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quest diagnostics 3_18_08Cowen


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quest diagnostics 3_18_08Cowen

  1. 1. Cowen and Company Health Care Conference March 18, 2008
  2. 2. Safe Harbor Disclaimer » 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. A copy of this presentation is available on our website at Patients Growth People
  3. 3. 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
  4. 4. The Leader in Diagnostic Testing » US Diagnostic Testing » Market: >$45 B $ in millions Source: Washington G-2 Reports and company information Patients Growth People
  5. 5. Consistently Strong Growth » #11 Fortune 500 Ranking: 10-year Total Shareholder Return » $8 Dollars in Billions Revenue $7 1999-2007 $6 10 yr CAGR 18% $5 $4 $3 $2 $1 0 1999 2000 2001 2002 2003 2004 2005 2006 2007 $3.50 EPS $3.00 1999-2007 10 yr CAGR 25% $2.50 $2.00 $1.50 $1.00 $0.50 $0.00 1999 2000 2001 2002 2003 2004 2005 2006 2007 Fortune Ranking based on years 1997-2006 Patients Growth People
  6. 6. Favorable Industry Trends » » Essential Healthcare Service Growing and Aging Population Innovations in Science & Medicine Personal Interest in Health Convergence of Information • Genetic Predisposition • Diagnostic Testing • Diagnostic Imaging • Information Technology Influences >70% of Healthcare Decisions Patients Growth People
  7. 7. Moving to Higher Growth, Higher Margin Segments » » 2000 Revenue 2007 Pro Forma Revenue Total Revenue: $3.4 Billion Total Pro Forma Revenue: $7.0 Billion Patients Growth People
  8. 8. Expanding Market Leadership » 2008 2000 » Clinical Testing Gene-based & Esoteric Testing Employer Services Anatomic Pathology Testing P Risk Assessment Services - Healthcare Information Technology - Point of Care (Near Patient) Testing - Clinical Trials Testing P P International Market - P Overall Market Leader/Niche Leadership P Market Participant Patients Growth People
  9. 9. 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
  10. 10. Strategy to Drive Profitable Growth » » Sustainable Competitive Advantage Deliver Superior Patient Experience Continuously Drive Six Sigma Quality Lead in Medical Innovation/Information Leverage Unparalleled Assets & Capabilities Expand Diagnostic Scope Expand Geographic Reach Patients Growth People
  11. 11. Providing Superior Patient Experience » » Patient Gold Standards Prompt, Caring, Courteous Service PSC Appointment Scheduling Only Laboratory with Appointment Scheduling at PSC’s Reduces Patient Wait Time Improves Patient Convenience Google Health Collaboration Facilitate Patient-Physician Communications Secure Electronic Access to Lab Results Patients Growth People
  12. 12. Leading Medical Innovator » » Broadest Product and Service Offering Multiple Channels to Access New Technology Internal Development – Nichols Institute Joint Development Relationships Licensing/Distribution Relationships Most Comprehensive Test Menu Leader in Cancer, CVD & Infectious Disease Testing Pioneer in Molecular Diagnostics, LC-MS/MS & Micro-array Leading Experts for Medical Consultation 900 MDs & PhDs >30 Academic Associates Unmatched Medical & Technical Expertise Patients Growth People
  13. 13. Most Comprehensive Test Menu » » Cancer Transplantation / Coag LeumetaTM HLA FDA-registered lab H/I Breast Recurrence Coag consultations Cancer of Unknown Primary New Technology Cardiovascular Disease XSenseTM Infectious Disease ClarisureTM HepaScoreTM Amino Acids by LC/MS PhenoscriptTM LC-MS/MS Chikungunya Personalized Medicine Epstein Barr Virus Patients Growth People
  14. 14. Enabling Personalized & Targeted Medicine » » Improving Patient Care Enables More Appropriate Drug Therapy Rituxan® Rituxan® Sensitivity (CD20) Herceptin® Her2 Campath® Campath Sensitivity (CD2) Irinotecan UGT1A1 Warfarin CYP450 2C9 Carbamazephine HLA - screens out certain Asian patients Abacavir HLA - predisposition to hypersensitivity Aspirin Monitor personal resistance levels Tysabri Tysabri Antibody testing Improves Disease Management Leumeta™ CellSearch Hepascore™ Reducing Medical Costs Patients Growth People
  15. 15. Unparalleled Assets and Capabilities » » Health Life Patients Physicians Hospitals Employers Pharma Plans 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
  16. 16. Expanding Diagnostic Scope Near Patient Testing » » Opportunity to Improve Patient Care Attractive Benefits For Hospitals, Physician Offices & International Markets Enables More Timely And Effective Decisions Expanding Product Menu Platform Technology Results Integrated into Care360 Reducing Medical Costs Patients Growth People
  17. 17. Expanding Geographic Reach » » Broadening Our Geographical Coverage 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 Increasing Market Opportunity Patients Growth People
  18. 18. India. . .An Untapped Opportunity » » 1 Billion People and Emerging Economic Power 300 Million People in Middle Class Expanding Consumerism Increased Incidence of Chronic Disease Diabetes: 17% (among the highest in the world) Hypertension: 51% of adults Hyperlipidemia Cancer: ~1 million new cases each year Infectious diseases: 1000 deaths/day from Tuberculosis Expanding Interest in Early Detection, Prevention & Treatment Highly Fragmented Diagnostic Testing Market Patients Growth People
  19. 19. Leverage Strong Brands and Expertise in India Market » » • Physicians • Hospitals • Pharmaceutical Companies • Life Insurers Medical/Scientific Expertise and Operational Excellence • Six Sigma • World renowned scientists, pathologists and testing • Laboratory best practices methods Patients Growth People
  20. 20. India: Tailored Solutions » » Global Brand + Local Conditions Patients Growth People
  21. 21. Reducing Costs by $500 Million » » Leverage Lean Six Sigma to Improve Efficiency Streamline Lab Operations Optimize Logistics Routes and PSC Resources Improve Billing and Call Center Operations Leverage Purchasing Capabilities Maintain Service Levels Patients Growth People
  22. 22. 2007 Full Year Results » » Decisive Actions and Bold Moves Restored Momentum Revenues $6.7 billion Operating Income 16.3% EPS $2.84 Cash from Operations $927 million Positioned for Sustained Revenue & Earnings Growth Patients Growth People
  23. 23. 2008 / 2009 Focus » » Margin Expansion and Earnings Growth Drive Top-Line Growth Integrate AmeriPath Reduce Costs by $500 Million Expand International and Products Businesses Excellence in Execution Patients Growth People
  24. 24. 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
  25. 25. » » Patients Growth People