Quest Diagnostics Incorporated · NYSE:DGX
Quest Diagnostics — Investor Day (November 2012)
18 slides from Quest Diagnostics's investor day presentation, Nov 16, 2012
Slide 1: Safe Harbor Disclosure
Safe Harbor Disclosure This presentation may contain 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 current estimates, projections, expectations or beliefs
Slide 2: Quest Diagnostics
Quest Diagnostics o A high quality company with an opportunity to improve performance - Strong reputation - Many capabilities to leverage - Solid foundation to build upon o Focused on restoring growth and driving operational excellence in our core business o Strengthening the management team and str
Slide 3: Agenda
Agenda o Market Perspective o New Vision, Goals and Strategy o Drive Operational Excellence o Restore Growth o Deliver Disciplined Capital Deployment 4 our new QUEST
Slide 4: U.S. Diagnostic Testing Represents a Small Cost but Drives a Disproportionate Impact on Healthcare
U.S. Diagnostic Testing Represents a Small Cost but Drives a Disproportionate Impact on Healthcare 2012 Health Consumption Expenditures $2.4T Lab $72B (3%) Hospital (36%) Professional Services (29%) Other (16%) Prescriptions (12%) Other Medical Products(4%) Laboratory Testing makes up only 3% of hea
Slide 5: U.S. Diagnostic Testing Market is Large and Growing
U.S. Diagnostic Testing Market is Large and Growing 2 Distinct Segments in a $72B Market "Four walls of the hospital" Hospital Services Addressable Market $28B (39%) 1 Outpatient $8B (11%) 2 Inpatient $20B (28%) "Outside the Four Walls" Ambulatory Physician Services Addressable Market $44B (61%) 3 H
Slide 6: We Operate in a Highly Fragmented Market
We Operate in a Highly Fragmented Market Total U.S. Lab Market 61% DGX 9% Hospital-Outpatient 11% Hospital-Inpatient 28% Outside the Hospital 52% Total = $72B "Outside the Hospital" Lab Segment 55% Other 6% POL 6% Hospital Outreach 33% DGX 13% Independent Labs 42% Total = $44B Independent Lab Segmen
Slide 7: Forces at Work in the Industry
Forces at Work in the Industry Volume o Organic growth (population/utilization) o More insured lives o Growth in esoteric testing Reimbursement o Government and commercial pricing pressure o Shift from FFS to capitation o Growth in exchanges and Medicaid Stakeholder Dynamics o Physician acquisition
Slide 8: Trends Contributing to Industry Growth Opportunities
Trends Contributing to Industry Growth Opportunities Esoteric growth through disease focus Esoteric solutions combined with routine testing across continuum of care Hospital Dynamics Related to Lab Services Hospital acquisition of physician practices Hospitals and ACOs turn to partners to manage lab
Slide 9: Agenda
Agenda o Market Perspective o New Vision, Goals and Strategy o Drive Operational Excellence o Restore Growth o Deliver Disciplined Capital Deployment 10 our new QUEST
Slide 10: We Have Launched a Refresh of our Vision, Goals and Culture
We Have Launched a Refresh of our Vision, Goals and Culture Our new vision o Empowering better health with diagnostic insights Values o Quality, Integrity, Accountability, Collaboration, Innovation, Leadership Aspirational goals o A healthier world - Help more people - Deliver innovative insights -
Slide 11: Our Five Point Strategy
Our 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 deployment and strategically aligned accretive acq
Slide 12: Refocus on Diagnostic Information Services
1 Refocus on Diagnostic Information Services We Conducted a Thorough Portfolio Review to Evaluate all Assets to Ensure Strong Strategic Fit Retain and Improve Performance o Pathology services, including AmeriPath - Core to our future - Focus on improving performance o Celera - Complete integration o
Slide 13: Drive Operational Excellence
2 Drive Operational Excellence o Focus on four strategic imperatives - Enterprise IT architecture - End-to-end customer value chain - Business performance tools - Cost excellence - Invigorate o Invigorate goal - Deliver $500M in savings in 2014 compared to 2011 baseline - Increase goal to $600M run-
Slide 14: Restore Growth: Seven Growth Themes
3 Restore Growth Seven Growth Themes Near - Term Focus 1 Sales and Marketing Excellence 2 Grow Esoteric through our Disease Focus 3 Partner with Hospitals and IDNs 4 Succeed Internationally Long - Term Focus 5 Create Value from Information Assets 6 Lead in Companion Diagnostics 7 Extend in Adjacent
Slide 15: Simplify the Organization
4 Simplify the Organization Diagnostic Information Services BEFORE Business 1 Business 2 Business 3 Business 4 Business 5 NEW Value Creation Value Delivery General Management Science & Innovation Sales & Marketing Strategic Marketing Operations Support Functions 16 our new QUEST
Slide 16: Simplify the Organization
4 Simplify the Organization Steve Rusckowski President and CEO Value Creation Value Delivery Jay Wohlgemuth MD SVP Science and Innovation Cathy Doherty SVP Business Lines Everett Cunningham SVP Commercial John Haydon SVP Operations Diagnostic Information Services Kathy Ordonez SVP Diagnostic Solutio
Slide 17: Deliver Disciplined Capital Deployment and Strategically Aligned Accretive Acquisitions
5 Deliver Disciplined Capital Deployment and Strategically Aligned Accretive Acquisitions o Restore growth - Sales and marketing excellence - Esoteric testing with disease state focus - Strategic hospital/IDN partnerships o Drive operational excellence - Expand margins through Invigorate - Realize s
Slide 18: Deliver Disciplined Capital Deployment and Strategically Aligned Accretive Acquisitions
Deliver Disciplined Capital Deployment and Strategically Aligned Accretive Acquisitions * Restore growth — Sales and marketing excellence — Esoteric testing with disease state focus — Strategic hospital/IDN partnerships * Drive operational excellence — Expand margins through Invigorate — Realize sig