Quest Diagnostics Incorporated · NYSE:DGX
Quest Diagnostics — 35th Annual J.P. Morgan Healthcare Conference (January 2017)
33 slides from Quest Diagnostics's conference presentation, Jan 11, 2017
Slide 1: Accelerating Growth, Building Value
Accelerating Growth, Building Value Steve Rusckowski Chairman, President and Chief Executive Officer 35th Annual J.P. Morgan Healthcare Conference January 11, 2017
Slide 2: Safe Harbor Disclosure
SAFE HARBOR DISCLOSURE The statements in the following presentation that are not historical facts may be forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date that they are made and which reflect management’s curr
Slide 3: Quest is a major player in healthcare
Quest is a major player in healthcare… Access to Serves 50% ~80% of U.S. of hospitals insured lives 470,000 Physicians connected to Care360 portal Serves 1/3of the U.S. adult population 675+ and ~50% within 3 years EMR interfaces ~$7.5B 2015 revenue Q2 Solutions helped Expanding retail develop 50% o
Slide 4: ...with unmatched capabilities
…with unmatched capabilities 20B+ 2,200+ Patient Patient service data points centers Quest owns or controls 20,000+ ~570 pending and Phlebotomists, paramedics and 700 issued patents contract nurses worldwide ~$7.5B 2015 revenue ~100 650+ Peer reviewed Quest-employed publications MDs and PhDs publish
Slide 5: Quest is the clear leader in a fragmented market
Quest is the clear leader in a fragmented market Total Outside the Hospital Independent U.S. Lab Market Lab Segment Lab Segment $79 billion $50 billion $27 billion POL and Other Inpatient 11% DGX Independent 37% Outside Other 24% Labs 63% the Independent 54% 56% Hospital 35% Labs 20% LH Hospital Out
Slide 6: Hospital Health Systems account for $48B (~60% of market) via three segments
Hospital Health Systems account for $48B (~60% of market) via three segments Market Characteristics DGX Opportunity Reference Reference ~$4 billion Grow advanced $4 billion market test send out Testing business Quest #1 Hospital Outreach Hospital ~$17 billion Acquire and/or partner on Inpatient Outr
Slide 7: Quest is positioned for continued market leadership during a time of significant change
Quest is positioned for continued market leadership during a time of significant change Stakeholder Technology Utilization Reimbursement Dynamics Evolution 7 Confidential | Internal Use Only
Slide 8: We've been on a journey since 2012
We’ve been on a journey since 2012… 8 Confidential | Internal Use Only
Slide 9: Our 5-Point Strategy as we shared it in 2012
Our 5-Point Strategy as we shared it in 2012 1 Refocus: Refocus on diagnostic information services 2 Drive: Drive Operational Excellence 3 Restore: Restore Growth 4 Simplify: Simplify the organization to enable growth and productivity 5 Deliver: Deliver disciplined capital deployment and strategical
Slide 10: 1. Refocus on diagnostic information services
1. Refocus on diagnostic information services Generated $1 billion in proceeds 10 Confidential | Internal Use Only
Slide 11: 2. Drive operational excellence
2. Drive operational excellence Invigorate target SAVINGS $1.3 SAVINGS $1.1 billion $700 billion SAVINGS million On track INVESTOR DAY INVESTOR DAY INVESTOR DAY 2011 2012 2014 2016 2017 11 Confidential | Internal Use Only
Slide 12: 3. Restore growth
3. Restore growth Organic, Equivalent Revenues 7% 5% 3% 1% 0.7% 1.8% -1% -1.6% -3% -4.6% -5% 2013 2014 2015 2016 2016E through 3Q 12 Confidential | Internal Use Only
Slide 13: 3. Restore growth
3. Restore growth Revenue Growth from Acquisitions 7% 5% 5.6% 3% 1.0% 1% 1.4% 1.3% -1% -3% -5% 2013 2014 2015 2016 2016E through 3Q 13 Confidential | Internal Use Only
Slide 14: 3. Restore growth
3. Restore growth Total Equivalent Revenue 7% 5% 3% 4.0% 2.8% 1% 2.0% -1% -3.2% -3% -5% 2013 2014 2015 2016E 2016 14 Confidential | Internal Use Only
Slide 15: 4. Simplify the organization
4. Simplify the organization New structure built to drive Removed excess layers Established Quest Management growth from org structure System based on common tools 75% 70% 65% 60% 2012 2013 2014 2015 2016 Created Leading Quest Academy, Revised incentives for trained >300 leaders executives and sales
Slide 16: 5. Deliver disciplined capital deployment
5. Deliver disciplined capital deployment Cash Generated from Operations ($ Billions) and Dispositions since 2012: Returned to ~$ 2 Share repurchases ~$5 Shareholders billion ~$1 Dividends ~$1 CAPEX Invested ~$1 M&A Since 2012 Since 2012 16 Confidential | Internal Use Only
Slide 17: Delivering superior returns since 2014
Delivering superior returns since 2014 Share Price Performance 12/31/2013 – 12/30/2016 Total Shareholder Return (does not include dividends) 12/31/2013 – 12/30/16 DGX LH S&P 500 S&P HC S&P HC svcs 180 83% 160 140 49% 41% 120 29% 30% 100 80 DGX LH S&P 500 S&P HC S&P HC svcs 17 Confidential | Internal
Slide 18: Our 5-Point Strategy as we shared it in 2012
Our 5-Point Strategy as we shared it in 2012… 5 5-POINT STRATEGY 1 Refocus: Refocus on diagnostic information services 2 Drive: Drive operational excellence 3 Restore: Restore growth 4 Simplify: Simplify the organization to enable growth and productivity 5 Deliver: Deliver disciplined capital deploy
Slide 19: We're building on our progress by narrowing our focus
…We’re building on our progress by narrowing our focus 2 2-POINT STRATEGY Refocus on diagnostic information services OPERATING Simplify the organization to enable growth and productivity PRINCIPLES Deliver disciplined capital deployment and strategically aligned accretive acquisitions 19 Confidentia
Slide 20: Our strategy
Our strategy General Diagnostics. Routine testing provides steady growth and strong cash Advanced Diagnostics. Faster growth through innovation model Diagnostic Services. Faster growth through a range of opportunities 20 Confidential | Internal Use Only
Slide 21: General Diagnostics
General At a glance Diagnostics. ~$5.5 billion in 2015 revenues Routine testing Basic blood and urine testing provides steady Preventive screenings for heart disease, diabetes, HCV, etc. growth and Low single-digit market growth Essential portion of health care delivery strong cash Quest v
Slide 22: Advanced Diagnostics
Advanced At a glance Diagnostics. ~$1 billion in 2015 revenues Faster growth Genetic and molecular advanced testing through innovation An important part of precision medicine model A growing set of unique, innovation-based competitors Mid-to-high single-digit growth Quest value proposition
Slide 23: Diagnostic Services
Diagnostic At a glance Services. ~$1 billion in 2015 revenues Faster growth Employer, Insurer, Wellness, Data Analytics & Extended Care Services and Professional Lab Services (PLS) through a range Mid-to-high single-digit growth of opportunities Services support population health Enables p
Slide 24: Strategies
3 Offer the broadest access to diagnostic 2 Partner with health plans, hospital health systems and other innovation 4 Be recognized as the consumer-friendly risk-bearing entities provider of diagnostic information services 1 Grow 1-2% per Strategies 5 year through Support accretive, population strat
Slide 25: Strategic Relationships
Provider Partner Strategic Relationships position us for growth at the center of the healthcare ecosystem Consumer Public Health 25 Confidential | Internal Use Only
Slide 26: $1.3 Billion in run-rate savings
$1.3 Billion SAVINGS $1.3 IN RUN-RATE SAVINGS billion By end of 2017 Through enhanced quality and customer experience More opportunity for cost savings beyond 2017 beyond 2017 26 Confidential | Internal Use Only
Slide 27: 2017-2020 outlook shared at our November 2016 Investor Day
2017-2020 outlook shared at our November 2016 Investor Day Expect to continue accelerating top line growth – Total revenue 3-5% – Acquisitions 1-2% Earnings growth faster than revenue in the mid-to-high single-digit range High single-digit FCF growth 27 Confidential | Internal Use Only
Slide 28: Key Takeaways
KEY TAKEAWAYS Excellent progress delivering on commitments and creating value Laser-focused on accelerating growth and driving operational excellence Strategic partnerships provide clear competitive advantage 28 Confidential | Internal Use Only
Slide 29: Appendix
Appendix ) Quest Diagnostics”
Slide 30: Non-GAAP Reconciliations
Non-GAAP Reconciliations The following non-GAAP measures for: (i) equivalent revenue growth; and (ii) cash generated from operations and dispositions are presented because management believes those measures are useful adjuncts to GAAP results. Non-GAAP, or “adjusted”, measures should not be consider
Slide 31: Equivalent Revenue Growth
Equivalent Revenue Growth The following tables reconcile equivalent revenue growth/(decline) and its components to the corresponding measures determined under GAAP: Year Ended December 31, 2013 Year Ended December 31, 2014 Equivalent % Equivalent % $ % Growth Growth $ % Growth Growth (dollars in mil
Slide 32: Cash Generated from Operations and Dispositions
Cash Generated from Operations and Dispositions The following table reconciles cash generated from operations and dispositions to the corresponding measures determined under GAAP: Nine Months Ended Year Ended December 31, September 30, 2012 (a) 2013 (a) 2014 (a) 2015 (a) 2016 Cumulative Total (dolla
Slide 33: Investor Meeting
Diagnostics” (@ ) Quest INVESTOR MEETING
Quest Diagnostics — 35th Annual J.P. Morgan Healthcare Conference (January 2017) on 6ix