DIS Business

DS Businesses

Routine Clinical Testing

COVID-19 Testing

Gene-based and Esoteric

Anatomic Pathology

All Other Services

Physician Lab Services

Hospital Lab Services

Other DIS

DS Revenues

Total Revenue

09c28186e9cfdc6aadcf4fdb8a716d56cd52e6cd38c9a79d0de0a9a588f65f3d

Net income [USD, millions]

Depreciation and amortization [USD, millions]

Provision for credit losses [USD, millions]

Deferred income tax benefit [USD, millions]

Stock-based compensation expense [USD, millions]

Other, net [USD, millions]

Net cash provided by operating activities [USD, millions]

Business acquisitions, net of cash acquired [USD, millions]

Capital expenditures [USD, millions]

Other investing activities, net [USD, millions]

Net cash used in investing activities [USD, millions]

Proceeds from borrowings [USD, millions]

Repayments of debt [USD, millions]

Exercise of stock options [USD, millions]

Employee payroll tax withholdings on stock issued under stock-based compensation plans [USD, millions]

Dividends paid [USD, millions]

Distributions to noncontrolling interest partners [USD, millions]

Other financing activities, net [USD, millions]

Net cash provided by financing activities [USD, millions]

Net change in cash and cash equivalents and restricted cash [USD, millions]

Cash and cash equivalents and restricted cash, beginning of period [USD, millions]

Cash and cash equivalents and restricted cash, end of period [USD, millions]

966ccd8871256ff7eca7ca5ecd7fc3c694f48b57a0b63ff9d1956fab7f7d9f25

The near doubling of **Operating Income** in **Q4 2023** was primarily driven by multiple factors, including **growth in the base business** (with base revenues increasing by **4.7%** and testing volumes growing by **5.2%**), significant **cost reductions** through lower support costs and decreased performance-based compensation, a major decline in **COVID-19 testing revenues** (approximately **80%** drop, offset by base business strength), and a substantial reduction in **SG&A expenses** (from **$563 million** in Q4 2022 to **$407 million** in Q4 2023) which also contributed to improved margins.  **[DGX_3371541_4]** **[0001022079-24-000009_dgx123120238-kexhibit991.htm:2]** **[0001022079-24-000009_dgx123120238-kexhibit991.htm:5]** 

What factors contributed to the near doubling of Operating Income in Q4 2023?

Quest Diagnostics’ net income almost doubled in Q4 2023 because **lower overall operating costs and expenses** significantly improved profitability. In that quarter, the company reduced its selling, general and administrative expenses (from **$563 million** in Q4 2022 to **$407 million** in Q4 2023) and better managed other operating costs, which helped boost operating income from **$135 million** to **$267 million**. Additionally, a **4.7% increase in base business revenues** (reaching **$2.25 billion**) helped offset the impact of an **80% drop in COVID-19 testing revenues**, propelling the net income attributable to Quest Diagnostics from **$101 million** in Q4 2022 to **$192 million** in Q4 2023.  **[DGX_3371541_4]** **[0001022079-24-000009_dgx123120238-kexhibit991.htm:5]** 

Why did Net Income attributable to Quest Diagnostics almost double in Q4 2023?

The sharp spike in **Other Operating Expense** in **Q4 2023** was primarily driven by two factors: a **$29 million impairment charge** on certain long-lived assets related to the shutdown of a business, and a **$11 million loss** associated with an increase in the fair value of the contingent consideration accrual from previous acquisitions.  **[0001022079-24-000041_dgx-20231231.htm:106]** **[0000930413-24-000979_c108438_pre14a-ixbrl.htm:104]** 

What drove the sharp spike in Other Operating Expense in Q4 2023?

The turnaround in **Q4 2023** was primarily attributed to **gains associated with investments in deferred compensation plans**. This change marked a significant shift from prior periods, where there were substantial losses related to changes in the carrying value of strategic investments and deferred compensation plan investments.  **[0001022079-24-000041_dgx-20231231.htm:106]** **[0001022079-24-000009_dgx123120238-kexhibit991.htm:5]** 

What caused the turnaround in Other Income (Expense) in Q4 2023?

8c9a5be9bb99f7f327db9e774c7985d27d0eeaf211b9b28901860876f7efdea3

The sharp increase in cash during Q4 2023 was driven primarily by **financing activities**, notably **proceeds from borrowings** totaling **$2,592 million**, which more than offset the lower operating cash flow and higher investment outflows such as increased spending on business acquisitions.  **[0001022079-24-000041_dgx-20231231.htm:109]** **[0001022079-24-000041_dgx-20231231.htm:117]** 

What drove the sharp increase in cash in Q4 2023?

Cash is exceptionally high in Q3 2024 because **strong operating cash inflows** and **significant financing activities**, particularly proceeds from borrowings, more than offset the large cash outflows from investing activities. Specifically, operating activities increased cash by **$125 million** compared to the previous period, and financing activities provided an inflow of **$1.254 billion**—driven by **$1.846 billion** in borrowings—despite offsetting outflows from debt repayments and dividend payments. These combined factors resulted in a net increase of **$78 million**, raising the cash balance to **$764 million** in Q3 2024.  **[0001022079-24-000190_dgx-20240930.htm:35]** **[0001022079-24-000190_dgx-20240930.htm:2]** 

Why is cash exceptionally high in Q3 2024?

The significant jump in **total assets** in Q3 2024 was primarily driven by several key acquisitions. Notably, Quest Diagnostics acquired **LifeLabs Inc.** for approximately **USD $1 billion**, select assets of **Allina Health's outreach laboratory services business** for **$230 million**, and the laboratory business of three physician groups in New York for **$300 million**—along with other smaller acquisitions. These transactions significantly boosted the company's asset base, which was further enhanced by marked increases in **Goodwill and Intangible Assets, net**, as well as enhancements in **Property, Plant, and Equipment, net** and **Accounts Receivable, net**. This combination of strategic acquisitions and subsequent asset revaluation collectively contributed to the jump in total assets in Q3 2024.  **[0001022079-24-000190_dgx-20240930.htm:26]** **[0001022079-24-000190_dgx-20240930.htm:2]** 

What caused the significant jump in total assets in Q3 2024?

The surge in long-term debt in **Q3 2024** was primarily driven by a substantial debt issuance. Specifically, Quest Diagnostics issued **$1.85 billion** in senior notes with an average coupon of approximately **4.8%** in August 2024. This financing activity significantly increased the company's long-term debt, and it was part of broader financing efforts that provided net cash of **$1,254 million** over the nine months ended September 30, 2024.  **[DGX_3403177_5]** **[20241022NY35982:3]** 

Why did long-term debt surge in Q3 2024?

The spike in the current portion of long-term debt in Q1 2024 is explained by the fact that the **4.25% Senior Notes due April 2024** were reclassified from long-term debt to current debt as their maturity date approached, which increased the current portion substantially from **$303 million at the end of 2023** to **$906 million by the end of Q1 2024**.  **[0001022079-24-000096_dgx033120248-kex991.htm:3]** **[0001022079-24-000099_dgx-20240331.htm:2]** **[0001022079-24-000041_dgx-20231231.htm:144]** 

What explains the spike in the current portion of long-term debt in Q1 2024?

337ebb88d8d1a94f042b1940cf03dd1df6c0538fe54da4debfe419f712c1dadd

Net revenues (USD, millions)

Cost of services (USD, millions)

Selling, general and administrative (USD, millions)

Amortization of intangible assets (USD, millions)

Other operating expense, net (USD, millions)

Total operating costs and expenses, net (USD, millions)

Operating income (USD, millions)

Interest expense, net (USD, millions)

Other income (expense), net (USD, millions)

Total non-operating expense, net (USD, millions)

Income before income taxes and equity in earnings of equity method investees (USD, millions)

Income tax expense (USD, millions)

Equity in earnings of equity method investees, net of taxes (USD, millions)

Net income (USD, millions)

Less: Net income attributable to noncontrolling interests (USD, millions)

Net income attributable to Quest Diagnostics (USD, millions)

716c1036af53e032ffe43aedc363fad47b7c98c631f3797faa05183d920d5da2

e05dd2ed9e12787f61a8cd692aadcd22b6ad8480c4e9929ebc07cf853f2708fe

dccb96d9d83e73409e87d47cb374a4ec0e7e6713c76f95b679df2b23a14dece5

d9a7629a5d5bea7c34d1d0fcde44069c6972e3c72762860a22d8e23e2f41f3ec

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

- United States

- Foreign Operations

5e076738657f26193db4624721e2a1fee7a36faf08f8748288d6705a3820fb26

18ef6f3c68cc5d6973335c2844d56f7ea9c8f5f17ee2a79bcc8716311b1162dd

QUEST DIAGNOSTICS (DGX)

Financials