DGX - Earnings call transcript Q4 2024 | Quest Diagnostics Incorporated

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Operator

Welcome to the Quest Diagnostics Fourth Quarter and Full Year 2024 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'd now 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 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

In and X% fourth also morning, our while organic everyone. including revenue the nearly Shawn, Thanks, impressive growth, quarter, we approximately profitability. improving growth of good delivered XX%,

growth of businesses in X% the For the year, team X outreach lab to including and hospital we drove growth. LifeLabs X%, U.S. including acquisitions, full approximately In X close revenue organic completed our XXXX, in Canada

in several during We also areas growth expanded our and clinical double-digit advanced diagnostics year. sustained menu the drove

forming physician, our reach. to relationships plans and In with extend attracted addition, consumer channels, across we new while also business hospital new the geographic health

all on annual and targets. during and quality, in helped X% invigorate improvements us the deliver delivered experience our AI and automation which in quarter throughout and XXXX, investments productivity savings productivity of Our customer

growth strength as in we we guidance core We improved of XXXX. confidence our This position dynamics utilization us employee from and XXXX in choice. as retention, acquisitions revenue business, XXXX. completed favorably morning, momentum to the employer in robust for that the earnings provided our of continuing accelerate we strengthened reflects also position and our These meaningfully

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

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

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

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

Here that updates our comments these on on are in following of a operations. in U.S. XXXX. key quarter my made progress fourth primarily we the Please areas the note focused are few have

In Physician organic Lab from primarily high contributions Services, growth delivered acquisitions strong by growth the we U.S. single-digit in driven revenue and

physician hospital a outreach independent volumes acquisitions the both from in originate As reminder, lab offices. and

the transition acquisition month, outreach in the Ohio University completed of of in of Last business the Hospitals our and business we January. lab closed

We XXXX, year. last completed of on expect from moderate as from transactions growth pace in focus our driving acquisitions to productivity we

as drivers and other in growth quarter In customer included health the as wins large growth acquisitions, centers. new addition to well community groups physician among

take in a saw an and in step-up We testing people functional medicine wellness. also prevention as interest more

robust full benefited year, and compared from utilization historical we quarter fourth rates. the In to

high-quality, plans, narrow to see growth for also low-cost value Medicare networks. their We testing from our revenue which and continue volume strong Advantage

U.S. of the with Elevance which Health have Today, Health positioned January to of we in than access well plans, are on plan to benefit these effect access more Sentara to the dynamics both XX% from health took our X. as We we expand and in-network partnerships lives

Hospitals advanced Lab Hospital diagnostics reference nearly expanding own in than primarily order tests from testing these menu Lab we rather in by complemented of labs. due demand our performing their Services. tests reference greater continued Services, to growth revenues for in Professional fourth X% to the grew continue solid quarter a In range

are By the in-house, from referring testing pressures as in to tests skilled us, free personnel come such testing specialized equipment. and investing hospitals performing from that hiring lab lab expensive

in collaborations In with we Professional Services, New Jersey Lab completed Connecticut, X health Pennsylvania. and systems

expect from in early these to contribution relationships XXXX. see modest We

value wage constrained greater to laboratory high and Looking with and at patients access services. continue capital lab hospitals same want struggle XXXX, expect inflation, date to to keeping time, payers we to innovation. and up from with supply the At

services that recognize acquisitions. innovative improve to management lab testing, access increasingly through Quest and Hospitals lab can reference lab and cost-efficient outreach

grew revenues consumer-initiated In revenue approximately total just quarter questhealth.com, $XXX XXXX. nearly XX% partners, our and consumer-initiated $XX to consumer-facing million revenues to fourth the million. full testing in XX% year with nearly from channel in for platform, over the our grew Together testing,

our greatly provide to include to serving expanded also XXX comprehensive for different tests the consumers. platform increasingly a health-minded today's we offering During questhealth.com year,

disease In We Advanced advanced our growth Diagnostics, in the blood growth health, largely brain demand in cardiometabolic, generated quarter, health, to areas strong clinical including AD-Detect fourth and impressive several autoimmune due in double-digit experienced assessing we risk. for brain test across women's Alzheimer's health.

of to biomarkers better will dementia. our new assess forms can We Alzheimer's portfolio continue providers and other that with extend to help explore opportunities

We of to and areas patterns strong growth in we continue testing, cardiometabolic autoimmune advanced and also these in XXXX. generated expect

testing. were of driven women's and hereditary We quarter. during by growth genital self-collection Our adoption strong tract the see our option was health for testing of pleased prenatal largely to also infections in genetic

the Haystack of of test our minimal oncology, from we to validating in and last early disease year In residual tumor solid molecular cancers. aid blood detection MRD developing and much spent genomics

approximately feedback are in pleased academic XX MRD leading systems and also and engaged with early centers the oncology received. We Haystack community experience favorable we with program health our

transitioning expanding We these utilization program commercial and among focused are a are oncologists. to now medical organizations on

Turning excellence. operational to

and improvements. savings annual targeted Our cost X% productivity Invigorate program delivered our

and our laboratory operations: at are many our of in Here examples we're automation Jersey. New solutions Clifton, how improving some of AI We pilot

During testing, and tuberculosis eliminating tube the developed labeling system we quality. intervention a that fourth proprietary and automates preparation in manual and for implemented quarter, Clifton test improving

addition, an testing that accessioning automated requisition In solution began speeds processing. we

we roll Also plan flagging that enhances in Clifton, these closer other We by requiring out to AI parasitology human in screening examination. positive likely a XXXX. solutions deployed solution third-party later specimens to labs our

retention engagement a I'm categories XXXX. major remains workforce Improving job priority, our pleased that and across in significantly multiple improved rates

our it turn people group growth our to deliver together more want Sam, I business energized of to ready LifeLabs XX,XXX on create imperatives reason This before engine Now for the than delivering amazing thank life the behind purpose, a working and our colleagues to and strong, is time. our Quest entered world, last year. a over I to one we healthier XXXX and on at

And provide performance our more will guidance. details now XXXX Sam? and Sam on

Sam Samad

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

growing of versus of requisitions by XXXX, Total X.X%. organic the quarter fourth XX.X% by number the volume with volume increased measured

XX year, offset per by LifeLabs req approximately of mix, carries the was requisition. per versus quarter, volume in up the primarily impact mostly favorable by prior revenue acquisition, the lower by During and test X.X% driven negatively tests points. the increase per basis the impacted weather revenue of Total which an requisition number a

income revenues Reported basis, req consistent operating relatively was $XXX On with up million organic quarter last revenues $XXX in expectations. year. flat, versus to X.X% revenue its compared Unit our quarter of fourth or million was year. in of last XX.X% per was XX.X% the price or reimbursement the

of growth, compared by or revenues acquisitions, and compensation. last wage and adjusted estimate On XX.X% of income offset operating points. be operating year. weather performance-based basis an to adjusted of $XXX to was higher organic impact approximately impact million to million $XXX on recent XX We The revenue was increase partially the of basis, increases XX.X% weather, income of the impact margin the due operating strong or revenues in

was impact $X.XX ago. by the tax a EPS interest year Reported EPS in prior was Adjusted quarter quarter was the versus the $X.XX in $X.XX weather rate in compared the expense year. EPS and billion the $X.XX versus quarter. We prior higher billion fourth operations estimate XXXX impacted prior $X.XX to $X.XX in Cash approximately from was $X.XX year. of the the be Adjusted EPS the in the versus year. higher full to year

$XX.XX $X.XX $X.XX and now Revenues our of to to adjusted year XXXX range $XX.X be a Reported expected the $X.XX. in Turning and billion. EPS billion expected EPS be to to range to full be of $X.XX guidance. in between are to

expenditures be be Cash approximately from approximately to $XXX operations are expected $X.XX capital million. is to and expected billion,

the shows to XXXX our Relations Investor page EPS the a bridge that elements key posted an from today. to which the EPS our have presentation shared of adjusted EPS adjusted bridge, includes We we on of guidance website some adjusted XXXX

Our reflects considerations. following XXXX guidance the

Our coming revenue organic not in It completed any assume contribution revenue that closed growth, the could with approximately prospective remainder XXXX. guidance from does from the be X% assumes in XXXX. acquisitions M&A

As the assume XXXX. we CrowdStrike do IT in which last repeats absorbed you not outage related headwind know, we have year the to

generating less that prior XXXX in begin continue Haystack dilutive We Oncology slightly and the from of expect will versus revenue anticipate launch test be MRD the to to Haystack year. our

tests to to XXXX FDA as comply making this as of modernize regulations developed to investments in that are infrastructure scheduled are We IT later begin our year. laboratory with well

XX%. We for expense Adjusted to outstanding. be is margin approximately approximately full Operating versus shares the is average diluted prior the share XXX And expected year $XXX million net count to to interest tax is approximately anticipate our expected rate be expected be expand million. to year.

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

James Davis

quarter including growth To Thanks, plan our relationships. new and year. through presence organic and delivered we full new Canada and strong the in health Sam. the important geographies, in consolidated fourth expanded X We revenue acquisitions summarize,

drove and genomics oncology. our advanced Our position in strengthens innovations diagnostics in and Haystack molecular meaningful MRD growth,

take revenue Given these now utilization, to accelerate we Operator? growth we'd robust year. And questions. strengths expect to be happy and and business earnings your this

Operator

from [Operator question Caliendo Kevin will Instructions] with UBS. first Our come

Kevin Caliendo

appreciate trying in bridge. and is, earnings understand to on $XX question of have some one-timers a there's you expect not what a happened, said that there. that the assumptions do little Are specifically, million core for there the sort guess, Just I I'm the to And IT. investment guidance LDT some is but other there? bit margins spend -- other in of expand. expect are you additional out any and things of comping of margins I

in had we to frozen that want it's deal to fires the any accretion tundra Very ex Does one-timers deals the margins that the core I all from had that just sort of year or expand and weather. from of there's the X XQ, from the last whether built with? assume that question. we If will in weather understand long happening? guidance or things that

Sam Samad

Kevin. Thanks, is Yes. This Sam.

give Let some address guidance just me question. to your comments on

taking First should one-timers laid one-timers adding they're you're that the we've included. about, of that the bridge no be all, in There you or asking out. that all out additional are in

key a reduced growth we related benefit dilution, The I things, don't think, contribution to benefit M&A to positive addition benefit some which year-over-year. we so talked about in to a that in in 'XX. and repeat the got CrowdStrike, obviously, terms the organic of expect Haystack is revenue from some We've standpoint the

and it But terms of talk FDA regulatory about can in and to terms we in lab to some in share that. of some us get the IT the And comments modernizing investments up systems and we compliance offset more our LDT some build capabilities, then and really from an we systems, more our that investments, can to addition with systems about the in talked that. headwinds, compliance investments on and our information relates to

fact there. headwind. headwinds we the on, acquisitions the laid fund the a out Interest are about And LifeLabs, expense. then are that We've that some took especially $X.XX that there had represents we talked that other

some built In been related any specific because also weather not the specifically disruptions, of freeze assumption the some terms obviously, wildfires well. of QX South there and we're temperatures California, weather Northeast higher-than-expected to the snow and monitoring specifically that worse the we've in result weather, of as explicit lower in as seen, in have we seeing, snow a but what and we're have closely some January the

So there are of some these.

to margin operating There's In of expecting normalize to make we operating what adjustments to you get have or in don't report. margins. terms of expanded are terms operating margin, we -- expansion

XXXX, margin percentage, that at expand in operating or We are XX.X% in XXXX our which say. will expecting XXXX, in should finished -- I

James Davis

color Yes. Kevin, just me more little let the investments. on provide a

is So parts it. Sam there's as the said, FDA for X to in One requirements. preparation

the up year. this report to May device call, first medical to into the complaint of a we Now stand go have what to X set effect reporting enable ourselves And handling requirements notably, FDA. and on we any, unit

that It some do additional resources requires to does require investment. So some that.

that are is part, in what for. of investments those So used some

piece all from is, operate the order as The a MyQuest second provide we labs application intake our substantial today that and results to is system. logistics you we look, our operate we our enterprise how how to and more know, digital billing systems this entire through to

that improve we help investments and of this from customer experience. while from are us and substantial about our investments benefits cash year, make to been need and to those entire spectrum systems, think going as the more We time, making order improve entire the time next investments have to we some year and operations to certainly

going systems current to overall and it's between it's experience. modernizing into systems. we're migrate create We're over more dramatically labs infrastructure. of that's reduce really, going going cloud-based And our to to the complexity, this So IT to really improve efficiencies the our time, going customer some

costs, lower is going Ultimately, We're XX, really at Investor $X.XX for. these but it's that used going out to this being going our our be good there's ROI to that's on more investments. March lay a and IT Day what to on

Operator

question The Patrick will Citi. come from Donnelly of next

Patrick Donnelly

just one I about year some it's just to to maybe out average helpful year this starting lower hear LifeLabs talk to Sam, the the progresses? call Anything margin start, as at margin, for expansion heading cadence? talk Can point. overall. you about you corporate know the you to

would talk maybe So that helpful. be through just

on elevated here. exited as and been year just utilization, into you the have quickly as way obviously utilization through 'XX? assumptions What And this just on seen our then, you Jim, work XQ we

Sam Samad

Yes. Thanks, Patrick.

expansion reiterate, So we me versus on expecting margin, this are so margin XXXX. yes, let year again,

growth is I a we that that then organic midpoint, that think see the XX%, combination revenue the piece the $X.XX the at that's you the at the quarters. at more the have assumed approximately that laid let's better fact we which is a because bridge have contribution have it, or out revenue growth, call which quarters X% in is least components you roughly, XXXX we in X the about part comes that X in in XXXX at basically didn't basically guidance, midpoint LifeLabs, of of acquired roughly the margin in that significant of

low a at or our digits that the below which should average. will And double say, rate, double I digits, is in corporate so in come margin lower in the

X I a to low think start it, corporate right. mentioned and you're will you our will digits, get up LifeLabs double at is years X over margin rate, to ramp to average. which

XX% this the other rate. year, of bit come in and it's in terms the they XX% somewhere in drag of will at be a a margin it the But margin. But on to contribution lower, acquisitions,

in that in coming contribution probably acquired at terms the growth all So margin. revenue is high-teens in of

terms a really of And I And cycling about in I mention rates, pre-COVID of terms in. think what I'll Now EPS our the bit best go averages how won't to margin just a by cadence. proxy talk is point. a way in the was come back it But although comparative you cycling asked the about quarter. of is talk just these to as about will

approximately I first and would the fourth. will roughly pre-COVID doesn't XX% XX.X% in say that proxy proxy for to third XXXX, margin second, the be exactly we It cycling but quarters. But rate terms see it's in necessarily also good the of and the contribution in that a EPS, how from going XX% in it's mean to is in what good a in is quarter, XX.X% used our be the across are

is what it's our but it's cycling and I'm telling XXXX, in what proxy to you not again, good a directional, expect close this XXXX. would in for you cycling be is Now to

So we used to what that's see pre-COVID.

James Davis

many on utilization. Yes. with quarter. look we're and it out And the ways in your segments. the question of across fourth utilization many then Look, We pleased at coming

slight in req volume, quarter in the because of overall In a terms did weather QX. early of have hurricane we the impact

arrangements cost that money out California impacting just And been capitated weren't getting basis business in we business -- on. of that were then us certain So probably points. making XX we've it's

away So the cost and at the a req we strong little that, from and when volume those hospital from very, we segment, that the look very us physician in our in walked But segments core volume. volume quarter. was

Now per as Sam was also mentioned, rev our ex up the req LifeLabs, X.X% in organically, quarter.

And per rev a as calculation. you there's of that that go into things know, lot req

per driver price we rev that req. overall per the was per thing of that per test in first organic is the in biggest rev req But req quarter. was and at relatively look that And second probably quarter. increase flat the increase X/X of The test is the in the

that's new out, markers, we've big cardiometabolic rolled well. ApoB. what's so AB [indiscernible] And tests some increases XX/XX the of And seeing it things advanced as brain utilization health, and like the that Lp(a) driving We're is our in testing.

autoimmune has test per of req propelling the Our been growth. testing really some

a finally, nice And and like testing know, we health from uptick probably at lot we're I'd lot call then And functional seeing in things look volume that. a of hormone mention, they of physicians. things you and as of a types what

trends on on very trends hospital req, the strong. physician very, our segment So volume remain core and in per test the

Operator

Cherny question Leerink comes of next from Michael The Partners.

Michael Cherny

pull req. the It's over strong great a a rev quarter. obviously little on Maybe on Congratulations I thread of year really if a there bit course just can that XXXX. per

that And this of are arrangements think we 'XX heading the a about in continued marketing? about of payer and the into dynamic this and terms much technological should how long-term you versus how advancements As beyond, think trajectory? drivers of

James Davis

Okay.

At There's as negotiate lots XXXX. between swing of plus the We'll per year, or it in start with basis points, contracts to through minus this into we test. fast-forward still go probably XX point year. the okay? let's So again, could price price,

And X some the that is segment, experiencing testing. hospital segment in has the reference pressure been price particular,

during from on indicated didn't entire reference go XXXX we've calls, testing providers, COVID through think other with past period out right? so I the things. hospitals They busy were really RFP to the XXXX, for

in an RFPs, uptick in seeing and we're So price still there's pressure that segment.

look, on to still XX req, plus of expect stages. within very early think We're points. we minus the test to The range basis it's, So we at it again, continue. XX per or a [indiscernible],

overall brain So when growth like ApoB I is and talk still the LP(a) low. tests the about relatively test things incredible of on portfolio, these health and volume

there's left. Autoimmune in just think significant disorders growth one. autoimmune these still another the disorders across is skyrocketing significant segments we We're seeing So country.

So The we to expect it into that last those thing continue. goes payer trends mix. is

And I growing didn't year, our that been mention, segment last rest Medicare the all of we and faster it mix fourth the business. the our quarter, of Medicare, business than but in has saw Advantage, of

Medicare good is because that a reqs, business so And beneficiaries comorbidities many you lead know, frequent just generally they're testing. and actually more have to they're reqs, more mix as heavier that

that pretty of all favorable. is So

Sam Samad

Mike, I couple Maybe add just can a a of financial from standpoint. comments,

the it QX, X.X% organically. In terms per in req, at of was you rev if look up

break talked Jim increasing over components of number about, is really the quarters. continuously that a X/X test of that which If that per req, you been between the down from has benefit last

which test the different innovations off payer is the that payers. mix driven contribution some from combination other getting is third a we mix being of of payers And have, payer test then mix reimbursement the and we're the really of mix, benefit and just

improve, will As this in although to the our that of is expectation improvement. will year, continue towards slow per look it req we test terms XXXX or

we've rate. is at but a mean of we be quite same And be substantially not at that wouldn't we've it definitely, that of expect increasing over I the I we rate same peaked improvement So to been the to have pace going improvement, say -- number quarters. seen. that don't

only So with XXXX. that's provide rev-req I other comment regards would the to that in expectation

Operator

comes question from next ISI. Evercore Anderson of The Elizabeth

Unknown Analyst

back is IT [ 'XX. This Joanna to Maybe investment for $X.XX ] go Elizabeth. for that

to is of expect a be expected the kind LDT in regulation. 'XX Is you should that to we guys and I to think related onetime said or investment repeat most beyond?

James Davis

Yes.

is will is be a the on $X.XX, our infrastructure, of for in FDA said on we that IT majority First, there it readiness. modernizing but portion the there

what Now will it's tell for to difficult that. future the be

other that there's a right brought, now there'll associations know, and that XX. on hearings February on front you As the lawsuit be lawsuit courts and trade in oral of

second case the expect first to be we end or of And quarter. by the likely settled quarter early the

could the on supports that, So certainly If of outcome position, favors be yes, trade continued the then depending some investments. the our then association, the if there'll outcome investments outcome moderate. FDA those

core CFR customers. We in are of Part remember, we're XX operate outside our A to segments already that business Diagnostics These segments the on what under Quest XX. Now do ready. industry get have doing that serve pharmaceutical clinical

But FDA some investments lot on case. investments to will so continue systems in look, depend readiness. improve to be future of And those there'll to a the the court the related

Sam Samad

that Jim And then you we're Those earlier. $X.XX the going of investments part that about that talked IT that is the to continue. referenced other make will investments

investments have modernize system. to We our

be So this year. expect to don't just we that

over the expecting -- However, reaffirm. talked on single-digit we still high and long the terms our call in EPS we we guide QX that about long-term term of

will So part our guide but expectation. those continue, investments of long-term they're

Operator

question The Luke Sergott comes of Barclays. next from

Unknown Analyst

Luke is on [indiscernible] This Sergott. for

And place does the And get contracts? years? couple that business value-based for university we some provide Just the guys a contribution had with off, you did expect the will of typical you for you in with be reimbursement of guys to like what of of top acquisition outreach could First, this then payers? how that have lab assuming hospitals. the kind typical onset services start on transaction? the you expect little in trend these benefit rate rate what's more at the your down on from contracts detail revenue average can you And next

Sam Samad

the about this University closed I'll compensation at to in talk value-based want made you and one, we the of in end terms we the Hospital, or incentives Hospital acquisition, start Jim, it of But Maybe University with general. year.

an acquisition of So of It's roughly right the million. at end XXXX. $XXX

these usually provide per outreach acquisitions. don't of revenue each We

the of what paid a to revenues. is. outreach of I'll we to certain there's Usually, valuation pay exactly you certain mean valuation that we're here which what give X.Xx consider. provide is, for revenue acquisitions, that's university points somewhere hospital couple a doesn't there's is acquisitions. these but a those for So going we around not But That

a is contribution need on to average. And kind from this to consider Hospital other this that ballpark that is University is And you then number of that the be in piece going acquired that in revenue growth the included that you so bridge on website, terms it's from contribution that bar part we $X.XX in $X.XX of and EPS have to see of our acquisitions.

said portion Now just but a on from LifeLabs before, value-based There's we you want other that as 'XX I in is acquisitions that incentives? Jim, healthy outreach that of in give carryover to university, any included that. comments made piece. beyond did is

James Davis

Yes. helps and that From importantly, the time helps and -- obviously, are value-based Diagnostics to see helps payer, get that tied from but time from Quest we it the patient. we it to any moving didn't time, in as generally really quarter, health rec fourth employer the payments the systems incentive time and to into expensive

they're And of predict. incentives some do they to again, so come quarterly generally those so look in we occur. out some a after our a X-month results when period call And them back, period, come XX-month hard at

are collect these some make do Xx as is we outreach way of know, the Xx getting. some other systems health these we're that of when the to acquisitions. rates incentives these Now And we getting you

over come down X years. to They'll Over exactly time, Quest just rates. period our of a rates Diagnostics don't X migrate to

what pricing. I And call, incremental so there's,

the system those rate a to as rate, bonus we a Quest come So health of sometimes payer from it Diagnostics and overall part sometimes pricing. payments it's just move as payer

Operator

The next question Chickering Deutsche from comes Pito Bank. of

Pito Chickering

much more a X RFPs this the could as coming landscape the see how do see that are than X Has to up up shaping state, more seen XXXX? payers competitive sort result Looking expanding access turnover of next with XXXX couple And been with in states you volatility year? you've this environment, turnover. this you sort you years some at states of do year in of lost in

James Davis

Yes.

of on payer net-net, XXXX, all the all, came of we're first changes that better So in about off.

Colorado, we look through that some when in of we at we up Georgia. plants Nevada, the So in And picked the lives not were Virginia. with network in Elevance

that more the we subtract Alabama, we in then look we X lost we better than lives up at lives the off pick by When Sentara, well we're from million lives. and

access total significantly has as in we improved our XXXX. So enter

of you know, look, between years. agreements that negotiate in In X as the is health contract here plan somewhere and we will typical terms XXXX, X

year, somewhere we this typical range. we'll And and in be renew that health every XX% So of between XX% year, arrangements. plan

So this year. we're But to more going to and again come it every on year, magnitude, in renewing that we're do agreements that.

Operator

of from David next The question will come Westenberg Piper Sandler.

David Westenberg

last growth. on they just So the XXXX, revenue accelerate? the inorganic organic think do would how in lot my we you including growth stream? lap acquisitions actually a about integration, about those bit How is more as that like to go you just And little to count the had completed lot takes X acquisition speed, and revenue the there puts of integration have I you ones you acquisitions, expect believe acquisitions thinking the amount did big to to that should you. And of on given is and just LifeLabs, would available you given acquisitions enhance a the year? do do what make there this exactly back And year, out fact aggressive what a in

Sorry, that was long.

James Davis

Sure. Yes.

X revenue coming through X%. So it closed know, carry LifeLabs growth about last the -- months the impact date carryover XXXX Sam we that in that year. is anniversary, of had of in we impact you as XX-month from of okay? is only growth through his the last comments, And year, September as indicated acquisitions, months acquisitions, So X

this of X, And months so first we through the X carry that through year.

and we points than about So in total, of our LifeLabs, growth that that. So X/X is feel it's percentage okay? more about good XXXX of in X

integrating the acquisitions. at Now remains strong. yet team yes, And opportunities funnel of these at work is hard the

becomes is an So continue our If We're we If share small that attractive to to we'll backing in payer of look for opportunity it the that not away us great in criteria at. have market, it very opportunities. access our market. assess then from any. fits

we while improve work things our after lot on going things market of do shy a to our access. got and we've going to we're up that what plate, integrate So about picking not to have be

Sam Samad

Maybe of I can add just a quick Dave. couple comments,

yes, about integration. were talked lot of acquisitions difficulty integration complexity in of You XXXX. of of a sort And there and

Now a remember, in that's established it's an more LifeLabs is stand-alone Canada, entity company. of

are well. that They can have as from learn a labs but lot that from we they of things established. can learn us, There's them

because or they the say integration are operating close systems looking would I move point. to labs lighter them there to this is at So not we're our already and

So that's cadence not would about of I that we're what it's And doing 'XX. take mean, not in we're Just mind, of easier asked -- more integration. sort keep any M&A to you an then it in M&A, do more? not the

We but call any capital acquisitions. announced, in plan, our focused that allocated M&A M&A. do certain new has the lab have not capital tuck-in not we guide for we we have our potential, mostly outreach hospital have included been what in on It's

scale do are opportunities margin. that and very get to attractive more very we So a quickly because contribution will these healthy M&A

more don't M&A. not I to make expect we're any want going that sure do to just So that people

Operator

of The Blair. question comes William next Andrew from Brackmann

Andrew Brackmann

Haystack. on I wanted ask to

that a First, light for any shed little we 'XX, of also here as on commercial should moving volume now 'XX? guess, allow that more But additional can way customers picture expectations a asset or more pull-through asset commercial phase you're thinking and how bit of or any you having reimbursement in than the the the about halo programs, on sort to in side those important bigger maybe be just this should business? oncology effect I these

James Davis

Yes.

So -- Andrew. thanks,

pleased we're that progress look, we've Haystack. with the made So with

we in customers very centers, medical served last nice over a mix mentioned community we nonrevenue comments, academic basis the As of year, really on oncology. a XX

the now into those so And on full emphasis is right moving customers commercial arrangements.

Now build. we as build We're to we're Medicare. going start, going going Advantage. Medicare to We're to build

or then test denials the Medicare appropriate at denials why begin beginning, plan expect We around with high to the the conversations and is the it but the the then MAC you fight and of important for goodness you Advantage those be patients. appropriate

this business modest indicated, get year. Sam as revenue expect, that do we so to from And

you about opportunities. asked other Now

everyone, Diagnostics screening it a That a is business strong me that hematology our and includes very some includes let $X for oncology pathology Quest business. today. very anatomical First, assays very, remind look, strong very, of includes billion business a

from we we already of pull-through existing that and that actually the have, our get pay MRD So set we're off. customers of seeing expect to assay

to also a we have, have an in We addition planning TSO assay, MRD assay. our assay, XXX therapy

expect benefits some get in of to we our business well. so that segment as And

Operator

next The of Tycho comes Instructions]. Jefferies. question Peterson [Operator from

Unknown Analyst

going on. and was on screening, [ wondering to how your particularly for preventative impact This [ if to ] potential about preventative ] any is you I Tycho. is with I case ask Noah screening assumptions exposure big [indiscernible]? the Bradwell wanted have on

James Davis

Yes, out kits I'm [ you case. the I'm you cutting think there, Gradwell ]? were with familiar not little so Sam, sorry. I mentioned mean are. I that a bit you

Okay.

time and -- look, all spending carrying focus be a call the going general, to seems So shift I what and on across in would towards focus taking prevention this in to in I and shift our And disease effort wellness. from there shift what on call sickness would country. that

early think we're of functional that because lab tied should moving medicine early, the a that testing ensure and by used the prevention for morbidity that's in strongly be is on on shift is to it's general, today we actually that going from another wonderful to work one somebody focus wellness. is order a morbidity, really and not believe to so excited lot in And lab right? purpose industry, and our often in We

that, good lab to we going trends industry. we help those So about the and feel are think

Operator

will question come Nephron Jack Research. Meehan next from of The

Jack Meehan

get this you the was you expect expecting initial but progress latest if on revenue payment talked I to to data about generate thoughts and of not might Medicare Haystack, don't here, but it year was, updates I -- think test? just sure able can getting in we terms talk to this for know for addressed. be expectations wanted I about clinical

James Davis

Yes. Thanks, Jack.

[indiscernible] for experience brief just months X program X So to through this But I we did give comments. a during XXXX. [indiscernible] went few

lot gathered customers to gathered community insights oncology close new touched lot of we experience as of so centers [indiscernible] with well centers. on And we assay, a that academic a our as medical

start very in arrangements to Medicare as billing appropriate billing well of a will in denials process, you the Advantage now those expect commercial you those which respond MAC advantage some you the way customers test, any Medicare process Medicare we're the moving thoughtful to include new Like engage the you full So as and and plans. with denials, of plans.

And so ton have experience look, of a we with as this, know. you

every very country, reach our positive. all health into Advantage the Medicare are in our broad plan plan Our relationships access,

year. this in will revenue we segment so this get And

all new many this for Haystack So is end, in ownership Diagnostics studies, funded some would even terms many great had year. I I some year of by publish, are many, of stay clinical say to trials, prior coming to Quest we'll think, able results years, be and which clinical tuned. and

Operator

will from Morgan today for Erin Stanley. of come Wright question final The

Erin Wilson Wright

it bigger know underlying a want front? the market is little market head And progressing into utilization, one what's also, picture in there to underlying bit you're you well? of gains in sneak gains you how think terms expectations can regulatory on underlying of accelerating particularly and the how environment. PAMA environment. of just know your also that as that about because on in as I terms kind embedded Just But -- lastly, question market it's in share XXXX a versus I if share seeing about we then talked I

that? in thoughts and You but viewing spoke into in your administration stuff, to you're LDT of visibility of the kind any terms how change

James Davis

Yes.

with the me start PAMA. let on question So latter

So into cuts you did know, go not place. the rate as

less reform renewed and PAMA on rates going So focus the same, this there's that. we to year. would the say were fifth this was actually feel be good year that I about

House there's and with. X the committees Committee. As Committee, this that Energy Means and generally the you charged committees Senate really work with Those are There's House and we the know, things in country. Committee X Commerce care Finance health all

in say, to had bipartisan solve of is actually strong to look, We them. X, there's they the it would I are. support know And outreach So committee the chair already who there We've people. X new committee this year.

the get as throughout to So opportunity we're excited we to solution a work final PAMA about XXXX.

to #X place. priority in you, can and it's get Trade I a January hard at our X solution of Association, Aqua since work been we've tell the

So I share making are independent Look, general, independent for think, question. standpoint. on the market in the share labs labs a that market utilization progress all from

done you are communities and the of more know-how is What on system sign to less hospitals capital, we've assets, the resources, health that focused acquisitions other operations. focused a on is in that see, their outreach a gathering parts their work their their deploying the that

year lab I Diagnostics was feel in a and good attention book less the as gain just I great as that's of they past, the signs and outreach think I prospects. our health independent think It -- Quest that about business share seeing again, So for systems pay we're well to have industry. than

Operator

our final Quarter XXXX sir. you Thank question and Full Conference Call. in Diagnostics today, year for was participating for That Fourth Quest

James Davis

everyone. Thanks, look We on joining to York Investor New and seeing March you our you XX at appreciate in, forward in Day all City.

Operator

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

Quest Diagnostics (DGX) 30 Jan 252024 Q4 Earnings call transcript