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DGX · QUEST DIAGNOSTICS INC

30 filings

10-K

DGX 10-K Annual Reports

QUEST DIAGNOSTICS INC - 30 annual reports

Filing record · 2016–202610-K1110-Q328-K132

2025
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2025
Quest Diagnostics (DGX) reported 2025 net revenues of $11.0 billion, up 11.8% year over year, with organic growth of 5.3%. Operating income rose 15.6% to $1.56 billion, and diluted EPS increased 13.8% to $8.75. Growth was driven largely by acquisitions, including Spectra Laboratories assets and the full-year contribution of LifeLabs, which together added roughly 6.7% to DIS revenue. Organic requisition volume grew 3.4%, while revenue per requisition rose only 0.1% (2.4% organic), reflecting lower-revenue LifeLabs volume. Operating cash flow improved to $1.89 billion from $1.33 billion, aided partly by lower cash taxes from the OBBBA and a CARES Act payroll tax credit, and capital expenditures rose to $527 million. Capital returns were expanded. The Board raised the quarterly dividend 7.5% to $0.86 and added $1 billion to the buyback authorization, bringing remaining capacity to $1.4 billion. Total debt stood at about $5.7 billion, with $500 million of 3.45% notes due June 2026 and about $1.3 billion of undrawn credit capacity. Management guides to roughly $550 million of 2026 capex and about $60 million of Project Nova spending that year. Key risks for investors include continued Medicare reimbursement pressure under PAMA, the anticipated effect of OBBBA and expiring enhanced ACA premium tax credits (estimated at up to 50-60 basis points of revenue pressure by 2028), growing health plan utilization management, and the execution risk of the multi-year Project Nova and Invigorate programs. Ongoing legal and government investigations, including a Corporate Integrity Agreement with HHS, also remain relevant. The company also disclosed a $29 million impairment tied to a business exit and a $154 million amortization charge. The company is valued on a reasonable basis, but it carries meaningful reimbursement and integration risk.
Feb 26, 2026
2024
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2024
Quest Diagnostics (DGX) closed 2024 with net revenues of $9.87 billion, up 6.7% from $9.25 billion in 2023, and diluted EPS of $7.69, up 2.7%. Growth was driven mainly by acquisitions, which contributed roughly 3.9 points to DIS revenue growth, and by a 1.3% increase in revenue per requisition. Organic requisition volume grew only 0.7%, and COVID-19 testing continued to decline, so the underlying base-business growth (DIS revenue up 9.0% including acquisitions, with requisitions up 6.2%) is meaningfully flattered by M&A. Operating income rose 6.7% to $1.35 billion, but the operating margin was flat at 13.6% because cost of services and SG&A grew in line with revenue, and the company absorbed $127 million of intangible amortization and $62 million of restructuring and integration charges. Management attributes roughly $1.24 of 2024 diluted EPS to these items on a net basis. The defining event of the year was the roughly $2.2 billion of acquisitions, most notably LifeLabs in Canada (about $1 billion, funded with an $1.85 billion senior notes offering) and a series of outreach lab purchases from hospital systems including Allina Health, OhioHealth and University Hospitals. Management targets acquisitions that add about 1-2% of revenue per year, so 2024 was well above that pace. Free cash flow is thinner than the headline suggests: operating cash flow was $1.33 billion against $425 million of capital expenditures, and total debt rose to about $6.2 billion. Leverage increased while the company stated a continued commitment to an investment-grade rating, and it raised its quarterly dividend 6.7% to $0.80 per share while repurchasing only $150 million of stock during the year. Investors should weigh the strategic growth in Advanced Diagnostics, the MRD and Alzheimer's testing pipeline, and cost programs such as Invigorate against several watch items disclosed in the filing. These include PAMA Medicare reimbursement cuts, which Congress has delayed but which could resume in 2026, the FDA's phase-out of enforcement discretion for laboratory-developed tests, and a shift toward capitated payment arrangements, which rose to about 5% of revenue. The filing also notes a new multi-year "Project Nova" order-to-cash modernization program costing an estimated $250-310 million, and the risk of changes in federal healthcare policy following the 2024 U.S. presidential election.
Feb 20, 2025
2023
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2023
Quest Diagnostics (DGX) closed 2023 with net revenues of $9.25 billion, down 6.4% from $9.88 billion in 2022, as COVID-19 testing revenue fell to $223 million from $1.45 billion. The decline masks a healthier core: base business revenues (excluding COVID-19 testing) rose to $9.03 billion from $8.43 billion, and base DIS revenue per requisition growth and volume growth both improved. Diluted EPS fell to $7.49 from $7.97, reflecting lower COVID volumes, a $29 million impairment tied to a business shutdown, and about $108 million of intangible amortization. Operating cash flow dropped to $1.27 billion from $1.72 billion, partly from the timing of COVID-era collections and lower operating income. Management continued to lean on acquisitions and capital return. Quest bought Haystack Oncology for $392 million (MRD testing), acquired select assets of NewYork-Presbyterian's lab business for $275 million, and closed other deals totaling about $699 million in aggregate consideration. The company issued $750 million of 6.40% senior notes due 2033 and raised its quarterly dividend 5.6% to $0.75 per share, its 13th increase since 2012. It repurchased only $276 million of stock in 2023 versus $1.4 billion in 2022, leaving $1.0 billion of authorization. Total debt is about $4.7 billion. The key risk for investors is reimbursement. The filing highlights PAMA-driven Medicare fee cuts, with the next round delayed to January 1, 2025 and capped at 15% annually from 2025 to 2027. It also flags FDA's proposed rule to regulate laboratory-developed tests, consumer and payer pressure on pricing, and growing health plan steering toward preferred lab networks. Management points to its Invigorate cost program (targeting about 3% annual savings) and Advanced Diagnostics growth as offsets.
Feb 22, 2024
2022
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2022
Quest Diagnostics (DGX) reported 2022 net revenues of $9.9 billion, down 8.4% from $10.8 billion in 2021, as COVID-19 testing revenue fell to $1.45 billion from $2.77 billion. Excluding COVID-19 testing, the base business grew 5.6% in revenue and 2.2% in testing volume, and the company described itself as the world's leading provider of diagnostic information services. Diluted EPS fell to $7.97 from $15.55, largely because 2021 included a $314 million gain on the sale of its Q2 Solutions stake and 2022 operating income declined 40% to $1.43 billion. The filing also shows $1.7 billion of operating cash flow, $1.4 billion of share repurchases, and $305 million of dividends, and management raised the quarterly dividend 7.6% to $0.71 and added $1 billion to the buyback authorization. The filing highlights strategic growth initiatives: a target of more than 2% annual revenue growth through acquisitions, Advanced Diagnostics growth of at least 8% per year, consumer-initiated testing through QuestHealth, and Professional Laboratory Services for hospital partners. 2022 acquisitions included Pack Health and the Summa Health outreach business, and an agreement was signed in February 2023 to acquire select assets of New York-Presbyterian's laboratory business. Cost-control progress under the Invigorate program included $88 million of 2022 restructuring-related charges. Gross margin compression is visible in the results, with cost of services rising to 65.3% of revenue from 61.0%, and SG&A rising to 19.0% from 16.0%, partly due to $93 million of Quest for Health Equity donations. Key risks for investors include ongoing PAMA-driven Medicare reimbursement pressure (with cuts deferred to 2024 and capped at 15% annually), health plan and IDN pressure on pricing, potential FDA regulation of laboratory-developed tests, a fragmented and competitive market, cybersecurity incidents (including the 2021 ReproSource breach and the earlier AMCA incident), and several pending class actions and government inquiries. Total debt was about $4.0 billion at year-end 2022, and the company stated it intends to remain investment-grade.
Feb 21, 2023
2021
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2021
Quest Diagnostics (DGX) closed 2021 as a year of strong top-line growth and heavy capital return, though much of that growth was COVID-19 driven. Net revenues rose 14.3% to $10.8 billion, from $9.4 billion in 2020. COVID-19 testing contributed $2.77 billion, while base business revenue (excluding COVID-19 testing) grew to $8.0 billion from $6.7 billion. Diluted EPS from continuing operations was $15.55, up from $10.47, but that figure includes about $1.31 per share of net non-recurring benefits, most notably a $314 million pre-tax gain on the sale of its 40% stake in Q2 Solutions to IQVIA. Operating income rose 20.8% to $2.38 billion, and operating margin expanded to 22.1%. Cash generation and capital deployment were the main investor stories. Operating cash flow was $2.23 billion, and the company repurchased $2.2 billion of stock, including $1.5 billion under accelerated share repurchase agreements. Management also raised the quarterly dividend 6.5% to $0.66 and authorized an additional $1 billion buyback in February 2022. Leverage remains modest, with about $4.0 billion of debt against $872 million of cash, and the company maintains an investment-grade rating framework. Management guides to lower COVID-19 testing demand in 2022 and continued PAMA-driven Medicare reimbursement pressure from 2023 through 2025, which is capped at 15% annually. Key risks for investors include the durability of COVID-19 testing revenue, reimbursement cuts from PAMA and other government payers, health plan and IDN pressure on pricing, and the development of competing testing models such as point-of-care and home testing. The company also disclosed a 2021 ransomware incident at its ReproSource subsidiary and ongoing AMCA data-breach litigation. Leadership transition is underway: CEO Stephen Rusckowski will become Executive Chairman effective November 1, 2022, and James Davis will succeed him as CEO.
Feb 28, 2022
2020
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2020
Quest Diagnostics (DGX) reported a record 2020 driven by COVID-19 testing. Net revenues rose 22.1% to $9.44 billion from $7.73 billion, and operating income rose 60.2% to $1.97 billion. Diluted EPS from continuing operations was $10.47, versus $6.13 in 2019. The DIS business generated 97% of revenue, and COVID-19 testing contributed $2.72 billion of 2020 net revenue. Excluding COVID-19 testing, the base business declined: base testing volume fell 11.4% for the full year, with a 34% drop in Q2 that partly recovered in the second half. Operating cash flow nearly doubled to $2.0 billion, supported by higher earnings and a $100 million Social Security tax deferral benefit, and free cash flow after $418 million of capex was roughly $1.6 billion. The company deployed capital across acquisitions, dividends, and buybacks. It closed Blueprint Genetics, the Memorial Hermann outreach lab business, and the remaining 56% of Mid America Clinical Laboratories, spending about $330 million net of cash acquired. It paid $297 million in dividends, repurchased $325 million of stock, and in February 2021 raised the quarterly dividend about 11% to $0.62 and added $1 billion to the buyback authorization. Total debt was about $4.0 billion at year-end, and leverage covenants were temporarily loosened through mid-2021 to 6.5x EBITDA at year-end 2020, stepping down to 3.5x thereafter. Key investor watch items are the durability of COVID-19 testing revenue and reimbursement, which Medicare is cutting to $75 per test from January 2021, the pending PAMA reimbursement cuts (suspended until 2022 but scheduled to resume with up to 15% annual reductions for 2022-2024), ongoing litigation tied to the AMCA data breach and a 401(k) ERISA suit, and continued shifts in health plan and hospital dynamics. Management says that the base business volume and sustained cost savings from its Invigorate program (about $200 million delivered in 2020) are the main levers for growth beyond the pandemic.
Feb 22, 2021
2019
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2019
Quest Diagnostics (DGX) reported 2019 net revenues of $7.7 billion, up 2.6% year over year, with operating income up 11.8% to $1.231 billion and diluted EPS from continuing operations of $6.13, up 15.9%. Growth was driven by the Diagnostic Information Services (DIS) business, which grew revenue 2.8% on 4.3% volume growth (about 3.1% organic, 1.2% from acquisitions), partly offset by a 1.3% decline in revenue per requisition. Management attributed the pricing pressure mainly to PAMA-driven Medicare reimbursement cuts and rising denials. Operating margin improved to 15.9% from 14.6%, aided by a $95 million net other operating gain (including a $73 million sale-leaseback gain) and Invigorate cost-savings, though it was partly offset by higher amortization and integration costs. Cash generation was solid, with operating cash flow of $1.243 billion and capex of $400 million, leaving roughly $843 million of free cash flow. Total debt rose to $4.77 billion, and cash ended the year at $1.19 billion after net borrowings to fund acquisitions and refinancing. Management reiterated a strategy of returning most free cash flow to shareholders: the quarterly dividend was raised about 6% to $0.56 from $0.53, and $1.2 billion remained under the repurchase authorization. Key risks flagged in the filing include continued PAMA reimbursement cuts (about 10% scheduled for 2020, with further capped reductions from 2021 to 2023), government and health-plan pressure on pricing, potential FDA regulation of laboratory-developed tests, and cybersecurity exposure. The AMCA data security incident is a notable open item, with 39 lawsuits filed (37 still pending after two dismissals) and government investigations underway, though the company says the 2019 financial impact was not material.
Feb 20, 2020
2018
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2018
Quest Diagnostics (DGX) closed 2018 with net revenues of $7.53 billion, up 1.7% year over year, but operating income fell 5.5% to $1.10 billion and diluted EPS declined 3.8% to $5.29 from $5.50. The decline reflects $122 million of pre-tax restructuring and integration charges under the Invigorate cost program, a higher effective cost base from acquisitions, and pricing pressure. Organic DIS revenue actually declined 1.3%, with acquisitions (including Oxford Immunotec's U.S. lab business, ReproSource, MedXM and Cape Cod Healthcare's outreach business) supplying the growth. Revenue per requisition fell 1.2% on PAMA-driven Medicare rate cuts, higher denials and patient concessions, while volume rose 2.5%. Management's strategic message is a shift toward faster growth: the company now targets a compound annual revenue growth rate above 2%, up from 1-2%, built on partnerships with health plans (a long-term UnitedHealthcare agreement and new in-network status with Horizon BCBS New Jersey and BCBS Georgia, adding roughly 43 million insured lives effective January 1, 2019), IDN reference testing, consumer-initiated testing, and advanced diagnostics. Capital returns remain a priority: the quarterly dividend was raised 6% to $0.53, and about $2.8 billion has been returned via buybacks since 2013, though 2018 repurchases ($322 million) were lower than in 2017. Free cash flow was about $817 million (operating cash flow of $1.2 billion less $383 million of capex), and total debt rose to $3.9 billion. The key risks for investors are regulatory and reimbursement. Medicare CLFS rates were cut in 2018 and are scheduled to fall roughly another 10% in each of 2019 and 2020, with the company expecting 2019 reimbursement pressure above 2.5%. Other concerns include potential FDA regulation of laboratory-developed tests, payer consolidation, hospital insourcing, cyber risk following a 2016 data breach, and False Claims Act exposure.
Feb 21, 2019
2017
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2017
Quest Diagnostics' 2017 10-K shows a company growing revenue steadily while absorbing a large one-time tax benefit. Net revenues rose 2.6% to $7.71 billion, driven by the Diagnostic Information Services (DIS) business, which grew 3.3% on a 2.3% rise in requisition volume and a 1.0% gain in revenue per requisition. Diluted EPS increased 22% to $5.50, but this was flattered by a provisional $106 million net tax benefit from the Tax Cuts and Jobs Act and $37 million of excess stock-comp tax benefits. Excluding these items, earnings growth was materially slower, and operating income actually declined 8.8% to $1.165 billion, reflecting Invigorate restructuring and systems-conversion costs and the absence of the 2016 Focus Diagnostics gain. The filing's key forward-looking concern is reimbursement. PAMA revisions to the Medicare Clinical Laboratory Fee Schedule are expected to cut CLFS-based revenue by roughly 4% in 2018 and about 10% in each of 2019 and 2020, which management estimates will weigh on DIS reimbursement by about 0.5% in 2018. Management also flagged the FDA's possible regulation of laboratory-developed tests and a draft CMS policy on next-generation sequencing coverage as risks to the advanced diagnostics growth strategy. The company continues to pursue 1-2% annual growth through acquisitions, completed several in 2017 (about $587 million total), and announced an 11% dividend increase to $0.50 per quarter. Balance sheet leverage is manageable but notable: total debt was about $3.8 billion at year-end, cash was $137 million, and the company repurchased $465 million of stock while returning a majority of free cash flow to shareholders. Operating cash flow of $1.18 billion gives coverage of dividends and capex, though the margin of safety depends on maintaining investment-grade ratings and on continued cost savings from Invigorate, which reached over $1.3 billion in run-rate savings.
Feb 23, 2018
2016
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2016
Quest Diagnostics (DGX) reported 2016 net revenues of $7.5 billion, up 0.3% year over year, with the Focus Diagnostics sale, the Clinical Trials joint venture contribution and the wind-down of Celera products together reducing revenue growth by about 2.3 points. Diagnostic Information Services (DIS) revenue grew 2.5% to $7.1 billion, driven by 2.0% volume growth and 0.4% revenue per requisition growth, with acquisitions contributing 0.8 points. Reported operating income fell 8.7% to $1.28 billion, largely because 2015 included a $334 million gain on the Clinical Trials contribution, and diluted EPS from continuing operations declined 7.4% to $4.51. Excluding one-time items, management cited a net $0.26 per share drag in 2016, with a $118 million gain on the Focus sale offset by systems conversion costs and a $48 million debt-retirement loss. Cash generation improved, with operating cash flow rising to $1.07 billion from $821 million, and management returned capital through $590 million of buybacks and $223 million of dividends. The quarterly dividend was raised 12.5% to $0.45 for 2017, and the board added $1 billion of repurchase authority. Total debt was about $3.7 billion, and the company stated it is committed to an investment-grade credit rating. The Invigorate cost program reached more than $1.1 billion in run-rate savings against a $1.3 billion goal for exiting 2017, and management expects 2017 charges of $60 million to $80 million. Key risks include continued pricing and reimbursement pressure from government and commercial payers, the possible repeal or replacement of the ACA, PAMA fee schedule revisions targeted for 2018, FDA oversight of laboratory-developed tests, and a December 2016 cyberattack that exposed certain patient data. Investors should also note that billing operations were outsourced to Optum360 from November 2016, which introduces transition and execution risk, and that the effective tax rate rose to 39.5% in 2016.
Feb 22, 2017
2015
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2015
Quest Diagnostics' 2015 10-K shows a company that returned to top-line growth while executing a multi-year restructuring. Total net revenues reached $7.49 billion, up 0.8% from $7.44 billion in 2014, with the Diagnostic Information Services (DIS) business growing 1.3% to $6.97 billion on a 1.2% volume increase and a flat 0.1% revenue per requisition. The Diagnostic Solutions (DS) segment declined 6.1%, largely because the clinical trials business was contributed to the Q2 Solutions joint venture with Quintiles on July 1, 2015, which reduced total revenue growth by about 1.2 points. Reported profitability was inflated by one-time items. Operating income rose 42% to $1.40 billion, but this included a $334 million non-cash gain on the Q2 Solutions contribution and $105 million of restructuring and integration charges. Diluted EPS from continuing operations was $4.87, up from $3.78, with the company citing a net $0.48 benefit from items that were not part of the core run-rate. The effective tax rate rose to 33.8%, and a $145 million deferred tax expense on the Q2 gain weighed on results. Operating cash flow declined to $810 million from $938 million, partly due to $146 million of cash charges for early debt retirement. Capital allocation remained shareholder-focused. The company returned roughly 80% of free cash flow through $212 million of dividends and $224 million of buybacks, raised the quarterly dividend 5% to $0.40 in January 2016, and ended the year with $3.65 billion of total debt and $972 million of remaining repurchase authority. Management is targeting $1.3 billion in cumulative Invigorate run-rate savings by the end of 2017, with $200 million realized in 2015, and expects 2016 Invigorate charges of $80 to $100 million. Key risks remain reimbursement pressure from government and commercial payers, the possible PAMA-driven Medicare fee schedule reset expected as early as 2017, FDA oversight of laboratory-developed tests, and ongoing billing and qui tam litigation.
Feb 26, 2016
2014
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2014
Quest Diagnostics (DGX) reported 2014 net revenues of $7.4 billion, up 4.0% year over year, driven mainly by acquisitions (Solstas, Summit Health, Steward) rather than organic growth. Organic DIS volume declined about 1%, and revenue per requisition fell 1.8%. Operating income dropped 33% to $983 million because 2013 included a $474 million one-time gain on the ibrutinib royalty sale, and 2014 carried $121 million of restructuring charges. Income from continuing operations attributable to Quest fell to $551 million, or $3.78 per diluted share, versus $5.31 in 2013. Excluding the 2014 items, earnings per share were roughly $4.10 to $4.20, though this figure is an analyst estimate rather than a reported number. Cash generation improved, with operating cash flow of $938 million versus $652 million, helped by the absence of a 2013 tax payment tied to the royalty sale. Total debt rose to $3.8 billion from $3.3 billion, reflecting acquisition funding. Management reaffirmed a capital return framework that returns most free cash flow to shareholders through dividends and buybacks, and raised the quarterly dividend 15% to $0.38 per share. The company also launched a new Invigorate cost program targeting an additional $600 million in run-rate savings by the end of 2017, with about $300 million in expected pre-tax charges. Key risks include continued reimbursement pressure from government and commercial payers, competition from hospital-affiliated labs, potential FDA regulation of laboratory-developed tests, and an uncertain transition to new Medicare fee schedules in 2015. Management expects the business environment to be more stable in 2015 and reimbursement pressure to be consistent with 2014.
Feb 24, 2015
2013
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2013
Quest Diagnostics (DGX) reported 2013 net revenues of $7.1 billion, down 3.2% from 2012, as healthcare utilization weakened and Medicare fee schedule cuts reduced revenue per requisition by 3.6%. Requisition volume rose only 0.2%, and underlying volume excluding acquisitions fell 1.8%. Reported operating income rose 22.8% to $1.475 billion, but that was driven by a one-time $474 million pre-tax gain from the sale of ibrutinib royalty rights. Diluted EPS from continuing operations was $5.31, up 35.5%, with the gain contributing roughly $1.95 per share. Excluding the gain and restructuring/Enterix charges, underlying earnings declined. Management's five-point strategy centers on restoring growth through acquisitions (UMass, ATN, Dignity, ConVerge), clinical franchise organizations, and esoteric testing, alongside the Invigorate cost program, which delivered more than $250 million in 2013 savings and is targeted to reach about $700 million in run-rate savings by end-2014. Capital returns were significant: about $1.0 billion in share repurchases and dividends of $1.20 per share for the year, with the quarterly dividend raised 10% to $0.33 in January 2014. The company has about $3.3 billion of debt, a target debt/EBITDA of 2 to 2.25 times, and an announced $570 million acquisition of Solstas Lab Partners. Investors should weigh the strong headline earnings and cash returns against soft organic volume, continued reimbursement pressure (Medicare clinical lab fee schedule cut 0.75% in 2014, with management expecting 1-2% annual declines), a 2013 operating cash flow drop to $652 million, and pending legal matters including Medicaid overcharge suits and the Myriad BRCA patent dispute.
Feb 18, 2014
2012
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2012
Quest Diagnostics (DGX) reported 2012 net revenues of $7.38 billion, essentially flat versus 2011 ($7.39 billion), with diagnostic information services (DIS) at about 92% of revenue. Operating income rose 22% to $1.20 billion (16.3% margin vs. 13.4%), but the improvement is largely the result of comparison effects: 2011 included a $236 million Medi-Cal settlement charge. Income from continuing operations increased 37% to $630 million, or $3.92 diluted EPS, while net income attributable to Quest fell to $556 million ($3.46 diluted) after a $74 million loss from discontinued operations, mainly the $78 million HemoCue goodwill impairment. Underlying organic volume was roughly flat (requisitions up 0.2%), so the year's earnings gains depended more on cost reduction than on top-line growth. Management launched a five-point strategy centered on refocusing on core diagnostic information services, the Invigorate cost program ($600 million run-rate savings by the end of 2014, with an aspiration of $1 billion), and Project Restore to restore revenue growth. The company is simplifying its organization by eliminating three management layers and roughly 400 to 600 management positions by the end of 2013. It sold OralDNA and agreed in February 2013 to sell HemoCue for about $300 million, with proceeds earmarked for roughly $300 million of share repurchases. Leverage was reduced to a target debt/EBITDA of 2 to 2.25 times, and the quarterly dividend was raised 76% to $0.30 per share, which the company expects to grow over time. Key risks include continued reimbursement pressure (the 2013 Medicare Clinical Laboratory Fee Schedule decreases 2.95%, before sequestration), potential FDA regulation of laboratory-developed tests, competition from hospital-affiliated labs, health plan consolidation, ongoing government and qui tam investigations, and execution risk in the restructuring. Total debt was about $3.4 billion at year-end, and the company remains investment grade.
Feb 27, 2013
2011
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2011
Quest Diagnostics (DGX) enters 2012 as the world's largest commercial clinical testing company, reporting 2011 net revenues of $7.51 billion (up 1.9%, with the Athena and Celera acquisitions contributing 2.2 points) on roughly 146 million test requisitions. Underlying performance weakened: clinical testing volume was essentially flat, revenue per requisition rose only 1.1%, and operating income fell 23% to $995 million (13.2% of revenue vs. 17.6% in 2010). Diluted EPS from continuing operations declined 27.8% to $2.93, though that figure absorbs a $236 million pre-tax charge (about $1.22 per share) to settle the California Medi-Cal lawsuit, plus restructuring, acquisition and CEO-succession costs. Excluding these one-time items, the decline reflects softer physician office visits, higher employee compensation costs and investments in sales and service. Capital allocation is the main shift in strategy. Management plans to use most free cash flow in 2012 to pay down debt, targeting a debt/EBITDA ratio of 2 to 2.25 times, and expects to return a majority of free cash flow to shareholders afterward. The quarterly dividend was raised 70% to $0.17, and a further $1.0 billion repurchase authorization brings the total to $1.1 billion. Total debt rose to about $4.0 billion after roughly $1.1 billion of acquisitions and $935 million of buybacks in 2011, and the company announced a $500 million operating cost reduction program through 2014. Management says large acquisitions are unlikely near term. Key risks for investors include continued reimbursement pressure from health plans and government payers (Medicare clinical lab fees were cut 1.75% for five years under healthcare reform), growing FDA scrutiny of laboratory-developed tests, billing and fraud enforcement, including a Senate inquiry and several qui tam and state Medicaid suits, and the lack of a permanent CEO at the time of filing. The company reports effective internal controls, and PricewaterhouseCoopers issued an unqualified opinion dated February 16, 2012.
Feb 16, 2012
2010
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2010
Quest Diagnostics, a leader in diagnostic testing, reported $7.4 billion in net revenues for the fiscal year ended December 31, 2010. The company's strategy focuses on leveraging its extensive assets, driving medical innovation, delivering a superior patient experience, and maintaining high quality through Six Sigma processes. Significant investments in healthcare information technology, such as the Care360 suite, are aimed at improving patient care and clinician workflow, with the Care360 EHR solution receiving ONC-ATCB certification. The company operates in a competitive market influenced by healthcare reform, demographic trends, and technological advancements. Quest Diagnostics' diverse revenue streams include clinical testing (91% of 2010 revenues), life insurer services, clinical trials testing, diagnostic products, and employer services. Despite a slight decrease in net revenues compared to 2009, the company managed its costs effectively, resulting in stable operating income as a percentage of revenue, supported by reduced bad debt expenses and operational efficiencies.
Feb 16, 2011
2009
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2009
Quest Diagnostics Incorporated's 2009 Form 10-K highlights a company firmly established as the world leader in diagnostic testing, information, and services. For the fiscal year ended December 31, 2009, the company reported net revenues of $7.5 billion, processing approximately 148 million test requisitions. Quest Diagnostics' strategy focuses on delivering a superior patient experience, driving quality through Six Sigma, leveraging its extensive assets, and leading in medical innovation and IT solutions. The company detailed its growth in specialized testing areas like gene-based and esoteric testing, and anatomic pathology, noting significant strength in cancer diagnostics following the acquisition of AmeriPath. Financially, the company demonstrated resilience, with income from continuing operations growing to $730 million, or $3.88 per diluted share, up from $632 million, or $3.22 per diluted share, in 2008. This growth was supported by improved operating performance, lower interest expenses, and actions to enhance operational efficiency. The company also continued its commitment to shareholder returns through dividends and share repurchases. Despite economic challenges, Quest Diagnostics maintained a strong market position, driven by its comprehensive test menu, extensive network, and commitment to innovation and quality.
Feb 17, 2010
2008
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2008
Quest Diagnostics (DGX) reported a solid 2008 with net revenues of $7.25 billion, up 8.1% year over year, and income from continuing operations of $632 million, or $3.23 per diluted share, up from $2.84 in 2007. Growth was driven by the full-year contribution of the May 2007 AmeriPath acquisition (about 5 points of growth), a 5.5% increase in revenue per requisition, and a cost-reduction program that management says has already delivered over $300 million of annualized savings, with a target of $500 million by the end of 2009. Operating margin improved to 16.9% from 16.3%. Net income was $581 million after a $51 million loss from discontinued operations tied to the NID investigation. The most important overhang for investors is the NID matter, a federal settlement in principle that carries a $316 million reserve recorded in discontinued operations, with the final terms and a corporate integrity agreement still pending. Volume pressure is also visible: requisitions rose only 2.7%, with pre-employment drug testing down about 11%, and the company flagged reimbursement pressure from Medicare, health plans, and possible competitive bidding. Balance sheet deleveraging continued, with total debt down about $876 million since the AmeriPath deal to $3.08 billion, and free cash flow strengthened as operating cash flow reached $1.06 billion against $213 million of capex. The company also authorized an additional $500 million share repurchase in January 2009.
Feb 17, 2009
2007
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2007
Quest Diagnostics (DGX) closed 2007 as the largest U.S. clinical testing provider, with net revenues of $6.70 billion, up 7.0% from $6.27 billion in 2006. Growth was driven by the May 2007 AmeriPath acquisition (about 8 points of revenue growth) and the HemoCue, Focus Diagnostics and Enterix acquisitions (about 1.7 points). These gains were offset by the loss of its contracted-provider status with UnitedHealthcare (UNH), which reduced clinical testing volume about 7% and revenue growth by about 5%. Requisition volume fell 4.1% for the year. Operating margin fell to 16.3% from 18.0%, and diluted EPS from continuing operations dropped to $2.84 from $3.14. The headline GAAP figure is weaker than the continuing-operations results. Net income fell to $340 million ($1.74 diluted EPS) from $586 million, mainly because of a $241 million pre-tax reserve (about $214 million after tax, $1.10 per share) for the government investigation related to its former NID test-kit subsidiary (the parathyroid hormone matter). The company says eventual losses could substantially exceed that reserve. Management also reported an effective internal control assessment, though it excluded AmeriPath and HemoCue from scope. The balance sheet changed materially. Long-term debt rose to $3.38 billion from $1.24 billion, funding about $1.5 billion in acquisitions. Goodwill reached $5.22 billion, roughly 61% of total assets of $8.57 billion. Operating cash flow was steady at $927 million, and capital expenditures were $219 million. Management guided to $280-300 million of 2008 capital spending, a $500 million cost-reduction program announced in July 2007, and a focus on debt reduction and integration rather than large acquisitions. Key risks include Medicare competitive bidding (a San Diego pilot starting July 2008), payer consolidation, and the open government investigations.
Feb 22, 2008
2006
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2006
Quest Diagnostics' 2006 Form 10-K shows a company at a transition point. Net revenues grew 15% to $6.27 billion, operating income rose to $1.13 billion (18.0% margin, including $55 million of stock-based compensation and $27 million of integration charges), and income from continuing operations reached $626 million, or $3.14 per diluted share. Operating cash flow was $952 million. Growth was driven by the LabOne acquisition (about 8 points of growth), organic clinical testing volume and higher revenue per requisition from a shift toward esoteric and gene-based tests, which generated over $1 billion in revenue and grew more than 10%. The central investor concern is the loss of UnitedHealthcare (UNH) as a contracted payer effective January 1, 2007. UNH accounted for about 7% of 2006 net revenues, with some regional labs at 15-20% concentration. Management expects this and a Horizon BCBS New Jersey change to reduce 2007 revenue growth by 7-10%. Because roughly 40% or more of costs are fixed, management does not expect cost cuts to fully offset the profit decline, and it guides to 2007 revenue and earnings below 2006 levels with a return to growth in 2008. Investors should also weigh rising fixed-cost pressure, Medicare and Medicaid reimbursement risk, and an open federal investigation involving NID, the test-kit subsidiary that was discontinued in 2006. Strategically, the company is building a near-patient testing platform through the Focus Diagnostics, Enterix and HemoCue acquisitions. HemoCue, closed January 31, 2007 for about $420 million including assumed debt, was financed with a $450 million one-year term loan, which raises refinancing and leverage questions for 2007. Total debt was about $1.56 billion at year-end 2006.
Mar 1, 2007
2005
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2005
Quest Diagnostics Incorporated's 2005 10-K report highlights a year of significant growth and strategic acquisitions, positioning the company as a leader in the diagnostic testing industry. The company reported substantial net revenues of $5.5 billion, driven by a 7.4% increase, bolstered by the acquisition of LabOne, Inc. for $947 million, which expanded its service offerings into health screening and risk assessment for the life insurance sector. Organic growth within its core clinical testing business remained strong, with testing volumes increasing by 4.4% and average revenue per requisition improving by 2.3%, attributed to a favorable shift in test mix towards higher-value esoteric and gene-based testing. The company continues to invest in differentiating factors such as Six Sigma quality initiatives, unparalleled access and distribution networks, and advanced information technology solutions like its Care360 platform. While facing industry-wide pressures on reimbursement rates and increasing competition, Quest Diagnostics is well-positioned to capitalize on long-term industry growth trends, including an aging population and advancements in genomics. The company also maintained a strong financial position, with significant cash flows from operations and available borrowing capacity to fund future growth initiatives, including ongoing strategic acquisitions.
Feb 28, 2006
2004
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2004
Quest Diagnostics (DGX) closed 2004 with net revenues of $5.13 billion, up 8.2% year over year, and net income of $499 million, up about 14% from $437 million in 2003. Diluted EPS was $4.69 versus $4.04. Pro forma revenue growth was 6.7%, and pro forma testing volume rose 3.2%. Operating margin improved to 17.4% from 16.8%, driven by Six Sigma efficiencies, higher average revenue per requisition (up 2.6%), and a shift toward gene-based and esoteric testing, which the company says generated about $600 million in revenue and is growing over 10% annually. Operating cash flow rose to $799 million, and days sales outstanding improved to 47 days. Capital was returned to shareholders aggressively. Quest repurchased about 8.3 million shares for $735 million in 2004, including a $254 million buyback from GlaxoSmithKline, and it initiated its first quarterly dividend in late 2003 (raised to $0.18 per quarter in January 2005). Share repurchase authorization was expanded by $350 million in January 2005 to $512 million. Leverage was reduced: long-term debt fell to $724 million from $1.03 billion, largely because the 1.75% contingent convertible debentures were called and converted in January 2005. Key risks remain substantial. Medicare and Medicaid made up about 17% of revenue, reimbursement faces ongoing pressure from fee-schedule limits, proposed OIG 'usual charges' rules, and possible competitive bidding, and the company is cooperating with a federal subpoena on parathyroid hormone testing and facing qui tam suits. Healthcare insurers account for roughly half of revenue, and their capitation and non-exclusive contracting trends are pressuring pricing. Note that the Florida Medicaid competitive bid was withdrawn in February 2005. Goodwill of $2.5 billion, about 60% of total assets, is also a sensitive exposure if performance weakens.
Mar 10, 2005
2003
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2003
Quest Diagnostics (DGX) reported a strong 2003, with net revenues of $4.74 billion (up 15.3% from $4.11 billion), net income of $437 million (up 36% from $322 million), and diluted EPS of $4.12 (up from $3.23). Growth was driven largely by the February 2003 Unilab acquisition, which contributed ten months of results, but management reported pro forma revenue growth of 4.3% and pro forma testing volume that declined 1.2%. Operating margin expanded to 16.8% from 14.4%, supported by Six Sigma and standardization efficiencies, a lower SG&A ratio (24.6% vs. 26.2%), and a bad debt improvement to 4.8% of revenue. Gene-based testing, which exceeded $500 million in revenue and grew more than 20%, was a key mix driver of higher revenue per requisition. The balance sheet expanded materially: total assets rose to $4.30 billion and goodwill to $2.52 billion, while long-term debt increased to $1.03 billion. The company repurchased 4.0 million shares for $258 million, initiated its first-ever quarterly dividend of $0.15 per share, and generated $663 million in operating cash flow. Management noted that Medicare and Medicaid represent about 17% of revenue, that the 2004 Medicare fee schedule inflation adjustment was eliminated, and that a proposed OIG usual-charges rule and pending CMS reforms could pressure reimbursement. The company also has an ongoing set of government investigations and qui tam claims, and the CEO succession from Kenneth Freeman to Surya Mohapatra is scheduled for the May 2004 annual meeting.
Feb 27, 2004
2002
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2002
Quest Diagnostics (DGX) reported a strong 2002: net revenues rose 13.2% to $4.11 billion, and net income more than doubled to $322 million ($3.23 diluted EPS), up from $162 million in 2001. Management attributes the improvement to revenue growth from higher testing volume and better average revenue per requisition, the AML acquisition, Six Sigma and standardization efficiencies, lower bad debt (5.3% of revenue vs. 6.0%), and lower net interest expense. Adjusted for the end of goodwill amortization under SFAS 142, 2002 earnings still rose about 44% over the adjusted 2001 figure. Operating cash flow reached $596 million, and days sales outstanding fell to 49 from 54, while debt stayed near $800 million and stockholders' equity climbed to $1.77 billion. The major forward-looking event is the February 28, 2003 acquisition of Unilab Corporation, California's leading independent clinical lab. The deal involved about 7.4 million shares, $297 million in cash, and repayment of most of Unilab's debt through a new $450 million term loan. Management expects $25-30 million in annual synergies by end-2005 against up to $20 million in integration costs during 2003-2004. A required divestiture of certain northern California assets to LabCorp, worth about $27 million in annual revenue, is a partial offset. The filing also flags meaningful risks: roughly half of revenue depends on managed care contracts that are becoming more price-competitive, Medicare and Medicaid make up about 15% of revenue under complex billing rules, and the company has a history of government investigations and qui tam claims. Management guides to industry revenue growth of about 5-7% annually, with the low end expected in the near term.
Feb 28, 2003
2000
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 2000
Quest Diagnostics (DGX) reported FY2000 net revenues of $3.42 billion, up from $2.21 billion in 1999, driven mainly by the August 1999 acquisition of SmithKline Beecham Clinical Laboratories (SBCL). Net income swung to $102.1 million ($2.16 diluted EPS) from a $3.4 million loss in 1999. Excluding special items and extraordinary losses, income rose to $106.2 million from $41.2 million. Adjusted EBITDA reached $459.4 million, or 13.4% of net revenues, versus $237.0 million (11.2%) a year earlier. Operating cash flow was $369.5 million, and the company prepaid $155 million of bank term loans during the fourth quarter. The balance sheet is considerably healthier. Long-term debt fell to $760.7 million from $1,171.4 million, supported by a $256 million receivables-backed financing completed in July 2000, and common equity rose to $1.03 billion. Management points to roughly $150 million in targeted annual SBCL synergies (about $50 million achieved in 2000 and an additional $50 to $70 million expected in 2001), and it projects earnings growth above 30% annually before special charges. Integration is about 85% complete, with principal laboratory consolidation expected in early Q2 2001 and the full process possibly running to 2003. Key risks remain. Bad debt expense rose to 7.0% of revenue, and the company faces pending private billing claims and class actions tied to SBCL, with reserves of about $88 million. Medicare reimbursement is also a live concern: the Medicare share of revenue has declined from 20% in 1995 to 13% in 2000, and proposals on coinsurance, competitive bidding, and carrier consolidation could pressure fees. Investors should also note that the 2-for-1 stock split approved in February 2001 has not yet been reflected in per-share figures.
Apr 2, 2001
1998-A
QUEST DIAGNOSTICS INC Annual Report (Amendment), Year Ended Dec 31, 1998
This is Amendment No. 1 to Quest Diagnostics' (DGX) Form 10-K for fiscal 1998, filed April 30, 1999. It amends only Part III (Items 10 through 13) and contains no financial statements, revenue, earnings, or balance sheet data, so investors should not draw financial conclusions from it. The filing covers the board of directors, executive officers, executive pay, stock ownership, and related-party arrangements. As of February 28, 1999, there were 30,044,753 common shares outstanding and non-affiliate market value of about $636 million. Governance and pay are the main takeaways. The board is split into three classes, and Kenneth W. Freeman serves as Chairman, CEO, and President. His 1998 compensation was a $500,000 base salary, a $460,000 bonus, and options on 180,000 shares. He also holds an employment agreement through December 31, 1999, with generous severance and change-of-control protections. Many executive options fully vest when the pending purchase of SmithKline Beecham Clinical Laboratories closes, which links a meaningful part of management's equity to completion of that transaction. Ownership is concentrated among institutional holders. Wellington Management (10.3%), FMR Corp. (10.2%), and Mellon Bank (9.4%) are the largest holders. All directors and executive officers together hold about 2.9%. Corning Incorporated, which spun off Quest in 1996, owns all 1,000 outstanding preferred shares and continues to indemnify Quest for certain pre-1997 government and private billing claims, subject to limits and arbitration provisions. Corning also remains party to a tax sharing agreement covering 1996 and prior years.
Apr 30, 1999
1998
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 1998
Quest Diagnostics (DGX) reported modest recovery in its 1998 10-K: net revenues fell 4.6% to $1.459 billion (from $1.529 billion) on a 7.2% decline in base clinical testing volume, partly offset by a 2.5% increase in average revenue per requisition. Profitability improved sharply as the company lapped prior-year charges: net income was $26.9 million ($0.89 diluted EPS) versus a net loss of $22.3 million in 1997, cost of services fell to 59.0% of revenues from 60.7%, bad debt expense dropped to 6.1% of revenues, and Adjusted EBITDA rose to $158.6 million (10.9% of revenues). Operating cash flow was $141.4 million, days sales outstanding improved to 58 from 63, and total debt was reduced to $465 million (current plus long-term), though it remains high relative to the company's size. The dominant event is the pending $1.3 billion acquisition of SmithKline Beecham's clinical laboratory business (about $1.025 billion cash plus 12.6 million shares), expected to close by July 1999. If completed, SmithKline Beecham would own roughly 29.5% of Quest, debt would rise to about $1.4 billion, and Quest would become the largest U.S. clinical laboratory. Management guides to an adverse impact on second-half 1999 profitability and accretion in 2000 before transaction charges, and the deal depends on stockholder approval and financing for the cash portion. Investors should weigh the improved earnings and cash generation against several risks: a regulatory overhang (a five-year corporate integrity agreement, ongoing Nichols Institute government investigations, qui tam suits, and reserves of $52.6 million, largely indemnified by Corning), declining Medicare reimbursement, pricing pressure from managed care capitation, Year 2000 exposure with estimated remaining costs of $40-60 million, and integration risk from the SmithKline Beecham transaction. The company paid no dividends and its credit agreement prohibits them.
Mar 31, 1999
1997
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 1997
Quest Diagnostics (DGX), one of the three national independent clinical laboratories in the U.S., reported a 1997 net loss of $22.3 million ($0.77 per share), a sharp improvement from the $626.0 million loss in 1996, which was driven by large special charges including a $445 million intangible asset write-down and $188 million in government-claim reserves. Net revenues fell 5.4% to $1.53 billion as base clinical testing volume declined 7.3%, partly offset by a 2.9% rise in average prices, the first average price increase since 1992. Adjusted EBITDA was $153.8 million (10.1% of revenue), down from $166.4 million, and management cites a shift away from low-margin managed care and capitated business as a deliberate trade-off for pricing. The balance sheet improved in liquidity: cash rose to $161.7 million, operating cash flow was $176.3 million, and days sales outstanding fell to 63 from 73. Long-term debt was $482 million, and stockholders' equity was roughly flat at $541.7 million. Management is forecasting continued volume pressure in 1998, plus a Medicare fee-schedule cut to 74% of the 1984 median and an April 1998 switch to new AMA chemistry panels that it expects to hurt revenue, partly offset by expected cost savings from facility consolidations (over $20 million in annual benefits by 1999) and a Year 2000 program estimated at $60 to $70 million, partly capitalized. Investors should weigh the regulatory and legal overhang. The company remains under open government investigations, including the Nichols Institute matter and a Damon joint venture probe, with a $76 million reserve for government and private claims. Corning has agreed to indemnify many pre-1997 government claims, but not private claims after 2001 or litigation expenses. The company does not expect to pay dividends, and its credit agreement restricts them.
Mar 20, 1998
1997-A
QUEST DIAGNOSTICS INC Annual Report (Amendment), Year Ended Mar 31, 1997
This is Amendment No. 1 to Quest Diagnostics' (formerly Corning Clinical Laboratories) 10-K for fiscal 1996. It restates only Part III (directors, executive compensation, security ownership, and related-party transactions) and contains no financial statements, so it offers little on operating results or balance sheet. Investors should read it mainly as governance and transaction disclosure from the company's December 31, 1996 spin-off from Corning Incorporated. As of March 31, 1997, about 29.4 million common shares were outstanding, and non-affiliate market value was roughly $432 million. Corning still held all 1,000 shares of voting cumulative preferred stock. The spin-off and its financing reshaped the company. In the fourth quarter of 1996, Quest borrowed under a new Credit Agreement and issued 10.75% senior subordinated notes due 2006, then paid Corning about $495 million from the proceeds. Corning contributed about $712 million, mostly by forgiving intercompany debt, and funded a $119.1 million Damon settlement. Corning also agreed to indemnify Quest for most government fraud and billing penalties tied to pre-distribution periods, and for half of private overbilling settlements above $42.0 million, capped at $25.0 million and lasting five years. Those protections do not cover post-distribution billing claims. The filing also flags restrictions that matter for future corporate actions. For two years after the distribution, Quest must keep operating its clinical laboratory business and must not take actions such as large equity issuances, repurchases, mergers, or changes to its rights plan that could trigger tax problems for the spin-off. Quest also indemnifies Corning for taxes if those restrictions are breached, and that exposure could exceed the company's net asset value. Compensation terms are also significant: CEO Kenneth Freeman's employment agreement and change-of-control severance policy could generate large payments.
Apr 29, 1997
1996
QUEST DIAGNOSTICS INC Annual Report, Year Ended Dec 31, 1996
Quest Diagnostics (DGX) reported a deeply loss-making 1996 as it emerged as an independent public company from Corning via the December 31, 1996 Spin-Off Distribution. Net revenues were roughly flat at $1.62 billion (down about 0.8% from $1.63 billion), but the company posted a net loss of $626.0 million, driven primarily by a $445 million non-cash write-down of intangible assets (adopted under a new fair-value impairment policy), $223.6 million in restructuring and special charges (including $119 million Damon billing settlement-related reserves and a $13.7 million software write-off), and bad debt expense that, while reduced from 1995, remained elevated at $111 million. Adjusted EBITDA fell to $166.4 million (10.3% of revenue) from $176.5 million, with price declines of roughly 3% from managed care shifts and Medicare fee cuts. The balance sheet was substantially reshaped by the recapitalization. Long-term debt fell to $515 million from $1.2 billion, following a $350 million term loan, $150 million of 10.75% senior subordinated notes, and about $862 million of capital contributed by Corning, which forgave intercompany debt and funded the Damon settlement. Stockholders' equity rebounded to $539 million from $296 million. Corning also agreed to indemnify the company for most pre-1997 government billing claims, though the company retains exposure to non-indemnified private claims and the open Nichols investigation. Management's forward-looking commentary points to lower interest and amortization expense in 1997, improved cash flow predictability, and a goal of becoming the lowest-cost, highest-quality provider, although cost savings are targeted mainly for 1998. The company does not expect to pay dividends.
Mar 19, 1997