Slide 1: Third Quarter 2016
Third Quarter 2016 October 20, 2016
Slide 2: Safe Harbor Disclosure
Safe Harbor Disclosure The statements in this presentation 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 current esti
Slide 3: Q3 2016 Performance
Q3 2016 Performance ($ in millions, except per share data) Q3 Δ Prior Year Net Revenues, As Reported $ 1,885 0.3 % Net Revenue Growth, on an Equivalent Basis* 2.1 % DIS Revenues $ 1,800 2.1 % Rev/Req 0.0 % Volume 2.0 % Operating Income, As Reported $ 322 (48.9)% % of Revenues 17.1% (1,650) bps Adjus
Slide 4: Q3 2016 YTD Performance
Q3 2016 YTD Performance ($ in millions, except per share data) YTD Δ Prior Year Net Revenues, As Reported $ 5,654 0.2 % Net Revenue Growth, on an Equivalent Basis* 2.8 % DIS Revenues $ 5,365 2.7 % Rev/Req 0.4 % Volume 2.2 % Operating Income, As Reported $ 1,001 (13.6)% % of Revenues 17.7% (280) bps
Slide 5: 2016 Outlook
2016 Outlook • Revenues to be approximately $7.51 billion, an increase of approximately 0.5% over 2015 on a reported basis, and an increase of approximately 2.5% over 2015 on an equivalent basis. This compares to previous guidance of revenues between $7.47 billion and $7.54 billion. • Reported dilut
Slide 6: Non-GAAP Reconciliations
Non-GAAP Reconciliations The adjusted measures on pages 3 and 4 are presented because management believes those measures are useful adjuncts to GAAP results. Non- GAAP “adjusted” measures should not be considered as an alternative to the corresponding measures determined under GAAP. Management may u
Slide 7: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 (dollars in millions, except per share data) Adjusted net income: Net income attributable to Quest Diagnostics $ 192 $ 342 $ 490 $ 521 Gain on disposition of business (a) — (334) (118) (334)
Slide 8: Non-GAAP Reconciliations
Non-GAAP Reconciliations Three Months Ended Nine Months Ended September 30, September 30, 2016 2015 2016 2015 (dollars in millions, except per share data) Revenue on an equivalent basis: Net revenues $ 1,885 $ 1,880 $ 5,654 $ 5,644 Excluded revenue (g) — (34) — (145) Revenue on an equivalent basis $
Slide 9: Non-GAAP Reconciliations
Non-GAAP Reconciliations (b) For the three and nine months ended September 30, 2016, represents costs primarily associated with systems conversions and integration incurred in connection with further restructuring and integrating our business. For the three and nine months ended September 30, 2015,
Slide 10: Non-GAAP Reconciliations
Non-GAAP Reconciliations (c) For the three months ended September 30, 2016, primarily represents a gain on escrow recovery associated with an acquisition. For the nine months ended September 30, 2016, primarily represents a gain on escrow recovery associated with an acquisition, partially offset by
Slide 11: Non-GAAP Reconciliations
Non-GAAP Reconciliations (d) For the nine months ended September 30, 2016, represents charges associated with the March 2016 cash tender offer where the company purchased $200 million of its 6.95% Senior Notes due July 2037 and 5.75% Senior Notes due January 2040. For the nine months ended September
Slide 12: Non-GAAP Reconciliations
Non-GAAP Reconciliations (e) For the nine months ended September 30, 2016, for the gain on disposition of business, income tax expense resulted in a combined tax rate of 71.4%, which was significantly in excess of the combined statutory rate due to a lower tax basis in the assets sold, specifically
Slide 13: Non-GAAP Reconciliations
Non-GAAP Reconciliations (f) Represents the impact of amortization expense on diluted earnings per common share, net of the income tax benefit. The income tax benefit was primarily calculated using a combined tax rate of 38.9% for 2016 and 2015. The pre-tax amortization expense that is excluded from
Slide 14: 2016 Outlook Non-GAAP Reconciliations
2016 Outlook Non-GAAP Reconciliations The outlook for adjusted diluted EPS excluding amortization expense represents management’s estimates for the full year 2016 before the impact of special items and amortization expense. Further impacts to earnings related to special items may be incurred through
Slide 15: 2016 Outlook Non-GAAP Reconciliations
2016 Outlook Non-GAAP Reconciliations (a) Represents the pre-tax gain of $118 million on the sale of our Focus Diagnostics products business. (b) Represents pre-tax charges of $48 million associated with the retirement of debt and related refinancing charges in connection with the March 2016 cash te
Slide 16: 2016 Outlook Non-GAAP Reconciliations
2016 Outlook Non-GAAP Reconciliations The updated outlook for 2.5% revenue growth on an equivalent basis in 2016 represents management’s revenue estimates for 2016 versus reported 2015 revenues adjusted to exclude: the 2015 revenues from the clinical trials testing and Celera products businesses; an
Slide 17: Quest Diagnostics
(@ ) Quest Diagnostics