph 7 and the following paragraphs 8 through 11 "LabOne" whenever used shall mean LabOne and its affiliates. Affiliates are those entities from time to time controlling, controlled by, or under common control with LabOne and/or its successors and assigns. All inventions, products, discoveries, improvements, processes, manufacturing, marketing and service methods and techniques, formulae, design, styles, specifications, databases, computer programs (whether in source code or object code), know-how, strategies and data, whether or not patentable or registerable under copyright or similar statutes, made, developed or created by Employee (whether or not at the request or suggestion of LabOne, alone or in conjunction with others, and whether during regular hours at work or otherwise) during Employee's period of employment with LabOne (collectively, "Inventions"), shall be promptly and fully disclosed by Employee to an ap propriate executive of LabOne. Employee hereby assigns, transfers and conveys to LabOne all rights in and to all Inventions as its exclusive property. Employee shall give evidence and promptly execute and/or deliver to an appropriate executive of LabOne, without any additional compensation therefor, all papers, drawings, models, programs, data documents and other material:

(a) pertaining to or in any way relating to or evidencing any Inventions, or

(b) necessary or desirable to document such transfer, or to enable LabOne to file and process applications for and to acquire, maintain and enforce any and all patents, trademarks, registrations or copyrights with respect to any such Inventions, or to obtain any extension, validation, reissue, continuance or renewal of any such patent, trademark or copyright.

LabOne will be responsible for the preparation of any such instruments, documents and papers and for the implementation of any such proceedings and will reimburse Employee for all reasonable expenses incurred by Employee in complying with the provisions of this Section. EMPLOYEE IS HEREBY NOTIFIED THAT the provisions of this Section 7 shall not apply to an Invention for which no equipment, supplies, facility or trade secret information of LabOne was used and which was developed entirely on Employee's own time, unless:

(i) the Invention relates directly to the Lab Business or to LabOne's actual or demonstratively anticipated research or development, or

(ii) the Invention results from any work performed by Employee for LabOne.

8. Property of LabOne. All correspondence, notes, recordings, documents, customer lists and other materials and reproductions thereof pertaining to any aspect of the business of LabOne shall be the property of and shall be delivered to and retained by LabOne upon termination of Employee's employment pursuant to this Agreement.

9. Confidentiality. During the term of and at any time after the termination of his employment pursuant to this Agreement, Employee will hold in trust and confidence, will not divulge, disclose or convey to any person, firm, corporation or other entity and will keep secret and confidential all trade secrets, proprietary information and confidential information heretofore or hereafter acquired by him concerning LabOne, and will not use the same for himself or others in any manner, except to the extent that such information should become no longer a trade secret, proprietary or confidential. Such trade secrets, proprietary information and confidential information shall be deemed to include, but shall not be limited to, information, whether written or not:

(a) of a technical nature, such as but not limited to, technology, inventions, discoveries, improvements, processes, formulae, ideas, know-how, methods, compositions, computer software programs or research projects, including the identity of research organizations and researchers,

(b) of a business nature, such as but not limited to information concerning costs, profits, margins or losses, supplies, suppliers, marketing, sales or customers, and

(c) pertaining to future developments, such as but not limited to information concerning research and development or future marketing plans and methods.

10. Restrictive Covenants. In consideration for Employee's employment with LabOne and in further consideration of the compensation provided to Employee hereunder and the post-termination payments, if any, provided for in Section 12 hereof, Employee agrees that during the term of his employment pursuant to this Agreement, and for a period of two (2) years after the termination for any reason of his employment pursuant to this Agreement, Employee will not, without the prior written consent of LabOne, directly or indirectly, individually or in concert with others, or through the medium of any other corporation, partnership, syndicate, association, joint venture, or other entity or as an employee, officer, director, agent, consultant, partner, member or otherwise:

(a) solicit, accept, divert or service, or attempt to solicit, accept, divert or service, any business similar to the type and character of business then engaged by LabOne from any person or other entity that was as of the date of the termination of Employee's employment, or at any time within three (3) months of such date, a customer of LabOne,

(b) solicit, induce or encourage any employee, contractor or agent of LabOne to terminate employment or other relationship with LabOne, to compete with LabOne in any manner, or to provide similar services to a competitor of LabOne, or

(c) provide services to any person or other entity that competes with LabOne, or otherwise compete with LabOne in the LabOne Business or in any other business conducted by LabOne at the date of termination of Employee's employment.

It is understood and agreed that Section 10(c) shall apply only with respect to the following geographic areas: The territory in which LabOne or its representatives or agents, as of the date of the termination of Employee's employment pursuant hereto, sells or offers for sale LabOne's products or services.

11. Judicial Relief. LabOne and Employee agree that in the event that any court shall finally hold that any provision of Section 10 of this Agreement is void or constitutes an unreasonable restriction against Employee, the provisions of Section 10 shall not be rendered void, but shall apply with respect to such time or territory or to such other extent as such court may judicially determine or indicate constitutes a reasonable restriction under the circumstances. LabOne shall be entitled to appropriate injunctive relief in any court of competent jurisdiction to enforce its rights under Sections 7, 8, 9 and 10 of this Agreement, in addition to any other rights and remedies available to LabOne at law or in equity, it being agreed that any violation of Sections 7, 8, 9 or 10 of this Agreement by Employee is reasonably likely to cause irreparable damage to LabOne which will be difficult or impossible to value in monetary damages.

12. Termination. Employee's employment pursuant to this Agreement shall terminate upon the occurrence of any of the following events:

(a) Death. In the event that Employee dies during the term of this Agreement, LabOne shall pay to his executors or administrators an amount equal to the installments of his salary payable for the month in which he dies and any incentive compensation which may accrue during such month, and thereafter, LabOne shall have no further liability or obligation hereunder to his executors, heirs or assigns or any other person claiming under or through him.

(b) Disability. In the event that Employee continues to be unable to fully perform his duties and responsibilities hereunder by reason of illness, injury or mental or physical disability or incapacity for ninety (90) consecutive days, during which time he shall continue to be paid salary as provided in Section 4 hereof and any incentive compensation which may accrue during such months, Employee's employment pursuant to this Agreement may be terminated by LabOne, and LabOne shall thereafter have no further liability or obligation hereunder to Employee. Employee agrees in the event of any dispute under this Section to submit to a physical examination by a licensed physician selected by LabOne and to accept LabOne's decision based on the results thereof.

(c) Voluntary Termination. Employee's employment may be voluntarily terminated by Employee giving thirty (30) days' prior written notice to LabOne, during which time he shall continue to be paid salary as provided in Section 4 hereof through the date of termination and any incentive compensation which may accrue to the date of termination, and LabOne shall thereafter have no further liability or obligation hereunder to Employee.

(d) Termination for Cause. Employee's employment may be involuntarily terminated by LabOne at any time for cause. In the event that Employee is involuntarily terminated by LabOne for cause, LabOne shall pay Employee's salary as provided in Section 4 hereof through the date of termination and any incentive compensation which may accrue to the date of the termination, and LabOne shall thereafter have no further liability or obligation hereunder to Employee.

(e) Termination Without Cause. Employee's employment may be involuntarily terminated by LabOne at any time without cause by LabOne giving thirty (30) days' prior written notice to Employee. In the event that Employee is involuntarily terminated without cause during the Base Term of this Agreement, LabOne shall pay to Employee on or before the last day of his employment any incentive compensation which may accrue to the date of termination and a lump sum severance payment in an amount equal to the greater of (i) the installments of the base salary due Employee for the balance of the Base Term of the Agreement, or (ii) the aggregate of the last twelve (12) months' base salary paid Employee by LabOne preceding the month in which LabOne transmits such notice of termination. Following the Base Term of this Agreement, if Employee is involuntarily terminated without cause, LabOne shall pay to Employee on or before the last day of his employment any incentive compens ation which may accrue to the date of termination, and a lump sum severance payment in an amount equal to the aggregate of the last twelve (12) months' base salary paid Employee by LabOne ("Termination Payment"). Any payment to Employee pursuant to this Section will constitute the entire obligation of LabOne to Employee with respect to such termination, and will also constitute full settlement of any claim under law or in equity that Employee might otherwise assert against LabOne or any of its employees or directors on account of such termination.

(f) Change of Control. Notwithstanding any other provision of this Agreement to the contrary, in the event that (i) a change of control of LabOne shall occur at any time during which Employee is in the full-time employment of LabOne or its successor and (ii) within six (6) months after such a change in control Employee's employment is involuntarily terminated by LabOne or its successor without cause, LabOne shall pay to Employee on or before the last day of his employment any incentive compensation which may accrue to the date of termination, and a lump sum severance payment in an amount equal to the Termination Payment multiplied by two. For purposes of this Section 12(f), a "change of control" shall be deemed to have taken place if there shall have occurred (i) the sale or other disposition resulting in the transfer of legal or beneficial ownership of, or the right to vote, more than fifty (50%) of the outstanding capital stock of LabOne to one or more third - -party purchasers, except in connection with an underwritten public offering of the common stock of LabOne, (ii) a merger or consolidation of LabOne with or into any entity or (iii) a sale or other transfer of substantially all of the assets of LabOne to any person or entity. Any payment to Employee pursuant to this Section will constitute the entire obligation of LabOne to Employee with respect to such termination, and will also constitute full settlement of any claim under law or in equity that Employee might otherwise assert against LabOne or any of its employees or directors on account of such termination.

(g) Stock Option and Other Obligations. Notwithstanding any other provisions of this Agreement to the contrary, in the event of the termination of Employee's employment pursuant to this Agreement, any stock option or other agreement between LabOne and Employee in effect at the time and under any other applicable plan of LabOne shall be governed by the terms of any such agreement or applicable plan.

13. Survival. Notwithstanding the termination of Employee's employment pursuant to the provisions of Section 12 hereof, Employee's obligations under Sections 7, 8, 9 and 10 hereof and the provisions for relief against Employee in Section 11 hereof shall continue in full force and effect. Any right or power conferred upon LabOne or its affiliates or their respective Boards of Directors by the terms of this Agreement shall inure to the benefit of any person(s) of entity(ies) into which LabOne or any affiliate is consolidated, merged or liquidated, and the Board of Directors or other governing body of any such corporation of other entity.

14. Law Governing and Jurisdiction. This Agreement shall be governed by the laws of the State of Kansas. Employee consents to the jurisdiction of the state and federal courts situated in Johnson or Wyandotte counties for the determination of any controversy arising in connection with the interpretation, construction or enforcement of this Agreement.

15. Notices. All notices and other communications required or permitted hereunder or necessary or convenient shall be deemed to have been given when mailed by certified or registered mail, postage prepaid, addressed as follows:

If to Employee:

Kent McAllister

Kansas City, MO 64155

and if to LabOne:

W. Thomas Grant II
President and Chief Executive Officer
LabOne, Inc.
10101 Renner Boulevard
Lenexa, Kansas 66219,

or such other persons and addresses as have been furnished by Employee or LabOne to the other in writing. The failure of Employee or LabOne to require strict performance of any provision of this Agreement by the other, or the forbearance to exercise any right or remedy, shall not be construed as a waiver by such party of any such right or remedy, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy.

16. Contents of Employment Agreement, Amendment and Assignment. This Agreement sets forth the entire understanding between the parties with respect to the subject matter hereof and cannot be changed, modified or terminated except in writing. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of Employee hereunder are of a personal nature and shall not be assignable in whole or in part by Employee.

17. Severability. If any provision of this Agreement or the application thereof under any circumstance is adjudicated to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

LabOne, INC.

By:___________________________

EMPLOYEE

/s/ Kent McAllister
Kent McAllister

BY EXECUTING THIS AGREEMENT, EMPLOYEE ACKNOWLEDGES RECEIPT OF THE NOTIFICATION TO EMPLOYEE SET FORTH IN THE LAST SENTENCE OF SECTION 7 HEREOF.

EX-10

Exhibit 10.18

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Agreement"), made and entered into as of the 11^th day of May, 2001, by and between LabOne, Inc., a Missouri corporation ("LabOne"),and Michael J. Asselta ("Employee").

WITNESSETH:

WHEREAS, LabOne is a laboratory specializing in clinical, substance abuse and insurance testing and related information management services ("Lab Business");

WHEREAS, in accordance with the terms and provisions of this Agreement, LabOne desires to employ Employee to obtain the benefit of his substantial knowledge of and experience in the Lab Business, and Employee desires to be employed by LabOne; and

WHEREAS, LabOne and Employee agree that the restrictive covenants and confidentiality agreements contained in this Agreement are essential to the growth and stability of the Lab Business of LabOne and to the continuing viability of the Lab Business in the event the employment of Employee is terminated;

NOW, THEREFORE, in consideration of LabOne's agreement to employ Employee and the mutual promises herein contained, the parties hereto agree as follows:

1. Employment. LabOne hereby agrees to employ Employee, and Employee hereby agrees to accept such employment and to perform his duties and obligations hereunder, in accordance with the terms and conditions hereinafter set forth.

2. Term.

(a) Term. The term of Employee's employment pursuant to this Agreement shall commence on May 11, 2001, and shall continue until terminated in accordance with the provisions of Section 12 hereof.

(b) Termination Subsequent to Change in Control. Notwithstanding any other provision of this Agreement to the contrary, in the event that (i) a change of control of LabOne shall occur at any time during which Employee is in the full-time employment of LabOne or its successor and (ii) within one (1) year after such a change in control, Employee's employment is terminated by LabOne or its successor for any reason other than permanent disability, death or normal retirement, or is voluntarily terminated by Employee for any reason at his sole discretion, LabOne will promptly pay to Employee as termination compensation the lump sum amount described below.

The lump sum compensation payable to Employee shall be equal to three (3) times the average annual compensation includible in Employee's gross income for the most recent five (5) taxable years ending before the date of the change in control. If Employee has been an employee of LabOne for less than 5 years, Employee's lump sum payment shall be equal to 3 times the average annual compensation includible in Employee's gross income from LabOne based on the portion of the 5 year period during which Employee performed services for LabOne. To the extent that any amount required to be paid hereunder would constitute an "excess parachute payment" within the meaning of Section 280G(b) of the Internal Revenue Code of 1986, that excess amount need not be paid.

For purposes of this Section 2(b), a "change of control" shall be deemed to have taken place if there shall have occurred (i) the sale or other disposition resulting in the transfer of legal or beneficial ownership of, or the right to vote, more than fifty percent (50%) of the outstanding capital stock of LabOne to one or more third-party purchasers, except in connection with an underwritten public offering of the common stock of LabOne, (ii) a merger or consolidation of LabOne with or into any entity, or (iii) a sale or other transfer of substantially all of the assets of LabOne to any person or entity.

In the event of termination of employment under the circumstances described above, LabOne shall pay to Employee the installments of his base salary through the date of termination of employment, any annual incentive bonus for the previous year if such has been approved but not paid and the lump sum amount as termination compensation described below, and any remaining term of this Agreement shall be cancelled. Such payments to Employee will constitute the entire obligation of LabOne to Employee with respect to such termination, and will also constitute full settlement of any claim under law or in equity that Employee might otherwise assert against LabOne or any of its employees on account of such termination.

3. Duties and Responsibilities. Employee shall serve as Executive Vice President of Operations and Chief Operating Officer, shall report directly to the Chief Executive Officer, shall serve in such additional executive capacities as the President and Chief Executive Officer or Board of Directors of LabOne may from time to time prescribe, shall perform all duties and responsibilities incidental to such positions and shall cooperate fully with the Board of Directors and executive officers of LabOne. Employee shall devote all of his business time, attention and energy to the performance of the foregoing duties and responsibilities.

4. Compensation. During the term of Employee's employment pursuant to this Agreement, LabOne shall pay Employee an annual base salary of $130,000.00, or such other amount, which shall not be less than said base salary, as may from time to time be determined by LabOne, paid bi-weekly in arrears. Employee shall also be entitled to a car allowance of $400.00 per calendar month.

5. Stock Option. This Agreement does not affect existing grants to Employee of Non-Qualified Stock Options under the LabOne, Inc. 1997 Long-Term Incentive Plan or other Plan.

6. Annual Incentive Bonus and Benefits.

(a) Annual Incentive Bonus. During the term hereof, Employee shall be eligible to receive an annual incentive bonus comparable to that received by other executive officers of LabOne based upon the performance of LabOne in relation to pre-determined financial goals established by the Compensation Committee of the Board of Directors.

(b) Other Fringe Benefits. Employee shall be entitled to participate, after applicable eligibility periods, in such fringe benefit programs as LabOne may make available from time to time to its executive officers, including medical and dental insurance coverage, long-term disability insurance, pension plan, matching 401K contributions, section 125 cafeteria plan, $250,000 group term life insurance, and four (4) weeks paid vacation, all in amounts and on terms no less favorable than those provided to other executive officers of LabOne.

7. Inventions. All inventions, products, discoveries, improvements, processes, manufacturing, marketing and service methods and techniques, formulae, design, styles, specifications, databases, computer programs (whether in source code or object code), know-how, strategies and data, whether or not patentable or registerable under copyright or similar statutes, made, developed or created by Employee (whether or not at the request or suggestion of LabOne, alone or in conjunction with others, and whether during regular hours at work or otherwise) during Employee's period of employment with LabOne (collectively, "Inventions"), shall be promptly and fully disclosed by Employee to an appropriate executive of LabOne. Employee hereby assigns, transfers and conveys to LabOne all rights in and to all Inventions as its exclusive property. Employee shall give evidence and promptly execute and/or deliver to an appropriate executive of LabOne, without any additional compensation therefor, all papers, drawings, models, programs, data documents and other material:

(a) pertaining to or in any way relating to or evidencing any Inventions, or

(b) necessary or desirable to document such transfer, or to enable LabOne to file and process applications for and to acquire, maintain and enforce any and all patents, trademarks, registrations or copyrights with respect to any such Inventions, or to obtain any extension, validation, reissue, continuance or renewal of any such patent, trademark or copyright.

LabOne will be responsible for the preparation of any such instruments, documents and papers and for the implementation of any such proceedings and will reimburse Employee for all reasonable expenses incurred by Employee in complying with the provisions of this Section. EMPLOYEE IS HEREBY NOTIFIED THAT the provisions of this Section 7 shall not apply to an Invention for which no equipment, supplies, facility or trade secret information of LabOne was used and which was developed entirely on Employee's own time, unless:

(i) the Invention relates directly to the Lab Business or to LabOne's actual or demonstratively anticipated research or development, or

(ii) the Invention results from any work performed by Employee for LabOne.

8. Property of LabOne. All correspondence, notes, recordings, documents, customer lists and other materials and reproductions thereof pertaining to any aspect of the business of LabOne shall be the property of and shall be delivered to and retained by LabOne upon termination of Employee's employment pursuant to this Agreement.

9. Confidentiality. During the term of and at any time after the termination of his employment pursuant to this Agreement, Employee will hold in trust and confidence, will not divulge, disclose or convey to any person, firm, corporation or other entity and will keep secret and confidential all trade secrets, proprietary information and confidential information heretofore or hereafter acquired by him concerning LabOne or its subsidiaries, and will not use the same for himself or others in any manner, except to the extent that such information should become no longer a trade secret, proprietary or confidential. Such trade secrets, proprietary information and confidential information shall be deemed to include, but shall not be limited to, information, whether written or not:

(a) of a technical nature, such as but not limited to, technology, inventions, discoveries, improvements, processes, formulae, ideas, know-how, methods, compositions, computer software programs or research projects, including the identity of research organizations and researchers,

(b) of a business nature, such as but not limited to information concerning costs, profits, supplies, suppliers, marketing, sales or lists of customers, and

(c) pertaining to future developments, such as but not limited to information concerning research and development or future marketing methods.

10. Restrictive Covenants. In consideration for Employee's employment with LabOne and in further consideration of the compensation provided to Employee hereunder and the post-termination payments, if any, provided for in Section 12 hereof, Employee agrees that during the term of his employment pursuant to this Agreement, and for a period of two (2) years after the termination for any reason of his employment pursuant to this Agreement, Employee will not, without the prior written consent of LabOne, directly or indirectly, individually or in concert with others, or through the medium of any other corporation, partnership, syndicate, association, joint venture, or other entity or as an employee, officer, director, agent, consultant, partner, member or otherwise:

(a) solicit, accept, divert or service, or attempt to solicit, accept, divert or service, any business similar to the type and character of business then engaged in by LabOne from any person, corporation or other entity who was as of the date of the termination of Employee's employment a customer of LabOne,

(b) solicit, induce or encourage any employee, contractor or agent of LabOne to terminate employment or other relationship with LabOne or to compete with LabOne in any manner, or

(c) compete with LabOne in Lab Business or in any other business conducted by LabOne at the date of termination of Employee's employment.

It is understood and agreed that Section 10(c) shall apply only with respect to the following geographic area: All territory in which LabOne or its representatives or agents, as of the date of the termination of Employee's employment pursuant hereto, sells or offers for sale LabOne's products or services.

11. Judicial Relief. LabOne and Employee agree that in the event that any court shall finally hold that any provision of Section 10 of this Agreement is void or constitutes an unreasonable restriction against Employee, the provisions of Section 10 shall not be rendered void, but shall apply with respect to such time or territory or to such other extent as such court may judicially determine or indicate constitutes a reasonable restriction under the circumstances. LabOne shall be entitled to appropriate injunctive relief in any court of competent jurisdiction to enforce its rights under Sections 7, 8, 9 and 10 of this Agreement, in addition to any other rights and remedies available to LabOne at law or in equity, it being agreed that any violation of Sections 7, 8, 9 or 10 of this Agreement by Employee is reasonably likely to cause irreparable damage to LabOne which will be difficult or impossible to value in monetary damages.

12. Termination. Employee's employment pursuant to this Agreement shall terminate upon the occurrence of any of the following events:

(a) Death. In the event that Employee dies during the term of this Agreement, LabOne shall pay to his executors or administrators an amount equal to the installments of his salary payable for the month in which he dies and any incentive compensation which may accrue during such month, and thereafter, LabOne shall have no further liability or obligation hereunder to his executors, heirs or assigns or any other person claiming under or through him.

(b) Disability. In the event that Employee continues to be unable to fully perform his duties and responsibilities hereunder by reason of illness, injury or mental or physical disability or incapacity for ninety (90) consecutive days, during which time he shall continue to be paid salary as provided in Section 4 hereof and any incentive compensation which may accrue during such month, Employee's employment pursuant to this Agreement may be terminated by LabOne, and LabOne shall thereafter have no further liability or obligation hereunder to Employee. Employee agrees, in the event of any dispute under this Section to submit to a physical examination by a licensed physician selected by LabOne and to accept LabOne's decision based on the results thereof.

(c) Voluntary Termination. Employee's employment may be voluntarily terminated by Employee giving thirty (30) days' prior written notice to LabOne, during which time he shall continue to be paid salary as provided in Section 4 hereof through the date of termination and any incentive compensation which may accrue to the date of termination and LabOne shall thereafter have no further liability or obligation hereunder to Employee.

(d) Termination for Cause. Employee's employment may be involuntarily terminated by LabOne at any time for cause. In the event that Employee is involuntarily terminated by LabOne for cause, LabOne shall pay Employee's salary as provided in Section 4 hereof through the date of termination and any incentive compensation which may accrue to the date of the termination and LabOne shall thereafter have no further liability or obligation hereunder to Employee.

(e) Termination Without Cause. Employee's employment may be involuntarily terminated by LabOne at any time without cause by LabOne giving thirty (30) days' prior written notice to Employee. In the event that Employee is involuntarily terminated without cause, LabOne shall pay to Employee on or before the last day of his employment any incentive compensation which may accrue to the date of termination and a lump sum severance payment in an amount equal to the aggregate of the last twelve (12) months' base salary paid Employee by LabOne preceding the month in which LabOne transmits such notice of termination. Upon such payments, LabOne shall have no further liability or obligation hereunder to Employee. Such payments to Employee will constitute the entire obligation of LabOne to Employee with respect to such termination, and will also constitute full settlement of any claim under law or in equity that Employee might otherwise assert against LabOne or any of it s employees on account of such termination.

(f) Stock Option and Other Obligations. Notwithstanding any other provisions of this Agreement to the contrary, in the event of the termination of Employee's employment pursuant to this Agreement, any stock option or other agreement between LabOne and Employee in effect at the time and under any other applicable plan of LabOne shall be governed by the terms of any such agreement or applicable plan.

13. Survival. Notwithstanding the termination of Employee's employment pursuant to the provisions of Section 12 hereof, Employee's obligations under Sections 7, 8, 9 and 10 hereof and the provisions for relief against Employee in Section 11 hereof shall continue in full force and effect. Any right or power conferred upon LabOne or the Board of Directors of LabOne by the terms of this Agreement shall inure to the benefit of any person(s) of entity(ies) into which LabOne is consolidated, merged or liquidated, and the Board of Directors or other governing body of any such corporation of other entity.

14. Law Governing and Jurisdiction. This Agreement shall be governed by the laws of the State of Missouri.

15. Notices. All notices and other communications required or permitted hereunder or necessary or convenient shall be deemed to have been given when mailed by certified or registered mail, postage prepaid, addressed as follows:

If to Employee:

Michael J. Asselta,

Overland Park, Kansas 66213

and if to LabOne:

W. Thomas Grant II
President and Chief Executive Officer
LabOne, Inc.
10101 Renner Boulevard
Lenexa, Kansas 66219,

or such other persons and addresses as have been furnished by Employee or LabOne to the other in writing. The failure of Employee or LabOne to require strict performance of any provision of this Agreement by the other, or the forbearance to exercise any right or remedy, shall not be construed as a waiver by such party of any such right or remedy, nor shall any single or partial exercise of any right or remedy preclude any other or further exercise thereof or the exercise of any other right or remedy.

16. Contents of Employment Agreement, Amendment and Assignment. This Agreement sets forth the entire understanding between the parties with respect to the subject matter hereof and cannot be changed, modified or terminated except in writing. All of the terms and provisions of this Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective heirs, representatives, successors and assigns of the parties hereto, except that the duties and responsibilities of Employee hereunder are of a personal nature and shall not be assignable in whole or in part by Employee.

17. Severability. If any provision of this Agreement or the application thereof under any circumstance is adjudicated to be invalid or unenforceable, such invalidity or unenforceability shall not affect any other provision or application of this Agreement which can be given effect without the invalid or unenforceable provision or application.

18. Gender. Masculine pronouns used herein shall refer to the masculine or feminine gender as appropriate.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date first above written.

LabOne, INC.

By:____________________________

EMPLOYEE
By: /s/ Michael J. Asselta
Michael J. Asselta

EX-21

Exhibit 21

LabOne, Inc.
A Missouri Corporation

Subsidiaries

LabOne L.L.C. Kansas - Single member LLC

Central Plains Holdings, Inc. Kansas - C Corp.
     Central Plains Laboratories, L.L.C. Kansas - Single member LLC

ExamOne World Wide, Inc. Pennsylvania - C Corp.
     ExamOne World Wide of NJ, Inc. New Jersey - C Corp.

ExamOne Canada, Inc. Canada - C Corp.

LabOne Ohio

Lab One Canada, Inc. Canada - C Corp.

Osborn Group, Inc. Delaware - C Corp.
     Intellisys, Inc. Georgia - C Corp.

Systematic Business Services, Inc. Missouri - C Corp.
     ScanTech Solutions, LLC Missouri - Single member LLC

EX-23

Exhibit 23

Consent of Independent Registered Public Accounting Firm

The Board of Directors
LabOne, Inc.:

We consent to the incorporation by reference in the registration statements No. 333-92133, No. 333-92135, No. 333-92137, and No. 333-62548 on Form S-8 and the registration statement No. 333-118919 on Form S-3 of LabOne, Inc. of our reports dated March 11, 2005, with respect to the consolidated balance sheets of LabOne, Inc. as of December 31, 2004 and 2003, and the related consolidated statements of earnings, stockholders' equity and comprehensive income, and cash flows for each of the years in the three-year period ended December 31, 2004, and the related financial statement schedule, management's assessment of the effectiveness of internal control over financial reporting as of December 31, 2004, and the effectiveness of internal control over financial reporting as of December 31, 2004, which reports appear in the December 31, 2004 annual report on Form 10-K of LabOne, Inc.

Our report dated March 11, 2005 on management's assessment of the effectiveness of internal control over financial reporting and the effectiveness of internal control over financial reporting as of December 31, 2004 contains an explanatory paragraph that states that management excluded from its assessment of the effectiveness of LabOne, Inc.'s internal control over financial reporting as of December 31, 2004 Health Alliance's and Northwest Toxicology's internal control over financial reporting associated with total assets of $71.7 million and total revenues of $69.5 million included in the consolidated financial statements of LabOne, Inc. and subsidiaries as of and for the year ended December 31, 2004. Our audit of internal control over financial reporting of LabOne, Inc. also excluded an evaluation of the internal control over financial reporting of the laboratory operations of Health Alliance and Northwest Toxicology.

/s/ KPMG LLP

Kansas City, Missouri
March 11, 2005

EX-24

Exhibit 24

Power of Attorney

The undersigned hereby appoint Joseph C. Benage as attorney-in-fact, to execute in name and on behalf of the undersigned the Form 10-K Annual Report of LabOne, Inc., to be filed with the Securities and Exchange Commission for its fiscal year ended December 31, 2004.

Dated: March 1, 2005

/s/ Jill L. Force
Jill L. Force, Director

/s/ John P. Mascotte
John P. Mascotte, Director

/s/ James R. Seward
James R. Seward, Director

/s/ John E. Walker
John E. Walker, Director

EX-31

Exhibit 31.1

Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, W. Thomas Grant II, certify that:

1.) I have reviewed this annual report on Form 10-K of LabOne, Inc.;

2.) Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a.) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b.) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;

5.) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors;

a.) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 15, 2005

By /s/ W. Thomas Grant II

W. Thomas Grant II, Chairman of the Board,
President and Chief Executive Officer

EX-31 10 ex312.htm

Exhibit 31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John W. McCarty, certify that:

1.) I have reviewed this annual report on Form 10-K of LabOne, Inc.;

2.) Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a.) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b.) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;

5.) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors;

a.) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 15, 2005

By /s/ John W. McCarty

John W. McCarty, Executive V.P. and Chief
Financial Officer

EX-32 11 ex321.htm

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. the Annual Report on Form 10-K of LabOne, Inc. for the year ending December 31, 2004 (the "Report") fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of LabOne, Inc.

LabOne, Inc.

Date: March 15, 2005

By /s/ W. Thomas Grant II
W. Thomas Grant II, Chairman of the Board,
President and Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to LabOne, Inc., and will be retained by LabOne, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32 12 ex322.htm

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. the Annual Report on Form 10-K of LabOne, Inc. for the year ending December 31, 2004 (the "Report") fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of LabOne, Inc.

LabOne, Inc.

Date: March 15, 2005

By /s/ John W. McCarty
John W. McCarty, Executive V.P. and Chief
Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to LabOne, Inc., and will be retained by LabOne, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

-----END PRIVACY-ENHANCED MESSAGE-----

EX-31

Exhibit 31.2

Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, John W. McCarty, certify that:

1.) I have reviewed this annual report on Form 10-K of LabOne, Inc.;

2.) Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.) Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.) The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a.) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this annual report is being prepared;

b.) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.) evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.) disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting;

5.) The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors;

a.) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b.) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: March 15, 2005

By /s/ John W. McCarty

John W. McCarty, Executive V.P. and Chief
Financial Officer

EX-32 11 ex321.htm

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. the Annual Report on Form 10-K of LabOne, Inc. for the year ending December 31, 2004 (the "Report") fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of LabOne, Inc.

LabOne, Inc.

Date: March 15, 2005

By /s/ W. Thomas Grant II
W. Thomas Grant II, Chairman of the Board,
President and Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to LabOne, Inc., and will be retained by LabOne, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32 12 ex322.htm

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. the Annual Report on Form 10-K of LabOne, Inc. for the year ending December 31, 2004 (the "Report") fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of LabOne, Inc.

LabOne, Inc.

Date: March 15, 2005

By /s/ John W. McCarty
John W. McCarty, Executive V.P. and Chief
Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to LabOne, Inc., and will be retained by LabOne, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

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EX-32

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

I certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. the Annual Report on Form 10-K of LabOne, Inc. for the year ending December 31, 2004 (the "Report") fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of LabOne, Inc.

LabOne, Inc.

Date: March 15, 2005

By /s/ W. Thomas Grant II
W. Thomas Grant II, Chairman of the Board,
President and Chief Executive Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to LabOne, Inc., and will be retained by LabOne, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.

EX-32

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

I certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. the Annual Report on Form 10-K of LabOne, Inc. for the year ending December 31, 2004 (the "Report") fully complies with the requirements of Section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and

2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of LabOne, Inc.

LabOne, Inc.

Date: March 15, 2005

By /s/ John W. McCarty
John W. McCarty, Executive V.P. and Chief
Financial Officer

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to LabOne, Inc., and will be retained by LabOne, Inc., and furnished to the Securities and Exchange Commission or its staff upon request.