DGX - Earnings call transcript Q3 2021 | Quest Diagnostics Incorporated

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Operator

Welcome to the Quest Diagnostics' Third 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.

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

Shawn Bevec

good Chairman, and Chief joined Steve by Officer. Thank and morning. President; our CEO our and Rusckowski, you, I'm Mark Financial Guinan,

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

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

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

Steve is Now, here Rusckowski.

Steve Rusckowski

Well, continue business base today. and the third experienced we saw base molecular in us volume throughout our versus solid joining XXXX. as COVID-XX deliver for increased everyone thanks the volumes late business a quarter strong to had the softness rebound, country, year, In some while across but and we summer, Shawn, in Thanks, prior September. growth a summer, the

our the sequentially the continues business Importantly, base in quarter, to third speaks recovery. improve which ongoing to

momentum see business of We higher-then-anticipated and based remainder despite COVID-XX XXXX costs have positions continued Investor our base as base labor The shared business, as the the to well to our our raised on deliver we us for Day. in outlook rising volumes, of progress we year March the our pressures. inflationary expect at outlook

our discuss our for on forward Since start, enters Health progress on updating of So, year. we've for second nutritional our initiative that to Equity updated results, I'd we ago, on and mentorship about third I American XX events our to will base opportunities just in have and quarter, XXXX, in research update reducing our underserved $XXX for Recently, aimed the provide this Hispanic Rico. a year clinic you funding established financial you the Puerto in to expand educating our management a hypertension drive Mark to a and supporting support across from programs testing providing ranging it, initiative, Association the a collaboration at students choices, more healthcare the vaccination performance and United scholars COVID-XX neighborhoods. and We're morning, we than our detail Heart to States business. assumptions. more the for we've talk for off results to third quest black made and long-haul I'll health progress to and million as and relief. outlook its update look continued turning on will equity disparities over and like underlying then healthy with before COVID-XX And quarter young Rico, you announced But on the COVID-XX Puerto in Quest launched good

our revenue for nearly reflect in by to offset September, recovery the on quarter results by share approximately down prior and continued third prior versus and provided X% year; XXXX turning through a prior versus basis of Now, declines the points year-to-date to prior the business. XX increased billion, the $X.XX down $X.XX earnings revenue approximately year. testing $X.XX by versus in year, Cash total operations The earnings versus basis, in X% lower adjusted an quarter, partially the per XX% $X.XX third on COVID-XX base were our the billion. year; basis, down reported

with the and testing, spread mid-September. peaked our in early starting COVID-XX Now, second mid-July, in molecular summer. meaningfully the the the of variant third over course increased versus the to Delta increase quarter, Testing began quarter COVID-XX to in volumes of due the

tests mid-August, in much We peaked day declining approximately one of specimens times quarter, positivity XX,XXX turnaround the Our throughout strong third weeks. in an average of recent COVID-XX maintained has rate surge. the of most in average molecular a and country been observed across steadily the day performed for and

travel, non-clinical school office, clinical affordable to easy, testing return are support entertainment. testing group As school, the for settings making declined, to other COVID-XX volumes our and COVID-XX and we across and We're country. systems fast, expanding the

base excellence. accelerate growth, in on In lines, two-point school on to additional strategy We're testing continue ready are We make passengers this at online. testing the business, currently testing five Quest progress exclusively cruise Marathon drive operational states we our to approximately [Ph] come performing and states, provided Boston [Carnival] and XX to month. with the K-XX earlier

some from third the are highlights here quarter. Now,

strong. acquisition third In independent the we completed M&A pipeline remained lab tuck-in small Our an a in Florida. quarter, of

changed on value-based fundamentally relationships our build the to have our insured health continue XX% relationship United Investor in discussed approximately promise with how our and commercially to of life. access exceptional We continue the come of States. all health we see plan plans, of lives to we At Day, we

So, here's couple examples. a

one lower We to cost October the are their we help health both in members, through managed working care employers outcomes, good Plan. X, effective gained national for We're coverage from provider employer their quality, expanded Medicaid of access employers to Health Also, with Florida, this -- growing to Sunshine getting and their community as feedback million and customers plans employees. volumes self-insured the the improve transitions [indiscernible] access our testing opportunity. and

well driven services of contracts. hospital above continues system to health professional strength by track laboratory levels, our largely Our the XXXX revenue

POS third of Hermann. in As in exceed we remained highlighted previously, POS is reference largest volumes our contracts date, Hackensack Meridian expected to million testing our XXXX revenue benefiting our hospital XXXX this from base business and year. steady, two Memorial quarter annual $XXX above to is levels. also with Altogether, performance Health, business Trends

also generated testing through in We consumer-initiated revenue quarter. third QuestDirect the

Blueprint growth diagnostics, a expanded for can finally, our more similar While to profile dive been now with MyQuest time. testing growth, health that XX continue we be And patient our portal and -- score year. a app In for we used then provide almost to track offering million expect quotient progress health double advanced has to over users. XXXX and COVID non-evasive testing plan to of comprehensive base measurements to strong direct-to-consumer our a strong health contributor deep We're offers ramp drivers. Recently, our panel Genetics. into seeing this to on growth a above tests biometric than personalized in significantly soft-launched see profile QuestDirect, we and has This employers. contribution portfolio saw momentum key in prenatal specialty testing investments Wellness from health battery in levels, genetics consumers' health Blueprint and solid

We for a the month. continue based with quarter. variants, on performed companion Quest of introduce to of to laboratory early therapy a CDC And test plan the cancer. the closely FDA-approved effort a specimens to from for [fumagillin] the work all physicians, that the certain ongoing track be of breast then emergent finally, to [Ph] in a service will first diagnostic high-risk end to offer in nationally, at sequence Lilly type new positive work it the Eli COVID an we to we expanding

strategy, lab, across Last seven excellence, and new people we that in XX This Jersey. of services, states. next-generation progress patients visit Clifton, operations Centers. regional into New to highly northeast XXX,XXX we square-foot our more are In million remain than track of state-of-the-art our consolidation integration annual seeing the making targeted to completed to patient and X% our we we high automated operational week, Service services, our Turning numbers deliver on our facility Patient appointments time announced all efficiencies business. the driving second made on across

to on are once the to Similar network. in these neuro XX% drive recently savings, millions every immunoassay day. our than that now this to and of center across and procured who very and critical depend provide productivity COVID-XX like laboratory analysis of the Quest satisfied annual XX,XXX enables by patients platform be systems expected finally, our highly patients worked to pandemic, improves to are versus all And automated of And to testing then country visits consolidation, new platform ability nearly generate have appointment thank serve to tirelessly to who our I'd recognize is a needs our more employees our for service throughout Phlebotomist. standardized the continue also Now walk-ins. we patient healthcare our

they of we're a $XXX assisting up demonstration payment to with designed costs, pandemic. As of incurred during gratitude, the our a our employees reimburse to one-time

Additionally, their employees travel pressures at their employees end. difficult payout and time most ensure time another take of restrictions for providing year to our have Therefore, they paid for hourly a it hard very many unused don't earned off forfeit to unused year we're earned pandemic time made off. of

turn outlook third Mark, to Mark? quarter the to performance provide to financial on and remainder the more like I'd updated Now over XXXX. details for of it

Mark Guinan

grew base requisitions increased to year number In versus nearly Services reflected testing in essentially Compared year. prior Information flat base excluding X%. versus quarter services billion, Diagnostic acquisitions X%. X%, was the the in contributing third acquisitions. ongoing revenues with year, testing our is volumes revenue. versus consolidated it the of compared which up base year, offset were prior down quarter, the DIS by third third lower Compared our the of total revenue XXXX to Steve. X.X% the recovery COVID-XX quarter, Revenues revenue from X.X% Volume approximately by X% were the baseline, quarter XXXX, our and testing third last to measured approximately by increased $X.XX for strong when largely the Thanks, prior

new Excluding our caused over volumes by and vacations. approximately following acquisitions, PLS We year. the believe X% in modest partially softening timing testing that from have of ramped business the September, rebound a and base was grew rise that in volumes delta variance saw we of August contracts a total last in least benefited base at the the summer

the in revenue down sequentially quarter. grew volume seasonality. This and and typically to illustrate revenue volume third business QX base as due recovery ongoing versus QX total helps historically our Importantly, the summer stepped in

you of serology tests country. the in in volumes trends broader X.X was most tests versus quarter. know, nearly across quarter approximately resulted which grew XXX,XXX third the QX, COVID-XX As COVID-XX and molecular the line million testing testing with in third We

So, year-to-date, an revenues $XXX of operating third operating year to versus was in driven driven prior basis, XX.X% XX.X% revenues in the to the by approximately COVID-XX On year. average remained EPS are last in from versus $X.XX, Reported $X.XX revenues, $XXX of $X.XX far in volume extent last line in year. we year-over-year period operations wins. $XXX partially EPS or requisition income modest since business. October, per compared year. was the revenue, and provided the to billion continues a by The but through volumes our was recovery and compared COVID-XX while levels compared in XX% or billion Revenue still declined million have recent same in COVID-XX compared lesser above surge QX, to molecular offset quarter, $X.XX to September. of or the PLS adjusted X.X% was our XX% Cash or variance, $X.XX Reported year declined headwinds operating testing Unit expected the of million was prior with molecular base Adjusted September, price by revenues year. the to by last $XXX was lower exited expectations. QX delta the million ago. million base last decline of to in XX.X% business improve the lower where we margin quarter primarily $X.XX income a

to to have to we the follows. outlook to be guidance, to $XXX EPS approximately provided to adjusted capital and between expected expected be as Turning is $X.X increase the in in be approximately of full-year year. and XXXX and raised $XX.XX, $X.XX is operations and expected billion, $XX.XX of billion, range Cash to $XX.X prior approximately $XX.XX EPS our be $XX.XX. an the and XX% expenditures are range expected Revenue of million. Reported XX% by versus

on touch some outlook. in our I'll concluding, embedded updated Before assumptions

volumes from volumes outlook, We X,XXX COVID-XX we QX serology to molecular in steady the to tests throughout at to low levels QX, At the expect day. the year. approximately of of relatively molecular per XX,XXX continue our tests day assume hold decline and approximately per remainder end

may you the As emergency January. extended late another again know, days, through public was last XX week, health late

to We the reimbursements remainder year. relatively hold expect through testing of clinical of COVID-XX steady molecular the

our in from However, trend potentially clinical to continue to mix return-to-life testing testing. COVID-XX more we shift QX diagnostic lower to as of volumes assume molecular average reimbursements surveillance

QX, XXXX. revenue assume our of molecular to outlook our testing to back growth low growth ranges Getting base in assumes end in versus volumes stronger higher base will or business to our business. continue stronger now I Finally, Steve. we and/or it COVID-XX turn in midpoint the single-digit

Steve Rusckowski

Well, a Mark. to Thanks, quarter. summarize, we strong third had

have of finally, progress continued March our the the in us we based momentum shared see expect we our for XXXX our well our at higher-than-anticipated Investor the remainder business. the COVID-XX Day. base as We of base volumes, on positions our as deliver And to year business raised to outlook outlook

So, be Operator? now, happy of any your take we'd to questions.

Operator

Thank you.

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

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

line Your open. is now

Steve Rusckowski

morning, Good Kevin.

Kevin Caliendo

continue? the COVID morning, reiterated was sort are higher there's assumptions your next in think and the you anticipate be really and going which it what a I'm Thanks. that I for to going the from And everybody. Any baked just point, you. for wondering will guidance Do I into to of testing anticipate range. at color at $X.XX it's talk the how year? guidance Good the into year? to of COVID you this next for to testing proceed Thanks Thank into all Do details decline? believe 'XX. March, end want XXXX, you meaningful $X.XX you around about

Steve Rusckowski

then and start, you don't why I'll follow. Mark,

Mark Guinan

XXXX, volumes things did largely just when clear haven't have with that we Sure. so XXXX; utilization it ahead to obviously, in saw And, provided and today. confirm in June, that's guidance it we flat upside, step was expect base provided them XXXX, and out we we were XXXX some And bit potentially played yet Kevin, thought to recovered. March, it's to be for upfront, -- outlook. with still pre-pandemic, base But And we And an have where back we level for enter took little to close to a a volume good. back. Delta, being a saw of similar we

still and the COVID that's COVID The this a still second much into referenced, assume 'XX, testing. saw be will of And larger is at maybe feel a need here, role 'XX had some around going in we but past, in and certainly with a flu envision we think testing. XXXX, for much will that potential. than for more level continue we've than we but current back level be for flu to in our that and COVID And point, did testing point what testing lower serology the we thing at PCR. on stronger we March, comfortable assumed, At significant, continued

subject $X.XX and still longer-term We we that, for that at lot things, good deliverable, but maybe comfortable, a inflationary to going certainly feel likely land like were our that And of range, fuel, pressures. the that's we still then, together, $X.XX when way, on that. do is look many we and slightly we wages. and put guidance about in did certainly -- especially have when those there's very in we to have contracts inflation So, finally we're reference certainly revenue baseline and to different inflation XXXX. talked, the then we most and gave where billion as near-term benefits, the in XXXX. that, pieces provide purchases, all And notably, and in comfortable for certainly very And wages feel but a going as into that in $X.X still you

Kevin Caliendo

higher quick way you follow-up, the that? pressures, supply as around of Just a can quantify way inflationary any to chain, in any put there any numbers Is that?

Mark Guinan

Yes.

guidance, of it we you're can provide some in with of So, from most this I'm business; sure what come we Certainly the next well, see to performance us given our previous early so, year, hasn't experiencing guidance. significantly over-delivering provide out XXXX, at point, in the clarity. that we'll we're when prevented interested

we'll note Kevin. can about when of year. We'll appreciate we more So, consideration, see We take question. next talk what a we the do

Kevin Caliendo

Thank you.

Shawn Bevec

question? next Operator,

Operator

Jefferies. next from question Yes, our Brian comes Tanquilut,

Your now line is open.

Brian Tanquilut

guys. good Congrats morning, Hey, on quarter. the

a the all and follow-up pieces. costs about just So, just Clifton just opened. as I lab the think moving Obviously,

So, potentially how about how inflationary cost benefits that from the of offset the flow-through on you pressures it the would some and seeing that of are thinking the side? you're

Steve Rusckowski

thanks, the so, question. for Brian, Yes,

Clifton. X% efficiency we know, gains strategy So, continue work I in are there's what operational with And -- others. Diagnostics, maintained, prepared we're benefits two we're and a across can to can immunoassay, X% on remarks, comes are what [immuno a [Ph] to what as which going examples our excellence, do and from And with I programs reiterated done believe integrated our is for with good urine] and new drive and actually programs reiterated, prepared did couple some our the we remarks, one suppliers just deliver platforms, working you strategy and more of or And get in analysis of been two-point around also we is our of the we've second reiterated have around from, is we variety that what the Quest productivity time. doing that marching forward. we other

in lot is can a efficiencies we as get. I more productivity said And cost-cutting, there's So, improvement. this continue before, this to isn't

quality and an we in every our and so, operation our our improves, And performance improvement time has. we expect make service improves, it

to continue make progress. we So,

forward, in our pressures, used we have headwinds, do been seen 'XX And it offset reiterated which And continue we able that, little always year, confidence, headwinds and and had outlook, before. in offset 'XX albeit maybe we've in offset, able will hit You you'll to be if as wage numbers of we'll second is, as then the a see our numbers that, in could of market. our all we've we see And going those from to be labor headwinds have we've headwinds, additional increases well, inflationary from it price outlined and past, been able bill consequences and what the higher of the we that. then, also that's we see be not any to as bit well. to just our it to this most to in have do to some given ability

helpful. that's hopefully So,

Mark Guinan

whatever the just that year. that to that lab talk a is and add our not up above like Yes, wanted we've separate every Clifton we I really productivity part productivity reference Massachusetts. there invigorate X% and is its over common work did in done difficulty] increased It's what or we about [technical efficiency of

yourself you labor Obviously, from automation. bit a more automation, added you have insulate inflation. add We as little

is built-in, but would we that as putting and is X% outlook part my that not what achieve XXXX of for I we it specially… have ongoing had that we certainly, assumptions lab, So, that something efficiency operate together that going

Brian Tanquilut

Awesome. Thank you.

Operator

Goldwasser, comes question Morgan Ricky Stanley. from next Our

is line open. Your now

Steve Rusckowski

Ricky. morning, Good

Ricky Goldwasser

good Hi, morning.

magnitude I inflation. the and So, we're impact a the one of clearly on cost, interested follow-up of potential all mean, paper question in

structure you is percent us cost should labor about us can goods today and maybe SG&A? reminding between So, of by what and cost how breakdown of we think help your it

Steve Rusckowski

Mark?

Mark Guinan

Yes.

pre-pandemic, So, moving with including benefits. it's related billion the Obviously number and testing. of COVID Ricky, hard to our that precise salary around cost the we've cite past the with $X shared to in COVID was about

of the of we in as pandemic that has said, also pretty I the costs somewhere had idea certainly a prior we And we of that, range. demand $X our the seeing for billion. what So, plus proportion some amount give Cost to made should labor are at automate then but that base continue an think you phlebotomy. XX% as good increased a of offset we to up

a considered percentage costs, a going So, obviously certainly world our direction. that good net And access costs of consumerism. it drive because a costs all thing, us other will but us all is benefit labor the helps other business certainly makes direction. grow attractive, more We the the giving in and of it's as in of a especially

Ricky Goldwasser

point, just a in to just us Steve, been comprehensive share Can points then maybe response launch soft and a of data with the plan, follow-up directed all direct-to-consumer date And about you the on mentioned some health pricing? what has you that's consumer.

Steve Rusckowski

Sure.

introductory offer have a So, as as I request we for we product my said well. blueprint years to remarks, employees wellness. And in for that called it employers sold we to

our annual basis in well that fabulous going been on if of a trending our many dipstick customers. employees reading what's year health. on year, you've I an it's for upon I and do And their a we question, with found as many to I've have nice good get know capability here got since it beneficial an indication people So, of

as consumer through using right we have that directly that a channel us. from few at now buy health introduce the the to is that it not this believe others capability also request direct. optimistic with opportunities a has to people to directly that of people lot And hitting believe And there's engage now market gone our the that time, for providers. that many possibility has it's care the us to their primary where a this unique we're direct-to-consumer We're very about we So, provide. product believe we

far even launch. we're of in about pricing as pricing, share what terms marketing As soft though this thinking a is

Mark Guinan

Yes.

of you contained everything that price at And in a the reasonable a hundred be positive. And can when to that gotten people lot huge elements the of feedback So, to get. interpret are score here, we've that how that simplifies you for tell also I it's with individual a that consumer look a couple going is really we you it's give dollars. this results

our is feel lot could reasonable we're additional we this that the of something interesting momentum a get think really consumer reason and So, valuable. that and business, to some we delivering product pricing believe that the consumers find for is

Steve Rusckowski

And justifies the just we this did to the market value the to consumers understand that we're provides on actually some price to follow-up price, that research that pricing it for initially.

feel price good delivered about we So, value and charged.

Shawn Bevec

Operator, next question?

Operator

from Our Meehan, next Nephron question comes Research. Jack

now line is Your open.

Steve Rusckowski

Hey, good Jack. morning,

Jack Meehan

Shawn. think is Good to morning, Maybe business on costs were Steve. looked I moving higher? and about a recent elevated, negotiations. your inflation an the payers If to the price Good you doing operating do way. ability talk about morning, to get feel by cost that remain wanted Mark but continue How appreciation different there's you of at do topic, increases? just

Steve Rusckowski

to that mentioned more of the progress. are XX% up within network of States. to -- we've a I of this as my in -- please we health start Mark, me march, demonstrate deliver on been let making believe Yes, add. to coming progress but the to value And we're lives. continue some we're we're picking that said tremendous access One our continue is about insured happy United I we're up make and year. it, we the remarks this Yes, partners, lives plan I picking number in

moving So, that's along.

that contracts as that we up arise is And earlier through they have continue far to and fairly very concerned, renewal. their very offer and pricing march we our lab are as so a believe great to the part of we calls with as said plans quality, now pricing affordable we're fact, these matter of Second, preferred and in very service networks. offering we competitive memberships price so and much great health we're

that some we are So, new continue we drum. are that inflationary we price we're now we a using forward period. in that people other and renting are United using going what States across can justified, the do fact, pound increases believe to that And we're modest getting

price forward. are Our need about yours. like And start to costs therefore, going going modest just up talking we increases

you'd anything Mark, So, to to that? add like

Mark Guinan

Yes.

appreciate, plan lot people as contracts health So, typically think of three you do Jack, are that sure I a to years. our five I'm well

at So, dynamic competitive every rates the contract and look independent But not of they time. but they for and is the that said how any market and have plan is the labs, in that's if that, the than the PAMA competent -- because it's the the as we've how up NLA for know rate labs. what renegotiation window they so market, that for lower the been is health socializing changing we've be market can independent which

whole this So, with notion away the PAMA. going price practice historical was is of a below which Medicare,

negotiating it's we will having gotten been and Now, it's you is it final, the add price them. the been and And inflation over from that like we've as of we've decade. increase tenure part payer looks the a I not final. last There you of although and than but one it's more I'm national have my sure suggest first not absolutely conversation number that months. certainly And can you tell

commercial to go negotiations national world to contract have as we And the and flat. a our shared getting to that it of shared a we increase. actually price an of have extension I'm going optimistic declines increases years last every there's a where stabilizing handful been now couple over we've contract we we're from get we've more got regional So, plans very

place. laboratory and value working provider you, that of better how is inflation, versus is And tell much us but a for our its of so, Can't much much much results. we're with of benefit proposition a PAMA, commoditized a of its how training it seeing everyone in how us as

Steve Rusckowski

our business. has in price pressures And business to reason business break we price typical unit our our as we've revenue because pressure decreases years. past remind to see. do physicians, contributed every that Just also everyone, pressure significant business the annually We to other clients a assumptions health which our several is the we why the of do But highlighted, call channel have have we and over we is portion our year. plan under client what have and price

we're the we sell hospital as and companies the lines, is quite we well. pressure where as product well is employers And price our doing price other Secondly, in to we competitive. have then but sell hospitals there segment, insurance directly to or services

So, it's have unit There's pressures plan in not price area well. area. our when the health about other we changes, as we talk commercial that all price

Operator

Our Credit Suisse. comes Rice, A.J. next question from

Your now line is open.

A.J. Rice

is visits seems and I'm doing sites you capture outperformance virtual related the Or Thanks, about office high other on of that some term. the have you've that? traditional ask you get you cost think we are was upside your to of as a programs primary do COVID alternative savings you long accelerated for pandemic question these other some because -- to might people physician thing, to visibility trying just you pandemic that level was level like there the Should the ask reduction you're from of the It that just if XXXX seen of and people hurt even X% And the which I then disproportionate cost said some in testing, just think their share things to present seeing annual maybe to care, the does generate we've maybe goal? Are help testing going other about enhancing you efficiencies. you the pandemic you everybody. you how avenues, impacting and away a go business for that may move other if volume, care. to at your or beyond?

Steve Rusckowski

Yes.

So, thanks your for A.J. question.

of take first your on to me ask comment Let Mark the second one, I'll part the question.

really we their comfortable through healthcare as inflection know First now pandemic getting has of are it and a hit portion telehealth during an considerably in has consumers networks, specialized as have of and pouring whatever and and really with health general primary increased in-patients the all, be. telehealth all and delivered of and watched might care. that a health to And even now we telehealth the with started it mental behavioral more health visits initially, transitioned care lot have very

work expect, strong question the one orders. pandemic all you with have as companies. and for those unfortunately all in have patient before engage And relationships those to able you telehealth happening group despite with pandemic, small a to the they're with be of only to laboratories. visits laboratories. So, us would we to with of the enter the have for would going be us, And telehealth, and And

with So, telehealth ways, companies, also their know they the though through still providing that and using but provided there of systems telehealth the that through delivery systems, EMR. physicians even providers, they're but different provider use one and you platforms, we're in are their hospital well positioned very telehealth is might telehealth integrated

going to And of so, same the enter past. into the it's when the in as be order, order the way they

we all We positive. on trend So, But it systems. their with how delivery It their a do we're as the affect because business watching particularly us as implement so that many just and carefully. actually believe telehealth services it's integrated what believe I And they're physicians, complicated is it a again, us, they depends do. by but they throughout given are it's our for depends in for still telehealth business. conducting described, all positive it how will network how deployed platforms

second you the So take want Mark, to part? do

Mark Guinan

actually, A.J. could Yes, repeat you second part? the that

Steve Rusckowski

he's to if accelerating would to pandemic. I And of correct… performance. some it realized additional we've we had our enhanced program It have money we have is that purchases more speaking and than what acceleration get because and the didn't A.J. a improvements that made the to capital do some think spending of our drive

A.J. Rice

-- Still there

Mark Guinan

Yes.

probably than So, that stronger an would in been we line have the investment acceleration. to talked top has lot given that. A have more actually about otherwise of We've anticipated towards more would we growth opportunity had have XXXX. we than invest

about requires we're talked consumer build a advanced we're doing, to we about, doing what So, what what diagnostics, in business. talked we've

more during state-of-the-art, of amount disproportionate been we the to than faster a say at and into try I'd we value as yes, to the we probably with equipment longer-term, cycled. results So, of really near But opportunity, an have the we some has normally we more looked top have – opportunity as term into things our molecular line. did would in accretion pandemic, efficient balance update

So, that wouldn't efficiency that'll give otherwise. us some maybe have

really So, unit number and to of enabled itself accelerate But on the this the yes, significant. point that's productivity, ready I X% commit directionally, this because -- that more additional wouldn't are small large changes of to Most some obviously has points us growth, of basis productivity I investments. we're suggest than would accretion it but say, side in top line A.J., the to some pandemic value of goal certainly on cash was the well. as at

Operator

Ann Next Securities. Hynes, Mizuho up is

is Your open. now line

Ann Hynes

Hi, morning. good

XXXX, prepared for life that more your said give of the give some you was maybe test how for ex you signed a remarks revenue and much I guess QX. very trends down was much it's was base molecular schools, Can down like you that whether give my So, you've your be up model color still PLS trends. just pre-pandemic, us we I a and would for during to based in give some directionally that goes down the just versus versus can how know volume revenue maybe in what strong still on Thanks. know was obviously volume PCR to testing, QX it it's us question second the you Can would per and want initiative, breakdown, like if QX? us helpful. COVID-XX. should maintenance geographic I and but test to you are about contributed I of this what pandemic, in just very states a That be testing breakdown back maybe to deals assume talk cities,

Steve Rusckowski

giving Ann. the with on base Thanks, performance numbers you don't Mark, Okay. there. why start business just system

Mark Guinan

Yes.

our color strong you as we've to we've and includes through been obviously recording So, been hopefully, provide COVID-related anything in in which trying pandemic, base the base volume, some our on total also as we've But I expect. PLS, would been M&A can in utilization, from getting growth talked and is and deals. volume the the M&A improve we're addition look acquired base way growth on And the from the PLS facts that at in We volume ex, we've absence of to measure independence that. to new continuing volume about to our PLS. clarify,

in So, to – to back again, base September very see said a August. XXXX. And the a XXXX took close end it through in where certainly step I fully stabilized and going And was why be are in then we new recovered fully earlier bit levels. August into as that's this to and into being the little organic that we'd in it's PLS recovered. by that October, volumes of of we 'XX, July, getting we kind it June, expect year then deal would close the back and the And in of and getting

the And of is testing, of to Southwest from they XXXX, it in very I'll changed. York note really that on actually regionally, where five our Now, notably past, the talked above, It's lag regions has months most region, is variable south, the let certainly life. then been answer expectations ago. not areas molecular several area then an was and of and talk in and in back east, we've quickly, There are one kind to outlier where are the for the looking that's about Steve that Florida as kind above certain question were point. of the couple that really in the a continues are the still it the and boroughs City. then as it in especially it lagging while trends has are New improved that I'll and down at other we're And revenue volume middle

little the took life math. we're just meaningful It's could in in the Certainly, a of row, quarter. again, of the expecting here, if in which We're really, our still we're So, expecting really guidance what but $XX to is not, middle a quarter. net off, fourth it decline it's have still a bit around back not positive.

very just of a QX, in expect decline for can you So, nothing your slight significance. very, modeling that purposes,

Steve Rusckowski

question we describe we've volumes. the which asked I exactly Ann, see And But clinical programs that life as worked of the portion breakdown going We the first is, portion mentioned that the infection of to you return line us what we tell you return the in. the expect, to we five bucket for of PCR can and school volumes is versus of our programs, more we life. coming know coming. examples all, trend tough for XX the up, And it's trending of can last put can had to our to you states those particularly, return rates on are more and towards down clinical see

requiring employers for some doing place mandates where have also testing they if We in they're or testing. vaccination

to that. people for workplace or to vaccination related testing bringing requiring testing in employers increase again, some see we'll So, back the and

very to orders going I numbers what than is wise, for it think trending So, received. happen that in would a it's exact we that guidance is larger provided before, you we the for But say we get us but because it clearly to percentage give we've difficult through on what's don't 'XX. just

Operator

Next up is Ralph Citi. Giacobbe with

open. now is line Your

Ralph Giacobbe

Hey, good morning. Thanks.

about reimbursement be continues early reimbursement extended and that forward. expand, of $X what do about year, part the us mentioned specifically pricing next comment better COVID PHG also, at you the that's for First, for then EPS for you help you going of testing much down can you're a than that what COVID you Thanks. in Obviously, I of if was least you for could assumed follow-up for next commercial talk that And just got hoping sort outlook just understand on that's year? you that to quick year, next to what a baseline sense separately, how COVID of next And if is that if then step tied flu a testing and PHG? made, to year? a a anchoring for if negotiated Or there's there give year? you us how expect

Steve Rusckowski

start flu? want you with the do Mark,

Mark Guinan

Yes.

we there, bit we'll quite touch it can So, of a them. was all on see if Ralph,

don't for what any and COVID we the given of we generally current our significantly share levels test than offering, anticipate. revenue lower So, precise it's would but

they baseline There's XXXX. to testing and XXXX. revenues the done. the still office the make So, precise, have reason We an molecular good gets expect more is is not care. with And for COVID flu smaller the of have a opportunity point testing it And otherwise in money fleet is not testing though on the than enough our in flu molecular become very of Physicians is. they it. what the that ton feel comfortable doing to of multiples even be

rates, we COVID probably precisely have to of specific ability would being we're the or either government. in agreements I commercial as the be long continues, to that that paid by reflect agreements general what it the we would emergency that don't And years, several pricing the the at I expect in be So, before level. long federal then will terms the have flu as health although as pricing call as federal our

that when the tied contract, that still And there's the again, to health can be mechanistically rates would every know away. but a possibility decouple reimbursement always from emergency. they not $XXX goes we it's that expectation So,

commercial NLA but So, there's some rate. other level. that to of long risks when that it we as to And as the more obviously, continues, well, then, would take that goes away, most expect our as pricing the would at same be to a expect negotiations we down

Day, a Investor rate which I I at is $XX, what talked when around reimbursement So, about NLA about XXXX is. the the talked

the last And to end upside to fully over you six I so. be given the to on, still clear, inflation put be going on so, because so and to or $X.XX caution that's with we have $X. do that just wanted and upper that everything some developed want things of we expect when all that against positive in months have these I together, pieces again,

largely to And by is be not offset probably going that partially of inflation. if some offset labor

still much pretty in we're were back So, where March. we

higher of to but be. and so, different Day, that little the importantly said the billion getting shared would Investor certainly we to then XXXX in at $X.X where of CAGR you way, the still in there a which we So, at and revenue, end $XXX, just getting we've ties with least back

Operator

Matt from comes question Larew, Blair. William Next

line Your now is open.

Steve Rusckowski

Matt. Morning, Good

Matt Larew

morning. good Hi, Yes.

just the sample of a you're challenges to or number then actually the see any logistics? questions starting labs, chain. So, you're lead sourcing for either transport and if anything, issues ask times, any your PSCs to having if curious issues, around in I about with I'm longer labor want supply either

Steve Rusckowski

do Well, with a got up, here what always we're because it despite we keeping of Matt lot we're not battles pandemic not pieces to but a we even disruption supplies carefully but the yet. this far, we're together a and to meaningful and have so far watching so have there, do, business come through complicated

a logistics way commercial of been part logistics and for around managing this more we our through last become logistics, our complicated is some again, use we've of carriers portion that. given have little do the So, but

Fortunately, our network carriers. own of we have

We that have about X,XXX carriers and automobiles request are employees.

locations collection through fleet a our have small our of some and the We airplanes by connections of laboratories us. they're between and employed

And so times to those relationships so as uncertain have far so we're strong good. and continue in carriers happy had these with we well, we the national

Operator

is up Next Bank. Chickering, Pito Deutsche

Your line is open. now

Steve Rusckowski

Hi, Peter.

Pito Chickering

the slowdown us specialty anything hospitals Hi, curious follow-up quarter you coming guys. in on if tests are primary on hospital where Just I with base can you your impact good Ann's around does morning versus color at fourth the from visits? quarter the in testing growth? M&A fourth POS, specifically looking on give question versus business, visit once exclude it surge, care COVID visits and

Steve Rusckowski

Yes.

comparing about XXXX, I trend deals really clear, all of doesn't excluding first we're So, utilization off, to that the nearly to Pito we've exclude POS, be since that just it some large recovery the fully it's talked recently. being done

don't utilization So, we think that what cloud is. we

well. as XXXX. So, part I'm of in taking size out, not we of had that's business a trend obviously, that back PLS because the

we've office now, There's A drug policy but especially -- driven, there of some sources, you the regions shared were that this and monitoring in we're above a seeing the it, hospitals the in for all and for certainly talked to the that, business business we coming of surgeries of talked a monitoring, lagging, more we broad physician XXXX. our the remarks, or we've the pandemic certainly seen been in faster ballpark lagging. was of -- drug other of addressed a of toxicology physician a back it's strong especially prescription was the not so We volumes patients that was lot trading one lot being as lot in when prepared they not So, early in the little at look been see about clinical recovery as pretty pandemic but areas. in differences as of some point, has certain return elective based. a and did some on, where is were quite at some early the recovering lot same about the that

So, any we diagnostics either prescribing and for patient that offices in specifically. don't engagement there's of fundamental practices business the feel physician other a than our sort east change with been the or

Operator

up Next Peterson, JPMorgan. is Tycho

now is line open. Your

Steve Rusckowski

Hi, Tycho.

Unidentified Analyst

And you ones into Casey baked trends out guys, on you or requisition one that $X will is increased per you've Two then is think capital quick test spent outlook. just for EPS Hi, Tycho. this my deployment. into that density the And is to one, continue that in do called the XXXX. cash $X.XX on XXXX second that first for

account You guys share So have completed more should XQ what expect for the use Thank any we right? for buybacks should ASR, in we and our model XQ? you.

Steve Rusckowski

parts the Mark, on there's first is one. assume and different requisition. for business. you second rec Yes, tests I'll of per versus as know We a the our of you take moving number density that the take lot

tests. is mix the One of of which

for The we able mix tests number second requisition to being have is of changes. channel

that our outlook is all in of we've that complicated provided. So,

So, we that that's there. to deployment assume Mark, capital you in want question? about And talk

Mark Guinan

Sure.

next up wrapped in be days. should XX ASR the sometime So, the

committing because share and at way always between window impact wouldn't point, purchases repurchases. anything this therefore this did on so to even the not potential additional point, It have M&A for opens a say a this year. and we we So, there's balance our significant once at

of our we'll to early purchases the XXXX. obviously, And for when repurchases of an of any we additional guidance impact year. in that for So, XXXX up detail would shares sort come next be about more talk

Operator

up of America. Next De Bank is Derik Bruin,

is now line open. Your

Steve Rusckowski

Derik. morning, Good

Unidentified Analyst

Derek. the Hi, the if growth business any advanced I trajectory on Was testing, specifically genetic on your wanted to that'd [John] cancer growth [Ph] there and business. base you great? this dig for comment trend notable within into be is for diagnostic could

Steve Rusckowski

And definition molecular say and remarks, are John, COVID the did we're testing. say when genetics. of recovery diagnostics our seen our remind and recovery it advanced not include advanced does I and entirely diagnostics molecular, we've everyone that in pleased our I with in

business. testing our good our it's molecular saw prenatal if for that. testing. good blueprint give genetic with did that's beyond some strength that And recall, and So, we and base, genetics growth nicely you in And genetics an are recovery business. nice progressing And growth you about us will, we very in feel and as last our seeing growth acquisition year, and we for nice

in good the growth really in recovery So, and focused we is we're those areas. and those seeing about areas feel that we're one general genetics of on

Operator

Next ISI. Mike Evercore up is Newshel,

is line Your open. now

Steve Rusckowski

Mike. Hey

Mike Newshel

thanks. Hey,

and labor XXXX that sort a absorb in post about outlook. targets of the there's you XXXX growth? long-term in of costs laid earnings terms -- inflation do for that your in Does can growth any you you that have have issues out talked change So,

Steve Rusckowski

Mark?

Mark Guinan

Yes.

obviously have that broad and point, this like range, would at we periods offsets time. that. -- to of other for just I look We'll done I So, a say but we've in identify

to a multi-year we deviate of on should terms we'll that in other we being sure as and -- enough digits, years. we although look significant in of time offset not next everything productivity identified the I'm it's through move -- opportunities our I that. outlook growth So, the we for have over some earnings high-single several

Operator

questions. There are no more

Steve Rusckowski

good. very Okay,

So, thanks day. to everyone continued everyone call your have a for joining and support great appreciate our We today.

Operator

Conference XXXX posted Diagnostics at Eastern the of XXXX. accessed A later Eastern call November from will Thank Telephone approximately at XX, www.questdiagnostics.com. a.m. prepared today available callers. remarks Quarter for Quest replay transcript A on replays callers or online Web at XXXX, Quest October X, www.questdiagnostics.com/investor be phone or domestic XXX-XXX-XXXX of Time you on call by Diagnostics' XXX-XXX-XXXX be site midnight this Third Time for may Call. for participating Goodbye. until will in be the on international XX:XX

Quest Diagnostics (DGX) 21 Oct 212021 Q3 Earnings call transcript