March 18, 2008
Cowen and Company Health Care Conference
Patients Growth People
»
»Safe Harbor Disclaimer
A copy of this presentation is available on our website at www.questdiagnostics.com
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 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, the competitive environment, changes in government regulations, changing relationships with customers, payers, suppliers and strategic partners and other factors discussed in “Business” in Part I, Item 1, “Risk Factors” and “Cautionary Statement for Purposes of the ‘Safe Harbor’ Provisions of the Private Securities Litigation Reform Act of 1995” in Item I, Part 1A, “Legal Proceedings” in Part I, Item 3, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 and “Quantitative and Qualitative Disclosures About Market Risk” in Part II, Item 7A in the Quest Diagnostics 2007 Annual Report on Form 10-K and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Quantitative and Qualitative Disclosures About Market Risk” in the Company’s 2008 Quarterly Reports on Form 10-Q and other items throughout the Form 10-K and the Company’s 2008 Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.
Patients Growth People
»
»Who is Quest Diagnostics?
Leader in Providing Healthcare Insights and SolutionsComprehensive Diagnostic Testing
Routine ——» Esoteric• Diagnose• Monitor• Predict• Prevent
Advanced Information Technology SolutionsImprove Care and Efficiency
Facilitate Introduction of New TherapeuticsClinical Trials Testing
Innovative Diagnostic ProductsEnable Care Closer to the Patient
Risk Assessment Solutions to Life Insurance Industry
Touching Patients ~150 Million Times Each Year
Patients Growth People
»
»The Leader in Diagnostic Testing
US Diagnostic Testing Market: >$45 B
Source: Washington G-2 Reports and company information
$ in millions
Patients Growth People
»
»Consistently Strong Growth
Dol
lars
in B
illio
ns Revenue1999-2007
10 yr CAGR 18%
0$1$2$3$4$5$6$7
$8
1999 2000 2001 2002 2003 2004 2005 2006 2007
#11 Fortune 500 Ranking: 10-year Total Shareholder Return
EPS1999-2007
10 yr CAGR 25%
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
1999 2000 2001 2002 2003 2004 2005 2006 2007
Fortune Ranking based on years 1997-2006
Patients Growth People
»
»Favorable Industry Trends
Growing and Aging Population
Innovations in Science & Medicine
Personal Interest in Health
Convergence of Information• Genetic Predisposition• Diagnostic Testing• Diagnostic Imaging • Information Technology
Essential Healthcare Service
Influences >70% of Healthcare Decisions
Patients Growth People
»
»
Moving to Higher Growth,Higher Margin Segments
2007 Pro Forma Revenue2000 Revenue
Total Pro Forma Revenue: $7.0 BillionTotal Revenue: $3.4 Billion
Patients Growth People
»
»Expanding Market Leadership
Clinical TestingGene-based & Esoteric TestingEmployer ServicesAnatomic Pathology TestingRisk Assessment Services Healthcare Information TechnologyPoint of Care (Near Patient) TestingClinical Trials TestingInternational Market
P---P-
PP
2000 2008
Overall Market Leader/Niche LeadershipP Market Participant
Patients Growth People
»
»Our Goals
Undisputed World Leader in Diagnostic Testing,Information and Services
Profitably Grow > Industry Rate
Expand Operating Income to 20%
Expand International Operations to ~10% of Revenues
Patients Growth People
»
»Strategy to Drive Profitable Growth
Deliver Superior Patient Experience
Continuously Drive Six Sigma Quality
Lead in Medical Innovation/Information
Leverage Unparalleled Assets & Capabilities
Expand Diagnostic Scope
Expand Geographic Reach
Sustainable Competitive Advantage
Patients Growth People
»
» Patient Gold StandardsPrompt, Caring, Courteous Service
PSC Appointment SchedulingOnly Laboratory with Appointment Scheduling at PSC’sReduces Patient Wait TimeImproves Patient Convenience
Google Health CollaborationFacilitate Patient-Physician CommunicationsSecure Electronic Access to Lab Results
Providing Superior Patient Experience
Patients Growth People
»
»Leading Medical Innovator
Unmatched Medical & Technical Expertise
Multiple Channels to Access New TechnologyInternal Development – Nichols InstituteJoint Development RelationshipsLicensing/Distribution Relationships
Most Comprehensive Test MenuLeader in Cancer, CVD & Infectious Disease TestingPioneer in Molecular Diagnostics, LC-MS/MS & Micro-array
Leading Experts for Medical Consultation900 MDs & PhDs>30 Academic Associates
Broadest Product and Service Offering
Patients Growth People
»
»Most Comprehensive Test Menu
CancerLeumetaTM
H/I Breast RecurrenceCancer of Unknown Primary
Cardiovascular Disease
Infectious DiseaseHepaScoreTM
PhenoscriptTM
Chikungunya
Epstein Barr Virus
Transplantation / CoagHLA FDA-registered lab
Coag consultations
New TechnologyXSenseTM
ClarisureTM
Amino Acids by LC/MS
LC-MS/MS
Personalized Medicine
Patients Growth People
»
» Improving Patient Care
Enabling Personalized & Targeted Medicine
Enables More Appropriate Drug TherapyRituxan® Rituxan® Sensitivity (CD20)Herceptin® Her2Campath® Campath Sensitivity (CD2)Irinotecan UGT1A1Warfarin CYP450 2C9Carbamazephine HLA - screens out certain Asian patientsAbacavir HLA - predisposition to hypersensitivityAspirin Monitor personal resistance levelsTysabri Tysabri Antibody testing
Improves Disease ManagementLeumeta™ CellSearchHepascore™
Reducing Medical Costs
Patients Growth People
»
»Unparalleled Assets and Capabilities
Patients Physicians Hospitals Health Plans Employers Pharma Life
Insurers Serving ½ US Physicians & Hospitals
Broadest Services Offering
Leading Esoteric Labs
POC Products
Connectivity with 125,000 Physicians
4,000 Logistics Vehicles & 25 Aircraft
2,100 Patient Service Centers
Nationwide Appointment Scheduling
1,000 Person Sales Force
800 Pathologists & Dermatopathologists
13,500 Phlebotomists & Paramedical Professionals
Patients Growth People
»
»
Expanding Diagnostic ScopeNear Patient Testing
Attractive Benefits For Hospitals, Physician Offices & International Markets
Enables More Timely And Effective Decisions
Expanding Product Menu
Platform Technology
Results Integrated into Care360
Opportunity to Improve Patient Care
Reducing Medical Costs
Patients Growth People
»
»Expanding Geographic Reach
Clear Leadership in US….with Room to Grow
Leverage Existing Labs in Puerto Rico, Mexico, and UK
Increase Foreign Testing Sent to Nichols Institute
Exploit Point of Care Distribution Network in 130 Countries
Entering India – Serving Multiple Markets
Broadening Our Geographical Coverage
Increasing Market Opportunity
Patients Growth People
»
»India. . .An Untapped Opportunity
1 Billion People and Emerging Economic Power300 Million People in Middle ClassExpanding Consumerism
Increased Incidence of Chronic DiseaseDiabetes: 17% (among the highest in the world)Hypertension: 51% of adultsHyperlipidemiaCancer: ~1 million new cases each yearInfectious diseases: 1000 deaths/day from Tuberculosis
Expanding Interest in Early Detection, Prevention & Treatment
Highly Fragmented Diagnostic Testing Market
Patients Growth People
»
»
Leverage Strong Brands andExpertise in India Market
• Physicians• Hospitals
• Pharmaceutical Companies
• Life Insurers
Medical/Scientific Expertise and Operational Excellence• World renowned scientists,
pathologists and testing methods
• Six Sigma• Laboratory best practices
Patients Growth People
»
»India: Tailored Solutions
Global Brand + Local Conditions
Patients Growth People
»
»Reducing Costs by $500 Million
Streamline Lab Operations
Optimize Logistics Routes and PSC Resources
Improve Billing and Call Center Operations
Leverage Purchasing Capabilities
Maintain Service Levels
Leverage Lean Six Sigma to Improve Efficiency
Patients Growth People
»
»2007 Full Year Results
Revenues $6.7 billion
Operating Income 16.3%
EPS $2.84
Cash from Operations $927 million
Positioned for Sustained Revenue & Earnings Growth
Decisive Actions and Bold Moves Restored Momentum
Patients Growth People
»
»2008 / 2009 Focus
Drive Top-Line Growth
Integrate AmeriPath
Reduce Costs by $500 Million
Expand International and Products Businesses
Excellence in Execution
Margin Expansion and Earnings Growth
Patients Growth People
»
»Building on Strength
Industry Leader in a Vital and Growing Industry
A History of Disciplined Growth
Track Record of Successfully Integrating Acquisitions
Strong Cash Generator
Proven Management Team
Uniquely Positioned with Unparalleled Assets & Capabilities
Focused on Execution
Patients Growth People
»
»