DGX - Earnings call 3 2023 | Quest Diagnostics Incorporated

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Operator

Welcome to the Quest Diagnostics Third Quarter 2023 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.

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

Shawn Bevec

good Chairman, and Samad, joined Jim by Chief Thank Executive morning. Officer our Chief Officer. Sam and Davis, Financial you, I'm President; our and

discuss make During we to earnings comparable the reconciliation forward-looking press non-GAAP in measures measures. measures to statements of this non-GAAP We may and tables call, GAAP release. a provide will our

our include, on Actual most filed those affect Quest may and uncertainties results that to, on report may differ annual and X-K. quarterly limited future recent materially reports but results Form from described subsequently not those Form on in Form projected. Risks and current are Diagnostics' XX-K XX-Q reports

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

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

here Now Davis. is Jim

James Davis

good and nearly in driving We third grew morning, our X% channels. by physician base growth quarter, business largely and our everyone. the in hospital Shawn, Thanks,

Our consumer business channel base also continued to growth. revenue produce solid

will plan collaborations are that and were we addition, negotiations this opportunities us have health These going that our on pleased growth strength strategic renewals In for scheduled we now to successfully all forward. completed year. build for position

on and is deliver improvements savings. Our annual track X% to Invigorate productivity program

sequentially improved base productivity the addition, In our year-over-year. business of and

details opportunities, growth. are lab guidance our and third financial and financial I'll business highlights This about well then from provide services a talk results positioned of and strength of the more updated continued will Given professional Sam XXXX. robust quarter, our discuss for on the morning, for our we M&A pipeline

quarter. of highlights Now from some let's turn the the to

evolving the core physicians, to drive by customers, to Our strategy needs growth hospitals of and continuing meet is consumers. our

an our are and on enabling across We clinical faster-growing growth oncology. with including genomics customer through areas, advanced intense focus diagnostics channels molecular

driver In hospital addition, an outreach labs. a independent growth acquisitions as with remain emphasis of well on our purchases key smaller as accretive

improvements strategic automation our to service. business strategy across quality, deployment the of operational efficiency and improve with driving includes AI Finally, and

Here the we lab are made physician health mid-single-digit these In services, our base and general few a testing. business we in key delivered updates driven growth progress on and have revenue the wellness areas. strength cardiometabolic by in

relationships driver strong also Our with in key plans health the a quarter. were

earlier, plan all completed mentioned successfully scheduled strategic for we negotiations our were health for I year. As renewals this that

Our to success health clinical the their is members. a deliver we economic and value and plans of result

the plan our growth fueling more with health contracts. revenues to Today, Together to which focus initiatives than plan health of compared from are to on contracts we've double-digit are reduce labs. value-based health our high-cost out-of-network plans, these XX% renewed generated leakage traditional a

In addition, volume to to from labs together Quest. redirect are high-cost we working

for are both majority health of Importantly, costs. good patients and is for care paying which this employers the

testing single hospital Lee Health, Northern progress high as and the grew digits in lab we Health. Health revenues hospital In in Tower saw including Light and most base our strength reference relationships, PLS services, quarter recent with continued

affordable. that health by help testing strategy systems quality, Our laboratory innovative high and is hospital is to care and productivity patient delivering improve accessible

services of hospital and We acquisition to manage opportunities. a professional robust lab outreach continue pipeline

their for help and continue out with to pressures, to systems lab to are which in more Health face outreach cost some cases, us business. their and strategy them of monetize prompting hospital reach labor

workforce. labs, hospitals lab services professional supply Our manage and can help chain

to solutions patient to time. test at the from the to providing deliver also insights right our right the are analytical guide We hospitals right

capital on Consumer of from Health, base and enable acquisitions revenue consumer-initiated outreach patient their and their growth. that our support business health solid to the channel In business generated care testing In quarter. hospital areas addition, we the systems growth expertise drive focus in

quarter. higher-growth well profitable menu, consumer including We these each and the attribute diagnostics. our key These oncology, our was for key as highly and include expanded this health Underpinning other test our continuing areas tuberculosis molecular as strong addition, demand In to channels, is of genomics physician, STIs, performance and testing. channel again comprehensive advanced consumer several blood hospital areas. innovative test

areas double-digits and neurology, infectious revenues and and grew disease women's we health, quarter, in clinical cardiometabolic reproductive including the During immunology. multiple

blood ApoE services. provide We genetic spectrometry which insight proteins features are use Alzheimer's the risk amyloid testing based in and services highly innovative portfolio, particularly encouraged sensitive risk by our marker. into Alzheimer's These our mass to disease growth AD-Detect on technologies

quarter, for spinal strong we both cerebral as proteins panel well, APOE fluid levels which demand as as providers the our During helps amyloid tau well status. saw Alzheimer's of and identified the

and prenatal We tests. significantly especially health, women's reproductive carrier also grew in in screening noninvasive and

our therapy. forefront build breakthrough biopharmaceutical the virus diagnostic designation the in growing innovation and places for collaborations Sarepta which cell test the of collaboration FDA developed Duchenne the AAV This at adeno-associated gene companion dystrophy therapies us with FDA designation muscular AAV us quarter, gene During companies. for other we positions granted area with to in of and called Therapeutics the

disease track. liquid Finally, minimal area The to the enter acquisition of testing. MRD biopsy Oncology high-growth on Haystack positions the integration or residual of remains us

We MRD Excellence Oncology Texas. of expect in Lewisville, XXXX to our Center test in first launch our from early

operational to Now improvement. productivity and turning

improving of way targeted productivity Our operations. to how to its and like Invigorate improvements annual is well X% X savings. I'd program delivering on we're our share examples

front-end First, and automation to during quality sites More we receive front-end automation and improve deploying XXXX. productivity. will Pittsburgh which are to Dallas our laboratories, planned in processing enhance specimen are

regional scan our labs By of use freeing paper-based coming will expanding into of the entry, character recognition, are manual We XX%. data labs. samples from from by we of improve specimen or our coming OCR, to optical into up our processors in this recs productivity all data

functions less optimize call our by some of we administrative into Finally, XXX,XXX center spaces. footprint. consolidating our for functions. nearly space continue estate existing footprint and real reduced to our we square real We've need Post-pandemic, estate feet by

over it I Before the would to that recently Administration like proposed on perspective offer our regulate Drug as the rule developed laboratory Food medical to I'd devices. and by hand tests Sam,

it innovations would states, adding long-standing CLIA, rule We are If are not that the use to care tests medical every under unilaterally LDTs essential coverage care system. regulate developed our our federal enacted, association, and oversight impact the compromising services by addition cost accredited Lab the health guide Medicare regulated to FDA's and medical highly as to determinations. These ACLA, providers for of legislation patients known authority bodies that under does proposed as slowing innovation makes the diagnostic statutory trade day. patient device with unnecessary the have FDA care by existing authority. assertion access, to its agree in

turn our to details guidance. on more Sam and I'll over to updated provide our Now performance XXXX it

Sam Samad

Jim. our for versus from quarter, million. XXXX, versus reflecting Thanks Information offset consolidated prior growth of billion Base X.X% the base year to to while in billion, year. business. revenues the In X.X% XX% third testing COVID-XX third grew $X.XX the the $X.X Revenues testing prior revenues business to $XX X.X% were declined compared down revenues partially Services quarter COVID-XX lower by revenue Diagnostic declined

in declined grew versus prior Revenue total due to Total versus XX growth quarter compared versus volumes in contributing to in our the lower was panels, X.X% PLS year, test year. $XXX Base basis third or volume. price price revenue per an of by Positive our lower $XXX and reimbursement business operating with rec income demand Reported volume million increase points was base acquisitions expectations. molecular XX.X% measured year, the and requisition for respiratory relationships COVID-XX the declined by declined mix. unit requisitions last testing revenues by prior XX.X% offset the million Total consistent of X.X% unit prior per X.X% X.X% number of volume. or the to revenues with year. driven reimbursement partially

$XXX income reductions. $XXX revenues primarily headcount in is COVID-XX XX% basis, of year-over-year business, to partially wage XX.X% million revenues, offset and costs, lower lower related The benefit decline compared performance-based the year. by an base to in and million revenues On income adjusted higher was operating adjusted increases or compensation or of last testing operating growth

the EPS Adjusted closely Cash Reported $X.XX to ago. year-to-date EPS primarily track. $X.XX corporate reduce functions by The support lower and last decline period. our collections. of in costs actions continue remain and $X.XX year timing from the flow income year. year to support was to was quarter our on manage prior a million was compared this operations in and was cash $XXX in cost operating compared billion year of related approximately We $X.XX the $XXX operating million to versus $X.XX to

are is Base $X.XX billion COVID-XX revenues midpoint are in unchanged. the $XXX billion be Revenues of are guidance. and updated $X.XX Turning from between range be to expected year $X.XX $X.XX, $X.XX $X.XX $XXX a be narrowed to billion. to and be expected EPS $X.XX approximately to testing to expected million. expected a narrowed to XXXX approximately revenues billion $X.X billion. be to $X.XX with expenditures adjusted EPS $X.XX between our be approximately expected million. of full Reported range of Cash now to and to business to are operations capital and

will back to I that, turn now Jim. With it

James Davis

our revenue We in growth successfully negotiations summarize, scheduled To X% base all Sam. of relationships this Thanks, completed quarter. strategic health plan solid business year. for we were that for delivered of the nearly

XXXX. our We have as we base throughout productivity drove also done improved business in

and growth Finally, we'd ahead. Operator? robust base a to professional take the questions. lab your services happy for we opportunities, And given positioned with combined our well pipeline are business, now continued strength be of of M&A

Operator

from Instructions] Ann [Operator comes question Mizuho Our with Hynes Securities. first

Ann Hynes

do happening progress comment XX.X% XXXX? good margin with you turnover? feel Can And on goal still for just on the your about what's you

James Davis

again, Yes, to QX the turnover, improved employee QX. from

year, back to improvements Having QX actually to you pre-COVID we've as next as But XXXX we're us. be comment will QX that, optimistic we're not to it do So tailwind improvements go for see expect or to and Sam, that we continued certainly on... to from we a into seeing go we to levels. marched QX. said want feel still QX more as

Sam Samad

Yes, question. sure. Ann, thanks for the

as margin, XX.X%. on QX we the operating call, you recall So talked being expectations about approximately

improvement mentioned, turnover. we're of Jim terms slight in seeing As

into the and made seen. we've phlebotomist We be going of investments winter making but strong season volumes also anticipation investments are coming to of that in utilization terms here, frontline some the in some have

below to we approximately XX.X% -- make terms And cost initiatives. have strong, some of also making progress staff We're in good been the with be now we we but initiatives and light margins, frontline to year. volumes, of the improvement in the really have on investments all to Volumes the regards especially productivity expect targeted for slightly and phlebotomist.

James Davis

other me one Ann, Yes. margins. comment just let the make on

year. this $XXX we COVID quarter, of slightly QX, of go you was QX reimbursement was a XX% we to million. and to $XXX know, $XX. call COVID we $XXX did We our going were of the rate In as in second just second you that If And at and revenue. still And that back quarter, the then quarter go and improved XX.X% start million in margins with north the with quarter. million down $XX of, it, to from at blended up COVID

Now that for And the QX. we you at hit reimbursement was in small and It's quarter really know, results. on third quarter insignificant back XX.X%, with of we in COVID so line our and whole X% as basically $XX. total only into is revenue our X%, the go the

efforts teams So have we're that QX through of really and QX. QX the to these productivity in to from the it's really made the progress and proud numbers coming

Operator

And our with David Sandler. next Westenberg caller Piper is

David Westenberg

I we cost the proposal if of the thank you little bit answer a -- here. the on if stands FDA's I for it it is commentary now, sure on LDTs. just potential more not how mean, still But is? should IVD-cleared mean, kind because So right don't get yet hypothetical maybe FDA does switching I'm it because can I it's way -- with maybe you anticipate now for mean, back we this is tests? look products? of the like how know to to out month? about going look what some some a maybe theoretical right Quest in of Or to going maybe about this this this I the is it's and more high-value

James Davis

Yes.

going and don't I last certainly commentary this and is industry this opened back to look accurate. we associations. largely at up FDA to what It's because statement And think like. it's ACLA theoretical from and response the point know your other

not Look, said the having are our LDTs all operations. most part significant that, of

majority not we In do the basis, are of fact, on it's -- our XX% that actually a do just You're volume right it's we than are on deal diagnostics for not regulated of pharmaceutical -- of most so a LDTs ISO now. less the certified. labs right? huge LDTs, do. X what And companion in testing, -- label We it's is a drug, which us it's form for a

all don't believe is having we to to going work for with continue said We We something it's make And think work our good trade don't arrive Now we'll at sense. that do to we believe we're everyone. that, association. that will fair.

Operator

comes Our JPMorgan. Gill next Lisa from with question

Lisa Gill

curious you just if an about SALSA current to should I'm how as have going given environment into or update think just PAMA in XXXX we D.C.? the

James Davis

difficult, through be current So will right. difficult make, environment at say. would what I we uncertain year. And a little this more more I I you're right? current will what get in -- a PAMA this think Sure. but to think, is The Well, SALSA, The call, point. reform here's comprehensive standstill Congress,

all of to PAMA, CBO. Having the the went in again, said delay cuts a that, PAMA,

CBO from the PAMA So And if a will cuts, you delay And a this last process. new new data continue the the the And collection to is reasons X-year scored a to again, that rates. to updated the to delay is a significant continue to analysis for savings CBO higher process collection association is year. again, as and our we, the going cost government. data because new versus that trade CBO convinced delay lead you're obviously, a

health that important certainly, care will likelihood be lot there's are we it package fourth that a in So different be broader of things care the will that occur. a a And part good some health that of PAMA feel package. to has of But lot of delay to constituencies.

done there. So get we're will confident that something

Operator

Pito next with Bank. Chickering question from And our Deutsche comes

Kieran Ryan

You've Pito. got Kieran on Ryan for

Just XXXX pre-COVID materially year, XQ implied progression that it's looking XXXX what at it looks to you this in to like than the XQ kind of sequential from averaged range. better margin

lower is Invigorate any better than costs offset there deferred trends step-up combining these just CIT turnover on seen drive So really have around just just relatively was that and recently? and is I better And we've the tailwinds to that you oil there comp normal? of commodity-related some wondering,

Sam Samad

the is Kieran, Thank Yes, Sam. for this question.

are in COVID that of down about the drivers -- been the we've in would in seeing margins some think year, Jim despite I talked So the and QX what sequential mean, QX executing that earlier expect in significantly. improvement operating the coming and fact I is

following we So the has that over would expect price. year. One been margins, in is so helps our playing which the what QX far out of the course is

a in healthy around doing QX. We environment price the around renewals of doing positive plan all see driven by QX, the and and And the positive that's continue work price value-based and we some we're the see expect to to that third-party saw positive fact, strategic we, in in we're that plan, there. contracting price

first in it in the quarter. the second seen we in the in third, It It profitable that again factor. profitable to So dilutive definitely, is turned the while. the It pricing and was as quarter. we've environment a expect a be in fourth. CIT, said, was you healthiest profitable

then we're in Invigorate of taking you productivity. reductions that actions do the that benefit We because impact to of also into savings well We X/X that the one cost that's of of expect line, about we around I of as improving be QX. margin. cost mentioned, those continue of in the reductions least $XXX and lot as well see but -- to on mean, and million factoring SG&A started the at talked QX them QX in annual a cost is

pre-pandemic the talked that trends better So all of driving that you've than about. is

-- seeing of and we turnover what increases QX business, frontline the It in expect. to across said given as earlier, said, expect than well, utilization higher QX, in slightly volumes. trending and we I an as as some we more improved has would an targeted pre-pandemic. that is still phlebotomists and impact impact. are we're the seeing service offsetting And across that saw And we're was that a help it be of we it in in but strong higher where still some I Now to of make headwind staff having to these than QX

Operator

Elizabeth Evercore. Anderson is with caller next Our

Elizabeth Anderson

want just in bit the third more gross I quarter. a to on guess little I double-click the margin

you pieces. order you've different I sort given just amounts contributing on sort factors? the rank if talk or of us have think biggest you in answers, bits could dollar But if rank -- or either and or sequentially year-over-year basis, a either of

savings quarter continued about saving on as fourth what And about do sort expecting it think start initiatives. and to How sort that the cost like think into programs? be in then XXXX might of Invigorate secondly, some we have some those sightline from sounds of we Invigorate we and you good the productivity to flow-through the sort

Sam Samad

you. thank Yes,

regards to gross mean, we QX the I I in gross in lower say, $XX line revenues margins fact were that going below in with expectations. So key had being the margin, QX were QX. would QX levels, them of for driver, with versus million our

we sequentially, lower a saw revenues. $XX So million

not of of Now roughly biggest It lower portion terms that million a COVID. the revenues COVID, portion. was in was $XX about

the we because And as well. revenues saw as then seasonality, lower on base expected, business of

on revenue, until on percentage we margins quarter, what -- that around a we driven COVID, the COVID. fact saw lower In price seeing didn't saw QX by PHE QX, QX. a higher in price end for the midway that's lower we're average So gross on were a we was a also the the the price in through And margins gross then driven when point think or you about down about by and revenue almost are sequentially, talking COVID, impact decline. entirely

well. margin has that an gross on as impact So

and make gross drivers productivity Jim, comments. a on here. the expected. we comments But on Jim Invigorate, those of improvements will So the Invigorate But cost will couple maybe XXXX. X% those reductions with couple And with continue Invigorate, It's are line margin. a key our regards to of in expectations. will actions yielding make are the that and into

James Davis

Elizabeth. certainly, Yes,

targets what similar to to we've past. So that going we're going in into set are XXXX done the

some variable So processing. of broadly front actually operations. of we automation. entire use of talked That's our the this expect artificial We're the driving reading as We've talked and that at use -- as be to lab phlebotomy, automated generate end could throughout our of productivity the the text, work of about all do cost fast We've curves. lab furious can. and then approximately X% the we to manual intelligence about logistics, our of

about things a talked past, artificial the the in for big continue and The urinalysis, of denials intelligence is standard reimbursement that work we as always to use of opportunity We've then we always microbiology, us. and business, and bucket a hematology, work.

I We Paper read prepared ton reqs close rec, remarks reqs, the about there's the in on single them math of implementing of do in. paper still a fair it's work to there's a down still OCR talked XX% you million that, still technology that when to XX%, come Even to number. year, but it's every XXX these all there. if opportunity

So and We continue teams going drive to we talented in hard. feel around efforts it we'll it, year. it. next We good invest our productivity about into put

Operator

Bank from Next De America. caller is Bruin Derik of

Derik De Bruin

So got I've two.

what bottom going But of didn't line of the other PAMA. in you're probably it 'XX. delayed, In just I've got does for a to in to that's some because savings of back get think be is plans So do offset accretive one, that delayed that see follow-up. it Or to get that? and 'XX, will your got to we one. would to that then a by Haystack is XXXX, get dropped the it the guess, And delayed, down and lot investments first if first the i.e., I going does I doing. drop-down it The we're you're 'XX, it?

James Davis

future through Yes. base we the Well, growth it, I'd making And pretty Haystack, look drop-down we going the okay? dilution our on say, that first, with investments the on growth, are at and we've we're there, from growth. when we've drop-down, with happy the business which to respect incremental that at drop-down the is that seen gotten effect we're the propel to look after

we'll As today, take year, investment going we're next give we to into get a PAMA we're go will to but not guidance delayed, does close both obviously drive do, to obviously at look investment If we look. going also at margin take opportunities Invigorate our then the we'll cash growth. We'll we And future drive look investments. always at returning improvement, shareholders. to like to free look majority opportunities of --

Derik De Bruin

are what's strategy of approval doing just a the just reimbursement, it cost, on curious to test given diagnostics, that it? a what is new category? on curious I'm of in diagnostic going follow-up Alzheimer's patient sort cost And for FDA sort seek your there that? the I'm just is on you

James Davis

Okay.

we CMS test established of the So preponderance about the we the carrying systems our the I better from is see all of there what for patients. our bill, that, Medicare for client XXXX reimbursement that today. average you where $XXX bill from an that reimbursement value-added AD Having blood-based than it's the orders these reimbursement on for has would are preponderance because said comes incredibly test. test. And reimbursement directly tell is and actually health

it run. LDT of appropriately. At FDA LDTs we this that it. So for It's price an the like we're not approval many point, seeking we

and substantial. pretty biomarkers are make our testing, we're the that been cerebral also has The blood-based CSF diagnosis I fluid so it. growth you the to of help up spinal the happy using with And also in to And the -- both significantly patients. growth testing, with CSF as is tell of clinicians would quarter

Sam Samad

just maybe a points the come call. to back to and of you and couple for there are others that PAMA on Derik, question the And add

the That's to at we is thing to XXXX. the stage not delayed do. that's I'd do say, can PAMA only Given going come -- will and PAMA, given will today the That's thing as in be plan the around back uncertainty this if we uncertainty. prudent

because year So down we will plan come come as PAMA back. will next will if prices

likely an before, then get say, -- to talked to potentially we've there's Jim much said is as chance were will evaluate we yet. and And a -- I on will could we decision much if PAMA that line earlier about planning. could delayed. I'd balance, to versus set say, can that as not if we business happen, see million benefit result should would benefit But we happens, how that our we I say, drop Now We'll the this invest when that investments if and delay, And that in how $XX what but that assess that of not everything that as to then million $XX will the And to can drive EPS. make versus benefit a -- that decision made to when we and make guidance. we we evaluate as EPS improvement. year, bottom

Operator

is caller William Brackmann next Our Blair. with Andrew

Andrew Brackmann

I high to your to labs. Jim, around leakage cost to go comments back reducing want

of could forward? talked quantify big just sort and in that's opening talk of remarks. about just here, for broadly I can you opportunity strategy about part going of that how but think sort growth sort that I be your the know you maybe your of

James Davis

Yes.

X opportunity out-of-network steerage of there. like Quest I to from buckets then in second what labs. the systems high-priced call, labs leakage would to I think One independent in-network work is, labs there's health of Diagnostics. And generally is reducing

different strong but our just tight X payers. starts with and it initiatives, collaboration really generally So with very commercial

and work health into as what us high-priced us labs, information provide that which, physicians system who are them. not with are pay for They sending the on the are they good laboratories, what co-pays general, hand-in-hand out-of-network and for good provide work the doctors the using higher are employers paying you for obviously people going health We higher information deductibles, to country. the not in know, care still in that that's patients

information get commercial tight Diagnostics. them Quest call the the payers out convince as information. a to So them We the to try messaging the team. by can save same the time, We really work. like patients money always we're our independent that out on customers, they We using labs remind are to commercial distribute it's to to that partnership. At move

of we're and that's rates physicians why these commercial message we growth higher to providers, continue the seeing We have types plans and established with where significantly relationships.

Operator

Kevin is Our Caliendo next caller UBS. with

Kevin Caliendo

contract new you Congrats this, bit the with you volumes. benefited last payer there in anything the in a incentives on talk terms the you partners. did maybe the contracts, driving contracts? your -- Is if little were major renewals the duration there's time of there that Can actually about of

Just duration, terms, negatively, wondering anything positively has pricing, kind incentives, thing? of both if changed, that or

James Davis

then generally But don't talk as where what terms, first We foremost. will improve duration and to seek of spend, tell And I requisitions that. and move about previous like commercial the trend you around can in these mentioned a Yes. the We try we things the share incentives the question, second, that. I design that establish just price and payer our continues. is we fair to

our rates, try those XXX% In an as example outreach to we time we we derives benefit. design and to addition, of try to step over plan so that the period when we incentives do prices go from down commercial a rates benefit a of hospital acquisition down and Medicare derive the

agreement, those hard the want. types work build to the we we So in trend continues just and into of direction I think the incentives

Kevin Caliendo

of to sort for care lead more guys going forward? you Does potential this value-based

James Davis

take care continue arrangements continue to value-based our early reach Well, to meaning we within if really managing expensive call, every and we contracts, and lab you're embed other programs provide we when to care you from again, don't generally These from of into value-based work relationships industry, as types number going in value-based contracts. the we've I be deliver incented that said what these this -- that involved with that. fixed value-based there separate value let care, diagnostics you're so talk we incentive are, on are can commercial physician risk payments managing and ACO be that. about back When to large past, large have risk, of disease cost and the Medicare in reach more of progress taken physician ACO to for work plans a these health these continue with care and really you're and closely to ourselves some groups risk the towards the on good care they year, of early some these inpatient to we the are groups that payer, organizations

Operator

Nephron is next with Meehan caller Research. Our Jack

Jack Meehan

I of cleanup couple have a questions Sam. for

First is on collections.

So just an you pretty underlying any a growth, impact And second is had out, but it any -- if then know weather on add better AR called the X% actually weekdays on on that? good. you basis? been was I base could seeing can little anything have color I wondering build.

Sam Samad

bit -- speak, the the a first take whether collections there. or one, of and Yes. days. any Sure. weather I'll one-timer, little Listen, about Jack, note will so Jim talk nothing to

and a I trending or COVID, the trending really a that overall a are in of mix more down help think collection pre-pandemic, kind as that's think trending But trends DSOs to of given COVID. COVID. were of back if were you reduction a With DSO shorter look back higher result to I DSOs bit pre-pandemic. our the normal they window up, would where think AR DSOs is I

note quarters. some as at just that's end normal the within So really QX of of but timing nothing well, there. There's timing

comments did and growth and you where any I around collections are. we're with say, Jim, things are a want earning happy general, But make to in couple one-timers? would of So on track base

James Davis

year was weather it at was comment that, last significant hurricane on days and on The year's versus would July. year, was fell help. July a slight I not Jack, help because hurricane. things is September the year. that this I like early weather and versus but a worse quarter last a Monday last this Yes, in only in The other days slight of fourth a make mean, all, than in year's Tuesday

a bad year So days ago. and really are Tuesday Monday in versus essence, really, your

You day out But on one called the one Monday. because a XX. day Monday only again, had a fourth bad that's fell of

So yes, an I of there, that bit mean, a but not impact little significant.

Operator

Our is next with Citi. caller Donnelly Patrick

Patrick Donnelly

work I through Maybe a in still XX talk spend expect there to there. also like away a 'XX couple set And from Haystack. about be you could the follow-ups we catalyst approval we the would some just It any line time then getting see of on related the guess, data? sounds to specific timing that more expectations when helpful? just process Can

James Davis

Yes.

the Haystack we made was As we've for process. set decision-making for we of that Obviously, been generation. evidence continues -- line time our what There's the said, that's part team. our ourselves, on

we establishing we're the of oncology the production, as with commercial key process partners. call, relationships for release, commercial ready of some what Now assay, our in get I

in ready, get when that early of of seek testing do assay buildup some once So our is Texas good We're we assay, Oncology to the feel we'll Center of Excellence testing, bringing the a about about good we so testing we substantial good. far, and reimbursement use likely so up feel Lewisville, mentioned, that approaching that. then start and of lot the as we'll [indiscernible] to a the

with respect Sam on I'll to... the let financials touch

Sam Samad

spend, terms here I and then question Patrick. mean, regards -- I'll EPS to 'XX, around sure. year, this in with I'll and talk terms Yes, talk dilution your address

that about same $X.XX So We range. on the is again, that team expecting dilution to $X.XX. be progress very in $X.XX to It's in pleased call. the still the year, we're talked QX $X.XX range, This making. with the the EPS to

you If annualized that -- what this XXXX and towards still to applies, is dilution the see said expect 'XX, we've see what year. than what is going in you this be we look less to

if you to $X.XX $X.XX that, to $X.XX, the next that's $X.XX annualize year. So

than this on year. be next things So annual an we year basis are expect to less where trending

expect 'XX on accretive. forward, look then we 'XX, just as lower expect be be So And an to dilution to basis. we 'XX annual than and then actually improvement we

with deal announced when the with said consistent on call. we we that's said QX So what what the we consistent

Operator

Our Wright caller Erin is Stanley. Morgan next with

Erin Wilson Wright

those I gains key as fourth previous you mentioned well think previous question of from year? productivity laid But in understand basis kind PAMA continue, unknown. out drivers question, XX like of I continues quarter. deviation of there's a think And the about next that and should is should anticipate points operating we to into margin for a XXX profit dynamics as -- guidance what long-term somewhat or are the we the profit XXXX, kind some You expansion

Sam Samad

clarify, and the Well, let me way. question, for Erin, the thanks by

of basis X and over off XX we XXXX. that points have the Investor for what to is talked an the So about Day rate at improvement we years of XXX that's

terms had XX%. XXX the operating if by higher in if of next said either years gets being with in we of being the did reform delayed. had we over rate at the points XXX said we improve We was time basis and to PAMA X So PAMA XX or could the approximately margin lower 'XX end end come around comprehensive back the SALSA

the XX So That has to not XXX X over applies. the still changed. years

margin our down. to a operating lower off XXXX of going have come expectations base it's apply Now because in

the expect call. on I -- talked XX.X% the we on the approximately call, about that to slightly said we be it marginally earlier As below below QX

and expansion all, mean, years, still over I I pricing for But and apply. was that foremost, the is say, for by The the way, positive X environment. -- the in of first positive the first X would XXXX operating drivers drivers margin XXXX. not

price positive very depending expect we're encouraged happens and renewed, have We that price, are seeing pricing that environment. talked year, relationships ex We the but to the what by strategic we're PAMA, on about positive we seeing been next continue. and

or fruit growth Productivity more yield that improve phlebotomist the for adding terms Invigorate productivity and talked CIT in they're their do, they we we next one expect becoming experience seeing well more investments productivity starting about and being instance, profitable. both that And we of and that improvement, we're also year to gain that hires to as as We're of them. productive.

expect all to So drivers those of we continue.

would signs slight to too what say worse markedly it improvement, XXXX. that We a early early that early don't an improves saw encouraging. The to We saw it is to say it's right expect whether become bit than it's of item. in now XXXX. too in but project today. some that we mean now necessarily to Turnover right QX were is But uncertain for

James Davis

thing the margin you is know, fixed Yes. in that as up Erin. trends. The mixes last encouraged rate. And say business lots volume coming certainly costs the has we're by I'd the into existing of a business volume incremental

physician And are in systems. we trends about good good health good in the volume and feel feel opportunities about fourth next front the the of that we quarter M&A the of our funnel as our us We script, in through trends march year. early feel office. we So about volume as I in mentioned

Operator

last Jefferies. with caller Our Brian is Tanquilut

Brian Tanquilut

up just gains G&A, factoring margin of quickly. really question Erin's we to If maybe of is build the this on the baseline and right Sam, follow think composition -- such to profit guess, mentioned, and about all productivity between you the off PAMA. I gross things that

to growth maybe we pipeline there. the what's deals. the given just, and your growth today? about in the rate a And sustain some Jim, follow-up on had should be Obviously, quick How then you've thinking ability pipeline hospital

Sam Samad

to to not Yes. that it first couple baseline the I mean, with off of improvement is that period of. XXXX are a question, about, regards is the right XX There look terms believe we to Brian, factors at in talked of the the we to XXX. in build there.

than it's Again, improvement there's a which to a But going about is, $XXX basis to factor the one, 'XX year, is be terms X be years. them than something the are much uncertainty terms this we going we factor But PAMA, It's smaller to saw that believe, $XXX the 'XX, believe is going another the over albeit less right regular still factor. flu of XX becomes into for COVID, baseline, a one million a obviously. of we of on next is the in and what be going the to off. other from drop the test, One like just the margin is it a but as negative XXX approximately much to approximately in one million test we of instance. operating confident point still year

James Davis

the breadth say opportunities them hospital in teams trends our are the the up cost things Yes. health on the neurology, hard. growth them cancer, as are investments for focusing for we're working systems. as of Brian, encouraged drive as whether that's going with that and their well I those investments, by right, the in outreach systems, our that growth are depth our direction, funnel said very health will I script, health And the of obstetric, that in pointing I in cardiology, are of truly think, in capital PLS. And things drive systems,

at capital are driving significantly those make laboratories. of and that us are the they they their albeit on their now book And I outreach business are health to care the good focus like make good the today. all really think systems, growth, investments, thinking costs in that turn how things institutions really really New Presby investments ones sign sell York a you so investments you see can when their strategic of higher, need that's When to

Operator

the for That day. was question our last

James Davis

in certainly All team the appreciate Diagnostics Quest all our from right. today. done we've productivity to all for again to away really also our support. to have thank continuing continued satisfy transitioned Diagnostics. continue in joining as business, COVID, drive magnificent I drive We thanks Quest and Everyone, base your a call job use patients, growth and those our that want who, providers

have a day. great everyone, thanks, So and

Operator

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

Quest Diagnostics (DGX) 24 Oct 232023 Q3 Earnings call transcript