Quest Diagnostics (DGX) 2 Feb 232022 Q4 Earnings call transcript

Welcome to the Quest Diagnostics Fourth Quarter and Full Year 2002 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 copyrighted property of Quest Diagnostics with all rights reserved. Any redistribution of retransmission of the 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, Investor Relations for Quest Diagnostics. ahead. go Please

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

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

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

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

is here Jim Now Davis.

Thanks Shawn, and good morning everyone.

full more Quest had the a in X% than growing fourth base in the and XXXX revenues strong for year. year business quarter X% with

COVID-XX expected testing but exceeded we As XXXX. declined billion still $X.X revenues in

colleagues to challenge industry growing business. a of to and lab have team to incredibly create possible over I strong how while without period the last not rose our worked the healthier the during commitment the XX,XXX of nearly am in performance together compassion an insights been COVID-XX world. has deliver base proud several help unprecedented would years this of our Our who

our then detail will morning, performance and provide full I’ll XXXX, quarter on for financial discuss guidance. our our fourth XXXX results year Sam This discuss and more the

$X.XX In reported cash $X.X and quarter, million. on were $X.XX were a on total share basis, per the basis fourth adjusted was revenues from operations $XXX billion, earnings an

XXXX, were Earnings total a more in on basis. including billion, and reported billion share adjusted revenue. per was base on basis year revenues from were full $X.XX business than Cash billion. an $X.X the For $X.X operations $X.X $X.XX

As you to and our X% increased dividend by $X.XX share authorization saw morning, this repurchase we increased per share approximately billion. our $X quarterly

I’d like Before regulatory discussing some updates. to recent XXXX, additional highlights positive for share

in impacted Medicare million delayed million. Congress cuts place our that would which PAMA take between reimbursement First, approximately revenue have scheduled XXXX, under $XX to were $XX and

While association we the fix our work we trade to are to with seek delay, pleased closely PAMA. to continue a permanent with

for collection a provide This CMS to of $XX fees with Second, million XX increased approximately specimen reimbursement Quest first for nearly year. could years. in million $XX this time Medicare the benefit

Regarding COVID-XX have COVID-XX upward in volumes steady throughout December. testing late volumes revenues, while we our declined ramp since did steadily see QX, a

XXXX. revenues COVID-XX significantly to in our to expect compared XXXX We lower be

to X,XXX XX,XXX expectations have We tests tests in XX,XXX prior from day XXXX XX,XXX day. to our per to lowered volume per COVID-XX molecular

In addition, end payors policies and negotiate the we of commercial reimbursement in continue coverage with to May. following PHE the

system our Health, a growing some northeastern we Suma are integrated Ohio. of the serving in quarter, I we business in highlights acquisition In services the now this business. communities laboratory fourth recent will how outreach completed large share health of

of to services into assets entered also laboratory Maine. in an Health’s select Northern acquire We outreach located agreement business Light

Northern laboratories of We services management for provide hospital with will cancer Light’s center along its laboratory also lab. nine professional

management, lab very is shift challenges monetizing and help labor mobile business. other with Our the population and/or health margin assets. which capability-building services, regional funnel pressures from health active. M&A is analytics, small pipeline inpatient opportunities particular, with to care, of to major outpatient are Quest including mix their strong, systems, through potential systems, and due health deals facing by can In outreach labs,

gain health value-based from traditional related to demonstrate started these we In Also, plans, contracts see to meaningfully value-based growth contracts. these higher incentives strategic traction continue we’ve which to value with contracts benefit we helps relationships. the than of with where

the cost With so in Medicare to the collections, broadest increase lab members enable testing. fees we to access about continue in their recent make specimen low paid to begun reimbursement high discussions appropriately provide our customers specimen getting Higher collection health members. continuous their patient investment CMS’ services for with we’ve plan and services have quality to us for phlebotomy

TruSight assay by double-digit to with extends strong In providing generated offer tissue pharma comprehensive selection. gene profiling in to turnaround This expanded and XXX of help genomic we pathology patient’s Oncology XXX laboratory-developed selection a therapy beyond to This panel diagnosis test time from test. relies tumor solid our services oncologists cancer genetics Illumina also therapy the test capabilities tumor. diagnostics, faster a launched advanced growth a in XXXX. upon prenatal In we XXXX, as

Throughout of like and growing capabilities hereditary portfolio, XXXX, the genetic pharma services. genomic we investments to opportunities our some faster to services, strengthen sequencing continued bio-informatics of testing, support our make and which prenatal

in also position continued in strong women’s which sales growth invested well prenatal We our will health us force for genetics.

we more of found consumer the digital million platform, simpler, new we testing consumer COVID-XX to fall lab our executing a $XX Consumers both tests. to progress XXXX, make intuitive to this and approximately way our launched strategy. of year, order be initiated recorded continue base QuestHealth.com. In testing. We Last have

some testing to strongest in and advertising, growth December. consumer acceleration ramping spend in base sight, date saw order encouraged Following of the of We following new through marketing the are by up the promotional we of fourth Monday quarter. our we launch volumes Cyber began some the

approached our decline. our impact of operational the well our savings inflationary not goal pressures through did excellence, completely improvements productivity program. XXXX as of improvements in unit we to savings productivity in and Shifting and as X% modest business, Those Invigorate offset a price the

have inflation faced significant companies and many wage like we pandemic, the pressures. Following

our efforts margins We and to business. base increasing our are drive in expand productivity

productivity conversion project builds Lenexa Marlborough our with and automated drive a artificial to a laboratory. analysis. platform highly Last improvements of This lab year, new and our greater on in to new began intelligence. project We’ve consolidation we new automation additional continue sample makes Clifton We use is artificial and work assist microbiology we’ve with introduced use labs. intelligence done and platform of in that what automation

we’ve from Finally, announced the we savings last realize platform to begun year. conversion that urinalysis early

continues a retaining and our us. priority frontline key be Filling positions for to

turnover our our Although workforce in and to engagement experienced retention. average we higher frontline improve we taken have job have of employee categories, stabilize actions some than and

our XXXX. to actions these in enhance productivity expect We help

SG&A in in million of reductions We approximately including XXXX, have $XXX also primarily by taken X.X% actions to workforce support our functions. corporate approximately reduce

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

Jim. Thanks

$X.XX XX.X% million. down XX% Base growth of revenues were Revenues prior revenues grew consolidated quarter, declined testing declined testing year, XXXX, fourth business versus information XX% X.X% to for reflecting $X.XX to by our in revenue. the the revenues year. partially testing billion, from the COVID-XX revenue $XXX billion In offset services diagnostic to COVID-XX the fourth strong lower compared prior base quarter services versus while

XXXX basis declined of points the fourth to volume. by XX.X% of quarter number the measured acquisitions XX with versus requisitions contributing volume total Total

headwind the decline testing a X.X%. to base year-over-year total and the of which was employer versus volume more The primarily drug prior For quarter, events lower declined volume together volumes adverse the related represented year. than during quarter, testing X.X% weather

the X.X the approximately decline This tests tests throughout the million quarter. per the and rising an contributed molecular the million After XXXX. COVID-XX less versus versus volumes volumes volumes. X% fourth in modestly make COVID-XX of testing in was of day our daily down molecular January third to declined QX during roughly quarter, X.X tests of We currently XX,XXX quarter up to our X.X quarter. fourth resulted down than approximately tests and average

fourth more molecular per consistent driven incentives and by expectations with XX requisition the revenue strong value-based declined of X.X% and with quarter, Unit including in was req the driven environment req This under points a X.X%. prior revenue approximately our versus concessions. increase was volume. price plans, patient including at reimbursement in In up quarter. favorable health per factors, COVID-XX Base number per lower mix, revenue test the primarily remained by pressure year, business the our pricing contracts, lower basis payor

year-over-year extent quarter the higher in The or decline $XXX was compared to of year. $XXX lower last was million of revenues investments adjusted year. base On adverse XX.X% impact last operating $XXX fourth compared as $XXX million our primarily our in weather negative revenues to million or as to X.X% or volume, an COVID-XX revenues lesser related on accelerate the income of revenues XX.X% is income operating growth of business. of revenues testing to well to XX.X% a or Reported in and operating income basis, adjusted million

increase significant a experienced we costs. quarter employee fourth the in Additionally, in healthcare

operations a EPS $X.XX to last quarter XXXX billion full $X.XX Reported compared in $X.XX was versus fourth Cash period. year EPS to Adjusted was year in $X.XX from billion $X.XX ago. was compared for prior the the $X.XX year year.

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

consider For the following. our guidance, XXXX please

now to per As COVID-XX to Jim year. average roughly highlighted, full tests XX,XXX we are molecular volumes X,XXX day the for assuming

through to reimbursement see of modest QX. and continue respiratory spring to average uptick testing COVID-XX molecular for levels decline near during We through PHE. continue end the could season recent summer to volumes expect We the in but a the assume

reimbursements CMS $XX that will in when expires has the PHE indicated May. be

is COVID-XX we $XXX negotiate health guidance policies revenue COVID-XX that to Note testing continue testing coverage regarding lower reimbursements than for had expectations post-PHE. back the XXXX for We with million approximately and October. our in plans

we this year that full earnings the is our at lowest line With testing being year becoming earnings. expect of a XX% roughly XX% cadence to year, QX with seasonality business, with more of portion in COVID-XX typically smaller an of the quarter significantly overall pre-pandemic

QX these XXXX, reduce will $XXX the X.X% in approximately corporate million We including in in have and second will of expand workforce primarily benefit be The also SG&A reductions of quarter. taken by functions. support actions modest to our in actions approximately

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

Sam. Thanks

summarize, delivered and in year X% smaller To revenues expected growth base testing business XXXX. our declined COVID of significantly forward. strong of our as business will going a represent last we in portion

on details efforts day York strategy our XX at March during event. New with an productivity for and our to this forward Exchange. on the base drive in of investor look are more We announcement sharing Look soon expand We more to our increasing business. our margins upcoming Stock

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

[Operator instructions]

first Ann in Hynes the from queue question Securities. with The Mizuho is

Your open. line is now

Hi, good morning. Thank you.

also back in embedded Maybe if versus major has fallen much end now you low that that in guidance. reinvest assumptions benefiting you reiterated QX to incremental the the much to million high about we and $XXX of to when the what’s million is XXXX mid-$X Can business? how expect How in do versus Thanks. guidance you discuss in line, earnings? $XXX end the range the talk of bottom

just let Yes, the first revenue me about speak guidance.

We to had day so on revenue suggested we peaked - day about just XX,XXX the change which that and COVID we’re versus had what you continue and we Again, the requisitions really day, roughly based year. million million per but it’s to had fall. XX,XXX of December. to per expect downward we revised It guidance know, to the remarks, midpoint guidance, January, the decline ’XX, COVID a seeing. in in our in a thought we’ve here in volumes in $XXX about trends we’ve to slope, XX,XXX originally COVID a in indicated As it’s revenue XX,XXX averaged downward for that’s been really $XXX last X,XXX

base explanation On so the assumed on acquisition business, revenue growth the to really that’s X.X% we’ve the without on a business, base total side. help, the X% revenue

the for maybe so couple Ann, Sam. you a comments, of is Yes, - and this question add I’ll thank

is QX which the around is that also the collection which delay, of XXXX range, as the benefit there changed COVID. really, the we which of XXX which reimbursement to really Versus $XXX talked specimen what obviously million the are what were we now things I a the also when to should we that about includes But changed back just fees, key mentioned, of you PAMA million, to in think from. the one positives shared some includes are $XXX one have we being--or which thing, negative, that somewhere the to I referring say, couple fact negative, in that you that’s

a had XX,XXX back assumptions to that as said, Jim just COVID XX,XXX then were, we The day.

January, seeing remarks, a of is say, typically Now down it and January as season the our come day I peak volumes, we a on to expectations then prepared the the year in we’re XX,XXX are, the and day realistic. for respiratory from so XX,XXX mentioned of around to would XX,XXX there, starts

itself we’ve when I in really it’s the down shared around versus revenues terms we think taken and assumptions. what total in in in October, what again, expected keep versus XX,XXX. to the the But we’ve to of bottom be top, range know, of in XX,XXX said as the terms business, million back COVID business out going also growth. COVID reserve But itself, the some mind term benefit by said we $XXX we that also--from differentiates really for benefit to of couple you that, in investments the of amount you months for investments the ago, a million will $XXX we million referenced, strategic invest we small a to the long carved $XXX We’ve that

thanks. Great,

next Patrick is Citi. question Our Donnelly with from

open. Your line is now

the for guys. questions. morning Thanks good taking Hey,

margin puts Sam, little ’XX, growth the expecting were in seems the inflation, came going we maybe - light for the comfortable the you. where SG&A bridge moving you Are Just into and and called up it one XQ. that lower million and $XXX just Thank pricing; talk to base Can you step investments? from you to need DTC of for then XQ margins the between Margins get business you investments, know, changing out any takes a with want number guys like plans there pieces. you. DTC cut. about

thank the and you yes, for Patrick, question. Sure

little talk rate a Let QX margin about and XX.X%. me bit in the the QX,

COVID year, of also Here which in the was margin some QX we the well. but revenues headwinds, had seeing least which obviously sequentially, a significant of versus impacted we throughout the are in some at which were drop as QX,

growth of terms still in fairly sequential I inflation, itself, QX, that but were in QX, with the line expectations had of what investments, about which we margin roughly so terms a investments In had had driver. say We we rate per not million of would $XX impacted elevated. necessarily

impact in some That met of the higher also impacted driver expectations employees quarter the million One million negative so of in thing. of it QX revenues. in cost. in points another was rate higher at a on driven cost by in higher was margin to was I higher have especially that employee if but impact, their the approximately our utilization, so of COVID have $XXX were about--obviously healthcare that after and of in was drop roughly you sequentially, our that factor end COVID rate looking revenues general. towards $XXX healthcare deductibles, things big talked basis terms That QX, you’re versus than XX year about

that obviously into projections of XXXX, achieve rate that you that’s the we that our the things the look gave. give have we some and that we here can in in factored us if are prospectively guidance Now confidence

$XXX those in implemented. have already and I million We would say have of SG&A been reductions, taken XX%

the Now, course you SG&A probably won’t we year. the expect of the it see in fully, benefit in see more latter in million see of $XXX QX, to QX effect QX reductions but you’ll and over starting that’s really part that taking this in

our investments XXXX of growth to because versus be In the of that, start to less see investments you terms towards benefit we we XXXX, these some investments, from in business. referenced the expect of dilutive

guidance and a specimen growth rate the revenue we also Then so on drop-down of as reimbursement the is, is that fee and base have, growth X%, to from the collection the a assumption business, margin on and range that’s assumption benefit going have we approximately finally, to at based well drive volume midpoint additional revenues. improvement that margin going obviously the from those

That’s helpful, thanks Sam.

You’re welcome.

is question next Research. with Nephron from The Jack Meehan

is Your open. line

questions had on morning. I Health. good few Thank you, a Quest

ramp million XXXX? First, sales, the versus there fall then testing breakdown the push? is can you after just initiated consumer a revenue share second, investment $XX COVID and did of base about on what that your Then you sales, expectations of for are for how of the talked finally, base;

based once marketing growth the XX% spend expected start. CIT, total million, more the of business; $XX so December. however, the the we growth December Jack, consumer business, year-over-year, significant month our We performed our we launched COVID On was me of the initiated let base in we got in launched put over actually our business, Yes, testing as base November platform, initiatives and on than it in once place. new

that versus expect dilutive As we’ve this year we to less business said, be XXXX.

the for ramp something that know, day. you significantly you we’ll day. up, investor CIT, projection to terms we’ll a and significantly base but In down, ramp better we give will total our at COVID of investor of expect give revenue you Obviously view at

then a how Great, If from out sales for assuming what came anything and we core just and there possible follow-up serology, of much look the one or back contract your on of on it molecular, call XXXX, to you’re the XXXX? is do COVID. CDC outside

Here’s say. what I’d

was spread variants pop $XX work the to is continue remain, do cases development or got positive CDC that volume, in inform to new sequencing we’ve a up. to As say expect we need The contract, December. ended just for XX on fall, What to we one I’ll down, the and is help said simply continuous to add-on thing - doesn’t the the as addition that seroprevalence to indicated, serology, significant That last roughly the had contract the in with million others the the of CDC we information volume year. we right does PCR with anymore. XX a a about now expected, of The X coming CDC CDC, test XX it study. contract

Super, thank Jim. you

welcome. You’re

AJ The Suisse. next question with is from Rice Credit

Your is open. now line

Yes, hi everybody. Thanks.

deals. peer those too. on know terms announcing the to there closest pipeline Do transactions you Obviously seeing you interest competitive those whether--I continues You of off, you testing some aligning deals, it be is which the change attribute mentioned you? as steady any of on with is labs. the also express you more a us Can - in hospital-related being are your done? labs some landscape small in activity more COVID tell deals for are potentially that is running to in regional What regional do seeing see

Yes AJ, dynamic been. services change there’s of What in of competitive lab deals I ever as you no, as big tell question. engagements. the or you hospital I professional terms thanks pursuit tell no would in real for the these types outreach it’s would is funnel the is of

to here that. first year, very several expect in about good feel We of the still the close deals half so

so COVID of terms we competitive every our In If out Certainly on don’t it and that potentially at that that we participated many then are labs in we testing, out in position it there, not of a the of adds I’d out, small to are yes, are raise look take we first significant we and geographic and a say competitive think declining, think there’s their sell bye standpoint, up that If flag put one those. look them. marketplace, need now we’ll retirement it. there and size. each from a we hands a left at certain seeing regional that volume is that those few

lot. a thanks Okay,

You’re welcome.

Bank. is Deutsche Pito from question from next The Chickering

Your open. line is now

good Hey, taking for questions. morning my Thanks guys.

volume. long cost what Invigorate usually and cost most of finding cost how and in record efficiencies the via to fixed SG&A, done savings Invigorate Invigorate, I’m or leverage so very cost usually cost a finds million through cutting compares of services track Quest has $XXX SG&A of on curious

very Invigorate million, for of base XXXX. plan, Yes, million target $X.X is our $XXX so in a plan the takeout the our X% that billion-ish, for cost it that roughly call $XXX incremental XXXX. we X%, close cost to our entire so We year. to With target first, actually Invigorate million got company, call $XXX

other wage As along did offset we’ve remarks, and that with pressures. non-labor just inflationary not said the completely did price headwind slight in prepared it see, the inflation we

we churning really a in workforce. is initiatives thing driving say that will we the We the I be phlebotomists, actually down. has productivity processing, the we’re funnel full company. help so and slightly coming plan be good as us stabilization that go we XXXX, ideas, Diagnostics productivity a really terms of it productivity good we’ve about specimen positive XXXX feel easier Now softer, Attrition simply our your of all-in into we XXXX. that got and Quest major across impact the when has overall other a we about in XXXX, which price to expect offsetting you’re on expect through would of it’s stabilized, in think and for logistics to constantly productivity feel inflation,

that that is repeat which going from on of top at taken reductions actions, here, The your million because risk the really to for we the $XXX Invigorate all important the addition improvements the part. the it’s Jim of the SG&A At expect still of most in for being to redundant said assumptions. and I’m we’ve productivity X% beginning, something get, what that’s already

Got quick it, two sorry, and follow-ups.

talked about phlebotomists. You

curious right where hourly to against today wage retail is compete is level the phlebotomist the channels. if think and you Just

public pricing while. second about been supply have is The for one companies a the lab talking

vendors leveraging in U.S., offset that your as the supply largest labs inflation changing scale? for Just of inflation for what simply can assume ’XX, you by one the you curious or and/or

certainly Yes, What in as line X% were tell what and we’re for so saw I country. of impact we It’s our vary for retention would to with rates our year. the XXXX, region in I wages by increase indicated, phlebotomy our the improved. X% has phlebotomy that last is planning wage you

so certainly Our about feel stabilized good declined, attrition has and we that.

just inflation, supply the Then on curious--?

inflation. a purchase going for quality a year supply is between time we up, contracts those we’re When the turnaround cost, of under meaning we and perspective. represent vendors an deflation, the run Again, come from XX% to each sorry, generally improvements competition and opportunity for contract. what I’m Yes, they look

some of and reagents the is inflation like on really that. the things non-supplies, in hit Where us the XXXX

just been could that. see Some as normal businesses, masks, hotels, gowns, be as pre-analytical like your things that like supplies, of that, could inflation well which and things travel have the in you that all air

Now think that’s expenses that. on again, and here put certainly and we XXXX, as we travel get and things we into like softening guardrails living

Great, thanks so much.

is Brian The from Jefferies. next Tanquilut with question

Your now line is open.

a payors. Hey, quick on question from just rates good morning guys. Jim,

points at the think think optimism some But just you’ve curious bit pressure a commercial bit a basis do remarks, expressed called in side. speaking out prepared reimbursement of past, or rate in seeing in so broadly I terms how improvement increasing little so, on of in your just payor receptivity XX I Thanks. reimbursement of we you the front. what to reconcile maybe rates that, and in seeing the you’re little

rate prepared one five XX% think Diagnostics, best these four rate--you you also the renew a view that I length the every contracts, said in in represents down years year, of new so seen about basis about flat so that we at preponderance contracts will, feel prior that. said which contracts to and a seen was that to very we’ve pricing that this expect is so will holding XX% we minimum and we points, in good to time my positive. as of know, I’ve the as increases can which Yes, rate those we that they XX contracts, renegotiate Quest remarks with our actually We’ve

Medicare through we What today look that reimbursed roughly million XX% do. commercial the we’ve - draws a of we got increase draw is, increases, we’ve and rate fee also on million to get said $XX $XX

as going XX% turn every to to reimburse not We’re this but to do are across so us pushing up increase to that those that hard well, rates push take those prices at hard business. only expand we

X% of of business, other our largely businesses I can price portfolio say this X% population $XXX million optimistic XXXX. $XXX business, Quest I’d forward joined business, we’ve solutions employee gotten a thing to is, increases employer that Quest last and look, in One that since is most on and our portfolio The in be put health outlook that price of for there’s XXXX. those - Diagnostics million Exam pushed we’ve Again, we’ve to place the in for business our

to price maybe remarks headwind. a points impact a in the just in of around of it, Yes, QX points couple price year-over-year talked prepared of put basis roughly about XX of emphasis we

definitely is look in It’s year-over-year, reimbursement of right from progress towards what’s terms of to our pricing. specimen some that’s make obviously good managed we benefited collection really in reflected a now a and positive. We’ve actually the price As guidance XXXX, impact positive our the fee.

so those incentives important priced it laboratories into like on back Diagnostics, The other Diagnostics, we it value, which that value-based put we’ve there’s these I payor rewards come additional it’s based and equation, for share us. with be us Quest spend hospital could are mix. contracts, an thing of incentive our on earn of to want talked actually plans, contracts is succeed XX% be in to the and These the of over leakage, achieving plan on could requisitions mention really type health from high incentives good Quest health value-based some business, part our have value for be about don’t into as based the of we movement labs that of price to based could but

Shawn. Brian, this is

last that one we impact pretty plan of in stable, I saw to largely wanted pretty hospitals. client actually the thing largely the The the Most price Just driven so. book with XXXX good, add. bill, of by was was health some

Very Got helpful, it. thank you.

is UBS. The Caliendo next from question with Kevin

open. is line Your

with first is, bit. Hi, guess thanks my of are tailwind, the there? pricing all this a that Two, offsets little these so incremental puts how is about million SG&A, the you’re a such about, think my I we there ’XX, certainly any in trying line, it’s bottom there there just incremental. trying offset to that--you I puts I’m volume drops terms typically for, takes $XXX like. I’m understand Invigorate do better your that one understand just takes. offsets it really that would costs that pricing is Is benefit $XXX and for of--or taking for is or think some to change the is to there know, an the something other inflationary million pressures, on margin and and to mix, the effect? the on other Is mix labor talking basically, question.

Invigorate Yes, it is million, bottom incremental again and line. the the record, plan our it of drops to $XXX right yes, to

improvement to pricing, In as of line terms bottom drops no, the the well.

benefit, came not mix. and reduce but was improvements that surge point. tailwind our we offset along ability COVID, nice mix, to we collect, very Obviously in in three denials the buckets: at we mix test saw RSV for so both our year; a That our of put was other had for year-over-year for Then us and that QX, positive made with we QX good would to the big any We’re positive flu flu get terms in a since strong for this suggesting testing which [indiscernible] do certainly year. RSV was and the and concessions, in and paid payor patient moderated; finally, of has work in in ability XXXX. business then we

dollar can quick our And billion one if gets we should models used in the just XXXX? follow-up, buyback assume in I ask

what’s offset guidance. but that you to into the that year, authorization increase, be don’t to What to No, roughly any authorization, is the we at are the we assumed, buybacks end that’s the assume on count currently with essentially addition the $X expect not that we are the have so projections. do so of actually, that built the Kevin. is share dilution, equity billion should where The share is flat billion in dollar the we’ve assumed share in previous $XXX million

Very helpful, thank you guys.

Andrew from with next William The Blair. is question Brackmann

Your open. line is

Hey the guys, morning. questions. Thanks taking good for

commercial conversations maybe reimbursement detail it how just trending thinking you on there. are payors and just give with how that expectations to as with are permanent portfolio Then be to any ending, the those broadly, related I your about should we guess changes little relates COVID? Maybe thinking respiratory test how specifically Thanks. three COVID a through us PHE to we’ve that, testing lived of years about more now

with once direct CMS--and health discussions Yes, we’ve will the to public so that $XX. it’s rate them, ends, again, the had go emergency clear very

test new well. be be discussions as driving and expecting certainly should with as a we rate that are such. to payors expect We that those that $XX treated commercial It’s

that’s different Some Andrew, may we that, negotiate. have a opinion where so on slightly

need there’s that, and we’re symptomatic out that these country testing, the these payors well, as coverage that way we to addition favorable in can. asymptomatic so to we’re needs the decisions going drive tests, need to that bullish be these worked discussions most policy In tests, all versus commercial

to away In RSV be in depending be negative, XXXX, XXXX that a so there some remains were they it tests, we terms variety XXXX. physicians so in in go early to seen, we’ll out to to COVID of out with in obviously first winter. if and flu three When respiratory COVID you so out like one up know, how whether But turned did the January then in go re-flexed the were on just expect with here see patterns late don’t it’s patients of there. plays respiratory tick the panels, away and and fall, fall, going winter some presented out one symptoms, physicians still not there, others, ordered to in ordered and to have

The of next Bruin Derik America. Bank with is question from de

is line Your open.

my for question. Thank morning. good you taking Hey,

then, still revenue that to the ’XX and embedded a housekeeping the should think--and about X% the then that’s The it your in question expense quick just forward should question, follow-up. and housekeeping expectations for in we the net how going contribution? think Thanks. growth look way at about M&A and bogey your how then we think interest for revenue also contribution One and on at for year, the guide, volume should we

I’ll handle type the part missed the What I expense? so the Yes, on of questions, but expense.

sorry net interest I’m - expense.

interest to assumption there. okay. roughly to year-over-year in take I’d the of flat, net - That’s ‘XXX is expense ’XX, say terms Derik, Oh,

have so M&A, deals assumed we for really of been is ’XX, have made have that see but any deals benefit that our ’XX, in what’s already - those M&A XXXX instance, terms you’ll prospective terms a for is already, in no what no included. in M&A, prospective included material hospital guide in in from essentially outreach, closed there what of ’XX In closed was

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’XX? M&A, All what’s so the for contribution right, completed then with

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you. thank Great,

the The queue in last ISI. question is Anderson from with Evercore Elizabeth

line is Your open.

Hi guys. Thanks so much for the question.

incremental positive had any to that in and think kind contribution assumptions pricing, diagnostics then necessary of XXXX investments and growth, ’XX, on that specifically be impact your it. and including accelerate you I advanced a more for sustain question about will the for specifically

investments in talked Yes, so categories. three really about we’ve our

on which that it we’ve First, than grow indicated, consumer business the our certainly XXXX. to in in we initiated less will XXXX, it continue and side testing as base was be dilutive of will covered, testing,

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the LDT, is prepared Illumina but LDT it’s decisions referred selection brought cancer. Quest - we a the new in platform up the it’s a in TSO mentioned I therapy for and As QX it as XXX, in really remarks, using important to

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Morgan. in with that more There JP queue one is the Vatnsdal question Rachel from popped

is Your open. line

guys Thanks the taking for question. Perfect.

the you some was noted First just that fully recoveries up, not the New of on New York? topics uneven you follow-up that recovered, can hitting we’ve recovery some is on Thanks. you on March, geography. still quarter, expectations give previously that? through for in on, can plan the so any update Then there York of us analyst about us this just the City talked you by walk day Last my the latest

Yes, for is the thank Sam. this question Rachel, you, -

said me In what the we terms and yet. seen of really said repeat haven’t a in we change because before, the consistent let what dynamic geography, I major it’s we with think

We where exception I are geographies, from X% the the above levels York New to we’ve population, in seen outflow to think and the of city pre-pandemic most population X% City, to the across back roughly notable terms X% being east, the X% city. leaving of

it’s coming vibrant think haven’t New think more back But don’t there’s activity. to more where back York any of getting pre-pandemic it in back and was means. that and I care though the don’t City, by even come fully yet, seen in I much We is city health terms people

on an so is as that other and about we is pre-pandemic still see transportation ridership a but line of coming that of being to the we that utilization. XX% also metric levels the The pre-pandemic last look everywhere is terms how it’s points below indicator, ridership, else terms based lagging, on levels in here public as above is The thing data back, east punch key at in still or got.

for investor day. Yes, Rachel, on thanks the and then question

really to I topics think four that about. there’s broad going we’re talk

excited and give lot what progress initiated which testing we’ll that, also serving to standpoint. consumer systems, growth those our to this on business, genomic and why we’re doing sequencing business, a be First the we’re part core the doing we’ll about on around you health to color physicians, and making We’ll deep then serving in address go drive continue of more continue segments. and growth, oncology is we’re we what from an

what experience part a never-ending we’ll address and and our of doing give we improve productivity Finally for you in beyond. and ’XX we’re what and always, It’s customer do business. drive plans this to we’ll continue we as and productivity, to drive the

reminder, session. just be Stock term New March we’ll a our as is the part Finally, as that XX, obviously provide at York outlook long will Exchange, and it it of

further questions the no I’m in queue. showing

look forward and Exchange, everyone. a all joining York you Stock Okay, so New the I seeing Thanks everybody March thank XX to to wanted today. on for We the afternoon. great call at have

you Thank everybody.

domestic and or on later call. in until at XX, from by Quest at time the A Eastern callers, fourth XXXX will remarks approximately XXX-XXX-XXXX participating February quarter Thank conference international today Eastern prepared XXXX XXXX. for of X, online www.questdiagnostics.com. posted callers. time call for accessed be Diagnostics be year you Telephone www.questdiagnostics.com/investor, at midnight will available or for replays website am phone transcript replay call the on Diagnostics’ Quest of on this be A may full on XXX-XXX-XXXX February XX:XX

Goodbye.