DGX - Earnings call transcript Q1 2024 | Quest Diagnostics Incorporated

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Operator

Welcome to the Quest Diagnostics First Quarter 2024 Conference Call. At the request of the company, this call is being recorded. The entire contents of the call, including the presentation and the 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. ahead. go please Sir,

Shawn Bevec

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

those discuss may non-GAAP materially of to from but may earnings that comparable the Risks statements During press a in may in Diagnostics' measures are on reports affect recent current not X-K. make measures report our described those include, to on and reports annual call, We and to, provide projected. we uncertainties and most this differ will and subsequently tables non-GAAP GAAP XX-K release. future limited measures. Form Quest Form reconciliation XX-Q Form results results quarterly on forward-looking our filed Actual

reported to and refer call, For reported refer adjusted to this to references diluted references EPS to EPS. EPS adjusted diluted EPS

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

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

Jim Now is here Davis.

James Davis

everyone. X% morning, quarters. continuing good first and delivered the nearly Shawn, Thanks, strong momentum we base quarter, growth, revenue recent business In the of

ago. also total years the the revenues nearly first for pandemic time We X grew of since the height

enabled physicians us focus customer commercial utilization high on new hospitals, plan care and advantage to of take growth. combined broad of access drive strong and Our health our rates with health sustained

brain advanced including double-digit in multiple advanced clinical within cardiometabolic health, areas, health investments also women's enabled and growth Our diagnostics health. key

quality. automation levels which continue includes In as improve AI addition, and and well to as our ongoing investments productivity initiative, in service Invigorate

are Given the year. strength our the full we raising our for business, guidance of

quarter, engage advancing the developed administration that to rule appropriate the still preserves and the proposed to FDA's rule services. of like discuss turning in laboratory testing proposed the to regulate I'd on withdraw laboratory critical briefly role the highlights We to Before encourage legislation diagnostics.

to continues critical forward will which testing, compromise believe, We care we are access unnecessary to slow if diagnostic this add regulation, move with lab costs. FDA that disappointed enacted, innovation, and health the patient

that lacks including statutory raises legal authority issues, We to the serious also these FDA services. the unilaterally that rule the regulate believe

While we with will the we on potential trade comply steps. ACLA work be continue with rule, prepared to to association will next our

our our talk on highlights the detail and recap I'll first Then results guidance our strategy Now quarter. updated and about discuss Sam will financial XXXX. financial from for provide

growth customers, meet is of delivering channels the and our diagnostics our that advanced customer areas, health enable consumers. oncology. growth molecular needs brain including Our on genomics clinical strategy focused and solutions intense and focus across drive on through faster-growing an evolving core to physicians, with hospitals We

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

includes of service, Our operational also strategic business and AI across improvements efficiency the the the experience. driving improve quality, automation strategy workforce and to with deployment

delivered to have driver practices our channel by of owned large we these strengthening gains. health XX% few health physician physician plan services, care high we've in reflects new by members plan growth sustained retailers. single-digit market on U.S. high as wins physician made key This progress Here Quest also Diagnostics. approximately at is and customer success are business share In a and driven each updates overall and including services large with the of areas. growth access growth all base those our the of revenue the utilization, of groups lab in physician broad in multispecialty laboratory health sizes, access relationships our significant A

and out-of-network redirect employers. patients health plans them closely care to prices through that laboratory often outreach reduce for raising significantly which with volume programs partner innovation. We and labs, costs labs charge costs value do, size, our Health than from scale higher and we hospital

in our we enhancements pay. investments as frontline remain as adjustments also to and We such pricing digital increase the strategy disciplined through our platform customer in experience improving

previously, plan contracts renegotiated health successfully that year. renewal our for we highlighted were As large we last up

In incentive. addition, more than type our plan XX% revenues now some have of of health value-based

In physician the contributed acquisition services, our lab of growth Lenco, York independent an New to in recent also in quarter.

by reference continues last largely hospital testing They grow faster mid-single in Our reference we and quality particular, grew testing, cytotechnology our roles trends, the lab several technology. and momentum continued Hospitals business our pre-pandemic opportunities. In be and more like microbiology digits. in which histology, from with we certain staffing to with and innovation, robust, easily persistent than promising year. M&A base services, progress more Hospital us are we making to fields challenges pipeline revenues sending talent because our our with of value. fill can our are maintaining face also specialized

to In and strategies. cost reevaluate as their face staffing lab continue general, hospitals challenges they both

health reference efficiencies selling us provides with rise, continues a through sense the capital to with heightened priorities system of ways leaders help and other with savings their lab to professional and for operations, capital testing, services optimize by directing of generate strategies. capital lab access that Additionally, lab returns. help as are of range their outreach through Many better some hospitals a are cost their Quest hospitals areas programs. are whether revisiting into more or investment urgency clinical and approaching to

year pipeline delivered double consumer-facing very of grew As strong. Consumer the outreach that testing business and from doubled, platform, initiated PLS our revenues opportunities revenues both our on while remains base nearly building questhealth.com. digits, we result, last a gains

test testing. health most panels, tuberculosis general categories of popular included and STDs Some our

expand reach exposure to of assessing launch to are testing such our forever menu extending with our PFAS continue for test and potential through also partners. as channel We chemicals dangerous various our

health several brain we in disease hereditary disease and diagnostics, for health brain genetics, strong our areas, cardiometabolic health. Alzheimer's of advanced test risk prenatal clinical particularly tests CSF revenue generated women's within double-digit Quest for Alzheimer's by In advanced largely health, portfolio including growth our early blood includes diagnosing and driven key assessment which test our monitoring. of Growth was and AD-Detect and

blood test launching our menu. we to add year additional our expand are to AD-Detect biomarkers We week this this intend and to providers further p-tauXXX

In March and our oncology, for clinical of as institutions the The prepare experience and have of we molecular national test the early year. later this test with broad is validation completed MRD step leading MRD launch early Haystack the final oversubscribed XX cancer our in Haystack genomics our program to nearly experience participants. program

the are about We opportunities in also early excited screening. blood-based cancer our

test liquid Texas efforts We specimens partner Louisville, for first colorectal received U.S. This the trial biopsy PROMISE from our DX. for forward cancer to gain to the screening quarter, supporting this for clinical look Universal our approval on site a regulatory test. Universal's

service, helps providers cancers on sequencing for tumor tumor somatic STEPXXX centers. our based select mutation profiles is lastly, cancer late-stage large which therapy from generating And interest

in treatment to a us are monitoring MRD cancer be oncology screening, molecular leader the and fast-growth Our space positioning selection and other markets. and investments in genomics

excellence. operational to Turning

deliver Our X% program and savings aims Invigorate cost productivity targeted annual to improvements. a

During service we continued to deploy and levels quarter, well productivity the automation as quality. improve AI and to as

basic use service calls and front we service creating term center to questions reducing we customer and answer made from will to phlebotomists which door, digital progress on in website patients workload AI our For team. what our a kiosks instance,

make operations other several automated and efficient labs also front-end sites focus these our systems recently These employees across and systems XXXX. We process expect of while to preparation quality other value-added our improve in elements in work. the also deploy more to freeing specimen on

delivering superior I'd like colleagues customer experience. Quest for Finally, to a my personally thank

I'm a at which one Week, a us celebrated health reminds day, care. create together role Lab working just purpose the XX,XXX world, life Our bring at Quest industry time. nearly the of life that employees to labs to proud our play healthier heart of every key

that, with our guidance. I'll to turn provide performance on details to more our Sam And it XXXX Sam? over and

Sam Samad

up first business prior while Thanks, were points reflecting Diagnostic consolidated base revenues X%. Jim. Information the growth up grew the to were billion, testing In offset versus lower X.X% prior strong X.X% in partially revenues by compared year for from year revenues quarter, our base Revenues the revenues, nearly the measured Services year first requisitions, $X.XX of in weather January. impact weeks the the severe testing number X volumes increased first Total versus volume, basis prior base grew services. X.X% with despite versus total Total of testing XXXX, COVID-XX XX of to X.X% of quarter acquisitions the contributing by the volume.

the year. Adjusted test of benefit in XX.X% growth revenues first or to wage primarily impacted base of by quarter, mix income XX.X% approximately prior year million operating the due compared req the prior and and relatively higher increase consistent per basis the by million test due quarter million On $XXX of business reimbursement revenues favorable $XXX per ago. was and X. volume requisition offset quarter costs. year. Subsequent the testing first weather req per quarter, April test first strong repaid a operations of income $X.XX up an by was slightly an by COVID-XX to EPS XX.X% was million $X.XX favorable the driven quarter $XXX negatively revenue lower last the or offset the was the of prior XX% of testing. in from lower was an end flat X.X% Base largely versus in $XXX operating in EPS $XX req of XX or up in or the the test year. Cash of compared $X.XX, year, $XXX price to on During points. Revenue revenues, Unit the was prior was year mix. to number increases increase basis, COVID-XX matured operating in was Reported million number revenues business, per notes, adjusted the in to Adjusted year. million which flat. Reported to million versus was last compared versus $XXX growth largely income senior we revenues versus

is $X.XX $X.X is adjusted Turning to be billion, $X.X and capital $XXX range Revenues to a from and expected be $X.XX expected are a in $X.XX approximately of year be Reported are be be EPS Cash to $X.XX. of our and to billion. to guidance. EPS million. approximately operations billion to expected XXXX to full $X.XX expenditures range expected to updated between in

to some $XXX you for COVID-XX testing the year. following underlying guidance assumptions as our key million The are decline to your update revenues approximately consider full models.

year, expense change million. Haystack the to to been dilution year. Operating interest be for margin to flat to end driven No expectation share count In our guidance expand that the of our EPS and to compared for improved the or terms to $X.XX from productivity. growth adjusted of $XXX by full only closed Net to an full oncology approximately average includes M&A, be incremental volume for have of XXXX. date. acquisitions Weighted announced

at $X.XX the strong X by into to than are have we our headwind $X.XX the While QX, which quarter given more only midpoint, experienced EPS the in year, adjusted January. in $X.XX from the we offsets trends volume we raised guidance weather

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

James Davis

summarize, growth our and business XXXX. on hospitals revenue customer Thanks, core physicians, Sam. our across channels, trends strong To consumers, from delivered building

plan sustained high diagnostics us strong health relationships, investments Our access health care customer drive customer in of to new are growth. broad enabling advantage and advanced take and utilization

are confidence as as in steadily improving in improved profitability and us productivity well giving quality levels We service XXXX.

Operator? take questions. Now your we'd be happy to

Operator

[Operator Instructions] today of come question Donnelly will Citi. Our first from for Patrick

Patrick Donnelly

in way throughout dilution this want expected on to pieces? that about talk like year, than Obviously, there? a here. the story way you're can It a want expected right the you just kind to then quarter sounds this that margins, ironed Haystack as make better kind you the see out I to we to little of way think But work last as about the moving in better expectations bit 'XX the through Can the work talk as them have terms our I come we expectation. about about our Sam. year. we cadence think focus and the for the Nice year, maintaining progress was metric the of as of performance sure quarter. we big through

Sam Samad

good Yes. morning. Sure, and Patrick,

of QX to is best about think year-over-year, look terms year it the XX% maybe in XX.X% of way operating were margins at we this it in compared year. last So to

last quarter of price price quarter headwind you about So of can year think to well terms as $XX in but different and million price. at terms this last in parts COVID then. reimbursed consider ways. less had same were you this But big getting for both at look many much we some moving COVID, a a versus year, because versus because also volumes, lower $XXX back at We obviously,

year, dilution growth If versus then to the I in but you other being think the you you biggest incremental QX. was headwinds, mean, still COVID improvements. as and last these about productivity one said, for base smaller saw volume Haystack, full But $X.XX year expect be we offsetting headwinds, it that

So of business base improvement operating majority we as actually of consumer through margins. The headwind initiated testing offset in the almost the COVID well. expanded terms margins also

see good We in improvement that profitability. business to in momentum continue great and

Our significantly base of last from gross QX margins year. improved quite actually

So and we very had we've the encouraged by momentum the forward. start see that going that

to it's, then say, normal going seasonality you step would a QX In terms is, and I'd think which QX expect normal your margins of in consistent would QX, cadence, second I down in forward. margins, maybe operating step operating and QX seasonality say, of that pre-COVID up terms for in question, answer A to I us.

Operator

of Securities. Hynes next will from The come Mizuho question Ann

Ann Hynes

Great.

came I'm sorry, there we should QX Can in your be we view consensus should we but else you'd something differential tell And as expectations? by what conservatism? by only Or that as versus mean, So raised internal I is consider us X%. you EPS model. $X.XX. XX%

Sam Samad

start, let but as of both is in way. the expectations, our by So by Sam. internal expectations. terms versus in add all also you This beat own well, Ann. to thank means. We me external question, for Jim, anything want And you QX, the if versus And

of really at significant in $X.XX year on of most And in for in impact. headwinds in heard terms from that X the weeks, EPS of of QX tough impact We offset we at as we a of to So was, offset the driven terms headwind and mean EPS of the utilization headwind quite you XX we fact point a weeks of had weather remarks January a But terms terms the time, out came basis weather. were really, $X.XX from us X portion better. result of call first the prepared We called had by that earnings beginning that. I headwind expected of in the we weather. that on the weather. a the that the

table. So to that's the good that the behind and essentially $X.XX, we largely us, feel $X.XX off that's taken

EPS felt So comfortable midpoint. we by increasing our at $X.XX the

-- We base expecting normal only we say, strong, utilization, was here. Utilization We're in to back in the in not only quarters still first X utilization X QX. it's Now quarters the really in that quarter business go. we're especially what saw more have to, the we second go next would quarter. I

would we is driven had So also that's what our the pleased EPS very with the range headwind and that in the taking I by. QX beat But off say weather table.

James Davis

We add, channels, Yes. is was The Ann, it saw physician health that only saw broad-based. the thing I'd well. as we all growth systems in and across volume it

beat and in very internal we in So back strong. it expectations. slow finished start did March, a nicely it came After January, February and our

Operator

The next Kevin of question from UBS. comes Caliendo

Kevin Caliendo

regards tests there scope injunction that with maybe the going be you that Is did of anything were out that might to so going little sure a know of or to, proposal and get that think LDT. I'm plays can you and have what ask it way before through how to any can over wanted had going in bit go for an let little implications I maybe about out hoping that think included? And the guidance a bit So some are it. the sort the reported final this expecting to you guiding? change ruling in maybe you the you the was you fiscal for try ACLA. about were financial you're it time 'XX, But you proposal, us you've talk to address maybe an like you that to come are anything to the actually now you initial

James Davis

Yes.

Kevin. thanks, So

don't all we yet. largely what We've rule seen device proposed code. So A the follows XX look, the CFR final Part It's regulated the is XX, rule. is know which

just preparing start we're let very and So Diagnostics strong with management look, Quest organization me for it. quality today. system quality we in you, But a strong tell a

was also from CLIA other come space. follow. people robust health a CLIA many guidelines would good the manufacturing follow and myself we Diagnostics in that we know, tell feel Quest you you care that about And companies the regulated we device in other from As XXXX. It's guidelines, and implemented very that. I

to we here there's what And what Certainly, those not So what CFR in do. impact we'll to the final be it. address XX CLIA how gaps know gaps do know recommends between is. there's But we earnings EPS and recommends. We we'll prepared or what XXXX. know once going to on rule be any

was out the X- know, you laid to frame X-year time time As a frame.

it. we've do we'll So in quality place We'll and address organization the a confidence be this to and way. prepared, thoughtful in got

Operator

Tanquilut Brian The next will come from Jefferies. of question

Unknown Analyst

You've got Taji Brian. on for

just on points basis XX So first, volume. to contribution, total called out contribution obviously, M&A the

is contribution the basis full the XX to curious, for Just revenues still point expectation year stand?

James Davis

the But is other close the then basis year. yes, to in if will for don't point expect robust. as But we continue things would It's funnel time. additional Well, the trend mentioned this timing take and good. do acquisitions some this year, we transactions any quarters. our do And involved, script, XX is following we these

we're but optimistic. cautiously So,

Sam Samad

our announced just to provide we be the things approach guidance have our always the clear, that And only consistent and Yes. carryover will is going include that be acquisition. to in been that we

announced in So our included not will we anything guidance. that be haven't

in if So we other point, do any to prospectively them Jim's our going transactions, forward. close will we guidance include

Operator

next Morgan The of Stanley. come will Wright question from Erin

Erin Wilson Wright

of just diagnostics the I tracking wanted advanced expectations. kind segment, on how internal that's to broader ask to relative

Just instance, obviously bit about front? as talk acquisition. catalyst the what's in advances holes And offering you Alzheimer's, in that the have little on Haystack front? on made potential your opportunities? see for You've the you and a like that areas can Haystack then next And

James Davis

Yes.

in even standpoint, advanced exceeded our it certainly quarter. expectations an diagnostic met the here and from So

AB is for with a in announced which yesterday uptake test, We're We health we've brain me how really press blood-based talk test p-tauXXX. our pleased is So about has again added a p-tauXXX. of The exceeded introduced that had expectations. XX/XX amyloid already plaque first. We let really, test doing. that release

blood-based brain is like So great we in feel portfolio the shape. health,

of that As continues well. portfolio well the well, CSF the side to do as

On the well. screening very and women's carrier are health care side, genetics prenatal doing

continue between somewhere as to pre-revenue. early there. With are more We've what it's But in We on that start to XX oversubscribed. embark call we it our that we saw you respect double-digit program. had experience program script filled know, to said a to Haystack, about we see We and we growth the partners than thought to quickly at with. customers. we and up lot XX XX off it were And cut the still

So going the to run several for in next the a position for we about quarter. program feel months, will good national early that. launch which that We're later experience us broader

So about our advanced contribution across tests. diagnostics the feeling portfolio of of good

Operator

will Cherny from The come next of Leerink question Michael Partners.

Michael Cherny

of utilization it Maybe, I you the about guidance, the can will to Sam, and if the slightly be dynamics expectation normal environment. more back a turn talked that

into As also on total does you think not the that, about how but and expectations that on number, only that. for how your organic mix factor volume

Sam Samad

for Mike, you seconds sorry, the repeat Can question of missed it. lost please you few a kind there. of we portion I because

Michael Cherny

Is this better?

Sam Samad

Yes, you. better. this much Thank is

Michael Cherny

to my trying fix I'm Okay. headset.

from the volume areas factors So but included will points dynamics, are could question into that just it's expectations and allow expansion? market, that a potentially what's short? for expansion margin ingrained of how pull just on make hit a both that in to and expectations the you the the where And -- margin you organic perspective fall versus the your sure also a mix you normalization is push

Sam Samad

all as some Jim, can I color start means, I by you Yes. add well. can and mean

about key in as helps areas think that we and volumes growing the growing portfolio talked that standpoint that But -- revenues, the from from as grew overall digits, well. of than I X diagnostics which in volumes in have in us us got grew a some QX. less we that profitability also in some within helps base tests advanced double Jim X.X%, Mike, really we've earlier, are

drives close sort as terms in we of slightly Our volumes, maybe productivity mid-single of a of our that and lot in look expectation in that is the that margins we're improvement and terms below growing to of forward. digits,

improvement growth and both that terms mix X that we tests for terms these So to the expect of of in also remaining advanced drive of in some productivity. have, diagnostics in terms overall an we volume of but quarters,

assuming not mid-single growth. We base that same more continue this of are that excess be next is utilization at of we at maybe level to come in expect revenue some volume be that's that a assumption, than we to call and just -- going do remember, and growth it's the comfortable that quarters, Now to the it whether X based Maybe normalize. saying closer same extent, lower you point, we're to rate this growth But not starts sure. slightly we're and some conservative down to volume going digits. clinical

Jim, would add anything there? you

James Davis

a I just COVID, from would look, growth the so basis was really quarter relatively say, with XX in all On Yes. points total of basis, a mix we rep-per-req the flat. pricing had still standpoint, good. in, even

and test that And strong. the year that Sam remember, $XXX really million decline. said it req last offset, in $XX per script, worth that So at per COVID COVID of was test mix test. were as suggests really,

rep-per-req. saw we standpoint still that a So offset mix from growth completely and in

in quarter. with the we mix saw really the So that happy

Operator

Nephron Next question of Meehan Research. from comes Jack

Jack Meehan

if you Was bit little could unpack more. growth hoping the core a

the that the lay what notable. core So a looking Historically, pretty gains? beat nearly like Was the why was been this just a for. to I versus out any quarter? you it steady a Can so That for maybe lot be X% business, And has dynamic? came pretty was in X%. on outside is lab a thoughts of growth factors in utilization stronger share supposed

James Davis

physician said above, up of we But yes, Jack. X in large also several or closed picking that, what quarter. integrated we're X all with we've remains last think in Certainly, seen We it's strong, groups the with transactions the think utilization we the large Yes, consistent share. I X the quarters.

strong. was physician core volume Our growth

hospital growth Our was reference strong.

quarter. the relatively volume in Our strong PLS

contributing suggests to And growth. that well also up. hospitals business our utilization pathology in So as was

as combination see it share well plus retailers physician all physician as channels, types, across all utilization physician groups. And a we large of these it's So gains.

Sam Samad

thing Yes. mention Sam. as And other I'll well. Jack, one this is

you're the COVID overall good almost very the mean in quarter. quarter, year-over-year. that growth, so base consumer-initiated base well Health testing If Basically, looking strength at tailwind doubled and as Quest was business excluding a business the I business, in

Operator

The next comes from Evercore question of Elizabeth Anderson ISI.

Elizabeth Anderson

slight of a business. -- pick how like you prior me. of just the for that about up, sort Maybe progression the two-parter and think could Sam, just on get sort were that first, comment about you consumer the what average? And In about your environment? are the versus to towards when margin you How corporate of saying then the labor turnover you you secondarily, Can more for to talk you the think expectations just quarter? wages are continued seeing about

James Davis

both. address I'll Yes.

So consistent with overall business. the are margins margins business in on the our the consumer

meeting good that. So improve we so And to it's all right there. feel year, It's at about last for continue the and the company.

but environment, a the teens, saw up, last year. In rates were we just yet terms threshold in in not to our we say, a or retention the levels definitely pre-COVID let's down labor running tick the -- at high of that below below tick XX% back and

the We jobs All our about feel across in So processing. that. frontline board. good and that, saw moving in. we in improved specimen direction the a logistics feel we It about tick downward good was attrition, quarter, that's the

Operator

JPMorgan. of Gill comes next question from The Lisa

Lisa Gill

looks margin? of maybe an that about Can comments, us you some talk arrangement. like plans care prepared to health give just value-based now and of your example you of the means having what about talked XX% what In type that

James Davis

Yes.

generally, we it incentives So types. talking two here. we're value-based what call is there's And about

is related acquisitions. So one to

plan business, XXX% system going to rates down on outreach not It we that the is over that health an to It with of health time. that step paying line we let's book X. to contracted down are of day XXX% Medicare. will when with health acquire and So say, was the come

that higher there's over So down some paid our in fact, of step for time. getting price doesn't rate, work a since period it to we're again, right --

The or second broad-based to are movement. of types of really types incentives incentive related volume

laboratories requisitions Diagnostics. high-priced laboratories system out-of-network into Quest of movement or So from health from

it's that systems -- out-of-network from, for again, And labs. you're so plan are at in share paid and tied gains coming from health requisitions moving that getting it's -- essence, health gains share those to

So really, that we two the those are of get. types incentives value

Lisa Gill

quarter. Jim, change no to the all cyberattack the Quest at confirm, just And there's in on from impact

James Davis

No, X% through somewhere a $XX the our quarter. of impact and impact an pipes were revenue million those standpoint. from than but between adjudication requisitions in moving ever million no less $XX They're cash

Sam Samad

And is the revenue. just to to any be cash impact necessarily really a not impact delay, clear,

Lisa Gill

Okay, comment. great. for Thanks the

Operator

comes of Michael question Ryskin next Bank from The of America.

Michael Ryskin

I quarter. earlier up the on Congrats follow want to on an point.

year. You touched just the the and rest how you quarter the headwind about on for the that overcame of COVID think in to price

else concluded growth? the of health year? mean some again, as think last some through So the per of be you terms we I impressive for you in you as How what's we should about said, -- that and of of COVID two-parter that year headwinds the through you that of revenue saw rest a that's major then basing requisition thinking Is go in growth pricing despite kind of year? that that should driving and the anything that of some And arena benefit, plan had that the the that and renegotiations year. rest headwind.

James Davis

Yes.

let start, So me and Sam let make some comments. then I'll

moving there's multiple the here. remember, parts rec calculation, rev So in

is it for first price. it the flat to and of quarter, was the year. in be flattish the pure rest The one We we expect said

is req, per req, test mix mix. payer per rev in test said also per req then Test req calculation and test and the We the positive quarter. in

was quarter, we expect mix that in that favorable continue. the to to We expect Test continue.

in the trend like that saw we So the told, all we quarter. first

takes Sam, we and it Now we'll quarter see out. there's But as each do have always move plays puts you. to and how through

Sam Samad

all, COVID year. happen $XXX I'll $XX material really year, of mean couple that add had million We've it's of the the point, I in decline. million a first things. Yes. for to Michael, the rest not of full be COVID QX. for One, decline going maybe said of We the

going price given was there went the be May a price impact really last But small related fact felt impact actually -- the to So in the to a biggest year. that yes, impact of it minor is middle down because price QX.

minor them we helps. the businesses price increases then flattish Then just as ingredients it's the the terms negative a modestly a impact price Jim price. price. of at that, of to the have within it's really, So in dynamics. terms we've pricing terms other impact. if you full health in up look impact. And system The of Jim, we price color some little expect in for bit said, is some year that health plans, be a had of where on

I in overall, of think terms for net neutral year. impact the So price the

Operator

next [Operator Davis Barclays. Our Stephanie comes Instructions] of from question

Stephanie Davis

Congrats on the quarter.

on your prior You your touched the in centers a remarks. opportunity bit automation in

So solutions centers. us I opportunity up? what front like that the have AI phlebotomy could you that help structure be how in difficult of desk tease with or hoping is and these that talent versus mix about cost will looks we coming How out was the of admin more could AI to improve should think cost much

James Davis

know, And off patient higher aliquoting, efforts urine service that's of within us. centers. wages, a for the the and labor. I Stephanie, processing laboratories, dividends rent people always the where expense, there's in specimen would pay that. like in automation and than structure efforts automation laboratories, said it's things area, the XX% phlebotomy, what we Well, our in we've it's our the pouring And obviously although of continue of to cost say that as the call that. you tubes for Within much about supplies is mostly sorting, continue company

a side, highly operation. as I phlebotomy the On labor-intensive it's yes, mentioned,

minutes to is to Now still there time paperwork, that biggest the comes What entry time, computer requisitions we movement electronic there's end to into from XX% draw XX% stuff. in paper service type XX to that improve of our X probably to that paper is requisitions. system. The of doing to today information opportunity X still having Quest manual typical still a up minutes XX into our center patient that input

hits also, that work paper could on the working physician convert try allow that us would that we other some that. for back So through self-draw. tell and you send I some we're offices to

that work these continue So we development. stages, are stage even our staff phlebotomy on more some things productive. make to early early should other But

Operator

final Brackmann Blair. of from Andrew today our question William And will come

Andrew Brackmann

of a announced since the about Haystack it's Maybe just you earlier. acquisition. following guess on diagnostics related to guys advanced some questions been I year up that from

So I but the you be that know maybe MRD views just we or of your then? this drive in those share to thinking no future it spending about how since talk in you asset to And about the on can particular, wins? may segment some in here additional evolved potential year, how dilution have change related or investments should mentioned

James Davis

double Andrew, that Yes. changed strong that I our hasn't market estimates, Haystack the in MRD space today we thesis on they're Well, very the and mean making -- very, grow doing by is with our our The digits. in terrific. doing at all applaud one continues test inroads competitor them, to the acquisition. market, primary well there's and and

that basis marketplace the for credible second, very a third in competition, of strong So we low offering very, good very think very has detection. limits and a having

feel test. about So that good

going. about is we and where it's market the this So investment great feel -- still

a We're build planning, advice on STEPXXX launched going that. that standpoint. oncologists from as to We've medical therapy treatment get planning well assay doctors, to cancer our allows

about tumor-informed feel feel it's good we by way, good the like again, -- technology. about And the So on that. We Haystack, test. we a

this from up centers. medical mentioned a oncologists broad-based signed As prelaunch customers XX community-based are earlier, early we've set of These to program. we academic experience customers for

us come that have basis of early on for this So a this. we up, customers be launching away national we'll we year. program wrap later this like once the right And experience mix to

Sam Samad

Andrew, this standpoint. dilution Sam, just is to add And a from --

dilution [ solution, year total, of is $X.XX this ] to which last in still not have It's XX [indiscernible] changed. expectations incremental our versus So year.

For year, expect we Haystack. next from less dilution

So a expect to we we basis, neutral actually look to towards to 'XX. accretive on a tailwind. year-over-year And basically start as be being then it's

that from Jim the changed expectations, referenced. has interest or experience nothing financial we're in So a program and dilution the thrilled really about early

Operator

final the question. was that And

James Davis

Thanks, good thanks We support. operator, and again day, right. call continued joining Have All our really a for appreciate your everyone. today.

Operator

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

Quest Diagnostics (DGX) 23 Apr 242024 Q1 Earnings call transcript