accelerating growth, building value...accelerating growth, building value steve rusckowski chairman,...
TRANSCRIPT
Accelerating Growth, Building Value
Steve Rusckowski
Chairman, President and Chief
Executive Officer
36th Annual J.P. Morgan
Healthcare Conference
January 10, 2018
Confidential | Internal Use Only 2
SAFE HARBOR DISCLOSURE
The statements in the following presentation 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 current
estimates, projections, expectations or beliefs and which involve risks and uncertainties that could
cause actual results and outcomes to be materially different. Risks and uncertainties that may
affect the future results of the Company include, but are not limited to, adverse results from
pending or future government investigations, lawsuits or private actions, the competitive
environment, changes in government regulations, changing relationships with customers, payers,
suppliers or strategic partners and other factors discussed in the Company's most recently filed
Annual Report on Form 10-K and in any of the Company's subsequently filed Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K, including those discussed in the “Business,” “Risk
Factors,” “Cautionary Factors that May Affect Future Results” and “Management’s Discussion and
Analysis of Financial Condition and Results of Operations” sections of those reports.
Confidential | Internal Use Only 3
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Quest is a major player in healthcare…
Serves 50% of hospitals
470,000 Physicians
connected to Quanum portal
Expanding retail presence
50% FDA-approved Oncology Precision Medicine drugs since 2014
Q2 Solutions helped
of all develop
675+ EMR interfaces
Access to
~80% of U.S.
insured lives
Serves 1/3 U.S. adult population
and ~50% within 3 years
of the
~$7.7B 2017E revenue
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…with unmatched capabilities
~100 Peer reviewed
publications published annually
6,000+ Patient access points
20,000+
650+ Quest-employed MDs and PhDs
40B+ Patient
data points
~$7.7B
Quest owns or controls
~570 issued patents
worldwide 700
pending and Phlebotomists, paramedics and contract nurses
2017E revenue
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Quest is the clear leader in a fragmented market
Total
U.S. Lab Market
Outside the Hospital
Lab Segment
Independent
Lab Segment
$79 billion $50 billion $27 billion
DGX
LH
Other
Independent
Labs 56%
24%
20%
Independent
Labs
54%
Hospital
Outreach
35%
11%
POL and Other
Outside
the
Hospital
Inpatient
63% 37%
Total U.S. lab market growing ~2-3%
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Hospital Health Systems account for $48B (~60% of market) via three segments
Inpatient Professional
Laboratory Services
(PLS)
~$27 billion market
Hospital
Outreach
Acquire and/or partner on
outreach business
~$17 billion market
Grow reference and advanced diagnostics
business
Reference
Testing
~$4 billion market
Quest #1
Market Characteristics DGX Opportunity
Reference
$4 billion
Hospital
Outreach Inpatient
$27 billion $17 billion
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Quest is positioned for continued market leadership during a time of significant change
Utilization Reimbursement Stakeholder Dynamics
Technology Evolution
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OPERATING
PRINCIPLES
Our two-point strategy
Remain focused on diagnostic information services
Continue to strengthen organizational capabilities
Deliver disciplined capital deployment and
strategically aligned accretive acquisitions
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-4.6%
-1.6%
0.7% 1.5% 1.7%
-5%
-3%
-1%
1%
3%
5%
7%
2013 2014 2015 2016 2017
Organic, Equivalent Revenue
We have made steady progress since 2012…
through 3Q
Confidential | Internal Use Only 11
1.4%
5.6%
1.3%
1.1% 0.9%
-5%
-3%
-1%
1%
3%
5%
7%
2013 2014 2015 2016 2017
Revenue Growth from Acquisitions
We have made steady progress since 2012…
through 3Q
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-3.2%
4.0%
2.0%
2.6% 2.6%
-5%
-3%
-1%
1%
3%
5%
7%
2013 2014 2015 2016 2017
Total Equivalent Revenue Growth
We have made steady progress since 2012…
through 3Q
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1 Grow 1-2% per
year through
accretive,
strategic
acquisitions
Be recognized as the
consumer-friendly
provider of diagnostic
information services
4
Offer the broadest
access to diagnostic
innovation 3
Accelerate Growth Strategies
Partner with health
plans, hospital health
systems and other
risk-bearing entities
2
5 Support
population
health with data
analytics and
extended care
services
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2017 was a busy year
Acquisitions announced/closed in 2017 position us well for 2018
Hospital Outreach
HOCC / Backus
Hospital Outreach Hospital Outreach *
Hospital Outreach
*Signed, not yet closed
Confidential | Internal Use Only 15
Health Plans Hospital Health Systems
Partner with Health Plans and Hospital Health Systems
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Offer the broadest access to diagnostic information
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Consumer-friendly provider
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Population health, data analytics
and extended care services
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Strategic Relationships
position us for growth at the center of the healthcare ecosystem
Consumer Public Health
Provider Partner
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$1.3 billion
SAVINGS
2017
IN RUN-RATE SAVINGS
$1.3 Billion By end of 2017
More opportunity for cost savings beyond 2017
Through enhanced quality and customer experience
beyond
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We will continue to drive growth and operational excellence
Increase Digital
Enablement
Expand Margins
Transform Platform for
Growth
Deliver Quality & Service w/
QMS
Inspire & Engage
Employees
Cut Waste / Improve
Customer Experience
Reinvent our Growth
Capabilities
Transform How We
Deliver Value
Confidential | Internal Use Only 22
2020 Outlook reaffirmed
Expect to continue accelerating top line growth
– Total revenue 3-5%
– Acquisitions 1-2%
Earnings growth faster than revenue in the mid-to-high single-digit range
– We are confident in our ability to achieve this outlook under PAMA
– Acceleration in industry consolidation represents potential upside
– Meaningful benefit from lower corporate tax rates to return cash to shareholders and reinvest in
the business…more details to come with 4Q17 earnings and 2018 guidance in early February