Quest Diagnostics (DGX) 20 Oct 222022 Q3 Earnings call transcript

Welcome to the Quest Diagnostics Third Quarter 2022 Conference Call. At the request of the company, this call is being recorded. The entire contents of the call, including the presentation and question-and-answer session that will follow, are the copyrighted property of Quest Diagnostics with all rights reserved. Any redistribution, retransmission or rebroadcast of this call in any form without the written consent of Quest Diagnostics is strictly prohibited.

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

good Chairman, and CEO joined Steve Officer. by and Thank Executive morning. Officer our Financial Chief Chief Samad, Davis, and Rusckowski, Sam you our I’m President; elect; Jim

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

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

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

Now, here is Rusckowski. Steve

us and for today. Shawn thanks, Thanks, everyone, joining

we we delivered pressures despite earnings drove for of the Hurricane quarter, areas. impact business Ian in raised strong in base the have strong we performance, growth outlook and our of remainder despite our had While X% and Based investments a third growth XXXX. the we inflationary on

We areas. also in expertise our progress good made very grow and transition, on help adding important depth us leadership management to

on X, Jim As as November you the Executive remain assume know, Chairman. will and of I will President and CEO responsibilities

Jim, If savings Before it say Salsa on sustainable to I Medicare to Services clinical turn over a continues few enacted strengthen. I’d support Act of the Based on trade our Laboratory path. to schedule efforts PAMA and Salsa Salsa. Association, put about a the fix like and laboratory for fee would broadened to back access words has

As not planning if a $XX this $XX intervene you of schedule PAMA XXXX know, again year. fee we currently in million reduction under to Congress for Medicare million does are

postponing that enactment we after or and stop Washington therefore already continue It However, very Congress to three the acted the burden support going is times place. that for from reducing to Salsa to is election. cuts aimed Congress doing work build unfortunately, are into at returns the when important we has further of

with remain other will As I ACLA issue, stakeholders. on transition to actively the working and engaged this Executive Chairman,

turn Jim to it over Davis. like I’d Now to

leadership thank the XX behalf Thanks, I Diagnostics of years. of for like last over Steve. Quest would your colleagues, you Quest On XX,XXX our to

Steve. for shared with a future all and friendship and strong You you transformed transition. grateful the foundation a trusted healthcare personally turned that struggling I’m a help and around Thanks, shareholder company that build growth. was for guidance into value partner and during Quest the

our to results. Turning

base in the the earlier in volume the grew and we Our August year. performance third saw year-over-year trends in rebounding that from quarter softer with September business

hit Ian were in like of for customers restore of our have employees impacted up of enduring Ian our Hurricane while Hurricane we their our their thank incredible before colleagues need. labs of to and also our to to the in fact, who homes PSCs our we to efforts employees support in I’m experienced. seeing also base September, In for outside ever stepped financial personal some I’d and belongings. testing provide wake the the volumes loss grateful areas, to highest and patients

us. As many for of you an state important aware are is of Florida

diagnostics $X.XX million. and plateauing COVID-XX Earnings on and were by business the have June basis. continue in During from After revenues In July, invigorate advanced we million quarter, X.X initiated our have our operational were we a been reported XX% the structure continued on quarter, revenues in down quarter. to testing. were from declined. offset inflationary previous was our strategy operations in to managing $XXX XX% consumer our closely share third pressures initiatives. through billion. invest molecular revenues per COVID-XX steadily testing XXXX grew cost and $X.XX down volumes an provided and excellence Cash third total the the base quarter the pursue basis and XXX and help adjusted testing To

executing quarter, in average make volumes growth accelerate third expect to fourth we We operational to point two In to molecular the XX,XXX the excellence. XX,XXX strategy day progress our and continued per to drive quarter. COVID-XX

announced Ohio. highlights M&A a purchase Summa the lab driver system integrated We continues of to healthcare some recently from be Health, are a large growth. from quarter. an in outreach Here delivery

it’s acquisition, While this is indicator. small a positive a

and seeing range systems discussions and that pressures the before more are labor large and to small of that make face Many pandemic. health We attractive. very our financial open substantial systems services are hospital

news pipeline hope activity this with We’re pleased the additional with you in our later M&A year. to share and

by centers. five health professional a with community expertise services owned Lee to announced selected Health, chain Lee Florida’s hospitals primary outpatient system owned also relationship supply Southwest We lab health and provide for

Health. We will for also reference testing continue to Lee perform

slightly relationship Ian, expect revenue Hurricane plans we this on by though implementation have have XXXX. delayed will positive a Our impact in growth been

faster value appealing to our does with overall continuing our based value also to plans them to relationships business of while and based health with volumes health cost some but Value traction. it grow our provides helps Turning expand exceptional to the for health us members. based yield their provides based revenues in gain other begun reduce health Not better plans continue and base this Value only than insights plans outcomes engage now to value contracts benefit to enables national the it relationships to renew are care, footprint care to quarter. members, share. because plans. overall of continue health and to Both plans. in gain an We’ve

XX% and agreements, of goal from based increased on and renegotiate plan to relationships We’re plan our we of volumes value our continue by the health from end to track as revenues Also, meet health we year. extend of realizing pricing next contracts. see these

seeing And environment. genetics in two of to a majority genomic included We’re the the pricing services the our sequencing third prenatal advanced saw stable and have over favorable more quarter. growth positive renewals years diagnostics In from last we reimbursement.

hematology, strengthen our hereditary oncology capabilities to continued in to to accelerate services. make We and pharma services genetics, and investments genomic sequencing growth

and testing molecular this offerings friendly is is The of the sequencing Mark platform. and established for our of molecular with site diagnostics, week, areas. new leader expanding our Mark, investments in next and of recently initiated new driving we’re we number and Vice genomics an these enhancements. Senior consumer last oncology. in Gardner, position genomics oncology growth making in a President announced powerful more generation to The Just launch consumer In responsible addition compelling us enabled experience a user new e-commerce a and

million of first launch, make in and fourth of further testing we revenues by expect XXXX the annual of initiated XXXX. toward consumer in quarter We’re our weeks ending early encouraged its by few the progress of success goal in the site the to $XXX

We a allergy and women’s the initiated health Check cover to look drive new to campaign offerings new which sexually transmitted for everything site testing our ads. tests and also out new awareness testing, Questhealth.com from at broader consumer the launched of ad infections.

The second experience. gains and service customer strategy thereby improving driving cost, operational drive two remain and focused is excellence. on points part improving the to productivity We of our our operational quality,

a examples. few are Here

to which volumes of our of arriving our PSC enables are to than COVID-XX us testing less our quality number our have geography, serve an to XX% at within just and enhance we’ve years This appointments ago. to repurpose some increased our reduce compared flex platforms patients appointment COVID-XX to allows to As particular a declined, XX% meet faster. of begun patients with Today, demand costs. three us workforce

for sets a when and our expectations into patient service For self our long a now to balances in the Walk-ins and how load wait. patients waiting walk they check they’ll the room program in new who need phlebotomist. arrive learn register schedule center

roughly which average Our since wait is XXXX. half minutes, is the time approximately five level

we drive Finally, of automation inflationary the to and offset drive gains help continue productivity to intelligence to pressures. artificial use

performance Now I’ll insights on more of Sam share remainder who a the it and for turn will updated on over details more provide our to guidance XXXX.

$X.XX X.X% the declined our respectively and the increased The positivity growth August in number the basis decline COVID-XX third business the XX.X% base the September. volume partially the grew by late versus represented business our approximately XXXX approximately of approximately consolidated Total performance declined million Ian testing tests of to third prior volume. the services In year quarter billion, were $XXX volumes revenue impact quarter We strengthened base cases compared of testing measured beginning down COVID-XX volumes Total volume in during quarter, The while testing a Jim. solid prior and from organic Acquisitions million. to rates the impact points tests prior XX% growth in X.X% year. prior for prior to revenue XX.X% quarter. versus base to down the to total versus continued respectively. year. X.X% of Revenues headwind contributed services Hurricane testing lower X.X requisitions versus of July Ian the X.X% by of year. million the The COVID-XX basis quarter. to information second molecular and declined decline as Thanks, resulted XX revenues Hurricane throughout points the and year. offset quarter. testing and end million the tests of revenues at XX the declined despite X.X versus the X Base diagnostic revenues third COVID-XX billion $X.X reflected and

far quarter to COVID-XX lower adjusted third of with declined in XX.X% averaged in EPS additional our our also per the $XXX XX,XXX base cash year basis pressure of $X.XX business. revenue XX The income Adjusted molecular in The prior volume versus the adjusted expectations favorable period. expenses. EPS tests primarily last to the by rec by consistent revenues or was to was quarter. to or a have in The year. channels, volume year quarter year. compared so for requisition molecular of retail EPS higher million $X.XX molecular COVID-XX testing was basis, and Reported year-over-year business impact points reduced primarily operating last a driven accelerate revenues non-traditional COVID-XX compared pricing $X.XX roughly XXXX, and operating was with Revenue in which adjusted $XXX Base $XXX investments of We billion than COVID-XX volume. from $XXX income million XX.X% quarter. reimbursement revenues an in the year billion were $X.XX compared more ago. unit Year-to-date, X.X%. October. provided carry prior was XX% or less operations is compared $X.XX by per Our operating versus in up remained third day XX% or volumes was environment X.X% On Hurricane million decline of in lower income impacted revenues million to year. price portion $X.XX last Reported of by testing related growth the approximately to Ian the $X.XX of

and $X.XX are to between $X.XX billion expected and expected $X.XX range expected and $X.XX guidance. billion be COVID-XX Base now $X.XX $X.XX our at to expected are $X.X be are updated billion. to is please $X.XX be in be you business to revenues range expenditures of to EPS are capital be following. million. between operations revenues between guidance, to and to $X.XX. testing approximately Cash and billion to to $XXX consider of And billion. be be by $X.XX a in billion. $X.XX about provided Reported when think least Turning Revenues to expected expected EPS billion our the adjusted a updated

in to the tests average per to volumes assuming quarter. molecular day fourth roughly COVID-XX XX,XXX We are XX,XXX

mid health testing also through We XXXX. volumes this week, COVID-XX public rate reasonable reimbursement end assumption days through therefore emergency We believe this relatively another is Last into hold XX was average to the extended for testing a for year. molecular run of heading assume molecular COVID-XX the steady January.

reimbursements expect PHG to We January. in we the which currently expires, happen decline when will assume

of timing first Ian has business continued hurricane the the on Given fourth impact weeks of couple in our of quarter. the the

this making we the million expect spent new fourth through As year to more to growth. consumer quarter a our quarter of approximately platform. reminder, and are $XXX promotion testing and We primarily investments to in than $XX million initiated the we third support marketing invest accelerate

wanted few lot your I there’s of a to say for on about expectations Finally, a to focus EPS before getting know questions, I words XXXX. XXXX.

a detailed to obviously number I nothing from see meeting to prepared aren’t for you that XXXX would next are but guidance consider current estimates assumptions range within expect, As year today. a There prevent of reasonable dynamics us consensus of outcomes. we and might provide

We and assumptions provide back will Steve. our in early will to review to continue and turn our XXXX it plans now February. I full guidance

Sam. base the of year-over-year. guidance our future. and the base business raised our well in Thanks, investments which we position on continue business to performance remainder accelerated make year us in full our while growth grew the quarter have for revenue XXXX. the summarize, to for we our expectations And based Well We

thank I’ve commitment the will all President Jim as understand years on over I’d earnings to many will this interest company. Chairman. I last time business. the to your earlier, our and our in your be conversations and this XX you my like enjoyed As I you for as of call CEO for Executive mentioned call and and remain last thank

Finally, the you’ve business insights, capacity healthcare be your my through done our one been Diagnostics, Quest our you. what as customers. to grown in crisis empowered the provide lifetime Thank to serve the better of with the history. always challenging serve Together, XX,XXX honor of a we have to Colleagues it’s health will and our testing CEO. I critical of grateful most

Now your we’d be of take Operator? any questions. happy to

Thank you.

to in Securities. is open from [Operator Mizuho queue first Instructions] Hynes will questions. We now it The the Ann question up with

Your if your there, line Ann button. mute check open. is now you’re please

Okay.

Sorry that. about

these pleasure Okay, to congratulate Steve, just you with want years. has a I working say -- it and all been

Thanks Ann.

And investor you was just color on maybe that provided you question Do great. XXXX us but Do it for maybe for earnings first talk modeling on directionally to thanks profitability side year. Obviously, in this my So the that to XXXX? in expect know the the tell just side become purposes. in DTC profile you XXXX. the be what That program. I XXXX? on of Thanks. changed since headwind and we maybe would and about profitable a top first minds, has the within positive it’s negative

Yes, thanks morning. good and

here. in So have fill color let Sam me and I’ll start some

since has changes few top XXXX been year-to-date. about from headwinds. a on XX never And reimbursement a and where down losing points. better tailwinds historically much We tailwind without of was a a I’ll approximately PAMA there’s were points XXX PAMA that. were basis was lot then but we standpoint And over XXXX. basis of That’s talk better. So environment in just

going feel about price XXXX. into much we So better

XXXX base levels. Our above are back volumes

exceeded February, we In of quarter. points January XXXX. fact, In the September, the during it high point

feel about good So that.

in rates that’ll to We business, going diagnostics portfolio, out into our above normal And of as about and the we’ve our in know, investments we Yes, investments tailwind side expect CIT. in you get You growth that then portfolio. of made advanced mentioned good be that. feel XXXX. a investing

in as our COVID, built well some headwinds, million to into we with plan, cuts $XX We’ve of third dealing you year a know. as have round we’re didn’t million which PAMA Now $XX next XXXX. obviously

certainly into XXXX early and inflation our We part running didn’t $X.XX business. there. quarter year that to $X.XX We any of be Sam, expect next at inflation caller? some we XX a we the that’s expect we point. Early estimated year, in continue other the of through XX that have going And to year. we’ll to see into next next part

captured that Yes, we varying I of assumptions. so consensus seen there’s far February, seen that within changed again, assumptions, guidance we’re, from I But I’ve range you’ve listen, so us prevents Well, current give reasonable the of wanted least we’ve nothing outcomes. that far, estimates again, these at it. maybe Jim. in meeting a mean, some to just think to capture going or

In of XXX in share earnings first lift next of quarters well, a terms provide the we the repurchases this terms million made repurchases, as year. three have and share year, throughout of that’ll year

let because and of ‘XX. a you little we about some not of I comment another our us to get helping cost, misunderstanding bit think alluded a into about made, me make we’ve adding just the and Ann Yes that. as to investments that there’s ‘XX And

year, be some investments. diagnostics million. four investments. rates XXXX, we proceeds see made So have we’ve you and consumer dollars is started make return. Jim mentioned investments started will of XXX of our you get a worth we only we two have the One expect that, to investing would initiated we of And billion advanced quarter faster we took as testing. and And growth the said, in expect a of as recall, this if And investments We those in the a roughly already from second as COVID about because probably to businesses. we’ll

a And we of the not will in investment you of starting because see is will have get growth we for to of and CIT you’re the where you’ll what details, drain investment XXXX, on rate grows, be accelerate And though get and the particularly good that some ‘XX. CIT. are because fast to part going even a don’t give XXXX, we report the so we XXXX earnings going about that growth. return that for in asked we’re to from see will financials, throttle And less our around to for a exact that a at tailwind market how CIT capacity

so we’ll diagnostics, is are these businesses, million. from saying And it of advanced we just that return on CIT it that temporal. by me $XXX close $XXX of but going back exact hold to let profitability, was about to building an we’re number some get because give and And million, permanent, you two but some

when through expenses ‘XX you modeling for expect is coming at look us might SG&A so for XX, these what actually in have expenses you And about R&D XXXX. And total we you XXXX. and working and what think versus on modeled and for down from expenses are

a these some that’s So change of temporal. because were investments

you. just So it there. I’ll leave Thank

Thanks.

is with UBS. question Next from Kevin Caliendo

Your line now open. is

actually what of thinking comment a be to through to on rate guidance the there versus through Thanks, this, of right the expand thinking to meaningful getting has because pretty expenses coming there out. out, want coming is the and run numbers, sort Steve’s amount

us. So like, $XX talking including accelerate down of, goes incremental and is would be thinking XXX, PAMA sort volumes to to we’re on as of about that half million think we unless to expenses come need that that, really are away to should get million the the you of margins of $XXX

that percentage out? on So just can And bit of you more us the how to little think expense like Is comes about XXX side? it that? modeling maybe that give a

Yes.

about year, are Kevin, So you yes, next down. mean, taking I expenses think as we

we reductions strategic would program in productivity to necessarily year. we assumption an at have every some that’s expenses the we down. invigorate the macro and look that I now, That’s And that investments up be as not would we we given also way our further an But business. make. to coming going I are in expect right ongoing invigorate in. productivity environment do, are the assume there’s that that have a not and business we program from reinvigorating have where So we

have consider at as So those things. to you you I think look margins,

other increasing inflationary assumption consistent next the And areas. are taking we is year environment a But maybe down and invigorator. by have salaries, are benefits we by focusing on and to wages We increasing X%. expenses X% wages

ask can a bit different way. little I Maybe it

margins. margins. that versus about to what Your pre-COVID about If that try think way. it, we all or you know don’t would look in we then setting? you I margins base base think model than base were a be margins think COVID But could they better to were it

So now have that right that’s kind assumptions talk should for the of we about we XXXX.

to environment to I pricing is comment think right not versus improving. total margins. think But COVID base now going it way We’re on margins is about the the

So impact basis which in as terms historically reductions. less seeing impact are year. was price low But pressure our we’re a seeing on for the said next quarter XX of There’s of we PAMA we the business, in an pricing points.

an savings going So the make. to talked of make. going I we’re the talked I that’s we’re And reductions productivity improvement. to invigorate about some that about cost that

So I definitely won’t give we but margin business are to some the number productivity see going in improvements specific there. base a

I really so helpful. That’s much, tried. Thanks guys.

question with Jack from Meehan is Nephron Next Research.

Your now line is open.

Thank Good about wanted utilization. to I morning. ask you.

worry heading because to a was growth there accelerated of actually lot -- of base your into the X%. So quarter

just think going am on like market driving might out-performance I doing? the is looks you the it versus be So what here what curious relative

Yes.

So thank Jack.

in third mentioned month comments, every we volumes quarter. our through the opening the improved As

And even that we was September, much obviously reported. better So impact was better. was weak, the hurricane with the August average July than

on on XX revenue clinical the price, mix to did In come we of strong performance. from in Despite a addition that business per in And the our basis revenue contributed bass X.X% quarter, point chunk business. base mix growth headwind reported and a the that quarter improved rack. which

in reference was And levels. quarter. testing appeared be health is of the the strong Physician so which our segment, with strong to in a also utilization happy offices PLS system our and combination even we were

to a more. little Maybe bit just dig in trying

about sent Just that an would dynamics, dialogue, you issue? any you, or thoughts everyone’s and on either hospitals sales be outreach great. growth like your trying now are being what’s work around Or market getting think out? reference with more I the more heard kind labor to share have understand of

Jack. Sure,

tell on can never that with has So fronts. our stronger opportunities health you multiple been systems I

in health system grow. health Akron, Lee a a pressures quarter, Now PLS by And that PLS we the as new systems funnel reporting, Summa relationship by of health in the opportunities of read announced exacerbated the pressures the announced We acquisition. Health that outreach margin nursing to Summa continues the have the in Ohio. not Florida. don’t and with day goes side. wages, There’s on some one about in the we of they journals with particularly

opportunistic So us go and into health them of to it’s help upwards a to can systems XX% to very explain reduce XX% to them XX%. we how by lifespan their

or monetize And book outreach infusion business to provide them. to so, of their some cash

So us. it’s an opportunistic time for

question Wright with Morgan Erin Stanley. Next is from

is now line open. Your

Hi, in of dynamics your give an are commercial and offsets where to in the those preferred relationships could there? on pricing update helping at we And you terms payers with of terms us in negotiations your believe esoteric volume? I steer impact on more the at And was Thanks. United targeting recent, business have laboratory on do that as any over all? does management it’s side. that initiatives testing such benefit relationships some

Yes.

So Aaron. thank you,

the It’s the relationships again, turn our if been of payers, with relationship, you output we’ll So to the measure to want never better. pricing commercial environment.

high victory. opportunities also that had there’s only We’ve of number into with negotiations day labs, quality health, from we’re we’ve We’ve we’ve that them teams that that quarter XXXX, for entering are XXXX, expensive also go based that and day us points. we in work price resulted been that to this by Healthcare for using you majority losing of we yes, physicians two and our have and are physicians basis said in to collectively price institutions flat United out in XXX last payers able to We consider and closely labs. using meaning us Quest the are lower the either and over of down together the working with so XX out points positive years the the better were target move like and as We to basis relationships back target teams said work value likes a value health create earn and back labs increases network to price very value we we of Diagnostics. the and that for system Rex

to Erin to Jack’s Yes question comments is of on first or plan share. all, gain and

one continue believe that are element is we’re relationships plans we so Nationals. as share with gain making she that more will the progress particularly we to without pick And of and do progress up

make exclusive sure we to want payer XX not pricing, that basis remind but is you Just to points commercial pricing. all

So that payer improved we physicians vastly with reference within with Jim’s client pricings price commercial comment with price work. concessions is have to and we we have hospital it But were. relationships, where pressure versus

So there’s other than price ago. of that points was concessions it on improved basis that less in payer side, XX number. it’s But the years where commercial much

with Tanquilut Brian from is question Jefferies. Next

line Your open. is

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

for economic How and that trends inflation essentially, So patient? we’re we’re thinking about the be consumer, the how broader as the given I backdrop the your seeing that’s And should here. the think here especially declining outlook impacting about XXXX just core is testing, COVID you seeing? obviously that

Yes.

think down. the for question. come to continues Brian, COVID, thanks, is would So about I The again, way it

our physicians testing, whether the only or of to PLS opportunities health XX,XXX on Too are these feel and into we east, it. third next move COVID. but thinking reference to additional base new as two we quarter, the part XX% help through it’s over And recovered, in announcements growing we tuned. City are expect XX,XXX then that part to our continue. Again, great go stay year. about we business, early obviously, at New But as day, BQX reported of a point here in our XX%, the concern, opportunities. system the get that volumes We trend year. partners more some now, acquisition several the terms in Although one early area. should we an of variants, we’re closed but as we’re at York feel We to to it’s as we outreach looking reported now new the and be XX%, great tell, announced we may There X.X cases, but and next inflection funnel be higher that of BQ into all about be of remember,

Just is that based remind are between COVID you correlation volumes there to a that all business.

And And see in before, we’ve so of improves, we we’ve help started that goes that COVID could of up base and our clearly to a QX we base natural somewhat because COVID as talked have softens. to believe some business. extent, hedge, as and

we recovered, the situation major our that seen therefore And gradually of the going have improve City. a we where we have COVID not still have years. back next step we’ll said seen We be XXXX. on in before, couple they’ll forward. base full were past. that improving believe in tailwind recovery by of And growth over markets as in go the still to And New should we step And most York

area So major haven’t the that only full we seen that’s recovery. metropolitan

So an be to COVID direction favorable should the base. perspective, overall from

Next with question from A.J. Credit is Rice Suisse.

now open. is line Your

together. capital about Looking bit little to deployment. working Maybe to just talk a

as You’re talking mentioned. obviously, you the you lot did a repurchase about today, share here on

So the store. to that continues be part of

think You’ve got see deals year direct so investments exited these or Does two? some there. priorities and other And and you hospital out next deployment opportunities. consumer as potentially M&A we then capital how forth. of the and this about that, year the There talking are do capital

for A.J. thanks, Sam. the is Yes, question. This

through about think X.XX flow now we’ve cash the of billion three you right of our as operating So quarters position, generated year.

return whatever it’s of healthy going cash We of that said we deployment million. we’re to When majority a And million we obviously, in talked shareholders. XXX sitting flow on the back free about philosophy, and think in the the on the that you free expect going the focus we’re XXX year, that’s, in we flow to of cash going capital, cash our strategic consistent. very to net about million share the sure back form we’re to we have, invest of XXX of that capital M&A. investments. We’re our of very making amount we return to of make have strategic shareholders business This to dividends, form repurchases of

that are to have repurchases. we transactions really the I I have the a as have think robust to cash extent deals our to we, then opportunities, back disciplined creative extent we in to M&A we extent and we threshold we’re of though, in ROIC to that mean, to the return Now, strategic going terms mentioned, share of the about and don’t M&A add meet accretive that we a produce that Jim going us be that believe very the value that pipeline

Next Pito with Bank. from question Chickering Deutsche is

Your line now open. is

And good Hey, pricing. guidance of over quarter XXX. pricing business Steve, your improved good as COVID morning, guys. as the analyzes thanks help, as base years guys, $X.XX the And well for strong different to all fourth questions for the the

XXX launch that So XXXX. Is pad XXX, if pretty gap a numbers. PAMA big in like would one, we the seems consensus put be of which that versus in

So can cost how you XXX give and between us some more cutting? bridge between revenue growth color gap to and XXX on the

Thanks, Pete. Yes.

I’ll Let and start then pipe me have Sam, here. in

on the rate So first guidance growth of company the term long remains. our

our We expect X%. accretion to nice of top grow get we that to margin base line business to off to the X% X%. X% on expect And

X%. good So X% about we still that feel to

points well We’ve few what in our percentage of portfolio. I in said to as said got as list, percentage, we’ve good ins outreach, call funnel both we’ve a tuck obviously, two that that a our deals roughly some would acquisition. come enhance fill gaps from a of year, from can capabilities, great Next

that. about good feel So

We also program as from offset pressures said, inflation. program margin about seen to that we’ve invigorate reinvigorating feel of our continuing the work good that, and Sam to invigorate our some

Steve and deliver said, the cost to to tuning what we year. make we feel in So the to us. testing good fine about. the investments need we that, rebalances feel year and cost in should initiated structure And deliver a next tailwind that said we’re Sam next good making We as then ADX the consumer be structure, and necessary about finally are we’ll we’ve

feel good about we that. So

I’ll of add Jim’s. couple comments a Yes to maybe

that to CIT So now, build Jim is mentioned just give growth give fact model obviously we’re directionally will you as investments to you also consumer into, reductions but one, going not about you things for an drive next some segment. build year. your to guidance right think that or maybe that. just The Expense in important

next in And it’s as points you year environment for we’ve QX. as think year. XX that look less basis fact you so said, they will versus be us definitely The this about at a dilutive, when improving pricing

that improvement XX,XXX assumption you so obviously then is all case COVID coming some number January, down. And it assumption the mean, But the use base that’s the average that because the that. though result is there’s right plans. So is that it’s that’s testing impact when as health XX,XXX fact in is with negative the the I a based down, is COVID COVID of least that’s around PHE in X% retail that ending, that straight even it’s longer ends contracts that that. with think incur around incur have business reimburse of our now. XX,XXX at assumption value PHE variability no talked that about emergency. comes you end because also XXXX our is channels to an of price the in of no margin we going not no we things And right into XX,XXX. impact to will maybe we pricing now in the the non longer that the what will down, longer, traditional of There’s that the a we cost But after the additional an about pricing terms the we’re seeing, coming

margin impacted also on know, by So price reimbursement COVID completely that as you that take by can or the you reimbursed decrease. being

grow. base when remember modeling that our the quarter will remember off Pito growing it ‘XX. is in base the Guys business think say about you fourth

long Jim’s of just a to improvements. under we’ll then track record secondly, is and And comments this company Sam’s leadership Jim’s Okay. and underscore has continue productivity

program. so And operational Jim, his talked prepared in our about excellence remarks

drive And productivity. a Invigorate that specific called to program have Invigorate. X% is program We

think pressure, XXXX, reduction, PAMA think to inflationary as you Invigorate you offsetting need as the about of the and when you getting about about So as potentially growth, well some base And think cut expense as potentially. a well you and driving forward, our the in investor a leaves room as lot that Jim be I around us company. tell will there’s he to particularly can more drive presentations, this going digitalization and we’ve automation, for highlighted productivity, before,

Donnelly Next Citi. with question is from Patrick

line Your now is open.

the labor secondarily, a chain just on at of about supply have on guys kind bit we a Has Maybe of are that up thank would kind I cost them well, plateaued of for color, then it’s bit issues questions. where inflation better? talk on the as of of pop in side, that and been the know, one, a be of that that well. vein, guys, getting of little that Maybe retention, you helpful. back process? against you handle terms a guys And Hey, in us seen labor the least you just the some taking similar

Yes, thanks, so Patrick.

So first, inflation. on the labor

the along roughly we’re to So and between our merit plan of year have X% to across to what next other is seeing this a adjustments way. company. would is make increase year But we some expect X%, equity X%, and the have

which I affects standpoint, quarter, good labor modeling utilization. than has stabilized our that X% is from to higher in a a So obviously like, here planning it productivity. we stabilized think range you the albeit, from feels a X% and that But retention I’ll attrition employee level would on still tell at it’s third

there’s imagine and hard of go on work about into making can So we of not really continue you lot it’s employer wages, that a things, just other as that. to choice, the classes

billion not anything supplies contract we’ve price call the previous roughly of under on up we entered north on years, If what pre in inflation sometimes of XX% of most through is front it price $X and analytical materials analytical in And And those the we contracts purchase contract. $X terms indexes of prices or improve. period, about billion, that of that supplies. worth In terms and of it’s going actually contain into do up. locked

about some of big roughly pressures. good is And that where So, we billion not that’s see but up. locked inflationary XX% feel X number a that, is completely we do

the we services, million of $XX roughly a have is million, we Travel of, logistics, lot supplies pre-analytical janitorial to and $XXX services. that addition analytical have professional expenses. living spend, other In

all where contract. our majority really we see in So, is not the of of under today. that business And that’s inflation

it possibly Hard program our can. we’re will Fed to predict. we will committed, are Invigorate hard worse get year, as But everything slow But better real this we that that is for and get offset will hopefully doing, seeing. to the work we pressures it as much those of We next inflationary again year. next

from with Next question Bruin Bank is of Derik De America.

line Your open. now is

you’d of A like your But Hi, to the Steve. update Thanks. solve of recession sort the good know, and in sort me, increase expect time or your head appreciate sort PAMA answered years. any your couple already. a for of you and might bills from from you struggling expecting I questions. all for lot a you of it Thanks customers. are follow guess as with past the and up in seeing they’re up, as on patience of another over then of one picks I been into Any morning, sort have people to not concerns any and opting we are right inflation that, on pay mean, now. relief debt

start the let’s with comment. PAMA Salsa So

Salsa. what we my is, assume many So Number assumed. we for than sides that, PAMA the House in the I’ll in should plan we effort you this on remarks comment And years is that. XXXX. as now, aisle. support. two have both is prepared that’s should That’s caught on in the of is What very those congressional And to add talk in better support Senate on And the to both said, until and news about strong. we the

that. So that going as year, will PAMA. on expect, alignment attach Salsa, also, we’re there is There And need with were to. of this it’s a would that And to the money. imagine table. to And trying a the fix to I have we we lot busy. is if permanent implementation can find that it Washington to of we is cost you successful But can late know it’ll be a vehicle in topics

a score of the been CBO. a from we’re in alignment And the industry doing send for you process has letters of can pay getting efforts to there so through to tell that. colleagues I working my needs be grassroots we’ve going never support the throughout stronger. So and we’re into this Washington. And But

get full over line. set to a court the really So goal Salsa press

relief. we’re can relief. is, again. again, planning. obviously that Salsa we in to to the if indicate We’ll question ask or push successful get that got Salsa there, not for a we’re XXXX planning I’m But on year to don’t, But another not we’re we be don’t the that. another with if pivot get that Again, going year our get going during We’ve that we past. of will if Now, not of

that. Yes. no are -- This impact as seeing we good in an on of or is uptick yet unless are question we on rate patient seeing not patients very concession any

concessions our going and of to we we’re We have to fact, actually next a things improved patient actually work In year. this hard. real work improved lot has and build into do rate and year-over-year

We have time we adjudication. call real what

we into comes literally x-the payment take PSE, patient adjudicate us. our we the can requisition to claim and So, that coming

that is patient when So a we claim to going multiple form of tests the is. be pay know the we approved know real then that so that are us to time we denied, balance what requisition the or to know patient adjudicated, patient. on we And provide or and ways charge what give bill payment the for how

We’re whole upstream. move process working that actually to on things

delivered sent if to us, been it physician has appointment will, we that you can do is an appointment, an requisition because patient makes is and as to pre-adjudication, making the when that electronically, patient So us the online. already

claim. that before they pre-adjudicate come can even So we PSC into the

to going We’re the do that. capability build to

the And improves be walk before they’re productivity patient PSE. into knowledge they the billed our of as it to well gives going what as PSE so

doing make patient. And of pay we’re to things things rate. of to lots patient those So our to it all easier inform help the concession

And in the the is queue from last [Indiscernible]. question

Your line is now open.

like requisition to a strong a here. heard I’m ask going maybe very base but been lot The revenue much. down on a a more times per less of your comments bad very I test back have very, imply would growth know a come we’ve that that’s to XX which way. hit other bibs, components few per think topic really and on different been pricing component something Thanks X% being I basis. improving or mix must

there tests you curious mix of us PLS volumes saw? this I’m driven some per fully number. value some of could improvements testing, can I categories changing that on I’m you that type like for Was mixed feels know and requisition street what a have quarter? aren’t What upside the that at been the from us number nuances maybe contracts of throwing but revenue? was more color quarter some big of you, normal? this were by go understood numbers this impact if were driving a qualitative it lot So a give than seeing there you the with based or Or quantify up pretty

it. into to want dig So

Yes.

Eric. Thanks So.

So as into you know, things a there’s the lot go of that calculation.

we So down said basis because per about XX price test was let’s that take points. already out,

So your math is directionally correct.

is that. clinical start All me just There diagnostics the about of really tell advanced making from mix, there quarter. mix that types investments let in that mix. just in And mix. we’re is mix paying you up were the X.X% the are I’ll things payer enter very of into off. with three that different and clinical business

getting other a Hematology Caner good. standpoint there. quarter. of things a genetic mix higher in of and business the based was We’re really there’s lot From molecular testing advanced and good tasks. mix a

quarter there’s the payer fix lost. cap fee commercial And than, a of you a and better payments. from just obviously, cap tell service in was First, fee we’ll service, per and if you was less cap to got for mix standpoint, was and

helped certainly us. So that

issues. quarter. our portion to tends just rack. in good mix there’s from testing a portion is consumer commercial? in health business portion our rep in coming better left that is some What pricing was from was Our CIT, from payer And Medicaid? per quarter the revenue our we’re finally from the coming systems actually a initiated getting has then finally, The And that CIT business favorable higher coming is market, business. and that reference What and then per is Medicare? and What pure was up mix

lot of kind of it. a the it. So summary factors But of that’s go into

me It’s this sure the the we around support and is pleasure last again, for was going for I’m XXnd over I our added up working all all Okay, you. travels. that Thank thank you I seeing of my to with you support. call. been you’re a And be years, the math question. your think your in

day. you thank have a great and So

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