DGX - Earnings call transcript Q1 2021 | Quest Diagnostics Incorporated

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Operator

Good morning. Welcome to the Quest Diagnostics First Quarter 2021 Conference Call. At the request of the company, this call is being recorded. The entire contents of the call, including the presentation and question-and-answer session that will follow, are the copyrighted property of Quest Diagnostics with all rights reserved. Any redistribution, retransmission, or rebroadcast of this call in any form without the written consent of Quest Diagnostics is strictly prohibited.

introduce Diagnostics. Vice to Relations of like Quest for I’d Shawn President Bevec, Investor Now, please. ahead, Go

Shawn Bevec

Thank you and morning. Chief Chief and good Officer. Executive our Steve Financial Officer Chairman, Rusckowski, and President; Mark our I’m Guinan, here with

X-K. drivers of impact reimbursement and cash will on pandemic’s by: that continues operating the to rates differ statements and/or Risks the may COVID-XX to During non-GAAP that those knowledge will Actual company and pandemic, be earnings of measures the press its measures. make pandemic state measures Quest tests; and GAAP COVID-XX most the system reports Form of believe impact US results, and XX-Q, on and may healthcare current are reconciliation of discuss the XX-K to the to US governmental and economy; on a and results and local client-payer control. release. on financial healthcare-insured, responses condition future the limited government, future driven molecular and comparable recent Form this pandemic’s and but quarterly materially flows, timing, provide reports described affect in may include, to projected. call, are federal, subsequently the on company’s impact for The including Diagnostics primarily non-GAAP which duration; pandemic scope, COVID-XX beyond our the we filed the uncertainties and effectiveness from Form Annual the forward-looking those We severity not the results Report in tables

adjusted rates. acquisitions, Growth volumes, growth volumes base testing to revenue outlook with and to are refer organic to business refer reported base adjusted revenue rates testing reported EPS or growth, this from For growth to projections, References call, including EPS excluding to refer EPS. compound references references to long-term adjusted annual and total growth diluted revenue EPS diluted growth, earnings COVID-XX our testing. associated

acquisitions from base our business. will be measured rates revenue Finally, growth against

Now, Steve Rusckowski. here is

Steve Rusckowski

for quarter and PLS base pre-pandemic today. to Thanks, business to for first in continuing relationships industry our with and our In was helped which March, joining XXXX and a strong from near began, growth accelerated demand for in trends. the Shawn, line time since us pandemic with testing, the base in businesses baseline. COVID-XX business the monthly acquisitions the base in revenue reduction everyone thanks versus grew first offset levels. the Contributions Quest the had recover organic

you return the addition provide on second first exits the the XXXX, this into we or Quest of year. ASR, as for as billion vaccinated. And recent the for in at the Vaccination minds pandemic continue PAMA. and provide Mark continue this well help performance the and noted Testing of testing before our of year. financial recent of share reducing more amount expect neglected authorization you repurchase morning returning a center regarding the COVID-XX repurchase, our to supplies year time perspective in economy industry days. company's reopen Day, people spread activities perspective the as morning, we testing, past to of that life. remains and element press now, increased the share details Americans $X front our developments as address will routine have to the remains the our pandemic, our well to provide As get Directors our over on the been saw Board share all and lives, like safely I'd will thoughts our Also, by segments positioned as as is also helping issues news people more regarding normal of But quarter, than US in to Investor on release virus grow ongoing a on testing more launch to the I'll update billion most to be our wanted business, results. of hospitalization dynamics available vaccine $X.X and on become to into then we in in testing discuss to our This quarter detail share an coming most the critical perspective and the of will to base accelerated saving PAMA. of Americans. and the the we on key recent of of critical the control be COVID-XX is role some care

access office labs and agree The reported labs, evidence over the sample XX% independent believe didn't remains exploring included outpatient that of a data the data recently hospital critical, more independent CMS reported that Congress. office been and that for provides claim recording CMS have round labs collection collected just it testing rates would data the Medicare would office lab findings outreach to hospitals that had The payer and of higher is also refute not and representative both sample and physician to laboratories, calculated instead alternatives services independent ongoing hospital analysis saying to screening PAMA been part accurate CMS. response attempts lab critical of of and the PAMA XXXX, delayed We not to under laboratories that need follow rates used We've millions are access MedPAC and more year. the cuts they methods from the that who less all process seniors but the that as to that over reporting. rely impacted horizon physician representative the counts. alternative burdensome physician submit round if the pandemic, data surveying We years higher in physician data reliable MedPAC have mentioned that on. fee of data. encouraged CMS on collection help We were labs. represented for the we're got one office and that more hospitals seniors is So ensure and nation's laboratories, XX% have and in the next past schedule continued routine fix our and avoid for wrong, also clinical to MedPAC a of the care first found PAMA on to independent of to of by have need by

we were Additionally, dismissal challenge disappointed by of Court recent ACLA's a to U.S. District the by PAMA.

next working are determine ACLA We to with this litigation. to with steps respect

to representative continued establish access originally clinical work as the by services truly fee We schedule intended. is the supports continue that a innovation, to Congress with service market of full and -- laboratory policymakers laboratory and

more Total basis Earnings per billion. turn increased to and nearly by revenues our on Now $X.X XXX% from by by than Cash results into XX% basis first I'll the $X.XX. than provided tripled on reported XXX% adjusted $XXX to share operations $X.XX more to million. nearly an to quarter. grew a

highest reflecting day. of below tests trend. an of business As our at the I quarter, average continue day testing slowed approximately mentioned XXX,XXX its tests quarter, industry-wide our pandemic first which level capacity earlier, is COVID-XX since performed the start base performed to a for per molecular in XXX,XXX of quarter, COVID-XX and well current in recover the throughout the in the quarter. We Demand an the first

in are rely by and entertainment, people engaged numbers. and to schools, on industries to travel needed large safely businesses which bringing back We bring several and on testing fronts together

a efficiently. to our with logistics as in Quest With schools it focus classroom want is and help as positioned we're cost-effective range well the to to partners quality, offer using to school, with our extensive working and network, PCR the pooling. well current help quickly back to ability testing get get We on high kid done of

to Investor drive talk our ago through to Day, in We so we strategy make operational today few of We take two-point strategy continue our you progress detail to accelerate discussed growth on excellence. a highlights at our the few weeks quarter. a and

Mercy. Mercy, in acquire excited services health Missouri clinical about and of indicated outreach integrated on And Arkansas, of outreach with nation's The providers complete like are the Mercy Oklahoma. highly Kansas, from serving and systems, having most and of to business operates track multi-state and laboratory mid-year. larger we're our healthcare by we one acquisition the services leaders at laboratory patients XX We hospitals board this systems to currently discussion we're Investor as laboratory Day, agreement business

services of and million. our sale in lab an began good and revenue a January global plan selected in insured off of share partner. as contributing to professional out-of-network progress, journey in it announced is lead minority originally central access IQVIA removing quarter. for groups benefits And with support laboratory implemented vision the start, leader a Q² Q² strategic Health UnitedHealthcare lab the of relationship for We as Quest phase XX% health a Hackensack Solutions $XXX Meridian first ability to Solutions strategic taking for Our advantage a initiative good We IQVIA in will services. made states. the the next quarter. to has in the on

also brought services X from Anthem We strategic more seeing we've And with ConnectiCare. relationship EmblemHealth redirection the these we're then in benefits initiatives. its our provide for efforts quarter. and to in clinical eight And renewed more million linkage long-standing affiliate states a EmblemHealth with finally, comprehensive laboratory during members than of

excellence. operational drive to strategy our to Turning

performance. savings achieved We track deliver tier XX quality XX the improving metrics, we and top again year-over-year once also In the in which quarter, the experience are improvement gauge X% process, to customer operational our we across we're track in business. and to on of the quality

it I'll to turn our to performance. financial over Mark on Now, details more provide Mark?

Mark Guinan

XX.X% Compared during and the Thanks, demand increased up a volumes our total X%. baseline, $X.XX volumes base compared impact grew which new first measured versus by prior to COVID-XX benefited M&A and by diagnostic base approximately revenues POS year. began testing year. our quarter revenue, in X.X% versus the information the of to winter which in reflected for approximately of Volume, testing continued increased XXXX. the year, prior number XX% versus testing recovery X.X%. prior contributing severe The Steve. ongoing prior quarter, increased XXXX weather that quarter billion, the acquisitions the from the services negatively partnerships requisitions with extent first impacted year, services into In for lesser were consolidated XX%, Revenues

of first more Excluding view in began. recovery in baseline year; as quarter the same-store weather and M&A the in the down XXXX represents in last of the base base X% the well pandemic and a volumes first as wins our versus since business quarter the This PLS over net approximately of March. declined the new X% testing impact

COVID-XX volumes coincided expected While across industry. faster the demand with QX, reduced declined than the decline testing throughout

the million in $X.XX The ongoing Reported unit compared the the margin completed X.X prior we billion $X.XX, $X.X more operations with first April, increase share and molecular XXXX. base last quarter $XXX $X.XX for tests recovery year, year. approximately Importantly, versus Included COVID-XX exited over the to averaging the Adjusted billion last deployment. driven and cash to repurchases prior $X.X the volumes available provided business. and expectations. in tests, XX% in QX continued the to nearly driven acquisition in tests We nearly first largely QX the million Modest we Reported line income compared was in sheet. $XXX to quarter in increased million, the revenues was year. or a by in to to the have in versus year per operating XX.X% volume serology of $XXX currently Revenue divestiture revenues, revenue We Cash million contributing $XXX stabilized X,XXX On adjusted QX income resulted COVID-XX the last EPS per the was by net by than revenues quarter testing. our demand day. X.X% approximately compared with year. COVID-XX in $XXX operating balance first and in was serology growth ago. compared operating versus XX,XXX quarter, our in million, these strong in several in ended for headwinds have $X.XX price or weeks. of molecular approximately due $XXX of in XXX,XXX last growth year. XX% EPS year-over-year million proceeds in of tests XX.X% the revenues on or $XXX or quarter were from quarter XX.X% was QX, was cash million an We million in basis, first testing

share buybacks in $X.X our year. we in increase we today, billion additional approximately have $X the the ability execute that announced now authority this billion to repurchase Following

approximately We the expect days. of coming repurchase $X.X transaction launch share billion to accelerated in an

be in be as capital be XX% XXXX operations to to the We've by Turning the range our and $X.XX. to follows: of a EPS billion, of updated adjusted for expected guidance. versus half outlook the prior be and $X.X to and at provided million. to $X in billion $X and expected to approximately range increase billion be expenditures Reported XX% expected revenues first year. of an are $X.XX $XXX Cash least to of EPS between $X.XX expected $X.XX and is approximately

Before considerations concluding, first of half XXXX. embedded to some outlook for about briefly in think our review I'll updated assumptions remainder the and

continued On XXXX. in steady remaining M&A we quarter. improvement expect a in baseline the We base same-store second base and new wins, business our XXXX excluding the below see throughout view, our business PLS slightly

We full XXXX. a base continue baseline to the second half anticipate in to our business recovery our XXXX of compared in

average assuming day to COVID-XX are in no XX,XXX roughly serology We per testing will QX volumes meaningful compared molecular change COVID-XX testing tests volumes QX. and in

our testing program versus K-XX in we expectations the the continue in testing, the testing declining clinical the COVID-XX while should the for continue partially in are demand as forward. second to in life material the going first of in testing year. believe demand expect of we assuming offset strongly Return we molecular for half. serology a for school half clinical increase Given later demand serology And such value testing to significant in XXXX the COVID-XX the to of decline progress U.S., vaccination not

to Finally, currently public surveillance our the lower reimbursement year, extended the turn the relatively trend to in the mid-July. steady to emergency from now first second with of shift of testing. we clinical health through in and testing held it I likely being back volumes through molecular Steve. this to COVID-XX return continue will COVID-XX half to trend life diagnostic molecular is as quarter, This QX, mix expect

Steve Rusckowski

Thanks, to XXXX. very in to off Mark. a we're And summarize, strong start

the finally, to Quest people like continue that they all of Our thank needs who neglected care back Quest address serve every base who business on just routine near to then continues I'd to levels And people recover have the issues past pre-pandemic over as rely employees to the year. day.

happy we'd be And to take Operator? so your questions. with that,

Operator

you. Thank

now to question. At one please we questions. of will request We company, limit the open the to you it ask that up yourself

additional with have that questions, in first you the fall Kevin Instructions] ask [Operator from UBS. If Our queue. question back we comes you please Caliendo

Your line open. is

Kevin Caliendo

call. for Thanks my Hi. taking

Steve Rusckowski

Hi, Kevin.

Kevin Caliendo

Yeah. Good morning.

want be of suggesting commentary to expectation, the the was XQ, March, like year-over-year. some guess, year-over-year, guidance I is So that base of understand XQ your the it around business I sort would down up looked and

there March to of sort don't You it what that anomaly, in you're us seeing anything through was expect recover base of, Is fully. in changed, the an or take business terms the volumes?

Steve Rusckowski

Mark?

Mark Guinan

Sure.

confusion, we That when any base sorry being the about which March. M&A. So Kevin, new talk business, also and significant and our in for wins, were included up it PLS

So of a the tried utilization not XXXX number. -- same-store, do think it's we we we the was what apples What and that where apples to kind is. of business base so where organic an was the delineate you give call total to versus sense

So significant separate business base where M&A wins is. from performance and new that PLS

be business down non-PLS that number, store organic performance. to base not same utilization, our about talk in slightly we expecting total when that's So QX,

Steve Rusckowski

be to testing our in view it’d Mark, going QX. happen implied to share COVID what's So on good

Mark Guinan

Yeah.

about about demand. and next we more that an that And is talked get out, talked XX,XXX, we today, also of months. that to on providing We that see within several more less we'll QX be and the ramp continue we'll that throughout plays protected we're And in the vaccines so roll we a people see So and that out, about less how XX,XXX, the XXX,XXX would guidance based will we clinical how certainly but who'll quarter. expectation day second imply QX. down exited significant our a that's shared over expectation course,

Steve Rusckowski

the our in just ranges base organic assume us are But COVID, Kevin, PLS And include QX. quarter. expectation and somewhat you acquisitions The it on business, that continues second in and let's in organic growth. if then guidance QX what by gives we seen offset around focus we've would anticipating steady of it's growth. that in So the improvement with

helpful. that's hopefully, So

Mark Guinan

we stronger February -- number. close performance I expect that yet same-store out, was positive. weather, Steve Yeah. to QX But than And was the minus That's we said, not as as point the -- And to to to of said. get that improve, Kevin, X%. by we impacted just quoted that. X% numbers would March it obviously, for throughout QX, we minus but that

Operator

next Our Wright with from question comes Erin Credit Suisse.

line Your open. is

Erin Wright

Thanks.

Steve Rusckowski

Hi, Erin.

Erin Wright

across is perspective? here anticipate term, an investors, of deployment in consolidation still thinking in your And how that across few M&A just somewhat And we've well, what's you to the impact a the competitive anticipate of be we're industry there in longer inorganic Capital seen years, excess similar guidance one should mean, does questions now from to biggest historically? your growth? how broader of or over any do do meaningful we assumed pipeline positioning? you from pace And changes capacity what the the landscape getting the to view about accelerate, pace lab I next terms tied are And that as the post-COVID?

Mark Guinan

me let to then and it Steve, question guidance Hey, over I'll first, take turn you. the

second our And going and So that current to on that M&A not already guidance, is quarter. the is only we revenue announced transacted. not significant close generate deal volume counting Mercy obviously, second and any through or Erin, any the we're even hasn't been in quarter, the

So guidance Steve? anticipate the current not future does M&A.

Steve Rusckowski

Yeah.

strategies that the And years. one on help the six we've to a them. we past for discussions over pressure to So There examples talked pre-delivery of of we the delivering feel a about have have and the what good for lot strategy. strategy as last of hospital their options considering funnel characterized we They continues of these number we have on about prospects are months the our be on systems. is

year. in with grow us at come. shared continuation for this that, funnel X% And to do What the a at is building we we reaffirmed for XXXX. in year, we your And prospects that acquisition number good Day have our around still for outlook forward, so Investor that's believe interest the answer on more shared that we growth. of delivered per we and implied to outlook would years the three historically prior going our What we it's a see question, guidance through we to is

fewer what's interested So them see likewise, will, help their Quest consolidation. And and of clients. fewer general, see consolidation if trends to And see, gain systems the want fewer, on health and We your like finally, about to think with in play plan in what's as is do all our when in share. strategy. you the as important that do network more the we happening, strategy there And hands health thinking well. lab to providers those two forces with be just share a in is will care them. and about you if we that, most And

the support health believe also is what's So what's megatrends and that all that our plans. happening and both actually some and with said improved with we happening view the in what time, are industry, for happening hospitals have changes we've to for

Operator

next with Our Bank. question comes from Pito Chickering Deutsche

Your line open. is

Pito Chickering

Thanks Good morning, questions. my guys. for taking

can sort some types Looking dock market, can on are routine on the on the offices and versus normalizing of give some are the areas? tests? us more Any routine and of what different versus what hospitals you us color laggard the of details their customers, baseline give test you you country? strength in us and give at weaknesses parts can your Within color

Steve Rusckowski

Sure. Sure.

way So all customers around the at look let the take the market. me a different run we

We're us the in several which to recovery good the recovery have a news. South Coast, see XXXX in to and in last levels seeing, better West we earlier. we recover to starting Texas the West. bring California the geographically, South starting and the So back weeks, is East that actually spoke good We in really seen much

would say those in I are moving right So the direction.

into and hotspots that is lockdowns that to seen affect and the the going that's the happens you've spikes offset delivery, health in and the going to when concerned Midwest Now our long business. as in people about through are the

the in Midwest. Pennsylvania Northeast say, the New some if recovering seen and the including England. York the then we're will, and behind, the It's it's going in that, let’s finally you most And New of off, we've Northeast So slowly, and still Northeast. and but into

So that's the swing. geographic

We business physician to see is we were. back by levels. as see business, back outpatient far procedures XXXX getting hospital We getting where hospital remissions actually We're business to As to XXXX very levels. versus the close encouraged that.

at side, So postponed that it starting were. is and what business on tracking depends those or state on. treatment And we that oncology, Primary And to care And versus time, physician. drugs mental drug XXXX. at varies our prescription the starting physician that. where diagnosis oncology monitoring nicely to where abuse and compared that that's health to particularly for we type behavioral on still health by and in work of see we turn same business is to still then have the and turn an down issue were all

Mark, that So going by franchises. to anything as going geographically. What's add we what's like also feel a by that? clinical what you you’d physician, on to gives but described for

Mark Guinan

think summary, No, Thanks. Steve. I a good that's

Steve Rusckowski

Yeah.

Operator

question next Our from Giacobbe Citi. with Ralph comes

Your open. line is

Steve Rusckowski

Good morning.

Ralph Giacobbe

morning. Because lower Thanks. revenue to guidance, that it maybe The just want you XQ? COVID understand, is was like upside expected. Good had sounded than from higher

deals? maybe And of core, is trying the better higher would reflects it if guidance? recent factored assumption an the margin. there it ASR understand included the Just in Because through revenue? and just or performance, just lower color assumption or is on the to of then increase be it So margin second, reconciling in, revenue that's otherwise, like running much based look there, doesn't

Thanks. trying that as So well. I'm just to reconcile

Mark Guinan

Yes.

that, let shot take recovery a revenue at stronger-than-expected the me by driven base thanks. in Ralph, The is So higher business. absolutely

every COVID record than had down has anticipated throughout ramped faster of we we testing first the and acknowledged we've couple out, point you as So weeks, quarter.

down, the on recovered more to to offset is has We than base most that an ramp have stronger, business but expect revenue continue the certainly side.

of million to the for guidance. that already the in was have remind it In from half. with of in slightly part ownership the ASR in then And QX. I in loss equity earnings. just you is terms committed sale We did we the in the that XX% is guidance first related $XXX share consider to to the of $XXX had of the everyone ASR, that and is repurchases want when the our IQVIA, million proceeds accretive our the JV

to million over ASR offsetting $XXX $XXX in first the as foregoing previous committed equity really the to so had at of look guide So almost half, the million the -- earnings. $XXX those million We there. need you in already

repurchases when you really the combine So that, are share just up by million. several hundred

to clear want everyone make math I there. So sure is on the

So it the reflected guidance. in is

Operator

comes Our next question Brian Jefferies. Tanquilut from with

open. Your line is

Brian Tanquilut

share congrats March my good Steve you what you quarter. are I or you levels, of of guess, req number QX, terms April, Hey, assumption of core. morning you that? the us you What acuity just in on per Thank with saw even guys, revenue on any in the saw you. that in for volumes in can over rep the seeing think you about in already question as req, is like tests with into specifically color that per March, carrying guys,

Steve Rusckowski

Yeah.

modest of offer expansion for have of COVID watching thanks, So of But newer encouraging, more calculation calculation. historically the per test we to the about see we let's per April, increase you do testing getting we're if for say, more. explanation we're test req do straight test, at if seen in the the carefully. reasons, of made and will, look revenue for we was requisition we question. density, the a, requisition, number appreciate to with variety And of and new the talked have Mark

disease is Second, there higher population. a acuity and of and aging of chronic level the

in within standing was that's So notable that But we a have generally March. nothing increase seen out that. really general

Operator

with Meehan next from Our question Jack Research. comes Nephron

open. Your is line

Steve Rusckowski

Jack. Hi,

Jack Meehan

if beginning. was Good terms do COVID base you then your to also the of, of testing the an around at reference How for is us out think wondering, you could give give update testing testing shake that the and can year? What you levels, thinking in update you second opportunity you feel if your your in do awards expect half around the the the school morning. could terms as I upcoming how an of us there? positioning for

Steve Rusckowski

Yeah.

said where to back we off happening you go decline we PCR testing QX, and to in do you year the country. mentioned that What our and in the remarks, So we year. is in we expect see could throughout the COVID, we started see it

expect continue that continuing will and we the second into that trend in QX Mark as So said earlier, half. do

a integrators a with return around that we see roll from in more two activity of the the well-positioned offset, testing. physicians of what let's out life coordinating be beyond roll described Jack. do lot testing, it, COVID this Now moving number to activity, There's bit lot efforts in, call A and patients laboratory the what's engaged for that, on and schools. PCR the going mentioned in a systems little hospitals, clinical roll we of it funding transition out that around will with there. U.S. mechanisms their I seeing as roll uses remarks, for and to activities, from the of, We're government. We've actively there's

the But paints then testing this of physically of be as individual We and get to with turning The with their in as and this an the they pilot maybe provide to too. of our the We interested access New for want on requirements they full-time other mentioned are York places into thinking over corporations calls back. the you fall a activities. City, tourism put now back and the back meetings the to work, return check, they for. going big, to we get want progress, participated we sports just study York day. provide the let city, as albeit work not see will about see despite still they're people the is how Secondly, is And New in entertainment stands. prior into people if getting in in teams, back me say piece remarks the that course vaccination

So in larger do of back portion that what half. be the COVID for will we of activity type testing a

back half, This the in that nature. continued continue but do testing change PCR PCR Now in going in guidance testing is also, And the said, for with we're not and half, testing we this it's but to we all COVID-XX do fast. XXXX. see away not back believe will providing going

Operator

Our Larew next question from William Blair. with Matt comes

is line Your open.

Steve Rusckowski

morning, Hey, Matt. good

Matt Larew

a – Thanks guess, taking Thanks for morning. part. for I two good maybe my question. yeah,

of the But would just was to sort question, setting. Jack's that be of changes though is reference competitive that wanted much to first and the the lab consumer Everlywell terms market. setting to Steve, dynamics follow-up sort day testing your my opportunity going in if to return about get with in the PWN The any or of be in point-of-care just a on a really of your a question time of or turnaround combination a life approach how to take versus space? I that

Steve Rusckowski

Yeah. Yeah.

tests created But gold the So gold days, provide in exposed someone standard the you particularly all first through all, appropriate exposed know, as and of a know, there But test okay, the the antigen PCR rule standard. testing, been with days. testing, specificity antigen five as we rollout, is And of for pick if of for let's early sensitivity out we has And been person. to late are part testing, has that a the do in not day the day still were two is solution surveillance. are equal. say really potentially the as of PCR utilization infected

have our with is sensitivity good. PCR testing so specificity and we quite And the

that's be how it physician continue to confident an that important And of we're so we will why part and therefore, so fight pandemic. this that, sell

thought XXX,XXX often about months and for We're we the in. testing results come less the by is, forms. the get and the easy on As PCR variety now that a day day, the tests per many remarks average consumers is testing, the tests figure way, our the that have get And will are access testing out of we that capacity. reason time for in ago. XXX,XXX much for turnaround than – many to far as for several day they better remember we're about delivering trying that And to days to in approximately now consumer, for two-ish access than per

allows more to on to turnaround us places to have get want good access. that rely visible gold and those much believe, that more going which times, can they're So get the becomes as and standard, they people access better to we

interest active gone direct about So ends has with to the Investor turnaround continue to as collection serology have at expanding our consumer PCR good Day, that relationship testing. testing our we relationships of back from they on PCR we by that envelope to kit well. we tied talked perspective simply our to start FedEx And a levels We're CVS seeing access as mail are in and MyQuest. high put Walmart do promoting around we as what both well getting that up could and capability the of ship drive our on CVS with is platform, testing good also quite of And retailers. and with the Quest then well. a

natural been new exposed through we vaccines, about want some as effectiveness in to safe the questions fell that a natural they as locking continue all return vaccinated they the are that -- way. to variance in the that I have caveats or they if might start even a life build, have into ways to immunity, also, be not are we the with then situation the of have cracks assured So the will the immunity, with consumers they to we and that well. with as

got think, continue lot in that, we've for for now, that of to that, I we chance access to more us working on efficient Americans because a on will an better half. to and easier to back of and So And opportunity be PCR the do and good ways get keep testing.

Mark Guinan

want Yeah. the Matt understand and putting I broadly pool others you in in and And going a where up to surveillance sure when add. to samples we're make this case, that regularly, you it's how Steve, to to affordable because more XX works. economics to more like And do the well. I'd be get to single individual

what that And the or the that it's XX% going will individual. XX result, is, a less well. diagnostic, not have And those us sacrifice identified the per are. individuals the school to with tool back positive to test you we're if not the real The in who a to will them a because And through so will cost we know they they XX hence, provides that be entity sample in individuals. come diagnostic apply will that or people have

we don't positive then We the if our don't one today, clinical with doing we in and the do we capability do the process. individuals. Whereas to actually obligation pooled purposes, get it go tubes, collection that. samples, we that In also order this an the of sample. in to retest of So the those retesting pooling We is the individual and specimen back a retest. so test of that, forward inefficiency have to had we have have or positive, a submitting entity don't for a ability notify they and work, when we get to go

Operator

Our comes JPMorgan. question Peterson with next Tycho from

Your is line open.

Steve Rusckowski

Good morning. Hey, Tycho.

Mark Guinan

on you’re mute. Tycho,

Steve Rusckowski

You’re on mute

Unidentified Analyst

Hi.

is sort on as And you talk the in guide? is the to of EPS Can us This for a in the back down. Casey color that. upside the throughout and margin what not can XQ, you're explain just maybe we ASR? testing same PCR operating is about serology Tycho. then serology, from give but for XQ modeling going there? And the implied assume from Sorry is a of some you the the what's level Thanks. little what of half bit year resilience about decrease is Can the

Steve Rusckowski

the Mark, ASR? to do you want talk

Mark Guinan

Well, guidance. the updated our ASR in is

ASR, less tried as was incremental $XXX $XXX little repurchases had QX million, truly the se the relative I guidance. that in are $XXX about already an about the math, announced full to terms a remaining EPS the of million we So through we there's before than not of to walk per to and upside in we committed million already because lift, had the in

that So -- of $XXX $X accretive. of there. equity down in mature little relative billion that materially proceeds over million for A our earnings divestiture that's incremental. not But to QX, billion the from goes $X.X the the of slightly our stake to is

what $XXX that is to So updated the were incremental million that And share than repurchases of less guidance. it's really we guided into to built previously.

implied obviously, range. In we operating margin, terms have a of

answer that the So we precision. do with you all if midpoint, But math. take you the can't can

mix base COVID very And our than obviously, business at AWR that's erode realization of in the price $XXX business a mix we're the the leveraged. $XXX is less assumption testing that, margin that As that But that to slightly. offset reimbursement, we point. of recovers, lower the is toward will get base the

variable as our operating high but business COVID PCR. as it's historical the not that So recovery, loaded base on certainly much fully and enterprise quite the margin, higher drop-through than

Steve Rusckowski

continue imply same it will we Serology, at the level. Yeah. that

patients with We We on are value we is forward. value. in offer and virus semi-quant capability has that that into the the has insight pushing the of response therefore, going happening serology in general nice believe that what

We down had we serology, know that that tests at important to and PCR for the also continue and believe so. between viruses that. to Americans on We new will you've knowing value, historic look the keep beyond pushing

T to will immune long-term but We that, prospect. the We be has cells. that look response been don't have includes we continue at

more quarter. to far, should and you assume now it's in continue stable more for we that's so So what believe seen valuable but the we've with

support to continue developing that. We to the work on test

Operator

comes Goldwasser Our Ricky with next from Morgan question Stanley.

Your is open. line

Ricky Goldwasser

morning. Good hi. Yeah,

I because to questions follow-up. two So wanted

I half we decline. sort guidance, a operating to like But to margin We're core about think business. So first. talked you're payers more we think help as think a still not call, strategically. payers the digital-first the second, long-term first the of the being care imply maybe it's like sort pace us giving second about relationship going when hearing as it all the framework realize headwind? you talk guidance. about and like that does guys just fully with sequential about meaningful think expanding normalized health of, income on then everybody Anthem. And to lot half of that How just door I strategies modeling. second a more we is about should about we think half the That's some, -- front

So that strategy any narrow already? be digital investments payers that that that as how to volume require are you digital-first that think and part or on networks? having any the for additional you those accelerate will networks toward you see of an if opportunity And would so, can you, infrastructure you you have do actually, more with conversations in drive

Steve Rusckowski

the take Mark, you I'll the take second first one, one.

Mark Guinan

Steve. to COVID Again, in delivered Sure, over the tests half we first half, XXX,XXX for day. assuming just reiterate, QX. the that Thanks We're PCR per Ricky.

guidance can out provided When play how all about, half, we're will you that we we're about guidance confidently uncertain the delivered. want the think that that's implied certainly is in until in the you be will second as base those contributing half, So to guidance to parts why half the decline, we've second for talked moving QX. margin in first the still implicitly we confident give which not highly wait business,

about a growth to obviously how points. by And back end significantly the So what CAGR a back we the basis through business that, an as this talked look to level, about pre-pandemic than our I faster and the base by at pillars year, talking really line transition beyond XXXX. to would point line of talked top growth margin where and and that's about improving Investor grows then period, is Day we fully our recovered XXX our bottom getting

this a Certainly, have the year, feel be business. base to we COVID significant power the confidence step very earnings to of did minimal where dollars the testing very be bubble, year. operating the But business several in of of pandemic last we're COVID should back from base drops to coming we billion going once We'll So right pandemic COVID the down out and rhythm. level. a testing the testing healthy

strong when a X% and margin. that XXXX is growing than a volume we in improvements saw basis, operating were February, you in on expectation saw January, business Steve? early our you Our more

Steve Rusckowski

Yeah. Yeah.

to Just transition.

COVID in I our testing, as – for our earlier, said based believe growing XXXX. would business we outlook. upon XXXX And be the there into be pandemic do through and will indication So the of you with our Investor in a went as if is Mark which recall XXXX XXXX you XXXX. kind also, Day, we'll years you recovering, but will, gave from some math, to get we you bridge went going and to chart walk, base forward of some

So been working because have the with just a Rick, question while. this This started digital positioned. excited it on something and for the that very and isn't we deal we're add, well digital-first to end on. last we're you front you We've working have about

in much First we're Quest, connectivity very of all, go if a back provider embedded ecosystem like already. you of the large to

have interfaces electronic different all there's but the XXX Cerner, obviously, others. the the big We like of of that's over players hundreds medical records,

believe that because we a laboratory did be and partners, you overall, end, of to XXXX year, from that first but way we the and the with acceptance, the streamline out real on see growth engage working payers explosive they're the an if And positioned will, partners. when acceptance, strong this disposition very we have working that, the interoperability a front And and that offerings providers in this accepted it healthcare with that to has therefore, you growing service seen system and because with that's are will And are you that perspective, those been well different in continue. of on workflow other so other you're allows working we're more capability. past helpful to And is nicely explosively, and will players. if telehealth, fewer we've secondly like then that

the equally with need handful see. opportunity delivery. more this as are partners will as because who wanting lab initiative become And upgrade laboratory you [ph], a will we rely telehealth serve Those have well us. engage much that with They are our of direct-to-consumer themselves, believe indebted therefore, to on we're with therefore, with let's And business the providers, those ready described but fewer what do and consumers are the call of consumers are which some healthcare big an not for that they world is So that digital companies more we well, of we if delivery, very opportunity as we for that you physician. small know. new companies, opportunity the positioned prospects engage of will, service network see telehealth growing always to and a deferred that, of partners? number equipment to in for those And just this with as that a all the United,

enough fortunate XXXX. in As investing. and far are the XXXX as have capabilities We investment, to we were

XXXX back we you $XX shared about If over a and two over we investing again go years, at XXXX. million we're said Day, last what Investor the to period

related Some what is to that discussing portion here. of we're

And to by again, only And like so, well they yes, group of change. logistics laboratories, tens And with well with We're we're us. investments. limited do very we're will not do rate positioned telehealth can share to us, get this forward, some gain time companies, we the a limited plans. with by see and can't they we allow very this as because rate yes, it traction, positioned go with do a the select

So we have another question?

Shawn Bevec

Operator?

Operator

Our question next De comes America. from Derik with of Bank Bruin

line is open. Your

Derik de Bruin

morning. Good Hi.

Steve Rusckowski

Derik. Hi,

Derik de Bruin

Hey. Thanks the question. for taking

for bullish the I questions. of guidance testing sharply and Danaher before raised sort gave outlook for very two was a and this, XXXX actually COVID is, and backing also year their on So pretty that number. they call surprisingly the just One

-- you're there as question. these volume just That's that XXX,XXX How versus there are IVD first second more installed of point-of-care from utilizing it's So coming testing, volume of the capacity, the some you're I central that LDTs out of you. question your you got question to, some of shifting because ramp love seeing are lab? -- on shifting some your it the and point-of-care is out ramping the platforms? Is platforms base. test, the sort of more seeing this look you're of LDT And the just your I of to just profitable. is then platforms capacity? care. idea more a the how they at think capacity. -- is, the down you've think on point are first question you are Thank shifting decentralized down the to goes you're would because utilizing like Just using when you XXX,XXX-ish more at do Is IVD, -- your assume But how you

Steve Rusckowski

Yes.

picked use We see the that up half in throughout yes, the has the XX of part, increase back clearly first in point-of-care that continue and XXXX. an testing last the the availability we see did of and in months So antigen XXXX. testing

look testing trackers as this in of in how have clearly, we are those doing We So you dropped the tracking off mechanisms, industry volumes if at therefore, country, believe predominantly has dropped well. much and it's PCR. off, it

be not However, it we could point-of-care that’s there, the believe think testing antigen happening. in include there some but we all does testing

providers, forms. we if in testing at States and antigen look point-of-care the for you PCR is same you in if of look happy at United summer, coming throughout level see from the at excellence it, that level the testing the least that So were are and almost different you actual that look, the but

of a the So the yes, point-of-care to is capabilities there from PCR question transition we testing. around what and exclusively your answer have antigen is, to more is

going I all what said, created tests However, back are to not equal.

so working not helpful to with are reflex all created into sure be also can where you clients where and make also they PCR period point-of-care you for we're And equal. of can realize testing to costs a antigen use time. And what and need

XXXX has into remainder to So be of for but it down through the PCR we come continues because a described, strong and also XXXX. there role of what

Operator

comes with next Pito Our from Bank. question Deutsche Chickering

Your open. line is

Pito Chickering

impacts for make give what Could providers you these did the they for the you from UnitedHealthcare follow-up quarter, more here. did the volumes did your out-of-network question change markets of us in, what guys, in much. Thanks Hey, so a details in little thanks changes this on changes? see what

Steve Rusckowski

Yeah. Yeah.

by very early on and really pick saw March as the mated actually stop share, journey XXXX. program it network in But will, our days, So encouraged in shared a activity. We're kicked it's We what you a our Investor in XXXX, we be have saw have pandemic. what to it up if Day at very we can didn't off progress we is then the working there. good we what been we

on XX% up share level, which So to have share is the that activities least it getting limiting fully of actually is much their other to that over for have nice to where impact book. happened more us. has with period that design benefit to up and to does one us share it to insured what network working up move we're allow specifics we a have is gain. and of But at share. policy contribute picking of time, because some we to providing We did specifics list on don't topic, we and pick And share. this a what support examples And us did the we're how shared it provide picked but other United we share states of there's for

There payers And many outreach we are so their we share we're we is equally other sponsors. relationships share to is that working expensive their purchase continue with other with venue continue didn't we a and plan all of and work build continue an providers. some to working employers, to Their the are specific geography, with others. and will I'll this which of some to regions, on within of Anthem work expensive everything market. and with less with do But is relationship Quest, this is and also whose venue, opportunities the When that programs, doing. those active share United that programs have

Operator

Wolfe Research. last Our Kim with comes from question Eugene

line is Your open.

Steve Rusckowski

Hello.

Eugene Kim

good Hi, morning.

provided range. end base $X, XXXX, at what of baseline return assumption higher that believe $X.XX business the end of pre-pandemic a And So quickly the that was to range the I levels Day, Investor recovery toward to the the company and EPS of on year. fund and that

expectation, the Investor that than With about think how recovery should range faster provided Day? the I the Thanks. that we come -- potential mean, at

Steve Rusckowski

you there? Mark Hey, Mark?

Mark Guinan

Yeah.

to So a constantly update get to we Day, the asked that in position -- Investor of provided a rhythm because what I could would getting what we say that. is, in I'm not at update

So depending and for at? course, of base to have provide we of on give a this potential as guidance of of year broader out There's these that being $X.XX, baseline we the when on the reimbursement business and starting just to some of the be level. XXXX we we're the of to some of covered the fully business range, initiatives for more end guidance expecting level the by what's economy, that payers, the the back expansion by remaining that different as be variables Where said, not But pace rolled a depending depending gave we lot a year When recovered comment next be base about we'll of the is other XXXX. will COVID lives. to what But testing, United we of on, players grow. Anthem time lot obviously, there's by we'll several major lot know XXXX. the are before considerations,

say at that, for decline assumed So this of the stronger testing our it still be and others be fact, we comments. Because that And necessarily the Nobody base good around, was wouldn't the COVID XXXX. as we were faster not would in anywhere point anything near in recovery away. business, in XXXX implies and I yet it you is thinks heard from expecting it to well. going XXXX significance around

just got – ASR and So we the you've then announced.

of lot different a there's pieces. moving So

to confounded So ground to power, the we'll just really guidance thought wanted and for specific make Investor at ability XXXX. earnings comment that's was give provide everyone's it important why We people on our Day, when on our you we because a we XXXX, pandemic an update to understand long-term XXXX.

Shawn Bevec

Good.

appreciate think day, appreciate I So we've call. questions. you and the joining We Take care. your have a We great support, everybody. continued covered the all

Operator

XXXX, of on A of call on posted XX:XX midnight online remarks participating later phone at accessed Goodbye. available the conference transcript XX, Quest approximately the replays for a.m. X, be Thank international for by www.questdiagnostics.com/investor XXX-XXX-XXXX may time, for Diagnostics in Eastern this callers. be first at until call. callers XXXX Telephone or time Eastern April call from Diagnostics Quest today or domestic replay prepared will at XXXX. quarter www.questdiagnostics.com. will May be you XXX-XXX-XXXX A on website

Quest Diagnostics (DGX) 22 Apr 212021 Q1 Earnings call transcript