18ef6f3c68cc5d6973335c2844d56f7ea9c8f5f17ee2a79bcc8716311b1162dd

73887fb2e0be7938c59dca33a4204b7a2b62cb40825a1bf8db8dd22d578514d6

- Total Revenue: $2,621 million (**+15% YoY**)  **[0001022079-25-000008_dgx123120248-kexhibit991.htm:1]** **[0001022079-25-000008_dgx123120248-kexhibit991.htm:3]**  (from $2,288 million  **[0001022079-24-000041_dgx-20231231.htm:117]** **[0001022079-24-000041_dgx-20231231.htm:116]** )  
- DIS Business: $2,556 million (+15% YoY)  **[0001022079-25-000008_dgx123120248-kexhibit991.htm:1]**  (from $2,221 million  **[0001022079-24-000041_dgx-20231231.htm:160]** )  
- Cost of Goods Sold: $1,763 million (+14% YoY)  **[0001022079-25-000008_dgx123120248-kexhibit991.htm:3]**  (from $1,552 million  **[0001022079-24-000041_dgx-20231231.htm:117]** **[0001022079-24-000041_dgx-20231231.htm:116]** )  
- Operating Income (EBIT): $361 million (**+35% YoY**)  **[0001022079-25-000008_dgx123120248-kexhibit991.htm:1]** **[0001022079-25-000008_dgx123120248-kexhibit991.htm:3]**  (from $267 million  **[0001022079-24-000041_dgx-20231231.htm:117]** **[0001022079-24-000041_dgx-20231231.htm:116]** )  
- Net Income: $222 million (+16% YoY)  **[0001022079-25-000008_dgx123120248-kexhibit991.htm:1]** **[0001022079-25-000008_dgx123120248-kexhibit991.htm:3]**  (from $192 million  **[0001022079-24-000041_dgx-20231231.htm:117]** **[0001022079-24-000041_dgx-20231231.htm:116]** )  
- EPS (Basic): $1.98 (+15% YoY)  **[0001022079-25-000008_dgx123120248-kexhibit991.htm:5]** **[0001022079-25-000008_dgx123120248-kexhibit991.htm:3]**  (from $1.72  **[0001022079-24-000041_dgx-20231231.htm:117]** **[0001022079-24-000041_dgx-20231231.htm:116]** )  

729634e0812950910d408b159531d7e25d62eac46361804c34c23286e09aa728

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from Debt [USD, Millions]

Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

c4d3d780736c9e42048d4efbd245f5997c0c212ab5297d6c48c6cb43afd6ae12

| Metric [Unit: $ Million] | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|--------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Total Net Revenues**   | 2,330  **[DGX_3226477_2]** **[0001022079-23-000006_dgx123120228-kexhibit991.htm:1]**  | 2,331  **[0001022079-23-000093_dgx-20230331.htm:16]**  | 2,338  **[0001022079-23-000136_dgx-20230630.htm:20]**  | 2,295  **[0001022079-23-000157_dgx-20230930.htm:20]**  | 2,290  **[0001022079-24-000009_dgx123120238-kexhibit991.htm:1]**  | 2,366  **[0001022079-24-000099_dgx-20240331.htm:18]**  | 2,397  **[0001022079-24-000156_dgx-20240630.htm:20]**  | 2,488  **[0001022079-24-000190_dgx-20240930.htm:28]**  |
| **DIS Revenues**         | 2,265  **[0001022079-23-000006_dgx123120228-kexhibit991.htm:1]**  | 2,259  **[0001022079-23-000093_dgx-20230331.htm:16]**  | 2,268  **[0001022079-23-000136_dgx-20230630.htm:20]**  | 2,228  **[0001022079-23-000157_dgx-20230930.htm:20]**  | 2,250  **[DGX_3371541_4]**  | 2,298  **[0001022079-24-000099_dgx-20240331.htm:18]**  | 2,333  **[0001022079-24-000156_dgx-20240630.htm:20]**  | 2,427  **[0001022079-24-000190_dgx-20240930.htm:28]**  |
| **Other Segments**       | N/A | 72  **[0001022079-23-000093_dgx-20230331.htm:16]**  | 70  **[0001022079-23-000136_dgx-20230630.htm:20]**  | 67  **[0001022079-23-000157_dgx-20230930.htm:20]**  | N/A | 68  **[0001022079-24-000099_dgx-20240331.htm:18]**  | 64  **[0001022079-24-000156_dgx-20240630.htm:20]**  | 61  **[0001022079-24-000190_dgx-20240930.htm:28]**  |
| **Base Business Revenues** | 2,150  **[0001022079-23-000006_dgx123120228-kexhibit991.htm:1]**  | N/A | N/A | N/A | 2,250  **[0001022079-24-000009_dgx123120238-kexhibit991.htm:1]**  | N/A | N/A | N/A |
| **COVID-19 Testing Revenues** | 184  **[0001022079-23-000006_dgx123120228-kexhibit991.htm:1]**  | N/A | N/A | N/A | 37  **[DGX_3371541_4]**  | N/A | N/A | N/A |

99ace120c6273c121b01bd04d1d3a18c1e25cda4ee27960cfffe710b35f50917

Quest Diagnostics Incorporated is a leading provider of diagnostic information services, primarily operating through its Diagnostic Information Services (DIS) and Diagnostic Solutions (DS) segments. The company offers diagnostic insights from laboratory testing, serving a diverse clientele that includes physicians, hospitals, patients, health plans, employers, and government agencies **[0001022079-24-000041_dgx-20231231.htm:160]** **[0001022079-24-000041_dgx-20231231.htm:13]** **[0001022079-24-000099_dgx-20240331.htm:4]** **[0001022079-24-000099_dgx-20240331.htm:18]** **[0001022079-24-000190_dgx-20240930.htm:23]**. Additionally, Quest Diagnostics provides risk assessment services for insurers and healthcare information technology solutions for healthcare providers and payers **[0001022079-24-000041_dgx-20231231.htm:13]** **[0001022079-24-000099_dgx-20240331.htm:4]** **[0001022079-24-000041_dgx-20231231.htm:119]**. The company conducts most of its business in the United States but has recently expanded into the Canadian market through acquisitions **[0001022079-24-000156_dgx-20240630.htm:19]** **[0001022079-24-000190_dgx-20240930.htm:9]** **[DGX_3393930_9]**.

1. **Diagnostic Information Services (DIS)** - Provides diagnostic insights from laboratory testing, serving a wide range of customers including physicians, hospitals, patients, health plans, employers, and government agencies. This segment is characterized by a high volume of relatively low-dollar transactions, with revenues recognized primarily upon completion of the testing process **[0001022079-24-000041_dgx-20231231.htm:160]** **[0001022079-24-000041_dgx-20231231.htm:13]** **[0001022079-24-000099_dgx-20240331.htm:4]** **[0001022079-24-000099_dgx-20240331.htm:18]** **[0001022079-24-000190_dgx-20240930.htm:23]**.
2. **Diagnostic Solutions (DS)** - Offers risk assessment services for insurers and healthcare information technology solutions for healthcare providers and payers. This segment includes solutions under various brands, such as:
   - **AmeriPath** - Specializes in anatomic pathology services.
   - **Dermpath Diagnostics** - Focuses on dermatopathology services.
   - **ExamOne** - Provides risk assessment services for the insurance industry.
   - **Quanum** - Delivers healthcare information technology solutions **[0001022079-24-000041_dgx-20231231.htm:13]** **[0001022079-24-000099_dgx-20240331.htm:4]** **[0001022079-24-000041_dgx-20231231.htm:119]**.

eb589cf72df3e9b0286485e527586589ccedca1e2da6d7abaddea5dcbe315d4b

| Program Details          | Program 1       |
|--------------------------|-----------------|
| Approval Date            | N/A             |
| End Date/Duration        | No expiration   |
| Total additional amount  | **$13 billion**  **[0001022079-24-000190_dgx-20240930.htm:42]**  |
| Remaining authorization  | **$1.0 billion**  **[0001022079-24-000190_dgx-20240930.htm:36]** **[0001022079-24-000190_dgx-20240930.htm:17]**  |
| Details                  | Authorized since May 2003  **[0001022079-24-000190_dgx-20240930.htm:42]**  |

c53d550e269daeed89dc9a7ac8ee97ec7502f4f289929ef203fb23294d5706c7

d9a7629a5d5bea7c34d1d0fcde44069c6972e3c72762860a22d8e23e2f41f3ec

1. With COVID-19 revenues becoming insignificant and impacting growth by only about 50 basis points  **[DGX_3403177_14]** , how does Quest plan to compensate for this decline and maintain or accelerate organic growth going forward?
2. Considering that M&A contributed approximately 4% to revenue growth in the quarter and that LifeLabs alone added about $70 million  **[DGX_3403177_14]** , is the company's growth overly reliant on acquisitions, and what risks do you see in integrating multiple acquisitions, especially in new markets like Canada?
3. As you expand into new geographies where health systems previously limited your reach  **[DGX_3403177_1]** , what challenges do you anticipate in gaining market share in these areas, and how might this affect pricing and relationships with local providers?
4. Given the anticipated increase in interest expense due to recent debt issuance and the plan to retire lower coupon senior notes in 2025  **[DGX_3403177_5]** , how will this higher interest burden impact your margins and ability to invest in growth initiatives?
5. With the dilution from the Haystack MRD acquisition being approximately $0.20 this year and expected improvements next year  **[DGX_3403177_7]** , can you detail when you expect this investment to become accretive and what is the plan if reimbursement does not meet expectations?

60748dc4ba958ad3f83da95bb0cecd0b342a669933b7bf778e05366e95efa92a

fc55eba461fa0335e935bd40e7354e9bae5a1dda77c332a6a11eb88b8f018a5c

a622514e2035c79d956b49b291f8b53f0b44df79ad7e0659340be884d47e8e61

c4adca96088348d49babd1a02657042a3e9b7e74ca512083f6eb5940d4460185

- Laboratory Corporation of America Holdings, Inc.: Largest commercial clinical laboratory competitor  **[0001022079-24-000041_dgx-20231231.htm:30]** .
- Smaller regional and local commercial clinical laboratories: Compete in the clinical testing market  **[0001022079-24-000041_dgx-20231231.htm:30]** .
- Specialized advanced laboratories: Compete in the clinical testing market  **[0001022079-24-000041_dgx-20231231.htm:30]** .
- Hospital-affiliated laboratories: Compete for outreach testing and may leverage relationships with community clinicians  **[0001022079-24-000041_dgx-20231231.htm:30]** .
- Physician-office laboratories: Compete in the clinical testing market  **[0001022079-24-000041_dgx-20231231.htm:30]** .
- Anatomic pathology practices: Compete in anatomic pathology, including those in academic institutions and large physician group practices  **[0001022079-24-000041_dgx-20231231.htm:30]** .
- Providers of consumer-initiated testing: Compete in the clinical testing market  **[0001022079-24-000041_dgx-20231231.htm:30]** .
- Large physician group practices: Compete in anatomic pathology  **[0001022079-24-000041_dgx-20231231.htm:30]** .
- Providers of emerging digital pathology solutions: Compete in anatomic pathology  **[0001022079-24-000041_dgx-20231231.htm:30]** .
- New players such as employers and government agencies: Recently started to provide clinical lab testing services  **[0001022079-24-000041_dgx-20231231.htm:30]** .

4627c4240823014c9b5dc335b75940ad359fbfe42e298a408be1dd0123080714

- United States

- Foreign Operations

Total Revenue

9deeb93e55dab66de41daa7e102cb522cda1c94e28a78ba96e27289ee1f92552

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: FY 2024
- **Guidance**:
  - **Revenues**: $9.8 billion to $9.85 billion  **[DGX_3403177_4]** .
  - **Reported EPS**: $7.55 to $7.65  **[DGX_3403177_4]** .
  - **Adjusted EPS**: $8.85 to $8.95  **[DGX_3403177_4]** .
  - **Cash from Operations**: Approximately $1.3 billion  **[DGX_3403177_4]** .
  - **Capital Expenditures**: Approximately $420 million  **[DGX_3403177_4]** .
  - **Operating Margin**: Expected to be down versus the prior year due to integration of LifeLabs and other factors, but up excluding these impacts  **[DGX_3403177_5]** .
  - **Net Interest Expense**: Approximately $200 million  **[DGX_3403177_5]** .
  - **Weighted Average Share Count**: Expected to be flat compared to the end of 2023  **[DGX_3403177_5]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: FY 2024
- **Guidance**:
  - **Revenues**: $9.5 billion to $9.58 billion  **[DGX_3393930_5]** .
  - **Reported EPS**: $7.57 to $7.77  **[DGX_3393930_5]** .
  - **Adjusted EPS**: $8.80 to $9.00  **[DGX_3393930_5]** .
  - **Cash from Operations**: Approximately $1.3 billion  **[DGX_3393930_5]** .
  - **Capital Expenditures**: Approximately $420 million  **[DGX_3393930_5]** .
  - **Net Interest Expense**: Approximately $190 million, excluding interest expense related to debt financing for the LifeLabs acquisition  **[DGX_3393930_6]** .
  - **Weighted Average Share Count**: Expected to be flat compared to the end of 2023  **[DGX_3393930_6]** .
  - **Operating Margin**: Expected to expand for the full year  **[DGX_3393930_6]** .
  - **Dilution from Haystack Oncology**: Incremental $0.20 to adjusted EPS for the full year  **[DGX_3393930_6]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: FY 2024
- **Guidance**:
  - **Revenues**: $9.4 billion to $9.48 billion  **[DGX_3380248_4]** .
  - **Reported EPS**: $7.57 to $7.82  **[DGX_3380248_4]** .
  - **Adjusted EPS**: $8.72 to $8.97  **[DGX_3380248_4]** .
  - **Cash from Operations**: Approximately $1.3 billion  **[DGX_3380248_4]** .
  - **Capital Expenditures**: Approximately $420 million  **[DGX_3380248_4]** .
  - **COVID-19 Testing Revenues**: Expected to decline by approximately $175 million  **[DGX_3380248_4]** .
  - **Operating Margin**: Expected to expand for the full year  **[DGX_3380248_4]** .
  - **Net Interest Expense**: Approximately $190 million  **[DGX_3380248_4]** .
  - **Weighted Average Share Count**: Expected to be flat compared to the end of 2023  **[DGX_3380248_4]** .
  - **Dilution from Haystack Oncology**: Incremental $0.20 to adjusted EPS for the full year  **[DGX_3380248_4]** .

### Q4 2023 Earnings Call
- **Issued Period**: Q4 2023
- **Guided Period**: FY 2024
- **Guidance**:
  - **Revenues**: $9.35 billion to $9.45 billion  **[DGX_3371541_4]** .
  - **Reported EPS**: $7.69 to $7.99  **[DGX_3371541_4]** .
  - **Adjusted EPS**: $8.60 to $8.90  **[DGX_3371541_4]** .
  - **Cash from Operations**: Approximately $1.3 billion  **[DGX_3371541_4]** .
  - **Capital Expenditures**: Approximately $420 million  **[DGX_3371541_4]** .
  - **COVID Revenue Decline**: Assumed to decline at least $175 million  **[DGX_3371541_4]** .
  - **Net Interest Expense**: Expected to increase to approximately $190 million  **[DGX_3371541_5]** .
  - **Adjusted EPS in Q1**: Expected to be roughly 21% of the full year earnings  **[DGX_3371541_5]** .

dcda83d61a042b35874e76dc8536cab539bf0876fd8eca9e4f18aa2acb234975

| Name                | Position                                           | Start Date         | Short Bio                                                                                                                                                                                                                                                                                                                                                     |
|---------------------|----------------------------------------------------|--------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| James E. Davis      | Chairman, Chief Executive Officer, and President   | November 1, 2022   | James E. Davis became the **Chief Executive Officer and President on November 1, 2022**, and was appointed **Chairman of the Board on April 1, 2023**. He joined Quest Diagnostics in April 2013 and has held various positions, including Executive Vice President, General Diagnostics  **[0001022079-24-000041_dgx-20231231.htm:43]** **[0000930413-24-001247_c108438_def14a-ixbrl.htm:8]** **[0000930413-23-001199_c105212_def14a-ixbrl.htm:8]** **[0000930413-23-001199_c105212_def14a-ixbrl.htm:5]** .                                                        |
| Mark E. Delaney     | Senior Vice President and Chief Commercial Officer | March 2022         | Mark E. Delaney is responsible for all sales operations at Quest Diagnostics. Before joining, he was Vice President of Sales and Marketing at Hill-Rom Holdings Inc. and later at Baxter Healthcare  **[0001022079-24-000041_dgx-20231231.htm:43]** **[0001022079-23-000018_dgx-20221231.htm:49]** .                                                                                                                                                |
| Catherine T. Doherty| Senior Vice President, Regional Businesses         | March 2022         | Catherine T. Doherty manages the regional Diagnostic Information Services business. She joined Quest Diagnostics in 1990 and has held various roles, including Senior Vice President, Physician Services  **[0001022079-24-000041_dgx-20231231.htm:44]** **[0001022079-23-000018_dgx-20221231.htm:50]** .                                                                                                                                            |
| Mark A. Gardner     | Senior Vice President, Molecular Genomics and Oncology | October 2022    | Mark A. Gardner oversees oncology, pathology, specialty genetics, and R&D. He previously worked at Corza Medical and OmniSeq Corporation  **[0001022079-24-000041_dgx-20231231.htm:44]** **[0001022079-23-000018_dgx-20221231.htm:50]** .                                                                                                                                                                                                            |
| Karthik Kuppusamy   | Senior Vice President, Clinical Solutions          | August 2022        | Karthik Kuppusamy is responsible for clinical franchises excluding oncology, and other services. He joined Quest Diagnostics in 2014 from General Electric's healthcare business  **[0001022079-24-000041_dgx-20231231.htm:44]** **[0001022079-23-000018_dgx-20221231.htm:50]** .                                                                                                                                                                     |
| Patrick Plewman     | Senior Vice President, Diagnostics Services        | April 2022         | Patrick Plewman manages a portfolio of data-driven analytics and services offerings. He joined Quest Diagnostics in 2013 and has held various roles, including Vice President and General Manager of the West Region  **[0001022079-24-000041_dgx-20231231.htm:45]** **[0001022079-23-000018_dgx-20221231.htm:51]** .                                                                                                                                |
| Michael E. Prevoznik| Senior Vice President and General Counsel          | August 1999        | Michael E. Prevoznik joined Quest Diagnostics as Vice President and General Counsel in August 1999. He took on additional responsibilities for governmental affairs in 2003  **[0001022079-24-000041_dgx-20231231.htm:45]** **[0001022079-23-000018_dgx-20221231.htm:51]** .                                                                                                                                                                         |
| Sam A. Samad        | Executive Vice President and Chief Financial Officer| July 25, 2022     | Sam A. Samad is responsible for finance, accounting, investor relations, internal audit, and treasury activities. He joined Quest Diagnostics from Illumina, Inc.  **[0001022079-24-000041_dgx-20231231.htm:45]** **[0000930413-23-001199_c105212_def14a-ixbrl.htm:5]** .                                                                                                                                                                                   |
| Robert B. Carter    | Director (Board of Directors)                      | May 16, 2024       | Robert B. Carter serves as a Director on the Board of Directors for Quest Diagnostics Inc. He was required to file an initial statement of beneficial ownership of securities on **May 16, 2024**  **[0001022079-24-000111_xslF345X02/wk-form3_1716246698.xml:0]** .                                                                                                               |

5c3c1c8bbfef0df5b54ee694cf057426095078426ed86bbfd77c574a1ca49965

**Annual guidance for FY 2024:**
- **Revenues**: $9.8B to $9.85B  **[DGX_3403177_4]**  (raised from $9.5B to $9.58B  **[DGX_3393930_5]** )  
- **Reported EPS**: $7.55 to $7.65  **[DGX_3403177_4]**  (lowered from $7.57 to $7.77  **[DGX_3393930_5]** )  
- **Adjusted EPS**: $8.85 to $8.95  **[DGX_3403177_4]**  (no change from $8.80 to $9.00  **[DGX_3393930_5]** )  
- **Cash from Operations**: Approximately $1.3B  **[DGX_3403177_4]**  (no change from Approximately $1.3B  **[DGX_3393930_5]** )  
- **Capital Expenditures**: Approximately $420 million  **[DGX_3403177_4]**  (no change from Approximately $420 million  **[DGX_3393930_5]** )  
- **Operating Margin**: Expected to be down versus the prior year due to integration of LifeLabs and other factors, but up excluding these impacts  **[DGX_3403177_5]**  (lowered from expected to expand for the full year  **[DGX_3393930_6]** )  
- **Net Interest Expense**: Approximately $200 million  **[DGX_3403177_5]**  (raised from approximately $190 million  **[DGX_3393930_6]** )  
- **Weighted Average Share Count**: Expected to be flat compared to the end of 2023  **[DGX_3403177_5]**  (no change from prior guidance  **[DGX_3393930_6]** )  

b5c0d6b3698824d6b4b2f803a71aa4760cd7e26dc015445939c6a98fa53b3e4d

| Name                        | Start Date | End Date | Reason for Change |
|-----------------------------|------------|----------|-------------------|
| PricewaterhouseCoopers LLP  | 1995  **[0001022079-24-000041_dgx-20231231.htm:113]**  | Present  | Current auditor   |

b592447f3e60fc1018ad7e66f07169e7d648307f24f149fe1c4f78df6e88d132

9ea8470df4ae22eb5bbd13c0a64cba86cbace1ffccecf4f2a53db60447295fbf

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

- Total Revenue: $2,488 million (+8% YoY)  **[0001022079-24-000190_dgx-20240930.htm:1]** **[0001022079-23-000157_dgx-20230930.htm:20]**   
- DIS Business: $2,427 million (+9% YoY)  **[0001022079-24-000190_dgx-20240930.htm:23]** **[0001022079-23-000157_dgx-20230930.htm:20]**   
- DS Businesses: $61 million (-9% YoY)  **[0001022079-24-000190_dgx-20240930.htm:23]** **[0001022079-23-000157_dgx-20230930.htm:20]**   
- Operating Income (EBIT): $33 million (-90% YoY)  **[0001022079-24-000190_dgx-20240930.htm:1]** **[0001022079-24-000190_dgx-20240930.htm:28]** **[0001022079-24-000190_dgx-20240930.htm:23]** **[0001022079-23-000157_dgx-20230930.htm:1]** **[0001022079-23-000157_dgx-20230930.htm:26]**   
- Net Income: $226 million (+**977%** YoY)  **[0001022079-24-000190_dgx-20240930.htm:1]** **[0001022079-24-000190_dgx-20240930.htm:28]** **[0001022079-24-000190_dgx-20240930.htm:23]** **[0001022079-23-000157_dgx-20230930.htm:1]** **[0001022079-23-000157_dgx-20230930.htm:26]**   

faa5f7986c75f3f9f4b964dba0e4ca039bde76e599980fd6e779f45529f5fb0b

- **Strong revenue growth driven by acquisitions and expansion of health plan access**: Quest Diagnostics expects **2025 revenue growth from acquisitions to be about 6%**, with over **two-thirds coming from LifeLabs**. The integration of LifeLabs and other acquisitions is underway, and the company continues to explore M&A opportunities, focusing on hospital outreach lab acquisitions. Additionally, new contracts with **Elevance Health and Sentara Health Plans** have expanded Quest's reach to **more than 90% of the in-network lives in the U.S.**  **[DGX_3413710_12]** ,  **[DGX_3413710_11]** ,  **[DGX_3413710_7]**
- **Positive trends in test per requisition and utilization**, with **organic revenue per requisition up 3.3%** in Q4 2024, driven by a **increase in tests per requisition** due to new advanced diagnostics. Growth areas include **brain health**, with strong demand for Alzheimer's disease risk assessments; **advanced cardiometabolic testing**, with significant increases in **Lp(a) and ApoB** tests; and **autoimmune disorder testing**. These trends are expected to continue supporting revenue growth in 2025.  **[DGX_3413710_8]** ,  **[DGX_3413710_7]**
- **Launch of the Haystack MRD test**, anticipated to generate revenue in 2025 and strengthen Quest Diagnostics' position in **molecular genomics and oncology**. The company engaged with approximately **75 leading academic health systems and community oncology centers** in an early experience program and is transitioning them to commercial arrangements. This positions Quest to tap into the significant oncology market opportunity.  **[DGX_3413710_15]**

fe547459c6ef37642e923a7fd5bf799afcb0ba211965543f9725bf69a3ebe78d

- **Regulatory uncertainty regarding FDA oversight of laboratory developed tests (LDTs) could lead to increased compliance costs and margin pressure.** Quest Diagnostics plans to invest in FDA readiness, but the outcome depends on a pending lawsuit. If the FDA's position is upheld, continued investments will be required, impacting future expenses.  **[DGX_3413710_9]**
- **Reimbursement challenges for new tests like the Haystack MRD assay may delay revenue generation and affect growth in molecular genomics and oncology.** The company expects initial high denial rates from Medicare and Medicare Advantage plans and will need to engage in processes to overturn these denials, potentially impacting revenue from this segment.  **[DGX_3413710_15]**
- **Price pressure in the hospital segment, particularly for reference testing, could impact pricing power and margins.** Increased requests for proposals (RFPs) from hospitals are leading to competitive pricing, and this segment has experienced some price pressure that may affect overall revenue per test.  **[DGX_3413710_8]**

488b769ccfcf3b0644ca373e4fa03b62e3675f231febc9a8c4d66d9c201afd93

1. **Margin Expansion and Guidance**  
   **Q:** Will margins expand despite investments and headwinds?  
   **A:** Management expects operating margins to expand in 2025, increasing from **15.6% in 2024**.  **[DGX_3413710_6]**  Despite investments in FDA LDT compliance and IT modernization totaling **$0.20** per share  **[DGX_3413710_6]** , and interest expense headwinds of **$0.50** per share from acquisitions  **[DGX_3413710_6]** , organic revenue growth and contributions from acquisitions like LifeLabs support margin expansion.  **[DGX_3413710_6]** **[DGX_3413710_7]** 

2. **Acquisitions Impact**  
   **Q:** How will acquisitions enhance revenue and margins?  
   **A:** Acquisitions, including LifeLabs and University Hospitals, contribute approximately **6%** to 2025 revenue growth.  **[DGX_3413710_7]** **[DGX_3413710_10]** **[DGX_3413710_12]**  LifeLabs, while starting with margins below corporate average, is expected to reach corporate levels over 2-3 years.  **[DGX_3413710_7]** **[DGX_3413710_12]**  Management continues to pursue attractive M&A opportunities despite integration efforts.  **[DGX_3413710_12]** 

3. **Revenue per Requisition Growth**  
   **Q:** Is rev per req growth sustainable?  
   **A:** Rev per req increased **3.3%** organically in Q4 2024.  **[DGX_3413710_8]**  Growth is driven by higher tests per requisition, improved payer mix, and new tests in cardiometabolic and autoimmune segments.  **[DGX_3413710_7]** **[DGX_3413710_8]**  Management expects test per req growth to continue but at a slower rate in 2025.  **[DGX_3413710_8]** 

4. **Investments in IT and LDT Compliance**  
   **Q:** Are the $0.20 IT investments one-time?  
   **A:** The investments for FDA LDT compliance and IT modernization will continue beyond 2025.  **[DGX_3413710_6]** **[DGX_3413710_9]**  Future spending depends on regulatory developments, including pending lawsuits affecting FDA requirements.  **[DGX_3413710_9]**  These investments are part of long-term EPS growth expectations.  **[DGX_3413710_9]** 

5. **Competitive Landscape and Payer Contracts**  
   **Q:** How is the competitive environment shaping up?  
   **A:** Net access improved by over **1 million lives** due to new contracts with Elevance and Sentara, offsetting losses in Alabama.  **[DGX_3413710_11]**  Management expects to renew 25-30% of health plan contracts in 2025, similar to previous years.  **[DGX_3413710_11]** 

6. **Haystack MRD Assay Progress**  
   **Q:** What are expectations for Haystack?  
   **A:** Haystack is moving to full commercial arrangements in 2025, with modest revenue expected.  **[DGX_3413710_13]** **[DGX_3413710_15]**  Management anticipates high initial denials but plans to engage payers to improve coverage.  **[DGX_3413710_13]** **[DGX_3413710_15]**  The assay is expected to enhance Quest's **$1 billion** oncology business through pull-through opportunities.  **[DGX_3413710_13]** 

7. **Utilization Trends**  
   **Q:** How are utilization trends evolving?  
   **A:** Strong utilization with increased test volumes, particularly in core physician and hospital segments.  **[DGX_3413710_7]**  Growth in tests per req driven by new tests and focus on prevention and wellness.  **[DGX_3413710_7]** **[DGX_3413710_8]** **[DGX_3413710_14]** 

8. **Market Share Gains**  
   **Q:** Are market share gains accelerating?  
   **A:** Quest is gaining market share as hospitals focus less on outreach businesses.  **[DGX_3413710_16]**  Outreach acquisitions and reduced competition support share gains in the independent lab market.  **[DGX_3413710_12]** **[DGX_3413710_16]** 

9. **PAMA and Regulatory Outlook**  
   **Q:** Any updates on PAMA reform?  
   **A:** Management sees strong bipartisan support for PAMA reform in 2025.  **[DGX_3413710_16]**  Efforts are underway with key congressional committees to find a permanent solution.  **[DGX_3413710_16]** 

10. **Preventive Screening Focus**  
    **Q:** What's Quest's stance on preventive screening?  
    **A:** Quest views the industry's shift toward prevention and wellness positively, expecting it to benefit the lab industry through increased testing.  **[DGX_3413710_14]** 

29e20c9a351505d240bedbfbc8680adb1fd2ccce57b0020c43e283f059017b81

DGX Q4: 3.3% organic revenue-per-req growth, 6% 2025 growth from acquisitions, margins rising above 15.6% in 2024. Quest surpasses 90% in-network coverage, reinforcing expansion even as FDA LDT compliance weighs on costs.

555f500ec36cc88e65873163975721bd3fb0bba87a6ce5f3f2f7562ea01aba98

**Annual guidance for FY 2025:**  
- **Revenues**: $10.7B–$10.85B  **[DGX_3413710_4]**  (raised from $9.8B–$9.85B  **[DGX_3403177_4]** )  
- **Reported EPS**: $8.34–$8.59  **[DGX_3413710_4]**  (raised from $7.55–$7.65  **[DGX_3403177_4]** )  
- **Adjusted EPS**: $9.55–$9.80  **[DGX_3413710_4]**  (raised from $8.85–$8.95  **[DGX_3403177_4]** )  
- **Cash from Operations**: $1.45B  **[DGX_3413710_4]**  (raised from $1.3B  **[DGX_3403177_4]** )  
- **Capital Expenditures**: $500M  **[DGX_3413710_4]**  (raised from $420M  **[DGX_3403177_4]** )  
- **Net Interest Expense**: $275M  **[DGX_3413710_4]**  (raised from $200M  **[DGX_3403177_5]** )  
- **Operating Margin**: Expected to expand vs. prior year  **[DGX_3413710_4]**  (raised from “expected to be down vs. prior year” before integration impacts  **[DGX_3403177_5]** )  
- **Organic Revenue Growth**: Approximately 3%  **[DGX_3413710_4]**  (no prior guidance)  
- **Adjusted Tax Rate**: Approximately 25%  **[DGX_3413710_4]**  (no prior guidance)  
- **Average Share Count**: Approximately 114M diluted shares  **[DGX_3413710_4]**  (no prior guidance)

b27eaf514fb9037380b889f1eb34a892548bdac4b97f77e0277dff36a1b530c1

| Year | Amount Due (in millions) | Debt Type | Interest Rate | % of Total Debt |
|----------|------------------------------|---------------|-------------------|---------------------|
| 2025     | $600  **[0001022079-24-000190_dgx-20240930.htm:15]** **[0001022079-24-000190_dgx-20240930.htm:37]**               | 3.50% Senior Notes  **[0001022079-24-000190_dgx-20240930.htm:15]** **[0001022079-24-000190_dgx-20240930.htm:37]**  | 3.50%  **[0001022079-24-000190_dgx-20240930.htm:15]** **[0001022079-24-000190_dgx-20240930.htm:37]**  | 9.6% = (600 / 6,251) * 100  **[0001022079-24-000190_dgx-20240930.htm:2]** **[0001022079-24-000190_dgx-20240930.htm:15]**   **[0001022079-24-000190_dgx-20240930.htm:15]** **[0001022079-24-000190_dgx-20240930.htm:37]**  |
| 2026     | $501 **[0001022079-24-000190_dgx-20240930.htm:15]**                 | Unspecified **[0001022079-24-000190_dgx-20240930.htm:15]** | Not specified **[0001022079-24-000190_dgx-20240930.htm:15]** | 8.0% = (501 / 6,251) * 100  **[0001022079-24-000190_dgx-20240930.htm:2]** **[0001022079-24-000190_dgx-20240930.htm:15]**  **[0001022079-24-000190_dgx-20240930.htm:15]** |
| 2027     | $400 **[0001022079-24-000190_dgx-20240930.htm:15]**                 | 4.60% Senior Notes **[0001022079-24-000190_dgx-20240930.htm:15]** | 4.60% **[0001022079-24-000190_dgx-20240930.htm:15]** | 6.4% = (400 / 6,251) * 100  **[0001022079-24-000190_dgx-20240930.htm:2]** **[0001022079-24-000190_dgx-20240930.htm:15]**  **[0001022079-24-000190_dgx-20240930.htm:15]** |
| 2028     | $1 **[0001022079-24-000190_dgx-20240930.htm:15]**                   | Unspecified **[0001022079-24-000190_dgx-20240930.htm:15]** | Not specified **[0001022079-24-000190_dgx-20240930.htm:15]** | 0.0% = (1 / 6,251) * 100  **[0001022079-24-000190_dgx-20240930.htm:2]** **[0001022079-24-000190_dgx-20240930.htm:15]**  **[0001022079-24-000190_dgx-20240930.htm:15]** |
| 2029     | $600 **[0001022079-24-000190_dgx-20240930.htm:15]**                 | Unspecified **[0001022079-24-000190_dgx-20240930.htm:15]** | 4.625% **[0001022079-24-000190_dgx-20240930.htm:15]** | 9.6% = (600 / 6,251) * 100  **[0001022079-24-000190_dgx-20240930.htm:2]** **[0001022079-24-000190_dgx-20240930.htm:15]**  **[0001022079-24-000190_dgx-20240930.htm:15]** |
| 2034     | $850 **[0001022079-24-000190_dgx-20240930.htm:15]**                 | Unspecified **[0001022079-24-000190_dgx-20240930.htm:15]** | 5.00% **[0001022079-24-000190_dgx-20240930.htm:15]** | 13.6% = (850 / 6,251) * 100  **[0001022079-24-000190_dgx-20240930.htm:2]** **[0001022079-24-000190_dgx-20240930.htm:15]**  **[0001022079-24-000190_dgx-20240930.htm:15]** |
| 2037     | Not specified **[0001022079-24-000190_dgx09302024ex22.htm:0]**        | Unspecified **[0001022079-24-000190_dgx09302024ex22.htm:0]** | 6.95% **[0001022079-24-000190_dgx09302024ex22.htm:0]** | N/A |
| 2040     | Not specified **[0001022079-24-000190_dgx09302024ex22.htm:0]**        | Unspecified **[0001022079-24-000190_dgx09302024ex22.htm:0]** | 5.75% **[0001022079-24-000190_dgx09302024ex22.htm:0]** | N/A |
| Thereafter | $4,789 **[0001022079-24-000190_dgx-20240930.htm:15]**             | Unspecified **[0001022079-24-000190_dgx-20240930.htm:15]** | Not specified **[0001022079-24-000190_dgx-20240930.htm:15]** | 76.6% = (4,789 / 6,251) * 100  **[0001022079-24-000190_dgx-20240930.htm:2]** **[0001022079-24-000190_dgx-20240930.htm:15]**  **[0001022079-24-000190_dgx-20240930.htm:15]** |

ba00d55a2eff44f8c81cbd7da5b470aed23aa54bc511e83bbecfdc2f2a82fd53

- **Expected Decline in Utilization Rates**: Management anticipates a return to "**more normal utilization**" levels in the next three quarters, implying a potential decrease from the strong base business utilization experienced in Q1 2024.  **[DGX_3380248_7]** ,  **[DGX_3380248_12]**
- **Dilutive Impact of Haystack Oncology Acquisition**: The acquisition of Haystack Oncology is expected to result in a **$0.20 per share dilution** to adjusted EPS for the full year 2024. Additionally, Haystack is currently **pre-revenue**, which may negatively impact earnings.  **[DGX_3380248_6]** ,  **[DGX_3380248_10]**
- **Continued Decline in COVID-19 Testing Revenues**: COVID-19 testing revenues are projected to decline by **$175 million** for the full year 2024, with **$85 million** of this decline expected in the remaining quarters, potentially impacting total revenues.  **[DGX_3380248_16]**

bcfee66c53d488e9189ef31729bbd53cf9b61f27a68ee4179aaa1900c3aae3a0

1. **Margins Outlook**  
   **Q:** Can you discuss margin performance and expectations?  
   **A:** Management reported operating margins of **14.8%** in Q1, slightly below last year's **15%** due to a **$90 million** decline in COVID revenue and dilution from the Haystack acquisition.  **[DGX_3380248_6]**  They offset most headwinds through base volume growth and productivity improvements, including expansion in the consumer-initiated testing business.  **[DGX_3380248_6]**  Looking ahead, they expect normal seasonality with a step up in Q2 and Q3 and a step down in Q4.  **[DGX_3380248_6]** 

2. **Advanced Diagnostics & Haystack**  
   **Q:** How is the advanced diagnostics segment performing, especially Haystack?  
   **A:** The advanced diagnostics segment exceeded expectations, with strong growth in brain health tests like the AB 42/40 and the addition of p-tau217.  **[DGX_3380248_10]**  Women's health, including prenatal genetics and carrier screening, also saw double-digit growth.  **[DGX_3380248_10]**  Haystack remains pre-revenue but has launched an early experience program with **20** customers, positioning for a broader national launch later this year.  **[DGX_3380248_10]** **[DGX_3380248_18]** 

3. **Organic Volume Growth**  
   **Q:** What drove stronger-than-expected core growth this quarter?  
   **A:** Core revenues grew nearly **6%**, beating expectations by **3%**, driven by strong utilization and share gains.  **[DGX_3380248_13]**  They closed large transactions with two integrated physician groups and saw robust volume growth across physician channels, hospital references, and pathology.  **[DGX_3380248_13]**  Additionally, the Quest Health consumer-initiated testing business almost doubled year-over-year.  **[DGX_3380248_13]** 

4. **Volume and Margin Expansion**  
   **Q:** How do organic volume and mix expectations factor into margin expansion?  
   **A:** Management expects volume growth to be close to mid-single digits, slightly below in volumes, contributing to productivity and margin improvements.  **[DGX_3380248_12]**  Advanced diagnostics, growing in double digits, positively impact profitability.  **[DGX_3380248_12]**  They anticipate some normalization of excess utilization in the coming quarters.  **[DGX_3380248_12]** 

5. **LDT Regulations Impact**  
   **Q:** Any financial impact from proposed LDT regulations in 2024?  
   **A:** They foresee no impact on earnings or EPS in 2024 from proposed LDT regulations.  **[DGX_3380248_8]**  While awaiting the final rule, they are preparing to address any gaps over the 3- to 4-year timeframe and have confidence in their strong quality management system.  **[DGX_3380248_8]** 

6. **Pricing Trends**  
   **Q:** How should we think about pricing and revenue per requisition given COVID headwinds?  
   **A:** Despite a **$90 million** decline in COVID revenue, revenue per requisition increased due to positive test mix and test per requisition.  **[DGX_3380248_16]**  Pricing is expected to remain flat for the rest of the year, with continued favorable contributions from test mix.  **[DGX_3380248_16]**  COVID's impact on pricing will be minimal going forward.  **[DGX_3380248_16]** 

7. **M&A Contribution**  
   **Q:** Is the expected M&A revenue contribution still 50 bps for the year?  
   **A:** Yes, if no additional acquisitions occur, the **50 basis points** contribution to revenue will continue.  **[DGX_3380248_9]**  However, they have a robust acquisition pipeline and expect to close additional transactions this year.  **[DGX_3380248_9]** 

8. **Value-Based Care Arrangements**  
   **Q:** Can you explain value-based care arrangements with health plans and margin impact?  
   **A:** They have value-based incentives with about **50%** of health plans, including higher pricing during transitions from health system rates and incentives for moving volume from high-priced or out-of-network labs to Quest.  **[DGX_3380248_15]**  These arrangements contribute positively to margins.  **[DGX_3380248_15]** 

9. **Labor Environment**  
   **Q:** What's the current labor environment and its impact?  
   **A:** Employee retention improved, with attrition rates falling below **20%**, though not yet at pre-COVID levels.  **[DGX_3380248_14]**  Decreased attrition across logistics, specimen processing, and other frontline jobs positively impacted operations.  **[DGX_3380248_14]** 

10. **Consumer Business Margin**  
    **Q:** How is consumer business margin progressing?  
    **A:** Margins in the consumer-initiated testing business are consistent with overall company margins and continued to improve last year.  **[DGX_3380248_14]**  The business almost doubled year-over-year, excluding COVID.  **[DGX_3380248_13]** 

11. **Automation Impact**  
    **Q:** How does automation affect your cost structure, especially in phlebotomy?  
    **A:** Automation efforts focus on laboratory specimen processing, improving efficiency in tasks like sorting and aliquoting.  **[DGX_3380248_17]**  In phlebotomy, opportunities include reducing manual paperwork by converting **35%-45%** of paper requisitions to electronic, enhancing productivity.  **[DGX_3380248_17]** 

12. **EPS Guidance**  
    **Q:** Why only a modest EPS raise despite strong Q1 beat?  
    **A:** Despite beating internal expectations and offsetting weather-related headwinds, they increased EPS guidance by only **$0.10** at the midpoint due to expectations of normalizing utilization in the remaining quarters.  **[DGX_3380248_7]**  Volume growth was broad-based, but they remain cautious.  **[DGX_3380248_7]** 

13. **Haystack Investment**  
    **Q:** How has your view on the Haystack acquisition and MRD market evolved?  
    **A:** Their positive outlook on the Haystack acquisition remains unchanged, with the MRD market growing at strong double digits.  **[DGX_3380248_18]**  Confident in Haystack's technology, they plan a national launch after the early experience program.  **[DGX_3380248_18]**  Financial expectations, including **$0.20** of incremental dilution this year, remain the same.  **[DGX_3380248_18]** 

a2e8e6e9f83df632f918cc9e6d9a4122429a9b28f0d2e3d4df4ebf91ff32c34a

- **Quest Diagnostics reported strong broad-based volume growth**, with increases across all physician channels and hospitals, indicating share gains and robust utilization trends.  **[DGX_3380248_7]**
- **Operating margins improved and base gross margins increased significantly**, driven by base volume growth, productivity improvements, and the growth of the consumer-initiated testing business, which expanded margins and profitability.  **[DGX_3380248_6]**
- **Advanced diagnostics and consumer-initiated testing businesses are growing double digits**, contributing to revenue and margin expansion, with margins consistent with the overall business average.  **[DGX_3380248_14]**

2f3584461e27c938543b47ed4693f816d3e970153bba83d85d887c008ce2230a

- **Strong base business growth**: Quest Diagnostics reported **3.2% growth in base clinical testing volumes** and **5.1% growth in clinical base business revenues**, driven by increased test volumes, favorable test mix, and higher tests per requisition. This indicates robust market utilization and potential share gains.  **[DGX_3393930_10]** **[DGX_3393930_3]**
- **Strategic acquisitions fueling future growth**: The company announced **four acquisitions**, including PathAI Diagnostics, Allina Health, OhioHealth, and LifeLabs in Canada, which are expected to expand Quest's geographic reach and enhance its advanced diagnostics offerings. These acquisitions meet Quest's criteria for growth, profitability, and returns, and are projected to be accretive to earnings.  **[DGX_3393930_10]** **[DGX_3393930_11]** **[DGX_3393930_13]** **[DGX_3393930_21]**
- **Improved financial performance through pricing and efficiency**: Quest is benefiting from a **positive pricing and reimbursement environment**, now stabilized and flat to improving, compared to prior years' negative impacts. Combined with operational efficiencies, cost controls, and productivity improvements, including automation and AI, this is contributing to **margin expansion** and an increase in full-year guidance.  **[DGX_3393930_10]** **[DGX_3393930_18]**

78677f03aefd645478ff941fe631a804dc57cce4ab1cc2d4b4e2f50f4e64b621

- The integration of recent acquisitions, especially **LifeLabs**, is expected to take **several quarters** to achieve the desired profitability, potentially weighing on near-term margins. Additionally, **LifeLabs' operating margin rate is lower than Quest's company average**, which will take **a couple of years** to improve.  **[DGX_3403177_19]** **[DGX_3403177_18]**
- There is **uncertainty surrounding Medicare reimbursement rates** due to ongoing **PAMA** legislation delays, with potential reimbursement cuts that could negatively impact revenue. Quest is pressing for Medicare rates to go up, but legislative outcomes are uncertain.  **[DGX_3403177_21]**
- **Higher-than-normal wage inflation** of **3% to 4%**, compared to historical norms of **2% to 3%**, along with tight labor markets for frontline employees, may lead to increased costs and pressure margins.  **[DGX_3403177_13]**

2d0263960ae0ebd6be8c29e52122368c300a564bc50b6e0be5fcb3332ca0bb1f

- **Quest Diagnostics anticipates a decline in COVID-19 testing revenues of at least $175 million in 2024**, which will serve as a revenue and earnings headwind.  **[DGX_3371541_11]**
- **The acquisition of Haystack Oncology is expected to be dilutive to adjusted EPS by approximately $0.20 in 2024**, negatively impacting profitability.  **[DGX_3371541_4]** ,  **[DGX_3371541_11]** ,  **[DGX_3371541_8]**
- **Increased interest expenses due to higher borrowings are expected to impact earnings by about $0.25 per share in 2024**, as net interest expense is expected to increase to approximately $190 million.  **[DGX_3371541_5]** ,  **[DGX_3371541_11]**

a0dd44c173ec1581adfe1d4de052f8726c8670e906f9707e68a4da034734f49b

- **Quest Diagnostics expects operating margin expansion in 2024 driven by volume growth and cost reductions.**  **[DGX_3371541_9]**
- **The company remains confident in achieving its long-term financial outlook of mid-single-digit revenue growth and high single-digit earnings growth beyond 2024, despite temporary headwinds in 2024.**  **[DGX_3371541_11]**
- **Strong growth is anticipated in advanced diagnostics, particularly in Alzheimer's testing and the upcoming launch of the Haystack minimal residual disease (MRD) test, contributing to future revenue growth.**  **[DGX_3371541_15]** **[DGX_3371541_8]**

fb2e7753ab031b89659d35066822a0c9952f3017b33a0e9b721357e6ea98d5cc

1. **Guidance Raise and Drivers**  
   **Q:** What's driving the raised guidance and second-half improvements?  
   **A:** The company raised revenues by **$100 million** and EPS by **$0.05 to $8.80–$9.00**.  **[DGX_3393930_10]**  The majority of the revenue increase is from new M&A, including deals with Allina Health, OhioHealth, and upside from the PathAI acquisition.  **[DGX_3393930_10]**  Base volumes remain strong, and productivity improvements, cost reductions, and a positive pricing environment are contributing to improved margins.  **[DGX_3393930_10]** 

2. **Volume Trends and Utilization**  
   **Q:** How are volume trends and utilization expectations shaping up?  
   **A:** Base business volumes grew **3.2%**, translating into **5.1% revenue growth** due to test mix and increased tests per requisition.  **[DGX_3393930_11]**  Utilization remains strong, but the company expects it to gradually return to normal levels, with organic growth leveling off around **3%**.  **[DGX_3393930_12]**  Second-half base revenue growth is projected at **5.3%**, with some contribution from acquisitions.  **[DGX_3393930_12]** 

3. **M&A Activity and Impact**  
   **Q:** Could you elaborate on recent M&A activity and its impact?  
   **A:** Recent acquisitions include Allina Health, OhioHealth, PathAI, and LifeLabs.  **[DGX_3393930_10]** **[DGX_3393930_19]** **[DGX_3393930_21]**  The majority of the raised revenue guidance comes from these new deals.  **[DGX_3393930_10]**  The LifeLabs acquisition is expected to add **$0.10 to $0.15** EPS accretion in its first year, funded **75% by debt**.  **[DGX_3393930_19]**  The company is excited about these acquisitions, which provide growth opportunities in key markets.  **[DGX_3393930_21]** 

4. **Margin Outlook and Cost Trends**  
   **Q:** What's the outlook on margins and cost trends?  
   **A:** Operating margins are expected to be up year-over-year.  **[DGX_3393930_18]**  Wage increases are within the expected **3% to 4%** range.  **[DGX_3393930_18]**  Turnover has decreased from over **20%** last year to the mid-**18%** range.  **[DGX_3393930_18]**  Productivity improvements and cost reductions are ongoing to improve margins.  **[DGX_3393930_10]** 

5. **Regulatory Environment**  
   **Q:** Any updates on regulatory matters like PAMA, SALSA, and LDT rules?  
   **A:** The company is pushing for a **1-year delay in PAMA** and is confident it will be achieved.  **[DGX_3393930_14]**  Implementing the LDT rule is ongoing, with requirements to be met by May next year.  **[DGX_3393930_16]**  Recent Supreme Court actions may favor the company's position on regulatory interpretations.  **[DGX_3393930_17]** 

6. **Digital Pathology and PathAI Acquisition**  
   **Q:** How will the PathAI acquisition influence digital pathology efforts?  
   **A:** The company sees digital pathology as an opportunity to improve productivity and quality.  **[DGX_3393930_13]**  It plans to consolidate histology sites, route images to expert pathologists nationwide, and potentially achieve higher reimbursement using AI algorithms.  **[DGX_3393930_13]**  The anatomical pathology business is about a **$500 million** book of business.  **[DGX_3393930_13]** 

7. **Haystack Dilution and Future Impact**  
   **Q:** What's the outlook for Haystack's financial impact?  
   **A:** Haystack dilution this year will be **$0.35 to $0.40**, increasing by **$0.20** from the prior year.  **[DGX_3393930_15]**  In 2025, dilution will be less as revenues start from the assay launch later this year, and Haystack is expected to be slightly accretive in 2026.  **[DGX_3393930_15]** 

8. **Value-Based Care Contracts**  
   **Q:** How should we model value-based care payments?  
   **A:** Value-based care contributions are positive but **lumpy and hard to model**.  **[DGX_3393930_14]**  They include shared savings from acquisitions and incentives for shifting requisitions from high-priced labs.  **[DGX_3393930_14]**  Variability makes it difficult to provide specific guidance.  **[DGX_3393930_14]** 

9. **Market Share and Competitive Position**  
   **Q:** Are you gaining or maintaining market share in physician and hospital markets?  
   **A:** The company believes it's gaining share, with growth in the physician business outpacing the health system segment.  **[DGX_3393930_20]**  Recent wins with large physician groups and reference business support this view.  **[DGX_3393930_20]** 

10. **Debt Assumptions and Balance Sheet**  
    **Q:** Any updates on upcoming debt maturities and financing of acquisitions?  
    **A:** The LifeLabs acquisition is expected to be funded **75% by debt**.  **[DGX_3393930_19]**  The company targets a leverage ratio of **2.5 to 3x**, with potential temporary increase above 3x due to acquisitions, but plans to delever back.  **[DGX_3393930_19]** 

11. **Volumes from Preferred Networks**  
    **Q:** How are volumes from preferred network customers?  
    **A:** Volumes from payers with preferred arrangements are higher.  **[DGX_3393930_20]**  Incentives to move share from out-of-network and high-priced labs are effective.  **[DGX_3393930_20]** 

12. **Employer Business Decline**  
    **Q:** What's happening with the employer-based business volumes?  
    **A:** Employer-based businesses saw meaningful declines, contributing to the difference between **3.2%** and **1.7%** total base volume growth.  **[DGX_3393930_9]**  Pressures include changes in drug testing practices and reduced spending on wellness events.  **[DGX_3393930_9]**  These businesses are less than **5%** of overall revenue and are not expected to deteriorate further.  **[DGX_3393930_9]** 

13. **Increased M&A Activity Explanation**  
    **Q:** What led to the increased M&A activity this year?  
    **A:** There is **no change in strategy**; the M&A funnel is full, and timing led to multiple deals announced in one quarter.  **[DGX_3393930_21]**  The company remains focused on outreach tuck-in deals and opportunities where independent lab access is waning.  **[DGX_3393930_21]** 

fbbf8e915e4edb0ed4ab7e89a29eb2f92a4adcd43bcafdfd28a3408f8d40e93e

1. **Organic Growth Outlook**  
   **Q:** How will organic growth look next year?  
   **A:** Management expects organic growth of approximately **3%** in 2025, driven by strong utilization and share gains, including the impact from being in-network with Elevance starting January 2025.  **[DGX_3403177_8]**  They note that utilization remains strong, and the assumption of 3% growth is solid.  **[DGX_3403177_7]** 

2. **LifeLabs Acquisition Impact**  
   **Q:** What is the margin and earnings impact of the LifeLabs acquisition?  
   **A:** The LifeLabs deal closed earlier than expected, contributing about **$70 million** in revenue over five weeks in Q3.  **[DGX_3403177_14]**  While initially dilutive to operating margins, it is expected to be accretive to earnings by **$0.10 to $0.15** in the first full year.  **[DGX_3403177_9]**  Management anticipates margins to improve over the next 2-3 years, eventually reaching Quest's enterprise level.  **[DGX_3403177_9]** 

3. **Contracts with Elevance and Sentara Health**  
   **Q:** What can you tell us about the new contracts with Elevance and Sentara Health?  
   **A:** Quest will be in-network with Elevance in Colorado and Nevada starting January 2025, with expanded access in Georgia and Virginia  **[DGX_3403177_8]** , which should help fuel organic growth next year. Previously, Quest was not in Elevance's network in those states.  **[DGX_3403177_10]**  Sentara Health also added Quest to their network, which was previously served by other labs.  **[DGX_3403177_10]** 

4. **Wage Inflation and Turnover Rates**  
   **Q:** How is wage inflation impacting you, and are turnover rates improving?  
   **A:** Turnover rates have improved to **18-19%** from the low 20s last year.  **[DGX_3403177_12]**  Wage inflation remains at **3-4%**, slightly less than last year but higher than historical norms.  **[DGX_3403177_12]** **[DGX_3403177_13]**  Management expects wage inflation to stay around 3% next year, and is offsetting it through automation and AI in laboratories.  **[DGX_3403177_12]** 

5. **2025 EPS Growth Expectations**  
   **Q:** Should EPS grow faster next year given all the positive factors?  
   **A:** Despite revenue growth from M&A and improved organic growth, management expects EPS to grow in the high single digits in 2025.  **[DGX_3403177_20]**  They cite ongoing cost headwinds, including inflation at 3-4%, and competitive dynamics in the health system space.  **[DGX_3403177_20]** 

6. **PAMA Legislative Update**  
   **Q:** Any updates on the permanent solution for PAMA?  
   **A:** PAMA cuts have been delayed for five consecutive years, which is welcomed.  **[DGX_3403177_21]**  Management plans to push for a fix that acknowledges inflation since 2019, advocating for Medicare rates to increase rather than continuous delays.  **[DGX_3403177_21]** 

7. **Haystack Asset Performance**  
   **Q:** What is the outlook for the Haystack asset?  
   **A:** The dilution from Haystack is approximately **$0.20** this year, expected to be less next year.  **[DGX_3403177_7]**  Quest is preparing to launch the assay in the next few months and expects to obtain reimbursement as they move forward.  **[DGX_3403177_7]** 

8. **Revenue Details and COVID Impact**  
   **Q:** Can you provide details on revenue growth and COVID impact?  
   **A:** Total revenue grew by **8.5%** in Q3, with organic growth at **4.2%**.  **[DGX_3403177_14]**  M&A contributed about **4%**, including **$70 million** from LifeLabs.  **[DGX_3403177_14]**  COVID impacted revenue growth by about **50 basis points** year-over-year.  **[DGX_3403177_14]** 

9. **Unit Pricing Outlook for 2025**  
   **Q:** What is the expected unit pricing trend for 2025?  
   **A:** Management expects unit pricing to be flat to slightly positive in 2025.  **[DGX_3403177_15]**  While health systems present a net negative in pricing dynamics, health plans are modestly positive, and government business remains flat due to PAMA cuts being deferred.  **[DGX_3403177_15]** 

10. **Hospital Outreach Deals and Market Share Gains**  
    **Q:** How are hospital outreach deals contributing to market share gains?  
    **A:** Quest has acquired outreach businesses from Allina Health, OhioHealth, and University Hospitals, entering markets where they previously had minimal share.  **[DGX_3403177_16]**  These deals place Quest in strong positions in big, growing markets, and they continue to look for similar opportunities.  **[DGX_3403177_16]** 

92aad0101b15213f4ad79ae3b650fd03c3dab8d381dbca7059ca14a3a962a0e3

- **Quest Diagnostics is benefiting from increased utilization in Medicare Advantage plans, especially due to the shift towards narrower networks, which favor independent labs like Quest that offer high quality and lower costs.**  **[DGX_3403177_17]**
- **The acquisition of LifeLabs in Canada provides significant growth opportunities in a market with favorable demographics, such as higher population growth and an aging population, which can lead to increased testing demand.** Quest expects to improve LifeLabs' margins to align with company averages over the next few years through synergies and best practices.  **[DGX_3403177_18]**
- **Quest is expanding its market reach through new contracts with major health plans like Elevance Health and Sentara Health Plans, opening up access in previously limited states and representing commitment from health plans to include independent labs offering great quality, service, and competitive pricing.**  **[DGX_3403177_10]**

bcc251bbda08e49bd5fc840bd40b01ab3e75301a0d3f718589fed13f0e4be659

- **Regulatory and Legal Risks Related to LDT Rule Compliance**: Quest Diagnostics is facing potential increased compliance costs due to the FDA's Laboratory Developed Tests (**LDT**) rule. They need to establish a complaint handling unit by **May of next year**, and are involved in a lawsuit challenging the rule. If unsuccessful, they will need to make further investments to be fully compliant.  **[DGX_3393930_16]**
- **Declining Employer Services Business Impacting Growth Rates**: The company's employer-focused businesses, including employee drug testing, employee population health, and ExamOne life insurance assessments, have shown **significant declines year-over-year**. While these businesses represent **less than 5% of overall revenue**, they are **negatively impacting growth rates**.  **[DGX_3393930_9]**
- **High Employee Turnover in Frontline Positions**: Quest Diagnostics has experienced high turnover rates in frontline positions such as patient services and laboratory workers, with turnover **over 20% last year** and only a slight improvement to the **mid-18% range in the second quarter**. This could impact operational efficiency and increase costs associated with hiring and training new staff.  **[DGX_3393930_18]**

1a54a559afe1d63989b9b93fcd1039dc3802a7be9a425c4d2a8a2be9295190a0

1. **Margin Expansion in 2024**  
   **Q:** Will operating margins expand in 2024 versus 2023?  
   **A:** Management expects operating margins to expand in 2024, driven by volume growth and ongoing cost reductions, despite headwinds like COVID revenue decline and full-year Haystack dilution. They are confident about continued margin growth.  **[DGX_3371541_7]** **[DGX_3371541_9]** **[DGX_3371541_11]** **[DGX_3371541_12]** 

2. **Impact of PAMA Delay**  
   **Q:** How does the PAMA delay affect margins and investments?  
   **A:** The PAMA delay removes a potential negative, allowing Quest to avoid difficult cuts and proceed with investments in areas like Alzheimer's testing, PFAS testing, and lab system upgrades.  **[DGX_3371541_7]** 

3. **Haystack Progress and Dilution**  
   **Q:** What's the status of Haystack and its financial impact?  
   **A:** Haystack is progressing as expected, with no incremental investment beyond initial guidance. The test will launch commercially in the first half of the year, with a full-year dilution of **$0.15 to $0.20** in 2024.  **[DGX_3371541_8]** 

4. **Share Repurchase Plans**  
   **Q:** What are the plans for share repurchases in 2024?  
   **A:** Quest plans to offset equity dilution with share repurchases of approximately **$250 million to $275 million**, similar to the amount in Q4 2023.  **[DGX_3371541_8]** 

5. **Volume Growth and Utilization**  
   **Q:** What are volume growth and utilization expectations for 2024?  
   **A:** Volume growth is expected to continue slightly above normal market rates, supported by higher utilization observed in Q4 2023 and early 2024, despite some weather-related impacts in January.  **[DGX_3371541_10]** 

6. **Price Stability with Health Plans**  
   **Q:** What are price expectations with health plans for 2024?  
   **A:** Prices are expected to remain flat to slightly up in 2024, following successful renegotiations in 2023. Price per test provided a slight lift in 2023, and similar trends are anticipated.  **[DGX_3371541_13]** 

7. **M&A Contribution to Growth**  
   **Q:** How much will M&A contribute to 2024 revenue growth?  
   **A:** Acquisitions will contribute approximately **50 basis points** to revenue growth in 2024, reflecting carryover from deals made in 2023, such as NewYork-Presbyterian and Lenco.  **[DGX_3371541_17]** 

8. **Hospital Reference Testing Impact**  
   **Q:** How does increased hospital reference testing affect margins?  
   **A:** Higher hospital reference testing, which carries higher gross margins and lower phlebotomy costs, positively impacted margins as this business grew faster than the overall portfolio in Q4 and the full year.  **[DGX_3371541_18]** 

9. **Long-Term Earnings Growth Outlook**  
   **Q:** How confident are you in long-term earnings growth beyond 2024?  
   **A:** Management remains confident in their long-term growth targets of mid-single-digit revenue growth and high-single-digit EPS growth, viewing 2024 headwinds as temporary and maintaining a strong acquisition pipeline.  **[DGX_3371541_11]** 

10. **LDT Legislation and Haystack IP**  
    **Q:** How will LDT legislation affect you, and is Haystack at IP risk?  
    **A:** Approximately **10%** of Quest's tests are LDTs; they are prepared to comply with potential regulations. There is no IP risk with Haystack, as they are confident in their rights from Johns Hopkins.  **[DGX_3371541_14]** 

11. **Investments in Alzheimer's Testing**  
    **Q:** What's the opportunity in Alzheimer's testing?  
    **A:** Quest is expanding its blood-based Alzheimer's tests, experiencing double-digit growth in this area, and expects continued strong demand due to new therapeutic developments increasing awareness.  **[DGX_3371541_15]** 

12. **AI Investments and Impact**  
    **Q:** How are AI investments expected to affect margins?  
    **A:** Quest is investing in AI to optimize lab workflows, reduce labor, and improve efficiencies in areas like microbiology and pathology, which should yield margin benefits in the future.  **[DGX_3371541_16]** 

e5d431eea1c1d102625b55031c417b404f4969e6b1fd741c5ff2c8b398d368e2

Quest Diagnostics Inc (DGX)

Financials