Quest Diagnostics Incorporated · NYSE:DGX
Quest Diagnostics — 38th Annual J.P. Morgan Healthcare Conference (January 2020)
19 slides from Quest Diagnostics's conference presentation, Jan 14, 2020
Slide 1: Accelerating Growth, Building Value
Accelerating Growth, Building Value Steve Rusckowski Chairman, President and Chief Executive Officer 38th Annual J.P. Morgan Healthcare Conference January 14, 2020
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: Vision, 2-Point Strategy and Goals
1 VISION Empowering better health with diagnostic insights 2 2-POINT STRATEGY Accelerate growth Grow General Diagnostics Advanced Diagnostics Diagnostic Services Drive operational excellence 3 GOALS 6 Promote a healthier world Oi create an inspiring workplace
Slide 4: Quest plays a crucial role in driving health care's triple aim
Quest plays a crucial role in driving health care’s “triple aim” Healthier world: 1 We have a sharp focus on Medical Quality and Service Triple Superior experience: Aim 2 Quest is becoming the lab of choice for consumers Best value: 3 Quest delivers sizable cost advantage 4
Slide 5: Healthier world: sharp focus on Medical Quality and Service
Healthier world: We have a sharp focus on Medical Quality and Service 40B+ ~6,600+ Patient Patient access data points points Quest owns or controls 20,000+ ~570 pending and Phlebotomists, 700 issued patents paramedics and worldwide contract nurses Six Sigma Quality 650+ for key metrics such as lost
Slide 6: Superior experience: most consumer-oriented lab on the planet
Superior experience: Quest is becoming the most consumer-oriented lab on the planet MyQuest app Growing retail presence Consumer products 93.5% I was treated with Care and Compassion 92% Patient Satisfaction Score 83 Net Promoter Score (Patient Service Centers) Source: Internal Quest data 6
Slide 7: Best value: Quest delivers superior commercial rate advantage
Best value: Quest delivers superior commercial rate advantage $$ $$ $$ $ Boutique & $$ Quest $1x Hospital Labs $2-8x Note: Quest internal data and analysis. Data indexed to Quest and compares Quest in-network rates to in- and out-of-network rates for boutique and hospital laboratories. 7
Slide 8: Quest is poised for consolidation in a large, fragmented market
Quest is poised for consolidation in a large, fragmented market Total Physician Lab Independent U.S. Lab Market Services Segment Lab Segment $82B $52B $28B POL & other Hospital 10% DGX Lab 24% Services Independent 36% Physician Hospital Others Outreach Labs 54% Lab LH 36% 54% 22% Services 64% PHYSIC
Slide 9: Changing laboratory market fundamentals favor Quest
Changing laboratory market fundamentals favor Quest Three structural changes impacting the laboratory market: 1 2 3 PAMA-driven reimbursement Health plan access will Growing consumerization in pressure will drive reduce variation in lab spend healthcare is driving sharper structural change and drive
Slide 10: What passage of the LAB Act means to us
What passage of the LAB Act means to us LAB Act paves way for future PAMA reform Data reporting period delayed for one year – Applicable laboratories now scheduled to report data in the first quarter of 2021 Data collection period remains the same – Labs must report data from the original data c
Slide 11: Payers are taking action to reduce price variation in lab spend
Payers are taking action to reduce the wide price variation in lab spend Payers spend Preferred Lab Network >$500B on unnecessary cost variation Rate Alignment Policy As the quality and value leader, Quest is poised to grow and take share 11
Slide 12: Our access to insured lives is the highest it has been in a decade
Our access to insured lives is the highest it has been in a decade Access to Insured Lives Representing an Incremental Growth Opportunity of +43M 90% of Lives Lives New Major Plans 80% of Lives ~$4B Annualized Lab Revenue * Across Multiple Health Plan Contracts 2018 2019 * BlueCross BlueShield of Ge
Slide 13: Patients becoming more price sensitive as they bear greater health care costs
Patients becoming more price sensitive as they bear a greater portion of health care costs Percentage of covered Average annual Average annual Average annual workers enrolled in deductibles premiums for single premiums for family HDHP/HRA: for single coverage: coverage: coverage: 4% $303 $2,196 $5,7
Slide 14: Strategies
Accelerate growth 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 >2% per Strategies 5 year through Support accretive,
Slide 15: Drive operational excellence
Drive operational excellence ~3% 1 2 savings $ Reduce Denials and Patient Concessions Digital Experience 2019 AND EACH YEAR GOING FORWARD DRIVE Standardize & Optimize Automate 4 3 15
Slide 16: Case study: Narrowing supplier relationships, putting new innovations to work
Case study: Narrowing supplier relationships, putting new innovations to work Old Approach Immunoassay platform consolidation benefits 6 Shift from multi-supplier approach suppliers Greater throughput, autonomy and more efficient footprint 7 Suppliers involved in our redesign platforms event
Slide 17: Case study: Optimizing our lab footprint with the Lab of the Future
Case study: We are optimizing our lab footprint through investments in our next Lab of the Future New Clifton, NJ Lab to Doubles Average Consolidate Three Throughput Regional Labs >15% Improved 30% Greater Productivity Capacity 17 17
Slide 18: We continue to deliver shareholder value
We continue to deliver shareholder value Strong record of value creation: TSR through Dec 31, 2019 Total Shareholder Return: 1-year Total Shareholder Return: 6-year 144% 126% 105% 98% 85% 31% 34% 32% 21% 19% DGX LH S&P 500 S&P HC S&P HC DGX LH S&P 500 S&P HC S&P HC Svcs* Svcs* * Note: S&P HC Svcs In
Slide 19: Key takeaways
Key takeaways Our quality, service and price give us an unparalleled value proposition Reimbursement pressure will provide an opportunity to consolidate and gain share Our access to insured lives is the best it has been in a decade, providing a multi-year opportunity to grow Hospital system
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