CAUTIONARY STATEMENT FOR PURPOSES OF THE “SAFE HARBOR” PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

Some statements and disclosures in this document are forward-looking statements.  Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may”, “believe”, “will”, “expect”, “project”, “estimate”, “anticipate”, “plan” or “continue”.  These forward-looking statements are based on our current plans and expectations and are subject to a number of risks and uncertainties that could significantly cause our plans and expectations, including actual results, to differ materially from the forward-looking statements.  The Private Securities Litigation Reform Act of 1995, or the Litigation Reform Act, provides a “safe harbor” for forward-looking statements to encourage companies to provide prospective information about their companies without
fear of litigation.

We would like to take advantage of the “safe harbor” provisions of the Litigation Reform Act in connection with the forward-looking statements included in this document.  Investors are cautioned not to unduly rely on such forward-looking statements when evaluating the information presented in this document. The following important factors could cause our actual financial results to differ materially from those projected, forecasted or estimated by us in
forward-looking statements:         

(a)   Heightened competition, including increased pricing pressure, competition from hospitals for testing for non-patients and competition from physicians. See “Business—Competition”.

(b)   Impact of changes in payer mix, including any shift from fee-for-service to capitated fee arrangements. See “Business—Payers and Customers—Customers—Managed Care Organizations and Other Insurance Providers”.

(c)   Adverse actions by government or other third-party payers, including unilateral reduction of fee schedules payable to us, competitive bidding, or an increase in the practice of negotiating for exclusive contracts that involve aggressively priced capitated payments by managed care organizations. See “Business—Regulation of Reimbursement for Clinical Laboratory Services” and “Business—Payers and Customers—Customers—Managed Care Organizations and Other Insurance Providers”.

(d)   The impact upon our testing volume and collected revenue or general or administrative expenses resulting from our compliance with Medicare and Medicaid administrative policies and requirements of third party payers. These include:

(1)   the requirements of Medicare carriers to provide diagnosis codes for many commonly ordered tests and the possibility that third party payers will increasingly adopt similar requirements;

(2)   the policy of CMS to limit Medicare reimbursement for tests contained in automated chemistry panels to the amount that would have been paid if only the covered tests, determined on the basis of demonstrable “medical necessity”, had been ordered;

(3)   continued inconsistent practices among the different local carriers administering Medicare;  

(4)   inability to obtain from patients an advance beneficiary notice form for tests that cannot be billed without prior receipt of the form; and

(5)   the potential need to monitor charges and lower certain fees to Medicare to comply with the OIG’s proposed rule pertaining to exclusion of providers for submitting claims to Medicare containing charges that are substantially in excess of the provider’s usual charges.

See “Business—Regulation of Reimbursement for Clinical Laboratory Services” and “Business—Billing”.

(e)   Adverse results from pending or future government investigations, lawsuits or private actions.  These include, in particular significant monetary damages, loss or suspension of licenses, and/or suspension or exclusion from the Medicare and Medicaid programs and/or other significant litigation matters.  See “Business—Government Investigations and Related Claims”.

(f)     Failure to obtain new customers at profitable pricing or failure to retain existing customers, and a reduction in tests ordered or specimens submitted by existing customers.

(g)    Failure to efficiently integrate acquired clinical laboratory businesses, including Unilab, or to efficiently integrate clinical laboratory businesses from joint ventures and alliances with hospitals, and to manage the costs related to any such integration, or to retain key technical and management personnel.  See “Business—Recent Acquisitions”.

(h)    Inability to obtain professional liability or other insurance coverage or a material increase in premiums for such coverage or reserves for self-insurance.  See “Business—Insurance”.

(i)      Denial of CLIA certification or other licenses for any of our clinical laboratories under the CLIA standards, revocation or suspension of the right to bill the Medicare and Medicaid programs or other adverse regulatory actions by federal, state and local agencies.  See “Business—Regulation of Clinical Laboratory Operations”.

(j)     Changes in federal, state or local laws or regulations, including changes that result in new or increased federal or state regulation of commercial clinical laboratories, including regulation by the FDA.

(k)    Inability to achieve expected synergies from our acquisitions of other business, including Unilab.  See “Business—Recent Acquisitions”.

(l)      Inability to achieve additional benefits from our Six Sigma and standardization initiatives.

(m)   Adverse publicity and news coverage about the clinical laboratory industry or us.

(n)    Computer or other system failures that affect our ability to perform tests, report test results or properly bill customers, including potential failures resulting from the standardization of our IT systems and other system conversions, telecommunications failures, malicious human acts (such as electronic break-ins or computer viruses) or natural disasters.  See “Business—Information Systems” and “Business - Billing”.

(o)    Development of technologies that substantially alter the practice of laboratory medicine, including technology changes that lead to the development of more cost-effective tests such as (1) point-of-care tests that can be performed by physicians in their offices and (2) home testing that can be carried out without requiring the services of clinical laboratories.  See “Business—Competition” and “Business—Regulation of Clinical Laboratory Operations”.

(p)    Issuance of patents or other property rights to our competitors or others that could prevent, limit or interfere with our ability to develop, perform or sell our tests or operate our business.

(q)    Development of tests by our competitors or others which we may not be able to license, or usage of our technology or similar technologies or our trade secrets by competitors, any of which could negatively affect our competitive position.

(r)     Inability to commercialize newly licensed tests or technologies or to obtain appropriate reimbursements for such tests.

(s)     Inability to obtain or maintain adequate patent and other propriety rights protections of our products and services or to successfully enforce our proprietary rights.

(t)     Development of an Internet-based electronic commerce business model that does not require an extensive logistics and laboratory network.

(u)    The impact of the privacy regulations, security regulations and standards for electronic transactions regulations issued under HIPAA on our operations as well as the cost to comply with the regulations, including the failure of third party payers to complete testing with us, failure to agree on data content for claims, failure to accept default diagnosis codes in the absence of physician-supplied codes, or inability of payers to accept or remit transactions in HIPAA-required standard transaction and code set format.  See “Business—Privacy and Security of Health Information; Standard Transactions”.

(v)    Inability to promptly or properly bill for our services or to obtain appropriate payments for services that we do bill.  See “Business—Billing”.

(w)   Changes in interest rates and changes in our credit ratings from Standard & Poor’s and Moody’s Investor Services causing an unfavorable impact on our cost of and access to capital.

(x)    Inability to hire and retain qualified personnel or the loss of the services of one or more of our key senior management personnel.

(y)   Terrorist and other criminal activities, which could affect our customers, transportation or power systems, or our facilities, and for which insurance may not adequately reimburse us for.