DGX - Earnings call transcript Q3 2024 | Quest Diagnostics Incorporated

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Operator

Welcome to the Quest Diagnostics Third 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.

I'd now like to turn the call over to 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 to 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 including to and refer revenue call, revenue For compound Growth reported refer adjusted annual to projections, this growth to rates. growth references acquisitions, adjusted associated revenue diluted references outlook consolidated are EPS rates long-term to growth growth EPS. EPS and adjusted organic earnings growth, from our diluted with EPS

is Jim Davis. here Now

James Davis

and morning, everyone. Shawn, Thanks, good

together the during working Hurricanes their very purpose, into difficult while their inspired especially contending are serve details bring life working create commitment care life at with by patients collaboration effects world, personal one to the impacted I our want and this time. third get I'm customer time. lives. to a our focus, a Milton to employees recognize values, hard to we healthier They to Before our customers on and who Helene quarter, and the by Quest from the also

results. by physicians of including with wins expanded new We X.X% as acquisitions. our organic with a delivered turning quarter growth driven strong X.X% hospitals as business total customer and well growth, and revenue Now third to

in Canadians. excited more we acquisitions. the foundation growth expand X favorable demographics about completed us for opportunity serving we in serving Canada, of to millions that and LifeLabs, are is lab acquisition quarter, of than finalized with We provides third and the a a population LifeLabs a trusted our leader During strong U.S. the growing

completed we leading serving transaction X groups also laboratory quarter, Wisconsin. Minnesota end the acquired our We in Allina health New Health, of And the nonprofit at in of physician business York. system with the Western a

the health the OhioHealth and with complete plans acquire week systems also the University we During quarter, leading to to X this outreach just OhioHealth announced nonprofit transaction We select Ohio. assets acquisition University quarter. the Hospitals in lab Hospitals, and from with completed last expect later

ability improve seeking our top lab to affordability. strategies systems their highlight acquisitions attract to outreach health recent evolve to Our access and

of geographic limited also U.S. us systems They our where the previously in the position to reach. influence health of expand areas had

X to returns. profitability We complete this for year are now acquisitions on criteria and growth, our meet that track

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

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

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

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

growth. in the lab have progress on of made high single-digit Physician another each areas. revenue we updates some In we quarter of are delivered Here services, these

by new and Our expanded was increased to due business, driven advanced customer diagnostics. wins largely utilization our performance of

both a physician hospital volumes originate independent offices. core channel. from customer contributed reminder, as Our in to lab acquisitions this also and growth outreach within And acquisitions

testing Advantage options to Medicare We and strategies direct like revenue volume Quest. plans narrow strong high-quality, continue to within cost-efficient growth see network also where

we plan health progress partnerships. the During into quarter, our to expand through geographies made new also

renewed large limited reach agreement access. in extend with plan Nevada, Virginia, that previously our Elevance Georgia, which will Health national markets health in had a we We Colorado and

broadened Virginia announced also with our and Florida Plans. Sentara with Health recently our access We in arrangements

grew hospital In to historical mid-single revenues digits, to cytotechnology continue lab specialized and which services, positions, struggle we including histology, Hospitals levels. above is fill lab microbiology.

contributed take range our of rather their in-house being continued than increasing of These building to portfolio testing. the testing addition, is In for scope demand reference advanced capability. advantage diagnostics and ordered expanding as dynamics own strong hospitals

Our and help expertise in lab managing improve hospitals quality can operations. laboratories efficiency their core

leading as a laboratory we health a lab system innovations affordability. chain to in quality and and diagnostic scaling professional collaboration reference Jersey the testing with specializes New includes improve management. supply During in formed that services access, quarter, well as Quest

enables range care a continue us to out to help the us ranging ability acquisitions. from lab that workforce face, systems seek challenges premier outreach testing plans constraints reference demand to patients, more for affordable from they many of hospitals shortages for capital to why and to employers. from This That's health address collaborations professional the to management health

grew than consumer-facing our XX%. platform, more testing, questhealth.com, total consumer-initiated revenues In

less Our ago, testing. by years and grown for driven XX% repeat rate customer demand has comprehensive health, disease STI to than XX% from chronic X

identify vitamin During deficiencies. mineral blood quarter, also to we introduced and the tests micronutrient help

network expand resellers In our e-commerce addition, with and to we continue providers. partner

growth health blood-based brain we revenue of health, diagnostics, areas cardiometabolic and areas. clinical growth disorders. testing for in strong women's especially disease several as Alzheimer's well The health particularly as in our double-digit drove autoimmune was In across advanced AD-Detect

diagnostics advanced innovative services deliver in investments scale Our that and and care us to patient improve growth. enable drive

treatment from program, the track which providers academic MRD and quarter. for experience many Haystack test assess recurrence from leading results are in tumor early We're response to providers to fourth we Haystack MRD through have community blood genomics our oncology centers our molecular In cancer and the oncology, used to make on available date with and MRD Haystack nationally solid cancers. to pleased

genetic and testing, by consistent with growth quarters. was prenatal women's hereditary largely health recent Our in driven

discrete includes we introduced This convenient month, several testing. infections, self-collection way testing women a access We GTI and continued demand option give also genital service to centers specimen patient our robust X,XXX saw a STIs. at in tract which fast, that

In the area demand disorders and care autoimmune which strong order specialists. for help testing speed solutions, we care saw in by screen autoimmune of diagnosis physicians for comprehensively to primary disorders, our

HXNX be viruses. tests are later service selected the pleased a support be flu we diagnostic and this to the flu Finally, Oropouche HXNX We month. CDC introduce to to to providers laboratory avian of test by one development of of plan an Avian handful for

operational Now turning to excellence.

as quality. driven to and as automation use the levels Our aims deliver Invigorate largely X% AI cost service program and through savings improved of productivity improvements, well and productivity annual through

in we end-to-end our national routine for making the Lenexa, full of completed fully quarter, our the build-out third laboratory During core automated lab Kansas automation the network. tests our it at

We automated Clifton quality. our specimen improved piloting will accessioning are which help increase lab, and now processing productivity specimen in in

are automated collaboration samples. include cervical Digital to their with which to solution, System to help Diagnostics pleased we our analyze Hologic Hologic the extend cytology Genius cell Finally, utilizes AI

solution improve We quality efficiency cancer help expect and screening. cervical in us the will

collection to I before Congress to Medicare over delay want XXXX. Now the and moment it cuts for turn reimbursement to to under recognize PAMA scheduled data I take by decision Sam, a

to collaborate pleased we encourage solution provides legislative delay, with reimbursement. ACLA, that secure are we a association, to While Congress fair our continue permanent with the to trade

performance our Sam Sam? XXXX. and updated guidance Now for give will third our more quarter details on

Sam Samad

and quarter, versus up growth channels prior X.X%. Services third for as revenues Jim. hospital In revenues Consolidated year, grew billion, year. X% physician the Diagnostic were strong consolidated Revenues to our the organic key acquisitions. the contribution were from in Information prior closed up as X.X% the Thanks, by well recently $X.XX compared reflecting

of acquisition in of Allina closed our reminder, LifeLabs our outreach the end acquisition September. August and a As Health towards from closed

of average. X.X% LifeLabs X.X% up points by driven measured by The the by third X% carries primarily recent of advanced requisition July acquisitions of impacted impact prior to revenue total the driven volume basis weather in rec the lower global revenue of which the versus typical quarter by than IT and the impact with contributing requisitions, XXXX, tests negatively Total the number partially per per the was quarter. volume of and test approximately Total versus demand, in the requisition XX favorable increase outage acquisition, number CrowdStrike increased an diagnostics per our mix offset volume. by year, a in

compensation. Reported revenues the increase the of million well adjusted compared of and XX.X% year. reimbursement impact price with or in income offset was income CrowdStrike of million stable, increases or revenues On to $XXX of XX.X% compared of basis, was higher partially and weather as consistent $XXX to expectations. the The revenue as revenues an to revenues impact our recent operating $XXX XX.X% growth, income wage strong adjusted in year. third of Unit organic due was last XX.X% acquisitions, $XXX performance-based or or million the and outage by operating quarter million was last operating

in a to and to margin in approximately on the year. outage impact estimate was year $X.XX We on EPS operating quarter. basis Adjusted a XX the the estimate operating the IT weather of ago. $X.XX impact $X.XX We Reported in outage the versus be quarter margin IT impact the be and to prior of quarter. compared LifeLabs $X.XX was late points. negligible had $X.XX EPS the EPS approximately the weather

of $X.XX senior with versus quarter, through in Cash notes million of X.X%. approximately from third coupon the an the million year-to-date prior operations was the $XXX quarter In third issued average $XXX year. we billion

to now a adjusted EPS $X.XX guidance majority expected million. to with Cash announced our capital be $X.XX of our XXXX and from underlying you Reported and and expenditures closed of increase key Revenues is billion $XXX $X.X updated $X.X to to be billion. are $X.XX range to expected recently and The in in acquisitions our The $X.XX Turning updated to the full to be is related in approximately revenue guidance. following operations to between assumptions expected LifeLabs. guidance a $X.XX. year range billion updated are to expected consider. from are to for is EPS being be be approximately

to expecting but acquisitions we from expanding do these reminder, several quarters. earnings slightly year. over expect next are increasing profitability a contribution not material Therefore, with in breakeven a new As to initially profitability XXXX, profitable acquisitions typically are

the approximately quarter. Milton projecting and Hurricane to fourth EPS $X.XX the from approximately revenues disruption $XX in are by impact We negatively million by

weather of combined expected and of prior versus margin year and due LifeLabs CrowdStrike integration down the impact headwinds. be to Operating to the the

full $XXX count Excluding compared flat of Net interest share year million. be expected end to expense the margin to be of up. Weighted expected is is operating to items, impact these to the average be approximately XXXX.

We $X.XX the our EPS impact in fourth midpoint despite of and guidance quarter. maintained adjusted Hurricane the narrowed Milton at the have

I'd XXXX While share like about next think you to as to aren't considerations provide we guidance initial prepared year. today, some

to X% long-term a reaffirming from a mid-single-digit assumes expansion basis XXXX CAGR approximately outlook with to at over acquisitions are the X% and which growth CAGR through earnings X-year We XX margin our from least single-digit period. revenue of with high XXX points XXXX

complete X we X% target next to acquisitions to exceed year. will XXXX, X% the Given our from expect in revenue acquisitions we growth

expect from recent debt the Excluding due Interest already end expected issuance. LifeLabs, of as this other to is this be acquisitions towards to contribution next we a expense completed result the year. range carryover year to will be our the increase high that of

$X.XX retire with noted I plan senior X.X%. $XXX raised XXXX, we average notes And to in of with in billion of an As X.X% approximately coupon of senior March coupon notes of August. of million a previously, we

high our expect long-term pieces with consider we growth digits. the outlook as single we earnings into heading XXXX, Finally, to all the consistent moving in deliver

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

James Davis

organic by as and acquisitions. Thanks, and new growth expanded business Sam. hospitals customer business our and strong revenue summarize, wins physicians as total delivered with To well driven

end now profitability, criteria for that to on are by returns. meet track growth X year's complete We acquisitions and our

new growing advanced plan year. and us increasing drive next to health offering customer diagnostics business Our position access

drive of strength and in from acquisitions, growth XXXX. to are the we business well our earnings Given growth revenue revenue positioned and accelerated

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

Operator

[Operator Instructions]

from first Mizuho Hynes Our will question come of Ann Securities.

Ann Hynes

in with in that had Haystack, detail the within think organic now you do? business you've the change next can of the When and And the you a think you do how year assets is do all will you your assumptions remind how there for XXXX. over in profile any year, that, you growth will Thanks XXXX? for us think about

James Davis

Yes.

really So price growth good Those off very in but increases in and came improvements quarter req by rev coming and rev of test, being req. flat in per we basically really per test growth price improvements about test of req mix. with driven strong a just volume per X.X%, nice organic nice per

go it's and the point I So and with report hard on utilization appears some last outs week, to mean going it all there as in put means, based earlier we XXXX, payer X%. judge. enter It's the of strong. we week that on into to would at by utilization. out remains this approximately But

solid. think So I assumption of X% is an roughly

is to achieve terms we've said next going Haystack, dilution We said year the we're and In into less, dilution on the track be approximately would of that. this year still $X.XX.

Sam Samad

Yes. dilution $X.XX. incremental With this the regards to year Haystack and is

So it the year. total to we in forward $X.XX here it's to assay months launch $X.XX And the as a And of to will well. preparing next improve we next get reimbursement as dilution. go are and expect few

Operator

The question next Partners. Cherny Michael of Leerink

Michael Cherny

growth. from back correctly, just and about I you you think commentary your Obviously, to your combination share go some of can I I Elevance, heard the some a if If marketplace have incremental had inorganic gains Maybe of positioning.

growth how organic Ann's do is share way your within pickup can that you any the question you're great. control bit building doing down, relative about like to relative what the the versus side, relative think on pricing feel to be that market-driven. side much we you to there's would the If profile As a on break

James Davis

Yes.

and into on states to growth those the our in any for Virginia. And be those those we states with access With take fuel Georgia changes but expect those quarter impact of first, results, until again, of Colorado of help year which in are in to year. thanks Elevance, XXXX. none and none third effect the of the first changes question, respect changes the going allowing expanded in of organic next So Nevada, to the us in network But Mike. had

Sam Samad

pricing Maybe to if share gains. and I add with regards also

I terms reimbursement flattish business. improving still we our think expect pricing, in of within to slightly dynamics

is I this think it that's year. the expectation as going forward

that as some share and improving share we're about, So acquisitions. hospital a dynamic. talked a addition gains made, we're And recently as the of outreach in a shifted seeing the share where we've also result market reimbursement result Jim these some gained positive we've we've acquisitions to that -- just increased seeing gained of access we've good

Operator

of question next Donnelly Patrick Citi. The will from come

Patrick Donnelly

know but Sam, Can the there? about nice little bit maybe up. it accounting just a in And margin progression to term impact, at earnings I one that obviously margin into it impact. year. LifeLabs, maybe stuff near as that on next early. accretion both talk accretive should least earnings, bit then close just the a you there's see little we the then the get on know holds some I back and step to

lastly, it what we're like? what But versus because through would at to there. on deals and LifeLabs smaller just, just side be we looks talk the larger a we we obviously Jim, helpful continued M&A the being saw one topic that profile. expect much see And pipeline on then in the what Should

Sam Samad

won't in and about the a into details go to in us to had that would of XX%. about -- and CrowdStrike QX, maybe I briefly about for negative from weather in Patrick, a terms we There it Yes. trajectories quarter. with deal. was regards as XX impacted We impacted was first, actual operating margins I'll much in level, were points. But closer so just specifics basis QX say, by XX.X%. slight weather both around impact adjusted the LifeLabs I'll well operating then talk talk margins at forward, and the high what LifeLabs how going the too

revenues really, the some go as there. well in know, about deal terms we margin profile you increase in of you at beginning of had profitability. There is in forward. we X adjustments scaling to mentioned. the some accounting the of worth expected weeks' is LifeLabs deal terms adjustments, up as are of But As The as

Now from the and end full potential year, would we EPS $X.XX the X, the year close $X.XX deal talked deal in would the accretion that XXXX. was in have assuming a we'd to so that that of year about year at the -- basically

the margin on in listen, would color for we'll So be XXXX call specifically. the at the level, so is still deal an overall terms QX will of say as expectation enterprise. operating to early, margin I give -- below we that a high a operating closed bit our just what start Patrick, more But the

terms over some rates, to And margin margin to level So next and time. a but eventually be X to operating operating going dollars terms in but going ramp of the of accretive years the to it's going take operating EPS. bit it's at to in dilutive up of Quest that's X be margins,

and margin EPS that the from short on the So operating we to term. get more dollars margin the I'd in operating as focus deal rate accretion opposed say

James Davis

your on and -- funnel terms Yes. of part on question last Patrick, the in your the pipeline. question M&A of

the remain systems integration would But what Health completed, the of discussions Hospitals, labs X including lab and going that around in of lots System, then it assets phase just this digestion of now I deals the University Allina say is and physician obviously, health and So we've various here the in LifeLabs. York strong of on does with New we're office country. PathAI, OhioHealth,

work hard the talked margin are about. at accretion and these we've we that So getting at integrating

Our for outreach and small those. always appetite continue deals, on will look we're the for

Operator

The Chickering come Pito Deutsche from of question next Bank. will

Pito Chickering

on on go the back Sentara Elevance I Can and Health these questions contracts. to

order of long to talked you servicing guys. who managed any we've concessions you sort a Did large you to wins in just time the since contract in those have It's enter contracts give previously You those markets? pricing care you go guess states. patients. guess I previously? is pricing get weren't seen earlier, been for those to other I Or why in concessions states about in do

share payers simply So pushing Or hospital-based these central what the labs are it large curious servicing take to labs? just guys? from is labs

James Davis

Yes.

that completely Virginia. but were we with basis, network a to we've products, Nevada, indicated. Colorado Elevance, and their national limited for the all, same in out broadly on had except So their not and some markets the with we access of network. Georgia, I respect to been

just like labs. opening labs that many provide up access all to the So is an of independent this the large national other

So we that. great on feel

made and not great plan system that plan, health It being goes great into were but was a Florida. Sentara, the by laboratories, put the in and was they Virginia, below actually the we Virginia health us other a in serving. It's network. health previously Carolinas well to served down their the decision

good we that. feel about So really, really

health commitment great a and quality, great these just represents competitive plans great include offer pricing. it think service starts I independent that on with quality, behalf of Look, labs really to

Operator

will The Tanquilut next of question come Brian Jefferies. from

Meghan Holtz

for is on Holtz This Meghan Brian.

Just going be EPS back the is right, $X.XX, slightly, a if to midpoint stays my less. but while LifeLabs check guidance, per Milton, add back guidance should core at ex you have to hurricane, $X.XX Milton math, that little I up just

just can that of you EPS break So kind down guidance?

Sam Samad

And up really by midpoint, majority the EPS M&A revenue talk to a really bit sure. was as the as guidance, let million took well you revenue, that the because of M&A LifeLabs. of Yes, majority at the about talk and me we about little know, $XXX was

$XXX by majority driven the So in M&A, which, really would in up profitability. the is the said, I at say terms of million midpoint, as scales we

in So point your initial To term. little we range EPS, $X.XX tightened each on no the by side. to profitability the around

$X.XX. remains unchanged midpoint The too at

$X.XX headwind We Milton are in an absorbing from QX.

great good correct the higher some organic rev req -- req sense strength up, by that are We're seeing driven We're in Organic per as rev in and would you that's business. the X.X%. of gone the the even than at EPS, you QX, excluding impact utilization. saw of that. seeing was yes, per Milton, have So

the that largely impact unchanged EPS of the is at of midpoint. some offsetting So Milton, kept strength the but

Operator

Westenberg Piper Next question David of Sandler. will come from

David Westenberg

good Congrats on a quarter.

[indiscernible] believe meaningfully. I So reduced pretty

wage seeing here still inflation you're norms. think above historical I

historically help other you terms Are automation, some continue. terms see to of pushes in leverage, et that? maybe can could just they wage And tailwinds inflation So pulls ways, to with pressures, of headwinds rate. even in about ways those operating things, that some the any and talk actually do and long expect pressure, price are continue there low you you some the can you're seeing maybe unemployment talk other get of insurance of about cetera? wage increases how can And some of we AI, there say, offset if maybe

Shawn Bevec

there real you did just the quick, beginning. What in with? very you up Dave, broke start

David Westenberg

rates I started reduced. there turnover with being

above historical I believe wage is norms. However, still inflation

So just the you pulls got then can question rest and that? you right. think of pushes about the with talk the And I

Shawn Bevec

it. got we Yes,

James Davis

Yes.

down our in in as So come the we indicated rates XXXX. here turnover script, have

the So last XX% we're year, range. were XX% now in in low XXs, the and they below XX% to

this category. on of Some job depends really But we've a seen overall, nice improvement. still

than of tell XXXX kind to year. historical to slightly I'd in the But I range. norms, say Now want go X%, the to X% to it inflation XXXX it's wage pre-COVID, was would last terms less if back of to of X% you in X% you

was. XXX points higher it it's So basis than historically

might As down. to we has a but closer hang would are. to X% same it articles I we still to The reading America tell, into walk certainly And quit in come the year, early it's bit range. next think rate you're be I going think in that

I think relatively unemployment is stable.

think those markets, I labor frontline industry. can in stay where it's They see positions in those those phlebotomists, in primarily we our by be from to competitive the continued to processors, employees. lab don't roles, X they specimen employees, there'll the environment, of labor industry our need a logistics, our because move mean actually industry. So our types And particularly we more tightness

AI Now our about of and laboratories. inflation. offset doing to a of to wage there's continue in use that things automation lots we're lot We've talked

in in laboratory As our went we Kansas our automated third live indicated script, Lenexa, automation just operation. we highly the with full

then we us in sorting we to ton productivity the microbiology automated continues front-end laboratories. platforms our equipment AI-driven specimen platform, of like the of several that. some to of of types we're We've continue expand Copan, getting across and automation of laboratories, a our installed which what use our give call and nice And out Copan some

Sam Samad

in we regards P&L, Yes. I'm and that And overall forward, couple XXXX and of are as well just we aware if a there to in sure leverage both positive just I look things, dynamics with add of seeing as the of. you're going couple productivity David, a

still is rev that a In terms don't at there system -- pricing favorable. mean I of it isn't environment pricing health modest req, in the per challenging to say space.

But test req continue step-up in giving up seeing flat are We're versus seeing us to both we're and done. a to of overall per positive well rev the terms getting talked Utilization, we're in positive per about, per as as with test go of test nice mix, overall, req gained the historically, reimbursement. to req. aided positive, a terms fact share we've some of continues be that also we've which by we've acquisitions that

So us to this forward in these overall, improved year leverage additional XXXX. all of drive would look as productivity and we and

Operator

Research. The Jack Nephron next of comes question from Meehan

Jack Meehan

for to Wanted a follow follow-ups. of up had couple I Sam.

trying bit. dig the revenue little to into quarterly a Just

me quarter. X just of in the $XXX what added to within gauge the million were is, about LifeLabs have the XX-XX? much M&A could X% like like was, been first you was initial sales else looks what sales second base tell the everything weeks the growth? COVID How doing And The could from trying organic was then versus

Sam Samad

Jack. Sure, Yes.

stopped as insignificant. terms a was to it's All I total of growth points. growth. COVID, it -- basis become the year-to-year from expectations and base a on in would year on have basis, largely XX by COVID revenue really say impact our impact It versus about impacted impacted in That of noted, it to year QX. was regards with we've So stopped we total because I reporting COVID you reporting somewhat within mean, is really

so Now to X.X% was with X.X%. revenues we I other quarter. the for regards in M&A, your grew about total growth question, Organic by think

over quarter. So terms roughly or million was we so X% $XX revenues about had weeks in of the a about from in LifeLabs X contribution M&A.

sense the contribution portion to the So LifeLabs. significant of Obviously, of a that should a give as it's you growth. M&A

Operator

next comes Evercore. Elizabeth from The question of Anderson

Elizabeth Anderson

saying, the like One, positive long-term sounds term, that should confirm general, EPS? it a to And was saying XXXX to can think creates stable you unnecessary as volatility sort then pricing, were longer that impact know well. So in in DCP we I unit just some you neutral think was guys slightly you're what quarter? of I of the the for question.

just great. what you confirm be that's -- saying. could think I that if you're would I that,

Sam Samad

to thanks regards first With DCP, Yes. the Elizabeth for question.

a to the on I basis, it in quarter close million itself. year-to-year $XX up So would say, was

a negative operating impact So it was on in quarter. margin the

it's a give that the detail should was want. to you negative that but and on -- this depending the impact quarter year-over-year. markets, ebb going you So We flow

regards with the the current is bifurcate that, if XXXX think systems kind of and systems I been of definitely what view in of then pricing, in environment a And dynamics. I net and to terms in terms that is health challenging we've negative seeing a health reimbursement pricing

Health plans, I to flat would say, modestly positive. modestly positive,

business So pricing pieces you the expect flat together we and government since put we've overall, when now, got be the as were well the to right PAMA cuts deferred.

when guidance But the QX So you overall, I'd is XXXX specific on current call. say positive we'll information give the give expectation we is slightly more flat to view. the

Operator

from Morgan of is question Stanley. next The Wright Erin

Erin Wilson Wright

Great.

Has you geographies more around halo hospital And your been share of changed a deals little So in gains specific you've are with market the talking recently. anything of strategy deals? that terms these or volume about guess around where outreach seeing a that sort bit effect I from you're any and contributing moment the you're there gains, share target to of perspective? way or well what hospital outreach how kind the is deals. terms these revenue either how just at quantify approaching of much as this in market

James Davis

Yes.

we health to and the Ohio and which quarter Cleveland, later University OhioHealth So the market in lab in deals by Minneapolis Hospitals, health Allina expect All Columbus, announced, close Ohio. had closed X using in those those health were X markets systems the in the of we labs the physicians of -- characteristics systems of of and majority independent owned the therefore, systems.

marketplaces. So it us into puts those X

Our those before share de minimis these markets was acquisitions. in

which and markets, all a will play we markets, we now in access look all other in for with, And network to the were nationals markets, the continue markets, in in growing and of payer so we all X the are strong all those way those plans have of those big where have presence U.S. in that obviously, the strong by we markets. Blues markets

access. had we strong So

largely given very But health systems our the are ability physicians sell, was that to the limited. who owned by

for So the markets of of may look where dominated that strong in and those do that where these we they markets willing space, we nationally and are characteristics markets we of in have look for to which acquisitions. terms We health get systems access, out have we be market. that the look outreach for

Operator

Davis The comes question from next Stephanie Barclays. of

Stephanie Davis

benefits remarks the comment prepared had You revenue about from MA volume networks plans. the and in narrower at

given you challenges curious forward benefits the see and clients are the facing, a pace coming some some those potential adoption for in the was accelerated of for of years? strategy I few an So could

James Davis

think Advantage of versus work Medicare, that And narrow Medicare the as you Medicare more definition, to do networks. space. fairly any is I if spread health systems willing Medicare have, you plans generally going the Well, at look country by in provider. that well all know, across are the

definition, networks defined a plan plan, Medicare have more that the moves life more by when most Advantage are Medicare Again, from of Advantage a narrow. Medicare and to a plans

from So that. good there's come generally things that

experiencing utilization. book that seem That's some of now profit Advantage they're to as under forward, higher -- plans, us. generally on well. be Medicare experiencing for good the But business going they're And yes, they pressures

to So quality, independent good to cost. generally work Diagnostics, means service, Quest comes more lower extent of like that the labs and it great

work labs Diagnostics. to all Advantage we the Medicare labs opportunity like high-priced welcome with to out-of-network continue to to plans the from So work move Quest

Operator

comes The JPMorgan. next Lisa of question Gill from

Lisa Gill

couple a LifeLabs. guess follow-up questions of on I

to the the think growth you remarks, are secondly, then your Canada? you looks market I corporate average comment in understand maybe years, you margins being get So that X more And and prepared at there. the made Can like give Canada. Jim, about favorable today help idea in in us just us Quest that what over like you the below demographics to you'll Can today X margins talked what a for an look LifeLabs? of

James Davis

Yes.

Canada. on So demographics first the of

population the is the of higher significantly growth Canada than U.S. actually So

years. of north been it's several for X% So the last

us news participate. those that's so that And good for all for and

And higher U.S. is of physicians of also it life. visit the the Second average there's the is obviously, demographics the generally per people the there more Advantage, in is of Medicare the population what Canadian req's U.S., the they Medicare age is frequently, north aging see population levels. and acuity more -- we -- older what of in They

industry, And so the us. is older beneficial to also an population serving to

demographics that's it's the we between great why Ontario that that a provinces and total, Columbia, serve. But in the of think to operate. There's variation we British in like some Canada. So major place X we

that margin we yes, in average. to operating is and the sharing couple from close company than average. of we terms us the to to we through get margin, practices rate expect through of next the Now rate best ideas, us, company the back to expect lower expect and over years get of them margin synergies to And the our to Quest them

Operator

of comes Blair. Andrew question William next Brackmann from The

Andrew Brackmann

anything last deals you back talk accelerated Jim, to few years? I integration maybe wanted gives little to go your or Just share, keeping comfort have of sort bit going how evolved Can of integration and pace forward? digestion. your just on on a can the you more up about net this over comment which maybe tactics efforts

James Davis

Yes.

the So U.S. in we're I it on mean let's in deal. Obviously, it start operates LifeLabs. much here depends the very LifeLabs, with Canada.

we're the best buying is procurement going then buying to big I is changing that So for do shutting phlebotomy any of call no synergies we look network would in there's laboratories. right? across we opportunities take and are or logistics What things We're general, there's look side. best the things -- synergies, Quest what What What at? the -- not price. And at in for Diagnostics all. we're on they down that like the we and not are not network the at,

versus person benchmark operations phlebotomy, departments logistics, the FTE, in is just per the operations we laboratory, of microbiology, auto our draws We is, it benchmark practices within the them shared per how we stops the overall many bring into Second laboratory, in our a but side. And their operations. best cases, the we laboratory. each really And back that learn from it's obviously -- some we things what in chemistry. series from learned not

LifeLabs. of nature the that's So

the book is of we're that we're We're that cases, many health in take general, network. serving system acquiring what with the not acquiring on not acquiring in business. phlebotomist we Now deals, logistics, laboratories. a We're

on. And whether Quest on is movement about one, about number they're or second the into of lab physicians, of really, So they're is from that Cerner IT the integration, their all then integrating integration the with EMR whatever work Epic hospital or Diagnostics.

for laboratory again, the side, works groups it's the we profitability we take dedicated Sam some logistics deep on Quest, full-time phlebotomy doing hard that people. has as lot of team structure remarks, we rate get and side, So integrations to the of phlebotomy and the in in hit to these in and the quarters bring books his side They IT depending come it opportunities regional to of of of But business are a team that. so within these expect. look Generally, synergies with a will out said work, the up get in several productivity region, and experience what the side. And logistics this. to dedicated that we

Operator

is next question The from Kevin of UBS. Caliendo

Kevin Caliendo

of go that's it. appreciated appreciate But kind pieces. I'm growth should want XXXX. think -- Revenue the about just I given me on year. we the you moving of all next be incorrectly. better color if not probably I just this thinking of some gave tell M&A maturing these to into I that through

probably a dilution offset is shouldn't I'm the anticipated. estimated the -- like negative getting cost you there you you're in traditional mean, CAGR, The And $X.XX more an You impact unless is core grow which to your be margins, the of all up I about moving roughly. hopefully, it talked quarter the LifeLabs, $X.XX impact that down. faster Haystack pieces? not be next about add is coming have still extra Isn't year to of growth you X%, and wages, those going to or than thinking maturation as X%, organic EPS about thinking there trends, than just to plus the to that, Invigorate to benefit X% than X%

Sam Samad

Yes.

moving So pieces Kevin. the got right, I think you've

of got of a talked that got end M&A got high and said, we -- X%. LifeLabs LifeLabs given, full we've adding the we've excluding in as revenues about we've at We've growing As range there. worth you year about in the the prepared remarks,

will So help revenues that as well.

faster. -- the that also we've the carryover growth yes, M&A year. got be the So some from We've will done of revenue this

the early year. for significantly of cost terms that that's to in now, of face we're right to in I I'd mean I headwinds we're X%. assuming we're lesser it's, that say, going say next to -- headwinds instance, that general, assuming inflation, to wouldn't going X% in moderate You've that in still say general, like terms

So in what today that seeing to we're X% is X% range.

we're that think expecting I same. be the to

I line slightly we're fairly pricing in that detail more on to which flat QX think seeing the the dynamics will what right now, positive. is with on in give But call. general,

in we EPS system single Although, in as now, high And are seeing saying digits. going competitive said before, the for we're dynamics space. I health up the is

to on than But EPS. more growth rate feel So the extent QX that with for pieces, the that, the that call that all provide with that's information at moving we point, comfortable reaffirming we different we we this will. the just visibility have

that we're with teasing a the that It's the that's anything moving something that So -- we the at that end that's that there high gave disclosing. comfortable negative out not range all of guidance not we that basically feel parts we're here you're isn't we're before.

Operator

question America. last of Bank Ryskin come of from Michael Our will

Michael Ryskin

one. want been little PAMA. a I'll bit it's on ask the A close just -- I'll delayed. of stuff has lot to with been I covered. Obviously,

potentially a legislative solution. working You made some on permanent comments about

expand could that delayed a what Just like number has for been like look could of a and years bit, PAMA obviously, now. that you little on

So look of just we're kind again? we're not sense constant to the delay so any could this, in but a there, future like of cycle used what

James Davis

Yes.

a us our relief certainly straight So has to to been X you're delayed years, and industry. now right. entire PAMA and welcome it is

to legislative agenda, said continued through. having these election a with to can look, it's the you know, on work X change, up, committees The SALSA members There's a that one things task these House approved. of to that, Committee, leadership be change. have change. Committees Senate potentially complex coming the Now can has And get you can as lot

inflation, sounds while rate in that's in on followed we're years to year-over-year, defined, data the press work go these we'll defer us put I'm that and cuts at committees forth committee the going we're that, once memberships the to association it are heavy happy delay, enacted the of would had SALSA We we battle agreed which solution, be to not these to and if to and who They the be We've -- because Medicare put new a trade X to fact, collection of we've going by a a have years good sure good, were this table. called members over. And once for constant with say, of X wage hard of our are for that I support not really at election process. it's so the fact, will should cuts. delayed year had figure the fix to the other solution inflation And another were straight hard forth reductions. But called on work and going and case to out is up.

rates on to we've as need the we that gotten there's the to in inflationary said, rates our Sam environment been XXXX, from XXXX go our pricing. Yes, commercial pressure up that through reference But We've believe, given plans. hospital up. lived

new so that process. including the that's that the all the -- plans, hospital fix We'll collection data We labs. going they to pricing And benchmark we're commercial in propose. plans indicate when a paying believe are what our across commercial

I combination would up. believe find think we'll of that Medicare one go the lead that, should prices those to pricing

what for we're push to going that's going forward. So

Okay.

good call for joining you everyone. the today. day, much Have thank appreciate a We very support. your So

Operator

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

Quest Diagnostics (DGX) 22 Oct 242024 Q3 Earnings call transcript