Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2024 | Jul. 15, 2024 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2024 | |
Document Transition Report | false | |
Entity File Number | 001-12215 | |
Entity Registrant Name | Quest Diagnostics Inc | |
Entity Central Index Key | 0001022079 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2024 | |
Document Fiscal Period Focus | Q2 | |
Amendment Flag | false | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 16-1387862 | |
Entity Address, Address Line One | 500 Plaza Drive | |
Entity Address, City or Town | Secaucus, | |
Entity Address, State or Province | NJ | |
Entity Address, Postal Zip Code | 07094 | |
City Area Code | (973) | |
Local Phone Number | 520-2700 | |
Title of 12(b) Security | Common Stock, $0.01 Par Value | |
Trading Symbol | DGX | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 111,317,208 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Income Statement [Abstract] | ||||
Net revenues | $ 2,397 | $ 2,338 | $ 4,763 | $ 4,669 |
Operating costs and expenses and other operating income: | ||||
Cost of services | 1,593 | 1,546 | 3,188 | 3,106 |
Selling, general and administrative | 416 | 416 | 856 | 855 |
Amortization of intangible assets | 29 | 28 | 58 | 54 |
Other operating expense, net | 4 | 0 | 6 | 1 |
Total operating costs and expenses, net | 2,042 | 1,990 | 4,108 | 4,016 |
Operating income | 355 | 348 | 655 | 653 |
Other income (expense): | ||||
Interest expense, net | (44) | (37) | (87) | (72) |
Other income, net | 3 | 6 | 12 | 13 |
Total non-operating expense, net | (41) | (31) | (75) | (59) |
Income before income taxes and equity in earnings of equity method investees | 314 | 317 | 580 | 594 |
Income tax expense | (74) | (75) | (140) | (140) |
Equity in earnings of equity method investees, net of taxes | 0 | 7 | 8 | 12 |
Net income | 240 | 249 | 448 | 466 |
Less: Net income attributable to noncontrolling interests | 11 | 14 | 25 | 29 |
Net income attributable to Quest Diagnostics | $ 229 | $ 235 | $ 423 | $ 437 |
Earnings per share attributable to Quest Diagnostics’ common stockholders: | ||||
Basic (in dollars per share) | $ 2.05 | $ 2.08 | $ 3.79 | $ 3.88 |
Diluted (in dollars per share) | $ 2.03 | $ 2.05 | $ 3.75 | $ 3.83 |
Weighted average common shares outstanding: | ||||
Basic (in Shares) | 111 | 112 | 111 | 112 |
Diluted (in Shares) | 112 | 114 | 112 | 114 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Statement of Comprehensive Income [Abstract] | ||||
Net income | $ 240 | $ 249 | $ 448 | $ 466 |
Other comprehensive income (loss): | ||||
Foreign currency translation adjustment | (3) | 2 | (5) | 5 |
Other comprehensive (loss) income | (3) | 2 | (5) | 5 |
Comprehensive income | 237 | 251 | 443 | 471 |
Less: Comprehensive income attributable to noncontrolling interests | 11 | 14 | 25 | 29 |
Comprehensive income attributable to Quest Diagnostics | $ 226 | $ 237 | $ 418 | $ 442 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions | Jun. 30, 2024 | Dec. 31, 2023 |
Assets | ||
Cash and cash equivalents | $ 271 | $ 686 |
Accounts receivable, net of allowance for credit losses of $27 as of both June 30, 2024 and December 31, 2023 | 1,319 | 1,210 |
Inventories | 182 | 190 |
Prepaid expenses and other current assets | 245 | 286 |
Total current assets | 2,017 | 2,372 |
Property, plant and equipment, net | 1,832 | 1,816 |
Operating lease right-of-use assets | 603 | 602 |
Goodwill | 7,885 | 7,733 |
Intangible assets, net | 1,202 | 1,166 |
Investments in equity method investees | 126 | 135 |
Other assets | 216 | 198 |
Total assets | 13,881 | 14,022 |
Current liabilities: | ||
Accounts payable and accrued expenses | 1,247 | 1,359 |
Current portion of long-term debt | 606 | 303 |
Current portion of long-term operating lease liabilities | 159 | 153 |
Total current liabilities | 2,012 | 1,815 |
Long-term debt | 3,816 | 4,410 |
Long-term operating lease liabilities | 507 | 503 |
Other liabilities | 811 | 876 |
Commitments and contingencies | ||
Redeemable noncontrolling interest | 79 | 76 |
Quest Diagnostics stockholders’ equity: | ||
Common stock, par value $0.01 per share; 600 shares authorized as of both June 30, 2024 and December 31, 2023; 162 shares issued as of both June 30, 2024 and December 31, 2023 | 2 | 2 |
Additional paid-in capital | 2,314 | 2,320 |
Retained earnings | 9,080 | 8,825 |
Accumulated other comprehensive loss | (19) | (14) |
Treasury stock, at cost; 51 shares as of both June 30, 2024 and December 31, 2023 | (4,760) | (4,826) |
Total Quest Diagnostics stockholders’ equity | 6,617 | 6,307 |
Noncontrolling interests | 39 | 35 |
Total stockholders’ equity | 6,656 | 6,342 |
Total liabilities and stockholders’ equity | $ 13,881 | $ 14,022 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Millions, $ in Millions | Jun. 30, 2024 | Dec. 31, 2023 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 27 | $ 27 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 600 | 600 |
Common stock, shares issued (in shares) | 162 | 162 |
Treasury stock (in shares) | 51 | 51 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions | 6 Months Ended | |
Jun. 30, 2024 | Jun. 30, 2023 | |
Cash flows from operating activities: | ||
Net income | $ 448 | $ 466 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 233 | 219 |
Provision (credit) for credit losses | 3 | (1) |
Deferred income tax benefit | (36) | (16) |
Stock-based compensation expense | 42 | 40 |
Other, net | 16 | 1 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (113) | (38) |
Accounts payable and accrued expenses | (111) | (156) |
Income taxes payable | 20 | 5 |
Other assets and liabilities, net | 12 | 18 |
Net cash provided by operating activities | 514 | 538 |
Cash flows from investing activities: | ||
Business acquisitions, net of cash acquired | (248) | (609) |
Capital expenditures | (196) | (231) |
Other investing activities, net | 31 | 0 |
Net cash used in investing activities | (413) | (840) |
Cash flows from financing activities: | ||
Proceeds from borrowings | 0 | 1,147 |
Repayments of debt | (301) | (828) |
Exercise of stock options | 28 | 47 |
Employee payroll tax withholdings on stock issued under stock-based compensation plans | (23) | (28) |
Dividends paid | (163) | (154) |
Distributions to noncontrolling interest partners | (18) | (28) |
Other financing activities, net | (39) | (43) |
Net cash (used in) provided by financing activities | (516) | 113 |
Net change in cash and cash equivalents and restricted cash | (415) | (189) |
Cash and cash equivalents and restricted cash, beginning of period | 686 | 315 |
Cash and cash equivalents and restricted cash, end of period | $ 271 | $ 126 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Millions, $ in Millions | Total | Common Stock | Additional Paid-In Capital | Retained Earnings | Accumulated Other Compre- hensive Loss | Treasury Stock, at Cost | Non- controlling Interests |
Balance, shares at Dec. 31, 2022 | 111 | ||||||
Balance, value at Dec. 31, 2022 | $ 5,930 | $ 2 | $ 2,295 | $ 8,290 | $ (21) | $ (4,673) | $ 37 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 463 | 437 | 26 | ||||
Other comprehensive income (loss), net of taxes | 5 | 5 | |||||
Dividends declared | (161) | (161) | |||||
Distributions to noncontrolling interest partners | (25) | (25) | |||||
Issuance of common stock under benefit plans, shares | 1 | ||||||
Issuance of common stock under benefit plans | 15 | (41) | 56 | ||||
Stock-based compensation expense | 40 | 40 | |||||
Exercise of stock options | 48 | 48 | |||||
Shares to cover employee payroll tax withholdings on stock issued under stock-based compensation plans | (28) | (10) | (18) | ||||
Balance, shares at Jun. 30, 2023 | 112 | ||||||
Balance, value at Jun. 30, 2023 | 6,287 | $ 2 | 2,284 | 8,566 | (16) | (4,587) | 38 |
Balance, shares at Mar. 31, 2023 | 112 | ||||||
Balance, value at Mar. 31, 2023 | 6,088 | $ 2 | 2,266 | 8,412 | (18) | (4,612) | 38 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 247 | 235 | 12 | ||||
Other comprehensive income (loss), net of taxes | 2 | 2 | |||||
Dividends declared | (81) | (81) | |||||
Distributions to noncontrolling interest partners | (12) | (12) | |||||
Issuance of common stock under benefit plans | 9 | 1 | 8 | ||||
Stock-based compensation expense | 16 | 16 | |||||
Exercise of stock options | 18 | 1 | 17 | ||||
Balance, shares at Jun. 30, 2023 | 112 | ||||||
Balance, value at Jun. 30, 2023 | 6,287 | $ 2 | 2,284 | 8,566 | (16) | (4,587) | 38 |
Balance, shares at Dec. 31, 2023 | 111 | ||||||
Balance, value at Dec. 31, 2023 | 6,342 | $ 2 | 2,320 | 8,825 | (14) | (4,826) | 35 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 445 | 423 | 22 | ||||
Other comprehensive income (loss), net of taxes | (5) | (5) | |||||
Dividends declared | (168) | (168) | |||||
Distributions to noncontrolling interest partners | (18) | (18) | |||||
Issuance of common stock under benefit plans | 13 | (41) | 54 | ||||
Stock-based compensation expense | 42 | 42 | |||||
Exercise of stock options | 28 | (1) | 29 | ||||
Shares to cover employee payroll tax withholdings on stock issued under stock-based compensation plans | (23) | (6) | (17) | ||||
Balance, shares at Jun. 30, 2024 | 111 | ||||||
Balance, value at Jun. 30, 2024 | 6,656 | $ 2 | 2,314 | 9,080 | (19) | (4,760) | 39 |
Balance, shares at Mar. 31, 2024 | 111 | ||||||
Balance, value at Mar. 31, 2024 | 6,469 | $ 2 | 2,292 | 8,935 | (16) | (4,781) | 37 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Net income | 238 | 229 | 9 | ||||
Other comprehensive income (loss), net of taxes | (3) | (3) | |||||
Dividends declared | (84) | (84) | |||||
Distributions to noncontrolling interest partners | (7) | (7) | |||||
Issuance of common stock under benefit plans | 7 | 1 | 6 | ||||
Stock-based compensation expense | 20 | 20 | |||||
Exercise of stock options | 16 | 1 | 15 | ||||
Balance, shares at Jun. 30, 2024 | 111 | ||||||
Balance, value at Jun. 30, 2024 | $ 6,656 | $ 2 | $ 2,314 | $ 9,080 | $ (19) | $ (4,760) | $ 39 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 6 Months Ended |
Jun. 30, 2024 | |
Description of Business (Abstract) | |
DESCRIPTION OF BUSINESS | DESCRIPTION OF BUSINESS Background |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 2024 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The interim unaudited consolidated financial statements reflect all adjustments which in the opinion of management are necessary for a fair statement of results of operations, comprehensive income, financial condition, cash flows and stockholders' equity for the periods presented. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s 2023 Annual Report on Form 10-K. The year-end balance sheet data was derived from the audited consolidated financial statements as of December 31, 2023 but does not include all the disclosures required by accounting principles generally accepted in the United States (“GAAP”). The accounting policies of the Company are the same as those set forth in Note 2 to the audited consolidated financial statements contained in the Company’s 2023 Annual Report on Form 10-K. Use of Estimates The preparation of financial statements in conformity with GAAP 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 reporting period. Actual results could differ from those estimates. Earnings Per Share The Company's unvested restricted stock units that contain non-forfeitable rights to dividends are participating securities and, therefore, are included in the earnings allocation in computing earnings per share using the two-class method. Basic earnings per common share is calculated by dividing net income attributable to Quest Diagnostics, adjusted for earnings allocated to participating securities, by the weighted average number of common shares outstanding. Diluted earnings per common share is calculated by dividing net income attributable to Quest Diagnostics, adjusted for earnings allocated to participating securities, by the weighted average number of common shares outstanding after giving effect to all potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include the dilutive effect of outstanding stock options and performance share units granted under the Company's Amended and Restated Employee Long-Term Incentive Plan (“ELTIP”) and its Amended and Restated Non-Employee Director Long-Term Incentive Plan (“DLTIP”), as well as the dilutive effect of accelerated share repurchase agreements ("ASRs"), if applicable. Earnings allocable to participating securities include the portion of dividends declared as well as the portion of undistributed earnings during the period allocable to participating securities. New Accounting Standards to be Adopted In November 2023, the Financial Accounting Standards Board ("FASB") issued a new accounting standard which will require companies to disclose significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"). The pronouncement is effective for annual filings for the year ended December 31, 2024 and for interim periods within the year ended December 31, 2025. The Company does not expect the adoption of this standard to have a material impact on its results of operations, financial position or cash flows. In December 2023, the FASB issued a new accounting standard which will require companies to make additional income tax disclosures. The pronouncement is effective for annual filings for the year ended December 31, 2025. The Company does not expect the adoption of this standard to have a material impact on its results of operations, financial position or cash flows. In March 2024, the Securities and Exchange Commission issued a rule which will require companies to make certain climate-related disclosures in periodic filings. The rule includes certain disclosures in the footnotes of the financial statements: • capitalized costs, expenditures expensed, and losses incurred as a result of severe weather events and other natural conditions, such as hurricanes, tornadoes, flooding, drought, wildfires, extreme temperatures, and sea level rise; • capitalized costs, expenditures expensed, and losses related to carbon offsets and renewable energy credits or certificates if they are used as a material component of a registrant’s plans to achieve its disclosed climate-related targets or goals; and • whether estimates and assumptions used to produce the financial statements were materially impacted by risks and uncertainties associated with severe weather events and other natural conditions or any disclosed climate-related targets or transition plans. The footnote disclosures are effective for annual filings for the year ended December 31, 2025. The Company is currently evaluating the impact of the adoption of the rule. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2024 | |
Earnings Per Share [Abstract] | |
EARNINGS (LOSS) PER SHARE | EARNINGS PER SHARE The computation of basic and diluted earnings per common share was as follows (in millions, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Amounts attributable to Quest Diagnostics’ common stockholders: Net income attributable to Quest Diagnostics $ 229 $ 235 $ 423 $ 437 Less: Earnings allocated to participating securities 1 1 2 2 Earnings available to Quest Diagnostics’ common stockholders – basic and diluted $ 228 $ 234 $ 421 $ 435 Weighted average common shares outstanding – basic 111 112 111 112 Effect of dilutive securities: Stock options and performance share units 1 2 1 2 Weighted average common shares outstanding – diluted 112 114 112 114 Earnings per share attributable to Quest Diagnostics’ common stockholders: Basic $ 2.05 $ 2.08 $ 3.79 $ 3.88 Diluted $ 2.03 $ 2.05 $ 3.75 $ 3.83 The following securities were not included in the calculation of diluted earnings per share due to their antidilutive effect: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Stock options and performance share units 1 — 1 — |
RESTRUCTURING ACTIVITIES AND IM
RESTRUCTURING ACTIVITIES AND IMPAIRMENT CHARGES | 6 Months Ended |
Jun. 30, 2024 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING ACTIVITIES AND IMPAIRMENT CHARGES | RESTRUCTURING ACTIVITIES AND IMPAIRMENT CHARGES Invigorate Program The Company is engaged in a multi-year program called Invigorate, which includes structured plans to drive savings and improve productivity across the value chain, including in such areas as patient services, logistics and laboratory operations, revenue services, information technology and procurement. The Invigorate program aims to deliver 3% annual cost savings and productivity improvements to partially offset pressures from the current inflationary environment, including labor and benefit cost increases and reimbursement pressures. The Company is leveraging automation and artificial intelligence to improve productivity and also improve quality across the entire value chain, not just in the laboratory. Other areas of focus include reducing denials and patient concessions, enhancing the digital experience, and selecting and retaining talent. Restructuring and Impairment Charges The following table provides a summary of the Company's pre-tax restructuring and impairment charges for the three and six months ended June 30, 2024 and 2023: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Employee separation costs $ 8 $ 1 $ 14 $ 16 Asset impairment charges $ — $ 5 $ — $ 5 Total restructuring and impairment charges $ 8 $ 6 $ 14 $ 21 The restructuring and impairment charges incurred for the three and six months ended June 30, 2024 were associated with various workforce reduction initiatives as the Company continued to restructure its organization. Of the total restructuring and impairment charges incurred during the three months ended June 30, 2024, $4 million, and $4 million were recorded in cost of services and selling, general and administrative expenses, respectively. Of the total restructuring and impairment charges incurred during the six months ended June 30, 2024, $8 million and $6 million were recorded in cost of services and selling, general and administrative expenses, respectively. The restructuring and impairment charges incurred for the three and six months ended June 30, 2023 were primarily associated with various workforce reduction initiatives as the Company continued to restructure its organization. Additionally, during the three months ended June 30, 2023, the Company recorded an impairment charge for a corporate facility that was held for sale. All of the restructuring and impairment charges incurred during the three months ended June 30, 2023 were recorded in selling, general and administrative expenses. Of the total restructuring and impairment charges incurred during the six months ended June 30, 2023, $9 million and $12 million were recorded in cost of services and selling, general and administrative expenses, respectively. Charges for all periods presented were primarily recorded in the Company's DIS business. The restructuring liability as of June 30, 2024 and December 31, 2023, which is included in accounts payable and accrued expenses, was $16 million and $12 million, respectively. |
BUSINESS ACQUISITIONS
BUSINESS ACQUISITIONS | 6 Months Ended |
Jun. 30, 2024 | |
Business Combinations [Abstract] | |
BUSINESS ACQUISITIONS | BUSINESS ACQUISITIONS During the six months ended June 30, 2024, the Company completed acquisitions for an aggregate purchase price of $248 million (including contingent consideration initially estimated at $6 million), net of cash acquired, including the acquisitions discussed below. Of such amount, $30 million was prepaid during the twelve months ended December 31, 2023. In the Company's consolidated statement of cash flows for the six months ended June 30, 2024, such $30 million is included in business acquisitions, net of cash acquired, with a corresponding offset in other investing activities. The acquisitions preliminarily resulted in goodwill of $154 million, all of which is deductible for tax purposes. The acquisitions also preliminarily resulted in $95 million of customer-related intangible assets. Acquisition of select assets of Lenco Diagnostic Laboratories, Inc. ("Lenco") On February 12, 2024, the Company acquired select assets of Lenco, an independent clinical diagnostic laboratory provider serving physicians in New York, in an all-cash transaction for $111 million. Based on the preliminary purchase price allocation, which may be revised as additional information becomes available during the measurement period, the assets acquired and liabilities assumed primarily consist of $75 million of tax-deductible goodwill, $43 million of customer-related intangible assets and $7 million of operating lease liabilities. The intangible assets are being amortized over a useful life of 15 years. Acquisition of select assets of PathAI Diagnostics On June 10, 2024, the Company acquired select assets of PathAI Diagnostics, a business that provides anatomic and digital pathology laboratory services, in an all-cash transaction for $100 million. Based on the preliminary purchase price allocation, which may be revised as additional information becomes available during the measurement period, the assets acquired and liabilities assumed primarily consist of $55 million of tax-deductible goodwill, $39 million of customer-related intangible assets, $17 million of finance lease assets (recorded in property, plant and equipment, net on the Company's consolidated balance sheet), $17 million of related finance lease liabilities (recorded in long-term debt on the Company's consolidated balance sheet), $17 million of operating lease assets, $17 million of operating lease liabilities, $4 million of additional property, plant and equipment, and $2 million of inventories. The intangible assets are being amortized over a useful life of 15 years. The acquisitions were accounted for under the acquisition method of accounting. As such, the assets acquired and liabilities assumed were recorded based on their estimated fair values as of the closing dates. Supplemental pro forma combined financial information has not been presented as the impact of the acquisitions is not material to the Company's consolidated financial statements. The goodwill recorded primarily includes the expected synergies resulting from combining the operations of the acquired entity with those of the Company and the value associated with an assembled workforce and other intangible assets that do not qualify for separate recognition. All of the goodwill acquired in connection with the acquisitions has been allocated to the Company's DIS business. For further details regarding business segment information, see Note 12. During June 2024, the Company entered into a definitive agreement to acquire select assets of the laboratory services business of Allina Health, which serves providers and patients in Minnesota and Wisconsin. The transaction, which is expected to close during the three months ended September 30, 2024, remains subject to customary closing conditions. Additionally, during June 2024, the Company entered into a definitive agreement to acquire select assets of the laboratory services business of OhioHealth, which serves providers and patients in Ohio. The transaction, which is expected to close during the three months ended September 30, 2024, remains subject to customary closing conditions. For details regarding the Company's 2023 acquisitions, see Note 6 to the audited consolidated financial statements in the Company's 2023 Annual Report on Form 10-K. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2024 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Assets and Liabilities Measured at Fair Value on a Recurring Basis The following table provides a summary of the recognized assets and liabilities that are measured at fair value on a recurring basis: Basis of Fair Value Measurements Quoted Prices in Active Markets for Identical Assets/Liabilities Significant Other Observable Inputs Significant Unobservable Inputs June 30, 2024 Total Level 1 Level 2 Level 3 Assets: Deferred compensation trading securities $ 75 $ 75 $ — $ — Cash surrender value of life insurance policies 61 — 61 — Total $ 136 $ 75 $ 61 $ — Liabilities: Deferred compensation liabilities $ 141 $ — $ 141 $ — Contingent consideration 110 — — 110 Total $ 251 $ — $ 141 $ 110 Redeemable noncontrolling interest $ 79 $ — $ — $ 79 Basis of Fair Value Measurements December 31, 2023 Total Level 1 Level 2 Level 3 Assets: Deferred compensation trading securities $ 70 $ 70 $ — $ — Cash surrender value of life insurance policies 55 — 55 — Available-for-sale debt securities 2 — — 2 Total $ 127 $ 70 $ 55 $ 2 Liabilities: Deferred compensation liabilities $ 131 $ — $ 131 $ — Contingent consideration 104 — — 104 Total $ 235 $ — $ 131 $ 104 Redeemable noncontrolling interest $ 76 $ — $ — $ 76 A detailed description regarding the Company's fair value measurements is contained in Note 8 to the audited consolidated financial statements in the Company's 2023 Annual Report on Form 10-K. The Company offers certain employees the opportunity to participate in a non-qualified supplemental deferred compensation plan. A participant's deferrals, together with Company matching credits, are invested in a variety of participant-directed stock and bond mutual funds that are classified as trading securities. The trading securities are classified within Level 1 of the fair value hierarchy because the changes in the fair value of these securities are measured using quoted prices in active markets based on the market price per unit multiplied by the number of units held, exclusive of any transaction costs. A corresponding adjustment for changes in fair value of the trading securities is also reflected in the changes in fair value of the deferred compensation obligation. The deferred compensation liabilities are classified within Level 2 of the fair value hierarchy because their inputs are derived principally from observable market data by correlation to the trading securities. The Company offers certain employees the opportunity to participate in a non-qualified deferred compensation program. A participant's deferrals, together with Company matching credits, are “invested” at the direction of the employee in a hypothetical portfolio of investments which are tracked by an administrator. The Company purchases life insurance policies, with the Company named as beneficiary of the policies, for the purpose of funding the program's liability. Changes in the cash surrender value of the life insurance policies are based upon earnings and changes in the value of the underlying investments. Changes in the fair value of the deferred compensation obligation are derived using quoted prices in active markets based on the market price per unit multiplied by the number of units. The cash surrender value and the deferred compensation obligation are classified within Level 2 of the fair value hierarchy because their inputs are derived principally from observable market data by correlation to the hypothetical investments. Deferrals under the plan currently may only be made by participants who made deferrals under the plan in 2017. The Company's available-for-sale debt securities are measured at fair value using discounted cash flows. These fair value measurements are classified within Level 3 of the fair value hierarchy as the fair value is based on significant inputs that are not observable. Significant inputs include cash flows projections and a discount rate. During June 2023, the Company acquired Haystack Oncology, Inc. ("Haystack"), an early-stage oncology company focused on minimal residual disease testing to aid in the detection of residual or recurring cancer and better inform therapy decisions. In connection with the acquisition there is a contingent consideration obligation under which the seller can receive up to $100 million of additional consideration dependent upon the achievement of certain revenue benchmarks through 2028 and up to an additional $50 million of consideration dependent upon the Company receiving reimbursement coverage from the Centers for Medicare and Medicaid Services ("CMS"). The portion of the contingent consideration obligation which is dependent upon the achievement of certain revenue benchmarks was measured at fair value using a Monte Carlo method and is classified within Level 3 of the fair value hierarchy as the fair value is determined based on significant inputs that are not observable. Significant inputs include management’s estimate of revenue and other market inputs, including comparable company revenue volatility (40%) and a discount rate (10.5%). The portion of the contingent consideration obligation which is dependent upon the Company receiving reimbursement coverage from the CMS is also classified within Level 3 of the fair value hierarchy as the fair value is principally determined based on management's estimate, which is a significant input that is not observable. Additionally, the fair value of the entire contingent consideration obligation is also impacted by a market discount rate (5%) which adjusts the estimated payments to present value. The fair value of the contingent consideration obligation is not overly sensitive to movements in the comparable company revenue volatility or the discount rate used for the portion of the obligation that is dependent upon the achievement of certain revenue benchmarks. For example, changing the comparable company revenue volatility from 40% to 30% impacts the fair value by $8 million (assuming no other inputs are modified) and changing the discount rate from 10.5% to 7.0% impacts the fair value by $5 million (assuming no other inputs are modified). The Company has additional contingent consideration obligations in connection with other acquisitions. The liabilities related to such obligations are included in the amounts below. The following table provides a reconciliation of the beginning and ending balances of liabilities using significant unobservable inputs (Level 3): Contingent Consideration Balance, December 31, 2023 $ 104 Purchases, additions and issuances 6 Settlements (6) Total fair value adjustments included in earnings - realized/unrealized 6 Balance, June 30, 2024 $ 110 The $6 million net loss included in earnings associated with the change in the fair value of contingent consideration for the six months ended June 30, 2024 is reported in other operating expense, net. Of the aggregate $110 million contingent consideration obligation as of June 30, 2024, $82 million and $28 million were included in other liabilities and accounts payable and accrued expenses, respectively, in the Company's consolidated balance sheet. Of the aggregate $104 million contingent consideration obligation as of December 31, 2023, $99 million and $5 million were included in other liabilities and accounts payable and accrued expenses, respectively, in the Company's consolidated balance sheet. In connection with the sale of an 18.9% noncontrolling interest in a subsidiary to UMass Memorial Medical Center ("UMass") on July 1, 2015, the Company granted UMass the right to require the Company to purchase all of its interest in the subsidiary at fair value commencing July 1, 2020. As of June 30, 2024, the redeemable noncontrolling interest was presented at its fair value. The fair value measurement of the redeemable noncontrolling interest is classified within Level 3 of the fair value hierarchy because the fair value is based on a discounted cash flow analysis that takes into account, among other items, the joint venture's expected future cash flows, long term growth rates, and a discount rate commensurate with economic risk. The carrying amounts of cash and cash equivalents, accounts receivable, and accounts payable and accrued expenses approximate fair value based on the short maturities of these instruments. As of June 30, 2024 and December 31, 2023, the fair value of the Company’s debt was estimated at $4.3 billion and $4.6 billion, respectively. Principally all of the Company's debt is classified within Level 1 of the fair value hierarchy because the fair value of the debt is estimated based on rates currently offered to the Company with identical terms and maturities, using quoted active market prices and yields, taking into account the underlying terms of the debt instruments. |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2024 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT During the three months ended June 30, 2024, the Company repaid in full the outstanding indebtedness under the Company's $300 million of 4.25% senior notes which matured on April 1, 2024. The Company has $600 million of 3.50% senior notes due March 2025. The senior notes are included in current portion of long-term debt in the Company's June 30, 2024 consolidated balance sheet. Such notes were included in long-term debt in the Company's December 31, 2023 consolidated balance sheet. For further details, see Note 14 to the audited consolidated financial statements in the Company's 2023 Annual Report on Form 10-K. |
FINANCIAL INSTRUMENTS
FINANCIAL INSTRUMENTS | 6 Months Ended |
Jun. 30, 2024 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
FINANCIAL INSTRUMENTS | FINANCIAL INSTRUMENTS The Company uses derivative financial instruments, from time to time, to manage its exposure to market risks for changes in interest rates and foreign currencies. This strategy includes the use of interest rate swap agreements, forward-starting interest rate swap agreements, interest rate lock agreements and foreign currency forward contracts to manage its exposure to movements in interest and currency rates. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. These policies prohibit holding or issuing derivative financial instruments for speculative purposes. The Company does not enter into derivative financial instruments that contain credit-risk-related contingent features or requirements to post collateral. Interest Rate Risk The Company is exposed to interest rate risk on its cash and cash equivalents and its debt obligations. Interest income earned on cash and cash equivalents may fluctuate as interest rates change; however, due to their relatively short maturities, the Company does not hedge these assets or their investment cash flows and the impact of interest rate risk is not material. The Company's debt obligations consist of fixed-rate and, from time to time, variable-rate debt instruments. The Company's primary objective is to achieve the lowest overall cost of funding while managing the variability in cash outflows within an acceptable range. In order to achieve this objective, the Company has historically entered into interest rate swap agreements. Interest rate swaps involve the periodic exchange of payments without the exchange of underlying principal or notional amounts. Net settlements between the counterparties are recognized as an adjustment to interest expense, net. Interest Rate Derivatives – Cash Flow Hedges From time to time, the Company has entered into various interest rate lock agreements and forward-starting interest rate swap agreements to hedge part of the Company's interest rate exposure associated with the variability in future cash flows attributable to changes in interest rates. Interest Rate Derivatives – Fair Value Hedges Historically, the Company has entered into various fixed-to-variable interest rate swap agreements in order to convert a portion of the Company's long-term debt into variable interest rate debt. All such fixed-to-variable interest rate swap agreements have been terminated and proceeds from the terminations have been reflected as basis adjustments to the hedged debt instruments and are being amortized as a reduction of interest expense, net over the remaining terms of such debt instruments. As of June 30, 2024 and December 31, 2023, the following amounts were recorded on the consolidated balance sheets related to cumulative basis adjustments for fair value hedges included in the carrying amount of long-term debt: Hedge Accounting Basis Adjustment (a) Balance Sheet Classification June 30, 2024 December 31, 2023 Long-term debt $ 8 $ 13 (a) As of both June 30, 2024 and December 31, 2023, the entire balance is associated with remaining unamortized hedging adjustments on discontinued relationships. |
STOCKHOLDERS_ EQUITY AND REDEEM
STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST | 6 Months Ended |
Jun. 30, 2024 | |
Equity, Attributable to Parent [Abstract] | |
STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST | STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST Stockholders' Equity Changes in Accumulated Other Comprehensive Loss by Component Comprehensive income (loss) includes: • Foreign currency translation adjustments; • Net deferred gains (losses) on cash flow hedges, which represent deferred gains (losses), net of tax, on interest rate-related derivative financial instruments designated as cash flow hedges, net of amounts reclassified to interest expense (see Note 8); and • Net changes in available-for-sale debt securities, which represent unrealized holding gains (losses), net of tax, on available-for-sale debt securities. For the three and six months ended June 30, 2024 and 2023, the tax effects related to the deferred gains (losses) on cash flow hedges and net changes in available-for-sale debt securities were not material. Foreign currency translation adjustments related to indefinite investments in non-U.S. subsidiaries are not adjusted for income taxes. Dividend Program During each of the first and second quarters of 2024, the Company's Board of Directors declared a quarterly cash dividend of $0.75 per common share. During each of the four quarters of 2023, the Company's Board of Directors declared a quarterly cash dividend of $0.71 per common share. Share Repurchase Program As of June 30, 2024, $1.0 billion remained available under the Company’s share repurchase authorization. The share repurchase authorization has no set expiration or termination date. Share Repurchases For both the six months ended June 30, 2024 and 2023, the Company repurchased no shares of its common stock. Shares Reissued from Treasury Stock For the six months ended June 30, 2024 and 2023, the Company reissued 0.7 million shares and 0.9 million shares, respectively, from treasury stock under its Employee Stock Purchase Plan and its stock-based compensation program. For details regarding the Company's stock ownership and compensation plans, see Note 18 to the audited consolidated financial statements in the Company's 2023 Annual Report on Form 10-K. Redeemable Noncontrolling Interest In connection with the sale of an 18.9% noncontrolling interest in a subsidiary to UMass on July 1, 2015, the Company granted UMass the right to require the Company to purchase all of its interest in the subsidiary at fair value commencing July 1, 2020. The subsidiary performs diagnostic information services in a defined territory within the state of Massachusetts. Since the redemption of the noncontrolling interest is outside of the Company's control, it has been presented outside of stockholders' equity at the greater of its carrying amount or its fair value. As of June 30, 2024 and December 31, 2023, the redeemable noncontrolling interest was presented at its fair value. For further details regarding the fair value of the redeemable noncontrolling interest, see Note 6. |
SUPPLEMENTAL CASH FLOW & OTHER
SUPPLEMENTAL CASH FLOW & OTHER DATA | 6 Months Ended |
Jun. 30, 2024 | |
Supplemental Cash Flow Elements [Abstract] | |
SUPPLEMENTAL CASH FLOW & OTHER DATA | SUPPLEMENTAL CASH FLOW AND OTHER DATA Supplemental cash flow and other data for the three and six months ended June 30, 2024 and 2023 was as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Depreciation expense $ 88 $ 84 $ 175 $ 165 Amortization expense 29 28 58 54 Depreciation and amortization expense $ 117 $ 112 $ 233 $ 219 Interest expense $ (47) $ (39) $ (96) $ (76) Interest income 3 2 9 4 Interest expense, net $ (44) $ (37) $ (87) $ (72) Interest paid $ 61 $ 48 $ 105 $ 80 Income taxes paid $ 115 $ 101 $ 118 $ 134 Accounts payable associated with capital expenditures $ 31 $ 29 $ 31 $ 29 Dividends payable $ 84 $ 81 $ 84 $ 81 Businesses acquired: Fair value of assets acquired $ 134 $ 703 $ 289 $ 734 Fair value of liabilities assumed 34 36 41 36 Fair value of net assets acquired 100 667 248 698 Merger consideration payable 6 (88) — (88) Cash paid for business acquisitions 106 579 248 610 Less: Cash acquired — 1 — 1 Business acquisitions, net of cash acquired $ 106 $ 578 $ 248 $ 609 Leases: Leased assets obtained in exchange for new operating lease liabilities $ 52 $ 57 $ 87 $ 101 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Letters of Credit The Company can issue letters of credit under its $525 million secured receivables credit facility and its $750 million senior unsecured revolving credit facility. For further discussion regarding the facilities, see Note 14 to the audited consolidated financial statements in the Company's 2023 Annual Report on Form 10-K. In support of its risk management program, $73 million in letters of credit under the $525 million secured receivables credit facility were outstanding as of June 30, 2024, providing collateral for current and future automobile liability and workers’ compensation loss payments. Contingent Lease Obligations The Company remains subject to contingent obligations under certain real estate leases for which no liability has been recorded. For further details, see Note 19 to the audited consolidated financial statements in the Company’s 2023 Annual Report on Form 10-K. Certain Legal Matters The Company may incur losses associated with these proceedings and investigations, but it is not possible to estimate the amount of loss or range of loss, if any, that might result from adverse judgments, settlements, fines, penalties, or other resolution of these proceedings and investigations based on the stage of these proceedings and investigations, the absence of specific allegations as to alleged damages, the uncertainty as to the certification of a class or classes and the size of any certified class, if applicable, and/or the lack of resolution of significant factual and legal issues. The Company has insurance coverage rights in place (limited in amount; subject to deductible) for certain potential costs and liabilities related to these proceedings and investigations. In 2020, two putative class action lawsuits were filed in the U.S. District Court for New Jersey against the Company and other defendants with respect to the Company’s 401(k) plan. The complaint alleges, among other things, that the fiduciaries of the 401(k) plan breached their duties by failing to disclose the expenses and risks of plan investment options, allowing unreasonable administration expenses to be charged to plan participants, and selecting and retaining high cost and poor performing investments. In October 2020, the court consolidated the two lawsuits under the caption In re: Quest Diagnostics ERISA Litigation and plaintiffs filed a consolidated amended complaint. In May 2021, the court denied the Company's motion to dismiss the complaint. Discovery has been completed. Plaintiffs' motion for class certification and the Company's motion for summary judgment are pending. On June 3, 2019, the Company reported that Retrieval-Masters Creditors Bureau, Inc./American Medical Collection Agency (“AMCA”) had informed the Company and Optum360 LLC that an unauthorized user had access to AMCA’s system between August 1, 2018 and March 30, 2019 (the “AMCA Data Security Incident”). Optum360 provides revenue management services to the Company, and AMCA provided debt collection services to Optum360. AMCA first informed the Company of the AMCA Data Security Incident on May 14, 2019. AMCA’s affected system included financial information (e.g., credit card numbers and bank account information), medical information and other personal information (e.g., social security numbers). Test results were not included. Neither Optum360’s nor the Company’s systems or databases were involved in the incident. AMCA also informed the Company that information pertaining to other laboratories’ customers was also affected. Following announcement of the AMCA Data Security Incident, AMCA sought protection under the U.S. bankruptcy laws. The bankruptcy proceeding has been dismissed. Numerous putative class action lawsuits were filed against the Company related to the AMCA Data Security Incident. The U.S. Judicial Panel on Multidistrict Litigation transferred the cases that were then still pending to, and consolidated them for pre-trial proceedings in, the U.S. District Court for New Jersey. In November 2019, the plaintiffs in the multidistrict proceeding filed a consolidated putative class action complaint against the Company and Optum360 that named additional individuals as plaintiffs and that asserted a variety of common law and statutory claims in connection with the AMCA Data Security Incident. In January 2020, the Company moved to dismiss the consolidated complaint; the motion to dismiss was granted in part and denied in part. Plaintiffs filed an amended complaint, which the Company also moved to dismiss. The motion was granted in part and denied in part. Discovery is proceeding. In addition, a group of state attorney general offices are investigating the Company in connection with the AMCA Data Security Incident. The Company is cooperating with the investigation. ReproSource Fertility Diagnostics, Inc. (“ReproSource”), a subsidiary of the Company, is subject to two putative class action lawsuits related to a data security incident that occurred in August 2021 in which plaintiffs allege that an unauthorized party accessed or acquired protected health information and personally identifiable information of ReproSource patients. Bickham v. ReproSource Fertility Diagnostics, Inc. is pending in the U.S. District Court for the District of Massachusetts (the "Massachusetts District Court"), and Trouville v. ReproSource Fertility Diagnostics, Inc. , which was originally filed in the U.S. District Court for the Eastern District of California, has now been transferred to the Massachusetts District Court. A third case filed in the Massachusetts District Court, Gordon v. ReproSource Fertility Diagnostics, Inc. , was consolidated into the Bickham case. The Bickham and Trouville complaints seek to represent a class of all individuals potentially impacted by the August 2021 data security incident, and generally allege that ReproSource, among other claims, failed to adequately safeguard patients’ private information. On January 10, 2024, ReproSource agreed to settle the Bickham case on a class-wide basis. The settlement is pending approval by the District Court. If approved, ReproSource will receive a full release for all claims that the settlement class might possess arising out of the August 2021 data security incident. The Company’s motion to stay the Trouville case was granted. The Company is subject to a putative class action entitled Cole, et al. v Quest Diagnostics Incorporated , which was filed in the U. S. District Court for the Eastern District of California, for allegedly conspiring with Facebook to track customers’ internet communications on Company web platforms without authorization, in violation of the California Invasion of Privacy Act and the California Confidentiality of Medical Information Act . The complaint alleged that the Company’s actions were an invasion of privacy and contributed to a loss of value in plaintiffs’ personally identifiable information. The Company moved to dismiss the case or, in the alternative, transfer venue to the U.S. District Court for New Jersey. Subsequently, plaintiffs filed an amended complaint, which the Company also moved to dismiss. The Company's motion to transfer the case was granted. The Company refiled its motion to dismiss with the New Jersey District Court, which was granted in part and denied in part. As previously disclosed, in August 2011, the Company had received a subpoena from the U.S. Attorney for the Northern District of Georgia seeking various business records, including records related to the Company's compliance program, certain marketing materials, certain product offerings, and certain test ordering and other policies. The Company cooperated with the request. In 2021, a third amended complaint in a qui tam action filed in the U.S. District Court for the Northern District of Georgia was unsealed, which is related to the matter underlying the August 2011 subpoena. Both the U.S. Department of Justice and the State of Georgia declined to intervene in the action. The Company moved to dismiss the complaint and the complaint was dismissed without prejudice in August 2022. The relator subsequently filed a fourth amended complaint. The Company has moved to dismiss the fourth amended complaint. The Company also received subpoenas from the U.S. Attorney for the District of New Jersey. The subpoenas seek various records relating to the Company’s relationship with the New York Giants and adherence to certain company policies and federal laws. The Company is cooperating with the investigation. Other Legal Matters In the normal course of business, the Company has been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with the Company's activities as a provider of diagnostic testing, information and services. These actions could involve claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages, and could have an adverse impact on the Company's client base and reputation. The Company is also involved, from time to time, in other reviews, investigations and proceedings by governmental agencies regarding the Company's business which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. The federal or state governments may bring claims based on the Company's current practices, which it believes are lawful. In addition, certain federal and state statutes, including the qui tam provisions of the federal False Claims Act, allow private individuals to bring lawsuits against healthcare companies on behalf of government or private payers. The Company is aware of lawsuits, and from time to time has received subpoenas, related to billing or other practices based on the False Claims Act or other federal and state statutes, regulations or other laws. The Company understands that there may be other pending qui tam claims brought by former employees or other "whistleblowers" as to which the Company cannot determine the extent of any potential liability. Management cannot predict the outcome of such matters. Although management does not anticipate that the ultimate outcome of such matters will have a material adverse effect on the Company's financial condition, given the high degree of judgment involved in establishing loss estimates related to these types of matters, the outcome of such matters may be material to the Company's consolidated results of operations or cash flows in the period in which the impact of such matters is determined or paid. These matters are in different stages. Some of these matters are in their early stages. Matters may involve responding to and cooperating with various government investigations and related subpoenas. As of June 30, 2024, the Company does not believe that material losses related to legal matters are probable. Reserves for legal matters totaled $5 million and $6 million as of June 30, 2024 and December 31, 2023, respectively. Reserves for General and Professional Liability Claims As a general matter, providers of clinical testing services may be subject to lawsuits alleging negligence or other similar legal claims. These suits could involve claims for substantial damages. Any professional liability litigation could also have an adverse impact on the Company's client base and reputation. The Company maintains various liability insurance coverages for, among other things, claims that could result from providing, or failing to provide, clinical testing services, including inaccurate testing results, and other exposures. The Company's insurance coverage limits its maximum exposure on individual claims; however, the Company is essentially self-insured for a significant portion of these claims. The Company is subject to a series of individual claims brought by persons in Ireland related to allegations stemming from pap smear screening services performed by the Company. In general, claimants have alleged that the results of certain pap smear screening tests performed by the Company and other providers, pursuant to a program coordinated by the Irish government, were incorrect for individuals who were later diagnosed with cervical cancer. The Irish government and an independent scoping inquiry commissioned by the Irish government found that the Company’s performance of its screening services for the Irish cervical cancer screening program were in accordance with both Ireland’s requirements and international standards. The Company has settled claims made by certain individuals, is a party in multiple lawsuits and may be served as a party in additional lawsuits. The Company does not believe that the resolution of existing or future claims will have a material adverse effect on its financial position or liquidity, but the ultimate outcomes of these claims are unpredictable and subject to significant uncertainties. Reserves for general and professional liability claims matters, including those associated with both asserted and incurred but not reported claims, are established on an undiscounted basis by considering actuarially determined losses based upon the Company's historical and projected loss experience. Such reserves totaled $165 million and $173 million as of June 30, 2024 and December 31, 2023, respectively. While the basis for claims reserves is actuarially determined losses based upon the Company's historical and projected loss experience, the process of analyzing, assessing and establishing reserve estimates relative to these types of claims involves a high degree of judgment. Although the Company believes that its present reserves and insurance coverage are sufficient to cover currently estimated exposures, it is possible that the Company may incur liabilities in excess of its recorded reserves or insurance coverage. Changes in the facts and circumstances associated with claims could have a material impact on the Company’s results of operations (principally costs of services), cash flows and financial condition in the period that reserve estimates are adjusted or paid. |
BUSINESS SEGMENT INFORMATION
BUSINESS SEGMENT INFORMATION | 6 Months Ended |
Jun. 30, 2024 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENT INFORMATION | BUSINESS SEGMENT INFORMATION The Company's DIS business is the only reportable segment based on the manner in which the Chief Executive Officer, who is the Company's CODM, assesses performance and allocates resources across the organization. The DIS business provides diagnostic information services to a broad range of customers within its primary customer channels - physicians, hospitals, and patients and consumers. The DIS business accounted for greater than 95% of net revenues in 2024 and 2023. All other operating segments include the Company's DS businesses, which consist of its risk assessment services and healthcare information technology businesses. The Company's DS businesses offer solutions for insurers and offer solutions for healthcare providers and payers. As of June 30, 2024, substantially all of the Company’s services were provided within the United States, and substantially all of the Company’s assets were located within the United States. The following table is a summary of segment information for the three and six months ended June 30, 2024 and 2023. Segment asset information is not presented since it is not used by the CODM at the operating segment level. Operating earnings (loss) of each segment represents net revenues less directly identifiable expenses to arrive at operating income (loss) for the segment. General corporate activities included in the table below are comprised of general management and administrative corporate expenses, amortization and impairment of intangible assets and other operating income and expenses, net of certain general corporate activity costs that are allocated to the DIS and DS businesses. The accounting policies of the segments are the same as those of the Company as set forth in Note 2 to the audited consolidated financial statements contained in the Company’s 2023 Annual Report on Form 10-K and Note 2 to the interim unaudited consolidated financial statements. Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net revenues: DIS business $ 2,333 $ 2,268 $ 4,631 $ 4,527 All other operating segments 64 70 132 142 Total net revenues $ 2,397 $ 2,338 $ 4,763 $ 4,669 Operating earnings (loss): DIS business $ 420 $ 410 $ 793 $ 784 All other operating segments 8 10 17 18 General corporate activities (73) (72) (155) (149) Total operating income 355 348 655 653 Non-operating expense, net (41) (31) (75) (59) Income before income taxes and equity in earnings of equity method investees 314 317 580 594 Income tax expense (74) (75) (140) (140) Equity in earnings of equity method investees, net of taxes — 7 8 12 Net income 240 249 448 466 Less: Net income attributable to noncontrolling interests 11 14 25 29 Net income attributable to Quest Diagnostics $ 229 $ 235 $ 423 $ 437 |
REVENUE RECOGNITION
REVENUE RECOGNITION | 6 Months Ended |
Jun. 30, 2024 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGITION | REVENUE RECOGNITION DIS Net revenues in the Company’s DIS business accounted for over 95% of the Company’s total net revenues for the three and six months ended June 30, 2024 and 2023 and are primarily comprised of a high volume of relatively low-dollar transactions. The DIS business, which provides clinical testing services and other services, satisfies its performance obligations and recognizes revenues primarily upon completion of the testing process (when results are reported) or when services have been rendered. The Company estimates the amount of consideration it expects to be entitled to receive from payer customer groups in exchange for providing services using the portfolio approach. These estimates include the impact of contractual allowances (including payer denials), and patient price concessions. The portfolios determined using the portfolio approach consist of the following groups of payer customers: healthcare insurers, government payers (Medicare and Medicaid programs), client payers and patients. For further details regarding revenue recognition in the Company's DIS business, see Note 3 to the audited consolidated financial statements in the Company's 2023 Annual Report on Form 10-K. DS The Company’s DS businesses primarily satisfy their performance obligations and recognize revenues when delivery has occurred or services have been rendered. Net Revenue and Net Accounts Receivable by Payer Customer Type The approximate percentage of net revenue by type of payer customer was as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Healthcare insurers: Fee-for-service 36 % 37 % 36 % 37 % Capitated 3 3 3 3 Total healthcare insurers 39 40 39 40 Government payers 11 12 12 12 Client payers 33 33 33 33 Patients (including coinsurance and deductible responsibilities) 14 12 13 12 Total DIS 97 97 97 97 DS 3 3 3 3 Net revenues 100 % 100 % 100 % 100 % The approximate percentage of net accounts receivable by type of payer customer was as follows: June 30, 2024 December 31, 2023 Healthcare Insurers 26 % 24 % Government Payers 7 7 Client Payers 42 45 Patients (including coinsurance and deductible responsibilities) 22 20 Total DIS 97 96 DS 3 4 Net accounts receivable 100 % 100 % |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2024 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS During July 2024, the Company entered into a definitive agreement to acquire all of the outstanding shares of LifeLabs Inc. and all of the partnership interests of BPC Lab Finance LP (collectively "LifeLabs") for a cash purchase price based on a value of approximately C$1.35 billion Canadian Dollars (approximately $985 million U.S. Dollars), including net debt, subject to customary purchase price adjustments. LifeLabs provides laboratory diagnostic information and digital health connectivity systems in Canada. The closing of the acquisition is subject to certain closing conditions, including obtaining consents from certain key customers of LifeLabs, obtaining clearance under the Competition Act (Canada), and there not being any notice or order in effect under the Investment Canada Act which prohibits closing. The transaction is expected to close by the end of 2024, subject to satisfaction of certain closing conditions and approvals, including receipt of the consents and closing conditions described above. The Company expects to fund the acquisition through cash on hand and debt. |
Pay vs Performance Disclosure
Pay vs Performance Disclosure - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Pay vs Performance Disclosure | ||||
Net income attributable to Quest Diagnostics | $ 229 | $ 235 | $ 423 | $ 437 |
Insider Trading Arrangements
Insider Trading Arrangements | 3 Months Ended |
Jun. 30, 2024 | |
Trading Arrangements, by Individual | |
Rule 10b5-1 Arrangement Adopted | false |
Non-Rule 10b5-1 Arrangement Adopted | false |
Rule 10b5-1 Arrangement Terminated | false |
Non-Rule 10b5-1 Arrangement Terminated | false |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2024 | |
Accounting Policies [Abstract] | |
Basis of Presentation | The interim unaudited consolidated financial statements reflect all adjustments which in the opinion of management are necessary for a fair statement of results of operations, comprehensive income, financial condition, cash flows and stockholders' equity for the periods presented. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s 2023 Annual Report on Form 10-K. The year-end balance sheet data was derived from the audited consolidated financial statements as of December 31, 2023 but does not include all the disclosures required by accounting principles generally accepted in the United States (“GAAP”). |
Use Of Estimates | The preparation of financial statements in conformity with GAAP 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 reporting period. Actual results could differ from those estimates. |
Earnings Per Share | The Company's unvested restricted stock units that contain non-forfeitable rights to dividends are participating securities and, therefore, are included in the earnings allocation in computing earnings per share using the two-class method. Basic earnings per common share is calculated by dividing net income attributable to Quest Diagnostics, adjusted for earnings allocated to participating securities, by the weighted average number of common shares outstanding. Diluted earnings per common share is calculated by dividing net income attributable to Quest Diagnostics, adjusted for earnings allocated to participating securities, by the weighted average number of common shares outstanding after giving effect to all potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include the dilutive effect of outstanding stock options and performance share units granted under the Company's Amended and Restated Employee Long-Term Incentive Plan (“ELTIP”) and its Amended and Restated Non-Employee Director Long-Term Incentive Plan (“DLTIP”), as well as the dilutive effect of accelerated share repurchase agreements ("ASRs"), if applicable. Earnings allocable to participating securities include the portion of dividends declared as well as the portion of undistributed earnings during the period allocable to participating securities. |
New Accounting Standards to be Adopted | In November 2023, the Financial Accounting Standards Board ("FASB") issued a new accounting standard which will require companies to disclose significant segment expenses that are regularly provided to the chief operating decision maker ("CODM"). The pronouncement is effective for annual filings for the year ended December 31, 2024 and for interim periods within the year ended December 31, 2025. The Company does not expect the adoption of this standard to have a material impact on its results of operations, financial position or cash flows. In December 2023, the FASB issued a new accounting standard which will require companies to make additional income tax disclosures. The pronouncement is effective for annual filings for the year ended December 31, 2025. The Company does not expect the adoption of this standard to have a material impact on its results of operations, financial position or cash flows. In March 2024, the Securities and Exchange Commission issued a rule which will require companies to make certain climate-related disclosures in periodic filings. The rule includes certain disclosures in the footnotes of the financial statements: • capitalized costs, expenditures expensed, and losses incurred as a result of severe weather events and other natural conditions, such as hurricanes, tornadoes, flooding, drought, wildfires, extreme temperatures, and sea level rise; • capitalized costs, expenditures expensed, and losses related to carbon offsets and renewable energy credits or certificates if they are used as a material component of a registrant’s plans to achieve its disclosed climate-related targets or goals; and • whether estimates and assumptions used to produce the financial statements were materially impacted by risks and uncertainties associated with severe weather events and other natural conditions or any disclosed climate-related targets or transition plans. The footnote disclosures are effective for annual filings for the year ended December 31, 2025. The Company is currently evaluating the impact of the adoption of the rule. |
Derivative Financial Instruments | The Company uses derivative financial instruments, from time to time, to manage its exposure to market risks for changes in interest rates and foreign currencies. This strategy includes the use of interest rate swap agreements, forward-starting interest rate swap agreements, interest rate lock agreements and foreign currency forward contracts to manage its exposure to movements in interest and currency rates. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. These policies prohibit holding or issuing derivative financial instruments for speculative purposes. The Company does not enter into derivative financial instruments that contain credit-risk-related contingent features or requirements to post collateral. Interest Rate Risk The Company is exposed to interest rate risk on its cash and cash equivalents and its debt obligations. Interest income earned on cash and cash equivalents may fluctuate as interest rates change; however, due to their relatively short maturities, the Company does not hedge these assets or their investment cash flows and the impact of interest rate risk is not material. The Company's debt obligations consist of fixed-rate and, from time to time, variable-rate debt instruments. The Company's primary objective is to achieve the lowest overall cost of funding while managing the variability in cash outflows within an acceptable range. In order to achieve this objective, the Company has historically entered into interest rate swap agreements. Interest rate swaps involve the periodic exchange of payments without the exchange of underlying principal or notional amounts. Net settlements between the counterparties are recognized as an adjustment to interest expense, net. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The computation of basic and diluted earnings per common share was as follows (in millions, except per share data): Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Amounts attributable to Quest Diagnostics’ common stockholders: Net income attributable to Quest Diagnostics $ 229 $ 235 $ 423 $ 437 Less: Earnings allocated to participating securities 1 1 2 2 Earnings available to Quest Diagnostics’ common stockholders – basic and diluted $ 228 $ 234 $ 421 $ 435 Weighted average common shares outstanding – basic 111 112 111 112 Effect of dilutive securities: Stock options and performance share units 1 2 1 2 Weighted average common shares outstanding – diluted 112 114 112 114 Earnings per share attributable to Quest Diagnostics’ common stockholders: Basic $ 2.05 $ 2.08 $ 3.79 $ 3.88 Diluted $ 2.03 $ 2.05 $ 3.75 $ 3.83 |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following securities were not included in the calculation of diluted earnings per share due to their antidilutive effect: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Stock options and performance share units 1 — 1 — |
RESTRUCTURING ACTIVITIES AND _2
RESTRUCTURING ACTIVITIES AND IMPAIRMENT CHARGES (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Pre-Tax Restructuring and Impairment Charges | The following table provides a summary of the Company's pre-tax restructuring and impairment charges for the three and six months ended June 30, 2024 and 2023: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Employee separation costs $ 8 $ 1 $ 14 $ 16 Asset impairment charges $ — $ 5 $ — $ 5 Total restructuring and impairment charges $ 8 $ 6 $ 14 $ 21 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Measurement Inputs | The following table provides a summary of the recognized assets and liabilities that are measured at fair value on a recurring basis: Basis of Fair Value Measurements Quoted Prices in Active Markets for Identical Assets/Liabilities Significant Other Observable Inputs Significant Unobservable Inputs June 30, 2024 Total Level 1 Level 2 Level 3 Assets: Deferred compensation trading securities $ 75 $ 75 $ — $ — Cash surrender value of life insurance policies 61 — 61 — Total $ 136 $ 75 $ 61 $ — Liabilities: Deferred compensation liabilities $ 141 $ — $ 141 $ — Contingent consideration 110 — — 110 Total $ 251 $ — $ 141 $ 110 Redeemable noncontrolling interest $ 79 $ — $ — $ 79 Basis of Fair Value Measurements December 31, 2023 Total Level 1 Level 2 Level 3 Assets: Deferred compensation trading securities $ 70 $ 70 $ — $ — Cash surrender value of life insurance policies 55 — 55 — Available-for-sale debt securities 2 — — 2 Total $ 127 $ 70 $ 55 $ 2 Liabilities: Deferred compensation liabilities $ 131 $ — $ 131 $ — Contingent consideration 104 — — 104 Total $ 235 $ — $ 131 $ 104 Redeemable noncontrolling interest $ 76 $ — $ — $ 76 |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation | The following table provides a reconciliation of the beginning and ending balances of liabilities using significant unobservable inputs (Level 3): Contingent Consideration Balance, December 31, 2023 $ 104 Purchases, additions and issuances 6 Settlements (6) Total fair value adjustments included in earnings - realized/unrealized 6 Balance, June 30, 2024 $ 110 |
FINANCIAL INSTRUMENTS (Tables)
FINANCIAL INSTRUMENTS (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Debt Instrument Fair Value Basis Adjustment Attributable to Hedged Debt | As of June 30, 2024 and December 31, 2023, the following amounts were recorded on the consolidated balance sheets related to cumulative basis adjustments for fair value hedges included in the carrying amount of long-term debt: Hedge Accounting Basis Adjustment (a) Balance Sheet Classification June 30, 2024 December 31, 2023 Long-term debt $ 8 $ 13 (a) As of both June 30, 2024 and December 31, 2023, the entire balance is associated with remaining unamortized hedging adjustments on discontinued relationships. |
SUPPLEMENTAL CASH FLOW & OTHE_2
SUPPLEMENTAL CASH FLOW & OTHER DATA (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Supplemental Cash Flow Elements [Abstract] | |
Supplemental Cash Flow and Other Data | Supplemental cash flow and other data for the three and six months ended June 30, 2024 and 2023 was as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Depreciation expense $ 88 $ 84 $ 175 $ 165 Amortization expense 29 28 58 54 Depreciation and amortization expense $ 117 $ 112 $ 233 $ 219 Interest expense $ (47) $ (39) $ (96) $ (76) Interest income 3 2 9 4 Interest expense, net $ (44) $ (37) $ (87) $ (72) Interest paid $ 61 $ 48 $ 105 $ 80 Income taxes paid $ 115 $ 101 $ 118 $ 134 Accounts payable associated with capital expenditures $ 31 $ 29 $ 31 $ 29 Dividends payable $ 84 $ 81 $ 84 $ 81 Businesses acquired: Fair value of assets acquired $ 134 $ 703 $ 289 $ 734 Fair value of liabilities assumed 34 36 41 36 Fair value of net assets acquired 100 667 248 698 Merger consideration payable 6 (88) — (88) Cash paid for business acquisitions 106 579 248 610 Less: Cash acquired — 1 — 1 Business acquisitions, net of cash acquired $ 106 $ 578 $ 248 $ 609 Leases: Leased assets obtained in exchange for new operating lease liabilities $ 52 $ 57 $ 87 $ 101 |
BUSINESS SEGMENT INFORMATION (T
BUSINESS SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Segment Reporting [Abstract] | |
Summary of Segment Reporting Information by Segment | The following table is a summary of segment information for the three and six months ended June 30, 2024 and 2023. Segment asset information is not presented since it is not used by the CODM at the operating segment level. Operating earnings (loss) of each segment represents net revenues less directly identifiable expenses to arrive at operating income (loss) for the segment. General corporate activities included in the table below are comprised of general management and administrative corporate expenses, amortization and impairment of intangible assets and other operating income and expenses, net of certain general corporate activity costs that are allocated to the DIS and DS businesses. The accounting policies of the segments are the same as those of the Company as set forth in Note 2 to the audited consolidated financial statements contained in the Company’s 2023 Annual Report on Form 10-K and Note 2 to the interim unaudited consolidated financial statements. Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net revenues: DIS business $ 2,333 $ 2,268 $ 4,631 $ 4,527 All other operating segments 64 70 132 142 Total net revenues $ 2,397 $ 2,338 $ 4,763 $ 4,669 Operating earnings (loss): DIS business $ 420 $ 410 $ 793 $ 784 All other operating segments 8 10 17 18 General corporate activities (73) (72) (155) (149) Total operating income 355 348 655 653 Non-operating expense, net (41) (31) (75) (59) Income before income taxes and equity in earnings of equity method investees 314 317 580 594 Income tax expense (74) (75) (140) (140) Equity in earnings of equity method investees, net of taxes — 7 8 12 Net income 240 249 448 466 Less: Net income attributable to noncontrolling interests 11 14 25 29 Net income attributable to Quest Diagnostics $ 229 $ 235 $ 423 $ 437 |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 6 Months Ended |
Jun. 30, 2024 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The approximate percentage of net revenue by type of payer customer was as follows: Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Healthcare insurers: Fee-for-service 36 % 37 % 36 % 37 % Capitated 3 3 3 3 Total healthcare insurers 39 40 39 40 Government payers 11 12 12 12 Client payers 33 33 33 33 Patients (including coinsurance and deductible responsibilities) 14 12 13 12 Total DIS 97 97 97 97 DS 3 3 3 3 Net revenues 100 % 100 % 100 % 100 % |
Accounts Receivable Disaggregation | The approximate percentage of net accounts receivable by type of payer customer was as follows: June 30, 2024 December 31, 2023 Healthcare Insurers 26 % 24 % Government Payers 7 7 Client Payers 42 45 Patients (including coinsurance and deductible responsibilities) 22 20 Total DIS 97 96 DS 3 4 Net accounts receivable 100 % 100 % |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Amounts attributable to Quest Diagnostics’ common stockholders: | ||||
Net income attributable to Quest Diagnostics | $ 229 | $ 235 | $ 423 | $ 437 |
Less: Earnings allocated to participating securities | 1 | 1 | 2 | 2 |
Earnings available to Quest Diagnostics’ common stockholders – basic and diluted | $ 228 | $ 234 | $ 421 | $ 435 |
Weighted average common shares outstanding - basic | 111 | 112 | 111 | 112 |
Stock options and performance share units | 1 | 2 | 1 | 2 |
Weighted average common shares outstanding - diluted | 112 | 114 | 112 | 114 |
Basic (in dollars per share) | $ 2.05 | $ 2.08 | $ 3.79 | $ 3.88 |
Diluted (in dollars per share) | $ 2.03 | $ 2.05 | $ 3.75 | $ 3.83 |
Stock options and performance share units (in shares) | 1 | 0 | 1 | 0 |
RESTRUCTURING ACTIVITIES AND _3
RESTRUCTURING ACTIVITIES AND IMPAIRMENT CHARGES - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Restructuring Cost and Reserve [Line Items] | |||||
Total restructuring charges | $ 8 | $ 1 | $ 14 | $ 16 | |
Invigorate Program | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Target percent for annual productivity savings | 3% | 3% | |||
Invigorate Program | Accounts Payable and Accrued Expenses | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Restructuring reserve | $ 16 | $ 16 | $ 12 | ||
Invigorate Program | Cost of services | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total restructuring charges | 4 | 8 | 9 | ||
Invigorate Program | Selling, general and administrative | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Total restructuring charges | $ 4 | $ 6 | $ 12 |
RESTRUCTURING ACTIVITIES AND _4
RESTRUCTURING ACTIVITIES AND IMPAIRMENT CHARGES (Pre-Tax Restructuring and Impairment Charges) (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Restructuring Cost and Reserve [Line Items] | ||||
Employee separation costs | $ 8 | $ 1 | $ 14 | $ 16 |
Asset impairment charges | 0 | 5 | 0 | 5 |
Total restructuring and impairment charges | $ 8 | $ 6 | $ 14 | $ 21 |
BUSINESS ACQUISITIONS (Details)
BUSINESS ACQUISITIONS (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | |||||
Jun. 10, 2024 | Feb. 12, 2024 | Jun. 30, 2024 | Dec. 31, 2023 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Business Acquisition [Line Items] | |||||||
Consideration | $ 248 | ||||||
Payment for contingent consideration | 6 | ||||||
Prepayments to acquire businesses | $ 30 | 30 | |||||
Goodwill acquired during the period | 154 | ||||||
Cash paid for business acquisitions | $ 106 | $ 579 | 248 | $ 610 | |||
Goodwill | 7,885 | $ 7,733 | 7,885 | ||||
Goodwill, expected tax deductible amount | 154 | 154 | |||||
Customer Relationships | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets | $ 95 | $ 95 | |||||
Lenco Diagnostics Laboratories, Inc. | |||||||
Business Acquisition [Line Items] | |||||||
Cash paid for business acquisitions | $ 111 | ||||||
Goodwill | 75 | ||||||
Goodwill, expected tax deductible amount | 75 | ||||||
Operating lease liabilities | 7 | ||||||
Lenco Diagnostics Laboratories, Inc. | Customer Relationships | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets | $ 43 | ||||||
Intangible assets, useful life | 15 years | ||||||
PathAI Diagnostics | |||||||
Business Acquisition [Line Items] | |||||||
Cash paid for business acquisitions | $ 100 | ||||||
Goodwill | 55 | ||||||
Goodwill, expected tax deductible amount | 55 | ||||||
Finance lease assets | 17 | ||||||
Finance lease liabilities | 17 | ||||||
Operating lease right-of-use assets | 17 | ||||||
Operating lease liabilities | 17 | ||||||
Property, plant, and equipment | 4 | ||||||
Inventories | 2 | ||||||
PathAI Diagnostics | Customer Relationships | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets | $ 39 | ||||||
Intangible assets, useful life | 15 years |
FAIR VALUE MEASUREMENTS (Recogn
FAIR VALUE MEASUREMENTS (Recognized Assets and Liabilities at Fair Value) (Details) - Recurring Basis - USD ($) $ in Millions | Jun. 30, 2024 | Dec. 31, 2023 |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Deferred compensation trading securities | $ 75 | $ 70 |
Cash surrender value of life insurance policies | 61 | 55 |
Available-for-sale debt securities | 2 | |
Total | 136 | 127 |
Deferred compensation liabilities | 141 | 131 |
Contingent consideration | 110 | 104 |
Total | 251 | 235 |
Redeemable noncontrolling interest | 79 | 76 |
Quoted Prices in Active Markets for Identical Assets / Liabilities, Level 1 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Deferred compensation trading securities | 75 | 70 |
Cash surrender value of life insurance policies | 0 | 0 |
Available-for-sale debt securities | 0 | |
Total | 75 | 70 |
Deferred compensation liabilities | 0 | 0 |
Contingent consideration | 0 | 0 |
Total | 0 | 0 |
Redeemable noncontrolling interest | 0 | 0 |
Significant Other Observable Inputs, Level 2 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Deferred compensation trading securities | 0 | 0 |
Cash surrender value of life insurance policies | 61 | 55 |
Available-for-sale debt securities | 0 | |
Total | 61 | 55 |
Deferred compensation liabilities | 141 | 131 |
Contingent consideration | 0 | 0 |
Total | 141 | 131 |
Significant Unobservable Inputs, Level 3 | ||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||
Deferred compensation trading securities | 0 | 0 |
Cash surrender value of life insurance policies | 0 | 0 |
Available-for-sale debt securities | 2 | |
Total | 0 | 2 |
Deferred compensation liabilities | 0 | 0 |
Contingent consideration | 110 | 104 |
Total | 110 | 104 |
Redeemable noncontrolling interest | $ 79 | $ 76 |
FAIR VALUE MEASUREMENTS (Narrat
FAIR VALUE MEASUREMENTS (Narrative) (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2024 USD ($) | Jun. 30, 2024 USD ($) | Dec. 31, 2023 USD ($) | Jun. 30, 2023 USD ($) | Jul. 01, 2015 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Fair value of debt | $ 4,300,000,000 | $ 4,300,000,000 | $ 4,600,000,000 | ||
UMass Joint Venture | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Ownership percentage by noncontrolling owners | 18.90% | ||||
Fair Value, Inputs, Level 3 | Contingent Consideration | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Total fair value adjustments included in earnings - realized/unrealized | 6,000,000 | ||||
Liability | 110,000,000 | 110,000,000 | 104,000,000 | ||
Fair Value, Inputs, Level 3 | Contingent Consideration | Other Liabilities | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Liability | 82,000,000 | 82,000,000 | 99,000,000 | ||
Fair Value, Inputs, Level 3 | Contingent Consideration | Accounts Payable and Accrued Expenses | |||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||||
Liability | $ 28,000,000 | $ 28,000,000 | $ 5,000,000 | ||
Haystack Oncology, Inc. | Comparable Company Revenue Volatility | |||||
Business Acquisition [Line Items] | |||||
Measurement input | 0.40 | 0.40 | |||
Haystack Oncology, Inc. | Discount rate | |||||
Business Acquisition [Line Items] | |||||
Measurement input | 0.105 | 0.105 | |||
Haystack Oncology, Inc. | Additional, Based on Revenue | |||||
Business Acquisition [Line Items] | |||||
Maximum contingent consideration payment | $ 100,000,000 | ||||
Haystack Oncology, Inc. | Additional, Reimbursement Coverage | |||||
Business Acquisition [Line Items] | |||||
Maximum contingent consideration payment | $ 50,000,000 | ||||
Haystack Oncology, Inc. | Additional Impact | Discount rate | |||||
Business Acquisition [Line Items] | |||||
Measurement input | 0.05 | 0.05 | |||
Haystack Oncology, Inc. | Changing Comparable Company Revenue Volatility | Comparable Company Revenue Volatility | |||||
Business Acquisition [Line Items] | |||||
Measurement input | 0.30 | 0.30 | |||
Increase in contingent consideration liability | $ 8,000,000 | ||||
Haystack Oncology, Inc. | Changing Discount Rate | Comparable Company Revenue Volatility | |||||
Business Acquisition [Line Items] | |||||
Increase in contingent consideration liability | $ 5,000,000 | ||||
Haystack Oncology, Inc. | Changing Discount Rate | Discount rate | |||||
Business Acquisition [Line Items] | |||||
Measurement input | 0.070 | 0.070 |
FAIR VALUE MEASUREMENTS (Reconc
FAIR VALUE MEASUREMENTS (Reconciliation of Beginning and Ending Balances of Assets and Liabilities Unobservable Inputs) (Details) - Significant Unobservable Inputs, Level 3 - Contingent Consideration $ in Millions | 6 Months Ended |
Jun. 30, 2024 USD ($) | |
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | |
Balance, December 31, 2023 | $ 104 |
Purchases, additions and issuances | 6 |
Settlements | (6) |
Total fair value adjustments included in earnings - realized/unrealized | 6 |
Balance, June 30, 2024 | $ 110 |
DEBT (Details)
DEBT (Details) - Senior Notes - USD ($) | Apr. 01, 2024 | Jun. 30, 2024 | Mar. 17, 2014 |
4.25% Senior Notes Due 2024 | |||
Debt Instrument [Line Items] | |||
Face amount | $ 300,000,000 | ||
Extinguishment of debt | $ 300,000,000 | ||
Debt instrument, interest rate | 4.25% | ||
3.50% Senior Notes due March 2025 | |||
Debt Instrument [Line Items] | |||
Face amount | $ 600,000,000 | ||
Debt instrument, interest rate | 3.50% |
FINANCIAL INSTRUMENTS (Balance
FINANCIAL INSTRUMENTS (Balance Sheets) (Details) - USD ($) $ in Millions | Jun. 30, 2024 | Dec. 31, 2023 |
Long-term Debt | Fair Value Hedging | ||
Derivative [Line Items] | ||
Hedge Accounting Basis Adjustment | $ 8 | $ 13 |
STOCKHOLDERS_ EQUITY AND REDE_2
STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST (Details) - USD ($) $ / shares in Units, $ in Billions | 3 Months Ended | 6 Months Ended | |||||||
Jun. 30, 2024 | Mar. 31, 2024 | Dec. 31, 2023 | Sep. 30, 2023 | Jun. 30, 2023 | Mar. 31, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Jul. 01, 2015 | |
Schedule of Stockholders' Equity and Redeemable Noncontrolling Interest [Line Items] | |||||||||
Dividends per common share | $ 0.75 | $ 0.75 | $ 0.71 | $ 0.71 | $ 0.71 | $ 0.71 | |||
Share repurchase authorization remaining available | $ 1 | $ 1 | |||||||
Reissuance of shares for employee benefit plan | 700,000 | 900,000 | |||||||
UMass Joint Venture | |||||||||
Schedule of Stockholders' Equity and Redeemable Noncontrolling Interest [Line Items] | |||||||||
Ownership percentage by noncontrolling owners | 18.90% | ||||||||
Treasury Stock, at Cost | |||||||||
Schedule of Stockholders' Equity and Redeemable Noncontrolling Interest [Line Items] | |||||||||
Purchases of treasury stock- shares | 0 | 0 |
SUPPLEMENTAL CASH FLOW & OTHE_3
SUPPLEMENTAL CASH FLOW & OTHER DATA (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Supplemental Cash Flow Elements [Abstract] | ||||
Depreciation expense | $ 88 | $ 84 | $ 175 | $ 165 |
Amortization expense | 29 | 28 | 58 | 54 |
Depreciation and amortization expense | 117 | 112 | 233 | 219 |
Interest expense | (47) | (39) | (96) | (76) |
Interest income | 3 | 2 | 9 | 4 |
Interest expense, net | (44) | (37) | (87) | (72) |
Interest paid | 61 | 48 | 105 | 80 |
Income taxes paid | 115 | 101 | 118 | 134 |
Accounts payable associated with capital expenditures | 31 | 29 | 31 | 29 |
Dividends payable | 84 | 81 | 84 | 81 |
Fair value of assets acquired | 134 | 703 | 289 | 734 |
Fair value of liabilities assumed | 34 | 36 | 41 | 36 |
Fair value of net assets acquired | 100 | 667 | 248 | 698 |
Merger consideration payable | 6 | (88) | 0 | (88) |
Cash paid for business acquisitions | 106 | 579 | 248 | 610 |
Less: Cash acquired | 0 | 1 | 0 | 1 |
Business acquisitions, net of cash acquired | 106 | 578 | 248 | 609 |
Leases: | ||||
Leased assets obtained in exchange for new operating lease liabilities | $ 52 | $ 57 | 87 | 101 |
Changes in bank overdrafts | $ (38) | $ (26) |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) | Jun. 30, 2024 USD ($) | Dec. 31, 2023 USD ($) | Oct. 31, 2023 USD ($) | Nov. 30, 2021 USD ($) | Dec. 31, 2020 claim | Oct. 31, 2020 claim |
Loss Contingencies [Line Items] | ||||||
Self-insurance reserves | $ 165,000,000 | $ 173,000,000 | ||||
Excludes general and professional liability claims | ||||||
Loss Contingencies [Line Items] | ||||||
Litigation reserves | 5,000,000 | $ 6,000,000 | ||||
Secured Receivables Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Credit facility capacity | $ 525,000,000 | |||||
Letters of credit outstanding, amount | $ 73,000,000 | |||||
Senior Unsecured Revolving Credit Facility | ||||||
Debt Instrument [Line Items] | ||||||
Credit facility capacity | $ 750,000,000 | |||||
401(k) Plan Lawsuit | Pending Litigation | ||||||
Loss Contingencies [Line Items] | ||||||
Class action lawsuits | claim | 2 | 2 |
BUSINESS SEGMENT INFORMATION (D
BUSINESS SEGMENT INFORMATION (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | |
Segment Reporting Information [Line Items] | ||||
Percentage of net revenues | 100% | 100% | 100% | 100% |
Total net revenues | $ 2,397 | $ 2,338 | $ 4,763 | $ 4,669 |
Total operating income | 355 | 348 | 655 | 653 |
Non-operating expense, net | (41) | (31) | (75) | (59) |
Income before income taxes and equity in earnings of equity method investees | 314 | 317 | 580 | 594 |
Income tax expense | (74) | (75) | (140) | (140) |
Equity in earnings of equity method investees, net of taxes | 0 | 7 | 8 | 12 |
Net income | 240 | 249 | 448 | 466 |
Less: Net income attributable to noncontrolling interests | 11 | 14 | 25 | 29 |
Net income attributable to Quest Diagnostics | $ 229 | $ 235 | $ 423 | $ 437 |
DIS business | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of net revenues | 97% | 97% | 97% | 97% |
Total net revenues | $ 2,333 | $ 2,268 | $ 4,631 | $ 4,527 |
Total operating income | $ 420 | $ 410 | $ 793 | $ 784 |
DIS business | Minimum | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of net revenues | 95% | 95% | 95% | 95% |
All other operating segments | ||||
Segment Reporting Information [Line Items] | ||||
Total net revenues | $ 64 | $ 70 | $ 132 | $ 142 |
Total operating income | 8 | 10 | 17 | 18 |
General corporate activities | ||||
Segment Reporting Information [Line Items] | ||||
Total operating income | $ (73) | $ (72) | $ (155) | $ (149) |
REVENUE RECOGNITION (Details)
REVENUE RECOGNITION (Details) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2024 | Jun. 30, 2023 | Jun. 30, 2024 | Jun. 30, 2023 | Dec. 31, 2023 | |
Segment Reporting Information [Line Items] | |||||
Percentage of net revenues | 100% | 100% | 100% | 100% | |
Net accounts receivable | 100% | 100% | 100% | ||
DIS business | |||||
Segment Reporting Information [Line Items] | |||||
Percentage of net revenues | 97% | 97% | 97% | 97% | |
Net accounts receivable | 97% | 97% | 96% | ||
DIS business | Healthcare Insurers | |||||
Segment Reporting Information [Line Items] | |||||
Percentage of net revenues | 39% | 40% | 39% | 40% | |
Net accounts receivable | 26% | 26% | 24% | ||
DIS business | Healthcare Insurers | Fee-for-service | |||||
Segment Reporting Information [Line Items] | |||||
Percentage of net revenues | 36% | 37% | 36% | 37% | |
DIS business | Healthcare Insurers | Capitated | |||||
Segment Reporting Information [Line Items] | |||||
Percentage of net revenues | 3% | 3% | 3% | 3% | |
DIS business | Government Payers | |||||
Segment Reporting Information [Line Items] | |||||
Percentage of net revenues | 11% | 12% | 12% | 12% | |
Net accounts receivable | 7% | 7% | 7% | ||
DIS business | Client Payers | |||||
Segment Reporting Information [Line Items] | |||||
Percentage of net revenues | 33% | 33% | 33% | 33% | |
Net accounts receivable | 42% | 42% | 45% | ||
DIS business | Patients (including coinsurance and deductible responsibilities) | |||||
Segment Reporting Information [Line Items] | |||||
Percentage of net revenues | 14% | 12% | 13% | 12% | |
Net accounts receivable | 22% | 22% | 20% | ||
DIS business | Minimum | |||||
Segment Reporting Information [Line Items] | |||||
Percentage of net revenues | 95% | 95% | 95% | 95% | |
All other operating segments | DS Businesses | |||||
Segment Reporting Information [Line Items] | |||||
Percentage of net revenues | 3% | 3% | 3% | 3% | |
Net accounts receivable | 3% | 3% | 4% |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) $ in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | 6 Months Ended | |||
Jul. 24, 2024 USD ($) | Jul. 24, 2024 CAD ($) | Jun. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) | Jun. 30, 2024 USD ($) | Jun. 30, 2023 USD ($) | |
Subsequent Event [Line Items] | ||||||
Cash paid for business acquisitions | $ 106 | $ 579 | $ 248 | $ 610 | ||
Subsequent Event | LifeLabs | ||||||
Subsequent Event [Line Items] | ||||||
Cash paid for business acquisitions | $ 985 | $ 1,350 |