Quest Diagnostics Incorporated · NYSE:DGX
Quest Diagnostics — Investor Day (March 2021)
28 slides from Quest Diagnostics's investor day presentation, Mar 11, 2021
Slide 1: Investor Day
INVESTOR DAY | HH]
Slide 2: Poised for Growth in a Post-Pandemic World
Poised for Growth in a Post-Pandemic World Steve Rusckowski Chairman, CEO and President
Slide 3: 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 4: 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 5: 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 6: Vision and 2-point strategy
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 ro Promote a healthier world St Create an inspiring workplace @) Quest —
Slide 7: 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 8: 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% 53% LH 36% 22% Physician Lab Services 64% BEYOND 2022,
Slide 9: 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 16 Use Authorizations
Slide 10: The future of COVID-19 testing
The future of COVID-19 testing The virus isn’t going away anytime soon Test volumes will decrease over time in 2021 We’re moving from primarily clinical uses to increased testing for “Return-to-Life” Serology testing could play a role in assessing immune response Like influenza, COVID-19 i
Slide 11: COVID-19 has underscored the importance of partnerships
COVID-19 has underscored the importance of partnerships
Slide 12: Key drivers to accelerate growth
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 year through ac
Slide 13: We have fundamentally changed our relationship with health plans
HEALTH PLANS HOSPITAL HEALTH SY STEMS 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 fro
Slide 14: Progress on our march to $1B in revenue from expanded health plan access
HEALTH PLANS HOSPITAL HEALTH SY STEMS ADVANCED DIAGNOSTICS DIRECT-TO-CONSUMER TESTING We’ve made progress on our march to $1B in revenue from expanded health plan access…and there is much more opportunity ahead Current and expected share within UnitedHealthcare, Anthem Georgia, New broader, and Hori
Slide 15: 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 16: Health system C-suites are more open to talking about lab strategy
HEALTH PLANS HOSPITAL HEALTH SYSTEMS ADVANCED DIAGNOSTICS DIRECT-TO-CONSUMER TESTING Winning begets winning: Health system C-suites are more open than ever to talking about getting help with their lab strategy Memorial Hermann is a nationally recognized not-for-profit health system that includes 17
Slide 17: 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 18: Recent innovation will drive faster growth in Advanced Diagnostics
HEALTH PLANS HOSPITAL HEALTH SY STEMS 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 ra
Slide 19: Case study: Innovation in advanced Next Generation Sequencing services
HEALTH PLANS HOSPITAL HEALTH SY STEMS ADVANCED DIAGNOSTICS DIRECT-TO-CONSUMER TESTING Case study: Innovation in advanced Next Generation Sequencing services plays to our operational strengths Insights & Services Modular applications providing scale, Consumer Health Health Pharm a screening Systems P
Slide 20: Consumer testing is a $2B opportunity
HEALTH PLANS HOSPITAL HEALTH SY STEMS 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 21: Our M&A capabilities support growth drivers
Our M&A capabilities support growth drivers, enabling >2% revenue CAGR from acquisitions since 2018 Outreach Lab Purchases Regional Fold-in Capabilities 7 TRANSACTIONS SINCE 2018 5 TRANSACTIONS SINCE 2018 6 TRANSACTIONS SINCE 2018 ACQUIRED REVENUE ~$265M ~$25M ~$185M SINCE 2018 Note: Acquired revenu
Slide 22: Driving operational excellence enables key growth drivers
Driving operational excellence enables key growth drivers ~3% targeted 1 2 $ Reduce Denials and Patient Concessions Digital Experience savings ANNUALLY DRIVE Standardize, Continuous Optimize & Improvement 4 Automate 3
Slide 23: Key takeaways
Key takeaways COVID-19 testing will continue in 2021 as we move from clinical uses to Return-to-Life The pandemic made us more agile and allowed us to invest $75M in 2020-21 for growth Our base business is poised for a full recovery by the end of 2021 Momentum in our key growth drivers positions us
Slide 24: Appendix
Appendix Non-GAAP Reconciliations
Slide 25: Note on Non-GAAP Financial Measures
Note on Non-GAAP Financial Measures The non-GAAP measures for (i) adjusted diluted EPS from continuing operations, (ii) free cash flow and (iii) contribution margin are presented because management believes those measures are useful adjuncts to measures under the accounting principles generally acce
Slide 26: Adjusted Diluted EPS from Continuing Operations
Adjusted Diluted EPS from Continuing Operations The following table reconciles adjusted diluted earnings per share from continuing operations ("Diluted EPS") to reported res ults under GAAP.
Slide 27: Adjusted Diluted EPS from Continuing Operations
Adjusted Diluted EPS from Continuing Operations a) For the tw elve months ended December 31, 2020 and 2019, represents costs primarily associated w ith systems conversions and integration incurred in connection w ith further restructuring and integrating our business. For the tw elve months ended De
Slide 28: Free Cash Flow
Free Cash Flow The following table reconciles free cash flow to the corresponding measures determined under GAAP.