Summary
Quest Diagnostics (DGX) hosted an Investor Day on March 11, 2021, providing an updated long-term outlook and strategic initiatives designed to drive shareholder value. Key takeaways include an expectation for base business revenues to fully recover by the end of 2021, with projected compound annual growth rates (CAGR) for the base business between 4-5% and for the total company's adjusted diluted EPS between 7-9% from 2022-2024. While COVID-19 testing revenues are expected to decline meaningfully in 2022, the company is focused on strategic growth areas and operational excellence. Management outlined several strategic initiatives, including expanding access to commercially insured lives, strengthening hospital relationships, growing advanced diagnostics and consumer testing, and utilizing acquisitions to drive base business growth. Quest Diagnostics also reiterated its commitment to operational excellence, targeting annual savings of approximately 3%, and its capital deployment strategy, which prioritizes returning a majority of free cash flow to shareholders through dividends and share repurchases, with a planned $900 million in share repurchases in the first half of 2021. The company's outlook for the first half of 2021 remains unchanged.
Key Highlights
- 1Base business revenues are expected to fully recover by the end of 2021.
- 2Projected base business revenue CAGR of 4-5% for 2022-2024.
- 3Projected total company adjusted diluted EPS CAGR of 7-9% for 2022-2024.
- 4COVID-19 testing revenues are anticipated to step down meaningfully in 2022.
- 5Strategic focus on expanding access, advanced diagnostics, consumer testing, and hospital partnerships.
- 6Commitment to operational excellence with a goal of 3% annual savings.
- 7Planned $900 million in share repurchases in the first half of 2021, emphasizing capital return to shareholders.