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November 12, 2008
Credit Suisse Health Care Conference
Patients | Growth | People
2
Who is Quest Diagnostics?
•Leader in Providing Healthcare Insights and Solutions
• Comprehensive Diagnostic Testing• Routine ——» Esoteric
• Diagnose• Monitor• Predict• Prevent
–Advanced Information Technology Solutions• Improve Care and Efficiency
–Facilitate Introduction of New Therapeutics• Clinical Trials Testing
–Innovative Diagnostic Products• Enable Care Closer to the Patient
–Risk Assessment Solutions to Life Insurance Industry
Touching Patients ~150 Million Times Each Year
Patients | Growth | People
3
The Leader in Diagnostic Testing
Source: Washington G-2 Reports and company information
$ in millions
• U.S. Diagnostic Testing Market: ~ $50 B
Patients | Growth | People
4
Favorable Industry Trends
• Growing and Aging Population
• Scientific & Medical Innovations
• Personal Interest in Health
• Convergence of Information
Essential Healthcare Service
Influences >70% of Healthcare Decisions
Patients | Growth | People
5
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
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Expanding Market Leadership
• Clinical Testing• Gene-based & Esoteric Testing• Employer Services• Anatomic Pathology Testing• Risk Assessment Services • Healthcare Information Technology• Point of Care (Near Patient) Testing• Clinical Trials Testing• International Market
•••• P• -• -• -• P• -
•••••••• P• P
2000 2008
Overall Market Leader/Niche LeadershipP Market Participant
Patients | Growth | People
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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
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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
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Patient Gold StandardsPrompt, caring, courteous service
PSC Appointment SchedulingOnly laboratory with appointment scheduling at PSCsReduces patient wait time; improves convenience
Google Health CollaborationFacilitate patient-physician communicationsSecure electronic access to lab results
Delivering Superior Patient Experience
Patients | Growth | People
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Leading Medical Innovator
Multiple Channels to Access New TechnologyInternal Development – Nichols InstituteJoint Development RelationshipsLicensing/Distribution Relationships
Focused on Addressing Areas of Significant Patient NeedCancer, Cardiovascular Conditions, Infectious DiseaseLess invasive; less painful; more convenient for patients
Leading Experts for Medical Consultation900 MDs & PhDs
Culture of Collaborative InnovationAcademic relationshipsInvestment in innovative firms and technologiesPartnerships with pharmaceutical companies
Patients | Growth | People
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Continual Stream ofDiagnostic Testing Advances
Cancer– LeumetaTM
– HE-4– H/I Breast Recurrence– Cancer of Unknown Primary
Cardiovascular Disease– Ion Mobility (Lipid Profile)
Infectious Disease– HepaScoreTM
– Chikungunya
Transplantation/Coagulation– HLA FDA-registered lab
– Coag consultations
New Technologies/New Applications– XSenseTM (Fragile X)
– ClarisureTM (CGH Microarray)
– LC/MS for Amino Acids
– LC-MS/MS
Personalized Medicine
Patients | Growth | People
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Enabling Personalized andTargeted 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 levels
Improves Disease ManagementLeumeta™ CellSearchHepascore™
Improving Patient Care …..Reducing Medical Costs
Patients | Growth | People
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Unparalleled Assets and Capabilities
Patients | Growth | People
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Expanding Diagnostic ScopeNear Patient Testing
Attractive benefits for hospitals, physician offices and 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
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Expanding Geographic Reach
Clear leadership in U.S….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
Increasing Market Opportunity
Broadening Our Geographical Coverage
Patients | Growth | People
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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 and treatmentHighly fragmented diagnostic testing market
Patients | Growth | People
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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 & Stimulate Growth
Leverage Lean Six Sigma to Improve Efficiency
$300 million savings run rate by year end
Patients | Growth | People
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Lean in the Lab – Optimizing Flow
“Before” Spaghetti Map of Urinalysis
Patients | Growth | People
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Lean in the Lab – Optimizing Flow
“After” Spaghetti Map
Significant reductions are obtainable
Patients | Growth | People
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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
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2008 Q3 YTD Results
Revenues $5.4 B, ↑ 10.4%
Operating Income 16.6%, ↑ 0.8%
EPS* $2.41, ↑~18%
Cash from Operations $700 million
*Excludes a Q3 non-cash write-down of an investment ($0.03) and impact associated with hurricanes ($0.02 )
Patients | Growth | People
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2008 Guidance
Revenues ↑ >8% ($7 Billion)
Operating Income approaching 17%
EPS* $3.17 - $3.22
Cash from Operations ~$900 million
CapEx $200 - $220 million
Investing to Drive Superior Growth
Returning to Earnings Growth
*Excludes a Q3 non-cash write-down of an investment ($0.03) and impact associated with hurricanes ($0.02 )
Patients | Growth | People
23
Building on Strength
Leader in a vital and growing industry
Strong cash generator, with a strong balance sheet
Uniquely positioned with unparalleled assets & capabilities
History of disciplined growth and successful acquisitions
Proven management team
Focused on Execution
Patients | Growth | People
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