Quest Diagnostics(US:DGX)2020-07-23 20:43Financial Data and Key Metrics Changes - Total revenues for the second quarter declined approximately 6% to $1.83 billion compared to the same period in 2019 [10] - Reported earnings per share (EPS) decreased by approximately 10% to $1.36, while adjusted EPS decreased by approximately 18% to $1.42 [10][23] - Cash provided by operations was $602 million year-to-date through June 30, compared to $596 million in the same period last year [23] - The company ended the quarter with nearly $1 billion in cash on the balance sheet [23] Business Line Data and Key Metrics Changes - Revenues for diagnostic information services declined 5.7% compared to the prior year [19] - Testing volumes in the base business declined approximately 34% versus the prior year, with a recovery observed in May and June [20][21] - Revenue per requisition increased 15.3% versus the prior year, primarily driven by reimbursement for COVID-19 molecular testing [22] Market Data and Key Metrics Changes - The company performed roughly 8.5 million COVID-19 molecular diagnostic tests and more than 2.5 million antibody tests [11] - The capacity to perform COVID-19 molecular diagnostic tests increased to 130,000 per day, with expectations to reach 150,000 tests per day [11][21] Company Strategy and Development Direction - The company aims to grow more than 2% per year through acquisitions and expand relationships with health plans and hospital systems [15][17] - Recent acquisitions include the Memorial Hermann outreach business and plans to acquire Mid America Clinical Laboratories [16] - The company is focused on enhancing its MyQuest patient portal, which has seen a significant increase in registrations [18] Management's Comments on Operating Environment and Future Outlook - Management reinstated the financial outlook for the remainder of the year, reflecting uncertainty due to the pandemic [9][24] - The company expects base testing volumes to remain below prior year levels for the remainder of the year, with a potential average decline of 20% [25] - Management believes that COVID-19 testing will continue to play a significant role in 2021, especially in relation to vaccine distribution [51] Other Important Information - The company has taken cost management actions, including temporary workforce actions, which were largely reversed to meet increased demand for testing [14] - The company has a strong M&A pipeline and expects more opportunities for acquisitions due to challenges faced by hospitals [17] Q&A Session Summary Question: Clarification on serology testing and its contribution - Management indicated that serology testing is currently being conducted and is expected to contribute to the outlook, particularly as confidence in antibody testing grows [32] Question: Molecular testing referral patterns and return-to-work testing - Management noted that demand for molecular testing is exceeding capacity, with return-to-work programs contributing to increased demand [37][38] Question: Long-term growth from testing opportunities - Management expressed confidence in the strategies for growth through acquisitions and organic growth, emphasizing the importance of relationships with health plans [45][46] Question: Guidance assumptions and potential declines in testing - Management acknowledged the uncertainty in predicting future testing volumes and emphasized a cautious approach in guidance [49][56] Question: Vaccine distribution and testing roles - Management discussed the potential role of testing in prioritizing vaccine distribution, particularly for high-risk groups [63][64] Question: Reimbursement policies and payer mix - Management confirmed that commercial rates are expected to align with Medicare rates, while also noting some pressure from payers regarding frequency of testing [66][70]