BUSINESS SEGMENT INFORMATION

6 Months Ended

Jun. 30, 2011

Business Segment Information

Business segment information

14.          BUSINESS SEGMENT INFORMATION

Clinical testing is an essential element in the delivery of healthcare services. Physicians use clinical tests to assist in the detection, diagnosis, evaluation, monitoring and treatment of diseases and other medical conditions. Clinical testing is generally categorized as clinical laboratory testing and anatomic pathology services. Clinical laboratory testing is performed on whole blood, serum, plasma and other body fluids, such as urine, and specimens such as microbiology samples.  Anatomic pathology services are principally for the detection of cancer and are performed on tissues, such as biopsies, and other samples, such as human cells. Customers of the clinical testing business include patients, physicians, hospitals, employers, governmental institutions and other commercial clinical laboratories. The clinical testing business accounted for greater than 90% of net revenues from continuing operations in 2011 and 2010.

All other operating segments include the Company's non-clinical testing businesses and consist of its risk assessment services, clinical trials testing, healthcare information technology and diagnostics products businesses.  The Company's risk assessment business provides underwriting support services to the life insurance industry including teleunderwriting, specimen collection and paramedical examinations, laboratory testing, medical record retrieval, case management, motor vehicle reports, telephone inspections, prescription histories and credit checks.  The Company's clinical trials testing business provides clinical testing performed in connection with clinical research trials on new drugs, vaccines and certain medical devices.  The Company's healthcare information technology business is a developer and integrator of clinical connectivity and data management solutions for healthcare organizations, physicians and clinicians than can help improve patient care and medical practice.  The Company's diagnostics products business manufactures and markets products that enable healthcare professionals to make healthcare diagnoses, including products for point-of-care testing for the professional market.  During the second quarter of 2011, the Company acquired Athena and Celera (see Note 4 for further details).  Athena is included in the Company's clinical laboratory testing business.  The majority of Celera's operations are included in the Company's clinical laboratory testing business, with the remainder in other operating segments.

On April 19, 2006, the Company decided to discontinue NID's operations and results of operations for NID have been classified as discontinued operations for all periods presented (see Note 13).

At June 30, 2011, substantially all of the Company's services are provided within the United States, and substantially all of the Company's assets are located within the United States.

The following table is a summary of segment information for the three and six months ended June 30, 2011 and 2010.  Segment asset information is not presented since it is not used by the chief operating decision maker at the operating segment level.  Operating earnings (loss) of each segment represents net revenues less directly identifiable expenses to arrive at operating income for the segment.  General management and administrative corporate expenses, including amortization of intangible assets and the charge to earnings in the first quarter of 2011 of $236 million related to the settlement of the California Lawsuit (see Note 12), are included in general corporate expenses below.  The accounting policies of the segments are the same as those of the Company as set forth in Note 2 to the Consolidated Financial Statements contained in the Company's 2010 Annual Report on Form 10-K and Note 2 to the interim consolidated financial statements.

	Three Months Ended June 30,		Six Months Ended June 30,
	2011	2010	2011	2010
Net revenues:
Clinical laboratory testing business	$  1,726,948	$ 1,715,112	$  3,389,113	$ 3,372,179
All other operating segments	176,253	159,615	335,665	308,051
Total net revenues	$  1,903,201	$ 1,874,727	$  3,724,778	$ 3,680,230
Operating earnings (loss):
Clinical laboratory testing business	$     373,748	$    390,216	$     684,032	$    731,101
All other operating segments	14,766	16,944	22,625	18,506
General corporate expenses	(71,660)	(41,266)	(358,843)	(85,151)
Total operating income	316,854	365,894	347,814	664,456
Non-operating expenses, net	(39,058)	(36,101)	(67,080)	(58,080)
Income from continuing operations before taxes..	277,796	329,793	280,734	606,376
Income tax expense	105,762	125,651	154,988	231,029
Income from continuing operations	172,034	204,142	125,746	375,347
Loss from discontinued operations, net of taxes..	(507)	(266)	(881)	(318)
Net income	171,527	203,876	124,865	375,029
Less: Net income attributable to noncontrolling interests	8,384	9,261	15,583	17,966
Net income attributable to Quest Diagnostics	$     163,143	$    194,615	$     109,282	$    357,063