Quest Diagnostics Incorporated · NYSE:DGX
Quest Diagnostics — 40th Annual J.P. Morgan Healthcare Conference (January 2022)
24 slides from Quest Diagnostics's conference presentation, Jan 12, 2022
Slide 1: Poised for Growth in a Post-Pandemic World
Poised for Growth in a Post-Pandemic World Steve Rusckowski Chairman, CEO and President January 12, 2022
Slide 2: Safe Harbor Disclosure
SAFE HARBOR DISCLOSURE The statements in the following presentations which 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 cu
Slide 3: What you'll hear today
What you’ll hear today Quest’s role as the leader in diagnostic information services Latest perspectives on COVID-19 testing Drivers of accelerating growth Long-term outlook beyond 2022
Slide 4: 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 Serves >56B 6,850+ ~23,000 ~1.8M ~50% 1/3 of the patient retail phlebotomists, tests U.S. adult data and paramedics processed of U.S. population poin
Slide 5: Vision and 2-point strategy
1 VISION Empowering better health with diagnostic insights 2 2-POINT STRATEGY Accelerate growth Grow General Diagnostics Extend Diagnostic Services Expand Advanced Diagnostics Drive operational excellence 3 GOALS oO Promote a healthier world O Create an inspiring workplace
Slide 6: Quest supports healthcare's Triple Aim by Powering Affordable Care
Quest supports healthcare’s Triple Aim by Powering Affordable Care Continuously Unmatched Improving the Affecting costs of innovating quality, speed, customer care through through advanced and reach to help experience improved access technology and drive better through seamless and strategic testing
Slide 7: Quest is gaining share in a large, fragmented market
Quest is gaining share in a large, fragmented market 2019 Total Physician Lab Independent U.S. Lab Market Services Segment Lab Segment $82B $52B $28B POL & other Hospital 11% DGX Lab 24% Services Independent Others Hospital 36% Outreach Labs 54% LH 53% 36% 22% Physician Lab Services 64% BEYOND 2022,
Slide 8: COVID-19 has made us more agile as a company and enabled us to invest for growth
COVID-19 has made us more agile as a company and enabled us to invest for growth Emergency 21 Use Authorizations
Slide 9: The future of COVID-19 testing
The future of COVID-19 testing The virus isn’t going away anytime soon COVID-19 testing volumes are expected to decline in 2022 and beyond Serology testing could play a role in assessing immune response Like influenza, COVID-19 testing will be a permanent part of our test menu
Slide 10: COVID-19 has underscored the importance of partnerships
COVID-19 has underscored the importance of partnerships
Slide 11: Investing in key drivers to accelerate growth
Investing in key drivers to accelerate growth Health Hospital Advanced Direct-to-Consumer Plans Health Systems Diagnostics Testing $1B+ from Increase share in Accelerate growth $250M revenues expanded health the $50B Health to 8% on $1.2B by 2025 plan access Systems market of revenue Grow >2% per ye
Slide 12: We have fundamentally changed our relationship with health plans
HEALTH PLANS HOSPITAL HEALTH SYSTEMS ADVANCED DIAGNOSTICS DIRECT-TO-CONSUMER TESTING We have fundamentally changed our relationship with health plans >25% SHARE SHARED SAVINGS Drive toward our fair share of 25% REDIRECTION Sharing in savings from value created LEAKAGE for health plans Move work from
Slide 13: Positioned to grow share in the $50 billion hospital health systems market
HEALTH PLANS HOSPITAL HEALTH SYSTEMS ADVANCED DIAGNOSTICS DIRECT-TO-CONSUMER TESTING We are positioned to grow share in the $50 billion hospital health systems market, and market dynamics favor Quest A Turbulent Marketplace… …Impacting Health System Lab Strategies Margin Broader Care Technology Cons
Slide 14: Gaining momentum in our $500 million Professional Lab Services business
HEALTH PLANS HOSPITAL HEALTH SYSTEMS ADVANCED DIAGNOSTICS DIRECT-TO-CONSUMER TESTING Gaining momentum in our $500 million Professional Lab Services business 2020 Highlights Case study of new business The HMH agreement is our largest PLS contract to date, utilizing the full >$2B over 10 years suite o
Slide 15: Recent innovation will drive faster growth in Advanced Diagnostics
HEALTH PLANS HOSPITAL HEALTH SYSTEMS ADVANCED DIAGNOSTICS DIRECT-TO-CONSUMER TESTING Recent innovation will drive faster growth in Advanced Diagnostics Advanced molecular Investing to accelerate Sequencing innovation and genetic testing; growth to the market reduces cost and $1.2 billion in 2019 rat
Slide 16: Consumer testing is a $2B opportunity
HEALTH PLANS HOSPITAL HEALTH SYSTEMS ADVANCED DIAGNOSTICS DIRECT-TO-CONSUMER TESTING Consumer testing is a $2B opportunity, and we’re investing to build a substantial business Digital Delivery Channels Consumer Transformation (Retail & Home) Engagement Consumers bring the same Consumers desire more
Slide 17: Driving operational excellence enables key growth drivers
Driving operational excellence enables key growth drivers ~3% targeted 1 2 $ savings Reduce Denials Digital and Patient Experience Concessions ANNUALLY DRIVE Standardize, Continuous Optimize & 4 3 Improvement Automate
Slide 18: Balanced capital deployment: ~$14B deployed since 2012
Balanced capital deployment: ~$14B deployed since 2012 Cash Generated from Deployed ~$13.6 Billion (through Q3 2021) Operations and Divestitures Share Repurchases ~$5.6 Returned to Shareholders $14.2B ~$2.2 Dividends CAPEX ~$3.0 Invested M&A ~$2.8
Slide 19: Setting a baseline for future growth beyond 2022
Setting a baseline for future growth beyond 2022 Long-term outlook from 2018 implied adj. EPS between approximately $7.40-$8.00 in 2022 Implied Revenue Implied Adjusted EPS ~$8.00 ~$9,150 6% 5% ~$8,475 ~$7.40 3% $7,531 4% $6.31 2018 2022 2018 2022
Slide 20: Key takeaways
Key takeaways COVID-19 testing will continue in 2022 The pandemic made us more agile and allowed us to invest for growth Our base business fully recovered as we exited 2021 Momentum in our key growth drivers positions us to accelerate growth in the base business
Slide 21: Appendix
Appendix Non-GAAP Reconciliations
Slide 22: Note on Non-GAAP Financial Measures
Note on Non-GAAP Financial Measures The non-GAAP measure for adjusted diluted EPS is presented because management believes that the measure is a useful adjunct to a measure under the accounting principles generally accepted in the United States (“GAAP”). As used in this presentation the term “adjust
Slide 23: Adjusted Diluted EPS
Adjusted Diluted EPS The following table reconciles adjusted diluted earnings per share ("Diluted EPS") to reported results under GAAP. Twelve months ended December 31, 2018 Diluted EPS - as reported $5.29 Restructuring and integration charges (a) 0.66 Amortization of intangible assets 0.57 Other
Slide 24: Adjusted Diluted EPS
Adjusted Diluted EPS (a) Represents costs primarily associated with workforce reductions, systems conversions and integration incurred in connection with further restructuring and integrating our business. Income tax impacts were primarily calculated using combined statutory tax rates of 25.5%. (b)
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