Quest Diagnostics Incorporated · NYSE:DGX
Quest Diagnostics — Investor Day (November 2018)
28 slides from Quest Diagnostics's investor day presentation, Nov 29, 2018
Slide 1: Accelerating Growth, Building Value
Accelerating Growth, Building Value Steve Rusckowski Chairman, President and Chief Executive Officer
Slide 2: Safe Harbor Disclosure
SAFE HARBOR DISCLOSURE The statements in the following presentations 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 cur
Slide 3: Quest Diagnostics: the leader in Diagnostic Information Services
Quest Diagnostics: the leader in Diagnostic Information Services Leader in rapidly evolving market with unsurpassed focus, scale and innovation Serves Expanding Serves 675+ retail 40B+ 6,000+ 20,000+ 50% EMR 1/3 of the Patient Patient Phlebotomists, presence U.S. adult of U.S. interfaces data access
Slide 4: Confidential | Internal Use Only
1 2 3 4 Confidential | Internal Use Only
Slide 5: We continue to deliver value
We continue to deliver value Strong record of value creation: TSR since 2016 and 2014 ended Nov 16, 2018 Total Shareholder Return 2016 – Nov 16, 2018 Total Shareholder Return 2014 – Nov 16, 2018 129% 59% 98% 43% 42% 80% 80% 33% 34% 64% DGX LH S&P 500 S&P HC S&P HC DGX LH S&P 500 S&P HC S&P HC Svcs*
Slide 6: Quest plays a crucial role within the healthcare ecosystem
Quest plays a crucial role within the healthcare ecosystem Diagnostic Clinical trials information recruitment services Population health Home-based care Employer wellness benefit 6 Confidential | Internal Use Only
Slide 7: Quest is uniquely positioned to grow and gain share
Quest is uniquely positioned to grow and gain share Laboratory market fundamentals are changing dramatically: 1 2 3 PAMA-driven reimbursement Open health plan access Growing consumerization in pressure will drive structural will reduce variation in lab healthcare is driving sharper change spend and
Slide 8: The U.S. lab market is large and growing modestly
The U.S. lab market is large and growing modestly Total U.S. Lab Market $82B Hospital Lab Services 36% Physician Quest Market Lab Share Services 9% 64% 8 Confidential | Internal Use Only
Slide 9: The Physician Lab Services segment is fragmented and remains ripe for consolidation
The Physician Lab Services segment is fragmented and remains ripe for consolidation Physician Lab Services Segment $52B POL & Other 10% ~1 – 2% TOTAL PHYSICIAN LAB Independent Hospital Labs SERVICES SEGMENT Outreach 54% GROWTH 36% 13% Quest Market Share 9 Confidential | Internal Use Only
Slide 10: Quest is the leader in the Independent Lab segment
Quest is the leader in the Independent Lab segment Independent Lab Segment $28B DGX ~0.5 – 1% 24% INDEPENDENT LAB Others SERVICES SEGMENT 54% LH GROWTH 22% 10 Confidential | Internal Use Only
Slide 11: The U.S. lab market is large and growing modestly
The U.S. lab market is large and growing modestly 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 54% LH 36% 22% Services 64% PHYSICIAN LAB SERVIC
Slide 12: Protecting Access to Medicare Act of 2014
PROTECTING ACCESS TO MEDICARE ACT OF 2014 12 Confidential | Internal Use Only
Slide 13: Payer strategies to open networks and reduce variation in lab spend create opportunity to grow
Payer strategies to open networks and reduce variation in lab spend create opportunity to grow Cost variation is a large and extraneous cost for payers Lab is a substantial source Payers spend of variation, greater than: Providers • Office procedures >$500B • Orthopedics on unnecessary • Advanced ra
Slide 14: Employers and their employees are focused on cost and disparities in price
Employers and their employees are focused on cost and disparities in price Mass General Newton Hospital Lab Tests Quest Hospital Wellesley Mark-up Lipids $19 $68 $48 2.5x Kidney Function $12 $44 $77 4.2x Vitamin D-3 Level $41 $117 $80 2.0x Cardiac Enzyme Level $7 $28 $21 2.8x Blood Glucose Control $
Slide 15: Quest is uniquely positioned to grow and gain share
Quest is uniquely positioned to grow and gain share 1 2 3 PAMA Open Health Plan Access Consumerization This market remains fragmented and is poised to consolidate 15 Confidential | Internal Use Only
Slide 16: 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 >2% per Strategies 5 year through Support accretive, population strate
Slide 17: Grow General Diagnostics
1 Grow >2% per year through accretive, strategic acquisitions 5 Support 2 Partner with health Grow population health plans, hospital General with data analytics health systems Diagnostics and extended care and other risk- services bearing entities Expand Extend Advanced Diagnostic Diagnostics Servic
Slide 18: We are overdelivering on our strategy to deliver 1-2% growth from M&A
We are overdelivering on our strategy to deliver 1-2% growth from M&A Outreach Lab Purchases Regional Fold-in Capabilities Marin General Hospital MedFusion/ Cleveland ClearPoint Heart Lab Cape Cod Health 2018 West Broward 2017 2017 2018 Shiel Medical Hartford Hospital / Oxford 2017 Signal Genetics I
Slide 19: 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 Leader in rapidly evolving market with unsurpassed focus, scope and innovation Access to Insured Lives Representing an Incremental Growth Opportunity of +43M 90% of Lives Lives New Major Plans ~$4B 80% of Lives Annualized Lab Revenue
Slide 20: Hospitals are struggling financially and becoming more open to help with their lab strategy
Hospitals are struggling financially and becoming more open to help with their lab strategy Hospitals are struggling with growing costs and slowing revenues Most hospital CEOs and CFOs still not fully aware of how PAMA is impacting their outreach labs* Once aware, hospitals are much more open
Slide 21: Advanced Diagnostics. Faster growth
Advanced At a glance Diagnostics. >$1 billion in 2017 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 22: Quest is becoming the lab of choice for consumers
Quest is becoming the lab of choice for consumers DIGITAL EXPERIENCE RETAIL EVERYDAY PRODUCTS EXCELLENCE 22 Confidential | Internal Use Only
Slide 23: We have built a growing business in population health and data analytics
We have built a growing business in population health and data analytics 001010010010011 1011101011101110 001010010010000 Monetize Data Pharma Population Health Extended Care Settings Improve Quality / Close Gaps 23 Confidential | Internal Use Only
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 >2% per Strategies 5 year through Support accretive, population strate
Slide 25: Operational excellence: Drive, Digital Experience, Automate
1 2 $ Reduce Denials and Patient Concessions Digital Experience DRIVE Standardize & Optimize Automate 4 3 25 Confidential | Internal Use Only
Slide 26: $1.3B savings
SAVINGS Invigorate Target Quest continues to $1.3B drive operational excellence, with ~3% More opportunity savings in front of us EACH YEAR GOING FORWARD 2017 26 Confidential | Internal Use Only
Slide 27: Key takeaways
Key takeaways Structural changes coming to our industry provide an opportunity to consolidate and gain share Quest has the best access to insured lives in a decade, providing us with a multi-year opportunity to grow Hospital systems are under significant pressure and more open to working with
Slide 28: Investor Meeting
Diagnostics” K (@ ) Quest INVESTOR MEETING