10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.  20549

FORM 10-K

(Mark One)
  X  		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ------      SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended       December 31, 2002
                         --------------------------------------------
OR
	   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
- ------   SECURITIES EXCHANGE ACT OF 1934

For the transition period from                    to
                              -------------------    ----------------
Commission file number                   1-11353
                     ------------------------------------------------
			LABORATORY CORPORATION OF AMERICA HOLDINGS
- ---------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
         DELAWARE                           	 13-3757370
- ---------------------------------------------------------------------
(State or other jurisdiction of       	(I.R.S. Employer
 incorporation or organization)             Identification No.)

  358 South Main Street, Burlington, North Carolina	        27215
- ---------------------------------------------------------------------
      (Address of principal executive offices)       	      (Zip Code)

						336-229-1127
- ---------------------------------------------------------------------
	(Registrant's telephone number, including area code)

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

Title of each class  			 Name of exchange on which registered
- ---------------------            ------------------------------------
Common Stock, $0.10 par value	 New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: None
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.
                                                    --------
Indicate by check mark whether the registrant is an accelerated filer
(as defined in Exchange Act Rule 12b-2).  Yes  X  No
                                             ----    -----
As of June 28, 2002, the aggregate market value of the voting and
non-voting common equity held by non-affiliates of the registrant was
approximately $6.5 billion, based on the closing price on such date
of the registrant's common stock on the New York Stock Exchange.

Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date:
147,691,417 shares as of February 28, 2003.



PART I

Item 1.   DESCRIPTION OF BUSINESS

     Laboratory Corporation of America Holdings (the "Company"),
headquartered in Burlington, North Carolina, is the second largest
independent clinical laboratory company in the United States based
on 2002 net revenues.  Through a national network of laboratories,
the Company offers more than 4,000 different clinical laboratory
tests which are used by the medical profession in routine testing,
patient diagnosis, and in the monitoring and treatment of disease.
In addition, the Company has developed specialty and niche
businesses based on certain types of specialized testing
capabilities and client requirements, such as oncology testing,
HIV genotyping and phenotyping, diagnostic genetics and clinical
research trials.  The Company has significantly expanded its
routine and specialty testing businesses through the acquisitions
of Dynacare Inc. ("Dynacare") and DIANON Systems, Inc. ("DIANON").
Since its founding in 1971, the Company has grown into a national
network of 47 primary laboratories (including the recent
acquisition of DIANON) and over 1,200 service sites, consisting of
branches, patient service centers and STAT laboratories, which are
laboratories that have the ability to perform certain routine
tests quickly and report the results to the physician immediately.

     On July 25, 2002, the Company completed its acquisition of
Dynacare, a provider of clinical laboratory testing services in 21
states in the United States and two provinces in Canada.  The
acquisition of Dynacare has enabled the Company to expand its
national testing network and the Company expects to realize
significant operational synergies from the acquisition.  Dynacare
had 2001 revenues of approximately $238.0 million and had
approximately 6,300 employees at the closing date of the
acquisition.  On January 17, 2003, the Company completed the
acquisition of DIANON, a leading national provider of anatomic
pathology and genetic testing services with a primary focus on
advanced oncology testing.  DIANON had 2001 revenues of
approximately $125.7 million and had approximately 1,100 employees
at the closing date of the acquisition.  DIANON significantly
enhances the Company's oncology testing capabilities and positions
it to more effectively market and distribute the advanced testing
technologies that the Company has developed internally or has
licensed from its technology partners, such as Myriad Genetics,
Inc., EXACT Sciences Corporation, Celera Diagnostics and
Correlogic Systems, Inc.

     With over 24,000 employees, the Company processes tests on
more than 300,000 patient specimens daily and provides clinical
laboratory testing services to clients in all 50 states, the
District of Columbia, Puerto Rico, and two provinces in Canada.
Its clients include physicians, hospitals, HMOs and other managed
care organizations, governmental agencies, large employers, and
other independent clinical laboratories that do not have the
breadth of its testing capabilities.  Several hundred of the
Company's 4,000 tests are frequently used in general patient care
by physicians to establish or support a diagnosis, to monitor
treatment or to search for an otherwise undiagnosed condition.
The most frequently-requested of these routine tests include blood
chemistry analyses, urinalyses, blood cell counts, Pap tests, HIV



tests, microbiology cultures and procedures, and alcohol and other
substance-abuse tests.  The Company performs this core group of
routine tests in each of its major laboratories using
sophisticated and computerized instruments, with most results
reported within 24 hours.

     The Company's Annual Report on Form 10-K, Quarterly Reports
on Form 10-Q, Current Reports on Form 8-K, and all amendments to
those reports are made available free of charge through the Media
and Investor Relations section of the Company's internet website
at www.labcorp.com as soon as practicable after such material is
electronically filed with, or furnished to, the Securities and
Exchange Commission.

The Clinical Laboratory Testing Industry

     Laboratory tests and procedures are used generally by hospitals,
physicians and other health care providers and commercial clients to
assist in the diagnosis, evaluation, detection, monitoring and
treatment of diseases and other medical conditions through the
examination of substances in the blood, tissues and other specimens.
Clinical laboratory testing is generally categorized as either
clinical testing, which is performed on body fluids including blood
and urine, or anatomical pathology testing, which is performed on
cytologic samples, tissue and other samples, including human cells.
Clinical and anatomical pathology procedures are frequently ordered
as part of regular physician office visits and hospital admissions in
connection with the diagnosis and treatment of illnesses.  Certain of
these tests and procedures are used principally as tools in the
diagnosis and treatment of a wide variety of medical conditions such
as cancer, AIDS, endocrine disorders, cardiac disorders and genetic
disease.  The most frequently requested tests include blood chemistry
analyses, urinalyses, blood cell counts, Pap tests, HIV tests,
microbiology cultures and procedures and alcohol and other substance-
abuse tests.

     The clinical laboratory industry consists primarily of three
types of providers: hospital-based laboratories, physician-office
laboratories and independent clinical laboratories, such as those
owned by the Company.  The Company believes that in 2002
approximately 49% of the clinical testing revenues in the United
States were derived by hospital-based laboratories, approximately 12%
were derived by physicians in their offices and laboratories, and
approximately 39% were derived by independent clinical laboratories.
The Centers for Medicare and Medicaid Services ("CMS") of the
Department of Health and Human Services ("HHS") has estimated that in
2002 there were approximately 5,000 independent clinical laboratories
in the United States.

Effect of Market Changes on the Clinical Laboratory Business

     Many market-based changes in the clinical laboratory business
have occurred over the past ten years, primarily as a result of
the shift away from traditional, fee-for-service medicine to
managed-cost health care.  The growth of the managed care sector
presents various challenges to the Company and other independent
clinical laboratories.  Managed care organizations typically
contract with a limited number of clinical laboratories and
negotiate discounts to the fees charged by such laboratories in an



effort to control costs.  Such discounts have historically
resulted in price erosion and have negatively impacted the
Company's operating margins. In addition, managed care
organizations have used capitated payment contracts in an attempt
to fix the cost of laboratory testing services for their
enrollees.  Under a capitated payment contract, the clinical
laboratory and the managed care organization agree to a per
member, per month payment to cover all laboratory tests during the
month, regardless of the number or cost of the tests actually
performed.  The Company makes significant efforts to ensure that
esoteric tests (which are more sophisticated tests used to obtain
information not provided by routine tests and generally involve a
higher level of complexity and more substantial human involvement
than routine tests) are excluded from capitated arrangements and
therefore paid for separately by the managed care organization and
rarely enters into such contracts without such exclusions.
Capitated payment contracts shift the risks of additional testing
beyond that covered by the capitated payment to the clinical
laboratory.  For the year ended December 31, 2002, such capitated
contracts accounted for approximately $121.4 million of the
Company's net sales.  The increase in managed care and insurance
companies' attempts to control utilization of medical services
overall has also resulted in declines in the utilization of
laboratory testing services.

     In addition, Medicare (which principally services patients 65
and older), Medicaid (which principally serves low-income
patients) and insurers have increased their efforts to control the
cost, utilization and delivery of health care services.  Measures
to regulate health care delivery in general and clinical
laboratories in particular have resulted in reduced prices, added
costs and decreased test utilization for the clinical laboratory
industry by increasing complexity and adding new regulatory and
administrative requirements.  From time to time, Congress has also
considered changes to the Medicare fee schedules in conjunction
with certain budgetary bills. The Company believes that reductions
in reimbursement for Medicare services will continue to be
implemented from time to time.  Reductions in the reimbursement
rates of other third-party payors are likely to occur as well.

     Despite the market changes discussed above, the Company
believes that the volume of clinical laboratory testing will be
positively influenced by several factors, including the expanded
base of genomics knowledge, which has led to an enhanced
appreciation of the value of gene-based diagnostic assays for
current patient care as well as for the development of new
therapeutics.  Additionally, these novel gene-based tests have led
to an increased awareness by physicians that clinical laboratory
testing is a cost-effective means of prevention and early
detection of disease and monitoring of treatment.  In an effort to
better offer new technology as medical needs and standards of care
develop, the Company recently announced partnerships with Myriad
Genetics, Inc. to make Myriad's predictive medicine products
broadly available to primary care physicians throughout the United
States and with EXACT Sciences Corporation to exclusively license
EXACT's proprietary technologies for the detection of colorectal
cancer.  Additional factors which may lead to future volume growth
include an increase in the number and types of tests which are
readily available (due to advances in technology and increased



cost efficiencies) for testing of sexually transmitted diseases
such as AIDS and the general aging of the population in the United
States.  The impact of these factors is expected to be partially
offset by declines in volume as a result of increased controls
over the utilization of laboratory services by Medicare and other
third-party payors, particularly managed care organizations.

Laboratory Testing Operations and Services

     The Company has 47 primary testing facilities, and over 1,200
service sites consisting of branches, patient service centers and
STAT laboratories.  A "branch" is a central facility which collects
specimens in a region for shipment to one of the Company's
laboratories for testing.  Test results can be printed at a branch
and conveniently delivered to the client.  A branch also is used as a
base for sales staff.  Generally, a "patient service center" is a
facility maintained by the Company to serve the physicians in a
medical professional building or other strategic location.  The
patient service center collects the specimens as requested by the
physician.  The specimens are sent, principally through the Company's
in-house courier system (and, to a lesser extent, through independent
couriers), to one of the Company's major laboratories for testing.
Some of the Company's patient service centers also function as "STAT
labs", which are laboratories that have the ability to perform
certain routine tests quickly and report results to the physician
immediately.  The Company processed an average of approximately
310,000 patient specimens per day in 2002.  Patient specimens are
delivered to the Company accompanied by a test request form.  These
forms, which are completed by the client, indicate the tests to be
performed and provide the necessary billing information.

     Each specimen and related request form is checked for
completeness and then given a unique identification number.  The
unique identification number assigned to each specimen helps to
ensure that the results are attributed to the correct patient.  The
test request forms are sent to a data entry operator who ensures that
a file is established for each patient and the necessary testing and
billing information is entered.  Once this information is entered
into the computer system, the tests are performed and the results are
entered through computer interface or manually, depending upon the
tests and the type of equipment involved.  Most of the Company's
computerized testing equipment is connected to the Company's
information systems.  Most routine testing is completed by early the
next morning and test results are printed and prepared for
distribution by service representatives that day. Some clients have
local printing capability and are able to print the reports out
directly in their offices.  Clients who request that they be called
with a result are so notified in the morning.  It is Company policy
to notify the client immediately if a life-threatening result is
found at any point during the course of the testing process.

Company Strategy

     The Company believes that it has differentiated itself from its
competition and positioned itself for continued strong growth by
building a leadership position in genomic and other advanced testing
technologies.  This leadership position enables the Company to
provide a broad menu of testing services for the infectious disease
and cancer markets, which it believes represent two of the most



significant areas of future growth in the genomic clinical laboratory
industry.  The Company's primary strategic objective is to expand its
leadership position in genomic and other advanced testing
technologies and leverage its national core testing infrastructure to
deliver outstanding and innovative clinical testing services to
patients and physicians nationwide.

     Develop and Be First to Market with New Tests

     Advances in medicine have begun to fundamentally change
diagnostic testing, and new tests are allowing clinical laboratories
to provide unprecedented amounts of health-related information to
physicians and patients.  Significant new tests introduced over the
past several years include a gene-based test for human papilloma
virus, Myriad Genetics' predictive test for breast cancer and tests
for HIV phenotyping and cystic fibrosis.  As science continues to
advance, the Company expects new testing technologies to emerge;
therefore, it intends to continue to invest in advanced testing
capabilities so that it can remain on the cutting edge of clinical
laboratory testing.  The Company has added, and expects to continue
to add, new testing technologies and capabilities through a
combination of internal development initiatives, technology licensing
and partnership transactions and selected acquisitions.  Through its
national sales force, the Company rapidly introduces new testing
technologies to physician customers.  For example, last year the
Company entered into an exclusive sales and distribution partnership
with Myriad Genetics under which it now offers certain of Myriad
Genetics' products, including a predictive test for breast cancer, to
physicians throughout the United States, creating an immediate
distribution pipeline into the primary care physician market for
these products.

     Capitalize on Unique Opportunities with Partnered Technologies

     The Company has announced a number of significant licensing and
partnership agreements which provide it with access to exciting new
testing technologies that it expects will have an increasing impact
on diagnostic testing.  For example, in June 2002, the creation of an
exclusive, long-term strategic partnership with EXACT Sciences to
commercialize PreGen-Plus, EXACT Sciences' proprietary, non-invasive
technology to aid in the early detection of colorectal cancer was
announced.  The Company currently plans to launch this gene-based
test, which represents a significant new tool for the early detection
of colorectal cancer, in the second half of 2003.  The Company is
collaborating with Celera Diagnostics to determine the clinical
utility of laboratory tests based on novel diagnostic markers for
Alzheimer's disease, breast cancer and prostate cancer and will have
exclusive access to any related markers found to have clinical
utility.  In addition, the Company recently signed a co-exclusive
licensing agreement with Correlogic Systems to commercialize its
ovarian cancer protein pattern blood test, which offers the prospect
of accurate and early detection of ovarian cancer.  With its
exclusive sales and distribution partnership with Myriad Genetics,
physicians now have the convenience of sending patients to one of the
Company's patient service centers for Myriad Genetics' predisposition
testing for breast, ovarian, colon, uterine and melanoma skin
cancers, as well as hypertension.  The Company's relationship with
Myriad Genetics makes it one of the few clinical laboratories in the
United States to provide the entire oncology care continuum from



predisposition to surveillance testing, including screening,
evaluation, diagnosis and monitoring options.

     Enhance the Company's Oncology Testing Business by Leveraging
DIANON's Unique Capabilities

     DIANON is a national provider of oncology testing services and
significantly enhances the Company's oncology testing capabilities.
DIANON is recognized by physicians, managed care companies and other
customers as a leading provider of a wide range of anatomic pathology
testing services, with particular strength in uropathology,
dermatopathology, GI pathology and hematopathology.  DIANON's
strengths in anatomic pathology complement the Company's strengths in
other areas of cancer testing, particularly cytology.  The Company
expects that DIANON's extremely effective specialized sales force,
scientific expertise, efficient operating model and proprietary
CarePath clinical and pathology reporting system will allow it to
enhance its cancer testing business.  The Company intends to apply
DIANON's best practices to its existing anatomic pathology
operations, through which it expects to realize significant
operational efficiencies.  The Company believes that DIANON's
sophisticated sales and marketing organization will enhance the value
of its strategic cancer initiatives with Myriad Genetics, EXACT
Sciences, Celera Diagnostics, Correlogic Systems and its other
technology partners as well as increase its sales potential by
offering a wider range of testing services with the addition of the
Company's broader cancer testing menu to DIANON's existing test menu.

     Leverage National Infrastructure

     The Company's national presence provides it a number of
significant benefits and it intends to maintain and continue to build
its national presence.  The Company's national network of 47 primary
laboratories and over 1,200 service sites, including branches,
patient service centers and STAT laboratories, enables it to provide
high-quality services to physicians, hospitals, managed care
organizations and other customers across the United States and
Canada.  Recent agreements with Premier, as well as the Company's
managed care contracts with United Healthcare, Aetna, MAMSI and
others, demonstrate the importance of being able to deliver services
on a nationwide basis.  Furthermore, the Company's scale provides it
with significant cost structure advantages, particularly related to
supply and other operating costs.

     Expand Hospital Alliances

     Another of the Company's primary growth strategies is to develop
an increasing number of hospital and other provider alliances.  These
alliances can take several different forms, including laboratory
technical support (management) contracts, reference agreements and
cooperative testing arrangements.  The Company has focused and will
continue to focus on developing cooperative testing relationships
that capitalize on hospitals' ability to perform rapid response
testing and our ability to provide high quality routine and esoteric
testing.



Testing Services

     Routine Testing

     The Company currently offers approximately 4,000 different
clinical laboratory tests or procedures. Several hundred of these are
frequently used in general patient care by physicians to establish or
support a diagnosis, to monitor treatment or medication, or to search
for an otherwise undiagnosed condition. The most frequently requested
tests include blood chemistry analyses, urinalyses, blood cell
counts, Pap tests, HIV tests, microbiology cultures and procedures
and alcohol and other substance-abuse tests.  These routine
procedures are most often used by physicians in their
outpatient office practices. Physicians may elect to send such
procedures to an independent laboratory or they may choose to
establish an in-house laboratory to perform some of the tests.

     The Company performs this core group of routine tests in each of
its major laboratories, which constitutes a majority of the testing
performed by the Company.  In July 2002, the Company acquired
Dynacare, which enabled the Company to expand its national testing
network.  The Company generally performs and reports most routine
procedures within 24 hours, utilizing a variety of sophisticated and
computerized laboratory testing instruments.

     Specialty and Niche Testing

     While the information provided by many routine tests may be used
by nearly all physicians, regardless of specialty, many other
procedures are more specialized in nature.  One of the primary growth
strategies of the Company is the continued expansion of its specialty
and niche businesses, which involve certain types of unique testing
capabilities and/or client requirements.  In general, the specialty
and niche businesses are designed to serve two market segments:
(i) markets which are not typically served by the clinical testing
laboratory; and (ii) markets which are served by the clinical
testing laboratory and offer the possibility of adding related
services (such as clinical trials or occupational drug testing)
from the same supplier.  The Company's research and development
group continually seeks new and improved technologies for early
diagnosis.  For example, the Company's Center for Molecular
Biology and Pathology ("CMBP") is a leader in molecular
diagnostics and polymerase chain reaction ("PCR") technologies,
which are often able to provide earlier and more reliable
information regarding HIV, genetic diseases, cancer and many other
viral and bacterial diseases. In August 2000, the Company acquired
Los Angeles-based National Genetics Institute, Inc. (NGI), a
leader in the development of PCR assays for Hepatitis C (HCV).  In
June 2001, the Company acquired Minneapolis-based Viro-Med
Laboratories, Inc., which offers molecular microbial testing using
real time PCR platforms.  Management believes these technologies
may represent a significant savings to the healthcare system
increasing the detection of early stage (treatable) diseases. The
following are specialty and niche businesses in which the Company
offers testing and related services:



Infectious Disease.  The Company provides complete viral load
testing as well as HIV genotyping and phenotyping.  In 2000, the
Company added HIV GenoSure? to its portfolio of HIV resistance
testing services.  The Company's use of this leading-edge
technology puts it in the forefront of HIV drug resistance
testing-one of the most important issues surrounding the treatment
of HIV.  Additionally, the Company provides comprehensive testing
for HCV including both PCR testing and genotyping at CMBP, NGI and
Viro-Med.

Allergy Testing.  The Company offers an extensive range of
allergen testing services as well as computerized analysis and a
treatment program that enables primary care physicians to diagnose
and treat many kinds of allergic disorders.


Clinical Research Testing.  The Company regularly performs
clinical laboratory testing for pharmaceutical companies
conducting clinical research trials on new drugs.  This testing
often involves periodic testing of patients participating in the
trial over several years.

Diagnostic Genetics.  The Company offers cytogenetic, molecular
cytogenetic, biochemical and molecular genetic tests.

Identity Testing.  The Company provides forensic identity testing
used in connection with criminal proceedings and parentage
evaluation services which are used to assist in the resolution of
disputed parentage in child support litigation.  Parentage testing
involves the evaluation of immunological and genetic markers in
specimens obtained from the child, the mother and the alleged
father. Management believes it is now the largest provider of
identity testing services in the United States.

Oncology Testing.  The Company offers an extensive series of
testing technologies that aid in diagnosing and monitoring certain
cancers and predicting the outcome of certain treatments.  At NGI,
the Company's scientists have novel assays for detecting melanoma
and breast cancer in varying stages of clinical development.
During 2001, the Company began offering PreGen-26, a DNA-based
colorectal cancer test.  PreGen-26 is intended to detect certain
rare forms of colorectal cancer earlier, when treatment is most
effective.  In the second half of 2003, the Company plans to offer
PreGen-Plus, a non-invasive technology to aid in the early
detection of more common forms of colorectal cancer which will
reach a broader population than PreGen-26.  Both PreGen-26 and
PreGen-Plus utilize EXACT Sciences' proprietary genomics-based
technology.  In January 2003, the Company acquired DIANON, a
national provider of oncology testing services.  DIANON is
recognized by physicians, managed care companies and other
customers as a leading provider of a wide range of anatomic
pathology testing services, with particular strength in
uropathology, dermatopathology, GI pathology and hematopathology.

Occupational Testing Services.  The Company provides testing for
the detection of drug abuse for private and government customers,
and also provides blood testing services for the detection of drug
abuse and alcohol. These testing services are designed to produce



"forensic" quality test results that satisfy the rigorous
requirements for admissibility as evidence in legal proceedings.
The Company also provides other analytical testing and a variety
of management support services.

     The specialized or niche testing services noted above, as well
as other complex procedures, are sent to designated facilities where
the Company has concentrated the people, instruments and related
resources for performing such procedures so that quality and
efficiency can be most effectively monitored.  CMBP, NGI and Viro-Med
also specialize in new test development and related education and
training.

Clients

     The Company provides testing services to a broad range of
health care providers.  During the year ended December 31, 2002,
no client or group of clients under the same contract accounted
for more than four percent of the Company's net sales.  The
primary client groups serviced by the Company include:

     Independent Physicians and Physician Groups

     Physicians requiring testing for their patients who are
unaffiliated with a managed care plan are one of the Company's
primary sources of testing services.  Fees for clinical laboratory
testing services rendered for these physicians are billed either
to the physician, to the patient or the patient's third party
payor such as insurance companies, Medicare and Medicaid.
Billings are typically on a fee-for-service basis.  If the
billings are to the physician, they are based on the wholesale or
customer fee schedule and subject to negotiation.  Otherwise, the
patient is billed at the laboratory's retail or patient fee
schedule and subject to third party payor limitations and
negotiation by physicians on behalf of their patients.  Revenues
received from Medicare and Medicaid billings are based on
government-set fee schedules.

     Hospitals

     The Company provides hospitals with services ranging from
routine and specialty testing to contract management services.
Hospitals generally maintain an on-site laboratory to perform
immediately needed testing on patients receiving care.  However,
they also refer less time sensitive procedures, less frequently
needed procedures and highly specialized procedures to outside
facilities, including independent clinical laboratories and larger
medical centers.  The Company typically charges hospitals for any
such tests on a fee-for-service basis which is derived from the
Company's customer fee schedule.  Fees for management services are
billed monthly at contractually agreed-upon rates.

     HMOs and Other Managed Care Groups

     The Company serves HMOs and other managed care organizations.
These medical service providers typically contract with a limited
number of clinical laboratories and then designate the laboratory or
laboratories to be used for tests ordered by participating
physicians.  The majority of the Company's managed care testing is



negotiated on a fee-for-service basis.  Testing is sometimes
reimbursed on a capitated basis for managed care organizations.
Under a capitated payment contract, the Company agrees to perform
certain laboratory tests during a given month for which the managed
care organization agrees to pay a flat monthly fee for each covered
member.  The tests covered under agreements of this type are
negotiated for each contract, but usually include routine tests and
exclude highly specialized tests.  Many of the national and large
regional managed care organizations prefer to use large independent
clinical labs such as the Company because they can monitor service
and performance on a national basis.

     Other Institutions

     The Company serves other institutions, including governmental
agencies, large employers and other independent clinical laboratories
that do not have the breadth of the Company's testing capabilities.
The institutions typically pay on a negotiated fee-for-service basis.

Payors

     Most testing services are billed to a party other than the
physician or other authorized person who ordered the test.  In
addition, tests performed by a single physician may be billed to
different payors depending on the medical insurance benefits of a
particular patient.  Payors other than the direct patient include,
among others, insurance companies, managed care organizations,
Medicare and Medicaid.  For the year ended December 31, 2002,
accessions (based on the total volume of accessions) and average
revenue per accession by payor are as follows:

                                                         Revenue
                           Accession Volume as             per
                               a % of Total              Accession
                          ----------------------         ----------
Private Patients                   2.9%                   $119.93
Medicare, Medicaid and
  Other                           18.7%                   $ 31.87
Commercial Clients                37.4%                   $ 26.27
Managed Care                      41.0%                   $ 30.45

Affiliations and Alliances

     The Company continues to develop its relationships with
hospitals through traditional and non-traditional business models.
The Company has increased its focus on the traditional business model
with a hospital, whereby the Company enters into a reference service
agreement and establishes a Hospital Territory Manager role.  The
addition of this sales/service position sets the Company at an
advantage with specialized and targeted attention for the Company's
hospital customers.  In the non-traditional business model, the
Company has seen strong growth due to laboratory technical support
(management) contracts and shared services agreements.  In 2002, the
Company added a number of new traditional and non-traditional
relationships with hospitals.

     Reference agreements, the Company's traditional business model,
provide a means for hospitals to outsource patient laboratory testing
services that are not time critical (e.g., test results reported



within twenty-four hours of drawing the specimen as opposed to those
requiring two to four hour turnaround).  These agreements allow the
hospitals to maintain their own STAT/emergency lab on-site, while
eliminating certain costs of maintaining a full-service lab on their
premises.

     One example of a non-traditional business model is where the
Company provides technical support services or laboratory management
for a fee in a variety of health care settings.  In these
relationships, the Company may supply the laboratory manager and/or
provide other laboratory personnel, as well as testing equipment and
supplies, in the management of a laboratory that is owned by a
hospital, managed care organization or other health care provider.
Under the typical laboratory technical support agreement, the
laboratory manager is employed by or under contract with the Company.
In such laboratory management arrangements, the Company generally
bills the hospital a monthly contractually-determined management fee
in addition to different fixed on-site and off-site fees per test.
Highly esoteric tests are generally billed under a separate fee
schedule.  A pathologist is designated by the laboratory owner to
serve as medical director for the laboratory, and all billing,
licensure and permits also remain the obligation of the owner of the
laboratory.

     In another example of a non-traditional business model, the
Company develops a cooperative testing relationship with a hospital
that has an outreach program within its community.  The parties
combine efforts to support the needs of a specific community.  These
relationships center around capitalizing on such hospital's excess
capacity and ability to perform rapid response testing and the
Company's ability to provide lower cost, high quality esoteric
testing.  These arrangements provide communities with synergistic,
high quality testing services within a single infrastructure.

     An important advantage the Company offers to its clients is the
flexibility of the Company's information systems for creating single
or double bi-directional interfaces to support such cooperative
testing arrangements.  Such bi-directional interfaces allow each
party's system to efficiently and effectively communicate with the
other party's system.

     The Company's laboratory management and technical support
agreements typically have initial terms between three and five years.
However, most contracts contain a clause that permits termination for
cause prior to the contract expiration date of the initial term.
There are additional termination clauses that generally fall into one
of the following categories: (1) termination without cause by either
party during the additional term, after written notice 60 to 120 days
prior to termination; (2) termination by the hospital if there are
uncorrected deficiencies in the Company's performance after 30 days'
written notice; (3) termination if there is a loss of accreditation
or licensure held by the Company which accreditation or licensure is
not reinstated within 60 days of the loss; or (4) termination should
the Company fail to meet anticipated profitability.  While the
Company believes that it will maintain and renew its existing
contracts, there can be no assurance of such maintenance or renewal.



     The Company has developed several different pricing formulas
under its non-traditional business contracts.  The Company generally
bills the hospital a monthly contractually-determined management fee
in addition to different fixed on-site and off-site fees per test.
Highly esoteric tests are generally billed under a separate fee
schedule.  In certain cases, profitability may depend on the
Company's ability to accurately predict test volumes, patient
encounters or the number of admissions.

Sales and Marketing and Client Service

     The Company offers its services through a combination of direct
sales generalists and specialists.  Sales generalists market the
mainstream or traditional routine laboratory services primarily to
physicians, while specialists concentrate on individual market
segments, such as hospitals or managed care organizations, or on
testing niches, such as identity testing or genetic testing.
Specialist positions are established when an in-depth level of
expertise is necessary to effectively offer the specialized services.
When the need arises, specialists and generalists work cooperatively
to address specific opportunities.  At December 31, 2002, the Company
employed 254 generalists and 122 specialists.  The Company's sales
generalists and specialists are compensated through a combination of
salaries, commissions and bonuses, at levels commensurate with each
individual's qualifications and responsibilities. Commissions are
primarily based upon the individual's productivity in generating new
business for the Company.

     The Company also employs regional service managers and account
managers ("AMs") to interact with clients on an ongoing basis.  AMs
monitor the status of the services being provided to clients, act as
problem-solvers, provide information on new testing developments and
serve as the client's regular point of contact with the Company.  At
December 31, 2002, the Company employed 349 AMs.  AMs are compensated
through a combination of salaries and bonuses commensurate with each
individual's qualifications and responsibilities.

     The Company believes that the clinical laboratory service
business is shifting away from the traditional direct sales structure
to one in which the purchasing decisions for laboratory services are
increasingly being made by managed care organizations, insurance
plans, employers and even by patients themselves.  In view of these
changes, the Company has adapted its sales and marketing structure to
more appropriately address the opportunities presented by this shift.

     The Company competes primarily on the basis of the quality of
its testing, reporting and information systems, its reputation in
the medical community, the pricing of its services and its ability
to employ qualified personnel.  During 2002, one of the Company's
goals has been to improve client service.  An important factor in
improving client service includes the Company's initiatives to
improve its billing process.  See "-Billing."

Information Systems

     The Company has developed and implemented management
information systems to monitor operations and control costs.  All
financial functions are centralized in Burlington, North Carolina
including purchasing and accounting.  Management believes this



provides greater control over spending as well as increased
supervision and monitoring of results of operations.

     The Company believes that the health care provider's need for
data will continue to place high demands on the Company's information
systems staff.  The Company operates several systems to handle
laboratory, billing and financial data and transactions.  The Company
believes that the efficient handling of information involving
clients, patients, payors and other parties will be a critical factor
in the Company's future success.  The Company's Corporate Information
Systems Division manages its information resources and programs on a
consolidated basis in order to achieve greater efficiency and
economies of scale.  The Company employs a Chief Information Officer,
whose responsibility is to integrate, manage and develop the
Company's information systems.
Billing

     Billing for laboratory services is a complex process.
Laboratories must bill many different payors such as doctors,
patients, hundreds of different insurance companies, Medicare,
Medicaid and employer groups, all of whom have different billing
requirements.  The Company believes that a majority of its bad debt
expense is the result of non-credit related issues which slow the
billing process.  A primary cause of bad debt expense is missing or
incorrect billing information on requisitions.  The Company believes
that this experience is similar to that of its primary competitors.
The Company generally performs the requested tests and returns the
test results regardless of whether billing information has been
provided at all or has been provided incorrectly.  The Company
subsequently attempts to obtain any missing information or rectify
any incorrect billing information received from the health care
provider.  Among the many other factors complicating the billing
process are more intricate billing arrangements due to contracts with
third-party administrators, disputes between payors as to the party
responsible for payment of the bill and auditing for specific
compliance issues.

     During 2002, the Company's days sales outstanding (DSO) were
reduced 4 days from December 31, 2001 levels to 54 days as a result
of Company-wide efforts to increase cash collections from all payors,
as well as on-going improvements to its claim submission processes.
The Company is continuing to take the steps necessary to improve DSO
and cash collections by:

1) conversion of decentralized billing locations to a centralized
billing system.  During 2002, billing activity in Denver, Phoenix
and Seattle was converted to the centralized billing system.  In
2003 and 2004, the Company will concentrate its conversion
activities on the Dynacare locations as well as begin conversion
on the DIANON locations;

2) implementation of, beginning in the first quarter of 2000, an
initiative to reduce the number of requisitions received that are
missing certain billing information.  This initiative involves
measuring the number of clinical requisitions received from an
ordering client, as well as what specific information was not
provided.  The Company then identifies root causes of why the
information was missing and takes steps to ensure that information



is provided in the future.  These steps include re-educating
clients as to what information is needed in order for the Company
to bill and collect for the test.  As of December 31, 2002, the
percentage of requisitions received which were missing billing
information was 4.6% as compared to 6.0% at the end of 2001.

     Although there can be no assurance of success, the Company has
developed a number of initiatives to address the complexity of the
billing process and to improve collection rates.  These initiatives
include:  i) installation of personal computer based products in
client offices and Company locations to help with the accuracy and
completeness of billing information captured on the front-end; ii)
establishment of a project group to focus on improvements in order
entry; and iii) development and implementation of enhanced
eligibility checking to compare information to payor records before
billing.  Additionally, the Company believes that it can benefit from
the conversion of its multiple billing systems into a centralized
system.

Quality Assurance

     The Company considers the quality of its tests to be of critical
importance, and it has established a comprehensive quality assurance
program for all of its laboratories and other facilities designed to
help assure accurate and timely test results.  In addition to the
compulsory external inspections and proficiency programs required by
CMS and other regulatory agencies, Company-wide systems and
procedures are in place to emphasize and monitor quality assurance.
All of the Company's regional laboratories are subject to on-site
evaluations, the College of American Pathologists ("CAP") proficiency
testing program, state surveys and the Company's own internal quality
control programs.

     External Proficiency/ Accreditations.  The Company participates
in numerous externally-administered, blind quality surveillance
programs, including the CAP program.  The blind programs supplement
all other quality assurance procedures and give Company management
the opportunity to review its technical and service performance from
the client's perspective.

     Internal Quality Control.  The Company regularly performs
internal quality control testing by running quality control samples
with known values at the same time as patient samples submitted for
testing.  All quality control sample test results are entered into
the Company's national laboratory computer, which connects the
Company's facilities nationwide to a common on-line quality control
database.  This system helps technologists and technicians check
quality control values and requires further prompt verification if
any quality control value is out of range.  The Company has an
extensive, internally administered program of blind sample
proficiency testing (i.e. the testing laboratory does not know the
sample being tested is a quality control sample), as part of which
the Company's locations receive specimens from the Company's Quality
Assurance and Corporate Technical Services departments for analysis.

     The CAP accreditation program involves both on-site inspections
of the laboratory and participation in CAP's proficiency testing
program for all categories in which the laboratory is accredited by
CAP.  CAP is an independent non-governmental organization of board-



certified pathologists which offers an accreditation program to which
laboratories can voluntarily subscribe.  CAP has been accredited by
CMS to inspect clinical laboratories to determine adherence to the
Clinical Laboratory Improvement Act of 1967, and the Clinical
Laboratory Improvement Amendments of 1988 standards.  A laboratory's
receipt of accreditation by CAP satisfies the Medicare requirement
for participation in proficiency testing programs administered by an
external source.  All of the Company's major laboratories are
accredited by CAP.

     The Company's forensic crime laboratory, located at Research
Triangle Park, NC, is accredited by the American Society of Crime
Laboratory Directors, Laboratory Accreditation Board ("ASCLD/LAB") in
the category of DNA testing.  Under the Crime Laboratory
Accreditation Program managed by the ASCLD/LAB, a crime laboratory
undergoes a comprehensive and in-depth inspection to demonstrate that
its management, operations, employees, procedures and instruments,
physical plant, and security and personnel safety procedures meet
stringent quality standards.  The Company is one of 238 ASCLD
accredited crime laboratories worldwide and is one of only eight
private crime laboratories holding the accreditation.  Accreditation
is granted for a period of five years provided that a laboratory
continues to meet the standards during that period.

Competition

     The clinical laboratory business is intensely competitive.  The
Company believes that in 2002 the entire United States clinical
laboratory testing industry had revenues exceeding $34 billion;
approximately 49% of such revenues were attributable to hospital-
affiliated laboratories, approximately 39% were attributable to
independent clinical laboratories and approximately 12% were
attributable to physicians in their offices and laboratories.  There
are presently two national independent clinical laboratories: the
Company and Quest Diagnostics Incorporated ("Quest"), which had
approximately $4.1 billion in revenues from clinical laboratory
testing in 2002.

     In addition to the other national clinical laboratory, the
Company competes with many smaller regional independent clinical
laboratories as well as laboratories owned by hospitals and
physicians.  The Company believes that the following factors, among
others, are often used by health care providers in selecting a
laboratory: i) pricing of the laboratory's test services; ii)
accuracy, timeliness and consistency in reporting test results; iii)
number and type of tests performed; iv) service capability and
convenience offered by the laboratory; and v) its reputation in the
medical community.  The Company believes that it competes favorably
with its principal competitors in each of these areas and is
currently implementing strategies to improve its competitive
position.

     The Company believes that consolidation will continue in the
clinical laboratory testing business.  In addition, the Company
believes that it and the other large independent clinical laboratory
testing companies will be able to increase their share of the overall
clinical laboratory testing market due to a number of external
factors including cost efficiencies afforded by large-scale automated
testing, Medicare reimbursement reductions and the growth of managed



health care entities which require low-cost testing services and
large service networks.  In addition, legal restrictions on physician
referrals and their ownership of laboratories as well as increased
regulation of laboratories are expected to contribute to the
continuing consolidation of the industry.

Employees

     As of January 31, 2003, the Company had approximately 24,000
full-time equivalent employees.  Subsidiaries of the Company have
four collective bargaining agreements which cover approximately 700
employees.  Two of the contracts have expired and the parties are
presently continuing to abide by their key terms.  One subsidiary has
a bargaining unit of 75 employees that has begun negotiations on an
initial contract.  The Company believes that its overall relations
with its employees are good.

Regulation and Reimbursement

     General

     The clinical laboratory industry is subject to significant
governmental regulation at the federal, state and sometimes local
levels. As described below, these regulations concern licensure and
operation of clinical laboratories, payment for laboratory services,
health care fraud and abuse, security and confidentiality of health
information and environmental and occupational safety.

     Regulation of Clinical Laboratories

     The Clinical Laboratory Improvement Amendments of 1988 ("CLIA")
extend federal oversight to virtually all clinical laboratories by
requiring that they be certified by the federal government or by a
federally-approved accreditation agency.  Pursuant to CLIA, clinical
laboratories must meet quality assurance, quality control and
personnel standards.  Laboratories also must undergo proficiency
testing and are subject to inspections.

     Standards for testing under CLIA are based on the complexity of
the tests performed by the laboratory, with all tests classified as
either high complexity, moderate complexity, or waived.  Laboratories
performing high complexity testing are required to meet more
stringent requirements than moderate complexity laboratories.  Labs
performing only waived tests, which are tests determined by the Food
and Drug Administration to have a low potential for error and
requiring little or no oversight, may apply for a certificate of
waiver indicating that they need not comply with most of the
requirements of CLIA.  All major and many smaller Company facilities
hold CLIA certificates to perform high complexity testing.  The
Company's remaining smaller testing sites hold CLIA certificates to
perform moderate complexity testing or have a certificate of waiver.

     The sanction for failure to comply with CLIA requirements may be
suspension, revocation or limitation of a laboratory's CLIA
certificate, which is necessary to conduct business, as well as
significant fines and/or criminal penalties.  The loss or suspension
of a license, imposition of a fine or other penalties, or future
changes in the CLIA law or regulations (or interpretation of the law
or regulations) could have a material adverse effect on the Company.



     The Company is also subject to state regulation.  CLIA provides
that a state may adopt regulations different from or more stringent
than those under federal law, and a number of states have implemented
their own laboratory regulatory schemes.  State laws may require that
laboratory personnel meet certain qualifications, specify certain
quality controls, or require maintenance of certain records.  For
example, some of the Company's laboratories are subject to the State
of New York's clinical laboratory regulations, which contain
provisions that are more stringent than those under federal law.

     The Company believes that it is in compliance with federal and
state laboratory requirements, and the Company's laboratories have
continuing programs to ensure that their operations meet all
applicable regulatory requirements, but no assurances can be given
that the Company's laboratories will pass all future licensure or
certification inspections.

     Payment of Clinical Laboratory Services

     In both 2002 and 2001, the Company derived approximately 16% of
its net sales from tests performed for beneficiaries of the Medicare
and Medicaid programs.  In addition, the Company's other business
depends significantly on continued participation in these programs,
and other government healthcare programs, because clients often want
a single laboratory to perform all of their testing services.  Both
governmental and private sector payors have made efforts to contain
or reduce health care costs, including payment for clinical
laboratory services, in recent years.

     In 1984, Congress established a Medicare fee schedule for
clinical laboratory services performed for patients covered under
Part B of the Medicare program.  Subsequently, Congress imposed a
national ceiling on the amount that can be paid under the fee
schedule.  Laboratories bill the program directly and must accept the
scheduled amount as payment in full for covered tests performed on
behalf of Medicare beneficiaries.  In addition, state Medicaid
programs are prohibited from paying more than the Medicare fee
schedule limitation for clinical laboratory services furnished to
Medicaid recipients.

     Since 1984, Congress has periodically reduced the ceilings on
Medicare payment to clinical laboratories from previously authorized
levels.  In 1993, pursuant to provisions in the Omnibus Budget and
Reconciliation Act of 1993 ("OBRA '93"), Congress reduced, effective
January 1, 1994, the Medicare national limitations from 88% of the
1984 national median to 76% of the 1984 national median, which
reductions were implemented on a phased-in basis from 1994 through
1996 (to 84% in 1994, 80% in 1995 and 76% in 1996).  The 1996
reduction to 76% was implemented as scheduled on January 1, 1996.
OBRA '93 also eliminated the provision for annual fee schedule
increases based upon the Consumer Price Index for 1994 and 1995.
These reductions were partially offset, however, by annual Consumer
Price Index fee schedule increases of 3.2% and 2.7% in 1996 and 1997,
respectively.

     In August 1997, Congress passed and the President signed the
Balanced Budget Act of 1997 ("BBA"), which included a provision that
reduced, effective January 1, 1998, the Medicare national limitation
from 76% of the 1984 national median to 74% of the 1984 national



median.  An additional provision in the BBA froze the Consumer Price
Index update for five years.  This provision has recently expired and
in 2003, there will be a 1.19% increase in the fee schedule based on
the Consumer Price Index.

     For services reimbursed under the Medicare physician fee
schedule, the conversion factor and relative value units may be
subject to adjustment on an annual basis.  On February 28, 2003, the
Centers for Medicare and Medicaid Services ("CMS") increased the
conversion factor for pathology testing and other physician services
by an average of 1.6% as of March 1, 2003.

     Because a significant portion of the Company's costs are
relatively fixed, Medicare, Medicaid and other government program
payment reductions have a direct adverse affect on the Company's net
earnings and cash flows.  The Company cannot predict whether
additional Medicare reductions will be implemented.

     On April 1, 1997, Medicare's policy for billing of automated
chemistry profiles went into effect.  The policy, which was developed
by the Health Care Financing Administration ("HCFA"), now known as
CMS, working with the American Medical Association, eliminated the
old commonly used "19-22 test" automated chemistry profile, sometimes
referred to as a "SMAC" and replaced it with four new panels of
"clinically relevant" automated tests (each containing from four to
twelve chemistry tests).  As a result of this policy, all major
laboratory companies, including the Company, were required to
eliminate the old chemistry profiles from their standard test
requisition forms and standard test offerings by July 1, 1998.  The
Company developed and implemented a new "universal" test requisition
and "standard test offerings" which successfully incorporated all
required changes by the July 1, 1998 deadline.

     The automated chemistry profile billing policy is intended to
reduce the number of non-Medicare covered "screening tests" which
Medicare believes have in the past been inappropriately billed to
Medicare.  BBA also required the Department of Health and Human
Services to adopt uniform coverage, administration and payment
policies for lab tests using a negotiated rulemaking process.
Consensus was reached by the negotiated rulemaking committee which,
among other things, established policies limiting Medicare coverage
for certain tests to patients with specified medical conditions or
diagnoses.  These uniform policies will replace local Medicare
coverage policies.  The final rules were published on November 23,
2001 and generally became effective on November 25, 2002.  Due to the
variety of new rules (including limited coverage rules) which have
been adopted or proposed recently, and the short time that the final
rule has been in effect, the Company does not believe a meaningful
estimate of the potential revenue impact of these developments can be
made at this time.  The Company will continue to monitor this issue
going forward.

     Future changes in federal, state and local regulations (or in
the interpretation of current regulations) affecting government
payment for clinical laboratory testing could have a material adverse
effect on the Company.  However, based on currently available
information, the Company is unable to predict what type of
legislation, if any, will be enacted into law.



Security and Confidentiality of Health Information

     The Health Insurance Portability and Accountability Act of 1996
("HIPAA") was designed to address issues related to the portability
of health insurance.  A section on administrative simplification was
added to the law in an effort 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 regulations promulgated
under the administrative simplification provisions of HIPAA have been
finalized and include the Transactions and Code Sets Rule, the
Privacy Rule, and the National Standard Employer Identifier Rule,
which requires the use of a unique employer identifier in connection
with certain electronic transactions.  These regulations apply to
health plans, health care providers that conduct standard
transactions electronically, or health care clearinghouses ("covered
entities").  The security regulation was issued on February 20, 2003.

     The Transactions and Code Sets Rule standardizes the format and
data content to be used in the most common electronic health care
transactions, including, among others, health care claims,
eligibility, and health care claim status.  Its purpose is to
encourage the use of electronic exchanges while reducing the
administrative burden associated with using different formats.  The
compliance date for this rule was October 16, 2002; however, under
the Administrative Simplification Compliance Act, covered entities
(except small health plans) were permitted to file an extension plan
with the Department of Health and Human Services before October 16,
2002 to extend the compliance date to October 16, 2003.  The
extension plan described how the entity will come into compliance
with the Transactions and Code Sets Rule requirements by the
compliance date.  The Company and its subsidiaries have filed
extension plans and expect to meet the compliance date of October 16,
2003.  The Company has been informed that some of its payors may be
unable to meet the compliance date.  If those payors are unable to
meet the compliance date, it is possible that the Company's cash flow
could be disrupted as a result of those payors failing to accept
claims or failing to remit payment in standard format.  The Company
is optimistic that these potential issues will be resolved by the
compliance date, through additional guidance from the Department of
Health and Human Services or otherwise.

     The Privacy Rule regulates the use and disclosure of protected
health information ("PHI") by covered entities.  It also sets forth
certain rights that an individual has with respect to his or her PHI
maintained by a covered entity, such as the right to access or amend
certain records containing PHI or to request restrictions on the use
or disclosure of PHI.  Additionally, it requires covered entities to
implement certain administrative requirements, such as designating a
privacy officer, drafting and implementing privacy policies and
procedures, and training workforce members.  Health care providers
governed by the Privacy Rule must come into compliance by April 14,
2003.

     The Company's HIPAA project plans have two phases: (i)
assessment of current systems, applications, processes and procedure
testing and validation for HIPAA compliance and (ii) remediation of
affected systems, applications, processes and procedure testing and



validation for HIPAA compliance.

     The Company has completed the assessment phase of the
Transactions and Code Sets provision.  Remediation is currently in
progress and the Company expects to meet the October 16, 2003
compliance date.  The Company has completed the assessment phase of
the Privacy provision and has made financial projections and
initiated remedial measures designed to meet the April 14, 2003
compliance deadline.  The total cost associated with the requirements
of HIPAA is not expected to be material to the Company's operations
or cash flows.  There are, however, many unresolved issues in both of
these areas and future interpretations of HIPAA could impose
significant cost on the Company.

     In addition to the federal HIPAA regulations described above,
there are a number of state laws regarding the confidentiality of
medical information, some of which apply to clinical laboratories.
These laws vary widely, and new laws in this area are pending, but
they most commonly restrict the use and disclosure of medical
information.  Penalties for violation of these laws include sanctions
against a laboratory's state licensure, as well as civil and/or
criminal penalties.  Violations of the HIPAA provisions after the
applicable compliance dates could result in civil and/or criminal
penalties, including significant fines and up to 10 years in prison.

     Fraud and Abuse Regulations

     Existing federal laws governing Medicare and Medicaid, as well
as similar state laws, impose a variety of broadly described fraud
and abuse prohibitions on healthcare providers, including clinical
laboratories.  These laws are interpreted liberally and enforced
aggressively by multiple government agencies, including the U.S.
Department of Justice, the U.S. Department of Health and Human
Services Office of the Inspector General ("OIG"), and the states.
The federal government's enforcement efforts have been increasing, in
part as a result of the enactment of HIPAA, which, among other
things, provided for the establishment of a program to coordinate
federal, state and local law enforcement programs, and to conduct
investigations, audits and inspections relating to payment for
healthcare, and for the establishment of a federal anti-fraud and
abuse account for enforcement efforts, funded through collection of
penalties and fines for violations of the healthcare anti-fraud and
abuse laws.  Moreover, over the last several years, the clinical
laboratory industry has been the focus of major governmental
enforcement initiatives.

     The Medicare and Medicaid anti-kickback laws prohibit
intentionally providing anything of value to induce the referral of
Medicare and Medicaid business.  HHS has published safe harbor
regulations which specify certain business activities that, although
literally covered by the laws, will not violate the Medicare/Medicaid
anti-kickback laws if all conditions of the safe harbor are met.
Failure to fall within a safe harbor does not constitute a violation
of the anti-kickback laws; rather, the arrangement would remain
subject to scrutiny by HHS.  Most states have their own Medicaid
anti-kickback laws, and several states also have anti-kickback laws
that apply to attempts to gain referral of patients covered by
private insurance as well as federal programs.



     In October 1994, the OIG issued a Special Fraud Alert, which set
forth a number of practices allegedly engaged in by clinical
laboratories and health care providers that the OIG believes violate
the federal anti-kickback laws. These practices include providing
employees to collect patient samples at physician offices if the
employees perform additional services for physicians that are
typically the responsibility of the physicians' staff; selling
laboratory services to renal dialysis centers at prices that are
below fair market value in return for referrals of Medicare tests
which are billed to Medicare at higher rates; providing free testing
to a physician's HMO patients in situations where the referring
physicians benefit from such reduced laboratory utilizations;
providing free pick-up and disposal of bio-hazardous waste for
physicians for items unrelated to a laboratory's testing services;
providing facsimile machines or computers to physicians that are not
exclusively used in connection with the laboratory services
performed; and providing free testing for health care providers,
their families and their employees (professional courtesy testing).
The OIG stressed in the Special Fraud Alert that when one purpose of
the arrangements is to induce referral of program-reimbursed
laboratory testing, both the clinical laboratory and the health care
provider or physician may be liable under the anti-kickback laws, and
may be subject to criminal prosecution and exclusion from
participation in the Medicare and Medicaid programs.

     The OIG has provided additional guidance regarding arrangements
that may violate the anti-kickback laws.  In a 1999 Advisory Opinion,
the OIG concluded that a proposed arrangement whereby a laboratory
would offer physicians significant discounts on laboratory tests
billed to the physician might violate the anti-kickback act.  The OIG
reasoned that if the discounts were greater than could otherwise be
justified, the proposed arrangement could be viewed as the laboratory
providing discounts to the physician in exchange for referral by the
physician of non-discounted Medicare program business.  Similarly, in
1999 correspondence, the OIG stated that if any direct or indirect
link exists between a price discount that a laboratory offers to a
skilled nursing facility ("SNF") for Prospective Payment System
("PPS")-covered services and referrals of Medicare Part B business,
the anti-kickback statute would be implicated.  Moreover, the OIG
stated that it is continuing to monitor the situation regarding
potentially unlawful contracts between SNFs and service providers,
including laboratories.

     Under another federal provision, known as the "Stark" law or
"self-referral" prohibition, physicians who have an investment or
compensation relationship with a clinical laboratory may not, unless
a statutory exception applies, refer Medicare or Medicaid patients
for testing to the laboratory, regardless of the intent of the
parties.  Similarly, laboratories may not bill Medicare or Medicaid
or any other party for services furnished pursuant to a prohibited
referral.  There are federal Stark law exceptions for fair market
value compensation to a physician for reasonable and necessary
services, and for discounts to physicians purchasing laboratory
services.  There is also an exception for physician investment in a
laboratory company so long as the company's stock is traded on a
public exchange, the company has stockholder equity exceeding $75.0
million, and the physician's shares may be purchased on terms
generally available to the public.  State self-referral laws exist as
well, which apply to all patient referrals, not just Medicare and



Medicaid.

     There are a variety of other types of federal and state
anti-fraud and abuse laws, including laws prohibiting submission of
false or otherwise improper claims to federal healthcare programs,
and laws limiting the extent of any differences between the Company's
charges to Medicare and Medicaid and its charges to other parties.
The Company seeks to conduct its business in compliance with the
federal and state anti-fraud and abuse laws.  However, the Company is
unable to predict how these laws will be applied in the future, and
no assurances can be given that its arrangements will not be subject
to scrutiny under them.  Sanctions for violations of these laws may
include exclusion from participation in Medicare, Medicaid and other
federal healthcare programs, significant criminal and civil fines and
penalties, and loss of licensure.  Any exclusion from participation
in a federal healthcare program, or any loss of licensure, arising
from any action by any federal or state regulatory or enforcement
authority, would have a material adverse effect on the Company's
business.  In addition, any significant criminal or civil penalty
resulting from such proceedings could have a material adverse effect
on the Company's business.

     Environmental, Health and Safety

     The Company is subject to licensing and regulation under
federal, state and local laws and regulations relating to the
protection of the environment and human health and safety, including
laws and regulations relating to the handling, transportation and
disposal of medical specimens, infectious and hazardous waste and
radioactive materials as well as to the safety and health of
laboratory employees. All Company laboratories are subject to
applicable federal and state laws and regulations relating to
biohazard disposal of all laboratory specimens and the Company
generally utilizes outside vendors for disposal of such specimens.
In addition, the federal Occupational Safety and Health
Administration ("OSHA") has established extensive requirements
relating to workplace safety for health care employers, including
clinical laboratories, whose workers may be exposed to blood-borne
pathogens such as HIV and the hepatitis B virus. These regulations,
among other things, require work practice controls, protective
clothing and equipment, training, medical follow-up, vaccinations and
other measures designed to minimize exposure to, and transmission of,
blood-borne pathogens.

     On November 6, 2000, Congress passed the Needlestick Safety and
Prevention Act which required, among other things, that companies
include in their safety programs the evaluation and use of
engineering controls such as safety needles if found to be effective
at reducing the risk of needlestick injuries in the workplace.
During 2001, the Company voluntarily implemented the use of safety
needles at all of its service locations at a cost of approximately
$6.0 million.

     Although the Company is not aware of any current material non-
compliance with such federal, state and local laws and regulations,
failure to comply could subject the Company to denial of the right to
conduct business, fines, criminal penalties and/or other enforcement
actions.



     Drug Testing

     Drug testing for public sector employees is regulated by the
Substance Abuse and Mental Health Services Administration ("SAMSHA")
(formerly the National Institute on Drug Abuse), which has
established detailed performance and quality standards that
laboratories must meet to be approved to perform drug testing on
employees of federal government contractors and certain other
entities.  To the extent that the Company's laboratories perform such
testing, each must be certified as meeting SAMSHA standards. The
Company's Research Triangle Park, North Carolina; Raritan, New
Jersey; Houston, Texas; San Diego, California and Southaven,
Mississippi laboratories are SAMSHA certified.

     Controlled Substances

     The use of controlled substances in testing for drugs of abuse
is regulated by the federal Drug Enforcement Administration.

Compliance Program

     Because of evolving interpretations of regulations and the
national debate over health care fraud and abuse, compliance with all
Medicare, Medicaid and other government-established rules and
regulations has become a significant factor throughout the clinical
laboratory industry.  The Company has implemented a comprehensive
company-wide compliance program.  The objective of the Company's
compliance program is to develop, implement, and update compliance
safeguards as necessary.  Emphasis is placed on developing compliance
policies and guidelines, personnel training programs and various
monitoring and audit procedures to attempt to achieve implementation
of all applicable rules and regulations.

     Recently, DIANON settled a U.S. Department of Justice
investigation into several of DIANON's billing practices.  As part of
the settlement, DIANON entered into a voluntary corporate integrity
program.  As part of DIANON's acquisition of UroCor Inc., DIANON
assumed responsibility and liability for compliance with the UroCor
corporate integrity agreement.

     The Company seeks to conduct its business in compliance with all
statutes, regulations, and other requirements applicable to its
clinical laboratory operations.  The clinical laboratory testing
industry is, however, subject to extensive regulation, and many of
these statutes and regulations have not been interpreted by the
courts.  There can be no assurance therefore that applicable statutes
and regulations will not be interpreted or applied by a
prosecutorial, regulatory or judicial authority in a manner that
would adversely effect the Company. Potential sanctions for violation
of these statutes and regulations include significant fines and the
loss of various licenses, certificates, and authorizations, which
could have a material adverse effect on the Company's business.



Item 2.   PROPERTIES

     The following table summarizes certain information as to the
Company's principal operating and administrative facilities as of
December 31, 2002.

                          Approximate
                                    Area                      Nature of
      Location                (in square feet)                Occupancy
- ----------------------        ----------------           --------------------
Operating Facilities:
Birmingham, Alabama              100,000               Lease expires 2005
Phoenix, Arizona                  55,000               Lease expires 2009
Los Angeles, California           40,000               Lease expires 2004
San Diego, California             48,000               Lease expires 2007
Denver, Colorado                  20,000               Lease expires 2005
Tampa, Florida                    95,000               Lease expires 2015;
                                                          one 5 year
                                                          renewal option
                                  18,000               Lease expires 2005
Hollywood, Florida                21,000               Lease expires 2003
Chicago, Illinois                 45,000               Lease expires 2003;
                                                          two 5 year
                                                          renewal options
Louisville, Kentucky              60,000               Lease expires 2007;
                                                          two 5 year
                                                          renewal options
Baton Rouge, Louisiana            28,000               Lease expires 2004
Detroit, Michigan                 32,000               Lease expires 2004;
                                                          one 10 year
                                                          renewal option
Eden Prairie, Minnesota           48,000               Lease expires 2014
Meridian, Mississippi             29,000               Lease expires 2005
Kansas City, Missouri             78,000               Owned
Reno, Nevada                      16,000               Owned
                                  14,000               Lease expires 2003;
                                                          one 2 year
                                                          renewal option
Portsmouth, New Hampshire         47,000               Lease expires 2006;
                                                          one 5 year
                                                          renewal option
Raritan, New Jersey              187,000               Owned
Uniondale, New York              108,000               Lease expires 2007;
                                                          two 5 year
                                                          renewal options
Burlington, North Carolina       275,000               Owned
Charlotte, North Carolina         25,000               Lease expires 2003
Research Triangle Park,
 North Carolina                   71,000               Lease expires 2008;
                                                          three 5 year
                                                          renewal options
                                 111,000               Lease expires 2011;
                                                          three 5 year
                                                          renewal options
Dublin, Ohio                      81,000               Owned

Southaven, Mississippi            17,000               Owned

Dallas, Texas                     60,000               Lease expires 2004;
                                                          two 5 year
                                                          renewal option
Houston, Texas                    70,000               Lease expires 2012;
                                                          two 5 year
                                                          renewal options
San Antonio, Texas                44,000               Lease expires 2004;
                                                          two 5 year
                                                          renewal option



                                 Approximate
                                     Area                   Nature of
      Location                 (in square feet)             Occupancy
- --------------------          ---------------          ----------------------
Operating Facilities (cont.):

Salt Lake City, Utah              20,000                Lease expires 2005;
                                                           two 3 year
                                                           renewal options
Chesapeake, Virginia              16,000                Lease expires 2007;
                                                           three 5 year
                                                           renewal options
Herndon, Virginia                 80,000                Lease expires 2004
Richmond, Virginia                34,000                Lease expires 2006
Kent, Washington                  42,000                Lease expires 2005;
                                                           one 5 year
                                                           renewal option
Seattle, Washington               33,000                Lease expires 2004
Fairmont, West Virginia           25,000                Lease expires 2005;
                                                           three 5 year
                                                           renewal options
  Mechelen, Belgium               20,000                Lease expires 2007

Administrative facilities:
  Raritan, New Jersey             53,000                Owned
  Burlington, North Carolina     293,000                Owned
  Burlington, North Carolina     273,000                Leases expire
                                                             2003-2010;
                                                             various options to
                                                             purchase or renew

     All of the Company's major laboratory facilities have been built
or improved for the single purpose of providing clinical laboratory
testing services.  The Company believes that these facilities are
suitable and adequate and have sufficient production capacity for its
currently foreseeable level of operations.  The Company believes that
if it were to lose the lease on any of the facilities it presently
leases, it could find alternate space at competitive market rates and
readily relocate its operations to such new locations without
material disruption to its operations.

Item 3.   LEGAL PROCEEDINGS

     The Company is involved in litigation purporting to be a nation-
wide class action involving the alleged overbilling of patients who
are covered by private insurance. The Company has reached a
settlement with the class that will not exceed the existing reserves
or have a material adverse effect on the Company.  On January 9,
2001, the Company was served with a complaint in North Carolina which
purports to be a class action and makes claims similar to those
referred to above.  The claim has been stayed and the plaintiffs'
counsel has agreed to dismiss the case, with prejudice.  The Company
believes that the likelihood of an adverse result in the North
Carolina case is remote.  The Company is the appellant in a patent
case originally filed in the United States District Court for the
District of Colorado.  The Company has disputed liability and
contested the case vigorously.  After a jury trial, the district
court entered judgment against the Company for patent infringement.
The Company has appealed the case to the United States Court of
Appeals for the Federal Circuit.  The Company has received a letter
from its counsel dated February 7, 2003 stating "it remains our
opinion that the amended judgment and order will be reversed on
appeal".



     The Company is also involved in various claims and legal actions
arising in the ordinary course of business.  These matters include,
but are not limited to, intellectual property disputes, professional
liability, employee related matters, and inquiries from governmental
agencies and Medicare or Medicaid payors, and managed care payors
requesting comment on allegations of billing irregularities that are
brought to their attention through billing audits or third parties.
In the opinion of management, based upon the advice of counsel and
consideration of all facts available at this time, the ultimate
disposition of these matters is not expected to have a material
adverse effect on the financial position, results of operations or
liquidity of the Company.


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

   No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year covered by this report.



PART II

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

	The Common Stock trades on the New York Stock Exchange ("NYSE")
under the symbol "LH".  The following table sets forth for the
calendar periods indicated the high and low sales prices for the
Common Stock reported on the NYSE Composite Tape.

                                                High           Low
                                              --------       --------
2001
  First Quarter                                 43.750        24.875
  Second Quarter                                41.250        28.225
  Third Quarter                                 45.675        33.420
  Fourth Quarter                                45.000        36.500

                                                High           Low
                                              --------       -------
2002
  First Quarter                                 49.120        38.150
  Second Quarter                                52.375        43.300
  Third Quarter                                 45.210        26.000
  Fourth Quarter                                34.050        18.510

                                                High           Low
                                              ---------      --------
2003
  First Quarter (through February 28, 2003)     28.470        22.210

     On June 11, 2001 and on May 10, 2002, the Company effected 2-
for-1 stock splits.  The reported sales prices reflect such stock
splits.

     On February 28, 2003 there were 481 holders of record of the
Common Stock.

     It is currently the Company's policy not to pay dividends on its
common stock in order to increase its flexibility with respect to its
growth strategy.  In addition, the Company's senior credit facilities
place certain limits on the payment of dividends.



Item 6.   SELECTED FINANCIAL DATA

     The selected financial data presented below under the captions
"Statement of Operations Data" and "Balance Sheet Data" as of and for
the five-year period ended December 31, 2002 are derived from
consolidated financial statements of the Company, which have been
audited by PricewaterhouseCoopers LLP, independent accountants.  This
data should be read in conjunction with the accompanying notes, the
Company's consolidated financial statements and the related notes
thereto, and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," all included elsewhere herein.




                                              Year Ended December 31,
                               -------------------------------------------------
- ----------
                               2002 (a)(b)    2001        2000         1999
1998
                               ----------   --------    ---------    --------
- ---------
                                  (Dollars in millions, except per share
amounts)
                                                       

Statement of Operations Data:
 Net sales                    $ 2,507.7   $ 2,199.8    $ 1,919.3    $ 1,698.7
$ 1,612.6
 Gross profit                   1,061.8       925.6        766.6        629.1
563.4
 Operating income                 435.0       367.6        245.6(d)     149.7
127.6
 Earnings before
  extraordinary loss              254.6       182.7        112.1         65.4
68.8
 Extraordinary loss, net of
  tax benefit                        --         3.2(c)         --          --
- --
 Net earnings                     254.6       179.5        112.1         65.4
68.8

 Basic earnings
  per common share before
  extraordinary loss          $    1.78   $    1.31     $   0.82     $   0.30
$   0.49

 Extraordinary loss per
  common share, net
  of tax benefit              $      --   $    0.02     $     --     $    --
$     --

 Basic earnings
  per common share            $    1.78   $    1.29     $   0.82     $   0.30
$   0.49

 Diluted earnings
  per common share before
  extraordinary loss          $    1.77   $    1.29     $   0.80     $   0.29
$   0.49

 Extraordinary loss per
  common share, net
  of tax benefit              $      --   $    0.02     $     --     $     --
$     --

 Diluted earnings
  per common share            $    1.77   $    1.27     $   0.80     $   0.29
$   0.49

 Basic weighted average common
  shares outstanding
  (in thousands)                142,791     138,838       94,161       50,665
49,939

 Diluted weighted average common
  shares outstanding
  (in thousands)                144,198     141,077       96,299       51,509
49,939

Balance Sheet Data:
 Cash and cash
  equivalents                 $    56.4  $    149.2   $     48.8   $     40.3  $
22.7
 Intangible assets, net         1,217.5       968.5        865.7        803.9
836.2
 Total assets                   2,611.8     1,929.6      1,666.9      1,590.2
1,640.9
 Long-term obligations and
  redeemable preferred
  stock (e)                       521.5       509.2        355.8      1,041.5
1,110.0
 Total shareholders'
  equity                      $ 1,611.7  $  1,085.4   $    877.4   $    175.5  $
154.4



(a)  On July 25, 2002, the Company completed the acquisition of all
of the outstanding stock of Dynacare Inc. in a combination cash and
stock transaction with a combined value of approximately $496.4
million, including transaction costs.  See "Note 2 to the



Consolidated Financial Statements" for further discussion of this
acquisition.  During the third quarter of 2002, the Company recorded
restructuring and other special charges totaling $17.5 million.
These charges included a special bad debt provision of approximately
$15.0 million related to the acquired Dynacare accounts receivable
balance and restructuring expense of approximately $2.5 million
relating to Dynacare integration costs of actions that impact the
Company's existing employees and operations.

(b)   Effective January 1, 2002, the Company adopted Statement of
Financial Accounting Standards No. 142 "Goodwill and Other Intangible
Assets".  This Standard requires that goodwill and other intangibles
that are acquired in business combinations and that have indefinite
useful lives are not to be amortized.  See "Note 10 to the
Consolidated Financial Statements" for further discussion of the
effect of SFAS No. 142.

(c)  During the third quarter of 2001, the Company recorded an
extraordinary loss of $3.2 million (net of tax benefit) relating to
the write-off of unamortized bank fees associated with the Company's
term debt, which was repaid in September of 2001.  The Company also
recorded a charge of $8.9 million as a result of a payment made to a
bank to terminate an interest rate swap agreement tied to the
Company's term loan.

(d)  In the fourth quarter of 2000, the Company recorded a $4.5
million restructuring charge relating to the closing of its Memphis
drug testing facility.

(e)  Long-term obligations include capital lease obligations of $5.5
million, $6.1 million, $7.2 million, $4.4 million and $4.2 million at
December 31, 2002, 2001, 2000, 1999 and 1998, respectively.  Long-
term obligations also include the long-term portion of the expected
value of future contractual amounts to be paid to the former
principals of acquired laboratories.  Such payments are principally
based on a percentage of future revenues derived from the acquired
customer lists or specified amounts to be paid over a period of time.
At December 31, 2002, 2001, 2000, 1999 and 1998, such amounts were
$0.0 million, $0.3 million, $2.1 million, $0.0 million and $7.7
million, respectively.  Long-term obligations exclude amounts due to
affiliates.  On June 6, 2000, the Company called for redemption all
of its outstanding redeemable preferred stock, resulting in the
conversion of substantially all of the preferred stock into common
stock.  During 2001, the Company sold $744.0 million aggregate
principal amount at maturity of its zero coupon convertible
subordinated notes due 2021 in a private placement.  The Company
received approximately $488.6 million in net proceeds from the
offering.  The Company used a portion of the proceeds to repay
$412.5 million of its term loan outstanding under its credit
agreement.



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

     General

     During 2002, the Company accomplished several initiatives
directly related to the implementation of the Company's strategic
plan as well as expanding its national platform in routine testing.
This plan continues to provide growth opportunities for the Company
by building a leadership position in genomic and other advanced
testing technologies primarily through internal development efforts,
acquisitions and technology licensing activities.

    The Company's Center for Molecular Biology and Pathology, located
in Research Triangle Park, NC is a leader in the development and
application of molecular diagnostics and polymerase chain reaction,
or PCR, technologies in the areas of diagnostic genetics, oncology
and infectious disease.  The Company believes that these technologies
may represent a significant savings to the healthcare system by
increasing the detection of early stage (treatable) diseases.  The
Company's National Genetics Institute in Los Angeles, CA, develops
novel, highly-sensitive PCR methods used to test for hepatitis C and
other infectious agents and is the only laboratory in the U.S. that
is FDA-approved to screen plasma for infectious diseases.  Viro-Med
Laboratories, Inc., based in Minneapolis, MN, offers molecular
microbial testing using real-time PCR platforms and provides
significant additional capacity to support the continued expansion of
the Company's advanced testing business.  These Centers of Excellence
enable the Company to provide a broad menu of testing services for
the infectious disease and cancer markets, which the Company believes
represent two of the most significant areas of future growth in the
clinical laboratory industry.

     On July 25, 2002, the Company completed its acquisition of
Dynacare, a provider of clinical laboratory testing services in 21
states in the United States and two provinces in Canada.  Dynacare
had 2001 revenues of approximately $238.0 million and had
approximately 6,300 employees at the closing date of the acquisition.
This acquisition directly supports the Company's strategic objectives
of strengthening its national presence by expanding the Company's
geographic reach not only in various regions of the U.S., but also in
Canada and allows the Company to further enhance service to its
clients and their patients by offering more conveniently located
patient service centers and on-site testing facilities.  It also
allows the Company to broaden the array of testing services currently
available to physicians, particularly in specialized fields such as
molecular biology, genetics, oncology and infectious disease.  The
Company achieved $4.0 million in synergy savings relating to the
integration of Dynacare by the end of 2002 and expects to realize
total savings of $45.0 million by the end of 2004.

     The Company completed the acquisition of DIANON on January 17,
2003.  DIANON had 2001 revenues of approximately $125.7 million and
had approximately 1,100 employees at the closing date of the
acquisition.  This acquisition significantly enhances the Company's
oncology testing capabilities.  DIANON is recognized by physicians,
managed care companies and other customers as a leading provider of a
wide range of anatomic pathology testing services, which complement
the Company's strengths in other areas of cancer testing,



particularly cytology.  The Company expects that DIANON's extremely
effective specialized sales force, scientific expertise, efficient
operating model and proprietary CarePath clinical reporting system
will allow it to enhance its cancer testing business and will
position it to more effectively market and distribute the advanced
testing technologies that the Company has developed internally or has
licensed from its technology partners, such as Myriad Genetics, Inc.,
EXACT Sciences Corporation, Celera Diagnostics and Correlogic
Systems, Inc.  The Company expects to achieve synergy savings
relating to the integration of DIANON of $7.5 million in 2003 and
total synergy savings of $35.0 million by 2005.

     In February 2003, the Company announced an agreement to pay $4.5
million in cash to purchase certain assets in Northern California
from Quest Diagnostics Incorporated.  The assets to be purchased
include the assignment of four contracts with independent physician
associations (IPAs), as well as the leases for 46 patient service
centers, which are located throughout Northern California.  Acquiring
these assets provides the Company an immediate, competitive presence
in Northern California for the first time.  Quest Diagnostics has
indicated that approximately $27.0 million in annual revenues is
generated by capitated fees under the IPA contracts and associated
fee-for-service testing for physicians whose patients use these
patient service centers, as well as from specimens received directly
from the IPA physicians.  The IPAs have already consented to the
assignment of the contracts.  The asset sale to the Company has been
approved by the Federal Trade Commission.

     The Company has announced a number of significant licensing and
partnership agreements which provide it with access to new testing
technologies that it expects will have an increasing impact on
diagnostic testing.

     In December 2001, the Company entered into exclusive licensing
and marketing relationships with EXACT Sciences and Myriad Genetics.
In June 2002, the creation of an exclusive, long-term strategic
partnership with EXACT Sciences to commercialize PreGen-Plus, EXACT
Sciences' proprietary, non-invasive technology to aid in the early
detection of colorectal cancer, was announced.  The Company plans to
launch this gene-based test, which represents a significant new tool
for the early detection of colorectal cancer, in the second half of
2003.  As a result of the exclusive sales and distribution
partnership with Myriad Genetics, physicians now have the convenience
of sending patients to one of the Company's patient service centers
for Myriad Genetics' predisposition testing for breast, ovarian,
colon, uterine and melanoma skin cancers, as well as hypertension.
The Company's relationship with Myriad Genetics makes it one of the
few clinical laboratories in the U.S. to provide the entire oncology
care continuum from predisposition to surveillance testing, including
screening, evaluation, diagnosis and monitoring options.

     In October 2002, the Company announced a collaboration with
Celera to establish the clinical utility of laboratory tests based on
novel diagnostic markers.  The initial areas of collaboration include
efforts to improve the diagnosing of Alzheimer's patients and to
identify metastatic prostate cancer.  This exclusive relationship is
a continuation of the Company's strategy to develop a broad genomics
testing menu for cancer.



     In November 2002, the Company announced an agreement with
Correlogic Systems to commercialize its ovarian cancer protein blood
pattern test for the detection of ovarian cancer, which offers the
prospect of accurate and early detection of ovarian cancer.  This is
a common disease, which if detected early enough, is readily treated
and often curable.

     In addition to the acquisitions and relationships discussed
above, the Company believes future performance will be positively
affected by several factors:  1) The expansion of higher-value
genomic tests such as Cystic Fibrosis, HCV and HIV genotyping, along
with the continued growth of HIV viral loads and HPV testing; 2)
Continued conversion of traditional pap smears to the newer, high
value monolayer technology; 3) Continued progress with existing
licensing and business relationships (such as Myriad Genetics, EXACT
Sciences, Correlogic and Celera); 4) The Company's ongoing business
acquisition strategy; 5) Growing demand for genomic testing is
creating a positive shift in test mix toward higher value testing;
and 6) Improving regulatory and reimbursement environment in
Washington, such as the 1.19% CPI increase in the Medicare national
median lab fee schedule and the recent reversal in the proposed cuts
to the physician services fee schedule.

     As a result of the acquisitions of Dynacare and DIANON, coupled
with expected internal growth, the Company expects that 2003 revenues
will grow approximately 22% over revenue in 2002.

     The application of the Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets", resulted
in a decrease in amortization expense of approximately $26.0 million
for 2002.

     On October 22, 2002, the Company's Board of Directors authorized
a stock repurchase program under which the Company may purchase up to
an aggregate of $150.0 million of its common stock from time-to-time.
There were no Company purchases of its common stock during 2002.  It
is the Company's intention to fund future purchases of its common
stock with cash flow from operations.

Seasonality

     Volume of testing generally declines during the year-end holiday
periods and other major holidays.  In addition, volume declines due
to inclement weather may reduce net revenues and cash flows.
Therefore, comparison of the results of successive quarters may not
accurately reflect trends or results for the full year.

Critical Accounting Policies

The preparation of 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 financial statements and the reported amounts of
revenues and expenses during the reported periods. Significant
estimates include the allowances for doubtful accounts, amortization



lives for intangible assets, accruals for self-insurance reserves
and reserves for professional liability claims.

The process for estimating the ultimate collection of
receivables involves significant assumptions and judgments.
Billings for services under third-party payor programs, including
Medicare and Medicaid, are recorded as revenues net of allowances
for differences between amounts billed and the estimated receipts
under such programs.  Adjustments to the estimated receipts, based
on final settlement with the third-party payors, are recorded upon
settlement as an adjustment to net revenues.

In addition, the Company has implemented a process to
estimate and review the collectibility of its receivables based on
the period they have been outstanding.  Historical collection and
payor reimbursement experience is an integral part of the
estimation process related to reserves for doubtful accounts.  The
Company also assesses the current state of its billing functions
in order to identify any known collection or reimbursement issues
in order to assess the impact, if any, on the reserve estimates,
which involves judgment.  The Company believes that the
collectibility of its receivables is directly linked to the
quality of its billing processes, most notably, those related to
obtaining the correct information in order to bill effectively for
the services provided.  Revisions in reserve for doubtful accounts
estimates are recorded as an adjustment to bad debt expense within
selling, general and administrative expenses.  The Company
believes that its collection and reserves processes, along with
the close monitoring of its billing processes, helps reduce the
risk associated with material revisions to reserve estimates
resulting from adverse changes in collection and reimbursement
experience and billing operations.

Effective January 1, 2002, the Company adopted Statement of
Financial Accounting Standards No. 142 "Goodwill and Other
Intangible Assets".  This Standard requires that goodwill and
other intangibles that are acquired in business combinations and
that have indefinite useful lives are not to be amortized and are
to be reviewed for impairment annually based on an assessment of
fair value.  Other intangibles (patents and technology, customer
lists and non-compete agreements), are amortized on a straight-
line basis over the expected periods to be benefited, such as
legal life for patents and technology, 10 to 25 years for customer
lists and contractual lives for non-compete agreements.  The
impact of adopting SFAS No. 142 is summarized in Note 10 to the
Consolidated Financial Statements.

Accruals for self-insurance reserves (including workers'
compensation, auto and employee medical) are determined based on



historical payment trends and claims history, along with current
and estimated future economic conditions.

Professional liability reserves incorporate actuarially
determined losses based upon the Company's historical and
projected loss experience.

While management believes these estimates are reasonable and
consistent, they are by their very nature, estimates of amounts
that will depend on future events.  Accordingly, actual results
could differ from these estimates. See "Note 1 to the Consolidated
Financial Statements" for further discussion of significant
accounting policies.

Results of Operations

Year ended December 31, 2002 compared with Year ended December 31,
2001.

     Net sales for 2002 were $2,507.7 million, an increase of
14.0% from $2,199.8 million reported in the comparable 2001
period.  Testing volume, measured by accessions, increased 10.7%
(primarily as a result of the Dynacare acquisition and esoteric
volume growth) and price per accession increased 3.3% (due in part
to the shift in test mix to higher-value esoteric tests) compared
to 2001.

     Cost of sales, which includes primarily laboratory and
distribution costs, was $1,445.9 million for 2002 compared to
$1,274.2 million in 2001, an increase of 13.5%.  In the third
quarter of 2002, the Company announced a slowdown in volume growth
in the Carolinas.  In order to reverse these declines in volume,
the Company initiated a reinvestment program that included adding
individuals and facilities to improve client service.  Although
this reinvestment moderately increased the fourth quarter expenses
as expected, there was an improvement in the ratio of new to lost
accounts in the affected region.  Also, the Company incurred
certain costs associated with the acquisition and integration of
Dynacare such as additional overtime and temporary help and the
payment of retention bonuses.  Additional costs continue to be
incurred due to growth in esoteric and genomic testing and higher
volume of Pap tests being performed using more expensive monolayer
technology.  Cost of sales as a percentage of net sales was 57.7%
for 2002 and 57.9% in 2001.

     Selling, general and administrative expenses increased to $585.5
million in 2002 from $516.5 million in 2001 representing an increase
of $69.0 million or 13.4%.  This increase resulted primarily from
personnel and other costs as a result of the Dynacare acquisition.
Selling, general and administrative expenses were 23.3% and 23.5% as
a percentage of net sales in 2002 and 2001, respectively.

     The amortization of intangibles and other assets was $23.8
million and $41.5 million for 2002 and 2001, respectively.  The
decrease in the amortization expense is due to the adoption in 2002
of the non-amortization provisions of SFAS No. 142 for goodwill



offset partially by increases in identifiable intangibles
amortization resulting from the acquisition of Dynacare.

     During the third quarter of 2002, the Company recorded
restructuring and other special charges totaling $17.5 million.
The $17.5 million was comprised of a special bad debt provision of
approximately $15.0 million related to the acquired Dynacare
accounts receivable balance and an additional $2.5 million
relating to integration costs of actions that impact the Company's
existing employees and operations.

     Interest expense was $19.2 million in 2002 compared to $27.0
million in 2001.  The reduction in interest expense reflects the
Company's lower cost of borrowings from its zero coupon-subordinated
notes as well as overall market rate declines in interest rates in
2002 compared to 2001.

     As a result of the Dynacare acquisition, the Company has
investments in equity affiliates in Milwaukee, Wisconsin, Ontario,
Canada and Alberta, Canada.  These investments are accounted for
under the equity method of accounting and resulted in other income of
$13.4 million for 2002.

     Provision for income taxes was $177.7 million in 2002 compared
to $149.6 million in 2001.  The effective tax rate was 41.1% in 2002
and 45.0% in 2001.  The decrease in the effective tax rate is
primarily due to the elimination of amortization related to goodwill
upon adoption of SFAS No. 142 and, to a smaller extent, the Company's
reduction of $1.7 million of valuation allowance relating to its net
deferred tax assets.

Year ended December 31, 2001 compared with Year ended December 31,
2000.

     Net sales for 2001 were $2,199.8 million, an increase of
14.6% from $1,919.3 million reported in 2000.  Sales increased
approximately 8.2% due to an increase in volume and 5.9% due to an
increase in price per accession (which reflects actual price
increases and changes in the mix of tests performed).  These
increases occurred as a result of the Company's success in winning
new business as well as retaining and increasing business from
existing customers.  Excluding acquisitions, revenues would have
increased 10.6%.

     Cost of sales, which includes primarily laboratory and
distribution costs, was $1,274.2 million for 2001 compared to
$1,152.7 million in 2000, an increase of 10.5%.  The majority of
the increase in cost of sales is due to an increase in volume
(approximately $95.0 million), with an additional increase of
$13.0 million due to increases in the volume of Pap tests
performed using monolayer technology.  In addition, the Company
incurred incremental costs of approximately $6.0 million as it
implemented a self-mandated safety needle program.  Cost of sales
as a percentage of net sales was 57.9% for 2001 and 60.0% in 2000.
The decrease in the cost of sales as a percentage of net sales
primarily resulted from higher margin test mix, continued cost
reduction efforts and economies of scale achieved through volume
growth.



     Selling, general and administrative expenses increased to $516.5
million in 2001 from $483.0 million in 2000 representing an increase
of $33.5 million or 6.9%.  Selling, general and administrative
expenses were 23.5% and 25.2% as a percentage of net sales in 2001
and 2000, respectively.  The increase in selling, general and
administrative expenses is primarily the result of the Company's
acquisitions during the year combined with additional bad debt
expense as a result of the increase in net sales.

     Interest expense was $27.0 million in 2001 compared to $38.5
million in 2000.  During September 2001, the Company repaid its
outstanding term loan balance of $412.5 million with the proceeds
from the sale of zero coupon-subordinated notes.  During the third
quarter of 2001, the Company recorded an $8.9 million loss relating
to a payment made to terminate an interest rate swap agreement tied
to the Company's term loan.  In addition, the Company recorded a $3.2
million extraordinary loss, net of tax benefit, representing the
write-off of unamortized bank fees associated with the retired term
debt.

     Provision for income taxes was $149.6 million in 2001 compared
to $95.5 million in 2000.  The effective tax rate was 45.0% in 2001
and 46.0% in 2000.  The decrease in the effective rate reflects the
increase in the Company's pre-tax earnings relative to the amount of
non-deductible amortization of intangible assets.

Liquidity and Capital Resources

     Net cash provided by operating activities was $444.9 million,
$316.0 million and $246.7 million, in 2002, 2001 and 2000,
respectively.  The increase in cash flow from operations in both 2002
and 2001 primarily resulted from overall improved operating results
and the expansion of the business through acquisitions, and the
improvement of the Company's DSO to 54 days at the end of 2002 from
58 days at the end of 2001.

     Capital expenditures were $74.3 million, $88.1 million and $55.5
million for 2002, 2001 and 2000, respectively.  The Company expects
capital expenditures of approximately $90.0 million in 2003.  These
expenditures are intended to continue to improve information systems
and further automate laboratory processes.  Such expenditures are
expected to be funded by cash flow from operations as well as
borrowings under the Company's new senior credit facilities.

     In connection with the acquisition of DIANON, on January 31,
2003, the Company completed a private placement of $350.0 million in
senior notes, which was used to repay the $350.0 million bridge loan
that was entered into to fund part of the DIANON purchase.  The
notes, in an aggregate principal amount of $350.0 million, will bear
an interest rate of 5.5% and resulted in net proceeds of $345.1
million.

     In conjunction with the acquisition of DIANON, the Company's
planned financing of the acquisition, and announced shared repurchase
plan, Standard and Poor's lowered its overall rating on the Company
to BBB from BBB+ and Moody's issued a Baa3 rating to the Company's
newly issued Senior Notes.



     The Company's DSO at the end of 2002 improved to 54 days as
compared to 58 days at the end of 2001.  This improvement was due to
Company-wide efforts to increase cash collections from all payors, as
well as on-going improvements to claim submission processes.  In
addition, the Company continued to take steps necessary to improve
DSO and cash collections by:

1) Conversion of decentralized billing locations, including former
Dynacare locations, to a centralized billing system.  During
2002, billing activity in Denver, Phoenix and Seattle was
converted to the centralized billing system.  In 2003 and 2004,
the Company will concentrate its conversion activities on the
Dynacare locations as well as begin conversion of the DIANON
locations.
2) Implementation of, beginning in the first quarter of 2000, an
initiative to reduce the number of requisitions received that
are missing certain billing information.  This initiative
involves measuring the number of clinical requisitions received
from an ordering client, as well as what specific information
was not provided.  The Company then identifies root causes of
why the information was missing and takes steps to ensure that
information is provided in the future.  These steps include re-
educating clients as to what information is needed in order for
the Company to bill and collect for the test.  As of December
31, 2002, the percentage of requisitions received which were
missing billing information was 4.6% as compared to 6.0% at the
end of 2001.

     During September 2001, the Company repaid its outstanding
balance of $412.5 million on its term loan facility with the
proceeds from the issuance of zero coupon-subordinated notes.
Interest expense on the zero coupon-subordinated notes in the
financial statements is computed based on the notes' original issue
discount amortization for an effective rate of 2% per year.  This
non-cash interest expense totaled approximately $12.0 million in 2002
as compared to interest expense of $27.0 million in 2001 (primarily
related to the Company's retired term debt).  As the Company does not
pay any interest on the zero coupon-subordinated notes prior to their
maturity on September 11, 2021 (unless certain contingencies are
met), the replacement of the Company's long-term debt with the zero
coupon-subordinated notes will result in increases to the Company's
available cash.

     This reduction in cash interest expense and the resulting
retention of operating cash flows in the business is expected to
provide the Company increased flexibility in pursuing strategic
investments through possible acquisitions, technology purchases
and key business relationships.

     In February 2002, the Company entered into two senior credit
facilities with Credit Suisse First Boston, acting as
Administrative Agent, and a group of financial institutions
totaling $300.0 million.  The senior credit facilities consisted
of a 364-day revolving credit facility in the principal amount of
$100.0 million and a three-year revolving credit facility in the
principal amount of $200.0 million.

     On July 24, 2002, in conjunction with the acquisition of
Dynacare, the Company borrowed $150.0 million under the Dynacare



Bridge Loan Agreement, which had an original maturity date of July
23, 2003.  On November 29, 2002, the Company repaid all
outstanding balances under the Dynacare bridge loan and as a
result, the loan has been terminated.

     On January 14, 2003, the Company entered into a new $150.0
million 364-day revolving credit facility with Credit Suisse First
Boston, acting as Administrative Agent, and a group of financial
institutions to replace the existing $100.0 million 364-day
revolving credit facility, which had terminated.  The $200.0
million three-year revolving credit facility was amended on
January 14, 2003 and expires on February 18, 2005.

     On January 17, 2003, in conjunction with the acquisition of
DIANON, the Company borrowed $350.0 under the DIANON Bridge Loan
Agreement with Credit Suisse First Boston, acting as
Administrative Agent.  On January 31, 2003, the Company sold
$350.0 aggregate principal amount of its 5 1/2 % Senior Notes due
February 1, 2013.  Proceeds from the issuance of these Notes
($345.1), together with cash on hand was used to repay the $350.0
principal amount of the Company's bridge loan facility, and as a
result, the loan was terminated.

Pension Funding

     During 2000, 2001 and 2002, the Company made contributions to
its defined pension plan in the amounts of $8.6, $10.2 and $18.3,
respectively.  The Company expects to contribute $18.0 to its
defined pension plan during 2003.  See "Note 23 to the
Consolidated Financial Statements" for a further discussion of the
Company's pension and postretirement plans.

New Accounting Pronouncements

     See "Note 25 to Consolidated Financial Statements" for a
discussion of new accounting pronouncements.

Contractual Cash Obligations

                                     Payments Due by Period
                               ------------------------------------
                               1 Yr     2-3 Yrs   4-5 Yrs   > 5 Yrs
                               ------   -------  --------   --------
Capital lease obligations      $  3.6   $  5.4    $   4.1     $   --
Operating leases                 52.8     70.0       35.3       32.2
Contingent future acquisition
  payments                        5.7       --         --         --
Restructuring obligations         2.8      1.8        1.8        7.3
Contingent future licensing
  payments                       42.5      7.0       15.0         --
5 1/2 % Senior Notes               --       --         --      345.1
Zero Coupon-Subordinated Notes     --    530.5(a)      --         --
                               ------    ------     -----      -----
  Total contractual cash
     obligations               $107.4   $614.7     $ 56.2     $384.6
                                =====    =====      =====      =====


(a) Holders of the zero coupon-subordinated notes may require the
Company to purchase all or a portion of their notes on September
11, 2004, 2006 and 2011 at prices ranging from $712.97 to
$819.54 per note.  The Company may choose to pay the purchase
price in cash or common stock or a combination of cash and
common stock.  If the holders elect to require the Company to
purchase their notes, it is the Company's current intention to
retire the notes by a cash payment.  However, future market
conditions are subject to change.  Should the holders put the
notes to the Company on any of the dates above, the Company
believes that it will be able to obtain alternate financing to
satisfy this contingent obligation.

Other Commercial Commitments

     At December 31, 2002, the Company provided letters of credit
aggregating approximately $45.6 million, primarily in connection
with certain insurance programs.  These letters of credit are
secured by the Company's senior credit facilities and are renewed
annually, around mid-year.


Based on current and projected levels of operations, coupled with
availability under its new senior credit facilities, the Company
believes it has sufficient liquidity to meet both its short-term
and long-term cash needs.  For a discussion of the Company's zero
coupon-subordinated notes, see "Note 13 to Consolidated Financial
Statements."  For a discussion of the Company's new senior credit
facilities, see "Note 14 to Consolidated Financial Statements."


FORWARD-LOOKING STATEMENTS

     The Company has made in this report, and from time to time may
otherwise make in its public filings, press releases and discussions
with Company management, forward-looking statements concerning the
Company's operations, performance and financial condition, as well as
its strategic objectives.  Some of these forward-looking statements
can be identified by the use of forward-looking words such as
"believes", "expects", "may", "will", "should", "seeks",
"approximately", "intends", "plans", "estimates", or "anticipates" or
the negative of those words or other comparable terminology.  Such
forward-looking statements are subject to various risks and
uncertainties and the Company claims the protection afforded by the
safe harbor for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995.  Actual results could
differ materially from those currently anticipated due to a number of
factors in addition to those discussed elsewhere herein and in the
Company's other public filings, press releases and discussions with
Company management, including:

1. changes in federal, state, local and third party payor regulations
or policies (or in the interpretation of current regulations)
affecting governmental and third-party reimbursement for clinical
laboratory testing.

2. adverse results from investigations of clinical laboratories by
the government, which may include significant monetary damages



and/or exclusion from the Medicare and Medicaid programs.

3. loss or suspension of a license or imposition of a fine or
penalties under, or future changes in, the law or regulations of
the Clinical Laboratory Improvement Act of 1967, and the Clinical
Laboratory Improvement Amendments of 1988, or those of Medicare,
Medicaid or other federal, state or local agencies.

4. failure to comply with the Federal Occupational Safety and Health
Administration requirements and the Needlestick Safety and
Prevention Act which may result in penalties and loss of
licensure.

5. failure to comply with HIPAA, which could result in significant
fines.

6. increased competition, including price competition.

7. changes in payor mix, including an increase in capitated managed-
cost health care.

8. failure to obtain and retain new customers and alliance partners,
or a reduction in tests ordered or specimens submitted by existing
customers.

9. failure to integrate newly acquired businesses and the cost
related to such integration.

10.adverse results in litigation matters.

11.inability to attract and retain experienced and qualified
personnel.

12.failure to maintain our days sales outstanding levels.

13.decrease in credit ratings by Standard & Poor's and/or Moody's.

14.failure to develop or acquire licenses for new or improved
technologies, or if customers use new technologies to perform
their own tests.

15.failure in the Company's information technology systems resulting
in an increase in testing turn-around time or billing processes.

Item 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

     The Company addresses its exposure to market risks,
principally the market risk associated with changes in interest
rates, through a controlled program of risk management that has
included in the past, the use of derivative financial instruments
such as interest rate swap agreements.  Dynacare has cross
currency and interest rate swap agreements due January 15, 2006,
whereby Dynacare has swapped $85.5 million Canadian dollar
denominated receivables due from certain of its subsidiaries for
$58.9 million.  These same subsidiaries have swapped in aggregate
$85.5 million Canadian dollar denominated debt due to Dynacare
into $58.9 million.  The Company does not hold or issue derivative
financial instruments for trading purposes.  The Company does not
believe that its exposure to market risk is material to the



Company's financial position or results of operations.

     The Company's zero coupon-subordinated notes contain the
following three features that are considered to be embedded
derivative instruments under FAS No. 133:

1) The Company will pay contingent cash interest on the zero coupon-
subordinated notes after September 11, 2006, if the average market
price of the notes equals 120% or more of the sum of the issue
price, accrued original issue discount and contingent additional
principal, if any, for a specified measurement period.

2) Contingent additional principal will accrue on the zero coupon-
subordinated notes during the two year period from September 11,
2004 to September 11, 2006, if the Company's stock price is at or
below specified thresholds.

3) Holders may surrender zero coupon-subordinated notes for
conversion during any period in which the rating assigned to the
zero coupon-subordinated notes by Standard & Poor's Ratings
Services is BB- or lower.

     Based upon independent appraisals, these embedded derivatives
had no fair market value at December 31, 2002.

Item 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

           Reference is made to the Index on Page F-1 of the
           Financial Report included herein.

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

           Not Applicable.



                          PART III

     The information required by Part III, Items 10, 11, 13 and 15,
of Form 10-K is incorporated by reference to the registrant's
definitive proxy statement for its 2003 annual meeting of
stockholders, which is to be filed pursuant to Regulation 14A not
later than April 30, 2003.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

     See "Note 20 to the Consolidated Financial Statements" for a
discussion of the Company's Stock Compensation Plans.  Except for the
above referenced footnote, the information called for by this Item is
incorporated by reference in the information under the caption
"Security Ownership of Certain Beneficial Owners and Management"
appearing in the Proxy Statement.

Item 14.   CONTROLS AND PROCEDURES

     Within 90 days prior to the date of this report, the Company
carried out, under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer
and Chief Financial Officer, an evaluation of the effectiveness of the
design and operation of the Company's disclosure controls and
procedures.  Based on the foregoing, the Company's Chief Executive
Officer and Chief Financial Officer concluded that the Company's
disclosure controls and procedures are effective in timely alerting
them to material information which is required to be included in the
periodic reports that the Company must file with the Securities and
Exchange Commission.

     There were no significant changes in the Company's internal
controls or in other factors that could significantly effect the
internal controls subsequent to the date the Company completed its
evaluation.



PART IV

Item 15.   EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON
           FORM 8-K

(a)   List of documents filed as part of this Report:

           (1)  Consolidated Financial Statements and Independent
                Auditors' Reports included herein:

                See Index on page F-1

           (2)  Financial Statement Schedules:

                See Index on page F-1

      All other schedules are omitted as they are inapplicable or the
      required information is furnished in the Consolidated Financial
      Statements or notes thereto.

           (3)  Index to and List of Exhibits

                Exhibits:

      Exhibits 10.2 through 10.7 and 10.12 through 10.20 are
      management contracts or compensatory plans or arrangements.

3.1 -    Amended and Restated Certificate of Incorporation of
         the Company dated May 24, 2001 (incorporated herein by
         reference to the Company's Registration Statement on
         Form S-3, filed with the Commission on October 19,
         2001, File No. 333-71896).
3.2 -    Amended and Restated By-Laws of the Company dated April
         28, 1995 (incorporated herein by reference to the
         Company's report on Form 8-K, filed with the Commission
         on May 12, 1995).
4.1 -    Specimen of the Company's Common Stock Certificate
         (incorporated herein by reference to the Company's
         Annual Report on Form 10-K for the fiscal year ended
         December 31, 2001).
4.2 -    Indenture dated September 11, 2001 between the Company
         and Bank of New York, as trustee (incorporated herein
         by reference to the Company's Registration Statement on
         Form S-3, filed with the Commission on October 19,
         2001, File No. 333-71896).
4.3 -    Registration Rights Agreement dated September 11, 2001
         between the Company and Merrill Lynch, Pierce, Fenner &
         Smith Incorporated (incorporated herein by reference to
         the Company's Registration Statement on Form S-3, filed
         with the Commission on October 19, 2001, File No. 333-
         71896).
4.4 -    Rights Agreement dated December 13, 2001 between the
         Company and American Stock Transfer & Trust Company, as
         rights Agent (incorporated herein by reference to the
         Company's Registration Statement on Form 8-A, filed
         with the Commission on December 21, 2001, File No. 001-
         11353).
4.5 -    Indenture dated as of January 31, 2003 between the
         Company and Wachovia Bank, National Association, as
         trustee (incorporated herein by reference to the
         January 31, 2003 Form 8-K, filed with the Commission on
         February 3, 2003).



4.6 -    Registration Rights Agreement, dated as of January 28,
         2003 between the Company and the Initial Purchasers
         (incorporated herein by reference to the January 31,
         2003 Form 8-K, filed with the Commission on February 3,
         2003).
10.1 -   National Health Laboratories Incorporated Pension
         Equalization Plan (incorporated herein by reference to
         the Company's Annual Report on Form 10-K for the fiscal
         year ended December 31, 1992).
10.2 -   National Health Laboratories 1988 Stock Option Plan, as
         amended (incorporated herein by reference to the
         Company's Registration Statement on Form S-1, filed
         with the Commission on July 9, 1990, File No. 33-
         35782).
10.3 -   National Health Laboratories 1994 Stock Option Plan
        (incorporated herein by reference to the Company's
         Registration Statement on Form S-8, filed with the
         Commission on August 12, 1994, File No. 33-55065).
10.4* -  Laboratory Corporation of America Holdings Master
         Senior Executive Severance Plan.
10.5 -   Special Severance Agreement dated June 28, 1996 between
         the Company and Timothy J. Brodnik (incorporated herein
         by reference to the October 24, 1996 8-K).
10.6 -   Special Severance Agreement dated July 12, 1996 between
         the Company and John F. Markus (incorporated herein by
         reference to the October 24, 1996 8-K).
10.7 -   Special Severance Agreement dated June 28, 1996 between
         the Company and Robert E. Whalen (incorporated herein
         by reference to the October 24, 1996 8-K).
10.8 -   Exchange Agent Agreement dated as of April 28, 1995
         between the Company and American Stock Transfer & Trust
         Company (incorporated herein by reference to the May
         12, 1995 Form 8-K).
10.9 -   Three-Year Credit Agreement dated February 20, 2002
         among the Company, the lenders named therein and Credit
         Suisse First Boston, as administrative agent
         (incorporated herein by reference to the Company's
         Annual Report on Form 10-K for the fiscal year ended
         December 31, 2001).
10.10 -  First Amendment to the Three-Year Credit Agreement,
         dated January 14, 2003 (incorporated herein by
         reference to the January 17, 2003 Form 8-K, filed with
         the Commission on February 3, 2003).
10.11 -  364-Day Credit Agreement dated January 14, 2003 among
         the Company, the lenders named therein and Credit
         Suisse First Boston, as administrative agent
         (incorporated herein by reference to the January 17,
         2003 Form 8-K, filed with the Commission on February 3,
         2003).
10.12 -  Laboratory Corporation of America Holdings 1995 Stock
         Plan for Non-Employee Directors dated September 26,
         1995 (incorporated herein by reference to the Company's
         Registration Statement on Form S-8, filed with the
         Commission on September 26, 1995, File No. 33-62913).
10.13 -  Amendment to the 1995 Stock Plan for Non-Employee
         Directors (incorporated herein by reference to the
         Company's 1997 Annual Proxy Statement, filed with the
         Commission on June 6, 1997).
10.14 -  Amendment to the 1995 Stock Plan for Non-Employee
         Directors (incorporated herein by reference to Annex I
         of the Company's 2001 Annual Proxy Statement, filed
         with the Commission on April 25, 2001).



10.15 -  Laboratory Corporation of America Holdings 1997
         Employee Stock Purchase Plan (incorporated herein by
         reference to Annex I of the Company's Registration
         Statement on Form S-8 filed with the Commission on
         December 13, 1996, File No. 333-17793).
10.16 -  Amendments to the Laboratory Corporation of America
         Holdings 1997 Employee Stock Purchase Plan
         (incorporated herein by reference to the Company's
         Registration Statement on Form S-8, filed with the
         Commission on January 10, 2000, File No. 333-94331).
10.17 -  Laboratory Corporation of America Holdings Amended and
         Restated 1999 Stock Incentive Plan (incorporated herein
         by reference to Annex I of the Company's 1999 Annual
         Proxy Statement filed with the Commission of May 3,
         1999).
10.18 -  Laboratory Corporation of America Holdings 2000 Stock
         Incentive Plan (incorporated herein by reference to the
         Company's Registration Statement on Form S-8, filed
         with the Commission on June 5, 2000, File No. 333-
         38608).
10.19 -  Amendments to the 2000 Stock Incentive Plan
         (incorporated herein by reference to the Company's
         Registration Statement on Form S-8, filed with the
         Commission on June 19, 2002, File No. 333-90764).
10.20 -  Dynacare Inc., Amended and Restated Employee Stock
         Option Plan (incorporated herein by reference to the
         Company's Registration Statement on Form S-8, filed
         with the Commission on August 7, 2002, File No. 333-
         97745).
10.21 -  Support Agreement between Roche Biomedical
         Laboratories, Inc. and Hoffmann-La Roche Inc., dated as
         of April 27, 1995.
10.22 -  First Amendment to Support Agreement between Roche
         Biomedical Laboratories, Inc. and Hoffmann-La Roche
         Inc., dated as of July 26, 1995.
10.23 -  Second Amendment to Support Agreement between
         Laboratory Corporation of America Holdings, Hoffmann-La
         Roche Inc., Roche Molecular Systems, Inc. and Roche
         Diagnostic Systems, Inc., dated as of January 1, 1997.
10.24 -  Third Amendment to Support Agreement between Laboratory
         Corporation of America Holdings, Hoffmann-La Roche Inc.,
         Roche Molecular Systems, Inc. and Roche Diagnostic Systems,
         Inc., dated as of October 1, 1997.
10.25 -  Fourth Amendment to Support Agreement between
         Laboratory Corporation of America Holdings, Hoffmann-La
         Roche, Inc., Roche Molecular System, Inc., dated as of
         January 1, 1998.

21*   -  List of Subsidiaries of the Company

23.1* -  Consent of PricewaterhouseCoopers LLP

24.1* -  Power of Attorney of Jean-Luc B,lingard
24.2* -  Power of Attorney of Wendy E. Lane
24.3* -  Power of Attorney of Robert E. Mittelstaedt, Jr.
24.4* -  Power of Attorney of James B. Powell, M.D.
24.5* -  Power of Attorney of Andrew G. Wallace, M.D.

99.1* -  Written Statement of Chief Executive Officer and Chief
         Financial Officer pursuant to Section 906 of the
         Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)



*     Filed herewith.

(b)   Reports on Form 8-K

(1) A current report on Form 8-K dated October 2, 2002 was filed on
October 2, 2002 by the registrant, in connection with the press
release dated October 2, 2002 announcing an agreement with
Celera Diagnostics to collaborate in establishing the clinical
utility of laboratory tests based on novel diagnostic markers
for Alzheimer's disease, breast cancer, and prostate cancer.

(2) A current report on Form 8-K dated October 22, 2002 was filed on
October 22, 2002 by the registrant, in connection with the press
release dated October 22, 2002 announcing that the Company's
Board of Directors authorized a stock repurchase program.

(3) A current report on Form 8-K dated November 11, 2002 was filed
on November 12, 2002, by the registrant in connection with the
press release dated November 11, 2002 announcing that the
Company entered into a definitive agreement to acquire all of
the outstanding shares of DIANON Systems, Inc. for $47.50 per
share in cash.

(4) A current report on Form 8-K dated November 14, 2002 was filed
on November 14, 2002 by the registrant, containing the
Certification of Chief Executive Officer and Chief Financial
Officer of the Company, pursuant to 18 U.S.C Section 1350 as
adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002.



SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.

                           LABORATORY CORPORATION OF AMERICA HOLDINGS
                           -------------------------------------------
                                          Registrant


                                    By: /s/ THOMAS P. MAC MAHON
                                       --------------------------------
                                       Thomas P. Mac Mahon
                                       Chairman of the Board, President
                                       and Chief Executive Officer

Dated:  March 28, 2003

l

     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 28, 2003 in the capacities indicated.

      Signature                                Title
      ---------                                ------


/s/ THOMAS P. MAC MAHON
- -------------------------------------------    Chairman of the Board,
Thomas P. Mac Mahon                            President and Chief
                                               Executive Officer
                                              (Principal Executive Officer)

/s/ WESLEY R. ELINGBURG
- -------------------------------------------    Executive Vice President,
Wesley R. Elingburg                            Chief Financial Officer
                                               and Treasurer
                                              (Principal Financial Officer
                                               and Principal Accounting
                                               Officer)

/s/ JEAN-LUC BELINGARD*                  	Director
- ----------------------------------------
Jean-Luc Belingard

/s/ WENDY E. LANE*                       	Director
- ----------------------------------------
Wendy E. Lane

/s/ ROBERT E. MITTELSTAEDT, JR.*        	Director
- ----------------------------------------
Robert E. Mittelstaedt, Jr.

/s/ JAMES B. POWELL, M.D.*               	Director
- -----------------------------------------
James B. Powell, M.D.

/s/ ANDREW G. WALLACE, M.D.*            	Director
- ----------------------------------------
Andrew G. Wallace, M.D.


*  Bradford T. Smith, by his signing his name hereto, does hereby sign this
report on behalf of the directors of the Registrant after whose typed names
asterisks appear, pursuant to powers of attorney duly executed by such
directors and filed with the Securities and Exchange Commission.



By:/s/ BRADFORD T. SMITH
   ------------------------------------------
   Bradford T. Smith
   Attorney-in-fact



Certification
- -------------

I, Thomas P. Mac Mahon, certify that:

1. I have reviewed this annual report on Form 10-K of
Laboratory Corporation of America Holdings;

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 annual report;

3. Based on my knowledge, the financial statements, and
other financial information included in this annual
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 annual report;

4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures 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) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90
days prior to the filing date of this annual report (the
"Evaluation Date"); and

c) presented in this annual report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;

5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the
equivalent functions):

a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and

b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and

6. The registrant's other certifying officers and I have
indicated in this annual report whether or not there were
significant changes in internal controls or in other
factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation,
including any corrective actions with regard to
significant deficiencies and material weaknesses.

Date: March 28, 2003
      -----------------
                               /s/ THOMAS P. MAC MAHON
                               -----------------------
                                   Thomas P. Mac Mahon
                                   Chief Executive Officer

Certification
- -------------

I, Wesley R. Elingburg, certify that:

1. I have reviewed this annual report on Form 10-K of
Laboratory Corporation of America Holdings;

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 annual report;

3. Based on my knowledge, the financial statements, and
other financial information included in this annual
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 annual report;

4. The registrant's other certifying officers and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures 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) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90
days prior to the filing date of this annual report (the
"Evaluation Date"); and

c) presented in this annual report our conclusions about
the effectiveness of the disclosure controls and
procedures based on our evaluation as of the Evaluation
Date;

5. The registrant's other certifying officers and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of
registrant's board of directors (or persons performing the
equivalent functions):

a) all significant deficiencies in the design or operation
of internal controls which could adversely affect the
registrant's ability to record, process, summarize and
report financial data and have identified for the
registrant's auditors any material weaknesses in internal
controls; and

b) any fraud, whether or not material, that involves
management or other employees who have a significant role
in the registrant's internal controls; and

6. The registrant's other certifying officers and I have
indicated in this annual report whether or not there were
significant changes in internal controls or in other
factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation,
including any corrective actions with regard to
significant deficiencies and material weaknesses.

Date: March 28, 2003
      -----------------
                               /s/ WESLEY R. ELINGBURG
                               -----------------------
                                   Wesley R. Elingburg
                                   Chief Financial Officer



      LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
              INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                             AND SCHEDULE



                                                               Page
                                                               ----

Report of Independent Accountants                               F-2

Consolidated Financial Statements:

Consolidated Balance Sheets                                     F-3

Consolidated Statements of Operations                           F-4

Consolidated Statements of Changes in Shareholders'
   Equity                                                       F-5

Consolidated Statements of Cash Flows                           F-7

Notes to Consolidated Financial Statements                      F-9

Financial Statement Schedule:

  II - Valuation and Qualifying Accounts and Reserves          F-38



REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Shareholders
of Laboratory Corporation of America Holdings

     In our opinion, the consolidated financial statements
listed in the accompanying index present fairly, in all material
respects, the financial position of Laboratory Corporation of
America Holdings and its subsidiaries (the Company) at December
31, 2002 and 2001, and the results of their operations and their
cash flows for each of the three years in the period ended
December 31, 2002, in conformity with accounting principles
generally accepted in the United States of America.  In
addition, in our opinion, the financial statement schedule
listed in the accompanying index presents fairly, in all
material respects, the information set forth therein when read
in conjunction with the related consolidated financial
statements.  These financial statements and financial statement
schedule are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial
statements and financial statement schedule based on our audits.
We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of
America, which 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, assessing the
accounting principles used and significant estimates made by
management, and evaluating the overall financial statement
presentation.  We believe that our audits provide a reasonable
basis for our opinion.

     As discussed in Note 1 to the financial statements, the
Company adopted SFAS No. 142, "Goodwill and Other Intangible
Assets" which changed the method of accounting for goodwill and
other intangible assets effective January 1, 2002.



PricewaterhouseCoopers LLP
Charlotte, North Carolina
February 14, 2003




PART I - FINANCIAL INFORMATION


Item 1.  Financial Information

         LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
                         CONSOLIDATED BALANCE SHEETS
                 (Dollars in Millions, Except Per Share Data)

                                             December 31,        December 31,
                                             -------------      -------------
                                                 2002                2001
                                             --------------     -------------
ASSETS
Current assets:
  Cash and cash equivalents                  $     56.4          $    149.2
  Accounts receivable, net                        393.0               365.5
  Supplies inventories                             44.8                38.7
  Prepaid expenses and other                       33.8                16.7
  Deferred income taxes                            68.7                54.4
                                              ---------           ---------
Total current assets                              596.7               624.5

Property, plant and equipment, net                351.2               309.3
Goodwill                                          910.1               719.3
Identifiable intangible assets, net               307.4               249.2
Investments in equity affiliates                  400.6                  --
Other assets, net                                  45.8                27.3
                                              ---------           ---------
                                             $  2,611.8          $  1,929.6
                                              =========           =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Accounts payable                           $     79.9          $     60.2
  Accrued expenses and other                      148.5               125.6
  Current portion of long-term debt                 0.4                  --
                                              ---------           ---------
Total current liabilities                         228.8               185.8

Zero coupon-subordinated notes                    512.9               502.8
Long-term debt, less current portion                3.1                  --
Capital lease obligations                           5.5                 6.1
Other liabilities                                 249.8               149.5

Commitments and contingent liabilities               --                  --

Shareholders' equity:
  Preferred Stock, $0.10 par value; 30,000,000
    shares authorized; shares issued: none
  Common stock, $0.10 par value; 265,000,000
    shares authorized; 147,839,103 and
    141,107,436 shares issued and outstanding
    at December 31, 2002 and December 31,
    2001, respectively                             14.8                14.2
  Additional paid-in capital                    1,406.5             1,081.7
  Retained earnings                               266.1                11.5
  Treasury stock, at cost; 97,426 shares
    at December 31, 2002                           (4.4)                 --
  Unearned restricted stock compensation          (41.4)              (13.2)
  Accumulated other comprehensive loss            (29.9)               (8.8)
                                              ---------           ---------
   Total shareholders' equity                   1,611.7             1,085.4
                                              ---------           ---------
                                             $  2,611.8          $  1,929.6
                                              =========           =========


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



       LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS
               (Dollars in Millions, Except Per Share Data)

                                           Years Ended December 31,
                                     ------------------------------------
                                        2002         2001         2000
                                     ---------    ----------   ----------
Net sales                            $ 2,507.7    $ 2,199.8    $ 1,919.3

Cost of sales                          1,445.9      1,274.2      1,152.7
                                      --------     --------     --------
Gross profit                           1,061.8        925.6        766.6

Selling, general and
  administrative expenses                585.5        516.5        483.0
Amortization of intangibles
  and other assets                        23.8         41.5         33.5
Restructuring and other
   special charges                        17.5           --          4.5
                                      --------     --------     --------
Operating income                         435.0        367.6        245.6

Other income (expenses):
  Loss on sale of assets                  (0.6)        (1.8)        (1.0)
  Interest income                          3.7          2.4          1.5
  Interest expense                       (19.2)       (27.0)       (38.5)
  Income from equity
    investments, net                      13.4           --           --
  Termination of interest rate
    swap agreement                          --         (8.9)          --
                                      --------     --------     --------
Earnings before income taxes
  and extraordinary loss                 432.3        332.3        207.6
Provision for income taxes               177.7        149.6         95.5
                                      --------     --------     --------
Earnings before
  extraordinary loss                     254.6        182.7        112.1
Extraordinary loss, net of
  tax benefit                               --          3.2           --
                                      --------     --------     --------
Net earnings                             254.6        179.5        112.1

Less preferred stock dividends              --           --        (34.3)
Less accretion of mandatorily
  redeemable preferred stock                --           --         (0.3)
                                      --------     --------     --------
Net earnings attributable to
  common shareholders                $   254.6    $   179.5    $    77.5
                                      ========     ========     ========
Basic earnings per
  common share before
  extraordinary loss                 $    1.78   $     1.31   $     0.82
Extraordinary loss, net of
  tax benefit                               --         0.02           --
                                      --------    ---------    ---------
Basic earnings per
  common share                       $    1.78   $     1.29   $     0.82
                                      ========    =========    =========
Diluted earnings per
  common share before
  extraordinary loss                 $    1.77   $     1.29   $     0.80
Extraordinary loss, net of
  tax benefit                               --         0.02           --
                                      --------    ---------    ---------
Diluted earnings per
  common share                       $    1.77   $     1.27   $     0.80
                                      ========    =========    =========

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



          LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
          CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
                             (Dollars in Millions)

                                           Additional    Retained
                                  Common    Paid-in      Earnings     Treasury
                                  Stock      Capital     (Deficit)      Stock
                                 --------   ---------    ---------    ---------
BALANCE AT DECEMBER 31, 1999     $  5.2     $  420.0     $ (245.5)     $   --
Comprehensive earnings:
  Net earnings                       --           --        112.1          --
  Other comprehensive loss:
    Foreign currency translation
      adjustments                    --           --           --          --
                                  -----      -------      -------       -----
Comprehensive earnings               --           --        112.1          --
Issuance of common stock            0.2         17.6           --          --
Issuance of restricted stock
  awards                             --          9.3           --          --
Amortization of unearned
  restricted stock compensation      --           --           --          --
Income tax benefit from stock
  options exercised                  --         19.0           --          --
Conversion of preferred stock
  into common stock                 4.2        579.7           --          --
Preferred stock dividends            --           --        (34.3)         --
Accretion of mandatorily
  redeemable preferred stock         --           --         (0.3)         --
                                  -----      -------      -------       -----
BALANCE AT DECEMBER 31, 2000     $ 14.0     $1,041.2     $ (168.0)     $   --
Comprehensive earnings:
  Net earnings                       --           --        179.5          --
  Other comprehensive loss:
    Cumulative effect of change
     in accounting principle
      (net-of-tax of $0.4)           --           --           --          --
    Unrealized derivative loss
     on cash flow hedge              --           --           --          --
    Termination of interest
      rate swap agreement            --           --           --          --
    Foreign currency translation
      adjustments                    --           --           --          --
    Minimum pension liability
      adjustment                     --           --           --          --
                                  -----      -------      -------       -----
Comprehensive earnings               --           --        179.5          --
Issuance of common stock            0.2         14.8           --          --
Issuance of restricted stock
  awards                             --         11.3           --          --
Amortization of unearned
  restricted stock compensation      --           --           --          --
Income tax benefit from stock
  options exercised                  --         14.4           --          --
                                  -----      -------      -------       -----
BALANCE AT DECEMBER 31, 2001     $ 14.2     $1,081.7     $   11.5      $   --
Comprehensive earnings:
  Net earnings                       --           --        254.6          --
  Other comprehensive loss:
   Foreign currency translation
     adjustments                     --           --           --          --
   Minimum pension liability
     adjustment                      --           --           --          --
   Tax effect of other
     comprehensive loss
     adjustments                     --           --           --          --
                                  -----      -------      -------       -----
Comprehensive earnings               --           --        254.6          --
Issuance of common stock            0.1         18.2           --          --
Issuance of restricted stock
  awards                             --         40.9           --          --
Surrender of restricted stock
  awards                             --           --           --        (4.4)
Issuance of common stock and
  assumption of stock options in     --           --           --          --
  connection with acquisition,
  (net of forfeitures)              0.5        249.7           --          --
Amortization of unearned
  restricted stock compensation      --           --           --          --
Income tax benefit from stock
  options exercised                  --         16.0           --          --
                                  -----      -------      -------       -----
BALANCE AT DECEMBER 31, 2002     $ 14.8     $1,406.5     $  266.1      $ (4.4)
                                  =====      =======      =======       =====



      LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (CONTINUED)
                       (Dollars in Millions)

                                     Unearned     Accumulated
                                    Restricted      Other           Total
                                      Stock      Comprehensive   Shareholders'
                                   Compensation      Loss           Equity
                                   ------------  -------------  --------------
BALANCE AT DECEMBER 31, 1999        $   (4.1)      $   (0.1)       $  175.5
Comprehensive earnings:
  Net earnings                            --             --           112.1
  Other comprehensive loss:
    Foreign currency translation
      adjustments                         --           (0.3)           (0.3)
                                     -------        -------         -------
Comprehensive earnings                    --           (0.3)          111.8
Issuance of common stock                  --             --            17.8
Issuance of restricted stock
  awards                                (9.3)            --              --
Amortization of unearned
  restricted stock compensation          4.0             --             4.0
Income tax benefit from stock
  options exercised                       --             --            19.0
Conversion of preferred stock
  into common stock                       --             --           583.9
Preferred stock dividends                 --             --           (34.3)
Accretion of mandatorily
  redeemable preferred stock              --             --            (0.3)
                                     -------        -------         -------
BALANCE AT DECEMBER 31, 2000            (9.4)          (0.4)          877.4
Comprehensive earnings:
  Net earnings                            --             --           179.5
  Other comprehensive loss:
    Cumulative effect of change
     in accounting principle
      (net-of-tax of $0.4)                --             0.6            0.6
    Unrealized derivative loss
     on cash flow hedge                   --            (9.5)          (9.5)
    Termination of interest
      rate swap agreement                 --             8.9            8.9
    Foreign currency translation
      adjustments                         --            (0.6)          (0.6)
    Minimum pension liability
      adjustment                          --            (7.8)          (7.8)
                                     -------         -------        -------
Comprehensive earnings                    --            (8.4)         171.1
Issuance of common stock                  --              --           15.0
Issuance of restricted stock
  awards                               (11.3)             --             --
Amortization of unearned
  restricted stock compensation          7.5              --            7.5
Income tax benefit from stock
  options exercised                       --              --           14.4
                                     -------         -------        -------
BALANCE AT DECEMBER 31, 2001           (13.2)           (8.8)       1,085.4
Comprehensive earnings:
  Net earnings                            --              --          254.6
  Other comprehensive loss:
   Foreign currency translation
     adjustments                          --             2.3            2.3
   Minimum pension liability
     adjustment                           --           (43.2)         (43.2)
   Tax effect of other
     comprehensive loss adjustments       --            19.8           19.8
                                     -------         -------        -------
Comprehensive earnings                    --           (21.1)         233.5
Issuance of common stock                  --              --           18.3
Issuance of restricted stock
  awards                               (40.9)             --             --
Surrender of restricted stock
  awards                                  --              --           (4.4)
Issuance of common stock and
  assumption of stock options in
  connection with acquisition,
  (net of forfeitures)                  (1.6)             --          248.6
Amortization of unearned
  restricted stock compensation         14.3              --           14.3
Income tax benefit from stock
  options exercised                       --              --           16.0
                                     -------         -------        -------
BALANCE AT DECEMBER 31, 2002        $  (41.4)       $  (29.9)      $1,611.7
                                     =======         =======        =======

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



       LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                          (Dollars in Millions)

                                                 Years Ended December 31,
                                           ---------------------------------
                                                2002       2001       2000
                                           ----------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:

Net earnings                                  $  254.6   $  179.5   $  112.1

  Adjustments to reconcile net earnings to
   net cash provided by operating activities:
      Depreciation and amortization              101.8      104.0       89.6
      Stock compensation                          14.3        7.5        4.0
      Loss on sale of assets                       0.6        1.8        1.0
      Restructuring and other special charges     17.5         --        4.5
      Accreted interest on zero coupon-
        subordinated notes                        10.1        3.0         --
      Extraordinary loss, net of
        tax benefit                                 --        3.2         --
      Termination of interest rate
        swap agreement                              --        8.9         --
      Deferred income taxes                       28.9        1.6       (3.2)
      Change in assets and liabilities:
        Net change in restructuring reserves      (3.3)      (5.5)      (5.7)
        Decrease (increase) in accounts
          receivable, net                         11.1       16.2      (15.9)
        Increase in inventories                   (1.5)      (3.6)      (2.1)
        Decrease (increase) in prepaid
          expenses and other                     (12.5)       5.8       21.3
        (Decrease) increase in accounts payable   (7.8)      (3.4)       7.9
        Increase (decrease) in accrued
          expenses and other                      27.6       (2.0)      32.9
        Other, net                                 3.5       (1.0)       0.3
                                                ------     ------     ------
  Net cash provided by operating activities      444.9      316.0      246.7
                                                ------     ------     ------
CASH FLOWS FROM INVESTING ACTIVITIES:

  Capital expenditures                           (74.3)     (88.1)     (55.5)
  Proceeds from sale of assets                     1.8        4.4        1.4
  Deferred payments on acquisitions              (21.0)     (18.6)      (1.0)
  Distributions from equity affiliates in
    excess of cumulative earnings                  1.5         --         --
  Licensing technology                           (15.0)        --         --
  Acquisition of businesses, net of cash
    acquired                                    (261.9)    (127.7)     (94.9)
                                                ------     ------     ------
  Net cash used for investing activities        (368.9)    (230.0)    (150.0)
                                                ------     ------     ------

                                 (continued)



     LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS
                        (Dollars in Millions)

                                                 Years Ended December 31,
                                           ----------------------------------
                                               2002         2001        2000
                                           ------------   ---------  --------
CASH FLOWS FROM FINANCING ACTIVITIES:

 Proceeds from credit facilities             $  330.0    $   75.0   $     --
 Payments on credit facilities                 (330.0)      (75.0)        --
 Proceeds from zero coupon-subordinated
   notes                                           --       499.8         --
 Payments on long-term debt                    (204.6)     (478.5)     (95.0)
 Debt issuance costs                             (3.2)      (11.2)        --
 Termination of interest rate swap
   agreement                                     19.6        (8.9)        --
 Payments on long-term lease obligations         (1.1)       (1.1)      (1.2)
 Payment of preferred stock dividends              --          --       (9.5)
 Net proceeds from issuance of stock to
  employees                                      18.2        14.9       17.8
                                              -------     -------    -------
Net cash provided by (used for)
  financing activities                         (171.1)       15.0      (87.9)
                                              -------     -------    -------
Effect of exchange rate changes on cash
 and cash equivalents                             2.3        (0.6)      (0.3)

 Net (decrease) increase in cash and
   cash equivalents                             (92.8)      100.4        8.5
 Cash and cash equivalents at
   beginning of period                          149.2        48.8       40.3
                                              -------     -------    -------
 Cash and cash equivalents at
   end of period                             $   56.4    $  149.2   $   48.8
                                              =======     =======    =======
Supplemental schedule of cash
  flow information:
  Cash paid during the period for:
     Interest                                 $   1.5     $  23.2    $  40.7
     Income taxes, net of refunds               135.0       127.7       48.8

Disclosure of non-cash financing
  and investing activities:
 Preferred stock dividends                         --          --       24.8
 Accretion of mandatorily redeemable
   preferred stock                                 --          --        0.3
 Conversion of preferred stock into
   common stock                                    --          --      583.9
 Issuance of restricted stock awards             40.9        11.3        9.3
 Surrender of restricted stock awards             4.4          --         --
 Issuance of common stock in acquisitions       245.6          --         --
 Assumption of unvested stock options             5.0          --         --

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



     LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
            (Dollars in millions, except per share data)


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Financial Statement Presentation:

     Laboratory Corporation of America Holdings with its
subsidiaries (the "Company") is the second largest independent
clinical laboratory company in the United States based on 2002
net revenues.  Through a national network of laboratories, the
Company offers a broad range of testing services used by the
medical profession in routine testing, patient diagnosis, and in
the monitoring and treatment of disease.  In addition, the
Company has developed specialty and niche businesses based on
certain types of specialized testing capabilities and client
requirements, such as oncology testing, HIV genotyping and
phenotyping, diagnostic genetics and clinical research trials.

     Since its founding in 1971, the Company has grown into a
network of 47 primary testing facilities and over 1,200 service
sites consisting of branches, patient service centers and STAT
laboratories.  With over 24,000 employees, the Company processes
tests on more than 300,000 patient specimens daily and provides
clinical laboratory testing services in all 50 states, the
District of Columbia, Puerto Rico and two provinces in Canada.
The Company operates in one business segment.

     The consolidated financial statements include the accounts of
Laboratory Corporation of America Holdings and its subsidiaries after
elimination of all material intercompany accounts and transactions.
On July 25, 2002, the Company completed the acquisition of Dynacare,
a provider of clinical laboratory testing services.  Disclosure of
certain business combination transactions is included in Note 2 -
Business Acquisitions.

     The financial statements of the Company's foreign
subsidiaries are measured using the local currency as the
functional currency.  Assets and liabilities are translated at
exchange rates as of the balance sheet date.  Revenues and
expenses are translated at average monthly exchange rates
prevailing during the year.  Resulting translation adjustments
are included in "Accumulated other comprehensive loss".

Cash Equivalents:

     Cash equivalents (primarily investments in money market funds,
time deposits, commercial paper and Eurodollars which have original
maturities of three months or less at the date of purchase) are
carried at cost which approximates market.  As a result of the
Company's cash management system, checks issued but not presented to
the banks for payment may create negative book cash balances.  Such
negative balances are included in trade accounts payable and totaled
$22.1 and $9.3 at December 31, 2002 and 2001, respectively.



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
      (Dollars in millions, except per share data)

Inventories:

     Inventories, consisting primarily of purchased laboratory
supplies, are stated at the lower of cost (first-in, first-out) or
market.

Derivative Financial Instruments:

     Interest rate swap agreements, which have been used by the
Company from time to time in the management of interest rate
exposure, are accounted for on an accrual basis.  Amounts to be paid
or received under such agreements are recognized as interest income
or expense in the periods in which they accrue.

     The Company has cross currency and interest rate swap
agreements due January 15, 2006, whereby the Company has swapped
$85.5 Canadian dollar denominated receivables due from certain of
its subsidiaries for $58.9.  These same subsidiaries have swapped
in aggregate $85.5 Canadian dollar denominated debt due to
Dynacare into $58.9.  At December 31, 2002 the estimated fair
value of net unfavorable currency and interest rate swaps was
approximately $0.3.

     The Company's zero coupon-subordinated notes contain the
following three features that are considered to be embedded
derivative instruments under FAS No. 133:

1) The Company will pay contingent cash interest on the zero
coupon subordinated notes after September 11, 2006, if the
average market price of the notes equals 120% or more of the
sum of the issue price, accrued original issue discount and
contingent additional principal, if any, for a specified
measurement period.

2) Contingent additional principal will accrue on the zero
coupon-subordinated notes during the two year period from
September 11, 2004 to September 11, 2006, if the Company's
stock price is at or below specified thresholds.

3) Holders may surrender zero coupon-subordinated notes for
conversion during any period in which the rating assigned to
the zero coupon-subordinated notes by Standard & Poor's
Ratings Services is BB- or lower.

     Based upon independent appraisals, these embedded
derivatives had no fair market value at December 31, 2002 and
2001.

Property, Plant and Equipment:

     Property, plant and equipment are recorded at cost.  The
cost of properties held under capital leases is equal to the
lower of the net present value of the minimum lease payments or
the fair value of the leased property at the inception of the
lease.  Depreciation and amortization expense is computed on all
classes of assets based on their estimated useful lives, as
indicated below, using principally the straight-line method.



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
        (Dollars in millions, except per share data)

                                                           Years
                                                           ------
        Buildings and building improvements                   35
        Machinery and equipment                             3-10
        Furniture and fixtures                              5-10

     Leasehold improvements and assets held under capital leases are
amortized over the shorter of their estimated lives or the period of
the related leases.  Expenditures for repairs and maintenance are
charged to operations as incurred.  Retirements, sales and other
disposals of assets are recorded by removing the cost and accumulated
depreciation from the related accounts with any resulting gain or
loss reflected in operations.

Capitalized Software Costs:

     The Company capitalizes purchased software which is ready for
service and capitalizes software development costs incurred on
significant projects starting from the time that the preliminary
project stage is completed and management commits to funding a
project until the project is substantially complete and the software
is ready for its intended use.  Capitalized costs include direct
material and service costs and payroll and payroll-related costs.
Research and development costs and other computer software
maintenance costs related to software development are expensed as
incurred.  Capitalized software costs are amortized using the
straight-line method over the estimated useful life of the underlying
system, generally five years.

Fair Value of Financial Instruments:

     The carrying amounts of cash and cash equivalents, accounts
receivable, income taxes receivable and accounts payable are
considered to be representative of their respective fair values
due to their short-term nature.  The fair market value of the zero
coupon-subordinated notes, based on market pricing, was approximately
$495.2 as of December 31, 2002.

Reclassifications

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

Concentration of Credit Risk:

     Financial instruments that potentially subject the Company to
concentrations of credit risk consist primarily of cash, cash
equivalents and accounts receivable.

     The Company maintains cash and cash equivalents with various
major financial institutions.  The total cash balances on deposit
that exceeded the balances insured by the F.D.I.C., was approximately
$55.6 at December 31, 2002.  Cash equivalents at December 31, 2002,
totaled $33.5, which includes amounts invested in treasury bills and
short-term bonds.



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
       (Dollars in millions, except per share data)

     Substantially all of the Company's accounts receivable are with
companies and individuals in the health care industry.  However,
concentrations of credit risk are limited due to the number of the
Company's clients as well as their dispersion across many different
geographic regions.

     Accounts receivable balances (gross) from Medicare and Medicaid
were $82.7 and $91.2 at December 31, 2002 and 2001, respectively.

Revenue Recognition:

     Sales are recognized on the accrual basis at the time test
results are reported, which approximates when services are provided.
Services are provided to certain patients covered by various third-
party payor programs including the Medicare and Medicaid programs.
Billings for services under third-party payor programs are included
in sales net of allowances for contractual discounts and allowances
for differences between the amounts billed and estimated program
payment amounts.  Adjustments to the estimated payment amounts based
on final settlement with the programs are recorded upon settlement as
an adjustment to revenue.  In 2002, 2001 and 2000, approximately 16%
of the Company's revenues were derived from tests performed for the
beneficiaries of the Medicare and Medicaid programs.  Under capitated
agreements with managed care customers, the Company recognizes
revenue based on a predetermined monthly contractual rate for each
member of the managed care plan regardless of the number or cost of
services provided by the Company.

Income Taxes:

     The Company accounts for income taxes utilizing the asset
and liability method. Under this 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 and for tax loss carryforwards.  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.  Future tax benefits, such as net operating loss
carryforwards, are recognized to the extent that realization of
such benefits is more likely than not.

Stock Splits:

     On May 2, 2000, the Company effected a one-for-ten common stock
reverse split whereby the number of authorized shares of common stock
decreased from 520 million to 52 million and the par value increased
from $0.01 to $0.10.  On June 11, 2001, the Company effected a
two-for-one stock split through the issuance of a stock dividend
of one new share of common stock for each share of common stock
held by shareholders of record on June 4, 2001.  On May 10, 2002,
the Company  effected a two-for-one stock  split through the issuance



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
        (Dollars in millions, except per share data)

of a stock dividend of one new share of common stock for each share
of common stock held by shareholders of record on May 3, 2002.  All
references to common stock, common shares outstanding, average number
of common shares outstanding, stock options, restricted shares and
per share amounts in the Consolidated Financial Statements and Notes
to Consolidated Financial Statements have been restated to reflect
common stock splits and the reverse split on a retroactive basis.

Stock Compensation Plans:

     The Company accounts for its employee stock option plans using
the intrinsic method under APB Opinion No. 25 and related
Interpretations.  Accordingly, compensation for stock options is
measured as the excess, if any, of the quoted market price of the
Company's stock at the date of grant over the amount an employee must
pay to acquire the stock.  The Company's employee stock purchase plan
is also accounted for under APB Opinion No. 25 and is treated as non-
compensatory.

     The Company applies the provisions of APB Opinion No. 25 in
accounting for its stock compensation plans and, accordingly, no
compensation cost has been recognized for its stock compensation
plans in the financial statements.  Had the Company determined
compensation cost based on the fair value method as defined in SFAS
No. 123, the impact on the Company's net earnings on a pro forma
basis is indicated below:

                                               Years ended December 31,
                                               2002       2001       2000
                                             -------    -------    -------
   Net earnings                As reported   $ 254.6    $ 179.5    $ 112.1
                               Pro forma       233.9      167.3      108.0

   Basic earnings per
     common share              As reported   $  1.78    $  1.29    $  0.82
                               Pro forma        1.64       1.20       0.78
   Diluted earnings per
     common share              As reported   $  1.77    $  1.27    $  0.80
                               Pro forma        1.62       1.18       0.76

     Compensation cost for restricted stock awards is recorded by
allocating their aggregate grant date fair value over their vesting
period.

Earnings per Share:

     Basic earnings per share is computed by dividing net
earnings, less preferred stock dividends and accretion, by the
weighted average number of common shares outstanding.  Diluted
earnings per share is computed by dividing net earnings by the
weighted average number of common shares outstanding plus
potentially dilutive shares, as if they had been issued at the
beginning of the period presented.  Potentially dilutive common
shares result primarily from the Company's mandatorily redeemable
preferred stock (redeemed in 2000), restricted stock awards and
outstanding stock options.



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
       (Dollars in millions, except per share data)

     The following represents a reconciliation of the weighted
average shares used in the calculation of basic and diluted
earnings per share:
                                          Years ended December 31,
                                     2002           2001           2000
                                 -----------------------------------------
Basic                            142,791,247    138,837,750     94,161,336
Assumed conversion/exercise
of:
  Stock options                      584,259      1,116,399      1,421,000
  Restricted stock awards            822,210      1,123,294        716,716
                                 -----------    -----------     ----------
Diluted                          144,197,716    141,077,443     96,299,053
                                 ===========    ===========     ==========

     The following table summarizes the potential common shares
not included in the computation of diluted earnings per share
because their impact would have been antidilutive:

                                                    December 31,
                                          2002         2001       2000
                                        ---------------------------------
Stock Options                           2,012,960     29,738     469,848
Restricted Stock Awards                   974,496         --          --

     The Company's zero-coupon subordinated notes are
contingently convertible into 9,977,634 shares of common stock
and are not currently included in the diluted earnings per share
calculation because these notes were not convertible according to
their terms during 2002.

Use of Estimates:

     The preparation of 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 financial statements and the
reported amounts of revenues and expenses during the reported
periods. Significant estimates include the allowances for
doubtful accounts and deferred tax assets, amortization lives for
intangible assets and accruals for self-insurance reserves.  The
allowance for doubtful accounts is determined based on historical
collection trends, the aging of accounts, current economic
conditions and regulatory changes.  Actual results could differ
from those estimates.

Long-Lived Assets:

     Goodwill is evaluated for impairment by applying a fair value
based test on an annual basis and more frequently if events or
changes in circumstances indicate that the asset might be impaired.



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
       (Dollars in millions, except per share data)

     Long-lived assets, other than goodwill, are reviewed for
impairment whenever events or changes in circumstances indicate that
the carrying amounts may not be recoverable.  Recoverability of
assets to be held and used is determined by the Company at the entity
level by a comparison of the carrying amount of the assets to future
undiscounted net cash flows before interest expense and income taxes
expected to be generated by the assets.  Impairment, if any, is
measured by the amount by which the carrying amount of the assets
exceeds the fair value of the assets (based on market prices in an
active market or on discounted cash flows).  Assets to be disposed of
are reported at the lower of the carrying amount or fair value.  The
Company completed an annual impairment analysis of its indefinite
lived assets, including goodwill, and has found no instances of
impairment as of December 31, 2002.

Intangible Assets:

     Prior to July 1, 2001, the cost of acquired businesses in excess
of the fair value of net assets acquired was recorded as goodwill and
amortized on the straight-line basis ranging from 20 to 40 years.
Effective January 1, 2002, the Company adopted Statement of Financial
Accounting Standards No. 142 "Goodwill and Other Intangible Assets".
This standard requires that goodwill and other intangibles that are
acquired in business combinations and that have indefinite useful
lives are not to be amortized and are to be reviewed for impairment
annually based on an assessment of fair value.  Other intangibles
(patents and technology, customer lists and non-compete agreements),
are amortized on a straight-line basis over the expected periods to
be benefited, such as legal life for patents and technology, 10 to 25
years for customer lists and contractual lives for non-compete
agreements.  With the adoption of SFAS No. 142, the Company
reassessed the useful lives of these intangible assets and determined
that no changes are currently necessary.

2.   BUSINESS ACQUISITION - DYNACARE INC.

     On July 25, 2002, the Company completed the acquisition of
all of the outstanding stock of Dynacare Inc. in a combination
cash and stock transaction with a combined value of approximately
$496.4 including transaction costs.  The Company also converted
approximately 553,958 unvested Dynacare stock options into
297,013 unvested Company options to acquire shares of the Company
at terms comparable to those under the predecessor Dynacare plan.
This conversion of outstanding unvested options increased the
non-cash consideration of the transaction by approximately $5.0
and resulted in the recording of initial deferred compensation of
approximately $2.5.  In conjunction with this acquisition, the
Company repaid Dynacare's existing $204.4 of senior subordinated
unsecured notes, including a call premium of approximately $7.0.
The transaction was financed by issuing approximately 4.9 million
shares of the Company's common stock, valued at approximately
$245.6, assuming unvested Dynacare options valued at $5.0, and
using $245.8 in available cash and the proceeds of a $150.0
bridge loan and borrowings of $50.0 under the Company's $300.0
senior credit facilities.



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
       (Dollars in millions, except per share data)

     The Company terminated a number of interest rate swap
agreements related to Dynacare's existing senior subordinated
unsecured notes.  The $19.6 the Company received upon termination
of these swap agreements was included in the estimated fair value
of the net assets acquired as of July 25, 2002.

     Dynacare had 2001 revenues of approximately $238.0 and had
approximately 6,300 employees at the closing date of the
acquisition.  Dynacare operated in 21 states and two provinces in
Canada with 24 primary laboratories, 2 esoteric laboratories, 115
rapid response labs and 302 patient service centers.

     The acquisition of Dynacare was accounted for under the
purchase method of accounting.  As such, the cost to acquire
Dynacare has been allocated to the assets and liabilities
acquired based on fair values as of the closing date.  The
consolidated financial statements include the results of
operations of Dynacare subsequent to the closing of the
acquisition.

     The following table summarizes the Company's purchase price
allocation related to the acquisition of Dynacare based on the fair
value of the assets acquired and liabilities assumed on the
acquisition date.

                                                 Fair Values
                                                    as of
                                                July 25, 2002
                                                --------------
         Current assets                            $ 100.2
         Property, plant and equipment                48.0
         Goodwill                                    173.3
         Identifiable intangible assets               52.5
         Investment in equity affiliates             402.1
         Other assets                                 23.2
         Deferred compensation                         2.5
                                                    ------
           Total assets acquired                     801.8
                                                    ======
         Current liabilities                         268.1
         Long-term debt                               12.9
         Other liabilities                            24.4
                                                    ------
           Total liabilities assumed                 305.4
                                                    ------
           Net assets acquired                     $ 496.4
                                                    ======

     As a result of this acquisition, the Company recorded an
addition to non-deductible goodwill of approximately $173.3 and an
addition to customer lists of approximately $52.5 (expected period of
benefit of 15 years).  The investments in equity affiliates include
$341.7 of Canadian licenses (with an indefinite life and deductible
for tax).



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
            (Dollars in millions, except per share data)

     The following unaudited pro forma combined financial information
for the years ended December 31, 2002 and 2001, assumes that the
Dynacare acquisition was effected on January 1, 2001:

                                       Years Ended December 31,
                                      -------------------------
                                          2002         2001
                                      -------------------------
         Net sales                     $ 2,677.2    $ 2,454.6

         Earnings before
          extraordinary loss           $   260.0    $   193.2

         Net earnings after
          extraordinary loss           $   260.0    $   190.0

         Diluted earnings per
          common share:
           Before extraordinary loss   $    1.80    $    1.37
           After extraordinary loss    $    1.80    $    1.35

     The Company believes that the acquisition of Dynacare enhances
its ability to provide health coverage in the United States and
Canada by expanding its customer base and service capabilities.  The
Company believes that the price paid for the outstanding shares of
Dynacare was competitive with market conditions existing at the time.

3. BUSINESS ACQUISITION - DIANON SYSTEMS, INC.

     On January 17, 2003, the Company completed the acquisition of
all of the outstanding shares of DIANON Systems, Inc. (DIANON) for
$47.50 per share in cash, or approximately $598.6.  The transaction
was funded by a combination of cash on hand, borrowings under the
Company's senior credit facilities and a new bridge loan facility.
DIANON had 2001 revenues of approximately $125.7.

4. BUSINESS ACQUISITIONS - OTHER

     On June 4, 2001, the Company completed the acquisition of
Minneapolis-based Viro-Med Inc. for approximately $31.7 in cash and
contingent future payments of $12.0 ($3.7 and $7.9 earned and paid in
2002 and 2001, respectively) based upon attainment of specific
earnings targets.  Viro-Med's revenues for the year ended December
31, 2000 were approximately $25.2.

     On April 30, 2001, the Company completed the acquisition of all
of the outstanding stock of Path Lab Holdings, Inc. (Path Lab), which
is based in Portsmouth, New Hampshire for approximately $83.0 in cash
and contingent future payments of $25.0 ($11.1 and $5.5 earned and
paid in 2002 and 2001, respectively) based upon attainment of
specific earnings targets.  Path Lab's revenues for the year ended
December 31, 2000 were approximately $51.6.

     On June 27, 2000, the Company completed the acquisition of the
laboratory testing business of San Diego-based Pathology Medical
Laboratories for approximately $14.5 in cash.



   LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
          (Dollars in millions, except per share data)

5. INVESTMENTS IN EQUITY AFFILIATES

     At December 31, 2002 (as a result of the Dynacare
acquisition) the Company had investments in the following equity
affiliates:
                                  Net              Percentage
        Location               Investment        Interest Owned
- -----------------------       -----------       ---------------
  Milwaukee, Wisconsin         $   4.7               50.00%
  Ontario, Canada              $ 368.1               72.99%
  Alberta, Canada              $  28.0               43.37%

     These investments are accounted for under the equity method
of accounting.  The Company has no material obligations or
guarantees to, or in support of, these unconsolidated joint
ventures and their operations.

     Condensed financial information for the Ontario, Canada
equity affiliate as of December 31, 2002 and for the period of
July 25, 2002 through December 31, 2002 is as follows:

                Current assets           $  15.4
                Other assets                80.6
                                          ------
                Total assets                96.0
                                          ======
                Total liabilities           12.6
                Shareholders' equity        83.4
                                          ------
                Total liabilities and
                  shareholders' equity   $  96.0
                                          ======
                Net sales                $  48.7
                Gross profit             $  25.6
                Net earnings             $  16.1

6.   INTEGRATION OF DYNACARE

     During the third quarter of 2002, the Company finalized its plan
related to the integration of Dynacare's U.S. operations into the
Company's service delivery network.  The plan focuses on reducing
redundant facilities, while maintaining a focus on providing excellent
customer service.  A reduction in staffing will occur as the Company
executes the integration plan and consolidates duplicate or
overlapping functions and facilities.  Employee groups being affected
as a result of this plan include those involved in the collection and
testing of specimens, as well as administrative and other support
functions.

     In connection with the Dynacare integration plan, the Company
recorded $14.6 of costs associated with the execution of the plan.
The majority of these integration costs related to employee severance
and contractual obligations associated with leased facilities and
equipment.  Of the total costs indicated above, $12.1 related to
actions that impact the employees and operations of Dynacare, and was
accounted for as a cost of the Dynacare acquisition and included in
goodwill.  Of the $12.1, $6.0 related to employee severance benefits
for approximately 722 employees, with  the remainder primarily related



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
        (Dollars in millions, except per share data)

to contractual obligations associated with leased facilities and
equipment.  In addition, the Company recorded restructuring expense of
$2.5, relating to integration costs of actions that impact the
Company's existing employees and operations.  Of this amount $1.0
related to employee severance benefits for approximately 78 employees,
with the remainder primarily related to contractual obligations
associated with leased facilities and equipment.

     The Company also recorded a special bad debt provision of
approximately $15.0 related to the acquired Dynacare accounts
receivable balance.  This provision, based on Company experience, was
made in anticipation of changes in staffing and collection procedures
that will occur as the Company converts Dynacare customers to
LabCorp's billing system and related customer service organization.

7.   RESTRUCTURING AND NON-RECURRING CHARGES

     The following represents the Company's restructuring
activities for each of the years in the three years ended
December 31, 2002:
                                                 Lease and
                                  Severance     Other Facility
                                    Costs           Costs          Total
                                 -----------    ---------------   --------
Balance at January 1, 2000         $   0.5        $   26.3        $  26.8
  Memphis closure                      3.0             1.5            4.5
  Reclassifications and
    non-cash items                      --            (3.7)          (3.7)
  Cash payments                       (1.6)           (4.0)          (5.6)
                                    ------         -------         ------
Balance at December 31, 2000           1.9            20.1           22.0
  Reclassifications and
    non-cash items                    (0.7)            0.2           (0.5)
  Cash payments                       (1.0)           (4.5)          (5.5)
                                    ------         -------         ------
Balance at December 31, 2001           0.2            15.8           16.0
  Dynacare integration                 7.0             7.6           14.6
  Reclassifications and
    non-cash items                      --            (1.2)          (1.2)
  Cash payments                       (1.4)           (1.9)          (3.3)
                                    ------         -------         ------
Balance at December 31, 2002       $   5.8        $   20.3        $  26.1
                                    ======         =======         ======
Current                                                           $  10.0
Non-current                                                          16.1
                                                                   ------
                                                                  $  26.1
                                                                   ======
8.   ACCOUNTS RECEIVABLE, NET
                                           December 31,     December 31,
                                               2002              2001
                                          -------------     ------------
Gross accounts receivable                  $   536.2         $   485.0
Less allowance for doubtful accounts          (143.2)           (119.5)
                                            --------          --------
                                           $   393.0         $   365.5
                                            ========          ========

     The provision for doubtful accounts was $214.9, $202.5 and
$195.9 in 2002, 2001 and 2000 respectively.



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
       (Dollars in millions, except per share data)

9.   PROPERTY, PLANT AND EQUIPMENT, NET
                                           December 31,   December 31,
                                               2002           2001
                                           ------------  ------------
Land                                        $    15.3      $    9.9
Buildings and building improvements              89.5          79.2
Machinery and equipment                         409.7         367.5
Leasehold improvements                           76.2          66.4
Furniture and fixtures                           16.9          19.9
Construction in progress                         30.0          22.4
Buildings under capital leases                    5.4           5.4
Equipment under capital leases                    3.8           3.8
                                              -------       -------
                                                646.8         574.5
Less accumulated depreciation
  and amortization of capital lease assets     (295.6)       (265.2)
                                              -------       -------
                                             $  351.2      $  309.3
                                              =======       =======

     Depreciation expense and amortization of capital lease
assets was $73.0, $59.6 and $56.1 for 2002, 2001 and 2000,
respectively.

10.  GOODWILL AND INTANGIBLE ASSETS

     Goodwill at December 31, 2002 and 2001 consisted of the
following:

                                               2002           2001
                                            --------       ---------
Goodwill                                    $1,102.1       $  911.3
Less: accumulated amortization                (192.0)        (192.0)
                                             -------        -------
Goodwill, net                               $  910.1       $  719.3
                                             =======        =======

     The changes in the gross carrying amount of goodwill for the
years ended December 31, 2002 and 2001 are as follows:

                                               2002           2001
                                             -------        --------
Balance as of January 1                     $  911.3       $  860.5
Goodwill acquired during the year              190.8           50.5
                                             -------        -------
Balance as of December 31                   $1,102.1       $  911.3
                                             =======        =======

     The components of identifiable intangible assets are as follows:

                      December 31, 2002         December 31, 2001
                    -----------------------   -----------------------
                      Gross                     Gross
                    Carrying   Accumulated    Carrying   Accumulated
                     Amount    Amortization    Amount    Amortization
                    -----------------------   -----------------------
Customer lists      $  338.4    $   90.8      $  276.8    $   73.5
Patents and
  technology            55.2         6.0          35.0         1.8
Non-compete
  agreements            21.3        16.1          21.1        14.2
Trade name               5.9         0.5           5.9         0.1
                     -------     -------       -------     -------
                    $  420.8    $  113.4      $  338.8    $   89.6
                     =======     =======       =======     =======



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
      (Dollars in millions, except per share data)

     Amortization of intangible assets was $23.8, $41.5 and $33.5 in
2002, 2001 and 2000, respectively.  Amortization expense for the net
carrying amount of intangible assets is estimated to be $27.0 in
fiscal 2003, $26.8 in fiscal 2004, $26.1 in fiscal 2005, $24.8 in
fiscal 2006, and $24.5 in fiscal 2007.  These estimates include the
effect of the Dynacare acquisition.

     During 2002, the Company paid approximately $15.0 for certain
exclusive and non-exclusive licensing rights to diagnostic testing
technology.  This amount is being amortized over the life of the
licensing agreement.

     The following table presents net earnings, earnings before
extraordinary loss and basic and diluted earnings per common share,
adjusted to reflect results as if the non-amortization provisions of
SFAS No. 142 had been in effect for the periods presented.

                                                    December 31,
                                          --------------------------------
                                             2002        2001      2000
                                          --------------------------------
Net earnings attributable to
  common shareholders                     $ 254.6     $ 179.5     $  77.5
Add back: goodwill amortization,
  net of tax                                   --     $  25.0        20.2
                                           ------      ------      ------
Adjusted net earnings attributable to
  common shareholders                     $ 254.6     $ 204.5     $  97.7
                                           ======      ======      ======
Earnings before extraordinary loss,
  adjusted to exclude goodwill
  amortization, net of tax                $ 254.6     $ 207.7     $  97.7
                                           ======      ======      ======
Basic earnings per share:
Reported basic earnings per share         $  1.78     $  1.29     $  0.82
Add back: goodwill amortization,
  net of tax                                   --        0.18        0.21
                                           ------      ------      ------
Adjusted basic earnings per share         $  1.78     $  1.47     $  1.03
                                           ======      ======      ======
Basis earnings per share before
  extraordinary loss, adjusted to
  exclude goodwill amortization,
  net of tax                              $  1.78     $  1.49     $  1.03
                                           ======      ======      ======
Diluted earnings per share:
Reported diluted earnings per share       $  1.77     $  1.27     $  0.80
Add back: goodwill amortization,
  net of tax                                   --        0.18        0.21
                                           ------      ------      ------
Adjusted diluted earnings per share       $  1.77     $  1.45     $  1.01
                                           ======      ======      ======
Diluted earnings per share before
  extraordinary loss, adjusted to
  exclude goodwill amortization,
  net of tax                              $  1.77     $  1.47     $  1.01
                                           ======      ======      ======



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
      (Dollars in millions, except per share data)

11.  ACCRUED EXPENSES AND OTHER
                                          December 31,   December 31,
                                             2002           2001
                                          ------------  -------------
Employee compensation and benefits         $   60.8       $   57.2
Acquisition related accruals                   15.5            6.9
Restructuring reserves                         10.0            8.6
Accrued taxes                                   8.8            4.2
Self-insurance reserves                        28.5           31.5
Interest payable                                0.8            0.2
Swap payable                                   10.9             --
Royalty payable                                 6.0            5.5
Other                                           7.2           11.5
                                            -------        -------
                                           $  148.5       $  125.6
                                            =======        =======
12.  OTHER LIABILITIES
                                          December 31,   December 31,
                                             2002           2001
                                          ------------   ------------
Acquisition related accruals               $    2.0       $    2.0
Restructuring reserves                         16.1            7.4
Minimum pension liability                      56.6           15.4
Deferred income taxes                         108.3           63.5
Post-retirement benefit obligation             42.9           40.2
Self-insurance reserves                        20.9           20.7
Other                                           3.0            0.3
                                            -------        -------
                                           $  249.8       $  149.5
                                            =======        =======

13.  ZERO COUPON-SUBORDINATED NOTES

     In September 2001, the Company sold $650.0 aggregate
principal amount at maturity of its zero coupon convertible
subordinated notes (the "notes") due 2021 in a private placement.
The Company received approximately $426.8 (net of underwriter's
fees of approximately $9.8) in net proceeds from the offering.
In October 2001, the underwriters exercised their rights to
purchase an additional $94.0 aggregate principal amount pursuant
to an overallotment option from which the Company received
approximately $61.8 in net proceeds (net of underwriters fees of
approximately $1.4).  The notes, which are subordinate to the
Company's  bank debt, were  sold at an issue price of $671.65 per
$1,000 principal amount at maturity (representing a yield to
maturity of 2.0% per year).  Each one thousand dollar principal
amount at maturity of the notes is convertible into 13.4108
shares of the Company's common stock, subject to adjustment in
certain circumstances, if one of the following conditions occurs:

1) If the sales price of the Company's common stock reaches
specified thresholds during specified measurement periods.
2) If the credit rating assigned to the notes by Standard &
Poor's Ratings Services is at or below BB-.
3) If the notes are called for redemption.
4) If specified corporate transactions have occurred.



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
      (Dollars in millions, except per share data)

     Holders of the notes may require the Company to purchase all or
a portion of their notes on September 11, 2004, 2006 and 2011 at
prices ranging from $712.97 to $819.54, plus any accrued contingent
additional principal and any accrued contingent interest thereon.
The Company may choose to pay the purchase price in cash, common
stock or a combination of cash and common stock.  If the holders
elect to require the Company to purchase their notes it is the
Company's current intention to retire the notes by a cash payment.

     The Company may redeem for cash all or a portion of the
notes at any time on or after September 11, 2006 at specified
redemption prices per one thousand dollar principal amount at
maturity of the notes ranging from $741.92 at September 11, 2006 to
$1,000.00 at September 11, 2021 (assuming no contingent additional
principal accrues on the notes).

     The Company used a portion of the proceeds to repay $412.5
of its term loan outstanding under its credit agreement and to
pay $8.9 to terminate the interest rate swap agreement tied to
the Company's term loan.  The Company recorded an extraordinary
loss of $3.2 (net of taxes of $2.3) relating to the write-off of
unamortized bank fees associated with the Company's term debt.

     The Company has registered the notes and the shares of
common stock issuable upon conversion of the notes with the
Securities and Exchange Commission.

14.  LONG-TERM DEBT

     In February 2002, the Company entered into two senior credit
facilities with Credit Suisse First Boston, acting as
Administrative Agent, and a group of financial institutions
totaling $300.0.  The senior credit facilities consisted of a
364-day revolving credit facility in the principal amount of
$100.0 and a three-year revolving credit facility in the
principal amount of $200.0.  Based upon the Company's rating as
of December 31, 2002, the effective rate under the $200.0 and
$100.0 facilities was LIBOR plus 82.5 basis points and LIBOR plus
87.5 basis points, respectively.

     On January 14, 2003, the Company entered into a new $150.0
364-day revolving credit facility with Credit Suisse First
Boston, acting as Administrative Agent, and a group of financial
institutions to replace the existing $100.0 364-day revolving
credit facility, which had terminated.  The $200.0 three-year
revolving credit facility was amended on January 14, 2003 and
expires on February 18, 2005.  These credit facilities bear
interest at varying rates based upon the Company's credit rating
with Standard & Poor's Ratings Services.

     The senior credit facilities are available for general
corporate purposes, including working capital, capital
expenditures, funding of share repurchases and other payments,
and acquisitions.  The agreements contain certain debt covenants
which require that the Company maintain leverage and interest
coverage ratios.



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
       (Dollars in millions, except per share data)

     On July 24, 2002, in conjunction with the acquisition of
Dynacare, the Company borrowed $150.0 under the Dynacare Bridge
Loan Agreement, which had an original maturity date of July 23,
2003.  On November 29, 2002, the Company repaid all outstanding
balances under the Dynacare Bridge Loan, and as a result, the
loan was terminated.

     On January 17, 2003, in conjunction with the acquisition of
DIANON, the Company borrowed $350.0 under the DIANON Bridge Loan
Agreement with Credit Suisse First Boston, acting as
Administrative Agent.  On January 31, 2003, the Company sold
$350.0 aggregate principal amount of its 5 1/2 % Senior Notes due
February 1, 2013.  Proceeds from the issuance of these Notes
($345.1), together with cash on hand was used to repay the $350.0
principal amount of the Company's bridge loan facility, and as a
result, the loan was terminated.

15.  STOCK REPURCHASE PROGRAM

     On October 22, 2002, the Company's Board of Directors
authorized a stock repurchase program under which the Company may
purchase up to an aggregate of $150.0 of its common stock from
time-to-time.  It is the Company's intention to fund future
purchases of its common stock with cash flow from operations.
There were no Company purchases of its common stock during 2002.

16.  STOCKHOLDER RIGHTS PLAN

     The Company adopted a stockholder rights plan effective as
of December 13, 2001 that provides that each common stockholder
of record on December 21, 2001 received a dividend of one right
for each share of common stock held.  Each right entitles the
holder to purchase from the Company one-hundredth of a share of a
new series of participating preferred stock at an initial
purchase price of four hundred dollars.  These rights will become
exercisable and will detach from the Company's common stock if
any person becomes the beneficial owner of 15% or more of the
Company's common stock.  In that event, each right will entitle
the holder, other than the acquiring person, to purchase, for the
initial purchase price, shares of the Company's common stock
having a value of twice the initial purchase price.  The rights
will expire on December 13, 2011, unless earlier exchanged or
redeemed.

17.  LOSS ON INTEREST RATE SWAP AGREEMENT

     In the third quarter of 2001, in conjunction with the early
retirement of its long-term debt, the Company terminated its interest
rate swap agreement with a bank by making a settlement payment of
$8.9 with a portion of the proceeds from the sale of zero coupon-
subordinated notes.  In accordance with the provisions of SFAS
No. 133, as amended, this interest rate swap agreement had been
designated as a cash flow hedge and carried on the balance sheet
at fair value with a corresponding offset in accumulated other
comprehensive loss.



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
        (Dollars in millions, except per share data)

18.  MANDATORILY REDEEMABLE PREFERRED STOCK

     On June 6, 2000, the Company called for redemption all of
its outstanding Series A and Series B preferred stock at $52.83
per share, in accordance with the terms of the Preferred Stock
Offering, by July 6, 2000.  Substantially all of the holders of
the Series A and Series B preferred stock elected to convert
their shares into common stock.  As of July 31, 2000, the Series
A preferred stock was converted into 15,860,348 shares of common
stock and the Series B preferred stock was converted into
26,483,152 shares of common stock.

19.  INCOME TAXES

     The sources of income before taxes, classified between domestic
and foreign entities are as follows:

Pre-tax income:
                              2002        2001        2000
                             -------     -------     -------
Domestic                    $ 440.6     $ 336.6     $ 211.5
Foreign                        (8.3)       (4.3)       (3.9)
                             ------      ------      ------
Total pre-tax income        $ 432.3     $ 332.3     $ 207.6
                             ======      ======      ======

     The provisions for income taxes in the accompanying
consolidated statements of operations consist of the following:

                                               Years Ended December 31,
                                             ----------------------------
                                              2002       2001      2000
                                             ----------------------------
Current:
   Federal                                  $ 118.0    $ 122.8   $  85.2
   State                                       28.4       25.2      13.5
   Foreign                                      2.4         --        --
                                             ------     ------    ------
                                            $ 148.8    $ 148.0   $  98.7
                                             ------     ------    ------
Deferred:
   Federal                                  $  26.0    $  (2.3)  $  (8.6)
   State                                        4.7        3.9       5.4
   Foreign                                     (1.8)        --        --
                                             ------     ------    ------
                                               28.9        1.6      (3.2)
                                             ------     ------    ------
                                            $ 177.7    $ 149.6   $  95.5
                                             ======     ======    ======

     The tax benefit associated with dispositions from stock plans
reduced taxes currently payable by approximately $16.0, $14.4 and
$19.0 in 2002, 2001 and 2000, respectively.  Such benefits are
recorded as additional paid-in-capital.



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
       (Dollars in millions, except per share data)

     The effective tax rates on earnings before income taxes is
reconciled to statutory federal income tax rates as follows:

                                            Years Ended December 31,
                                        -------------------------------
                                           2002       2001       2000
                                        -------------------------------
Statutory federal rate                    35.0%      35.0%      35.0%
State and local income taxes,
   net of federal income tax effect        4.5        4.9        5.0
Non-deductible amortization of
   intangible assets                        --        2.3        3.1
Change in valuation allowance             (0.4)        --         --
Other                                      2.0        2.8        2.9
                                         -----      -----      -----
Effective rate                            41.1%      45.0%      46.0%
                                         =====      =====      =====

     The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities are as follows:
                                          December 31,   December 31,
2002 2001
                                          --------------  ------------
Deferred tax assets:
   Accounts receivable                     $    36.2       $    25.9
   Self-insurance reserves                      18.8            20.4
   Postretirement benefit obligation            17.0            15.8
   Acquisition and restructuring reserves       17.5             9.8
   Tax loss carryforwards                        6.8             1.6
   Employee benefits                            26.0             8.2
   Other                                         8.0            10.8
                                            --------        --------
                                               130.3            92.5
     Less valuation allowance                   (2.8)           (4.5)
                                            --------        --------
     Net deferred tax assets                   127.5            88.0
                                            --------        --------
Deferred tax liabilities:
   Deferred earnings                            (9.6)             --
   Intangible assets                           (88.5)          (64.0)
   Property, plant and equipment               (34.9)          (29.4)
   Zero coupon-subordinated notes              (18.1)           (4.1)
   Other                                        (7.9)           (1.2)
                                            --------        --------
     Total gross deferred tax liabilities     (159.0)          (98.7)
                                            --------        --------
Net deferred tax assets (liabilities)      $   (31.5)      $   (10.7)
                                            ========        ========

     Based upon the realization of certain capital loss
carryforwards, the Company reduced its valuation allowance applied
against its deferred tax assets by approximately $1.7 during the
second quarter of 2002.  The current valuation allowance brings the
Company's net deferred tax assets to a level where management
believes it is more likely than not the tax benefits will be
realized.

     The Internal Revenue Service has concluded its examination of
the Company's 2000, 1999 and 1998 income tax returns and has issued a
report of its findings.  While the Company will appeal certain issues
of the examination, management believes adequate provisions have been
recorded relating to the concluded examination.

     The Company has state tax loss carryforwards of approximately
$19.6 which expire 2003 through 2018.  In addition, as a result of
the Dynacare, Inc. acquisition, the Company has federal tax loss
carryovers of approximately $15.6 expiring periodically through 2021.



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
        (Dollars in millions, except per share data)

     The Company provided for taxes on undistributed earnings of
foreign subsidiaries.

20.  STOCK COMPENSATION PLANS

     In May 2000, the shareholders approved the 2000 Stock Incentive
Plan, authorizing 6.8 million shares for issuance under the plan plus
the remaining shares available from the Amended and Restated 1999
Stock Incentive Plan and the 1994 Stock Option Plan (the "Prior
Plans").  The effect was to increase to 11.68 million, the number of
shares available under the 2000 Stock Incentive Plan and Prior Plans.

     In May 2002, the shareholders approved an amendment to the 2000
Stock Incentive Plan authorizing an additional 8.0 million shares.
The effect was to increase to an aggregate of 19.68 million shares
for issuance under the 2000 Stock Incentive Plan.

     On July 25, 2002, the Company converted approximately
553,958 unvested Dynacare stock options into 297,013 unvested
Company options to acquire shares of the Company at terms
comparable to those under the predecessor Dynacare plan.  The
Company is not expecting to make further grants from this plan.

     During 2002, there were 2,463,808 options granted to
officers and key employees of the Company (which include 276,990
options assumed upon the acquisition of Dynacare).  The exercise
price for these options ranged from $11.02 to $48.02 per share.
Also, during 2002, two grants of restricted stock, for an
aggregate of 966,408 shares were awarded to senior management
under the 2000 Stock Incentive Plan at market values on the dates
of grant of $39.34 and $43.53.  Restrictions limit the sale or
transfer of these shares during four or six-year vesting periods
when the restrictions lapse.  Upon issuance of stock in 2002
under the 2000 Incentive Plan, unearned compensation of $40.9 was
recorded as additional paid-in capital and an equivalent amount
was charged to shareholders' equity as unearned restricted stock
compensation.

     The plan provides for accelerated vesting of outstanding
restricted shares in percentages of 33.3%, 66.7% or 100%, if
certain predefined two-year profitability targets are achieved as
of December 31, 2003 or certain three-year profitability targets
are achieved as of December 31, 2004.  The unearned restricted
stock compensation is being amortized to expense over the
applicable vesting periods.  For 2002, 2001 and 2000, total
restricted stock compensation expense was $14.3, $7.5 and $4.0,
respectively.  Total restricted shares granted in 2001 and 2000
were 348,488 and 525,600, respectively.  At December 31, 2002,
there were 8,285,483 additional shares available for grant under the
Company's stock option plans.

     The pro forma weighted average fair values at date of grant
for options issued during 2002, 2001 and 2000 were $23.50, $19.72
and $11.18 respectively, and were estimated using the Black-
Scholes option pricing model.  Weighted average assumptions for
the expected life in years, volatility and dividend yield were 7
years, .5, and 0% for each of the three years ended December 31,
2002.  Interest rate assumptions were 3.0%, 4.3% and 5.0% for the
years ended December 31, 2002, 2001 and 2000, respectively.



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
       (Dollars in millions, except per share data)

     The Company has an employee stock purchase plan, begun in
1997 and amended in 1999, with 3,000,000 shares of common stock
authorized for issuance.  The plan permits substantially all
employees to purchase a limited number of shares of Company stock
at 85% of market value.  The Company issues shares to
participating employees semi-annually in January and July of each
year.  A summary of shares issued is as follows:

                 2000         2001         2002         2003
               --------     --------      -------     --------
January        210,352      102,627       73,514      149,020
July           182,088       61,752       75,446

     Pro forma compensation expense is calculated for the fair
value of the employee's purchase right using the Black-Scholes
model.  Assumptions include a weighted average life of
approximately one-half year, dividend yield of 0%, risk free
interest rates for each six month period as follows:  2002 - 1.8%
and 1.8%; 2001 - 5.8% and 3.5% and 2000 - 5.5% and 6.1% and
volatility rates for each of the following six month periods:
2002 - .2 and .8; 2001 - .4 and .3 and 2000 - .5 and .5.

     The per share weighted average grant date fair value of the
benefits under the employee stock purchase plan for the first and
second six-month periods is as follows:

                       2002            2001            2000
                      -------         -------         -------
First six months      $11.87          $11.51           $2.55
Second six months     $18.21          $ 8.79           $5.21

     The following table summarizes grants of non-qualified
options made by the Company to officers and key employees under
all plans.  Stock options are generally granted at an exercise
price equal to or greater than the fair market price per share on
the date of grant.  Also, for each grant, options vest ratably
over a period of two to three years on the anniversaries of the
grant date, subject to their earlier expiration or termination.



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
       (Dollars in millions, except per share data)

     Changes in options outstanding under the plans for the periods
indicated were as follows:
                                                  Weighted-Average
                                      Number        Exercise Price
                                    of Options        per Option
                                   -----------    ------------------
Outstanding at January 1, 2000       4,002,329           $ 7.903
  (2,176,768 exercisable)

   Options granted                   1,658,996           $18.348
   Forfeited                          (141,449)          $11.945
   Exercised                        (2,389,124)          $ 6.369
                                     ---------
Outstanding at December 31, 2000     3,130,752	         $14.426
  (671,835 exercisable)

   Options granted                   2,094,976           $33.069
   Forfeited                          (197,923)          $21.828
   Exercised                        (1,121,872)          $ 9.967
                                     ---------
Outstanding at December 31, 2001     3,905,933           $25.331
  (729,504 exercisable)

   Options granted at market value   2,186,818           $42.524
   Granted above market value           77,750           $28.910
   Granted below market value          199,240           $18.626
   Forfeited                          (320,341)          $29.756
   Exercised                          (697,394)          $23.501
                                     ---------
Outstanding at December 31, 2002     5,352,006           $32.722
                                     =========
Exercisable at December 31, 2002     1,332,332           $23.501
                                     =========

     The weighted-average remaining life of options outstanding at
December 31, 2002 is approximately 8.1 years.

     The following table summarizes information concerning currently
outstanding and exercisable options.

              OPTIONS OUTSTANDING                      OPTIONS EXERCISABLE
- ---------------------------------------------------  ------------------------
                                Weighted
                                 Average   Weighted                Weighted
                                Remaining  Average                 Average
    Range of         Number    Contractual Exercise     Number     Exercise
Exercise Prices   Outstanding      Life     Price     Exercisable    Price
- -----------------------------------------------------------------------------

 $ 4.84 - 17.69     930,376       6.65     $13.073    520,862      $11.942
 $20.49 - 28.91     493,515       7.23     $26.686    268,317      $26.670
 $32.50 - 37.90   1,825,997       7.93     $33.087    543,153      $33.018
 $39.34 - 48.02   2,102,118       9.10     $42.517         --      $ 0.000
                  ---------                         ---------
                  5,352,006                         1,332,332
                  =========                         =========



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
       (Dollars in millions, except per share data)

21.  RELATED PARTY TRANSACTIONS

     The Company purchases certain items, primarily laboratory
testing supplies from various affiliates of Roche Holdings, Inc.
("Roche").  Total purchases from these affiliates, which are recorded
in cost of sales, were $55.2, $62.3, and $42.7 in 2002, 2001 and
2000, respectively. In addition, the Company made royalty payments to
Roche for diagnostic technology in the amounts of $4.7 in 2002, $4.4
in 2001 and $2.8 in 2000.  Amounts owed to Roche and its affiliates
at December 31, 2002 and 2001 were $3.3 and $4.6, respectively.
Revenue received from Roche for laboratory services was $1.4 in 2002,
$2.6 in 2001 and $1.3 in 2000.  Amounts owed from Roche and its
affiliates at December 31, 2002 and 2001 were $0.6 and $0.2,
respectively.  The Company believes that all of these transactions
with Roche have been conducted on an arms length basis.

     On February 21, 2002, the Company filed a registration statement
on Form S-3, relating to the sale by Roche of 7,000,000 shares of the
Company's common stock, with a 700,000 share over-allotment option.
At that time, Roche owned 10,705,074 shares of common stock
(approximately 15.13% of the common stock outstanding).  On March 12,
2002, Roche sold 7,000,000 shares of common stock and on March 18,
2002, an additional 700,000 shares of common stock were sold to cover
over-allotments of shares leaving Roche with 3,005,074 shares of the
Company's outstanding common stock, or approximately 4.22% at March
31, 2002.

     Roche entered into a number of call option contracts with
respect to the remaining 3,005,074 shares of the Company's common
stock it owned at March 31, 2002, which were not covered by the
registration statement.  We have been informed that each of these
call option contracts was exercised in full by July 2002, and as a
result, Roche no longer owns any shares of the Company's common
stock.

22.  COMMITMENTS AND CONTINGENT LIABILITIES

     The Company is involved in litigation purporting to be a nation-
wide class action involving the alleged overbilling of patients who
are covered by private insurance. The Company has reached a
settlement with the class that will not exceed the existing reserves
or have a material adverse affect on the Company.  On January 9,
2001, the Company was served with a complaint in North Carolina which
purports to be a class action and makes claims similar to those
referred to above.  The claim has been stayed and the plaintiff's
counsel has agreed to dismiss the case, with prejudice.  The Company
believes that the likelihood of an adverse result in the North
Carolina case is remote. The Company is the appellant in a patent
case originally filed in the United States District Court for the
District of Colorado.  The Company has disputed liability and
contested the case vigorously.  After a jury trial, the district
court entered judgment against the Company for patent infringement.
The Company has appealed the case to the United States Court of
Appeals for the Federal Circuit.  The Company has received a letter
from its counsel dated February 7, 2003 stating "it remains our
opinion that the amended judgment and order will be reversed on
appeal".



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
        (Dollars in millions, except per share data)

     The Company is also involved in various claims and legal actions
arising in the ordinary course of business.  These matters include,
but are not limited to, intellectual property disputes, professional
liability, employee related matters, and inquiries from governmental
agencies, Medicare or Medicaid payors, and managed care payors
requesting comment on allegations of billing irregularities that are
brought to their attention through billing audits or third parties.
In the opinion of management, based upon the advice of counsel and
consideration of all facts available at this time, the ultimate
disposition of these matters is not expected to have a material
adverse effect on the financial position, results of operations or
liquidity of the Company.

     The Company believes that it is in compliance in all material
respects with all statutes, regulations and other requirements
applicable to its clinical laboratory operations.  The clinical
laboratory testing industry is, however, subject to extensive
regulation, and many of these statutes and regulations have not been
interpreted by the courts.  There can be no assurance therefore that
applicable statutes and regulations might not be interpreted or
applied by a prosecutorial, regulatory or judicial authority in a
manner that would adversely affect the Company.  Potential sanctions
for violation of these statutes and regulations include significant
fines and the loss of various licenses, certificates and
authorizations.

     Under the Company's present insurance programs, coverage is
obtained for catastrophic exposures as well as those risks required
to be insured by law or contract.  The Company is responsible for the
uninsured portion of losses related primarily to general,
professional and vehicle liability, certain medical costs and
workers' compensation.  The self-insured retentions are on a per
occurrence basis without any aggregate annual limit.  Provisions for
losses expected under these programs are recorded based upon the
Company's estimates of the aggregated liability of claims incurred.
At December 31, 2002 and 2001, the Company had provided letters of
credit aggregating approximately $45.6 and $36.6, respectively,
primarily in connection with certain insurance programs.



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
       (Dollars in millions, except per share data)

     The Company leases various facilities and equipment under non-
cancelable lease arrangements.  Future minimum rental commitments for
leases with noncancellable terms of one year or more at December 31,
2002 are as follows:

                                     Operating          Capital
                                    ------------     ------------
     2003                             $ 52.8            $  3.6
     2004                               40.1               2.6
     2005                               29.9               2.8
     2006                               21.2               2.9
     2007                               14.1               1.2
     Thereafter                         32.2                --
                                       -----             -----
     Total minimum lease payments      190.3              13.1
     Less:
       Amounts included in
         restructuring accruals           --               3.3
       Amount representing interest       --               3.1
                                       -----             -----
     Total minimum operating
       lease payments and
       present value of minimum
       capital lease payments         $190.3            $  6.7
                                       =====             =====
     Current                                            $  1.2
     Non-current                                           5.5
                                                         -----
                                                        $  6.7
                                                         =====

     Rental expense, which includes rent for real estate, equipment
and automobiles under operating leases, amounted to $86.1, $74.8 and
$71.3 for the years ended December 31, 2002, 2001 and 2000,
respectively.

23.  PENSION AND POSTRETIREMENT PLANS

     The Company maintains a defined contribution pension plan for
all eligible employees. Eligible employees are defined as individuals
who are age 21 or older, have been employed by the Company for at
least six consecutive months and have completed 1,000 hours of
service.  Company contributions to the plan are based on a percentage
of employee contributions.  The cost of this plan was $8.5, $8.3 and
$7.5 in 2002, 2001 and 2000, respectively.

     In addition, substantially all employees of the Company are
covered by a defined benefit retirement plan (the "Company Plan").
The benefits to be paid under the Company Plan are based on years of
credited service and average final compensation.  The Company's
policy is to fund the Company Plan with at least the minimum amount
required by applicable regulations.

     The Company has a second defined benefit plan which covers its
senior management group that provides for the payment of the
difference, if any, between the amount of any maximum limitation on
annual benefit payments under the Employee Retirement Income Security
Act of 1974 and the annual benefit that would be payable under the
Company Plan but for such limitation.  This plan is an unfunded plan.



LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
(Dollars in millions, except per share data)

     The components of net periodic pension cost for both of the
defined benefit plans are summarized as follows:

                                                  Company Plans
                                             ------------------------
                                                   Years ended
                                                   December 31,
                                             2002     2001     2000
                                             ------------------------
Components of net periodic benefit cost
Service cost                                $ 11.9   $ 11.2   $ 10.9
Interest cost                                 12.4     11.4     10.6
Expected return on plan assets               (13.7)   (13.5)   (12.3)
Net amortization and deferral                  0.3     (1.5)    (1.5)
                                             -----    -----    -----
Net periodic pension cost                   $ 10.9   $  7.6   $  7.4
                                             =====    =====    =====

                                                      Company Plans
                                                    ------------------
                                                       December 31,
                                                      2002     2001
                                                    ------------------
Change in benefit obligation
Benefit obligation at beginning of year              $173.7   $152.3
Service cost                                           11.9     11.2
Interest cost                                          12.4     11.4
Actuarial loss                                         13.2      9.0
Benefits paid                                         (11.7)   (10.2)
                                                      -----    -----
Benefit obligation at end of year                     199.5    173.7
                                                      -----    -----
Change in plan assets
Fair value of plan assets at beginning of year        151.1    151.1
Actual return on plan assets                          (18.2)      --
Employer contributions                                 18.3     10.2
Benefits paid                                         (11.7)   (10.2)
                                                      -----    -----
Fair value of plan assets at end of year              139.5    151.1
                                                      -----    -----
Unfunded status, end of year                           60.0     22.6
Unrecognized net actuarial loss                       (76.3)   (33.7)
Unrecognized prior service cost                         3.3      5.5
Additional minimum liability                           56.6     15.4
                                                      -----    -----
Accrued pension liability                            $ 43.6   $  9.8
                                                      =====    =====

     At December 31, 2002, the additional minimum liability of
the Company's Cash Balance Retirement Plan exceeded the
unrecognized prior service cost by $56.6.  This amount has been
recorded as an increase to accumulated other comprehensive loss.

     Assumptions used in the accounting for the defined benefit
plans were as follows:
                                                  Company Plans
                                                ------------------
                                                  2002     2001
                                                ------------------
Weighted-average discount rate                    6.75%    7.25%
Weighted-average rate of increase
  in future compensation levels                    4.0%     4.0%
Weighted-average expected long-
  term rate of return                              9.0%     9.0%



     LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
            (Dollars in millions, except per share data)

     The Company assumed obligations under a subsidiary's
postretirement medical plan. Coverage under this plan is
restricted to a limited number of existing employees of the
subsidiary.  This plan is unfunded and the Company's policy is to
fund benefits as claims are incurred. The components of
postretirement benefit expense are as follows:

                                 Year ended      Year ended      Year ended
                                 December 31,    December 31,    December 31,
                                     2002            2001            2000
                                 ------------    ------------    ------------
Service cost                     $    0.9        $    1.0        $    0.8
Interest cost                         3.3             3.4             2.5
Net amortization and deferral        (1.1)           (1.1)           (0.6)
Actuarial loss                        0.4             0.7              --
                                  -------         -------         -------
Postretirement benefit costs     $    3.5        $    4.0        $    2.7
                                  =======         =======         =======

     A summary of the components of the accumulated
postretirement benefit obligation follows:

                                                     December 31,
                                                     2002    2001
                                                    --------------
    Retirees                                       $ 17.2  $ 13.1
    Fully eligible active plan participants          15.5    12.5
    Other active plan participants                   24.8    20.0
                                                    -----   -----
                                                   $ 57.5  $ 45.6
                                                    =====   =====

Reconciliation of the funded status of the               December 31,
  postretirement benefit plan and accrued liability      2002   2001
                                                       ---------------
Accumulated postretirement benefit obligation,
  beginning of year                                    $ 45.6  $ 43.1
Changes in benefit obligation due to:
  Service cost                                            0.9     1.0
  Interest cost                                           3.3     3.4
  Plan participants contributions                         0.3     0.2
  Actuarial (gain) loss                                   8.5    (1.1)
  Benefits paid                                          (1.1)   (1.0)
                                                        -----   -----
Accumulated post retirement benefit obligation,
  end of year                                            57.5    45.6
Unrecognized net actuarial loss                         (18.5)  (10.4)
Unrecognized prior service cost                           3.9     5.0
                                                        -----   -----
Accrued postretirement benefit obligation              $ 42.9  $ 40.2
                                                        =====   =====

     The weighted-average discount rates used in the calculation of
the accumulated postretirement benefit obligation was 6.8% and 7.3%
as of December 31, 2002 and 2001, respectively.  The health care cost
trend rate-medical was assumed to be 7.0% and 7.5% as of December 31,
2002 and 2001, respectively, and the trend rate-prescription was
assumed to be 10.6% and 12.0% as of December 31, 2002 and 2001,
respectively, declining gradually to 5.0% in the year 2011.  The
health care cost trend rate has a significant effect on the amounts
reported.  Increasing the assumed health care cost trend rates by a
percentage point in each year would increase the accumulated
postretirement benefit obligation as of December 31, 2002 by $9.8.
The impact of a percentage point change on the aggregate of the
service cost and interest cost components of the net periodic
postretirement benefit cost results in an increase of $0.7 or
decrease of $0.6.



     LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
            (Dollars in millions, except per share data)

24.  QUARTERLY DATA (UNAUDITED)

     The following is a summary of unaudited quarterly data:

                                      Year ended December 31, 2002
                           --------------------------------------------------
                             1st        2nd        3rd       4th       Full
                           Quarter    Quarter    Quarter   Quarter     Year
                           --------   --------   --------  --------  ---------
Net sales                  $ 590.0    $ 612.4    $ 655.2   $ 650.1   $2,507.7
Gross profit                 258.4      276.3      273.3     253.9    1,061.8
Net earnings                  65.8       78.5       57.3      53.0      254.6
Basic earnings per
  common share                0.47       0.56       0.40      0.36       1.78
Diluted earnings per
  common share                0.46       0.55       0.39      0.36       1.77


                                      Year ended December 31, 2001
                           ---------------------------------------------------
                             1st        2nd        3rd       4th       Full
                           Quarter    Quarter    Quarter   Quarter     Year
                           --------   --------   --------  --------  ---------
Net sales                  $ 525.4    $ 549.7    $ 560.9   $ 563.8   $2,199.8
Gross profit                 221.6      240.9      238.0     225.1      925.6
Net earnings                  43.5       52.1       43.1      40.8      179.5
Basic earnings per
  common share                0.31       0.38       0.31      0.30       1.29
Diluted earnings per
  common share                0.31       0.37       0.31      0.29       1.27

25.  NEW ACCOUNTING PRONOUNCEMENTS

     In January 2003, the FASB issued FASB Interpretation No. 46 (FIN
No. 46), "Consolidation of Variable Interest Entities, an
Interpretation of ARB No. 51." FIN No. 46 requires certain variable
interest entities to be consolidated by the primary beneficiary of the
entity if the equity investors in the entity do not have the
characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities
without additional subordinated financial support from other parties.
FIN No. 46 is effective for all new variable interest entities created
or acquired after January 31, 2003. For variable interest entities
created or acquired prior to February 1, 2003, the provisions of FIN
No. 46 must be applied for the first interim or annual period
beginning after June 15, 2003.  The Company does not believe it has
any unconsolidated variable interest entities, but has not fully
completed its evaluation.

     In December 2002, Statement of Financial Accounting Standards
("SFAS") No. 148, "Accounting for Stock-Based Compensation -
Transition and Disclosure - an amendment of FASB Statement No. 123",
was issued.  This Statement amends SFAS No. 123 to provide
alternative methods of transition for a voluntary change to the fair-
value based method of accounting for stock-based employee
compensation.  In addition, SFAS No. 148 amends the disclosure
requirements of SFAS No. 123 to require disclosure in interim
financial statements about the method of accounting for stock-based
employee compensation and the effect of the method used on reported
results.  The Company does not intend to adopt a fair-value based
method of accounting for stock-based employee compensation and does
not believe that SFAS No. 148 will have a material impact on its
consolidated financial statements.



     LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
           (Dollars in millions, except per share data)

     In November 2002, the FASB issued Interpretation No. 45,
"Guarantor's Accounting and Disclosure Requirements for Guarantees,
Including Indirect Guarantees of Indebtedness of Others."
Interpretation No. 45 changes current practice in accounting for and
disclosure of guarantees and will require certain guarantees to be
recorded as liabilities at fair value on the balance sheet.  Current
practice requires that liabilities related to guarantees be recorded
only when a loss is probable and reasonably estimable, as those terms
are defined in SFAS No. 5, "Accounting for Contingencies."
Interpretation No. 45 also requires a guarantor to make significant
new disclosures, even when the likelihood of making any payments
under the guarantee is remote.  The disclosure requirements of
Interpretation No. 45 are effective immediately.  The initial
recognition and measurement provisions are applicable on a
prospective basis to guarantees issued or modified after December 31,
2002.  The Company does not have any guarantees that would require
current disclosure or further recognition under Interpretation No.
45.

     In July 2002, SFAS No. 146, "Accounting for Costs Associated
with Exit or Disposal Activities" was issued.  This Statement
addresses the recognition, measurement, and reporting of costs
associated with exit or disposal activities, and supercedes Emerging
Issues Task Force Issue No. 94-3, "Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit an Activity
(including Certain Costs Incurred in a Restructuring)" ("EITF 94-3").
The principal difference between SFAS No. 146 and EITF 94-3 relates
to the requirements for recognition of a liability for a cost
associated with an exit or disposal activity.  SFAS No. 146 requires
that a liability for a cost associated with an exit or disposal
activity, including those related to employee termination benefits
and obligations under operating leases and other contracts, be
recognized when the liability is incurred, and not necessarily the
date of an entity's commitment to an exit plan, as under EITF 94-3.
SFAS No. 146 also establishes that the initial measurement of a
liability recognized under SFAS No. 146 be based on fair value.  The
provisions of SFAS No. 146 are effective for exit or disposal
activities that are initiated after December 31, 2002, with early
application encouraged.  The Company will adopt this statement
January 1, 2003 and it will not effect our financial position or
results of operations.

     In May 2002, SFAS No. 145, "Rescission of FAS Nos. 4, 44, and
64, Amendment of FAS 13, and Technical Corrections as of April 2002"
was issued.  This Statement rescinds SFAS No. 4, Reporting Gains and
Losses from Extinguishment of Debt, and an amendment of that
Statement, SFAS No. 64, Extinguishments of Debt Made to Satisfy
Sinking-Fund Requirements.  This Statement also rescinds SFAS No. 44,
Accounting for Intangible Assets of Motor Carriers.  This Statement
amends SFAS No. 13, Accounting for Leases, to eliminate any
inconsistency between the required accounting for sale-leaseback
transactions and the required accounting for certain lease
modifications that have economic effects that are similar to sale-
leaseback transactions.  This Statement also amends other existing
authoritative pronouncements to make various technical corrections,
clarify meanings, or describe their applicability under changed
conditions.  The provisions of this Statement related to the
rescission of SFAS No. 4 shall be applied in fiscal years beginning
after May 15, 2002. The Company will adopt this statement January 1,
2003 and it will result in the reclassification of the 2001
extraordinary loss.



     LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(Continued)
          (Dollars in millions, except per share data)

     In June 2001, SFAS No. 143, "Accounting for Asset Retirement
Obligations" was issued.  This Statement addresses financial
accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated legal
obligations of such asset retirement costs.  This Statement is
effective for fiscal years beginning after June 15, 2002.  The
Company does not expect that implementation of this standard will
have a significant financial impact.



                                                              Schedule II

            LABORATORY CORPORATION OF AMERICA HOLDINGS AND SUBSIDIARIES

                   VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
                    Years Ended December 31, 2002, 2001 and 2000
                               (Dollars in Millions)
- -----------------------------------------------------------------------------
                                Balance      Charged     Other
                                   at           to       (Deduct-   Balance
                                beginning   Costs and       ions)    at end
                                 of year     Expenses	   Additions   of year
- ------------------------------------------------------------------------------

Year ended December 31, 2002:
  Applied against asset
    accounts:

  Allowance for
  doubtful accounts           $  119.5    $  214.9    $ (191.2)    $  143.2
                               =======     =======     =======      =======
  Valuation allowance-
  deferred tax assets         $    4.5    $   (1.7)   $     --     $    2.8
                               =======     =======     =======      =======

Year ended December 31, 2001:
  Applied against asset
    accounts:

Allowance for
  doubtful accounts           $  123.0    $  202.5    $ (206.0)    $  119.5
                               =======     =======     =======      =======
  Valuation allowance-
  deferred tax assets         $    4.5    $     --    $     --     $    4.5
                               =======     =======     =======      =======

Year ended December 31, 2000:
  Applied against asset
    accounts:

Allowance for
  doubtful accounts           $  147.1    $  195.9    $ (220.0)    $  123.0
                               =======     =======     =======      =======
  Valuation allowance-
  deferred tax assets         $    4.5    $     --    $     --     $    4.5
                               =======     =======     =======      =======

EX-10.4

                                                                EXHIBIT 10.4

               LABORATORY CORPORATION OF AMERICA HOLDINGS
                 MASTER SENIOR EXECUTIVE SEVERANCE PLAN
                        (Effective April 17, 1996)


                                 PURPOSE

The purpose of this Laboratory Corporation of America Holdings Master Senior
Executive Severance Plan (the "Plan") is to provide severance benefits for a
select group of management employees. The Plan is not intended to duplicate
severance benefits provided to certain employees who have entered into
individual agreements relating to employment or the termination thereof.


                                ARTICLE I
                               DEFINITIONS

When used in this Plan and initially capitalized, the following words and
phrases shall have the following meanings unless the context clearly requires
otherwise:

1.1   "Base Salary" shall mean, as to any Covered Employee for any period,
his annual base salary rate, as of his Qualifying Termination, which is paid
to him by the Company during his employment for such period, before reduction
because of an election between benefits or cash provided under a plan of the
Company maintained pursuant to Section 125 or 401(k) of the Internal Revenue
Code of 1986, as amended, and before reduction for any other amounts
contributed to any other employee benefit plan.

1.2   "Cause" shall mean, as to any Covered Employee, that such Covered
Employee shall have committed prior to his termination of employment with the
Company any of the following acts:

      (a)   an intentional act of fraud, embezzlement, theft, or any other
            material violation of law in connection with his duties or in the
            course of his employment with the Company;

      (b)   the conviction of or entering of a plea of nolo contendere to a
            felony;

      (c)   alcohol intoxication on the job or current illegal drug use;

      (d)   intentional wrongful damage to tangible assets of the Company;

      (e)   intentional wrongful disclosure of material confidential
            information of the Company and/or materially breaching the
            noncompetition or confidentiality provisions of the Company's
            Employment Agreement and Confidentiality Statement or any other
            noncompetition or confidentiality provisions covering the
            activities of such employee;

      (f)   knowing and intentional breach of any employment policy of the
            Company; or

      (g)   gross neglect or misconduct, disloyalty, dishonesty, or breach of
            trust in the performance of the Covered Employee's duties that is
            not corrected to the Board's satisfaction within 30 days of the
            Covered Employee receiving notice thereof.

1.3   "Change in Control" shall mean an event of a nature that:

      (a)   any "person" (as the term is defined in Sections 13(d) and 14(d)
            of the Securities Exchange Act of 1934, as amended ("the Exchange
            Act")) who is not now presently but becomes the "beneficial
            owner" (as defined in Rule 13d-3 under the Exchange Act),
            directly or indirectly, of securities of the Company representing
            30 percent or more of the Company's outstanding securities except
            for any securities purchased by any tax-qualified employee
            benefit plan of the Company, or by Roche; or

      (b)   individuals who constitute the Board on the Effective Date (the
            "Incumbent Board") cease for any reason to constitute at least a
            majority thereof, provided that any person becoming a director
            subsequent to the date hereof whose election was approved by a
            vote of at least three-quarters of the directors comprising the
            Incumbent Board, or whose nomination for election by the
            Company's stockholders was approved by the Incumbent Board, shall
            be for purposes of this clause (b), considered as though he or
            she were a member of the Incumbent Board; or

      (c)   a plan of reorganization, merger, consolidation, sale of all or
            substantially all the assets of the Company or similar
            transaction occurs in which the Company is not the resulting
            entity, except if such plan, merger, consolidation, sale or
            similar transaction is with Roche; or

      (d)   a proxy statement soliciting proxies from shareholders of the
            Company, by someone other than the current management of the
            Company, seeking stockholder approval of a plan of
            reorganization, merger or consolidation of the Company or similar
            transaction with one or more corporations, except Roche, as a
            result of which the outstanding shares of the class of securities
            not issued by the Company shall be distributed.

1.4   "Company" shall mean Laboratory Corporation of America Holdings and any
successor corporation.

1.5   "Covered Employee" shall mean an employee described in Article II of
the Plan.

1.6   "Designated Group" shall mean any one of the groups of employees
designated as such on Schedule 1 attached hereto.

1.7   "Effective Date" shall mean April 17, 1996.

1.8   "Employer" shall mean the Company.

1.9   "Good Reason" shall mean:

      (a)   a reduction in base salary or targeted bonus as a percent of base
            salary without the consent of the employee;

      (b)   relocation to an office location more than 75 miles from the
            employee's current office without the consent of the employee; or

      (c)   a substantial reduction in job responsibilities and duties or
            transfer to another job without the consent of the employee.

Notwithstanding the foregoing, "Good Reason" shall not include a reduction in
base salary or target bonus of the Covered Employee where such reduction is
pursuant to a Company-wide reduction of base salaries and/or target bonuses.

1.10   "Plan" shall mean the Laboratory Corporation of America Holdings Master
Senior Executive Severance Plan, as the same may hereafter be amended from
time to time.

1.11   "Qualifying Termination" shall mean:

      (a)   involuntary termination without Cause;

      (b)   voluntary termination with Good Reason; however, notwithstanding
            the foregoing, the voluntary termination by the Covered Employee
            must occur within 90 days after the occurrence of the Good
            Reason, otherwise, such termination shall be considered voluntary
            termination without Good Reason and not a Qualifying Termination;
            or,

      (c)   Involuntary termination without Cause or Voluntary Termination
            with Good Reason within 36 months following a Change in Control.

Notwithstanding the foregoing, "Qualifying Termination" shall not mean any
termination of an employee's employment with the Company by reason of death,
disability, or retirement of the employee.

1.12   "Roche" shall mean Roche Holding Ltd. and any successor corporation,
and any company owned or controlled by Roche Holding Ltd. or its successor.

1.13   "Severance Pay" shall mean the sum payable as set forth in Section 3.1
of the Plan.

1.14   "Target Bonus" shall mean the mathematical product of multiplying a
Covered Employee's Base Salary by the percentage established as such Covered
Employee's target bonus factor under the annual incentive plan for the period
as of his Qualifying Termination. Other cash payments or target incentives
from long-term or synergy-related incentives shall not be included in the
Target Bonus.

1.15   "Term" shall mean the period commencing on the Effective Date and
ending at the time determined in accordance with Section 7.2.


                                ARTICLE II
                             COVERED EMPLOYEES

2.1   Status as a Covered Employee. Any management employee of the Company
designated by the Board to participate in the Plan and who is at the time of
a Qualifying Termination such a designated employee shall be eligible to
receive the benefits described in the Plan. As of the Effective Date, those
employees so designated by the Board are as set forth on the attached
Schedule 1.


                               ARTICLE III
                              SEVERANCE PAY

3.1   Amount of Severance. Subject to Sections 3.2 and 3.3, upon the
occurrence of a Qualifying Termination and the execution by the employee of a
Special Severance Agreement in substantially the form attached as Exhibit A,
which will contain, among other things, noncompetition, nonsolicitation, duty
of loyalty, confidentiality, and release provisions that shall apply to each
severance arrangement during, and in certain instances after, the time when
any severance payments are being made to each employee, the Company shall pay
Severance Pay to a Covered Employee in an amount equal to the mathematical
product of multiplying the factor shown on Schedule 1 for the Designated
Group to which the employee belongs at the time of termination, times such
employee's Base Salary, plus Target Bonus. Additionally, such Covered
Employee shall be entitled, for up to six months following a Qualifying
Termination, to payment by the Company of the Applicable Premium for the
continuation of those health benefits for which he or she qualified at the
time of the Qualifying Termination, pursuant to the Consolidated Omnibus
Budget Reconciliation Act of 1985 (COBRA).

3.2   Effect on Other Benefit Programs.

      (a)   The Severance Pay provided for hereunder is not intended to
            duplicate any payments to which a Covered Employee would
            otherwise be entitled under any individual agreement relating to
            employment (or the termination thereof) with the Company.
            Accordingly, no Severance Payment shall be payable under the Plan
            to any employee of the Company who is a party to such an
            agreement, unless such employee expressly waives his right to
            receive all payments and all other benefits thereunder and
            expressly elects to receive Severance Payments pursuant to this
            Plan in lieu of any payment and other consideration that would
            otherwise be provided to him pursuant to any such agreement.

      (b)   By the acceptance of any Severance Pay under the Plan, a Covered
            Employee shall be deemed to waive, release, and forever discharge
            any and all claims to the payment of any severance benefit under
            any severance plan or program of the Company other than the Plan
            or Agreement.

3.3   Limitation on Amount of Severance Pay. Notwithstanding any other
provision of this Plan, the total of the Severance Pay plus the Applicable
Premiums to be paid to or on behalf of a Covered Employee shall not exceed
three times the Covered Employee's Annual Compensation during the year
immediately preceding his termination of service. "Annual Compensation" means
the total of all compensation, including wages, salary, and any other benefit
of monetary value, whether paid in the form of cash or otherwise, that was
paid as consideration for the employee's service during the year or that
would have been so paid at the employee's usual rate of compensation if the
employee had worked a full year.

3.4   No Duty to Mitigate. A Covered Employee shall not be required by reason
of the Plan to mitigate damages or the amount of his Severance Pay under the
Plan by seeking other employment or otherwise, nor shall the amount of such
payments be reduced or adjusted by compensation earned by the Covered
Employee as a result of employment after his Qualifying Termination.


                                ARTICLE IV
                          CESSATION OF BENEFITS

4.1   Reemployment With the Company. If an employee already has received
benefits under the Plan, a Covered Employee who recommences employment with
the Company shall not be entitled to any further benefits under the Plan.

4.2   Breach of the Special Severance Agreement. If an employee breaches any
material term of the Special Severance Agreement, he or she shall be entitled
to no further benefits under the Plan. For purposes of this section, any
violation of the confidentiality, noncompetition, nonsolicitation, release,
or duty of loyalty provisions shall be considered "material."


                                ARTICLE V
                      DISTRIBUTION OF CASH PAYMENTS

5.1   Severance Pay. The Company shall pay the Covered Employee the amount to
which he or she is entitled under Section 3.1 as follows: (a) 50 percent of
the total Severance Pay due, less statutory deductions, shall be paid within
30 days following the execution of a Special Severance Agreement; and (b) the
remaining 50 percent of Severance Pay, less statutory deductions, shall be
paid within 30 days following the one-year anniversary of the execution of
the Special Severance Agreement, but only if the employee has complied in all
material respects with the terms and conditions of the Special Severance
Agreement.  Notwithstanding the foregoing, all payments due hereunder shall
be completed within 24 months of the termination of the Covered Employee's
employment, but payments shall be due hereunder only if the employee has
complied in all material respects with the terms and conditions of the
Special Severance Agreement.


                                ARTICLE VI
                          ADMINISTRATION OF PLAN

6.1   In General: Delegation. The Plan shall be administered by the Board.
The Board shall have sole and absolute discretion to interpret where
necessary all provisions of the Plan (including, without limitation, by
supplying omissions from, correcting deficiencies in, or resolving
inconsistencies or ambiguities in, the language of the Plan), to determine
the rights and status under the Plan of employees or other persons, to
resolve questions or disputes arising under the Plan, and to make any
determinations with respect to the benefits payable hereunder and the persons
entitled thereto as may be necessary for the purposes of the Plan. Without
limiting the generality of the foregoing, the Board is hereby granted the
authority (i) to determine whether a particular termination of employment
constitutes a "Qualifying Termination," and (ii) to determine whether a
particular employee is a "Covered Employee" under the Plan.

The Board may delegate any of its administrative duties, including, without
limitation, duties with respect to the processing, review, investigation,
approval, and payment of Severance Pay to a named administrator or
administrators. The Board's determination of the rights of any employee
hereunder shall be final and binding on all persons.

6.2   Regulations. The Board may promulgate any rules and regulations that it
deems necessary to carry out the purposes of this Plan, or to interpret the
terms and conditions of the Plan; provided, however, that no rule,
regulation, or interpretation shall be contrary to the provisions of the
Plan. The rules, regulations, and interpretations made by the Board, and any
determination of entitlement to benefits hereunder, shall be final and
binding on any employee or former employee of the Company.

6.3   Claims for Benefits and Review of Denials. A terminating Covered
Employee will be considered for benefits under the Plan automatically. Any
other employee of the Company who believes he is entitled to a benefit under
the Plan may make a claim for such benefit by submitting a written statement
to the Board of Directors setting forth the benefit to which the claimant
deems himself entitled, and the factual basis for his claim.

The Board of Directors or its delegate (hereinafter "Board of
Directors") will make a determination of whether an employee recognized by
the Board of Directors as a Covered Employee is entitled to benefits under
this Plan no later than the day prior to the date of such employee's
termination. The Board of Directors will act on any other application
(including a claim of status as a Covered Employee made as part of a claim
for benefits) or make any other determination it is requested to make under
the Plan and will inform the employee of its decision within 30 days of the
date the application or request is made, unless a longer time is required by
special circumstances, in which event the claimant will be notified in
writing of the special circumstances and of the expected decision date. The
determination will be made no later than 90 days after the date the
application or request is received. If the determination is a denial of a
claim, the Board of Directors will notify the claimant in writing of the
denial, setting forth the specific reasons for the denial and referring
specifically to the Plan provisions on which the denial is based. The notice
also will contain a description of any additional material or information
necessary for the claimant to perfect the claim and an explanation of why
such material is necessary. The notice will provide appropriate information
to the claimant on steps to appeal the denial. The claimant will have 60 days
from the date of the notice to request review of the decision by the Board of
Directors and may review pertinent documents and submit any additional
information along with the request for review that he or she deems pertinent.
A decision on review will be made within 60 days of receipt of the request
for review, except that the time for rendering the decision may be extended
to 120 days when special circumstances make it necessary to do so, in which
event the claimant will be notified in writing of the extension, informed of
the special circumstances, and informed of an expected decision date. The
decision on review, if it is a denial of the claim, will be in writing, will
specify the provisions of the Plan on which it is based, and will set forth
specific reasons for the denial.


                               ARTICLE VII
                     AMENDMENT OR TERMINATION OF PLAN

7.1   Right to Amend or Terminate. The Company reserves the right to alter,
amend, or terminate the Plan at any time. Any change in the terms of the Plan
(including termination of the Plan) that results from the exercise of the
Company's right to alter, amend, or terminate the Plan may be applicable to
active and/or former employees, including employees who separated from
service prior to the date on which the Company exercises its power to alter,
amend, or terminate the Plan, provided, however, that no such change in the
terms of the Plan will affect the amount of any benefit that was paid prior
to the date on which such change is adopted, or any benefit promised in a
Special Severance Agreement that was fully executed prior to the date on
which such change is adopted. Only the Board of Directors may exercise the
Company's reserved rights under this paragraph. No officer, employee, or
representative of the Company has the authority to promise or represent that
anyone's coverage and/or benefit under the Plan is or will be exempt from the
Company's reserved right to alter, amend, or terminate the Plan at any time,
unless such promise or representation is in writing and signed by hand by the
President of the Company. Notwithstanding the foregoing, the Plan and a
Covered Employee's participation in the Plan shall not be terminated for
36 months following a Change in Control.

7.2   Termination. This Plan shall continue in force until such time as the
Board shall terminate the Plan. Notwithstanding the foregoing, the Plan and a
Covered Employee's participation in the Plan shall not be terminated for
36 months following a Change in Control.


                              ARTICLE VIII
                           METHOD OF FUNDING

8.1   Plan is Not Funded. The Company shall pay benefits under the Plan from
current operating funds. No property of the Company is or shall be, by reason
of this Plan, held in trust for any employee of the Company, nor shall any
person have any interest in or any lien or prior claim upon any property of
the Company by reason of this Plan or the Company's obligations to make
payments hereunder.

                                ARTICLE IX
                               MISCELLANEOUS

9.1   Limitation on Rights. Neither the establishment of the Plan nor
participation herein shall give any employee the right to be retained in the
service of the Company or any rights to any benefits whatsoever, except to
the extent specifically set forth herein.

9.2   Headings. Headings of Articles and Sections in this instrument are for
convenience only and do not constitute any party of the Plan.

9.3   Gender and Number. Unless the context clearly indicates otherwise, the
masculine gender when used in the Plan shall include the feminine, and the
singular number shall include the plural and the plural number the singular.

9.4   Tax Withholding. The Company may withhold from any amounts payable
under this Plan all federal, state, city, or other taxes as shall be required
to be withheld pursuant to any law or governmental regulation or ruling.

9.5   Governing Law. The Plan shall be construed and governed in all respects
in accordance with the internal substantive laws of the State of Delaware.




                                                                   Schedule 1 to
                                          Master Senior Executive Severance Plan



                         Designated Groups, Covered Employees,
                                and Benefit Levels



                                 Severance Benefit for   Severance Benefit for
                                   Change In Control      all other Qualifying
                                  Event as a Multiple      Terminations as a
Designated         Covered          of Base Salary      Multiple of Base Salary
  Group           Employees      Plus Target Bonus(1)     Plus Target Bonus(1)
- -----------  ------------------  --------------------   -----------------------
President    President                    3X                      2X


Executive    All Executive Vice           3X                      2X
Vice         Presidents
Presidents


Senior       All Senior Vice              1X                      1X
Vice         Presidents
Presidents







- ---------------
  (1) Subject to the limitation contained in Section 3.3.

EX-21

                                                             EXHIBIT 21

SUBSIDIARIES

Owned Directly by Laboratory Corporation of America Holdings:

Name                                          Jurisdiction of Organization
- ---------------------------------             -----------------------------
LabCorp Delaware, Inc.                               Delaware
LabCorp, BVBA                                        Belgium
Lab Delivery Service of
     New York City, Inc.                             New York
Laboratory Corporation of America                    Delaware
Viro-Med Laboratories, Inc.                          Minnesota
National Genetics Institute                          California
LabCorp Limited                                      United Kingdom
Path Lab Holdings, Inc.                              Delaware
Center for Genetic Services, Inc.                    Texas
Clipper Holdings, Inc.                               Delaware
DIANON Systems, Inc.                                 Delaware


Owned Directly by Laboratory Corporation of America:

PoisonLab, Inc.                                      California


Owned Directly by Path Lab Holdings, Inc.:

LTC Services & Holdings, Inc.                        New Hampshire


Owned Directly by LTC Services & Holdings, Inc.:

Path Lab, Inc.                                       New Hampshire
MWorld, Inc.                                         New York


Owned Directly by Path Lab, Inc.:

Medical Management Services, Inc.                    Vermont


Owned Directly By Medical Management Services, Inc.:

Springfield Medical Laboratory, Inc.                 Vermont


Owned Directly by Clipper Holdings, Inc.:

3065619 Nova Scotia Company                          Nova Scotia




Owned Directly by 3065619 Nova Scotia Company:

Name                                          Jurisdiction of Organization
- ---------------------------                  -----------------------------

Dynacare Company                                      Nova Scotia


Owned by Dynacare Company:

ExecMed Health Services Inc.                          Ontario
896988 Ontario Inc.                                   Ontario
Dynacare Realty Inc.                                  Ontario
Dynacare Laboratories Limited Partnership (1)         Ontario
Dynacare G.P. Inc.                                    Ontario
Dynacare Financing GP (2)                             Delaware
3065703 Nova Scotia                                   Nova Scotia
Dynacare Holdco LLC                                   Delaware

Owned By Dynacare Laboratories Limited Partnership:

Gamma-Dynacare Medical Laboratories (3)               Ontario


Owned Directly by Gamma-Dynacare Medical Laboratories:

Gamma Leasehold Co., Inc.                             Ontario
Dynacare Gamma Institutional Laboratory Services      Ontario
Ultra-Med Developments Inc.                           Ontario
Gamma Dynacare Leasing Corp.                          Ontario
Dynacare X-Ray Services Limited                       Ontario
RD Belenger & Associates Ltd.                         Ontario
Centre Diagnostique Analab, Inc.                      Quebec


Owned Directly by Dynacare Financing GP:

3033331 Nova Scotia Company                           Nova Scotia


Owned Directly by 3033331 Nova Scotia Company:

Dynacare Delaware Financing LLC                       Delaware


Owned Directly by Dynacare Holdco LLC:

Dynacare Laboratories Inc.                            Delaware



Owned by Dynacare Laboratories Inc.:

Name                                            Jurisdiction of Organization
- ------------------------------------           ----------------------------
Dynacare Northwest Inc.                               Washington
Clinical Laboratories Cheyenne                        Wyoming
Dynacare Southwest Laboratories, Inc.                 Delaware
Dynacare Holdings, Inc.                               Delaware
Dynacare Texas Shareholder, Inc.                      Delaware
Dynacare Texas Laboratories, Inc.                     Delaware
Dynacare Laboratory Management, Inc.                  Delaware
LabSouth Inc.                                         Delaware
Dynacare Oklahoma, Inc.                               Delaware
Dynacare Louisiana, Inc.                              Louisiana
Dynacare Mississippi, Inc.                            Delaware
DL/UHS Inc.                                           Delaware

Ownership Interests by Dynacare U.S. Subsidiaries:

SVL, Inc.(4)                                          Wyoming
HH/DL, LP (5)                                         Texas
SW/DL LP (6)                                          Delaware
HHD Genpar, Inc. (7)                                  Texas
Dynacare Louisiana, LLC (8)                           Louisiana
UHS/DL, LP (9)                                        Delaware


Note - All subsidiaries are 100% owned by Laboratory Corporation of
       America Holdings or Subsidiaries of Laboratory Corporation of
       America Holdings, unless otherwise noted.

(1)  Dynacare Company owns 99.9% of Dynacare Laboratories Limited
     Partnership.  Dynacare GP Inc. owns the remaining 0.1% interest.

(2)  Dynacare Company owns 99% of Dynacare Financing GP.  3065703 Nova Scotia
     owns the remaining 1% interest.

(3)  Dynacare Laboratories Limited Partnership owns a 72.99% interest in
     Gamma-Dynacare Medical Laboratories.

(4)  Owned directly by Dynacare Northwest, Inc.

(5)  Dynacare Southwest Laboratories, Inc. owns a 49.5% interest, Dynacare
     Holdings, Inc. owns a 49.5% interest and HHD Genpar, Inc. owns the
     remaining 1% interest in HH/DL, LP.

(6)  HH/DL, LP owns a 99% interest in SW/DL LP and HHD Genpar, Inc. owns the
     remaining 1% interest.

(7)  Dynacare Holdings, Inc. owns a 50% interest in HHD Genpar, Inc. and
     Dynacare Texas Shareholder, Inc. owns the remaining 50% interest.

(8)  Dynacare Louisiana, LLC is wholly owned by Dynacare Louisiana, Inc.

(9)  Dynacare Laboratory Management, Inc. holds a 49.8% and DL/UHS Inc. holds
     a 0.2% interest in UHS/DL, LP.

EX-23.1

                                                      EXHIBIT 23.1





Consent of Independent Accountants



We hereby consent to the incorporation by reference in the
Registration Statement on Form S-3 (No. 333-71896) and Forms S-8
(No. 33-43006, No. 33-55065, No. 333-39735, No. 333-94329, No. 333-
94331, No. 333-102602, No. 333-90764, and No. 333-97745) of
Laboratory Corporation of America Holdings of our report dated
February 14, 2003, relating to the financial statements and
financial statement schedule, which appear in this Form 10-K.





PricewaterhouseCoopers LLP

Charlotte, North Carolina
March 28, 2003

EX-24

                                               EXHIBIT 24.1
POWER OF ATTORNEY

     KNOWN ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints Bradford T. Smith his true
and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in
any and all capacities, in connection with the Laboratory
Corporation of America Holdings (the "Corporation") Annual
Report on Form 10-K for the year ended December 31, 2002
under the Securities Exchange Act of 1934, as amended,
including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name and on behalf of the
Corporation or on behalf of the undersigned as a director or
officer of the Corporation, and any amendments to the Form
10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or
amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and
Exchange Commission and any applicable securities exchange
or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agents, each acting alone, or
his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
     IN WITNESS WHEREOF, the undersigned has signed these
presents this 28th day of March, 2003.

                                  By:/s/  JEAN-LUC BELINGARD
                                  --------------------------
                                           Jean-Luc Belingard


                                               EXHIBIT 24.2

POWER OF ATTORNEY

     KNOWN ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints Bradford T. Smith his true
and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in
any and all capacities, in connection with the Laboratory
Corporation of America Holdings (the "Corporation") Annual
Report on Form 10-K for the year ended December 31, 2002
under the Securities Exchange Act of 1934, as amended,
including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name and on behalf of the
Corporation or on behalf of the undersigned as a director or
officer of the Corporation, and any amendments to the Form
10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or
amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and
Exchange Commission and any applicable securities exchange
or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agents, each acting alone, or
his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
     IN WITNESS WHEREOF, the undersigned has signed these
presents this 26th day of March, 2003.


                                  By:/s/  WENDY E. LANE
                                  ---------------------
                                          Wendy E. Lane


                                               EXHIBIT 24.3

POWER OF ATTORNEY

     KNOWN ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints Bradford T. Smith his true
and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in
any and all capacities, in connection with the Laboratory
Corporation of America Holdings (the "Corporation") Annual
Report on Form 10-K for the year ended December 31, 2002
under the Securities Exchange Act of 1934, as amended,
including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name and on behalf of the
Corporation or on behalf of the undersigned as a director or
officer of the Corporation, and any amendments to the Form
10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or
amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and
Exchange Commission and any applicable securities exchange
or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agents, each acting alone, or
his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.
     IN WITNESS WHEREOF, the undersigned has signed these
presents this 25th day of March, 2003.

                             By: /s/  ROBERT E. MITTELSTAEDT
                             -------------------------------
                                      Robert E. Mittelstaedt


                                                EXHIBIT 24.4

POWER OF ATTORNEY

     KNOWN ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints Bradford T. Smith his true
and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in
any and all capacities, in connection with the Laboratory
Corporation of America Holdings (the "Corporation") Annual
Report on Form 10-K for the year ended December 31, 2002
under the Securities Exchange Act of 1934, as amended,
including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name and on behalf of the
Corporation or on behalf of the undersigned as a director or
officer of the Corporation, and any amendments to the Form
10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or
amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and
Exchange Commission and any applicable securities exchange
or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agents, each acting alone, or
his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.

     IN WITNESS WHEREOF, the undersigned has signed these
presents this 24th day of March, 2003.

                                 By:/s/  JAMES B. POWELL, MD
                                 ---------------------------
                                         James B. Powell, MD


                                               EXHIBIT 24.5

POWER OF ATTORNEY

     KNOWN ALL MEN BY THESE PRESENTS, that the undersigned
hereby constitutes and appoints Bradford T. Smith his true
and lawful attorney-in-fact and agent, with full power of
substitution, for him and in his name, place and stead, in
any and all capacities, in connection with the Laboratory
Corporation of America Holdings (the "Corporation") Annual
Report on Form 10-K for the year ended December 31, 2001
under the Securities Exchange Act of 1934, as amended,
including, without limiting the generality of the foregoing,
to sign the Form 10-K in the name and on behalf of the
Corporation or on behalf of the undersigned as a director or
officer of the Corporation, and any amendments to the Form
10-K and any instrument, contract, document or other
writing, of or in connection with the Form 10-K or
amendments thereto, and to file the same, with all exhibits
thereto, and other documents in connection therewith,
including this power of attorney, with the Securities and
Exchange Commission and any applicable securities exchange
or securities self-regulatory body, granting unto said
attorneys-in-fact and agents, each acting alone, full power
and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might
or could do in person, hereby ratifying and confirming all
that said attorney-in-fact and agents, each acting alone, or
his substitute or substitutes, may lawfully do or cause to
be done by virtue hereof.

     IN WITNESS WHEREOF, the undersigned has signed these
presents this 26th day of March, 2003.

                               By:/s/  ANDREW G. WALLACE, MD
                               -----------------------------
                                       Andrew G. Wallace, MD

EX-99.1

EXHIBIT 99.1


Written Statement of
Chief Executive Officer and Chief Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C.
Section 1350)


     The undersigned, the Chief Executive Officer and the Chief Financial
Officer of Laboratory Corporation of America Holdings (the "Company"), each
hereby certifies that, to his knowledge on the date hereof:

     (a)  the Form 10-K of the Company for the Year Ended December 31, 2002
filed on the date hereof with the Securities and Exchange Commission (the
"Report") fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934; and

     (b)  information contained in the Report fairly presents, in all material
respects, the financial condition and results of operations of the
Company.


                           By:/s/THOMAS P. MAC MAHON
                              --------------------------------
                                 Thomas P. Mac Mahon
                                 Chief Executive Officer
                                 March 28, 2003



                          By:/s/WESLEY R. ELINGBURG
                             ---------------------------------
                                Wesley R. Elingburg
                                Chief Financial Officer
                                March 28, 2003


A signed original of this written statement required by Section 906 has
been provided to the Company and will be retained by the Company and
furnished to the Securities and Exchange Commission or its staff upon
request.