10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2019

Commission file number 001-12215

Quest Diagnostics Incorporated

500 Plaza Drive

Secaucus, NJ 07094

(973) 520-2700

Delaware

(State of Incorporation)

16-1387862

(I.R.S. Employer Identification Number)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o
	Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of April 12, 2019, there were outstanding 134,375,081 shares of the registrant’s common stock, $.01 par value.

PART I - FINANCIAL INFORMATION

		Page
Item 1. Financial Statements
	Index to unaudited consolidated financial statements filed as part of this report:
	Consolidated Statements of Operations for the Three Months Ended March 31, 2019 and 2018	2
	Consolidated Statements of Comprehensive Income for the Three Months Ended March 31, 2019 and 2018	3
	Consolidated Balance Sheets as of March 31, 2019 and December 31, 2018	4
	Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2019 and 2018	5
	Consolidated Statements of Stockholders’ Equity for the Three Months Ended March 31, 2019 and 2018	6
	Notes to Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
Item 3. Quantitative and Qualitative Disclosures About Market Risk
	See Item 2. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”	37
Item 4. Controls and Procedures
	Controls and Procedures	37

1

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018

(unaudited)

(in millions, except per share data)

	Three Months Ended March 31,
	2019			2018
Net revenues	$	1,891		$	1,884
Operating costs and expenses and other operating income:
Cost of services	1,244			1,226
Selling, general and administrative	384			363
Amortization of intangible assets	24			22
Other operating (income) expense, net	(9		)	1
Total operating costs and expenses, net	1,643			1,612
Operating income	248			272
Other income (expense):
Interest expense, net	(44		)	(41		)
Other income (expense), net	9			(2		)
Total non-operating expenses, net	(35		)	(43		)
Income before income taxes and equity in earnings of equity method investees	213			229
Income tax expense	(50		)	(52		)
Equity in earnings of equity method investees, net of taxes	13			12
Net income	176			189
Less: Net income attributable to noncontrolling interests	12			12
Net income attributable to Quest Diagnostics	$	164		$	177
Earnings per share attributable to Quest Diagnostics’ common stockholders:
Basic	$	1.22		$	1.30
Diluted	$	1.20		$	1.27
Weighted average common shares outstanding:
Basic	134			136
Diluted	136			139

The accompanying notes are an integral part of these statements.

2

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018

(unaudited)

(in millions)

	Three Months Ended March 31,
	2019		2018
Net income	$	176	$	189
Other comprehensive income:
Currency translation	4		6
Net deferred loss on cash flow hedges, net of taxes	—		1
Other comprehensive income	4		7
Comprehensive income	180		196
Less: Comprehensive income attributable to noncontrolling interests	12		12
Comprehensive income attributable to Quest Diagnostics	$	168	$	184

The accompanying notes are an integral part of these statements.

3

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

MARCH 31, 2019 AND DECEMBER 31, 2018

(unaudited)

(in millions, except per share data)

	March 31, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	464		$	135
Accounts receivable, net of allowance for doubtful accounts of $17 and $15 as of March 31, 2019 and December 31, 2018, respectively	1,079			1,012
Inventories	98			99
Prepaid expenses and other current assets	137			144
Total current assets	1,778			1,390
Property, plant and equipment, net	1,277			1,288
Operating lease right-of-use assets	497			—
Goodwill	6,605			6,563
Intangible assets, net	1,200			1,207
Investment in equity method investees	454			436
Other assets	126			119
Total assets	$	11,937		$	11,003
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses	$	1,029		$	1,021
Current portion of long-term debt	1,108			464
Current portion of long-term operating lease liabilities	145			—
Total current liabilities	2,282			1,485
Long-term debt	3,131			3,429
Long-term operating lease liabilities	393			—
Other liabilities	713			745
Commitments and contingencies
Redeemable noncontrolling interest	77			77
Stockholders’ equity:
Quest Diagnostics stockholders’ equity:
Common stock, par value $0.01 per share; 600 shares authorized as of both March 31, 2019 and December 31, 2018; 217 shares issued as of both March 31, 2019 and December 31, 2018	2			2
Additional paid-in capital	2,671			2,667
Retained earnings	7,694			7,602
Accumulated other comprehensive loss	(55		)	(59		)
Treasury stock, at cost; 83 shares and 82 shares as of March 31, 2019 and December 31, 2018, respectively	(5,022		)	(4,996		)
Total Quest Diagnostics stockholders’ equity	5,290			5,216
Noncontrolling interests	51			51
Total stockholders’ equity	5,341			5,267
Total liabilities and stockholders’ equity	$	11,937		$	11,003

The accompanying notes are an integral part of these statements.

4

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018

(unaudited)

(in millions)

	Three Months Ended March 31,
	2019			2018
Cash flows from operating activities:
Net income	$	176		$	189
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	84			74
Provision for doubtful accounts	4			3
Deferred income tax provision	3			24
Stock-based compensation expense	17			19
Other, net	(18		)	(1		)
Changes in operating assets and liabilities:
Accounts receivable	(71		)	(97		)
Accounts payable and accrued expenses	32			(68		)
Income taxes payable	43			5
Other assets and liabilities, net	5			32
Net cash provided by operating activities	275			180
Cash flows from investing activities:
Business acquisitions, net of cash acquired	(56		)	(130		)
Capital expenditures	(47		)	(73		)
Increase in investments and other assets	(7		)	(1		)
Net cash used in investing activities	(110		)	(204		)
Cash flows from financing activities:
Proceeds from borrowings	1,139			935
Repayments of debt	(802		)	(832		)
Purchases of treasury stock	(53		)	(50		)
Exercise of stock options	20			34
Employee payroll tax withholdings on stock issued under stock-based compensation plans	(15		)	(20		)
Dividends paid	(72		)	(61		)
Distributions to noncontrolling interest partners	(12		)	(15		)
Contributions from noncontrolling interest partners	—			2
Other financing activities, net	(41		)	18
Net cash provided by financing activities	164			11
Net change in cash and cash equivalents and restricted cash	329			(13		)
Cash and cash equivalents and restricted cash, beginning of period	135			137
Cash and cash equivalents and restricted cash, end of period	$	464		$	124
Cash and cash equivalents	$	464		$	124
Restricted cash	—			—
Cash and cash equivalents and restricted cash, end of period	$	464		$	124

The accompanying notes are an integral part of these statements.

5

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED MARCH 31, 2019 AND 2018

(unaudited)

(in millions)

			Quest Diagnostics Stockholders’ Equity
	Shares of Common Stock Outstanding		Common Stock		Additional Paid-In Capital			Retained Earnings			Accumulated Other Compre- hensive Loss			Treasury Stock, at Cost			Non- controlling Interests			Total Stock- holders’ Equity			Redeemable Non-controlling Interest
Balance, December 31, 2018	135		$	2	$	2,667		$	7,602		$	(59	)	$	(4,996	)	$	51		$	5,267		$	77
Net income								164									10			174			2
Other comprehensive income, net of taxes											4									4
Dividends declared								(72		)										(72		)
Distributions to noncontrolling interest partners																	(10		)	(10		)	(2		)
Issuance of common stock under benefit plans					2									4						6
Stock-based compensation expense					16									1						17
Exercise of stock options					1									19						20
Shares to cover employee payroll tax withholdings on stock issued under stock-based compensation plans					(15		)													(15		)
Purchases of treasury stock	(1	)												(50		)				(50		)
Balance, March 31, 2019	134		$	2	$	2,671		$	7,694		$	(55	)	$	(5,022	)	$	51		$	5,341		$	77
Balance, December 31, 2017	135		$	2	$	2,612		$	7,138		$	(48	)	$	(4,783	)	$	34		$	4,955		$	80
Net income								177									11			188			1
Other comprehensive income, net of taxes											7									7
Dividends declared								(66		)										(66		)
Distributions to noncontrolling interest partners																	(11		)	(11		)	(4		)
Issuance of common stock under benefit plans					4									4						8
Stock-based compensation expense					18									1						19
Exercise of stock options	1				2									32						34
Shares to cover employee payroll tax withholdings on stock issued under stock-based compensation plans					(20		)													(20		)
Purchases of treasury stock														(50		)				(50		)
Contributions from noncontrolling interest partners																	2			2
Balance, March 31, 2018	136		$	2	$	2,616		$	7,249		$	(41	)	$	(4,796	)	$	36		$	5,066		$	77

The accompanying notes are an integral part of these statements.

6

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(in millions, except per share data)

1.    DESCRIPTION OF BUSINESS

Background

Quest Diagnostics Incorporated and its subsidiaries ("Quest Diagnostics" or the "Company") empower people to take action to improve health outcomes.  The Company uses its extensive database of clinical lab results to derive diagnostic insights that reveal new avenues to identify and treat disease, inspire healthy behaviors and improve healthcare management.  The Company's diagnostic information services business ("DIS") provides information and insights based on the industry-leading menu of routine, non-routine and advanced clinical testing and anatomic pathology testing, and other diagnostic information services. The Company provides services to a broad range of customers, including patients, clinicians, hospitals, independent delivery networks ("IDNs"), health plans, employers and accountable care organizations ("ACOs"). The Company offers the broadest access in the United States to diagnostic information services through its nationwide network of laboratories, patient service centers and phlebotomists in physician offices and the Company's connectivity resources, including call centers and mobile paramedics, nurses and other health and wellness professionals. The Company is the world's leading provider of diagnostic information services. The Company provides interpretive consultation with one of the largest medical and scientific staffs in the industry and hundreds of M.D.s and Ph.D.s, many of whom are recognized leaders in their fields. The Company's Diagnostic Solutions businesses ("DS") are the leading provider of risk assessment services for the life insurance industry and offer healthcare organizations and clinicians robust information technology solutions.

2.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The interim unaudited consolidated financial statements reflect all adjustments which in the opinion of management are necessary for a fair statement of results of operations, comprehensive income, financial condition, cash flows and stockholders' equity for the periods presented. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s 2018 Annual Report on Form 10-K. The year-end balance sheet data was derived from the audited consolidated financial statements as of December 31, 2018, but does not include all the disclosures required by accounting principles generally accepted in the United States (“GAAP”).

The accounting policies of the Company are the same as those set forth in Note 2 to the consolidated financial statements contained in the Company’s 2018 Annual Report on Form 10-K except for the impact of the adoption of new accounting standards discussed under New Accounting Pronouncements.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Earnings Per Share

The Company's unvested restricted stock units that contain non-forfeitable rights to dividends are participating securities and, therefore, are included in the earnings allocation in computing earnings per share using the two-class method. Basic earnings per common share is calculated by dividing net income, adjusted for earnings allocated to participating securities, by the weighted average number of common shares outstanding. Diluted earnings per common share is calculated by dividing net income, adjusted for earnings allocated to participating securities, by the weighted average number of common shares outstanding after giving effect to all potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include the dilutive effect of outstanding stock options and performance share units granted under the Company's Amended and Restated Employee Long-Term Incentive Plan and its Amended and Restated Non-Employee

7

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

Director Long-Term Incentive Plan. Earnings allocable to participating securities include the portion of dividends declared as well as the portion of undistributed earnings during the period allocable to participating securities.

New Accounting Pronouncements

Adoption of New Accounting Standards

On January 1, 2019, the Company adopted a new accounting standard issued by the Financial Accounting Standards Board ("FASB") on accounting for leases using the modified retrospective method. This new accounting standard requires a lessee to recognize an asset and liability for most leases on its balance sheet. The Company elected the optional transition method that allowed for a cumulative-effect adjustment to the opening balance of retained earnings recorded on January 1, 2019 and did not restate previously reported results in the comparative periods. The Company also elected the package of practical expedients, which among other things, allowed it to carry forward its historical lease classification.

As a result of adoption of the new standard, the Company recorded operating lease assets and lease liabilities of approximately $500 million and $550 million, respectively as of January 1, 2019. The operating lease liability was determined based on the present value of the remaining minimum rental payments and the operating lease asset was determined based on the value of the lease liability, adjusted for the deferred rent balances of approximately $50 million, which were previously included in accounts payable and accrued expenses as well as other liabilities. Accounting for the Company's finance leases remains substantially unchanged. The adoption of the new standard did not materially impact the Company's consolidated results of operations or cash flows.

In addition, the adoption of this new accounting standard resulted in increased qualitative and quantitative disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases. For further details, see Note 9.

On January 1, 2019, the Company adopted a new accounting standard issued by the FASB that includes the overnight index swap rate based on the Secured Overnight Financing Rate as an additional benchmark interest rate for hedge accounting purposes. Adoption of this new accounting standard did not have an impact on the Company's existing interest rate swap agreements and it will be applied prospectively for new or redesignated hedges entered into after the adoption date.

New Accounting Standards To Be Adopted

In August 2018, the FASB issued an Accounting Standard Update (“ASU”) that aligns the requirements for deferring implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This ASU is effective for the Company in the first quarter of 2020 with early adoption permitted and can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently assessing the impact of the adoption of this ASU on the Company’s results of operations, financial position and cash flows.    

In June 2016, the FASB issued an ASU that changes the impairment model for most financial instruments, including trade receivables, from an incurred loss method to a new forward-looking approach, based on expected losses. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU is effective for the Company in the first quarter of 2020 and must be adopted using a modified retrospective transition approach. The Company is currently assessing the impact of the adoption of this ASU on the Company’s results of operations, financial position and cash flows.         

8

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

3.    EARNINGS PER SHARE

The computation of basic and diluted earnings per common share was as follows:

	Three Months Ended March 31,
	2019		2018
Amounts attributable to Quest Diagnostics’ common stockholders:
Net income attributable to Quest Diagnostics	$	164	$	177
Less: Earnings allocated to participating securities	1		1
Earnings available to Quest Diagnostics’ common stockholders – basic and diluted	$	163	$	176
Weighted average common shares outstanding – basic	134		136
Effect of dilutive securities:
Stock options and performance share units	2		3
Weighted average common shares outstanding – diluted	136		139
Earnings per share attributable to Quest Diagnostics’ common stockholders:
Basic	$	1.22	$	1.30
Diluted	$	1.20	$	1.27

The following securities were not included in the calculation of diluted earnings per share due to their antidilutive effect:

	Three Months Ended March 31,
	2019	2018
Stock options	4	2

4.    RESTRUCTURING ACTIVITIES

Invigorate Program

The Company is committed to a program called Invigorate which is designed to reduce its cost structure and improve performance. Invigorate consists of several flagship programs, with structured plans in each, to drive savings and improve performance across the customer value chain. These flagship programs include: organization excellence; information technology excellence; procurement excellence; service excellence; lab excellence; and billing excellence. In addition to these programs, the Company identified key themes to change how it operates including reducing denials and patient concessions; further digitizing the business; standardization and automation; and optimization initiatives in the areas of lab network and patient service center network. The Invigorate program is intended to partially offset reimbursement pressures and labor and benefit cost increases; free up additional resources to invest in science, innovation and other growth initiatives; and enable the Company to improve service quality and operating profitability.

9

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

Restructuring Charges

The following table provides a summary of the Company's pre-tax restructuring charges for the three months ended March 31, 2019 and 2018:

	Three Months Ended March 31,
	2019			2018
Employee separation costs	$	(3	)	$	11
Facility-related costs	—			1
Total restructuring charges	$	(3	)	$	12

The restructuring activity recorded in the three months ended March 31, 2019 represents a release of the liability relating to restructuring charges recorded in prior periods, which were determined to no longer be required. The restructuring charges incurred for the three months ended March 31, 2018 were primarily associated with various workforce reduction initiatives as the Company continued to simplify and restructure its organization. Of the total restructuring release recorded in the three months ended March 31, 2019, $(1) million and $(2) million were recorded in cost of services and selling, general and administrative expenses, respectively. Of the total restructuring charges incurred during the three months ended March 31, 2018, $4 million and $8 million were recorded in cost of services and selling, general and administrative expenses, respectively.

Charges for all periods presented were primarily recorded in the Company's DIS business.    

The restructuring liability as of March 31, 2019 and December 31, 2018, which is included in accounts payable and accrued expenses, was $26 million and $38 million, respectively.

5.     BUSINESS ACQUISITIONS

On February 11, 2019, the Company completed its acquisition of certain assets of the clinical laboratory services business of Boyce & Bynum Pathology Laboratories, P.C. ("Boyce & Bynum") in an all cash transaction for $61 million, which consisted of cash consideration of $55 million and contingent consideration estimated at $6 million. The contingent consideration arrangement is dependent upon the achievement of certain testing volume benchmarks. Based on the preliminary purchase price allocation, the assets acquired principally consist of $41 million of goodwill (of which $35 million is currently tax deductible) and $20 million of customer-related intangible assets. The intangible assets will be amortized over a useful life of 15 years. For further details regarding the fair value of the contingent consideration, see Note 6.

The acquisition was accounted for under the acquisition method of accounting. As such, the assets acquired and liabilities assumed were recorded based on their estimated fair values as of the closing date. Supplemental pro forma combined financial information has not been presented as the impact of the acquisition is not material to the Company's consolidated financial statements. The goodwill recorded primarily includes the expected synergies resulting from combining the operations of the acquired entity with those of the Company and the value associated with an assembled workforce and other intangible assets that do not qualify for separate recognition. All of the goodwill acquired in connection with the acquisition has been allocated to the Company's DIS business. For further details regarding business segment information, see Note 14.

For details regarding the Company's 2018 acquisitions, see Note 6 to the consolidated financial statements in the Company's 2018 Annual Report on Form 10-K.

10

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

6.     FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table provides a summary of the recognized assets and liabilities that are measured at fair value on a recurring basis:

			Basis of Fair Value Measurements
			Quoted Prices in Active Markets for Identical Assets / Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
March 31, 2019	Total		Level 1		Level 2		Level 3
Assets:
Trading securities	$	56	$	56	$	—	$	—
Cash surrender value of life insurance policies	39		—		39		—
Total	$	95	$	56	$	39	$	—
Liabilities:
Interest rate swaps	$	77	$	—	$	77	$	—
Deferred compensation liabilities	103		—		103		—
Contingent consideration	19		—		—		19
Total	$	199	$	—	$	180	$	19

			Basis of Fair Value Measurements
December 31, 2018	Total		Level 1		Level 2		Level 3
Assets:
Trading securities	$	53	$	53	$	—	$	—
Cash surrender value of life insurance policies	34		—		34		—
Total	$	87	$	53	$	34	$	—
Liabilities:
Deferred compensation liabilities	$	96	$	—	$	96	$	—
Interest rate swaps	93		—		93		—
Contingent consideration	14		—		—		14
Total	$	203	$	—	$	189	$	14

A detailed description regarding the Company's fair value measurements is contained in Note 8 to the consolidated financial statements in the Company's 2018 Annual Report on Form 10-K.    

The Company offers certain employees the opportunity to participate in non-qualified supplemental deferred compensation plans. A participant's deferrals, together with Company matching credits, are invested in a variety of participant-directed stock and bond mutual funds that are classified as trading securities. The trading securities are classified within Level 1 because the changes in the fair value of these securities are measured using quoted prices in active markets based on the market price per unit multiplied by the number of units held, exclusive of any transaction costs. A corresponding adjustment for changes in fair value of the trading securities is also reflected in the changes in fair value of the deferred compensation obligation. The deferred compensation liabilities are classified within Level 2 because their inputs are derived principally from observable market data by correlation to the trading securities.

11

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

The Company offers certain employees the opportunity to participate in a non-qualified deferred compensation program. A participant's deferrals, together with Company matching credits, are “invested” at the direction of the employee in a hypothetical portfolio of investments which are tracked by an administrator. The Company purchases life insurance policies, with the Company named as beneficiary of the policies, for the purpose of funding the program's liability. Changes in the cash surrender value of the life insurance policies are based upon earnings and changes in the value of the underlying investments. Changes in the fair value of the deferred compensation obligation are derived using quoted prices in active markets based on the market price per unit multiplied by the number of units. The cash surrender value and the deferred compensation obligations are classified within Level 2 because their inputs are derived principally from observable market data by correlation to the hypothetical investments. Deferrals under the plan currently may only be made by participants who made deferrals under the plan in 2017.

The fair value measurements of the Company's interest rate swaps classified within Level 2 of the fair value hierarchy are model-derived valuations as of a given date in which all significant inputs are observable in active markets including certain financial information and certain assumptions regarding past, present and future market conditions.

In December 2017, and as further discussed in Note 6 and Note 8 to the consolidated financial statements in the Company's 2018 Annual Report on Form 10-K, the Company completed the acquisition of certain assets of the clinical and anatomic pathology laboratory business of Shiel Holdings, LLC ("Shiel") which provides for up to $15 million of contingent consideration to be paid based on the achievement of certain testing volume benchmarks. In connection with the acquisition, the Company initially recorded a contingent consideration liability of $6 million which was classified within Level 3 of the fair value hierarchy. The contingent consideration was measured at fair value using an option-pricing method. Significant inputs included management's estimate of volume and other market inputs including comparable company revenue volatility of 6.9% and a discount rate of 4.5%. The estimated fair value of the contingent consideration associated with the Shiel acquisition was increased to $7 million in 2018 as a result of the remeasurement of the liability. Any contingent consideration associated with Shiel is expected to be paid in 2019.

In September 2018, and as further discussed in Note 6 and Note 8 to the consolidated financial statements in the Company's 2018 Annual Report on Form 10-K, the Company completed the acquisition of ReproSource, Inc. which provides for up to $10 million of contingent consideration to be paid based on the achievement of certain revenue targets. In connection with the acquisition, the Company initially recorded a contingent consideration liability of $5 million which was classified within Level 3 of the fair value hierarchy. The contingent consideration was measured at fair value using an option-pricing method. Significant inputs included management's estimate of revenue and other market inputs including comparable company revenue volatility of 8.5% and a discount rate of 6.5%. The contingent consideration associated with ReproSource, Inc. is expected to be paid in up to two installments in 2020 and 2021.

In February 2019, the Company completed the acquisition of certain assets of the clinical laboratory services business of Boyce & Bynum which provides for up to $25 million of contingent consideration to be paid based on the achievement of certain testing volume benchmarks. In connection with the acquisition, the Company initially recorded a contingent consideration liability of $6 million, which was classified within Level 3 of the fair value hierarchy. The contingent consideration was measured at fair value using an option-pricing method. Significant inputs included management's estimate of volume and other market inputs including comparable company revenue volatility of 8% and a discount rate of 7.2%. The contingent consideration associated with Boyce & Bynum is expected to be paid in up to two installments in 2019 and 2020. For further details regarding the Boyce & Bynum acquisition, see Note 5.

The following table provides a reconciliation of the beginning and ending balances of liabilities using significant unobservable inputs (Level 3):

	Contingent Consideration
Balance, December 31, 2018	$	14
Purchases, additions and issuances	6
Settlements	(1		)
Balance, March 31, 2019	$	19

12

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable and accrued expenses approximate fair value based on the short maturities of these instruments. As of March 31, 2019 and December 31, 2018, the fair value of the Company’s debt was estimated at $4.4 billion and $4.0 billion, respectively. Principally all of the Company's debt is classified within Level 1 of the fair value hierarchy because the fair value of the debt is estimated based on rates currently offered to the Company with identical terms and maturities, using quoted active market prices and yields, taking into account the underlying terms of the debt instruments.

7.    GOODWILL AND INTANGIBLE ASSETS

The changes in goodwill for the three months ended March 31, 2019 and for the year ended December 31, 2018 were as follows:

	March 31, 2019		December 31, 2018
Balance, beginning of period	$	6,563	$	6,335
Goodwill acquired during the period	42		228
Balance, end of period	$	6,605	$	6,563

Principally all of the Company’s goodwill as of March 31, 2019 and December 31, 2018 was associated with its DIS business.

For the three months ended March 31, 2019, goodwill acquired during the period was primarily associated with the acquisition of certain assets of the clinical laboratory services business of Boyce & Bynum (see Note 5). For the year ended December 31, 2018, goodwill acquired was principally associated with the acquisitions of the U.S. laboratory service business of Oxford Immunotec, Inc., Mobile Medical Examination Services, LLC., ReproSource, Inc. and the outreach laboratory service business of Cape Cod Healthcare, Inc. For details regarding the Company's 2018 acquisitions, see Note 6 to the consolidated financial statements in the Company's 2018 Annual Report on Form 10-K.

Intangible assets at March 31, 2019 and December 31, 2018 consisted of the following:

	Weighted Average Amortization Period (in years)	March 31, 2019							December 31, 2018
		Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
Amortizing intangible assets:
Customer-related	18	$	1,371	$	(497	)	$	874	$	1,355	$	(478	)	$	877
Non-compete agreements	9	3		(2		)	1		3		(2		)	1
Technology	17	104		(51		)	53		104		(50		)	54
Other	9	114		(78		)	36		114		(75		)	39
Total	17	1,592		(628		)	964		1,576		(605		)	971
Intangible assets not subject to amortization:
Trade names		235		—			235		235		—			235
Other		1		—			1		1		—			1
Total intangible assets		$	1,828	$	(628	)	$	1,200	$	1,812	$	(605	)	$	1,207

13

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

The estimated amortization expense related to amortizable intangible assets for each of the five succeeding fiscal years and thereafter as of March 31, 2019 is as follows:

Year Ending December 31,
Remainder of 2019	$	74
2020	97
2021	97
2022	91
2023	88
2024	86
Thereafter	431
Total	$	964

8.    DEBT

Long-term debt (including finance lease obligations) as of March 31, 2019 and December 31, 2018 consisted of the following:

	March 31, 2019			December 31, 2018
Secured Receivables Credit Facility (3.39% at December 31, 2018)	$	—		$	160
2.70% Senior Notes due April 2019	300			300
4.75% Senior Notes due January 2020	506			507
2.50% Senior Notes due March 2020	300			300
4.70% Senior Notes due April 2021	556			557
4.25% Senior Notes due April 2024	301			299
3.50% Senior Notes due March 2025	570			562
3.45% Senior Notes due June 2026	475			469
4.20% Senior Notes due June 2029	499			—
6.95% Senior Notes due July 2037	175			175
5.75% Senior Notes due January 2040	244			244
4.70% Senior Notes due March 2045	300			300
Other	36			37
Debt issuance costs	(23		)	(17		)
Total long-term debt	4,239			3,893
Less: Current portion of long-term debt	1,108			464
Total long-term debt, net of current portion	$	3,131		$	3,429

2019 Senior Notes Offering

In March 2019, the Company completed a senior unsecured notes offering (the “2019 Senior Notes”), consisting of $500 million aggregate principal amount of 4.20% senior notes due June 2029, issued at a discount of $1 million. The 2019 Senior Notes are unsecured obligations of the Company that rank equally with the Company's other senior unsecured obligations. The 2019 Senior Notes do not have a sinking fund requirement. The Company incurred $5 million of debt issuance costs associated with the 2019 Senior Notes, which is included as a reduction to the carrying amount of long-term debt and is being amortized over the term of the related debt.

14

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

A portion of the net proceeds from the 2019 Senior Notes were used to repay outstanding indebtedness under the secured receivables credit facility and for general corporate purposes. Additionally, in April 2019, a portion of the proceeds were used to repay in full the outstanding indebtedness under the Company's Senior Notes due April 1, 2019.

Secured Receivables Credit Facility

During the three months ended March 31, 2019, there were $640 million in cumulative borrowings under the secured receivables credit facility primarily associated with working capital requirements as well as the funding of the Company's 2019 business acquisition. During the three months ended March 31, 2019, there were $800 million in repayments under the secured receivables credit facility.

Maturities of Long-Term Debt

As of March 31, 2019, long-term debt matures as follows:

Year Ending December 31,
Remainder of 2019	$	302
2020	803
2021	553
2022	3
2023	1
Thereafter	2,649
Total maturities of long-term debt	4,311
Unamortized discount	(9		)
Debt issuance costs	(23		)
Fair value basis adjustments attributable to hedged debt	(40		)
Total long-term debt	4,239
Current portion of long-term debt	1,108
Total long-term debt, net of current portion	$	3,131

15

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

9.     LEASES

The Company determines if an arrangement is or contains a lease at contract inception. The Company leases office space, patient service centers, clinical laboratories, warehouses, logistic hubs and equipment primarily through operating leases with a limited number of finance leases. A right-of-use asset, representing the underlying asset during the lease term, and a lease liability, representing the payment obligation arising from the lease, are recognized on the balance sheet at lease commencement based on the present value of the payment obligation. For operating leases, expense is recognized on a straight-line basis over the lease term. For finance leases, interest expense on the lease liability is recognized using the effective interest method and amortization of the right-of-use asset is recognized on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term. Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

The Company primarily uses its incremental borrowing rate in determining the present value of lease payments as the Company's leases generally do not provide an implicit rate.

The Company has lease agreements with (i) right-of-use asset payments and (ii) non-lease components (i.e. payments related to maintenance fees, utilities, etc,) which have generally been combined and accounted for as a single lease component.

The Company's leases have remaining terms of less than 1 year to 15 years, some of which include options to extend the leases for up to 15 years. The Company's lease terms may include renewal options that are reasonably certain to be exercised and termination options that are reasonably certain not to be exercised. Certain leases also include options to purchase the leased property.

Certain of the Company's lease agreements include rental payments adjusted periodically for inflation or a market rate which are included in the lease liabilities.

Leases	Balance Sheet Classification	March 31, 2019
Assets
Operating	Operating lease right-of-use assets	$	497
Finance	Property, plant and equipment, net (a)	39
Total lease assets		$	536
Liabilities
Current:
Operating	Current portion of long-term operating lease liabilities	$	145
Finance	Current portion of long-term debt	4
Non-current:
Operating	Long-term operating lease liabilities	393
Finance	Long-term debt	31
Total lease liabilities		$	573

(a) Finance lease assets were recorded net of accumulated amortization of $25 million as of March 31, 2019.

16

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

Components of lease cost for the three months ended March 31, 2019 were as follows:

Lease cost
Operating lease cost (a)	$	73
Finance lease cost:
Amortization of leased assets	2
Interest on lease liabilities	1
Net lease cost	$	76

(a) Includes short-term leases and variable lease costs (primarily maintenance fees and utilities related to real estate leases) of $29 million.

The maturity of the Company's lease liabilities as of March 31, 2019 is as follows:

Maturity of lease liabilities	Operating leases		Finance leases		Total
Remainder of 2019	$	112	$	5	$	117
2020	135		6		141
2021	100		5		105
2022	75		5		80
2023	58		3		61
Thereafter	113		34		147
Total lease payments	593		58		651
Less: Interest (a)	55		23		78
Present value of lease liabilities	$	538	$	35	$	573

(a) Primarily calculated using the Company's incremental borrowing rate.

Minimum rental commitments under noncancelable operating leases, primarily real estate, in effect as of December 31, 2018 are as follows:

Year Ending December 31,
2019	$	181
2020	143
2021	106
2022	79
2023	60
Thereafter	122
Minimum lease payments	$	691

17

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

Lease term and discount rate for the three months ended March 31, 2019 were as follows:

Lease term and discount rate
Weighted-average remaining lease term (years):
Operating leases	5
Finance leases	13
Weighted-average discount rate:
Operating leases	3.2	%
Finance leases	8.6	%

See Note 12 for cash flow information on cash paid for amounts included in the measurement of lease liabilities, leased assets obtained in exchange for new operating lease liabilities, and leased assets obtained in exchange for new finance lease liabilities for the three months ended March 31, 2019.

10.    FINANCIAL INSTRUMENTS

The Company uses derivative financial instruments to manage its exposure to market risks for changes in interest rates and, from time to time, foreign currencies. This strategy includes the use of interest rate swap agreements, forward starting interest rate swap agreements, treasury lock agreements and foreign currency forward contracts to manage its exposure to movements in interest and currency rates. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. These policies prohibit holding or issuing derivative financial instruments for speculative purposes. The Company does not enter into derivative financial instruments that contain credit-risk-related contingent features or requirements to post collateral.

Interest Rate Risk

The Company is exposed to interest rate risk on its cash and cash equivalents and its debt obligations. Interest income earned on cash and cash equivalents may fluctuate as interest rates change; however, due to their relatively short maturities, the Company does not hedge these assets or their investment cash flows and the impact of interest rate risk is not material. The Company's debt obligations consist of fixed-rate and variable-rate debt instruments. The Company's primary objective is to achieve the lowest overall cost of funding while managing the variability in cash outflows within an acceptable range. In order to achieve this objective, the Company has entered into interest rate swaps. Interest rate swaps involve the periodic exchange of payments without the exchange of underlying principal or notional amounts. Net settlements between the counterparties are recognized as an adjustment to interest expense, net.

18

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

Interest Rate Derivatives – Cash Flow Hedges

From time to time, the Company has entered into various interest rate lock agreements and forward starting interest rate swap agreements to hedge part of the Company's interest rate exposure associated with the variability in future cash flows attributable to changes in interest rates.

In February 2019, the Company entered into interest rate lock agreements with several financial institutions for a total notional amount of $250 million, which were accounted for as cash flow hedges. These agreements were entered into to hedge a portion of the Company's interest rate exposure associated with variability in future cash flows attributable to changes in the ten-year treasury rates related to the planned issuance of the 2019 Senior Notes. In connection with the issuance of the 2019 Senior Notes in March 2019, these agreements were settled, and the Company paid $1 million. These losses are deferred in stockholders' equity, net of taxes, as a component of accumulated other comprehensive loss, and amortized as an adjustment to interest expense, net over the term of the respective senior notes.

The total net loss, net of taxes, recognized in accumulated other comprehensive loss, related to the Company's cash flow hedges was $9 million as of both March 31, 2019 and December 31, 2018. The net amount of deferred losses on cash flow hedges that is expected to be reclassified from accumulated other comprehensive loss into interest expense, net within the next twelve months is $3 million.

Interest Rate Derivatives – Fair Value Hedges

The Company maintains various fixed-to-variable interest rate swaps to convert a portion of the Company's long-term debt into variable interest rate debt. A summary of the notional amounts of these interest rate swaps as of March 31, 2019 and December 31, 2018 was as follows:

	Notional Amount
Debt Instrument	March 31, 2019		December 31, 2018
4.25% Senior Notes due April 2024	$	250	$	250
3.50% Senior Notes due March 2025	600		600
3.45% Senior Notes due June 2026	350		350
	$	1,200	$	1,200

The fixed-to-variable interest rate swap agreements in the table above have variable interest rates ranging from one-month LIBOR plus 2.2% to one-month LIBOR plus 3.0%.    

As of March 31, 2019 and December 31, 2018, the following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustments for fair value hedges included in the carrying amount of long-term debt:

	Carrying Amount of Hedged Long-Term Debt		Hedge Accounting Basis Adjustment (a)			Carrying Amount of Hedged Long-Term Debt		Hedge Accounting Basis Adjustment (a)
Balance Sheet Classification	March 31, 2019		March 31, 2019			December 31, 2018		December 31, 2018
Long-term debt	$	1,140	$	(40	)	$	1,125	$	(53	)

(a) The balance includes $37 million and $40 million of remaining unamortized hedging adjustment on a discontinued relationship as of March 31, 2019 and December 31, 2018, respectively.

19

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

The following table presents the effect of fair value hedge accounting on the statement of operations for the three months ended March 31, 2019 and 2018:

	Three Months Ended March 31,
	2019			2018
	Other income (expense), net			Other income (expense), net
Total for line item in which the effects of fair value hedges are recorded	$	9		$	(2	)
Gain (loss) on fair value hedging relationships:
Hedged items (Long-term debt)	$	(16	)	$	25
Derivatives designated as hedging instruments	$	16		$	(25	)

A summary of the fair values of derivative instruments in the consolidated balance sheets was as follows:

	March 31, 2019			December 31, 2018
Derivatives Designated as Hedging Instruments	Balance Sheet Classification	Fair Value		Balance Sheet Classification	Fair Value
Interest rate swaps	Other liabilities	$	77	Other liabilities	$	93

A detailed description regarding the Company's use of derivative financial instruments is contained in Note 15 to the consolidated financial statements in the Company's 2018 Annual Report on Form 10-K.        

11.    STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST

Stockholders' Equity

Changes in Accumulated Other Comprehensive Income (Loss) by Component

Comprehensive income (loss) includes:

• Foreign currency translation adjustments;

• Net deferred loss on cash flow hedges, which represents deferred losses, net of tax on interest rate related derivative financial instruments designated as cash flow hedges, net of amounts reclassified to interest expense (see Note 10).

For the three months ended March 31, 2019 and 2018, the tax effects related to the deferred losses on cash flow hedges were not material. Foreign currency translation adjustments related to indefinite investments in non-U.S. subsidiaries are not adjusted for income taxes.

Dividend Program

During the first quarter of 2019, the Company's Board of Directors declared a quarterly cash dividend of $0.53 per common share. During each of the first three quarters of 2018, the Company's Board of Directors declared a quarterly cash dividend of $0.50 per common share. During the fourth quarter of 2018, the Company's Board of Directors declared a quarterly cash dividend of $0.53 per common share.

Share Repurchase Program

As of March 31, 2019, $542 million remained available under the Company’s share repurchase authorizations. The share repurchase authorization has no set expiration or termination date.    

20

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

Share Repurchases

For the three months ended March 31, 2019, the Company repurchased 0.6 million shares of its common stock for $50 million.

For the three months ended March 31, 2018, the Company repurchased 0.5 million shares of its common stock for $50 million.

Shares Reissued from Treasury Stock

For the three months ended March 31, 2019 and 2018, the Company reissued 0.4 million shares and 0.6 million shares, respectively, from treasury stock for shares issued under the Employee Stock Purchase Plan and stock option plans. For details regarding the Company's stock ownership and compensation plans, see Note 17 to the consolidated financial statements in the Company's 2018 Annual Report on Form 10-K.

Redeemable Noncontrolling Interest

In connection with the sale of an 18.9% noncontrolling interest in a subsidiary to UMass Memorial Medical Center ("UMass") on July 1, 2015, the Company granted UMass the right to require the Company to purchase all of its interest in the subsidiary at fair value commencing July 1, 2020. The subsidiary performs diagnostic information services in a defined territory within the state of Massachusetts. Since the redemption of the noncontrolling interest is outside of the Company's control, it has been presented outside of stockholders' equity at the greater of its carrying amount or its fair value. The Company records changes in the fair value of the noncontrolling interest immediately as they occur. As of March 31, 2019, the redeemable noncontrolling interest was presented at its fair value. The fair value measurement of the redeemable noncontrolling interest is classified within Level 3 of the fair value hierarchy because the fair value is based on a discounted cash flow analysis that takes into account, among other items, the joint venture's expected future cash flows, long term growth rates, and a discount rate commensurate with economic risk.

21

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

12.    SUPPLEMENTAL CASH FLOW AND OTHER DATA

Supplemental cash flow and other data for the three months ended March 31, 2019 and 2018 was as follows:

	Three Months Ended March 31,
	2019			2018
Depreciation expense	$	60		$	52
Amortization expense	24			22
Depreciation and amortization expense	$	84		$	74
Interest expense	$	(45	)	$	(41	)
Interest income	1			—
Interest expense, net	$	(44	)	$	(41	)
Interest paid	$	28		$	49
Income taxes paid	$	3		$	2
Accounts payable associated with capital expenditures	$	13		$	16
Dividends payable	$	72		$	66
Businesses acquired:
Fair value of assets acquired	$	61		$	148
Fair value of liabilities assumed	—			(1		)
Fair value of net assets acquired	61			147
Merger consideration paid (payable), net	(5		)	(12		)
Cash paid for business acquisitions	56			135
Less: Cash acquired	—			5
Business acquisitions, net of cash acquired	$	56		$	130

	Three Months Ended March 31,
	2019
Leases:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	45
Operating cash flows from finance leases	$	1
Financing cash flows from finance leases	$	1
Leased assets obtained in exchange for new operating lease liabilities	$	25

22

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

13.     COMMITMENTS AND CONTINGENCIES

Letters of Credit

The Company can issue letters of credit totaling $100 million under its secured receivables credit facility and $150 million under its senior unsecured revolving credit facility. For further discussion regarding the Company's secured receivables credit facility and senior unsecured revolving credit facility, see Note 14 to the consolidated financial statements in the Company's 2018 Annual Report on Form 10-K and Note 8 to the interim unaudited consolidated financial statements.    

In support of its risk management program, to ensure the Company’s performance or payment to third parties, $71 million in letters of credit under the secured receivables credit facility were outstanding as of March 31, 2019. The letters of credit primarily represent collateral for current and future automobile liability and workers’ compensation loss payments.

Contingent Lease Obligations

The Company remains subject to contingent obligations under certain real estate leases, including leases that were entered into by certain predecessor companies of a subsidiary prior to the Company's acquisition of the subsidiary. No liability has been recorded for any of these potential contingent obligations. For further details, see Note 18 to the consolidated financial statements in the Company’s 2018 Annual Report on Form 10-K.

Legal Matters

The Company is involved in various legal proceedings. Some of the proceedings against the Company involve claims that could be substantial in amount.

In the normal course of business, the Company has been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with the Company's activities as a provider of diagnostic testing, information and services. These actions could involve claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages, and could have an adverse impact on the Company's client base and reputation.

The Company is also involved, from time to time, in other reviews, investigations and proceedings by governmental agencies regarding the Company's business, including, among other matters, operational matters, which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. The number of these reviews, investigations and proceedings has increased in recent years with regard to many firms in the healthcare services industry, including the Company.

The federal or state governments may bring claims based on the Company's current practices, which it believes are lawful. In addition, certain federal and state statutes, including the qui tam provisions of the federal False Claims Act, allow private individuals to bring lawsuits against healthcare companies on behalf of government or private payers. The Company is aware of lawsuits, and from time to time has received subpoenas, related to billing practices based on the qui tam provisions of the Civil False Claims Act or other federal and state statutes, regulations or other laws. The Company understands that there may be other pending qui tam claims brought by former employees or other "whistle blowers" as to which the Company cannot determine the extent of any potential liability.

Management cannot predict the outcome of such matters. Although management does not anticipate that the ultimate outcome of such matters will have a material adverse effect on the Company's financial condition, given the high degree of judgment involved in establishing loss estimates related to these types of matters, the outcome of such matters may be material to the Company's results of operations or cash flows in the period in which the impact of such matters is determined or paid.

These matters are in different stages. Some of these matters are in their early stages. Matters may involve responding to and cooperating with various government investigations and related subpoenas.  As of March 31, 2019, the Company does not believe that material losses related to legal matters are probable.

Reserves for legal matters totaled $1 million as of both March 31, 2019 and December 31, 2018.

23

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

Reserves for General and Professional Liability Claims

As a general matter, providers of clinical testing services may be subject to lawsuits alleging negligence or other similar legal claims. These suits could involve claims for substantial damages. Any professional liability litigation could also have an adverse impact on the Company's client base and reputation. The Company maintains various liability insurance coverages for, among other things, claims that could result from providing, or failing to provide, clinical testing services, including inaccurate testing results, and other exposures. The Company's insurance coverage limits its maximum exposure on individual claims; however, the Company is essentially self-insured for a significant portion of these claims. Reserves for such matters, including those associated with both asserted and incurred but not reported claims, are established on an undiscounted basis by considering actuarially determined losses based upon the Company's historical and projected loss experience. Such reserves totaled $125 million as of both March 31, 2019 and December 31, 2018. Management believes that established reserves and present insurance coverage are sufficient to cover currently estimated exposures.

14.    BUSINESS SEGMENT INFORMATION

The Company's DIS business is the only reportable segment based on the manner in which the Chief Executive Officer, who is the Company's chief operating decision maker ("CODM"), assesses performance and allocates resources across the organization. The DIS business provides diagnostic information services to a broad range of customers, including patients, clinicians, hospitals, IDNs, health plans, employers and ACOs. The Company is the world's leading provider of diagnostic information services, which includes providing information and insights based on the industry-leading menu of routine, non-routine and advanced clinical testing and anatomic pathology testing, and other diagnostic information services. The DIS business accounted for greater than 95% of net revenues in 2019 and 2018.

All other operating segments include the Company's DS businesses, which consist of its risk assessment services and healthcare information technology businesses. The Company's DS businesses are the leading provider of risk assessment services for the life insurance industry and offer healthcare organizations and clinicians robust information technology solutions.

As of March 31, 2019, substantially all of the Company’s services were provided within the United States, and substantially all of the Company’s assets were located within the United States.

The following table is a summary of segment information for the three months ended March 31, 2019 and 2018. Segment asset information is not presented since it is not used by the CODM at the operating segment level. Operating earnings (loss) of each segment represents net revenues less directly identifiable expenses to arrive at operating income (loss) for the segment. General corporate activities included in the table below are comprised of general management and administrative corporate expenses, amortization and impairment of intangibles assets and other operating income and expenses, net of certain general corporate activity costs that are allocated to the DIS and DS businesses. 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 2018 Annual Report on Form 10-K and Note 2 to the interim unaudited consolidated financial statements.

24

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

	Three Months Ended March 31,
	2019			2018
Net revenues:
DIS business	$	1,812		$	1,803
All other operating segments	79			81
Total net revenues	$	1,891		$	1,884
Operating earnings (loss):
DIS business	$	280		$	308
All other operating segments	9			11
General corporate activities	(41		)	(47		)
Total operating income	248			272
Non-operating expenses, net	(35		)	(43		)
Income before income taxes and equity in earnings of equity method investees	213			229
Income tax expense	(50		)	(52		)
Equity in earnings of equity method investees, net of taxes	13			12
Net income	176			189
Less: Net income attributable to noncontrolling interests	12			12
Net income attributable to Quest Diagnostics	$	164		$	177

15.    RELATED PARTIES

The Company's equity method investees primarily consist of its clinical trials central laboratory services joint venture and its diagnostic information services joint ventures, which are accounted for under the equity method of accounting. During both the three months ended March 31, 2019 and 2018, the Company recognized net revenues of $9 million associated with diagnostic information services provided to its equity method investees. As of March 31, 2019 and December 31, 2018, there was $4 million and $3 million, respectively, of accounts receivable from equity method investees related to such services. During the three months ended March 31, 2019, the Company recognized net revenues of $3 million associated with diagnostics information services provided to a noncontrolling interest partner in a joint venture. As of March 31, 2019, there was $2 million of accounts receivable from the noncontrolling interest partner related to such services.

During both the three months ended March 31, 2019 and 2018, the Company recognized income of $4 million associated with the performance of certain corporate services, including transition services, for its equity method investees, classified within selling, general and administrative expenses. As of March 31, 2019 and December 31, 2018, there was $2 million and $3 million, respectively, of other receivables from equity method investees included in prepaid expenses and other current assets related to these service agreements and other transition related items. In addition, accounts payable and accrued expenses as of both March 31, 2019 and December 31, 2018 included $1 million due to equity method investees.

16.    REVENUE RECOGITION

DIS

Net revenues in the Company’s DIS business accounted for over 95% of the Company’s total net revenues for the three months ended March 31, 2019 and 2018 and are primarily comprised of a high volume of relatively low-dollar transactions. The DIS business, which provides clinical testing services and other services, satisfies its performance obligations and recognizes revenues upon completion of the testing process, when results are reported, or when services have been rendered. The Company estimates the amount of consideration it expects to be entitled to receive from customer groups, determined using the portfolio approach, in exchange for providing services. These estimates include the impact of contractual allowances,

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QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(unaudited)

(in millions, except per share data)

including payer denials, and price concessions. The portfolios determined using the portfolio approach consist of the following groups of customers: healthcare insurers, government payers, client payers and patients.

DS

The Company’s DS businesses primarily satisfy their performance obligations and recognize revenues when delivery has occurred or services have been rendered.

The approximate percentage of net revenue by type of customer was as follows:

	Three Months Ended March 31,
	2019		2018
Healthcare insurers:
Fee-for-service	33	%	33	%
Capitated	4		4
Total healthcare insurers	37		37
Government payers	15		16
Client payers	31		30
Patient	13		13
Total DIS	96		96
DS	4		4
Net revenues	100	%	100	%

17.    TAXES ON INCOME

For the three months ended March 31, 2019 and 2018, the effective income tax rate was 23.7% and 22.5%, respectively. The effective income tax rate for the three months ended March 31, 2019 and 2018 benefited from $3 million and $8 million, respectively, of excess tax benefits associated with stock-based compensation arrangements.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Our Company

Diagnostic Information Services

Quest Diagnostics empowers people to take action to improve health outcomes. We use our extensive database of clinical lab results to derive diagnostic insights that reveal new avenues to identify and treat disease, inspire healthy behaviors and improve healthcare management. Our diagnostic information services business ("DIS") provides information and insights based on the industry-leading menu of routine, non-routine and advanced clinical testing and anatomic pathology testing, and other diagnostic information services. We provide services to a broad range of customers, including patients, clinicians, hospitals, independent delivery networks ("IDNs"), health plans, employers and accountable care organizations ("ACOs"). We offer the broadest access in the United States to diagnostic information services through our nationwide network of laboratories, patient service centers and phlebotomists in physician offices and our connectivity resources, including call centers and mobile paramedics, nurses and other health and wellness professionals. We are the world's leading provider of diagnostic information services. We provide interpretive consultation with one of the largest medical and scientific staffs in the industry. Our DIS business makes up over 95% of our consolidated net revenues.

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Diagnostic Solutions

In our Diagnostic Solutions ("DS") businesses, which represents the balance of our consolidated net revenues, we are the leading provider of risk assessment services for the life insurance industry and we offer healthcare organizations and clinicians robust information technology solutions.

First Quarter Highlights

• Our total net revenues of $1.9 billion were up 0.4% from the prior year period.

• In DIS:

◦ Revenues of $1.8 billion increased by 0.5% compared to the prior year period, which reflects the impact of recent acquisitions and organic volume growth (growth excluding the impact of acquisitions), partially offset by a decline in revenue per requisition.

◦ Volume, measured by the number of requisitions, increased 3.6% compared to the prior year period, with organic growth and acquisitions contributing approximately 2.4% and 1.2%, respectively.

◦ Revenue per requisition decreased by 3.0% compared to the prior year period.

• DS revenues of $79 million decreased by 2.8% compared to the prior year period primarily associated with our risk assessment services business.

• Net income attributable to Quest Diagnostics' stockholders was $164 million, or $1.20 per diluted share, in 2019, compared to $177 million, or $1.27 per diluted share, in the prior year period.

• Net cash provided by operating activities was $275 million in 2019, compared to $180 million in the prior year period. The $95 million increase in net cash provided by operating activities was primarily a result of lower performance-based compensation payments and timing of movements in our working capital accounts, partially offset by lower operating income in 2019 as compared to 2018.

In March 2019, we completed a senior notes offering (the “2019 Senior Notes”), consisting of $500 million aggregate principal amount of 4.20% senior notes due June 2029, issued at a discount of $1 million. A portion of the net proceeds from the 2019 Senior Notes were used to repay outstanding indebtedness under the secured receivables credit facility and for general corporate purposes. Additionally, in April 2019, a portion of the proceeds were used to repay in full the outstanding indebtedness under our senior notes due April 2019. For further details regarding our 2019 Senior Notes and our debt, see Note 8 to the interim unaudited consolidated financial statements.

Two Point Strategy

Our two point strategy is described in detail in "Item 1. Business: Our Strategy" in our 2018 Annual Report on Form 10-K. During the three months ended March 31, 2019, we continued to execute on our strategy as discussed below:

Acquisition of the Clinical Laboratory Services Business of Boyce & Bynum Pathology Laboratories, P.C.

On February 11, 2019, we completed our acquisition of certain assets of the clinical laboratory services business of Boyce & Bynum Pathology Laboratories, P.C. ("Boyce & Bynum"), in an all cash transaction for $61 million, which consisted of cash consideration of $55 million and contingent consideration initially estimated at $6 million. The contingent consideration arrangement is dependent upon the achievement of certain testing volume benchmarks. The acquired business is included in our DIS business.

For further details regarding our acquisitions, see Note 5 to the interim unaudited consolidated financial statements and Note 6 to the consolidated financial statements in the Company's 2018 Annual Report on Form 10-K.

Invigorate Program

We are engaged in a multi-year program called Invigorate, which is designed to reduce our cost structure and improve our performance. We currently aim annually to save approximately 3% of our costs, and in 2018 we achieved that goal.

Invigorate has consisted of several flagship programs, with structured plans in each, to drive savings and improve performance across the customer value chain. These flagship programs include: organization excellence; information technology excellence; procurement excellence; field and customer service excellence; lab excellence; and revenue services excellence. In addition to these programs, we identified key themes to change how we operate including reducing denials and patient concessions; further digitizing our business; standardization and automation; and optimization initiatives in our lab network and patient service center network. We believe that our efforts to standardize our information technology systems,

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equipment and data also foster our efforts to strengthen our foundation for growth and support the value creation initiatives of our clinical franchises by enhancing our operational flexibility, empowering and enhancing the customer experience, facilitating the delivery of actionable insights and bolstering our large data platform.

For the three months ended March 31, 2019, we incurred $14 million of pre-tax charges under our Invigorate program primarily consisting of systems conversion and integration costs, all of which result in cash expenditures. Additional restructuring charges may be incurred in future periods as we identify additional opportunities to achieve further cost savings.

For further details of the Invigorate program and associated costs, see Note 4 to the interim unaudited consolidated financial statements.

Critical Accounting Policies

There have been no significant changes to our critical accounting policies from those disclosed in our 2018 Annual Report on Form 10-K.

Impact of New Accounting Standards

The adoption of new accounting standards, including the new standard related to accounting for leases, are discussed in Note 2 to the interim unaudited consolidated financial statements. For further details regarding our leases, refer to Note 9 to the interim unaudited consolidated financial statements.

The impacts of recent accounting pronouncements not yet effective on our consolidated financial statements are discussed in Note 2 to the interim unaudited consolidated financial statements.

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Results of Operations

The following tables set forth certain results of operations data for the periods presented:

	Three Months Ended March 31,
	2019			2018			$ Change			% Change
	(dollars in millions, except per share amounts)
Net revenues:
DIS business	$	1,812		$	1,803		$	9		0.5	%
DS businesses	79			81			(2		)	(2.8	)
Total net revenues	$	1,891		$	1,884		$	7		0.4	%
Operating costs and expenses and other operating income:
Cost of services	$	1,244		$	1,226		$	18		1.4	%
Selling, general and administrative	384			363			21			5.8
Amortization of intangible assets	24			22			2			12.8
Other operating (income) expense, net	(9		)	1			(10		)	NM
Total operating costs and expenses, net	$	1,643		$	1,612		$	31		1.9	%
Operating income	$	248		$	272		$	(24	)	(8.7	)%
Other income (expense):
Interest expense, net	$	(44	)	$	(41	)	$	(3	)	7.9	%
Other income (expense), net	9			(2		)	11			NM
Total non-operating expenses, net	$	(35	)	$	(43	)	$	8		(18.2	)%
Income tax expense	$	(50	)	$	(52	)	$	2		(2.1	)%
Effective income tax rate	23.7		%	22.5		%	120 bps			NM
Equity in earnings of equity method investees, net of taxes	$	13		$	12		$	1		14.2	%
Net income attributable to Quest Diagnostics	$	164		$	177		$	(13	)	(7.3	)%
Diluted earnings per common share attributable to Quest Diagnostics’ common stockholders	$	1.20		$	1.27		$	(0.07	)	(5.4	)%
NM - Not Meaningful

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The following table sets forth certain results of operations data as a percentage of net revenues for the periods presented:

	Three Months Ended March 31,
	2019		2018
Net revenues:
DIS business	95.8	%	95.7	%
DS businesses	4.2		4.3
Total net revenues	100.0	%	100.0	%
Operating costs and expenses and other operating income:
Cost of services	65.7	%	65.1	%
Selling, general and administrative	20.3		19.2
Amortization of intangible assets	1.3		1.1
Other operating (income) expense, net	(0.5	)	0.1
Total operating costs and expenses, net	86.8	%	85.5	%
Operating income	13.2	%	14.5	%

Operating Results

Results for the three months ended March 31, 2019 were affected by certain items that on a net basis reduced diluted earnings per share by $0.20 as follows:

• pre-tax amortization expense of $29 million ($24 million in amortization of intangible assets and $5 million in equity in earnings of equity method investees, net of taxes) or $0.16 per diluted share; and

• pre-tax charges of $22 million ($11 million in cost of services and $11 million in selling, general and administrative expenses), or $0.12 per diluted share, primarily associated with systems conversions and integration incurred in connection with further restructuring and integrating our business; partially offset by

• a net pre-tax gain of $8 million ($1 million charge in selling, general and administrative expenses offset by a $9 million gain in other operating (income) expense, net), or $0.06 per diluted share, primarily due to a gain associated with an insurance claim for hurricane related losses partially offset by non-cash asset impairment charges, and

• excess tax benefits associated with stock-based compensation arrangements of $3 million, or $0.02 per diluted share, recorded in income tax expense.

Results for the three months ended March 31, 2018 were affected by certain items that on a net basis reduced diluted earnings per share by $0.25 as follows:

• pre-tax charges of $31 million ($12 million in cost of services, $18 million in selling, general and administrative expenses and $1 million in other operating (income) expense, net), or $0.17 per diluted share, primarily associated with workforce reductions, systems conversions and integration incurred in connection with further restructuring and integrating our business; and

• pre-tax amortization expense of $26 million ($22 million in amortization of intangible assets and $4 million in equity in earnings of equity method investees, net of taxes) or $0.14 per diluted share; partially offset by

• excess tax benefits associated with stock-based compensation arrangements of $8 million, or $0.06 per diluted share, recorded in income tax expense.

Net Revenues

Net revenues for the three months ended March 31, 2019 increased by 0.4% compared to the prior year period.

DIS revenues for the three months ended March 31, 2019 increased by 0.5% compared to the prior year period which reflects the impact of recent acquisitions and organic volume growth (growth excluding the impact of acquisitions), largely offset by a decline in revenue per requisition.

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• Acquisitions contributed approximately 1.8% to DIS revenue growth with organic revenue growth down 1.3%.

• DIS volume increased by 3.6%, with organic growth and acquisitions contributing approximately 2.4% and 1.2%, respectively, to DIS volume growth. Organic volume growth benefited from expanded in-network access primarily as a result of becoming a participating provider to UnitedHealthcare and Horizon Blue Cross Blue Shield of New Jersey. In addition, there was one less business day compared to the prior year period, which we estimate negatively affected the year-over-year comparison by 1.2%, partially offset by the impact of weather in the prior year period which we estimate favorably affected the comparison by 0.5%.

• Revenue per requisition decreased by 3.0% compared to the prior year period primarily due to reimbursement pressure, including unit price reductions associated with the Protecting Access to Medicare Act ("PAMA") and all other sources, of approximately 2.5%; increased denials; and higher patient concessions; partially offset by favorable test mix, driven in part by acquisitions.

Cost of Services

Cost of services consists principally of costs for obtaining, transporting and testing specimens as well as facility costs used for the delivery of our services.

For the three months ended March 31, 2019, cost of services increased by $18 million compared to the prior year period. The increase was primarily driven by: (i) additional operating costs associated with our acquisitions; (ii) higher depreciation expense associated with increased capital expenditures; and (iii) incremental operating expenses associated with organic volume growth, partially offset by productivity gains, including our ability to leverage our fixed cost structure to support the increase in volume, as well as other cost reduction initiatives primarily under our Invigorate program.

Selling, General and Administrative Expenses ("SG&A")

SG&A consist principally of the costs associated with our sales and marketing efforts, billing operations, bad debt expense and general management and administrative support as well as administrative facility costs.

SG&A increased by $21 million for the three months ended March 31, 2019, compared to the prior year period, primarily driven by higher costs associated with an increase in the value of the Company's deferred compensation obligations and additional operating costs associated with our acquisitions, partially offset by lower restructuring costs associated with workforce reductions and our ability to leverage our fixed cost structure to support the increase in volume, as well as other cost reduction initiatives primarily under our Invigorate program.

The increase in the value of the Company's deferred compensation obligations is largely offset by gains due to the increase in the value of the associated investments, which are recorded in other income (expense), net. For further details regarding the Company's deferred compensation plans, see Note 17 to the consolidated financial statements in our 2018 Annual Report on Form 10-K.

Amortization Expense

Amortization expense increased by $2 million for the three months ended March 31, 2019, compared to the prior year period as a result of recent acquisitions.    

Other Operating (Income) Expense, net

Other operating (income) expense, net includes miscellaneous income and expense items and other charges related to operating activities.

For the three monthsended March 31, 2019, other operating (income) expense, net includes a $12 million gain associated with an insurance claim for hurricane related losses partially offset by non-cash asset impairment charges of $2 million.

Interest Expense, net

Interest expense, net increased for the three months ended March 31, 2019 compared to the prior year period, primarily driven by higher interest rates associated with our variable rate indebtedness combined with higher average outstanding indebtedness.

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Other Income (Expense), net

Other income (expense), net represents miscellaneous income and expense items related to non-operating activities, such as gains and losses associated with investments and other non-operating assets.

Other income (expense), net for the three months ended March 31, 2019 increased by $11 million compared to the prior year period due to gains associated with investments in our deferred compensation plans.

Income Tax Expense

Income tax expense for the three months ended March 31, 2019 and 2018 was $50 million and $52 million, respectively. The decrease in income tax expense was primarily driven by the decrease in income before income taxes and equity in earnings of equity method investees, partially offset by a decrease in excess tax benefits associated with stock-based compensation arrangements. During the three months ended March 31, 2019 and 2018 we recognized $3 million and $8 million, respectively, of excess tax benefits associated with stock-based compensation arrangements.

Quantitative and Qualitative Disclosures About Market Risk

We address our exposure to market risks, principally the risk of changes in interest rates, through a controlled program of risk management that includes the use of derivative financial instruments. We do not hold or issue derivative financial instruments for speculative purposes. We seek to mitigate the variability in cash outflows that result from changes in interest rates by maintaining a balanced mix of fixed-rate and variable-rate debt obligations. In order to achieve this objective, we have entered into interest rate swaps. Interest rate swaps involve the periodic exchange of payments without the exchange of underlying principal or notional amounts. Net settlements are recognized as an adjustment to interest expense. We believe that our exposures to foreign exchange impacts and changes in commodity prices are not material to our consolidated financial condition or results of operations.

As of March 31, 2019 and December 31, 2018, the fair value of our debt was estimated at approximately $4.4 billion and $4.0 billion, respectively, using quoted prices in active markets and yields for the same or similar types of borrowings, taking into account the underlying terms of the debt instruments. As of March 31, 2019 and December 31, 2018, the estimated fair value exceeded the carrying value of the debt by $151 million and $85 million, respectively. A hypothetical 10% increase in interest rates (representing 36 basis points as of March 31, 2019 and 39 basis points as of December 31, 2018) would potentially reduce the estimated fair value of our debt by approximately $97 million and $88 million as of March 31, 2019 and December 31, 2018, respectively.

Borrowings under our secured receivables credit facility and our senior unsecured revolving credit facility are subject to variable interest rates. Interest on our secured receivables credit facility is based on either a rate that is intended to approximate commercial paper rates for highly rated issuers, or LIBOR, plus a spread. Interest on our senior unsecured revolving credit facility is subject to a pricing schedule that can fluctuate based on changes in our credit ratings. As such, our borrowing cost under this credit arrangement will be subject to both fluctuations in interest rates and changes in our credit ratings. As of March 31, 2019, the borrowing rates under these debt instruments were: for our secured receivables credit facility, commercial paper rates for highly rated issuers, or LIBOR, plus a spread of 0.70% to 0.725%; and for our senior unsecured revolving credit facility, LIBOR plus 1.125%. As of March 31, 2019, there were no borrowings outstanding under either our $600 million secured receivables credit facility or our $750 million senior unsecured revolving credit facility.

The notional amount of fixed-to-variable interest rate swaps outstanding as of both March 31, 2019 and December 31, 2018 was $1.2 billion. The aggregate fair value of the fixed-to-variable interest rate swaps was $77 million, in a liability position, as of March 31, 2019.

In February 2019, we entered into interest rate lock agreements with several financial institutions for a total notional amount of $250 million to hedge a portion of our interest rate exposure associated with variability in future cash flows attributable to changes in the ten-year treasury rates related to the planned issuance of the 2019 Senior Notes. In connection with the issuance of the 2019 Senior Notes, these agreements were settled, and we paid $1 million. These losses are deferred in stockholders' equity, net of taxes, as a component of accumulated other comprehensive loss, and amortized as an adjustment to interest expense, net over the term of the 2019 Senior Notes.

Based on our net exposure to interest rate changes, a hypothetical 10% change to the variable rate component of our variable rate indebtedness (representing 25 basis points) would potentially change annual interest expense by $3 million. A

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hypothetical 10% change in the forward one-month LIBOR curve (representing a 22 basis point change in the weighted average yield) would potentially change the fair value of our derivative liabilities by $16 million.

For further details regarding our outstanding debt, see Note 8 to the interim unaudited consolidated financial statements and Note 14 to the consolidated financial statements included in our 2018 Annual Report on Form 10-K. For details regarding our financial instruments and hedging activities, see Note 10 to the interim unaudited consolidated financial statements and Note 15 to the consolidated financial statements included in our 2018 Annual Report on Form 10-K.

Risk Associated with Investment Portfolio

Our investment portfolio includes equity investments comprised primarily of strategic equity holdings in privately and publicly held companies. These securities are exposed to price fluctuations and are generally concentrated in the life sciences industry. Equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) with readily determinable fair values are measured at fair value with changes in fair value recognized in net income. Equity investments that do not have readily determinable fair values are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes; we regularly evaluate these equity investments to determine if there are any indicators that the investment is impaired. The carrying value of our equity investments that do not have readily determinable fair values was $9 million as of March 31, 2019.

We do not hedge our equity price risk. The impact of an adverse movement in equity prices on our holdings in privately held companies cannot be easily quantified, as our ability to realize returns on investments depends on, among other things, the enterprises’ ability to raise additional capital or derive cash inflows from continuing operations or through liquidity events such as initial public offerings, mergers or private sales.

Liquidity and Capital Resources

	Three Months Ended March 31,						Change
	2019			2018
	(dollars in millions)
Net cash provided by operating activities	$	275		$	180		$	95
Net cash used in investing activities	(110		)	(204		)	94
Net cash provided by financing activities	164			11			153
Net change in cash and cash equivalents and restricted cash	$	329		$	(13	)	$	342

Cash and Cash Equivalents

Cash and cash equivalents consist of cash and highly liquid short-term investments. Cash and cash equivalents as of March 31, 2019 totaled $464 million, compared to $135 million as of December 31, 2018.

As of March 31, 2019, approximately 9% of our $464 million of consolidated cash and cash equivalents were held outside of the United States. Our current liquidity position does not require repatriation of these funds in order to fund operations in the United States. However, as a result of changes introduced by the Tax Cuts and Jobs Act, we may repatriate back to the United States the portion of these foreign funds not expected to be used to maintain or expand operations (including through acquisitions) outside of the United States.

Cash Flows from Operating Activities

Net cash provided by operating activities for the three months ended March 31, 2019 and 2018 was $275 million and $180 million, respectively. The $95 million increase in net cash provided by operating activities was primarily a result of:

• lower performance-based compensation payments; and

• timing of movements in our working capital accounts; partially offset by

• lower operating income in 2019 as compared to 2018.

Days sales outstanding, a measure of billing and collection efficiency, was 51 days as of March 31, 2019, 54 days as of December 31, 2018 and 48 days as of March 31, 2018.

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Cash Flows from Investing Activities

Net cash used in investing activities for the three months ended March 31, 2019 and 2018 was $110 million and $204 million, respectively. This $94 million decrease in cash used in investing activities was primarily a result of:

• a $74 million decrease in net cash paid for business acquisitions; and

• a $26 million decrease in capital expenditures.

Cash Flows from Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2019 and 2018 was $164 million and $11 million, respectively. This $153 million increase in cash provided by financing activities was primarily a result of:

• $337 million of net borrowings (proceeds from borrowings less repayments of debt) in 2019, compared to $103 million of net borrowings in 2018; partially offset by

• a $56 million decrease in bank overdrafts, which are generally settled in cash the following business day.

During the three months ended March 31, 2019, we completed the issuance of the 2019 Senior Notes. In addition, there were $640 million in cumulative borrowings under the secured receivables credit facility primarily associated with working capital requirements as well as the funding of our 2019 acquisition. During the three months ended March 31, 2019, there were $800 million in repayments under our secured receivables credit facility. During the three months ended March 31, 2019, there were no borrowings under our senior unsecured revolving credit facility.    

During the three months ended March 31, 2018, there were $935 million in cumulative borrowings primarily associated with the funding of a 2018 acquisition and other working capital requirements and $830 million in repayments under our secured receivables credit facility. During the three months ended March 31, 2018, there were no borrowings under our senior unsecured revolving credit facility.    

Dividend Program

During the first quarter of 2019, our Board of Directors declared a quarterly cash dividend of $0.53 per common share. During each of the first three quarters of 2018, our Board of Directors declared a quarterly cash dividend of $0.50 per common share. During the fourth quarter of 2018, our Board of Directors declared a quarterly cash dividend of $0.53 per common share.

Share Repurchase Program

As of March 31, 2019, $542 million remained available under our share repurchase authorizations. The share repurchase authorization has no set expiration or termination date.

Share Repurchases

For the three months ended March 31, 2019, we repurchased 0.6 million shares of our common stock for $50 million.

For the three months ended March 31, 2018, we repurchased 0.5 million shares of our common stock for $50 million.

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Contractual Obligations and Commitments

The following table summarizes certain of our contractual obligations as of March 31, 2019:

	Payments due by period
Contractual Obligations	Total		Remainder of 2019		1-3 years		4-5 years		After 5 years
	(dollars in millions)
Outstanding debt	$	4,276	$	300	$	1,350	$	—	$	2,626
Finance lease obligations	35		3		6		4		22
Interest payments on outstanding debt	1,677		162		315		259		941
Operating leases	704		158		268		151		127
Purchase obligations	1,770		235		554		435		546
Merger consideration obligations	19		14		5		—		—
Total contractual obligations	$	8,481	$	872	$	2,498	$	849	$	4,262

A description of the terms of our indebtedness and related debt service requirements and future payments of our outstanding debt is contained in Note 8 to the interim unaudited consolidated financial statements and Note 14 to the consolidated financial statements in our 2018 Annual Report on Form 10-K.

Interest payments on our outstanding debt includes interest associated with finance lease obligations and has been calculated after giving effect to our interest rate swap agreements, using the interest rates as of March 31, 2019 applied to the March 31, 2019 balances, which are assumed to remain outstanding through their maturity dates.

Operating lease obligations include variable charges (primarily maintenance fees and utilities associated with our real estate leases) in effect as of March 31, 2019. A discussion and analysis regarding our operating lease obligations is contained in Note 9 to the interim unaudited consolidated financial statements.

Purchase obligations include our noncancelable commitments to purchase products or services as described in Note 18 to the consolidated financial statements in our 2018 Annual Report on Form 10-K.

Merger consideration obligations include consideration owed on our business acquisitions. For details regarding our acquisitions, see Note 5 to the interim unaudited consolidated financial statements and Note 6 to the consolidated financial statements in our 2018 Annual Report on Form 10-K.

As of March 31, 2019, our total liabilities associated with unrecognized tax benefits were approximately $109 million, which were excluded from the table above. We expect that these liabilities may decrease by less than $36 million within the next twelve months, primarily as a result of payments, settlements, expiration of statutes of limitations and/or the conclusion of tax examinations on certain tax positions. For the remainder, we cannot make reasonably reliable estimates of the timing of the future payments of these liabilities. Additionally, it is reasonably possible that within the next 12 months, as a result of ongoing negotiations with tax authorities and the expiration of statutes of limitations, our total liabilities associated with unrecognized tax benefits will further decrease. See Note 9 to the consolidated financial statements in our 2018 Annual Report on Form 10-K for information regarding our contingent tax liability reserves.

In connection with the sale of an 18.9% noncontrolling interest in a subsidiary to UMass Memorial Medical Center ("UMass"), we granted UMass the right to require us to purchase all of its interest in the subsidiary at fair value commencing July 1, 2020. As of March 31, 2019, the fair value of the redeemable noncontrolling interest on the interim unaudited consolidated balance sheet was $77 million, which was excluded from the table above. Since the redemption of the noncontrolling interest is outside of our control, we cannot make a reasonably reliable estimate of the timing of the future payment, if any, of the redeemable noncontrolling interest. For further details regarding the redeemable noncontrolling interest, see Note 11 to the interim unaudited consolidated financial statements and Note 16 to the consolidated financial statements in our 2018 Annual Report on Form 10-K.

Our credit agreements contain various covenants and conditions, including the maintenance of certain financial ratios, that could impact our ability to, among other things, incur additional indebtedness. As of March 31, 2019, we were in

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compliance with the various financial covenants included in our credit agreements and we do not expect these covenants to adversely impact our ability to execute our growth strategy or conduct normal business operations.

Equity Method Investees

Our equity method investees primarily consist of our clinical trials central laboratory services joint venture and our diagnostic information services joint ventures, which are accounted for under the equity method of accounting. Our investment in equity method investees is less than 5% of our consolidated total assets. Our proportionate share of income before income taxes associated with our equity method investees is less than 10% of our consolidated income before income taxes and equity in earnings of equity method investees. We have no material unconditional obligations or guarantees to, or in support of, our equity method investees and their operations.

For further details regarding related party transactions with our equity method investees, see Note 15 to the interim unaudited consolidated financial statements and Note 20 to the consolidated financial statements in our 2018 Annual Report on Form 10-K.

Requirements and Capital Resources

We estimate that we will invest approximately $350 million to $400 million during 2019 for capital expenditures, to support and grow our existing operations, principally related to investments in information technology, laboratory equipment and facilities, including our new multi-year laboratory construction in Clifton, New Jersey, and additional investments in our advanced and consumer growth strategies.

As of March 31, 2019, $1.3 billion of borrowing capacity was available under our existing credit facilities consisting of $529 million available under our secured receivables credit facility and $750 million available under our senior unsecured revolving credit facility. The secured receivables credit facility includes a $250 million loan commitment which matures October 2019, and a $250 million loan commitment and a $100 million letter of credit facility which mature October 2020. The senior unsecured revolving credit facility matures in March 2023. For further details regarding the credit facilities, see Note 14 to the consolidated financial statements in our 2018 Annual Report on Form 10-K and Note 8 to the interim unaudited consolidated financial statements.

On April 1, 2019, we repaid our senior notes due April 1, 2019 with a portion of the net proceeds from the issuance of the 2019 Senior Notes.

We believe the borrowing capacity under the credit facilities described above continues to be available to us. Should one or several banks no longer participate in either of our credit facilities, we would not expect it to impact our ability to fund operations. We expect that we will be able to replace our existing credit facilities with alternative arrangements prior to their expiration.

We believe that our cash and cash equivalents and cash from operations, together with our borrowing capacity under our credit facilities, will provide sufficient financial flexibility to fund seasonal and other working capital requirements, capital expenditures, debt service requirements and other obligations, cash dividends on common shares, share repurchases and additional growth opportunities for the foreseeable future. We believe that our credit profile should provide us with access to additional financing to refinance upcoming debt maturities including the 4.75% Senior Notes due January 2020 and 2.50% Senior Notes due March 2020 and, if necessary, to fund growth opportunities that cannot be funded from existing sources.

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Forward-Looking Statements

Some statements and disclosures in this document are forward-looking statements. Forward-looking statements include all statements that do not relate solely to historical or current facts and can be identified by the use of words such as “may,” “believe,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan” or “continue.” These forward-looking statements are based on our current plans and expectations and are subject to a number of risks and uncertainties that could cause our plans and expectations, including actual results, to differ materially from the forward-looking statements. Risks and uncertainties that may affect our future results include, but are not limited to, adverse results from pending or future government investigations, lawsuits or private actions, the competitive environment, the complexity of billing, reimbursement and revenue recognition for clinical laboratory testing, changes in government regulations, changing relationships with customers, payers, suppliers and strategic partners and other factors discussed in our most recently filed Annual Report on Form 10-K and subsequently filed Quarterly Reports on Form 10-Q and Current Reports on Form 8-K, including those discussed in the “Business,” “Risk Factors,” “Cautionary Factors that May Affect Future Results” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections of those reports.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

See Item 2. "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Item 4.    Controls and Procedures

Management, including our Chief Executive Officer and our Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended). Based upon that evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this quarterly report.

During the first quarter of 2019, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting except that we implemented an integrated third-party lease accounting application and added internal controls to ensure that we appropriately account for our leases in accordance with the new lease accounting standard which was adopted on January 1, 2019.

37

PART II - OTHER INFORMATION

Item 1.    Legal Proceedings

See Note 13 to the interim unaudited consolidated financial statements for information regarding the status of legal proceedings involving the Company.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

The table below sets forth the information with respect to purchases made by or on behalf of the Company of its common stock during the first quarter of 2019.

ISSUER PURCHASES OF EQUITY SECURITIES
Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands)
January 1, 2019 – January 31, 2019
Share Repurchase Program (A)	—	$	—	—	$	592,126
Employee Transactions (B)	2,391	$	82.06	N/A	N/A
February 1, 2019 – February 28, 2019
Share Repurchase Program (A)	—	$	—	—	$	592,126
Employee Transactions (B)	88,306	$	88.04	N/A	N/A
March 1, 2019 – March 31, 2019
Share Repurchase Program (A)	569,857	$	87.74	569,857	$	542,128
Employee Transactions (B)	83,015	$	86.86	N/A	N/A
Total
Share Repurchase Program (A)	569,857	$	87.74	569,857	$	542,128
Employee Transactions (B)	173,712	$	87.40	N/A	N/A

(A) Since the share repurchase program’s inception in May 2003, our Board of Directors has authorized $8 billion of share repurchases of our common stock through March 31, 2019. The share repurchase authorization has no set expiration or termination date.

(B) Includes: (1) shares delivered or attested to in satisfaction of the exercise price and/or tax withholding obligations by holders of stock options (granted under the Company’s Amended and Restated Employee Long-Term Incentive Plan) who exercised options; and (2) shares withheld (under the terms of grants under the Amended and Restated Employee Long-Term Incentive Plan) to offset tax withholding obligations that occur upon the delivery of outstanding common shares underlying restricted stock units and performance share units.

38

Item 6. Exhibits

Exhibits:

10.1	Amended and Restated Employee Stock Purchase Plan
10.2	Quest Diagnostics Incorporated Senior Management Incentive Plan
31.1	Rule 13a-14(a) Certification of Chief Executive Officer
31.2	Rule 13a-14(a) Certification of Chief Financial Officer
32.1	Section 1350 Certification of Chief Executive Officer
32.2	Section 1350 Certification of Chief Financial Officer
101.INS	dgx-20190331.xml
101.SCH	dgx-20190331.xsd
101.CAL	dgx-20190331_cal.xml
101.DEF	dgx-20190331_def.xml
101.LAB	dgx-20190331_lab.xml
101.PRE	dgx-20190331_pre.xml

39

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

April 24, 2019

Quest Diagnostics Incorporated

By	/s/ Stephen H. Rusckowski
	Stephen H. Rusckowski
	Chairman, President and
	Chief Executive Officer
By	/s/ Mark J. Guinan
	Mark J. Guinan
	Executive Vice President and
	Chief Financial Officer

40

EX-10.1

Exhibit 10.1

Amended and Restated Employee Stock Purchase Plan

(As approved by the stockholders on May 4, 2006 and as amended effective as of February 18, 2019)

The purpose of the Employee Stock Purchase Plan (the “Program”) of Quest Diagnostics Incorporated (the “Corporation”) is to provide to employees an ongoing opportunity to purchase shares of Common Stock of the Corporation, par value $0.01 per share (“Common Stock”). The Program became effective upon its approval by the holders of stock entitled to vote at the Corporation’s May 4, 2006 Annual Meeting of Stockholders and has subsequently been amended.

1.Administration. The Program will be administered by the Compensation Committee of the Board of Directors (the “Committee”). The Committee will have authority to (a) exercise all of the powers granted to it under the Program, (b) construe, interpret and implement the Program, (c) to prescribe, amend and rescind rules and regulations relating to the Program, including rules governing its own operations, (d) to make all determinations necessary or advisable in administering the Program and (e) to correct any defect, supply any omission and reconcile any inconsistency in the Program. The determination of the Committee on any matters relating to the Program shall be final, binding and conclusive. No member of the Committee shall be liable for any action or determination made in good faith with respect to the Program. To the extent permitted by applicable law, the Committee may delegate such responsibilities and powers as it specifies to any employee or employees selected by it. Any action undertaken by an administrator in accordance with the Committee’s delegation of authority shall have the same force and effect as if undertaken directly by the Committee. Any such delegation may be revoked by the Committee at any time.

2.Eligibility. Such groups of employees of the Corporation or any subsidiary or other entity as may from time to time be designated by the Committee (“Participating Entity”) will be eligible to participate in the Program, in accordance with such rules as may be prescribed from time to time by the Committee. No employee can participate in the Program if such employee would, immediately after participating in the Program, own stock possessing five percent or more of the total combined voting power or value of all classes of stock of the Corporation or of its parent or subsidiary corporations. A person may not participate in the Program unless such person is an “employee” as defined in the instructions to the Form S-8 registration statement under the Securities Act of 1933, as amended (or any successor form) as in effect from time to time.

3.Shares Subject to the Program. The total number of shares of Common Stock which may be delivered pursuant to the Program will be nine million (9,000,000) shares of Common Stock in the aggregate. In the event of any stock split, reverse stock split, stock dividend, recapitalization, reorganization, merger, demerger, consolidation, split-up, spin-off, combination or exchange of shares, or any similar change affecting the Common Stock, or in the event the Company pays an extraordinary cash dividend: (i) the number and kind of shares which may be delivered under the Program; (ii) the number and kind of shares subject to outstanding Options (as hereinafter defined); and (iii) the exercise price of outstanding Options shall be appropriately adjusted consistent with such change in such manner as the Committee may deem equitable to prevent substantial dilution or enlargement of the right granted to, or available for, participants. Except as expressly provided herein, no issuance by the Corporation of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to an Option. The Shares delivered under the Plan may be authorized and unissued shares or shares held in the treasury of the Corporation, including shares purchased by the Corporation (at such time or times and in such manner as it may determine).

4.Participation; Payroll Deductions.

(a)An eligible employee may participate in the Program by completing the enrollment process specified by the Corporation, including authorizing payroll deductions from the employee’s eligible compensation (as determined from time to time by the Committee). Payroll deductions authorized by a participating employee will be given effect as soon as practicable after completion of the enrollment process, but may not be retroactive.

(b)Unless otherwise determined by the Committee, an employee may authorize a payroll deduction at a rate, in whole percentages, of (X) not less than one percent (1%) of the eligible compensation that the employee receives during each payroll period and (Y) not greater than ten percent (10%) of the eligible compensation that the employee receives during each payroll period; provided, however, that employees participating in the Program on June 29 , 2015 shall not be subject to the limitation set forth in clause (X) until such time, if any, as they change the amount of their payroll deduction.

1

Exhibit 10.1

(c)Payroll deductions authorized under the Program shall be held by the Corporation as part of its general funds. All funds held by the Corporation under the Program may be used for any corporate purpose. Records will be maintained of the payroll deductions of each participating employee. Participating employees shall not be credited with, or entitled to receive, interest in respect of payroll deductions.

(d)A participating employee may at any time request to stop, increase or decrease his or her payroll deductions by completing a Corporation-specified process. These requests shall become effective as soon as practicable after completion of the process. A participating employee shall have no right to withdraw payroll deductions.

(e)If a participating employee ceases to participate in the Program for any reason (including, without limitation, Program ineligibility or termination of employment), then that participating employee’s uninvested payroll deductions shall be refunded as soon as practicable.

5.Offerings.

(a)Certain Definitions; Offering; Corporate Contribution

(1)The Corporation shall make on the last business day of each calendar month, or on such other date or dates as the Committee may determine, an offer to participating employees to purchase shares of Common Stock under the Program. Each date on which an offer is made is referred to as an “Offer Date.”

(2)The period beginning on the day following an Offer Date and continuing through (and including) the next Offer Date shall be an “Offer Period.”

(3)The payroll deductions for a participating employee made under the Program during an Offer Period shall be the “Employee Contribution” for that Offer Period.

(4)On each Offer Date, for each employee for which there is an Employee Contribution for the Offer Period ending on that Offer Date, the Corporation shall make a “Corporate Contribution” equal to 0.0526 multiplied by the Employee Contribution.

(5)For each participating employee as of any date, the sum of all Employee Contributions plus all Corporate Contributions that have not yet been invested in shares of Common Stock purchased under the Program shall be the participating employee’s “Program Credits” as of that date.

(6)“Market Price” means, unless the Committee determines otherwise, the closing price of a share of Common Stock on the New York Stock Exchange Composite list (or such other stock exchange as shall be the principal public trading market for the Common Stock) on the relevant date of determination or, if the Common Stock is not traded on such date, the closing price on the New York Stock Exchange Composite list (or such other stock exchange as shall be the principal public trading market for the Common Stock) on the next preceding day on which the Common Stock was traded.

(b)On any Offer Date, if a participating employee’s Program Credits are sufficient to purchase at least one whole share of Common Stock (based on the Market Price on the Offer Date), then that participating employee will be entitled to purchase Common Stock under the Program on that Offer Date and will be granted an option (an “Option”) to purchase as many shares of Common Stock as may be purchased with the participating employee’s Program Credits. The exercise price for each Option will be the Market Price on the Offer Date. The participating employee shall be deemed to have exercised the Option as of the Offer Date and shall acquire the Common Stock subject to the Option.

(c)If on an Offer Date a participating employee’s Program Credits are not sufficient to purchase at least one whole share of Common Stock (based on the Market Price on the Offer Date), then that participating employee will not be entitled to purchase Common Stock under the Program on that Offer Date, and the participating employee’s Program Credits will be applied to the purchase of Common Stock in accordance with Section 5(b) on the next Offer Date.

6.Common Stock Acquired Under Program. Common Stock purchased by a participating employee under the Program shall be held by a third party agent in an account established for the participating employee.

2

Exhibit 10.1

7.Certain Rights.

(a)A participating employee shall not have any of the rights or privileges of a stockholder of the Corporation with respect to shares purchased under the Program unless and until ownership of such shares shall have been appropriately evidenced on the Corporation’s books.

(b)Rights under the Program are not transferable by a participating employee other than by will or the laws of descent and distribution, and are exercisable during the participating employee’s lifetime only by the participating employee.

(c)Nothing in the Program shall confer upon any employee the right to continue in the employ of the Corporation or any Participating Entity or affect any right which the Corporation or any Participating Entity may have to terminate such employment.

8.Amendment; Termination.

(a)The Committee may at any time, or from time to time, amend or suspend the Program in any respect, including retroactively to the extent necessary; provided, however that no such action shall be made without shareholder approval if such approval is required under tax or stock exchange rules and regulations. Upon any such suspension or amendment of the Program, the Committee may in its discretion determine that all payroll deductions pending investment under the Program will be applied under a successor program, if any, or promptly refunded.

(b)The Program and all rights of employees under any offering hereunder shall terminate at the discretion of the Committee or on the day that participating employees become entitled to purchase a number of shares of Common Stock greater than the number of shares of Common Stock remaining available for purposes of the Program; provided, however, if the number of shares of Common Stock so purchasable is greater than the shares of Common Stock remaining available, the available shares of Common Stock shall be allocated by the Committee among such participating employees in such manner as it deems fair.

(c)Upon termination of the Program all payroll deductions pending investment under the Program shall be applied under a successor program, if any, or promptly refunded.

9.Governmental Regulations. The Corporation’s obligation to sell and deliver shares of Common Stock under the Program is subject to the approval of any governmental authority required for the authorization, issuance, or sale of such stock.

10.Expenses. The Committee shall determine in its discretion the extent to which costs of administering and carrying out the Program, including the cost of maintaining participant accounts and costs (including brokerage fees) incurred in connection with transfers or sales of shares under the Program, will be borne by participating employees (including those whose employment has terminated).

11.Miscellaneous.

(a)As a condition to participation by an employee in the Program, the Corporation may withhold from any compensation to which the participating employee may be entitled all amounts necessary to satisfy all federal, state, city or other taxes required to be withheld in connection with the individual’s participation in the Program pursuant to any law or governmental regulation or ruling.

(b)The Program is not intended to qualify as an “employee stock purchase plan” within the meaning of Section 423(b) of the Internal Revenue Code, but is intended to meet the coverage and participation requirements of Sections 423(b)(3) and 423(b)(5) of the Internal Revenue Code and therefore to qualify as a “Stock Purchase Plan” within the meaning of Rule 16b-3 promulgated under the Securities Exchange Act of 1934.

12.Governing Law. The Program shall be interpreted, construed and administered in accordance with the laws of the State of New Jersey, without giving effect to principles of conflict of laws.

3

Exhibit 10.1

Annex I: Certain Supplemental Provisions

This Annex I to the Quest Diagnostics Incorporated Amended and Restated Employee Stock Purchase Plan sets forth supplemental terms and conditions applicable to (i) employees whose employment with the Corporation or another Participating Entity terminated (for any reason) on or prior to May 25, 2015 and (ii) employees and former employees whose accounts under the Program held securities of entities other than the Corporation.

1.    Rights on Retirement, Death, or Termination of Employment.

Following retirement or other termination of employment, a participant (or if the participant has died, the representative of the participant’s estate) may elect to have the shares of Common Stock held in the participant’s account under the Program: (i) transferred to a brokerage account designated by the participant; or (ii) sold and the proceeds remitted to the participant. If the Corporation does not receive a written election relating to the shares in a participant’s account from the participant within 60 days following the date the Corporation notifies the participant of the opportunity to make such election, the participant shall be deemed to have made the election provided for in clause (ii) of the preceding sentence; provided, however, that the Committee may in its discretion establish a different default procedure for participants who fail to make a timely election. This Part 1 of Annex 1 became effective as of May 25, 2015, including with respect to participants who have retired or whose employment has otherwise terminated prior to such date.

2.    Common Stock of Entities Other than the Corporation.

With respect to the shares of common stock or other securities of entities other than the Corporation held in accounts under the Program, a participant may elect to have the shares or other securities in the account: (i) delivered to the transfer agent for the issuer of such shares or other securities for the participant’s benefit; (ii) transferred to a brokerage account designated by the participant; or (iii) sold and the proceeds remitted to the participant. If the Corporation does not receive a written election relating to such shares or other securities in a participant’s account from the participant within 60 days following the date the Corporation notifies the participant of the opportunity to make such election, the participant shall be deemed to have made the election provided for in clause (iii) of the preceding sentence; provided, however, that the Committee may in its discretion establish a different default procedure for participants who fail to make a timely election. This Part 2 of Annex I became effective as of May 25, 2015.

4

EX-10.2

Exhibit 10.2

QUEST DIAGNOSTICS INCORPORATED

SENIOR MANAGEMENT INCENTIVE PLAN

(As amended and restated February 18, 2019)

SECTION 1. PURPOSES

The purpose of the Quest Diagnostics Incorporated Senior Management Incentive Plan (the “Plan”) is to attract, retain and motivate selected employees of Quest Diagnostics Incorporated (the “Company”) and its subsidiaries and affiliates who are executive officers or officers of the Company in order to promote the Company's long-term growth and profitability.

SECTION 2. ADMINISTRATION

(a)    The Plan shall be administered by a committee (the “Committee”) appointed by the Board of Directors of the Company (the “Board”), whose members shall serve at the pleasure of the Board. Unless otherwise determined by the Board, the Committee shall be the Compensation Committee of the Board. Notwithstanding anything to the contrary contained herein, the Committee may allocate among its members and may delegate some or all of its authority or administrative responsibility to such individual or individuals who are not members of the Committee as it shall deem necessary or appropriate; provided, however, that in the case of employees who are executive officers, the Committee may not delegate any of its authority or administrative responsibility hereunder to any individual or individuals who are not members of the Committee. Further, notwithstanding anything to the contrary contained herein, from time to time, the Board may assume, at its sole discretion, full or partial responsibility for administration of the Plan.

(b)    The Committee shall have complete control over the administration of the Plan, and shall have the authority in its sole and absolute discretion to: (i) exercise all of the powers granted to it under the Plan; (ii) construe, interpret and implement the Plan; (iii) prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations governing its own operations; (iv) make all determinations necessary or advisable in administering the Plan (including, without limitation, calculating the size of the Bonus payable to each Participant (as defined in Section 4)); and (v) correct any defect, supply any omission and reconcile any inconsistency in the Plan.

(c)    The determination of the Committee on all matters relating to the Plan and any amounts payable thereunder shall be final, binding and conclusive on all parties.

(d)    No member of the Board or the Committee or any employee of the Company or any of its subsidiaries or affiliates (each such person a “Covered Person”) shall have any liability to any person (including, without limitation, any Participant) for any action taken or omitted to be taken or any determination made in good faith with respect to the Plan or any Bonus. Each Covered Person shall be indemnified and held harmless by the Company against and from any loss, cost, liability or expense (including attorneys' fees) that may be imposed upon or incurred by such Covered Person in connection with or resulting from any action, suit or proceeding to which such Covered Person may be a party or in which such Covered Person may be involved by reason of any action taken or omitted to be taken under the Plan and against and from any and all amounts paid by such Covered Person, with the Company's approval, in settlement thereof, or paid by such Covered Person in satisfaction of any judgment in any such action, suit or proceeding against such Covered Person, provided that the Company shall have the right, at its own expense, to assume and defend any such action, suit or proceeding and, once the Company gives notice of its intent to assume the defense, the Company shall have sole control over such defense with counsel of the Company's choice. The foregoing right of indemnification shall not be available to a Covered Person to the extent that a court of competent jurisdiction in a final judgment or other final adjudication, in either case, not subject to further appeal, determines that the acts or omissions of such Covered Person giving rise to the indemnification claim resulted from such Covered Person's bad faith, fraud or willful criminal act or omission. The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which Covered Persons may be entitled under the Company's Restated Certificate of Incorporation or Amended and Restated Bylaws, as a matter of law, or otherwise, or any other power that the Company may have to indemnify such persons or hold them harmless.

1

Exhibit 10.2

SECTION 3. PERFORMANCE PERIOD

The Plan shall operate for successive periods (each a “Performance Period”). The first Performance Period commenced on January 1, 2003 and terminated on December 31, 2003. Thereafter, each Performance Period shall be one full fiscal year and/or portions of fiscal years of the Company, as determined by the Committee.

SECTION 4. PARTICIPATION

The Committee shall designate those individuals who shall participate in the Plan for each Performance Period (the “Participants”). Except as provided below, the Committee shall have the authority at any time during the Performance Period to remove Participants from the Plan for that Performance Period and to add Participants to the Plan for a particular Performance Period.

SECTION 5. BONUS AMOUNTS

(a)    Each Participant shall be paid a bonus based upon the achievement of one or more performance measures selected by the Committee. The performance measures may be described in terms of objectives that are related to the individual Participant or objectives that are Company-wide or related to a subsidiary, division, department, region, function or business unit and may be measured on an absolute or cumulative basis or on the basis of percentage of improvement over time, and may be measured in terms of Company performance (or performance of the applicable subsidiary, division, department, region, function or business unit) or measured in terms of performance relative to selected peer companies or a market index. In addition, performance goals that may be used by the Committee may include, without limitation, one or more of the following: operating profits (including EBITDA), net profits, earnings per share, profit returns and margins, revenues, cost/expense management, shareholder return and/or value, stock price, return on invested capital, cash flow, customer attrition, productivity, workforce diversity, employee satisfaction, individual executive performance, customer service and quality metrics. Performance goals may be adjusted after their establishment in such manner as the Committee considers necessary or appropriate.

(b)    Notwithstanding anything to the contrary in this Plan, the Committee may, in its sole discretion, reduce or increase up to an amount equal to 1% of the Company’s Earnings (as defined in Section 5(c)), the bonus amount for any Participant for a particular Performance Period at any time prior to the payment of bonuses to Participants pursuant to Section 6 (a Participant's bonus amount for each Performance Period, as so reduced or increased, the “Bonus”).

(c)    If a Participant's employment with the Company terminates for any reason before the end of a Performance Period, the Committee shall have the discretion to determine whether (i) such Participant shall be entitled to any Bonus at all, (ii) such Participant's Bonus shall be reduced on a pro-rata basis to reflect the portion of such Performance Period the Participant was employed by the Company or (iii) to make such other arrangements as the Committee deems appropriate in connection with the termination of such Participant's employment.

(d)    For purposes of this Section 5, “Earnings” means the Company's income before taxes and extraordinary gains and losses as reported in its audited consolidated financial statements for the relevant fiscal year, adjusted to eliminate, with respect to such fiscal year, the following items included in such audited statements: (i) losses related to the impairment of goodwill and other intangible assets; (ii) restructuring and other unusual non-recurring items separately reported; (iii) gains or losses that are the direct result of a major casualty or natural disaster; (iv) losses resulting from any newly-enacted law, regulation or judicial order; and (v) the cumulative effect of accounting changes.

SECTION 6. PAYMENT OF BONUS AMOUNT; VOLUNTARY DEFERRAL

Each Participant's Bonus shall be payable by such Participant's Participating Employer (as defined in Section 7(l)), or in the case of a Participant employed by more than one Participating Employer, by each such employer as determined by the Committee. The Bonus shall be payable in the discretion of the Committee in cash and/or an equity-based award of equivalent value. No Participant shall have any rights to payment of any amounts under this Plan unless and until the Committee determines the amount of such Participant's Bonus, that such Bonus shall be paid and the method and timing of its payment. To the extent that equity-based awards are

2

Exhibit 10.2

granted in lieu of cash they will be granted under another plan maintained by the Company. The cash value of such awards shall be determined by the Committee provided that in determining the number of Company restricted or deferred stock units payable in cash or shares of the Company's common stock, restricted shares of the Company's common stock or unrestricted shares of the Company's common stock that is equivalent to a dollar amount, that dollar amount shall be divided by the average of the high and low sales prices of the Company's common stock on the date of grant by the Committee (with fractional shares being rounded to the nearest whole share). The cash portion of the Bonus shall be paid at such time as bonuses are generally paid by the Participating Employer(s) for the relevant fiscal year. Subject to approval by the Committee and to any requirements imposed by the Committee in connection with such approval, each Participant may be entitled to defer receipt, under the terms and conditions of any applicable deferred compensation plan of the Company, of part or all of any payments otherwise due under this Plan. Any equity-based award shall be subject to such terms and conditions (including vesting requirements) as the Committee and the administrative committee of the plan under which such equity-based award is granted may determine.

SECTION 7. GENERAL PROVISIONS

(a)    Amendment, Termination, etc. The Board or the Committee may at any time and from time to time modify, alter, amend, suspend, discontinue or terminate the Plan, including in any manner that adversely affects the rights of Participants.

(b)    Nonassignability. No rights of any Participant (or of any beneficiary pursuant to this Section 7(b)) under the Plan may be sold, exchanged, transferred, assigned, pledged, hypothecated or otherwise disposed of (including through the use of any cash-settled instrument), either voluntarily or involuntarily by operation of law, other than by will or by the laws of descent and distribution. Any sale, exchange, transfer, assignment, pledge, hypothecation or other disposition in violation of the provisions of this Section 7(b) shall be void. In the event of a Participant's death, any amounts payable under the Plan shall be paid in accordance with the Plan to a Participant's estate. A Participant's estate shall have no rights under the Plan to receive such amounts, if any, as may be payable under this Section 7(b), and all of the terms of this Plan shall be binding upon any such Participant's estate.

(c)    Plan Creates No Employment Rights. Nothing in the Plan shall confer upon any Participant the right to continue in the employ of the Company for the Performance Period or thereafter or affect any right which the Company may have to terminate such employment.

(d)    Dispute Resolution. Any dispute, controversy or claim between the Company and any Participant arising out of or relating to or concerning the provisions of the Plan shall be heard only in a United States federal court or a New Jersey state court having subject matter jurisdiction located in New Jersey.

(e)    Governing Law. All rights and obligations under the Plan shall be governed by and construed in accordance with the laws of the State of New Jersey, without regard to principles of conflict of laws.

(f)    Tax Withholding. In connection with any payments to a Participant or other event under the Plan that gives rise to a federal, state, local or other tax withholding obligation relating to the Plan (including, without limitation, FICA tax), (i) the Company and any Participating Employer may deduct or withhold (or cause to be deducted or withheld) from any payment or distribution to such Participant whether or not pursuant to the Plan or (ii) the Committee shall be entitled to require that such Participant remit cash (through payroll deduction or otherwise), in each case in an amount sufficient in the opinion of the Company to satisfy such withholding obligation.

(g)    Section 409A. If any provision of the Plan or any Bonus contravenes Section 409A of the Internal Revenue Code (“Section 409A”)) or could cause a Participant to recognize income for United States federal tax purposes in respect of a Bonus prior to payment of the Bonus or to be subject to any tax or interest under Section 409A, such provision of the Plan or any Bonus may be modified to maintain, to the maximum extent practicable, the original intent of the applicable provision without the imposition of any tax or interest under Section 409A. Moreover, any discretionary authority that the Committee may have pursuant to the Plan shall not be applicable to a Bonus that is subject to Section 409A to the extent such discretionary authority would contravene Section 409A or cause a Participant to recognize income for United States federal tax purposes in respect of a Bonus prior to payment of the Bonus or to be subject to any tax or interest under Section 409A.

3

Exhibit 10.2

(h)    Right of Offset. The Company and any Participating Employer shall have the right to offset against the obligation to pay a Bonus to any Participant, any outstanding amounts (including, without limitation, travel and entertainment or advance account balances, loans or amounts repayable to it pursuant to tax equalization, housing, automobile or other employee programs) such Participant then owes to it.

(i)    Recoupment. All Bonuses granted under the Plan, shall be subject to clawback or recoupment as permitted or mandated by applicable law, rules, regulations or Company policy as enacted, adopted or modified from time to time.

(j)    Severability; Entire Agreement. If any of the provisions of this Plan is finally held to be invalid, illegal or unenforceable (whether in whole or in part), such provision shall be deemed modified to the extent, but only to the extent, of such invalidity, illegality or unenforceability and the remaining provisions shall not be affected thereby. This Plan shall not supersede any other agreement, written or oral, pertaining to the matters covered herein, except to the extent of any inconsistency between this Plan and any prior agreement, in which case this Plan shall prevail.

(k)    No Third Party Beneficiaries. The Plan shall not confer on any person other than the Company and any Participant any rights or remedies hereunder.

(l)    Participating Employers. Each subsidiary or affiliate of the Company that employs a Participant shall adopt this Plan (each, a “Participating Employer”). The obligation to pay the Bonus to each Participant shall be the sole liability of the Participating Employer(s) by which the Participant is employed, and neither the Company nor any other Participating Employer shall have any liability with respect to such amounts.

(m)    Successors and Assigns. The terms of this Plan shall be binding upon and inure to the benefit of the Company, each Participating Employer and their successors and assigns and each permitted successor or assign of each Participant as provided in Section 7(b).

(n)    Plan Headings. The headings in this Plan are for the purpose of convenience only and are not intended to define or limit the construction of the provisions hereof.

(o)    Construction. In the construction of this Plan, the singular shall include the plural, and vice versa, in all cases where such meanings would be appropriate. Nothing in this Plan shall preclude or limit the ability of the Company, its subsidiaries and affiliates to pay any compensation to a Participant under any other plan or compensatory arrangement whether or not in effect on the date this Plan was adopted.

4

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Stephen H. Rusckowski, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Quest Diagnostics Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

April 24, 2019

By	/s/ Stephen H. Rusckowski
	Stephen H. Rusckowski
	Chairman, President and
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Mark J. Guinan, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Quest Diagnostics Incorporated;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

April 24, 2019

By	/s/ Mark J. Guinan
	Mark J. Guinan
	Executive Vice President and
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. § 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. § 1350, the undersigned certifies that, to the best of my knowledge, the Quarterly Report on Form 10-Q for the period ended March 31, 2019 of Quest Diagnostics Incorporated, as being filed with the Securities and Exchange Commission concurrently herewith, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m or 78o(d)) and that the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Quest Diagnostics Incorporated.

Dated:	April 24, 2019	/s/ Stephen H. Rusckowski
		Stephen H. Rusckowski
		Chairman, President and
		Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER PURSUANT TO 18 U.S.C. § 1350,

AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. § 1350, the undersigned certifies that, to the best of my knowledge, the Quarterly Report on Form 10-Q for the period ended March 31, 2019 of Quest Diagnostics Incorporated, as being filed with the Securities and Exchange Commission concurrently herewith, fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. § 78m or 78o(d)) and that the information contained in the Quarterly Report fairly presents, in all material respects, the financial condition and results of operations of Quest Diagnostics Incorporated.

Dated:	April 24, 2019	/s/ Mark J. Guinan
		Mark J. Guinan
		Executive Vice President and
		Chief Financial Officer

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DOCUMENT AND ENTITY INFORMATION - shares	3 Months Ended
	Mar. 31, 2019	Apr. 12, 2019
Document and Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	Q1
Entity Registrant Name	QUEST DIAGNOSTICS INC
Entity Central Index Key	0001022079
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		134,375,081

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CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Statement [Abstract]
Net revenues	$ 1,891	$ 1,884
Operating costs and expenses and other operating income:
Cost of services	1,244	1,226
Selling, general and administrative	384	363
Amortization of intangible assets	24	22
Other operating (income) expense, net	(9)	1
Total operating costs and expenses, net	1,643	1,612
Operating income	248	272
Other income (expense):
Interest expense, net	(44)	(41)
Other income (expense), net	9	(2)
Total non-operating expenses, net	(35)	(43)
Income before income taxes and equity in earnings of equity method investees	213	229
Income tax expense	(50)	(52)
Equity in earnings of equity method investees, net of taxes	13	12
Net income	176	189
Less: Net income attributable to noncontrolling interests	12	12
Net income attributable to Quest Diagnostics	$ 164	$ 177
Earnings per share attributable to Quest Diagnostics’ common stockholders:
Basic (per share)	$ 1.22	$ 1.30
Diluted (per share)	$ 1.20	$ 1.27
Weighted average common shares outstanding:
Basic (in Shares)	134	136
Diluted (in Shares)	136	139

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Statement of Comprehensive Income [Abstract]
Net income	$ 176	$ 189
Other comprehensive income:
Currency translation	4	6
Net deferred loss on cash flow hedges, net of taxes	0	1
Other comprehensive income	4	7
Comprehensive income	180	196
Less: Comprehensive income attributable to noncontrolling interests	12	12
Comprehensive income attributable to Quest Diagnostics	$ 168	$ 184

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CONSOLIDATED BALANCE SHEETS - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Assets
Cash and cash equivalents	$ 464	$ 135
Accounts receivable, net of allowance for doubtful accounts of $17 and $15 as of March 31, 2019 and December 31, 2018, respectively	1,079	1,012
Inventories	98	99
Prepaid expenses and other current assets	137	144
Total current assets	1,778	1,390
Property, plant and equipment, net	1,277	1,288
Operating lease right-of-use assets	497	0
Goodwill	6,605	6,563
Intangible assets, net	1,200	1,207
Investment in equity method investees	454	436
Other assets	126	119
Total assets	11,937	11,003
Liabilities and Stockholders' Equity
Accounts payable and accrued expenses	1,029	1,021
Current portion of long-term debt	1,108	464
Current portion of long-term operating lease liabilities	145	0
Total current liabilities	2,282	1,485
Long-term debt	3,131	3,429
Long-term operating lease liabilities	393	0
Other liabilities	713	745
Commitments and contingencies
Redeemable noncontrolling interest	77	77
Quest Diagnostics stockholders’ equity:
Common stock, par value $0.01 per share; 600 shares authorized as of both March 31, 2019 and December 31, 2018; 217 shares issued as of both March 31, 2019 and December 31, 2018	2	2
Additional paid-in capital	2,671	2,667
Retained earnings	7,694	7,602
Accumulated other comprehensive loss	(55)	(59)
Treasury stock, at cost; 83 shares and 82 shares as of March 31, 2019 and December 31, 2018, respectively	(5,022)	(4,996)
Total Quest Diagnostics stockholders' equity	5,290	5,216
Noncontrolling interests	51	51
Total stockholders' equity	5,341	5,267
Total liabilities and stockholders' equity	$ 11,937	$ 11,003

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CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Millions, $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Statement of Financial Position [Abstract]
Allowance for doubtful accounts	$ 17	$ 15
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	600	600
Common stock, shares issued (in shares)	217	217
Treasury stock (in shares)	83	82

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CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Cash flows from operating activities:
Net income	$ 176	$ 189
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	84	74
Provision for doubtful accounts	4	3
Deferred income tax provision	3	24
Stock-based compensation expense	17	19
Other, net	(18)	(1)
Changes in operating assets and liabilities:
Accounts receivable	(71)	(97)
Accounts payable and accrued expenses	32	(68)
Income taxes payable	43	5
Other assets and liabilities, net	5	32
Net cash provided by operating activities	275	180
Cash flows from investing activities:
Business acquisitions, net of cash acquired	(56)	(130)
Capital expenditures	(47)	(73)
Increase in investments and other assets	(7)	(1)
Net cash used in investing activities	(110)	(204)
Cash flows from financing activities:
Proceeds from borrowings	1,139	935
Repayments of debt	(802)	(832)
Purchases of treasury stock	(53)	(50)
Exercise of stock options	20	34
Employee payroll tax withholdings on stock issued under stock-based compensation plans	(15)	(20)
Dividends paid	(72)	(61)
Distributions to noncontrolling interest partners	(12)	(15)
Contributions from noncontrolling interest partners	0	2
Other financing activities, net	(41)	18
Net cash provided by financing activities	164	11
Net change in cash and cash equivalents and restricted cash	329	(13)
Cash and cash equivalents and restricted cash, beginning of period	135	137
Cash and cash equivalents and restricted cash, end of period	464	124
Cash and cash equivalents	135
Cash and cash equivalents and restricted cash, end of period	$ 135	$ 137

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CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) shares in Millions, $ in Millions	Total	Common Stock	Additional Paid-In Capital	Retained Earnings	Accumulated Other Comprehensive Loss	Treasury Stock, at Cost	Non-controlling Interests
Balance, value at Dec. 31, 2017	$ 4,955	$ 2	$ 2,612	$ 7,138	$ (48)	$ (4,783)	$ 34
Balance, shares at Dec. 31, 2017		135.0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	188			177			11
Other comprehensive income, net of taxes	7				7
Dividends declared	(66)			(66)
Distributions to noncontrolling interest partners	(11)						(11)
Issuance of common stock under benefit plans	8		4			4
Stock-based compensation expense	19		18			1
Exercise of stock options, value	34		2			32
Exercise of stock options, shares		1.0
Shares to cover employee payroll tax withholdings on stock issued under stock-based compensation plans, value	(20)		(20)
Purchases of treasury stock, value	(50)					$ (50)
Purchases of treasury stock, shares						(0.5)
Contributions from noncontrolling interest partners	2						2
Balance, value at Mar. 31, 2018	5,066	$ 2	2,616	7,249	(41)	$ (4,796)	36
Balance, shares at Mar. 31, 2018		136.0
Balance, Value at Dec. 31, 2017	80
Redeemable Non-controlling Interest [Abstract]
Net income	1
Distributions to noncontrolling interest partners	(4)
Balance, Value at Mar. 31, 2018	77
Balance, value at Dec. 31, 2018	5,267	$ 2	2,667	7,602	(59)	(4,996)	51
Balance, shares at Dec. 31, 2018		135.0
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income	174			164			10
Other comprehensive income, net of taxes	4				4
Dividends declared	(72)			(72)
Distributions to noncontrolling interest partners	(10)						(10)
Issuance of common stock under benefit plans	6		2			4
Stock-based compensation expense	17		16			1
Exercise of stock options, value	20		1			19
Exercise of stock options, shares
Shares to cover employee payroll tax withholdings on stock issued under stock-based compensation plans, value	(15)		(15)
Purchases of treasury stock, value	(50)					$ (50)
Purchases of treasury stock, shares		(1.0)				(0.6)
Balance, value at Mar. 31, 2019	5,341	$ 2	$ 2,671	$ 7,694	$ (55)	$ (5,022)	$ 51
Balance, shares at Mar. 31, 2019		134.0
Balance, Value at Dec. 31, 2018	77
Redeemable Non-controlling Interest [Abstract]
Net income	2
Distributions to noncontrolling interest partners	(2)
Balance, Value at Mar. 31, 2019	$ 77

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DESCRIPTION OF BUSINESS

3 Months Ended

Mar. 31, 2019

Description of Business (Abstract)

DESCRIPTION OF BUSINESS

DESCRIPTION OF BUSINESS

Background

Quest Diagnostics Incorporated and its subsidiaries ("Quest Diagnostics" or the "Company") empower people to take action to improve health outcomes.  The Company uses its extensive database of clinical lab results to derive diagnostic insights that reveal new avenues to identify and treat disease, inspire healthy behaviors and improve healthcare management.  The Company's diagnostic information services business ("DIS") provides information and insights based on the industry-leading menu of routine, non-routine and advanced clinical testing and anatomic pathology testing, and other diagnostic information services. The Company provides services to a broad range of customers, including patients, clinicians, hospitals, independent delivery networks ("IDNs"), health plans, employers and accountable care organizations ("ACOs"). The Company offers the broadest access in the United States to diagnostic information services through its nationwide network of laboratories, patient service centers and phlebotomists in physician offices and the Company's connectivity resources, including call centers and mobile paramedics, nurses and other health and wellness professionals. The Company is the world's leading provider of diagnostic information services. The Company provides interpretive consultation with one of the largest medical and scientific staffs in the industry and hundreds of M.D.s and Ph.D.s, many of whom are recognized leaders in their fields. The Company's Diagnostic Solutions businesses ("DS") are the leading provider of risk assessment services for the life insurance industry and offer healthcare organizations and clinicians robust information technology solutions.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The interim unaudited consolidated financial statements reflect all adjustments which in the opinion of management are necessary for a fair statement of results of operations, comprehensive income, financial condition, cash flows and stockholders' equity for the periods presented. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s 2018 Annual Report on Form 10-K. The year-end balance sheet data was derived from the audited consolidated financial statements as of December 31, 2018, but does not include all the disclosures required by accounting principles generally accepted in the United States (“GAAP”).

The accounting policies of the Company are the same as those set forth in Note 2 to the consolidated financial statements contained in the Company’s 2018 Annual Report on Form 10-K except for the impact of the adoption of new accounting standards discussed under New Accounting Pronouncements.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Earnings Per Share

The Company's unvested restricted stock units that contain non-forfeitable rights to dividends are participating securities and, therefore, are included in the earnings allocation in computing earnings per share using the two-class method. Basic earnings per common share is calculated by dividing net income, adjusted for earnings allocated to participating securities, by the weighted average number of common shares outstanding. Diluted earnings per common share is calculated by dividing net income, adjusted for earnings allocated to participating securities, by the weighted average number of common shares outstanding after giving effect to all potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include the dilutive effect of outstanding stock options and performance share units granted under the Company's Amended and Restated Employee Long-Term Incentive Plan and its Amended and Restated Non-Employee Director Long-Term Incentive Plan. Earnings allocable to participating securities include the portion of dividends declared as well as the portion of undistributed earnings during the period allocable to participating securities.

New Accounting Pronouncements

Adoption of New Accounting Standards

On January 1, 2019, the Company adopted a new accounting standard issued by the Financial Accounting Standards Board ("FASB") on accounting for leases using the modified retrospective method. This new accounting standard requires a lessee to recognize an asset and liability for most leases on its balance sheet. The Company elected the optional transition method that allowed for a cumulative-effect adjustment to the opening balance of retained earnings recorded on January 1, 2019 and did not restate previously reported results in the comparative periods. The Company also elected the package of practical expedients, which among other things, allowed it to carry forward its historical lease classification.

As a result of adoption of the new standard, the Company recorded operating lease assets and lease liabilities of approximately $500 million and $550 million, respectively as of January 1, 2019. The operating lease liability was determined based on the present value of the remaining minimum rental payments and the operating lease asset was determined based on the value of the lease liability, adjusted for the deferred rent balances of approximately $50 million, which were previously included in accounts payable and accrued expenses as well as other liabilities. Accounting for the Company's finance leases remains substantially unchanged. The adoption of the new standard did not materially impact the Company's consolidated results of operations or cash flows.

In addition, the adoption of this new accounting standard resulted in increased qualitative and quantitative disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases. For further details, see Note 9.

On January 1, 2019, the Company adopted a new accounting standard issued by the FASB that includes the overnight index swap rate based on the Secured Overnight Financing Rate as an additional benchmark interest rate for hedge accounting purposes. Adoption of this new accounting standard did not have an impact on the Company's existing interest rate swap agreements and it will be applied prospectively for new or redesignated hedges entered into after the adoption date.

New Accounting Standards To Be Adopted

In August 2018, the FASB issued an Accounting Standard Update (“ASU”) that aligns the requirements for deferring implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This ASU is effective for the Company in the first quarter of 2020 with early adoption permitted and can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently assessing the impact of the adoption of this ASU on the Company’s results of operations, financial position and cash flows.    

In June 2016, the FASB issued an ASU that changes the impairment model for most financial instruments, including trade receivables, from an incurred loss method to a new forward-looking approach, based on expected losses. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU is effective for the Company in the first quarter of 2020 and must be adopted using a modified retrospective transition approach. The Company is currently assessing the impact of the adoption of this ASU on the Company’s results of operations, financial position and cash flows.

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EARNINGS PER SHARE

3 Months Ended

Mar. 31, 2019

Earnings Per Share, Basic and Diluted [Abstract]

EARNINGS (LOSS) PER SHARE

EARNINGS PER SHARE

The computation of basic and diluted earnings per common share was as follows:

	Three Months Ended March 31,
	2019		2018
Amounts attributable to Quest Diagnostics’ common stockholders:
Net income attributable to Quest Diagnostics	$	164	$	177
Less: Earnings allocated to participating securities	1		1
Earnings available to Quest Diagnostics’ common stockholders – basic and diluted	$	163	$	176
Weighted average common shares outstanding – basic	134		136
Effect of dilutive securities:
Stock options and performance share units	2		3
Weighted average common shares outstanding – diluted	136		139
Earnings per share attributable to Quest Diagnostics’ common stockholders:
Basic	$	1.22	$	1.30
Diluted	$	1.20	$	1.27

The following securities were not included in the calculation of diluted earnings per share due to their antidilutive effect:

	Three Months Ended March 31,
	2019	2018
Stock options	4	2

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RESTRUCTURING ACTIVITIES

3 Months Ended

Mar. 31, 2019

Restructuring and Related Activities [Abstract]

RESTRUCTURING ACTIVITIES

RESTRUCTURING ACTIVITIES

Invigorate Program

The Company is committed to a program called Invigorate which is designed to reduce its cost structure and improve performance. Invigorate consists of several flagship programs, with structured plans in each, to drive savings and improve performance across the customer value chain. These flagship programs include: organization excellence; information technology excellence; procurement excellence; service excellence; lab excellence; and billing excellence. In addition to these programs, the Company identified key themes to change how it operates including reducing denials and patient concessions; further digitizing the business; standardization and automation; and optimization initiatives in the areas of lab network and patient service center network. The Invigorate program is intended to partially offset reimbursement pressures and labor and benefit cost increases; free up additional resources to invest in science, innovation and other growth initiatives; and enable the Company to improve service quality and operating profitability.

Restructuring Charges

The following table provides a summary of the Company's pre-tax restructuring charges for the three months ended March 31, 2019 and 2018:

	Three Months Ended March 31,
	2019			2018
Employee separation costs	$	(3	)	$	11
Facility-related costs	—			1
Total restructuring charges	$	(3	)	$	12

The restructuring activity recorded in the three months ended March 31, 2019 represents a release of the liability relating to restructuring charges recorded in prior periods, which were determined to no longer be required. The restructuring charges incurred for the three months ended March 31, 2018 were primarily associated with various workforce reduction initiatives as the Company continued to simplify and restructure its organization. Of the total restructuring release recorded in the three months ended March 31, 2019, $(1) million and $(2) million were recorded in cost of services and selling, general and administrative expenses, respectively. Of the total restructuring charges incurred during the three months ended March 31, 2018, $4 million and $8 million were recorded in cost of services and selling, general and administrative expenses, respectively.

Charges for all periods presented were primarily recorded in the Company's DIS business.    

The restructuring liability as of March 31, 2019 and December 31, 2018, which is included in accounts payable and accrued expenses, was $26 million and $38 million, respectively.

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BUSINESS ACQUISITIONS

3 Months Ended

Mar. 31, 2019

Business Combinations [Abstract]

BUSINESS ACQUISITIONS

BUSINESS ACQUISITIONS

On February 11, 2019, the Company completed its acquisition of certain assets of the clinical laboratory services business of Boyce & Bynum Pathology Laboratories, P.C. ("Boyce & Bynum") in an all cash transaction for $61 million, which consisted of cash consideration of $55 million and contingent consideration estimated at $6 million. The contingent consideration arrangement is dependent upon the achievement of certain testing volume benchmarks. Based on the preliminary purchase price allocation, the assets acquired principally consist of $41 million of goodwill (of which $35 million is currently tax deductible) and $20 million of customer-related intangible assets. The intangible assets will be amortized over a useful life of 15 years. For further details regarding the fair value of the contingent consideration, see Note 6.

The acquisition was accounted for under the acquisition method of accounting. As such, the assets acquired and liabilities assumed were recorded based on their estimated fair values as of the closing date. Supplemental pro forma combined financial information has not been presented as the impact of the acquisition is not material to the Company's consolidated financial statements. The goodwill recorded primarily includes the expected synergies resulting from combining the operations of the acquired entity with those of the Company and the value associated with an assembled workforce and other intangible assets that do not qualify for separate recognition. All of the goodwill acquired in connection with the acquisition has been allocated to the Company's DIS business. For further details regarding business segment information, see Note 14.

For details regarding the Company's 2018 acquisitions, see Note 6 to the consolidated financial statements in the Company's 2018 Annual Report on Form 10-K.

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FAIR VALUE MEASUREMENTS

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

FAIR VALUE MEASUREMENTS

FAIR VALUE MEASUREMENTS

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table provides a summary of the recognized assets and liabilities that are measured at fair value on a recurring basis:

			Basis of Fair Value Measurements
			Quoted Prices in Active Markets for Identical Assets / Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
March 31, 2019	Total		Level 1		Level 2		Level 3
Assets:
Trading securities	$	56	$	56	$	—	$	—
Cash surrender value of life insurance policies	39		—		39		—
Total	$	95	$	56	$	39	$	—
Liabilities:
Interest rate swaps	$	77	$	—	$	77	$	—
Deferred compensation liabilities	103		—		103		—
Contingent consideration	19		—		—		19
Total	$	199	$	—	$	180	$	19

			Basis of Fair Value Measurements
December 31, 2018	Total		Level 1		Level 2		Level 3
Assets:
Trading securities	$	53	$	53	$	—	$	—
Cash surrender value of life insurance policies	34		—		34		—
Total	$	87	$	53	$	34	$	—
Liabilities:
Deferred compensation liabilities	$	96	$	—	$	96	$	—
Interest rate swaps	93		—		93		—
Contingent consideration	14		—		—		14
Total	$	203	$	—	$	189	$	14

A detailed description regarding the Company's fair value measurements is contained in Note 8 to the consolidated financial statements in the Company's 2018 Annual Report on Form 10-K.    

The Company offers certain employees the opportunity to participate in non-qualified supplemental deferred compensation plans. A participant's deferrals, together with Company matching credits, are invested in a variety of participant-directed stock and bond mutual funds that are classified as trading securities. The trading securities are classified within Level 1 because the changes in the fair value of these securities are measured using quoted prices in active markets based on the market price per unit multiplied by the number of units held, exclusive of any transaction costs. A corresponding adjustment for changes in fair value of the trading securities is also reflected in the changes in fair value of the deferred compensation obligation. The deferred compensation liabilities are classified within Level 2 because their inputs are derived principally from observable market data by correlation to the trading securities.

The Company offers certain employees the opportunity to participate in a non-qualified deferred compensation program. A participant's deferrals, together with Company matching credits, are “invested” at the direction of the employee in a hypothetical portfolio of investments which are tracked by an administrator. The Company purchases life insurance policies, with the Company named as beneficiary of the policies, for the purpose of funding the program's liability. Changes in the cash surrender value of the life insurance policies are based upon earnings and changes in the value of the underlying investments. Changes in the fair value of the deferred compensation obligation are derived using quoted prices in active markets based on the market price per unit multiplied by the number of units. The cash surrender value and the deferred compensation obligations are classified within Level 2 because their inputs are derived principally from observable market data by correlation to the hypothetical investments. Deferrals under the plan currently may only be made by participants who made deferrals under the plan in 2017.

The fair value measurements of the Company's interest rate swaps classified within Level 2 of the fair value hierarchy are model-derived valuations as of a given date in which all significant inputs are observable in active markets including certain financial information and certain assumptions regarding past, present and future market conditions.

In December 2017, and as further discussed in Note 6 and Note 8 to the consolidated financial statements in the Company's 2018 Annual Report on Form 10-K, the Company completed the acquisition of certain assets of the clinical and anatomic pathology laboratory business of Shiel Holdings, LLC ("Shiel") which provides for up to $15 million of contingent consideration to be paid based on the achievement of certain testing volume benchmarks. In connection with the acquisition, the Company initially recorded a contingent consideration liability of $6 million which was classified within Level 3 of the fair value hierarchy. The contingent consideration was measured at fair value using an option-pricing method. Significant inputs included management's estimate of volume and other market inputs including comparable company revenue volatility of 6.9% and a discount rate of 4.5%. The estimated fair value of the contingent consideration associated with the Shiel acquisition was increased to $7 million in 2018 as a result of the remeasurement of the liability. Any contingent consideration associated with Shiel is expected to be paid in 2019.

In September 2018, and as further discussed in Note 6 and Note 8 to the consolidated financial statements in the Company's 2018 Annual Report on Form 10-K, the Company completed the acquisition of ReproSource, Inc. which provides for up to $10 million of contingent consideration to be paid based on the achievement of certain revenue targets. In connection with the acquisition, the Company initially recorded a contingent consideration liability of $5 million which was classified within Level 3 of the fair value hierarchy. The contingent consideration was measured at fair value using an option-pricing method. Significant inputs included management's estimate of revenue and other market inputs including comparable company revenue volatility of 8.5% and a discount rate of 6.5%. The contingent consideration associated with ReproSource, Inc. is expected to be paid in up to two installments in 2020 and 2021.

In February 2019, the Company completed the acquisition of certain assets of the clinical laboratory services business of Boyce & Bynum which provides for up to $25 million of contingent consideration to be paid based on the achievement of certain testing volume benchmarks. In connection with the acquisition, the Company initially recorded a contingent consideration liability of $6 million, which was classified within Level 3 of the fair value hierarchy. The contingent consideration was measured at fair value using an option-pricing method. Significant inputs included management's estimate of volume and other market inputs including comparable company revenue volatility of 8% and a discount rate of 7.2%. The contingent consideration associated with Boyce & Bynum is expected to be paid in up to two installments in 2019 and 2020. For further details regarding the Boyce & Bynum acquisition, see Note 5.

The following table provides a reconciliation of the beginning and ending balances of liabilities using significant unobservable inputs (Level 3):

	Contingent Consideration
Balance, December 31, 2018	$	14
Purchases, additions and issuances	6
Settlements	(1		)
Balance, March 31, 2019	$	19

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable and accrued expenses approximate fair value based on the short maturities of these instruments. As of March 31, 2019 and December 31, 2018, the fair value of the Company’s debt was estimated at $4.4 billion and $4.0 billion, respectively. Principally all of the Company's debt is classified within Level 1 of the fair value hierarchy because the fair value of the debt is estimated based on rates currently offered to the Company with identical terms and maturities, using quoted active market prices and yields, taking into account the underlying terms of the debt instruments.

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GOODWILL AND INTANGIBLE ASSETS

3 Months Ended

Mar. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

GOODWILL AND INTANGIBLE ASSETS

GOODWILL AND INTANGIBLE ASSETS

The changes in goodwill for the three months ended March 31, 2019 and for the year ended December 31, 2018 were as follows:

	March 31, 2019		December 31, 2018
Balance, beginning of period	$	6,563	$	6,335
Goodwill acquired during the period	42		228
Balance, end of period	$	6,605	$	6,563

Principally all of the Company’s goodwill as of March 31, 2019 and December 31, 2018 was associated with its DIS business.

For the three months ended March 31, 2019, goodwill acquired during the period was primarily associated with the acquisition of certain assets of the clinical laboratory services business of Boyce & Bynum (see Note 5). For the year ended December 31, 2018, goodwill acquired was principally associated with the acquisitions of the U.S. laboratory service business of Oxford Immunotec, Inc., Mobile Medical Examination Services, LLC., ReproSource, Inc. and the outreach laboratory service business of Cape Cod Healthcare, Inc. For details regarding the Company's 2018 acquisitions, see Note 6 to the consolidated financial statements in the Company's 2018 Annual Report on Form 10-K.

Intangible assets at March 31, 2019 and December 31, 2018 consisted of the following:

	Weighted Average Amortization Period (in years)	March 31, 2019							December 31, 2018
		Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
Amortizing intangible assets:
Customer-related	18	$	1,371	$	(497	)	$	874	$	1,355	$	(478	)	$	877
Non-compete agreements	9	3		(2		)	1		3		(2		)	1
Technology	17	104		(51		)	53		104		(50		)	54
Other	9	114		(78		)	36		114		(75		)	39
Total	17	1,592		(628		)	964		1,576		(605		)	971
Intangible assets not subject to amortization:
Trade names		235		—			235		235		—			235
Other		1		—			1		1		—			1
Total intangible assets		$	1,828	$	(628	)	$	1,200	$	1,812	$	(605	)	$	1,207

The estimated amortization expense related to amortizable intangible assets for each of the five succeeding fiscal years and thereafter as of March 31, 2019 is as follows:

Year Ending December 31,
Remainder of 2019	$	74
2020	97
2021	97
2022	91
2023	88
2024	86
Thereafter	431
Total	$	964

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DEBT

3 Months Ended

Mar. 31, 2019

Debt Instruments [Abstract]

DEBT

DEBT

Long-term debt (including finance lease obligations) as of March 31, 2019 and December 31, 2018 consisted of the following:

	March 31, 2019			December 31, 2018
Secured Receivables Credit Facility (3.39% at December 31, 2018)	$	—		$	160
2.70% Senior Notes due April 2019	300			300
4.75% Senior Notes due January 2020	506			507
2.50% Senior Notes due March 2020	300			300
4.70% Senior Notes due April 2021	556			557
4.25% Senior Notes due April 2024	301			299
3.50% Senior Notes due March 2025	570			562
3.45% Senior Notes due June 2026	475			469
4.20% Senior Notes due June 2029	499			—
6.95% Senior Notes due July 2037	175			175
5.75% Senior Notes due January 2040	244			244
4.70% Senior Notes due March 2045	300			300
Other	36			37
Debt issuance costs	(23		)	(17		)
Total long-term debt	4,239			3,893
Less: Current portion of long-term debt	1,108			464
Total long-term debt, net of current portion	$	3,131		$	3,429

2019 Senior Notes Offering

In March 2019, the Company completed a senior unsecured notes offering (the “2019 Senior Notes”), consisting of $500 million aggregate principal amount of 4.20% senior notes due June 2029, issued at a discount of $1 million. The 2019 Senior Notes are unsecured obligations of the Company that rank equally with the Company's other senior unsecured obligations. The 2019 Senior Notes do not have a sinking fund requirement. The Company incurred $5 million of debt issuance costs associated with the 2019 Senior Notes, which is included as a reduction to the carrying amount of long-term debt and is being amortized over the term of the related debt.

A portion of the net proceeds from the 2019 Senior Notes were used to repay outstanding indebtedness under the secured receivables credit facility and for general corporate purposes. Additionally, in April 2019, a portion of the proceeds were used to repay in full the outstanding indebtedness under the Company's Senior Notes due April 1, 2019.

Secured Receivables Credit Facility

During the three months ended March 31, 2019, there were $640 million in cumulative borrowings under the secured receivables credit facility primarily associated with working capital requirements as well as the funding of the Company's 2019 business acquisition. During the three months ended March 31, 2019, there were $800 million in repayments under the secured receivables credit facility.

Maturities of Long-Term Debt

As of March 31, 2019, long-term debt matures as follows:

Year Ending December 31,
Remainder of 2019	$	302
2020	803
2021	553
2022	3
2023	1
Thereafter	2,649
Total maturities of long-term debt	4,311
Unamortized discount	(9		)
Debt issuance costs	(23		)
Fair value basis adjustments attributable to hedged debt	(40		)
Total long-term debt	4,239
Current portion of long-term debt	1,108
Total long-term debt, net of current portion	$	3,131

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LEASES

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

LEASES

LEASES

The Company determines if an arrangement is or contains a lease at contract inception. The Company leases office space, patient service centers, clinical laboratories, warehouses, logistic hubs and equipment primarily through operating leases with a limited number of finance leases. A right-of-use asset, representing the underlying asset during the lease term, and a lease liability, representing the payment obligation arising from the lease, are recognized on the balance sheet at lease commencement based on the present value of the payment obligation. For operating leases, expense is recognized on a straight-line basis over the lease term. For finance leases, interest expense on the lease liability is recognized using the effective interest method and amortization of the right-of-use asset is recognized on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term. Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

The Company primarily uses its incremental borrowing rate in determining the present value of lease payments as the Company's leases generally do not provide an implicit rate.

The Company has lease agreements with (i) right-of-use asset payments and (ii) non-lease components (i.e. payments related to maintenance fees, utilities, etc,) which have generally been combined and accounted for as a single lease component.

The Company's leases have remaining terms of less than 1 year to 15 years, some of which include options to extend the leases for up to 15 years. The Company's lease terms may include renewal options that are reasonably certain to be exercised and termination options that are reasonably certain not to be exercised. Certain leases also include options to purchase the leased property.

Certain of the Company's lease agreements include rental payments adjusted periodically for inflation or a market rate which are included in the lease liabilities.

Leases	Balance Sheet Classification	March 31, 2019
Assets
Operating	Operating lease right-of-use assets	$	497
Finance	Property, plant and equipment, net (a)	39
Total lease assets		$	536
Liabilities
Current:
Operating	Current portion of long-term operating lease liabilities	$	145
Finance	Current portion of long-term debt	4
Non-current:
Operating	Long-term operating lease liabilities	393
Finance	Long-term debt	31
Total lease liabilities		$	573

(a) Finance lease assets were recorded net of accumulated amortization of $25 million as of March 31, 2019.

Components of lease cost for the three months ended March 31, 2019 were as follows:

Lease cost
Operating lease cost (a)	$	73
Finance lease cost:
Amortization of leased assets	2
Interest on lease liabilities	1
Net lease cost	$	76

(a) Includes short-term leases and variable lease costs (primarily maintenance fees and utilities related to real estate leases) of $29 million.

The maturity of the Company's lease liabilities as of March 31, 2019 is as follows:

Maturity of lease liabilities	Operating leases		Finance leases		Total
Remainder of 2019	$	112	$	5	$	117
2020	135		6		141
2021	100		5		105
2022	75		5		80
2023	58		3		61
Thereafter	113		34		147
Total lease payments	593		58		651
Less: Interest (a)	55		23		78
Present value of lease liabilities	$	538	$	35	$	573

(a) Primarily calculated using the Company's incremental borrowing rate.

Minimum rental commitments under noncancelable operating leases, primarily real estate, in effect as of December 31, 2018 are as follows:

Year Ending December 31,
2019	$	181
2020	143
2021	106
2022	79
2023	60
Thereafter	122
Minimum lease payments	$	691

Lease term and discount rate for the three months ended March 31, 2019 were as follows:

Lease term and discount rate
Weighted-average remaining lease term (years):
Operating leases	5
Finance leases	13
Weighted-average discount rate:
Operating leases	3.2	%
Finance leases	8.6	%

See Note 12 for cash flow information on cash paid for amounts included in the measurement of lease liabilities, leased assets obtained in exchange for new operating lease liabilities, and leased assets obtained in exchange for new finance lease liabilities for the three months ended March 31, 2019.

LEASES

LEASES

The Company determines if an arrangement is or contains a lease at contract inception. The Company leases office space, patient service centers, clinical laboratories, warehouses, logistic hubs and equipment primarily through operating leases with a limited number of finance leases. A right-of-use asset, representing the underlying asset during the lease term, and a lease liability, representing the payment obligation arising from the lease, are recognized on the balance sheet at lease commencement based on the present value of the payment obligation. For operating leases, expense is recognized on a straight-line basis over the lease term. For finance leases, interest expense on the lease liability is recognized using the effective interest method and amortization of the right-of-use asset is recognized on a straight-line basis over the shorter of the estimated useful life of the asset or the lease term. Short-term leases with an initial term of 12 months or less are not recorded on the balance sheet; the Company recognizes lease expense for these leases on a straight-line basis over the lease term.

The Company primarily uses its incremental borrowing rate in determining the present value of lease payments as the Company's leases generally do not provide an implicit rate.

The Company has lease agreements with (i) right-of-use asset payments and (ii) non-lease components (i.e. payments related to maintenance fees, utilities, etc,) which have generally been combined and accounted for as a single lease component.

The Company's leases have remaining terms of less than 1 year to 15 years, some of which include options to extend the leases for up to 15 years. The Company's lease terms may include renewal options that are reasonably certain to be exercised and termination options that are reasonably certain not to be exercised. Certain leases also include options to purchase the leased property.

Certain of the Company's lease agreements include rental payments adjusted periodically for inflation or a market rate which are included in the lease liabilities.

Leases	Balance Sheet Classification	March 31, 2019
Assets
Operating	Operating lease right-of-use assets	$	497
Finance	Property, plant and equipment, net (a)	39
Total lease assets		$	536
Liabilities
Current:
Operating	Current portion of long-term operating lease liabilities	$	145
Finance	Current portion of long-term debt	4
Non-current:
Operating	Long-term operating lease liabilities	393
Finance	Long-term debt	31
Total lease liabilities		$	573

(a) Finance lease assets were recorded net of accumulated amortization of $25 million as of March 31, 2019.

Components of lease cost for the three months ended March 31, 2019 were as follows:

Lease cost
Operating lease cost (a)	$	73
Finance lease cost:
Amortization of leased assets	2
Interest on lease liabilities	1
Net lease cost	$	76

(a) Includes short-term leases and variable lease costs (primarily maintenance fees and utilities related to real estate leases) of $29 million.

The maturity of the Company's lease liabilities as of March 31, 2019 is as follows:

Maturity of lease liabilities	Operating leases		Finance leases		Total
Remainder of 2019	$	112	$	5	$	117
2020	135		6		141
2021	100		5		105
2022	75		5		80
2023	58		3		61
Thereafter	113		34		147
Total lease payments	593		58		651
Less: Interest (a)	55		23		78
Present value of lease liabilities	$	538	$	35	$	573

(a) Primarily calculated using the Company's incremental borrowing rate.

Minimum rental commitments under noncancelable operating leases, primarily real estate, in effect as of December 31, 2018 are as follows:

Year Ending December 31,
2019	$	181
2020	143
2021	106
2022	79
2023	60
Thereafter	122
Minimum lease payments	$	691

Lease term and discount rate for the three months ended March 31, 2019 were as follows:

Lease term and discount rate
Weighted-average remaining lease term (years):
Operating leases	5
Finance leases	13
Weighted-average discount rate:
Operating leases	3.2	%
Finance leases	8.6	%

See Note 12 for cash flow information on cash paid for amounts included in the measurement of lease liabilities, leased assets obtained in exchange for new operating lease liabilities, and leased assets obtained in exchange for new finance lease liabilities for the three months ended March 31, 2019.

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FINANCIAL INSTRUMENTS

3 Months Ended

Mar. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS

The Company uses derivative financial instruments to manage its exposure to market risks for changes in interest rates and, from time to time, foreign currencies. This strategy includes the use of interest rate swap agreements, forward starting interest rate swap agreements, treasury lock agreements and foreign currency forward contracts to manage its exposure to movements in interest and currency rates. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. These policies prohibit holding or issuing derivative financial instruments for speculative purposes. The Company does not enter into derivative financial instruments that contain credit-risk-related contingent features or requirements to post collateral.

Interest Rate Risk

The Company is exposed to interest rate risk on its cash and cash equivalents and its debt obligations. Interest income earned on cash and cash equivalents may fluctuate as interest rates change; however, due to their relatively short maturities, the Company does not hedge these assets or their investment cash flows and the impact of interest rate risk is not material. The Company's debt obligations consist of fixed-rate and variable-rate debt instruments. The Company's primary objective is to achieve the lowest overall cost of funding while managing the variability in cash outflows within an acceptable range. In order to achieve this objective, the Company has entered into interest rate swaps. Interest rate swaps involve the periodic exchange of payments without the exchange of underlying principal or notional amounts. Net settlements between the counterparties are recognized as an adjustment to interest expense, net.

Interest Rate Derivatives – Cash Flow Hedges

From time to time, the Company has entered into various interest rate lock agreements and forward starting interest rate swap agreements to hedge part of the Company's interest rate exposure associated with the variability in future cash flows attributable to changes in interest rates.

In February 2019, the Company entered into interest rate lock agreements with several financial institutions for a total notional amount of $250 million, which were accounted for as cash flow hedges. These agreements were entered into to hedge a portion of the Company's interest rate exposure associated with variability in future cash flows attributable to changes in the ten-year treasury rates related to the planned issuance of the 2019 Senior Notes. In connection with the issuance of the 2019 Senior Notes in March 2019, these agreements were settled, and the Company paid $1 million. These losses are deferred in stockholders' equity, net of taxes, as a component of accumulated other comprehensive loss, and amortized as an adjustment to interest expense, net over the term of the respective senior notes.

The total net loss, net of taxes, recognized in accumulated other comprehensive loss, related to the Company's cash flow hedges was $9 million as of both March 31, 2019 and December 31, 2018. The net amount of deferred losses on cash flow hedges that is expected to be reclassified from accumulated other comprehensive loss into interest expense, net within the next twelve months is $3 million.

Interest Rate Derivatives – Fair Value Hedges

The Company maintains various fixed-to-variable interest rate swaps to convert a portion of the Company's long-term debt into variable interest rate debt. A summary of the notional amounts of these interest rate swaps as of March 31, 2019 and December 31, 2018 was as follows:

	Notional Amount
Debt Instrument	March 31, 2019		December 31, 2018
4.25% Senior Notes due April 2024	$	250	$	250
3.50% Senior Notes due March 2025	600		600
3.45% Senior Notes due June 2026	350		350
	$	1,200	$	1,200

The fixed-to-variable interest rate swap agreements in the table above have variable interest rates ranging from one-month LIBOR plus 2.2% to one-month LIBOR plus 3.0%.    

As of March 31, 2019 and December 31, 2018, the following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustments for fair value hedges included in the carrying amount of long-term debt:

	Carrying Amount of Hedged Long-Term Debt		Hedge Accounting Basis Adjustment (a)			Carrying Amount of Hedged Long-Term Debt		Hedge Accounting Basis Adjustment (a)
Balance Sheet Classification	March 31, 2019		March 31, 2019			December 31, 2018		December 31, 2018
Long-term debt	$	1,140	$	(40	)	$	1,125	$	(53	)

(a) The balance includes $37 million and $40 million of remaining unamortized hedging adjustment on a discontinued relationship as of March 31, 2019 and December 31, 2018, respectively.

The following table presents the effect of fair value hedge accounting on the statement of operations for the three months ended March 31, 2019 and 2018:

	Three Months Ended March 31,
	2019			2018
	Other income (expense), net			Other income (expense), net
Total for line item in which the effects of fair value hedges are recorded	$	9		$	(2	)
Gain (loss) on fair value hedging relationships:
Hedged items (Long-term debt)	$	(16	)	$	25
Derivatives designated as hedging instruments	$	16		$	(25	)

A summary of the fair values of derivative instruments in the consolidated balance sheets was as follows:

	March 31, 2019			December 31, 2018
Derivatives Designated as Hedging Instruments	Balance Sheet Classification	Fair Value		Balance Sheet Classification	Fair Value
Interest rate swaps	Other liabilities	$	77	Other liabilities	$	93

A detailed description regarding the Company's use of derivative financial instruments is contained in Note 15 to the consolidated financial statements in the Company's 2018 Annual Report on Form 10-K.

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STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST

3 Months Ended

Mar. 31, 2019

Stockholders' Equity Attributable to Parent [Abstract]

STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST

STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST

Stockholders' Equity

Changes in Accumulated Other Comprehensive Income (Loss) by Component

Comprehensive income (loss) includes:

• Foreign currency translation adjustments;

• Net deferred loss on cash flow hedges, which represents deferred losses, net of tax on interest rate related derivative financial instruments designated as cash flow hedges, net of amounts reclassified to interest expense (see Note 10).

For the three months ended March 31, 2019 and 2018, the tax effects related to the deferred losses on cash flow hedges were not material. Foreign currency translation adjustments related to indefinite investments in non-U.S. subsidiaries are not adjusted for income taxes.

Dividend Program

During the first quarter of 2019, the Company's Board of Directors declared a quarterly cash dividend of $0.53 per common share. During each of the first three quarters of 2018, the Company's Board of Directors declared a quarterly cash dividend of $0.50 per common share. During the fourth quarter of 2018, the Company's Board of Directors declared a quarterly cash dividend of $0.53 per common share.

Share Repurchase Program

As of March 31, 2019, $542 million remained available under the Company’s share repurchase authorizations. The share repurchase authorization has no set expiration or termination date.    

Share Repurchases

For the three months ended March 31, 2019, the Company repurchased 0.6 million shares of its common stock for $50 million.

For the three months ended March 31, 2018, the Company repurchased 0.5 million shares of its common stock for $50 million.

Shares Reissued from Treasury Stock

For the three months ended March 31, 2019 and 2018, the Company reissued 0.4 million shares and 0.6 million shares, respectively, from treasury stock for shares issued under the Employee Stock Purchase Plan and stock option plans. For details regarding the Company's stock ownership and compensation plans, see Note 17 to the consolidated financial statements in the Company's 2018 Annual Report on Form 10-K.

Redeemable Noncontrolling Interest

In connection with the sale of an 18.9% noncontrolling interest in a subsidiary to UMass Memorial Medical Center ("UMass") on July 1, 2015, the Company granted UMass the right to require the Company to purchase all of its interest in the subsidiary at fair value commencing July 1, 2020. The subsidiary performs diagnostic information services in a defined territory within the state of Massachusetts. Since the redemption of the noncontrolling interest is outside of the Company's control, it has been presented outside of stockholders' equity at the greater of its carrying amount or its fair value. The Company records changes in the fair value of the noncontrolling interest immediately as they occur. As of March 31, 2019, the redeemable noncontrolling interest was presented at its fair value. The fair value measurement of the redeemable noncontrolling interest is classified within Level 3 of the fair value hierarchy because the fair value is based on a discounted cash flow analysis that takes into account, among other items, the joint venture's expected future cash flows, long term growth rates, and a discount rate commensurate with economic risk.

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SUPPLEMENTAL CASH FLOW & OTHER DATA

3 Months Ended

Mar. 31, 2019

Supplemental Cash Flow Elements [Abstract]

SUPPLEMENTAL CASH FLOW & OTHER DATA

SUPPLEMENTAL CASH FLOW AND OTHER DATA

Supplemental cash flow and other data for the three months ended March 31, 2019 and 2018 was as follows:

	Three Months Ended March 31,
	2019			2018
Depreciation expense	$	60		$	52
Amortization expense	24			22
Depreciation and amortization expense	$	84		$	74
Interest expense	$	(45	)	$	(41	)
Interest income	1			—
Interest expense, net	$	(44	)	$	(41	)
Interest paid	$	28		$	49
Income taxes paid	$	3		$	2
Accounts payable associated with capital expenditures	$	13		$	16
Dividends payable	$	72		$	66
Businesses acquired:
Fair value of assets acquired	$	61		$	148
Fair value of liabilities assumed	—			(1		)
Fair value of net assets acquired	61			147
Merger consideration paid (payable), net	(5		)	(12		)
Cash paid for business acquisitions	56			135
Less: Cash acquired	—			5
Business acquisitions, net of cash acquired	$	56		$	130

	Three Months Ended March 31,
	2019
Leases:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	45
Operating cash flows from finance leases	$	1
Financing cash flows from finance leases	$	1
Leased assets obtained in exchange for new operating lease liabilities	$	25

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COMMITMENTS AND CONTINGENCIES

3 Months Ended

Mar. 31, 2019

Commitments and Contingencies Disclosure [Abstract]

COMMITMENTS AND CONTINGENCIES

COMMITMENTS AND CONTINGENCIES

Letters of Credit

The Company can issue letters of credit totaling $100 million under its secured receivables credit facility and $150 million under its senior unsecured revolving credit facility. For further discussion regarding the Company's secured receivables credit facility and senior unsecured revolving credit facility, see Note 14 to the consolidated financial statements in the Company's 2018 Annual Report on Form 10-K and Note 8 to the interim unaudited consolidated financial statements.    

In support of its risk management program, to ensure the Company’s performance or payment to third parties, $71 million in letters of credit under the secured receivables credit facility were outstanding as of March 31, 2019. The letters of credit primarily represent collateral for current and future automobile liability and workers’ compensation loss payments.

Contingent Lease Obligations

The Company remains subject to contingent obligations under certain real estate leases, including leases that were entered into by certain predecessor companies of a subsidiary prior to the Company's acquisition of the subsidiary. No liability has been recorded for any of these potential contingent obligations. For further details, see Note 18 to the consolidated financial statements in the Company’s 2018 Annual Report on Form 10-K.

Legal Matters

The Company is involved in various legal proceedings. Some of the proceedings against the Company involve claims that could be substantial in amount.

In the normal course of business, the Company has been named, from time to time, as a defendant in various legal actions, including arbitrations, class actions and other litigation, arising in connection with the Company's activities as a provider of diagnostic testing, information and services. These actions could involve claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages, and could have an adverse impact on the Company's client base and reputation.

The Company is also involved, from time to time, in other reviews, investigations and proceedings by governmental agencies regarding the Company's business, including, among other matters, operational matters, which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. The number of these reviews, investigations and proceedings has increased in recent years with regard to many firms in the healthcare services industry, including the Company.

The federal or state governments may bring claims based on the Company's current practices, which it believes are lawful. In addition, certain federal and state statutes, including the qui tam provisions of the federal False Claims Act, allow private individuals to bring lawsuits against healthcare companies on behalf of government or private payers. The Company is aware of lawsuits, and from time to time has received subpoenas, related to billing practices based on the qui tam provisions of the Civil False Claims Act or other federal and state statutes, regulations or other laws. The Company understands that there may be other pending qui tam claims brought by former employees or other "whistle blowers" as to which the Company cannot determine the extent of any potential liability.

Management cannot predict the outcome of such matters. Although management does not anticipate that the ultimate outcome of such matters will have a material adverse effect on the Company's financial condition, given the high degree of judgment involved in establishing loss estimates related to these types of matters, the outcome of such matters may be material to the Company's results of operations or cash flows in the period in which the impact of such matters is determined or paid.

These matters are in different stages. Some of these matters are in their early stages. Matters may involve responding to and cooperating with various government investigations and related subpoenas.  As of March 31, 2019, the Company does not believe that material losses related to legal matters are probable.

Reserves for legal matters totaled $1 million as of both March 31, 2019 and December 31, 2018.

Reserves for General and Professional Liability Claims

As a general matter, providers of clinical testing services may be subject to lawsuits alleging negligence or other similar legal claims. These suits could involve claims for substantial damages. Any professional liability litigation could also have an adverse impact on the Company's client base and reputation. The Company maintains various liability insurance coverages for, among other things, claims that could result from providing, or failing to provide, clinical testing services, including inaccurate testing results, and other exposures. The Company's insurance coverage limits its maximum exposure on individual claims; however, the Company is essentially self-insured for a significant portion of these claims. Reserves for such matters, including those associated with both asserted and incurred but not reported claims, are established on an undiscounted basis by considering actuarially determined losses based upon the Company's historical and projected loss experience. Such reserves totaled $125 million as of both March 31, 2019 and December 31, 2018. Management believes that established reserves and present insurance coverage are sufficient to cover currently estimated exposures.

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BUSINESS SEGMENT INFORMATION

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

BUSINESS SEGMENT INFORMATION

BUSINESS SEGMENT INFORMATION

The Company's DIS business is the only reportable segment based on the manner in which the Chief Executive Officer, who is the Company's chief operating decision maker ("CODM"), assesses performance and allocates resources across the organization. The DIS business provides diagnostic information services to a broad range of customers, including patients, clinicians, hospitals, IDNs, health plans, employers and ACOs. The Company is the world's leading provider of diagnostic information services, which includes providing information and insights based on the industry-leading menu of routine, non-routine and advanced clinical testing and anatomic pathology testing, and other diagnostic information services. The DIS business accounted for greater than 95% of net revenues in 2019 and 2018.

All other operating segments include the Company's DS businesses, which consist of its risk assessment services and healthcare information technology businesses. The Company's DS businesses are the leading provider of risk assessment services for the life insurance industry and offer healthcare organizations and clinicians robust information technology solutions.

As of March 31, 2019, substantially all of the Company’s services were provided within the United States, and substantially all of the Company’s assets were located within the United States.

The following table is a summary of segment information for the three months ended March 31, 2019 and 2018. Segment asset information is not presented since it is not used by the CODM at the operating segment level. Operating earnings (loss) of each segment represents net revenues less directly identifiable expenses to arrive at operating income (loss) for the segment. General corporate activities included in the table below are comprised of general management and administrative corporate expenses, amortization and impairment of intangibles assets and other operating income and expenses, net of certain general corporate activity costs that are allocated to the DIS and DS businesses. 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 2018 Annual Report on Form 10-K and Note 2 to the interim unaudited consolidated financial statements.

	Three Months Ended March 31,
	2019			2018
Net revenues:
DIS business	$	1,812		$	1,803
All other operating segments	79			81
Total net revenues	$	1,891		$	1,884
Operating earnings (loss):
DIS business	$	280		$	308
All other operating segments	9			11
General corporate activities	(41		)	(47		)
Total operating income	248			272
Non-operating expenses, net	(35		)	(43		)
Income before income taxes and equity in earnings of equity method investees	213			229
Income tax expense	(50		)	(52		)
Equity in earnings of equity method investees, net of taxes	13			12
Net income	176			189
Less: Net income attributable to noncontrolling interests	12			12
Net income attributable to Quest Diagnostics	$	164		$	177

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RELATED PARTIES

3 Months Ended

Mar. 31, 2019

Related Party Transactions [Abstract]

Related Party Transactions

RELATED PARTIES

The Company's equity method investees primarily consist of its clinical trials central laboratory services joint venture and its diagnostic information services joint ventures, which are accounted for under the equity method of accounting. During both the three months ended March 31, 2019 and 2018, the Company recognized net revenues of $9 million associated with diagnostic information services provided to its equity method investees. As of March 31, 2019 and December 31, 2018, there was $4 million and $3 million, respectively, of accounts receivable from equity method investees related to such services. During the three months ended March 31, 2019, the Company recognized net revenues of $3 million associated with diagnostics information services provided to a noncontrolling interest partner in a joint venture. As of March 31, 2019, there was $2 million of accounts receivable from the noncontrolling interest partner related to such services.

During both the three months ended March 31, 2019 and 2018, the Company recognized income of $4 million associated with the performance of certain corporate services, including transition services, for its equity method investees, classified within selling, general and administrative expenses. As of March 31, 2019 and December 31, 2018, there was $2 million and $3 million, respectively, of other receivables from equity method investees included in prepaid expenses and other current assets related to these service agreements and other transition related items. In addition, accounts payable and accrued expenses as of both March 31, 2019 and December 31, 2018 included $1 million due to equity method investees.

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REVENUE RECOGNITION

3 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

REVENUE RECOGNITION

REVENUE RECOGITION

DIS

Net revenues in the Company’s DIS business accounted for over 95% of the Company’s total net revenues for the three months ended March 31, 2019 and 2018 and are primarily comprised of a high volume of relatively low-dollar transactions. The DIS business, which provides clinical testing services and other services, satisfies its performance obligations and recognizes revenues upon completion of the testing process, when results are reported, or when services have been rendered. The Company estimates the amount of consideration it expects to be entitled to receive from customer groups, determined using the portfolio approach, in exchange for providing services. These estimates include the impact of contractual allowances, including payer denials, and price concessions. The portfolios determined using the portfolio approach consist of the following groups of customers: healthcare insurers, government payers, client payers and patients.

DS

The Company’s DS businesses primarily satisfy their performance obligations and recognize revenues when delivery has occurred or services have been rendered.

The approximate percentage of net revenue by type of customer was as follows:

	Three Months Ended March 31,
	2019		2018
Healthcare insurers:
Fee-for-service	33	%	33	%
Capitated	4		4
Total healthcare insurers	37		37
Government payers	15		16
Client payers	31		30
Patient	13		13
Total DIS	96		96
DS	4		4
Net revenues	100	%	100	%

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TAXES ON INCOME

3 Months Ended

Mar. 31, 2019

Income Tax Disclosure [Abstract]

TAXES ON INCOME

TAXES ON INCOME

For the three months ended March 31, 2019 and 2018, the effective income tax rate was 23.7% and 22.5%, respectively. The effective income tax rate for the three months ended March 31, 2019 and 2018 benefited from $3 million and $8 million, respectively, of excess tax benefits associated with stock-based compensation arrangements.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

3 Months Ended

Mar. 31, 2019

Accounting Policies [Abstract]

Basis of Presentation

The interim unaudited consolidated financial statements reflect all adjustments which in the opinion of management are necessary for a fair statement of results of operations, comprehensive income, financial condition, cash flows and stockholders' equity for the periods presented. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. Operating results for the interim periods are not necessarily indicative of the results that may be expected for the full year. These interim unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements included in the Company’s 2018 Annual Report on Form 10-K. The year-end balance sheet data was derived from the audited consolidated financial statements as of December 31, 2018, but does not include all the disclosures required by accounting principles generally accepted in the United States (“GAAP”).

Use Of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Earnings Per Share

The Company's unvested restricted stock units that contain non-forfeitable rights to dividends are participating securities and, therefore, are included in the earnings allocation in computing earnings per share using the two-class method. Basic earnings per common share is calculated by dividing net income, adjusted for earnings allocated to participating securities, by the weighted average number of common shares outstanding. Diluted earnings per common share is calculated by dividing net income, adjusted for earnings allocated to participating securities, by the weighted average number of common shares outstanding after giving effect to all potentially dilutive common shares outstanding during the period. Potentially dilutive common shares include the dilutive effect of outstanding stock options and performance share units granted under the Company's Amended and Restated Employee Long-Term Incentive Plan and its Amended and Restated Non-Employee Director Long-Term Incentive Plan. Earnings allocable to participating securities include the portion of dividends declared as well as the portion of undistributed earnings during the period allocable to participating securities.

New Accounting Pronouncements

Adoption of New Accounting Standards

On January 1, 2019, the Company adopted a new accounting standard issued by the Financial Accounting Standards Board ("FASB") on accounting for leases using the modified retrospective method. This new accounting standard requires a lessee to recognize an asset and liability for most leases on its balance sheet. The Company elected the optional transition method that allowed for a cumulative-effect adjustment to the opening balance of retained earnings recorded on January 1, 2019 and did not restate previously reported results in the comparative periods. The Company also elected the package of practical expedients, which among other things, allowed it to carry forward its historical lease classification.

As a result of adoption of the new standard, the Company recorded operating lease assets and lease liabilities of approximately $500 million and $550 million, respectively as of January 1, 2019. The operating lease liability was determined based on the present value of the remaining minimum rental payments and the operating lease asset was determined based on the value of the lease liability, adjusted for the deferred rent balances of approximately $50 million, which were previously included in accounts payable and accrued expenses as well as other liabilities. Accounting for the Company's finance leases remains substantially unchanged. The adoption of the new standard did not materially impact the Company's consolidated results of operations or cash flows.

In addition, the adoption of this new accounting standard resulted in increased qualitative and quantitative disclosures regarding the amount, timing, and uncertainty of cash flows arising from leases. For further details, see Note 9.

On January 1, 2019, the Company adopted a new accounting standard issued by the FASB that includes the overnight index swap rate based on the Secured Overnight Financing Rate as an additional benchmark interest rate for hedge accounting purposes. Adoption of this new accounting standard did not have an impact on the Company's existing interest rate swap agreements and it will be applied prospectively for new or redesignated hedges entered into after the adoption date.

New Accounting Standards To Be Adopted

In August 2018, the FASB issued an Accounting Standard Update (“ASU”) that aligns the requirements for deferring implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This ASU is effective for the Company in the first quarter of 2020 with early adoption permitted and can be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is currently assessing the impact of the adoption of this ASU on the Company’s results of operations, financial position and cash flows.    

In June 2016, the FASB issued an ASU that changes the impairment model for most financial instruments, including trade receivables, from an incurred loss method to a new forward-looking approach, based on expected losses. The estimate of expected credit losses will require entities to incorporate considerations of historical information, current information and reasonable and supportable forecasts. This ASU is effective for the Company in the first quarter of 2020 and must be adopted using a modified retrospective transition approach. The Company is currently assessing the impact of the adoption of this ASU on the Company’s results of operations, financial position and cash flows.

Derivative Financial Instruments

The Company uses derivative financial instruments to manage its exposure to market risks for changes in interest rates and, from time to time, foreign currencies. This strategy includes the use of interest rate swap agreements, forward starting interest rate swap agreements, treasury lock agreements and foreign currency forward contracts to manage its exposure to movements in interest and currency rates. The Company has established policies and procedures for risk assessment and the approval, reporting and monitoring of derivative financial instrument activities. These policies prohibit holding or issuing derivative financial instruments for speculative purposes. The Company does not enter into derivative financial instruments that contain credit-risk-related contingent features or requirements to post collateral.

Interest Rate Risk

The Company is exposed to interest rate risk on its cash and cash equivalents and its debt obligations. Interest income earned on cash and cash equivalents may fluctuate as interest rates change; however, due to their relatively short maturities, the Company does not hedge these assets or their investment cash flows and the impact of interest rate risk is not material. The Company's debt obligations consist of fixed-rate and variable-rate debt instruments. The Company's primary objective is to achieve the lowest overall cost of funding while managing the variability in cash outflows within an acceptable range. In order to achieve this objective, the Company has entered into interest rate swaps. Interest rate swaps involve the periodic exchange of payments without the exchange of underlying principal or notional amounts. Net settlements between the counterparties are recognized as an adjustment to interest expense, net.

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EARNINGS PER SHARE (Tables)

3 Months Ended

Mar. 31, 2019

Earnings Per Share, Basic and Diluted [Abstract]

Schedule of Earnings Per Share, Basic and Diluted

The computation of basic and diluted earnings per common share was as follows:

	Three Months Ended March 31,
	2019		2018
Amounts attributable to Quest Diagnostics’ common stockholders:
Net income attributable to Quest Diagnostics	$	164	$	177
Less: Earnings allocated to participating securities	1		1
Earnings available to Quest Diagnostics’ common stockholders – basic and diluted	$	163	$	176
Weighted average common shares outstanding – basic	134		136
Effect of dilutive securities:
Stock options and performance share units	2		3
Weighted average common shares outstanding – diluted	136		139
Earnings per share attributable to Quest Diagnostics’ common stockholders:
Basic	$	1.22	$	1.30
Diluted	$	1.20	$	1.27

Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share

The following securities were not included in the calculation of diluted earnings per share due to their antidilutive effect:

	Three Months Ended March 31,
	2019	2018
Stock options	4	2

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RESTRUCTURING ACTIVITIES (Tables)

3 Months Ended

Mar. 31, 2019

Restructuring and Related Activities [Abstract]

Schedule of Pre-Tax Restructuring and Integration Charges

The following table provides a summary of the Company's pre-tax restructuring charges for the three months ended March 31, 2019 and 2018:

	Three Months Ended March 31,
	2019			2018
Employee separation costs	$	(3	)	$	11
Facility-related costs	—			1
Total restructuring charges	$	(3	)	$	12

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FAIR VALUE MEASUREMENTS (Tables)

3 Months Ended

Mar. 31, 2019

Fair Value Disclosures [Abstract]

Fair Value, Measurement Inputs

The following table provides a summary of the recognized assets and liabilities that are measured at fair value on a recurring basis:

			Basis of Fair Value Measurements
			Quoted Prices in Active Markets for Identical Assets / Liabilities		Significant Other Observable Inputs		Significant Unobservable Inputs
March 31, 2019	Total		Level 1		Level 2		Level 3
Assets:
Trading securities	$	56	$	56	$	—	$	—
Cash surrender value of life insurance policies	39		—		39		—
Total	$	95	$	56	$	39	$	—
Liabilities:
Interest rate swaps	$	77	$	—	$	77	$	—
Deferred compensation liabilities	103		—		103		—
Contingent consideration	19		—		—		19
Total	$	199	$	—	$	180	$	19

			Basis of Fair Value Measurements
December 31, 2018	Total		Level 1		Level 2		Level 3
Assets:
Trading securities	$	53	$	53	$	—	$	—
Cash surrender value of life insurance policies	34		—		34		—
Total	$	87	$	53	$	34	$	—
Liabilities:
Deferred compensation liabilities	$	96	$	—	$	96	$	—
Interest rate swaps	93		—		93		—
Contingent consideration	14		—		—		14
Total	$	203	$	—	$	189	$	14

Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation

The following table provides a reconciliation of the beginning and ending balances of liabilities using significant unobservable inputs (Level 3):

	Contingent Consideration
Balance, December 31, 2018	$	14
Purchases, additions and issuances	6
Settlements	(1		)
Balance, March 31, 2019	$	19

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GOODWILL AND INTANGIBLE ASSETS (Tables)

3 Months Ended

Mar. 31, 2019

Goodwill and Intangible Assets Disclosure [Abstract]

Changes in Goodwill, Net

The changes in goodwill for the three months ended March 31, 2019 and for the year ended December 31, 2018 were as follows:

	March 31, 2019		December 31, 2018
Balance, beginning of period	$	6,563	$	6,335
Goodwill acquired during the period	42		228
Balance, end of period	$	6,605	$	6,563

Intangible Assets Excluding Goodwill

Intangible assets at March 31, 2019 and December 31, 2018 consisted of the following:

	Weighted Average Amortization Period (in years)	March 31, 2019							December 31, 2018
		Cost		Accumulated Amortization			Net		Cost		Accumulated Amortization			Net
Amortizing intangible assets:
Customer-related	18	$	1,371	$	(497	)	$	874	$	1,355	$	(478	)	$	877
Non-compete agreements	9	3		(2		)	1		3		(2		)	1
Technology	17	104		(51		)	53		104		(50		)	54
Other	9	114		(78		)	36		114		(75		)	39
Total	17	1,592		(628		)	964		1,576		(605		)	971
Intangible assets not subject to amortization:
Trade names		235		—			235		235		—			235
Other		1		—			1		1		—			1
Total intangible assets		$	1,828	$	(628	)	$	1,200	$	1,812	$	(605	)	$	1,207

Future Amortization Expense Intangible Assets

The estimated amortization expense related to amortizable intangible assets for each of the five succeeding fiscal years and thereafter as of March 31, 2019 is as follows:

Year Ending December 31,
Remainder of 2019	$	74
2020	97
2021	97
2022	91
2023	88
2024	86
Thereafter	431
Total	$	964

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DEBT (Tables)

3 Months Ended

Mar. 31, 2019

Debt Instruments [Abstract]

Long-term Debt

Long-term debt (including finance lease obligations) as of March 31, 2019 and December 31, 2018 consisted of the following:

	March 31, 2019			December 31, 2018
Secured Receivables Credit Facility (3.39% at December 31, 2018)	$	—		$	160
2.70% Senior Notes due April 2019	300			300
4.75% Senior Notes due January 2020	506			507
2.50% Senior Notes due March 2020	300			300
4.70% Senior Notes due April 2021	556			557
4.25% Senior Notes due April 2024	301			299
3.50% Senior Notes due March 2025	570			562
3.45% Senior Notes due June 2026	475			469
4.20% Senior Notes due June 2029	499			—
6.95% Senior Notes due July 2037	175			175
5.75% Senior Notes due January 2040	244			244
4.70% Senior Notes due March 2045	300			300
Other	36			37
Debt issuance costs	(23		)	(17		)
Total long-term debt	4,239			3,893
Less: Current portion of long-term debt	1,108			464
Total long-term debt, net of current portion	$	3,131		$	3,429

Schedule of Maturities of Long-term Debt

As of March 31, 2019, long-term debt matures as follows:

Year Ending December 31,
Remainder of 2019	$	302
2020	803
2021	553
2022	3
2023	1
Thereafter	2,649
Total maturities of long-term debt	4,311
Unamortized discount	(9		)
Debt issuance costs	(23		)
Fair value basis adjustments attributable to hedged debt	(40		)
Total long-term debt	4,239
Current portion of long-term debt	1,108
Total long-term debt, net of current portion	$	3,131

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LEASES (Tables)

3 Months Ended

Mar. 31, 2019

Leases [Abstract]

Schedule Of Lease By Asset Type

Certain of the Company's lease agreements include rental payments adjusted periodically for inflation or a market rate which are included in the lease liabilities.

Leases	Balance Sheet Classification	March 31, 2019
Assets
Operating	Operating lease right-of-use assets	$	497
Finance	Property, plant and equipment, net (a)	39
Total lease assets		$	536
Liabilities
Current:
Operating	Current portion of long-term operating lease liabilities	$	145
Finance	Current portion of long-term debt	4
Non-current:
Operating	Long-term operating lease liabilities	393
Finance	Long-term debt	31
Total lease liabilities		$	573

(a) Finance lease assets were recorded net of accumulated amortization of $25 million as of March 31, 2019.

Lease, Cost

Components of lease cost for the three months ended March 31, 2019 were as follows:

Lease cost
Operating lease cost (a)	$	73
Finance lease cost:
Amortization of leased assets	2
Interest on lease liabilities	1
Net lease cost	$	76

(a) Includes short-term leases and variable lease costs (primarily maintenance fees and utilities related to real estate leases) of $29 million.

Operating Lease, Liability, Maturity

The maturity of the Company's lease liabilities as of March 31, 2019 is as follows:

Maturity of lease liabilities	Operating leases		Finance leases		Total
Remainder of 2019	$	112	$	5	$	117
2020	135		6		141
2021	100		5		105
2022	75		5		80
2023	58		3		61
Thereafter	113		34		147
Total lease payments	593		58		651
Less: Interest (a)	55		23		78
Present value of lease liabilities	$	538	$	35	$	573

(a) Primarily calculated using the Company's incremental borrowing rate.

Finance Lease, Liability, Maturity

The maturity of the Company's lease liabilities as of March 31, 2019 is as follows:

Maturity of lease liabilities	Operating leases		Finance leases		Total
Remainder of 2019	$	112	$	5	$	117
2020	135		6		141
2021	100		5		105
2022	75		5		80
2023	58		3		61
Thereafter	113		34		147
Total lease payments	593		58		651
Less: Interest (a)	55		23		78
Present value of lease liabilities	$	538	$	35	$	573

(a) Primarily calculated using the Company's incremental borrowing rate.

Schedule of Future Minimum Rental Payments for Operating Leases

Minimum rental commitments under noncancelable operating leases, primarily real estate, in effect as of December 31, 2018 are as follows:

Year Ending December 31,
2019	$	181
2020	143
2021	106
2022	79
2023	60
Thereafter	122
Minimum lease payments	$	691

Schedule of Lease Term and Discount Rate

Lease term and discount rate for the three months ended March 31, 2019 were as follows:

Lease term and discount rate
Weighted-average remaining lease term (years):
Operating leases	5
Finance leases	13
Weighted-average discount rate:
Operating leases	3.2	%
Finance leases	8.6	%

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FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2019

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Schedule of Derivative Instruments

A summary of the notional amounts of these interest rate swaps as of March 31, 2019 and December 31, 2018 was as follows:

	Notional Amount
Debt Instrument	March 31, 2019		December 31, 2018
4.25% Senior Notes due April 2024	$	250	$	250
3.50% Senior Notes due March 2025	600		600
3.45% Senior Notes due June 2026	350		350
	$	1,200	$	1,200

Schedule of Debt Instrument Fair Value Basis Adjustment Attributable to Hedged Debt

As of March 31, 2019 and December 31, 2018, the following amounts were recorded on the consolidated balance sheet related to cumulative basis adjustments for fair value hedges included in the carrying amount of long-term debt:

	Carrying Amount of Hedged Long-Term Debt		Hedge Accounting Basis Adjustment (a)			Carrying Amount of Hedged Long-Term Debt		Hedge Accounting Basis Adjustment (a)
Balance Sheet Classification	March 31, 2019		March 31, 2019			December 31, 2018		December 31, 2018
Long-term debt	$	1,140	$	(40	)	$	1,125	$	(53	)

(a) The balance includes $37 million and $40 million of remaining unamortized hedging adjustment on a discontinued relationship as of March 31, 2019 and December 31, 2018, respectively.

Schedule of Fair Value Hedge Accounting on the Statement of Operations

The following table presents the effect of fair value hedge accounting on the statement of operations for the three months ended March 31, 2019 and 2018:

	Three Months Ended March 31,
	2019			2018
	Other income (expense), net			Other income (expense), net
Total for line item in which the effects of fair value hedges are recorded	$	9		$	(2	)
Gain (loss) on fair value hedging relationships:
Hedged items (Long-term debt)	$	(16	)	$	25
Derivatives designated as hedging instruments	$	16		$	(25	)

Schedule of Derivative Liabilities at Fair Value

A summary of the fair values of derivative instruments in the consolidated balance sheets was as follows:

	March 31, 2019			December 31, 2018
Derivatives Designated as Hedging Instruments	Balance Sheet Classification	Fair Value		Balance Sheet Classification	Fair Value
Interest rate swaps	Other liabilities	$	77	Other liabilities	$	93

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SUPPLEMENTAL CASH FLOW & OTHER DATA (Tables)

3 Months Ended

Mar. 31, 2019

Supplemental Cash Flow Elements [Abstract]

Supplemental Cash Flow and Other Data

Supplemental cash flow and other data for the three months ended March 31, 2019 and 2018 was as follows:

	Three Months Ended March 31,
	2019			2018
Depreciation expense	$	60		$	52
Amortization expense	24			22
Depreciation and amortization expense	$	84		$	74
Interest expense	$	(45	)	$	(41	)
Interest income	1			—
Interest expense, net	$	(44	)	$	(41	)
Interest paid	$	28		$	49
Income taxes paid	$	3		$	2
Accounts payable associated with capital expenditures	$	13		$	16
Dividends payable	$	72		$	66
Businesses acquired:
Fair value of assets acquired	$	61		$	148
Fair value of liabilities assumed	—			(1		)
Fair value of net assets acquired	61			147
Merger consideration paid (payable), net	(5		)	(12		)
Cash paid for business acquisitions	56			135
Less: Cash acquired	—			5
Business acquisitions, net of cash acquired	$	56		$	130

	Three Months Ended March 31,
	2019
Leases:
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	45
Operating cash flows from finance leases	$	1
Financing cash flows from finance leases	$	1
Leased assets obtained in exchange for new operating lease liabilities	$	25

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BUSINESS SEGMENT INFORMATION (Tables)

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

Summary of Segment Reporting Information by Segment

The following table is a summary of segment information for the three months ended March 31, 2019 and 2018. Segment asset information is not presented since it is not used by the CODM at the operating segment level. Operating earnings (loss) of each segment represents net revenues less directly identifiable expenses to arrive at operating income (loss) for the segment. General corporate activities included in the table below are comprised of general management and administrative corporate expenses, amortization and impairment of intangibles assets and other operating income and expenses, net of certain general corporate activity costs that are allocated to the DIS and DS businesses. 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 2018 Annual Report on Form 10-K and Note 2 to the interim unaudited consolidated financial statements.

	Three Months Ended March 31,
	2019			2018
Net revenues:
DIS business	$	1,812		$	1,803
All other operating segments	79			81
Total net revenues	$	1,891		$	1,884
Operating earnings (loss):
DIS business	$	280		$	308
All other operating segments	9			11
General corporate activities	(41		)	(47		)
Total operating income	248			272
Non-operating expenses, net	(35		)	(43		)
Income before income taxes and equity in earnings of equity method investees	213			229
Income tax expense	(50		)	(52		)
Equity in earnings of equity method investees, net of taxes	13			12
Net income	176			189
Less: Net income attributable to noncontrolling interests	12			12
Net income attributable to Quest Diagnostics	$	164		$	177

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REVENUE RECOGNITION (Tables)

3 Months Ended

Mar. 31, 2019

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The approximate percentage of net revenue by type of customer was as follows:

	Three Months Ended March 31,
	2019		2018
Healthcare insurers:
Fee-for-service	33	%	33	%
Capitated	4		4
Total healthcare insurers	37		37
Government payers	15		16
Client payers	31		30
Patient	13		13
Total DIS	96		96
DS	4		4
Net revenues	100	%	100	%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Millions	Mar. 31, 2019	Jan. 01, 2019	Dec. 31, 2018
Accounting Policies [Abstract]
Operating lease, right-of-use asset	$ 497	$ 500	$ 0
Present value of lease liabilities	$ 538	550
Deferred rent		$ 50

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EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Earnings Per Share, Basic and Diluted [Abstract]
Net income attributable to Quest Diagnostics	$ 164	$ 177
Less: Earnings allocated to participating securities	1	1
Earnings available to Quest Diagnostics' common stockholders - basic and diluted	$ 163	$ 176
Weighted average common shares outstanding - basic	134	136
Stock options and performance share units	2	3
Weighted average common shares outstanding - diluted	136	139
Basic (per share)	$ 1.22	$ 1.30
Diluted (per share)	$ 1.20	$ 1.27
Stock options and performance share units not included due to their antidilutive effect	4	2

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RESTRUCTURING ACTIVITIES (Pre-Tax Restructuring and Integration Charges) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Restructuring and Related Activities [Abstract]
Employee separation costs	$ (3)	$ 11
Facility-related costs	0	1
Total restructuring charges	$ (3)	$ 12

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RESTRUCTURING ACTIVITIES (Narrative) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Restructuring Cost and Reserve [Line Items]
Total restructuring charges	$ (3)	$ 12
Accounts Payable and Accrued Liabilities
Restructuring Cost and Reserve [Line Items]
Restructuring reserve	26		$ 38
Cost of services
Restructuring Cost and Reserve [Line Items]
Total restructuring charges	(1)	4
Selling, general and administrative
Restructuring Cost and Reserve [Line Items]
Total restructuring charges	$ (2)	$ 8

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BUSINESS ACQUISITIONS (Details) - USD ($) $ in Millions		3 Months Ended
	Feb. 11, 2019	Mar. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Business Acquisition [Line Items]
Goodwill		$ 6,605	$ 6,563	$ 6,335
Customer Relationships
Business Acquisition [Line Items]
Intangible assets, useful life		18 years
Boyce & Bynum
Business Acquisition [Line Items]
Consideration	$ 61
Cash paid for acquisition	55
Goodwill	41
Goodwill, expected tax deductible amount	35
Boyce & Bynum | Customer Relationships
Business Acquisition [Line Items]
Intangible assets	$ 20
Intangible assets, useful life	15 years
Boyce & Bynum | Fair Value, Inputs, Level 3
Business Acquisition [Line Items]
Contingent consideration, liability	$ 6

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FAIR VALUE MEASUREMENTS (Recognized Assets and Liabilities at Fair Value) (Details) - Recurring Basis - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Trading securities	$ 56	$ 53
Cash surrender value of life insurance policies	39	34
Total assets	95	87
Interest rate swaps	77	93
Deferred compensation liabilities	103	96
Contingent consideration	19	14
Total liabilities	199	203
Quoted Prices in Active Markets for Identical Assets / Liabilities, Level 1
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Trading securities	56	53
Cash surrender value of life insurance policies	0	0
Total assets	56	53
Interest rate swaps	0	0
Deferred compensation liabilities	0	0
Contingent consideration	0	0
Total liabilities	0	0
Significant Other Observable Inputs, Level 2
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Trading securities	0	0
Cash surrender value of life insurance policies	39	34
Total assets	39	34
Interest rate swaps	77	93
Deferred compensation liabilities	103	96
Contingent consideration	0	0
Total liabilities	180	189
Significant Unobservable Inputs, Level 3
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Trading securities	0	0
Cash surrender value of life insurance policies	0	0
Total assets	0	0
Interest rate swaps	0	0
Deferred compensation liabilities	0	0
Contingent consideration	19	14
Total liabilities	$ 19	$ 14

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FAIR VALUE MEASUREMENTS (Narrative) (Details) - USD ($) $ in Millions		1 Months Ended
	Feb. 11, 2019	Sep. 30, 2018	Dec. 31, 2017	Mar. 31, 2019	Dec. 31, 2018	Sep. 19, 2018
Fair Value Disclosures [Abstract]
Fair value of debt				$ 4,400	$ 4,000
Shiel Holdings LLC (Shiel)
Business Acquisition [Line Items]
Contingent consideration value high			$ 15
Comparable company revenue volatility			6.90%
Discount rate			4.50%
Shiel Holdings LLC (Shiel) | Fair Value, Inputs, Level 3
Business Acquisition [Line Items]
Contingent consideration, liability			$ 6		$ 7
ReproSource, Inc.
Business Acquisition [Line Items]
Contingent consideration value high						$ 10
Comparable company revenue volatility		8.50%
Discount rate		6.50%
ReproSource, Inc. | Fair Value, Inputs, Level 3
Business Acquisition [Line Items]
Contingent consideration, liability		$ 5
Boyce & Bynum
Business Acquisition [Line Items]
Contingent consideration value high	$ 25
Comparable company revenue volatility	8.00%
Discount rate	7.20%
Boyce & Bynum | Fair Value, Inputs, Level 3
Business Acquisition [Line Items]
Contingent consideration, liability	$ 6

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FAIR VALUE MEASUREMENTS (Reconciliation of Beginning and Ending Balances of Assets and Liabilities Unobservable Inputs) (Details) - Significant Unobservable Inputs, Level 3 - Contingent Consideration $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Balance, December 31, 2018	$ 14
Purchases, additions and issuances	6
Settlements	(1)
Balance, March 31, 2019	$ 19

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GOODWILL AND INTANGIBLE ASSETS (Goodwill) (Details) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Goodwill [Roll Forward]
Goodwill, Balance at beginning of period	$ 6,563	$ 6,335
Goodwill acquired during the period	42	228
Goodwill, Balance at end of period	$ 6,605	$ 6,563

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GOODWILL AND INTANGIBLE ASSETS (Schedules) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Finite-Lived and Indefinite-lived Intangible Assets [Line Items]
Intangible assets, Cost	$ 1,828		$ 1,812
Intangible assets, Accumulated Amortization	(628)		(605)
Total intangible assets, Net	1,200		1,207
Amortization expense	24	$ 22
Remainder of 2019	74
Future Amortization Expense, 2020	97
Future Amortization Expense, 2021	97
Future Amortization Expense, 2022	91
Future Amortization Expense, 2023	88
Future Amortization Expense, 2024	86
Future Amortization Expense, Thereafter	431
Future Amortization Expense, Total	964
Intangible Assets Not Subject to Amortization - Tradenames
Finite-Lived and Indefinite-lived Intangible Assets [Line Items]
Intangible assets, Cost	235		235
Total intangible assets, Net	235		235
Intangible Assets Not Subject to Amortization - Other
Finite-Lived and Indefinite-lived Intangible Assets [Line Items]
Intangible assets, Cost	1		1
Total intangible assets, Net	$ 1		1
Customer-related intangibles
Finite-Lived and Indefinite-lived Intangible Assets [Line Items]
Weighted Average Amortization Period	18 years
Intangible assets, Cost	$ 1,371		1,355
Intangible assets, Accumulated Amortization	(497)		(478)
Total intangible assets, Net	$ 874		877
Non-compete agreements
Finite-Lived and Indefinite-lived Intangible Assets [Line Items]
Weighted Average Amortization Period	9 years
Intangible assets, Cost	$ 3		3
Intangible assets, Accumulated Amortization	(2)		(2)
Total intangible assets, Net	$ 1		1
Technology
Finite-Lived and Indefinite-lived Intangible Assets [Line Items]
Weighted Average Amortization Period	17 years
Intangible assets, Cost	$ 104		104
Intangible assets, Accumulated Amortization	(51)		(50)
Total intangible assets, Net	$ 53		54
Other
Finite-Lived and Indefinite-lived Intangible Assets [Line Items]
Weighted Average Amortization Period	9 years
Intangible assets, Cost	$ 114		114
Intangible assets, Accumulated Amortization	(78)		(75)
Total intangible assets, Net	$ 36		39
Total Amortizing Intangible Assets
Finite-Lived and Indefinite-lived Intangible Assets [Line Items]
Weighted Average Amortization Period	17 years
Intangible assets, Cost	$ 1,592		1,576
Intangible assets, Accumulated Amortization	(628)		(605)
Total intangible assets, Net	$ 964		$ 971

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DEBT (Long-Term Debt) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Total long-term debt	$ 4,239	$ 3,893
Debt issuance costs	(23)	(17)
Less: Current portion of long-term debt	1,108	464
Total long-term debt, net of current portion	3,131	3,429
Secured Receivables Credit Facility
Debt Instrument [Line Items]
Total long-term debt	0	$ 160
Credit facility borrowing rate		3.39%
2.70% Senior Notes due April 2019
Debt Instrument [Line Items]
Total long-term debt	$ 300	$ 300
Debt instrument, interest rate	2.70%
Debt instrument, maturity date	Apr. 01, 2019
4.75% Senior Notes due January 2020
Debt Instrument [Line Items]
Total long-term debt	$ 506	507
Debt instrument, interest rate	4.75%
Debt instrument, maturity date	Jan. 30, 2020
2.50% Senior Notes due March 2020
Debt Instrument [Line Items]
Total long-term debt	$ 300	300
Debt instrument, interest rate	2.50%
Debt instrument, maturity date	Mar. 30, 2020
4.70% Senior Notes due April 2021
Debt Instrument [Line Items]
Total long-term debt	$ 556	557
Debt instrument, interest rate	4.70%
Debt instrument, maturity date	Apr. 01, 2021
4.25% Senior Notes due April 2024
Debt Instrument [Line Items]
Total long-term debt	$ 301	299
Debt instrument, interest rate	4.25%
Debt instrument, maturity date	Apr. 01, 2024
3.50% Senior Notes due March 2025
Debt Instrument [Line Items]
Total long-term debt	$ 570	562
Debt instrument, interest rate	3.50%
Debt instrument, maturity date	Mar. 30, 2025
3.45% Senior Notes due June 2026
Debt Instrument [Line Items]
Total long-term debt	$ 475	469
Debt instrument, interest rate	3.45%
Debt instrument, maturity date	Jun. 30, 2026
4.20% Senior Notes due June 2029
Debt Instrument [Line Items]
Total long-term debt	$ 499	0
Debt instrument, interest rate	4.20%
Debt instrument, maturity date	Jun. 30, 2029
6.95% Senior Notes due July 2037
Debt Instrument [Line Items]
Total long-term debt	$ 175	175
Debt instrument, interest rate	6.95%
Debt instrument, maturity date	Jul. 01, 2037
5.75% Senior Notes due January 2040
Debt Instrument [Line Items]
Total long-term debt	$ 244	244
Debt instrument, interest rate	5.75%
Debt instrument, maturity date	Jan. 30, 2040
4.70% Senior Notes due March 2045
Debt Instrument [Line Items]
Total long-term debt	$ 300	300
Debt instrument, interest rate	4.70%
Debt instrument, maturity date	Mar. 30, 2045
Other
Debt Instrument [Line Items]
Other	$ 36	$ 37

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DEBT (Narrative) (Details) - USD ($)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Debt Instrument [Line Items]
Unamortized discount	$ 9,000,000
Proceeds from borrowings	1,139,000,000	$ 935,000,000
Repayments of debt	802,000,000	$ 832,000,000
Secured Receivables Credit Facility
Debt Instrument [Line Items]
Proceeds from borrowings	640,000,000
Repayments of debt	800,000,000
4.20% Senior Notes due June 2029
Debt Instrument [Line Items]
Face Amount	$ 500,000,000
Debt instrument, interest rate	4.20%
Unamortized discount	$ 1,000,000
Debt issuance costs	$ 5,000,000

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DEBT (Maturities of Long-Term Debt) (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Debt Instruments [Abstract]
Remainder of 2019	$ 302
2020	803
2021	553
2022	3
2023	1
Thereafter	2,649
Total maturities of long-term debt	4,311
Unamortized discount	(9)
Debt issuance costs	(23)	$ (17)
Fair value basis adjustments attributable to hedged debt	(40)
Total long-term debt	4,239	3,893
Current portion of long-term debt	1,108	464
Total long-term debt, net of current portion	$ 3,131	$ 3,429

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LEASES (Narrative) (Details)	3 Months Ended
	Mar. 31, 2019
Minimum
Lessee, Lease, Description [Line Items]
Remaining lease term	1 year
Maximum
Lessee, Lease, Description [Line Items]
Remaining lease term	15 years

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LEASES LEASES (Liabilities) (Details) - USD ($) $ in Millions	Mar. 31, 2019	Jan. 01, 2019	Dec. 31, 2018
Leases [Abstract]
Operating lease assets	$ 497	$ 500	$ 0
Finance lease assets	39
Total lease assets	536
Current operating lease liabilities	145		0
Current finance lease liabilities	4
Noncurrent operating lease liabilities	393		$ 0
Noncurrent finance lease liabilities	31
Total lease liabilities	573
Amortization of leased assets	$ 25

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LEASES (Costs) (Details) $ in Millions	3 Months Ended
	Mar. 31, 2019 USD ($)
Leases [Abstract]
Operating lease cost	$ 73
Amortization of leased assets	2
Interest on lease liabilities	1
Net lease cost	76
Short-term leases and variable lease costs	$ 29

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LEASES (Maturity) (Details) - USD ($) $ in Millions	Mar. 31, 2019	Jan. 01, 2019
Operating leases
Remainder of 2019	$ 112
2020	135
2021	100
2022	75
2023	58
Thereafter	113
Total lease payments	593
Less: Interest	55
Present value of lease liabilities	538	$ 550
Finance leases
Remainder of 2019	5
2020	6
2021	5
2022	5
2023	3
Thereafter	34
Total lease payments	58
Less: Interest	23
Present value of lease liabilities	35
Total
Remainder of 2019	117
2020	141
2021	105
2022	80
2023	61
Thereafter	147
Total lease payments	651
Less: Interest	78
Present value of lease liabilities	$ 573

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LEASES (Rent Payments) (Details) $ in Millions	Dec. 31, 2018 USD ($)
Leases [Abstract]
2019	$ 181
2020	143
2021	106
2022	79
2023	60
Thereafter	122
Minimum lease payments	$ 691

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LEASES (Term and Rate) (Details)	3 Months Ended
	Mar. 31, 2019
Leases [Abstract]
Weighted-average remaining lease term, Operating leases	5 years
Weighted-average remaining lease term,Finance leases	13 years
Weighted-average discount rate, Operating leases	3.20%
Weighted-average discount rate, Finance leases	8.60%

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FINANCIAL INSTRUMENTS (Narrative) (Details) - USD ($) $ in Millions	1 Months Ended	3 Months Ended
	Feb. 28, 2019	Mar. 31, 2019	Dec. 31, 2018
Derivative [Line Items]
Accumulated other comprehensive loss		$ (55)	$ (59)
Cash Flow Hedging
Derivative [Line Items]
Accumulated other comprehensive loss		9	$ 9
Net amount of deferred gains and losses on cash flow hedges that is expected to be reclassified within the next 12 months		$ 3
Fair Value Hedging | One-Month LIBOR | Minimum
Derivative [Line Items]
Floating rate		2.20%
Fair Value Hedging | One-Month LIBOR | Maximum
Derivative [Line Items]
Floating rate		3.00%
Treasury Lock | Cash Flow Hedging
Derivative [Line Items]
Notional amount	$ 250
Gain (loss) on derivatives	$ (1)

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FINANCIAL INSTRUMENTS (Summary of Notional Amounts) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018
4.25% Senior Notes due April 2024
Derivative [Line Items]
Debt instrument, interest rate	4.25%
Debt instrument, maturity date	Apr. 01, 2024
3.50% Senior Notes due March 2025
Derivative [Line Items]
Debt instrument, interest rate	3.50%
Debt instrument, maturity date	Mar. 30, 2025
3.45% Senior Notes due June 2026
Derivative [Line Items]
Debt instrument, interest rate	3.45%
Debt instrument, maturity date	Jun. 30, 2026
Interest Rate Swaps | Fair Value Hedging
Derivative [Line Items]
Notional Amount	$ 1,200	$ 1,200
Interest Rate Swaps | Fair Value Hedging | 4.25% Senior Notes due April 2024
Derivative [Line Items]
Notional Amount	250	250
Interest Rate Swaps | Fair Value Hedging | 3.50% Senior Notes due March 2025
Derivative [Line Items]
Notional Amount	600	600
Interest Rate Swaps | Fair Value Hedging | 3.45% Senior Notes due June 2026
Derivative [Line Items]
Notional Amount	$ 350	$ 350

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FINANCIAL INSTRUMENTS (Balance Sheets) (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Derivative [Line Items]
Fair value basis adjustments attributable to hedged debt	$ (40)
Hedging adjustment on a discontinued relationship	37	$ 40
Long-term Debt | Fair Value Hedging
Derivative [Line Items]
Carrying Amount of Hedged Long-Term Debt	1,140	1,125
Fair value basis adjustments attributable to hedged debt	$ (40)	$ (53)

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FINANCIAL INSTRUMENTS (Income Statement) (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Derivative [Line Items]
Other income (expense), net	$ 9	$ (2)
Other Nonoperating Income (Expense)
Derivative [Line Items]
Hedged items (Long-term debt)	(16)	25
Other Nonoperating Income (Expense) | Fair Value Hedging
Derivative [Line Items]
Derivatives designated as hedging instruments	$ 16	$ (25)

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FINANCIAL INSTRUMENTS (Summary of Fair Value of Derivatives) (Details) - USD ($) $ in Millions	Mar. 31, 2019	Dec. 31, 2018
Designated as Hedging Instrument | Other Liabilities | Interest Rate Swaps
Derivative [Line Items]
Liability Derivatives	$ 77	$ 93

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STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions	3 Months Ended
	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Jul. 01, 2015
Schedule of Stockholders' Equity and Redeemable Noncontrolling Interest [Line Items]
Dividends per common share	$ 0.53	$ 0.53	$ 0.50	$ 0.50	$ 0.50
Share repurchase authorization remaining available	$ 542
Purchases of treasury stock, value	$ 50				$ 50
Reissuance of shares for employee benefit plan	0.4				0.6
UMass Joint Venture [Member]
Schedule of Stockholders' Equity and Redeemable Noncontrolling Interest [Line Items]
Ownership percentage by noncontrolling owners						18.90%
Treasury Stock, at Cost [Member]
Schedule of Stockholders' Equity and Redeemable Noncontrolling Interest [Line Items]
Purchases of treasury stock- shares	0.6				0.5
Purchases of treasury stock, value	$ 50				$ 50

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SUPPLEMENTAL CASH FLOW & OTHER DATA (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Supplemental Cash Flow Elements [Abstract]
Depreciation expense	$ 60	$ 52
Amortization expense	24	22
Depreciation and amortization expense	84	74
Interest expense	(45)	(41)
Interest income	1	0
Interest expense, net	(44)	(41)
Interest paid	28	49
Income taxes paid	3	2
Accounts payable associated with capital expenditures	13	16
Dividends payable	72	66
Fair value of assets acquired	61	148
Fair value of liabilities assumed	0	(1)
Fair value of net assets acquired	61	147
Merger consideration paid (payable), net	(5)	(12)
Cash paid for business acquisitions	56	135
Less: Cash acquired	0	5
Business acquisitions, net of cash acquired	56	$ 130
Leases:
Operating cash flows from operating leases	45
Operating cash flows from finance leases	1
Financing cash flows from finance leases	1
Leased assets obtained in exchange for new operating lease liabilities	$ 25

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COMMITMENTS AND CONTINGENCIES (Details) - USD ($)	Mar. 31, 2019	Dec. 31, 2018
Debt Instrument [Line Items]
Litigation reserves	$ 1,000,000	$ 1,000,000
Self-insurance reserves	125,000,000	$ 125,000,000
Secured Receivables Credit Facility
Debt Instrument [Line Items]
Letters of credit outstanding, amount	71,000,000
Letter of Credit | Revolving Credit Facility
Debt Instrument [Line Items]
Credit facility capacity	150,000,000
Letter of Credit | Secured Receivables Credit Facility
Debt Instrument [Line Items]
Credit facility capacity	$ 100,000,000

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BUSINESS SEGMENT INFORMATION (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Segment Reporting Information [Line Items]
Percentage of net revenues	100.00%	100.00%
Total net revenues	$ 1,891	$ 1,884
Total operating income	248	272
Non-operating expenses, net	(35)	(43)
Income before income taxes and equity in earnings of equity method investees	213	229
Income tax expense	(50)	(52)
Equity in earnings of equity method investees, net of taxes	13	12
Net income	176	189
Less: Net income attributable to noncontrolling interests	12	12
Net income attributable to Quest Diagnostics	$ 164	$ 177
DIS business
Segment Reporting Information [Line Items]
Percentage of net revenues	96.00%	96.00%
Total net revenues	$ 1,812	$ 1,803
Total operating income	$ 280	$ 308
DIS business | Minimum
Segment Reporting Information [Line Items]
Percentage of net revenues	95.00%	95.00%
All other operating segments
Segment Reporting Information [Line Items]
Total net revenues	$ 79	$ 81
Total operating income	9	11
General corporate activities
Segment Reporting Information [Line Items]
Total operating income	$ (41)	$ (47)

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RELATED PARTIES (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018	Dec. 31, 2018
Equity Method Investee
Related Party Transaction [Line Items]
Revenues	$ 9	$ 9
Receivables	4		$ 3
Accounts payable, related parties	1		1
Equity Method Investee | Prepaid Expenses and Other Current Assets
Related Party Transaction [Line Items]
Other receivables	2		$ 3
Equity Method Investee | Selling, general and administrative
Related Party Transaction [Line Items]
Income from related party recognized	4	$ 4
Joint Venture
Related Party Transaction [Line Items]
Revenues	3
Receivables	$ 2

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REVENUE RECOGNITION (Details)	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Segment Reporting Information [Line Items]
Percentage of net revenues	100.00%	100.00%
DIS business
Segment Reporting Information [Line Items]
Percentage of net revenues	96.00%	96.00%
DIS business | Healthcare Insurers
Segment Reporting Information [Line Items]
Percentage of net revenues	37.00%	37.00%
DIS business | Healthcare Insurers | Fee-for-service
Segment Reporting Information [Line Items]
Percentage of net revenues	33.00%	33.00%
DIS business | Healthcare Insurers | Capitated
Segment Reporting Information [Line Items]
Percentage of net revenues	4.00%	4.00%
DIS business | Government Payers
Segment Reporting Information [Line Items]
Percentage of net revenues	15.00%	16.00%
DIS business | Client Payers
Segment Reporting Information [Line Items]
Percentage of net revenues	31.00%	30.00%
DIS business | Patient
Segment Reporting Information [Line Items]
Percentage of net revenues	13.00%	13.00%
DIS business | Minimum
Segment Reporting Information [Line Items]
Percentage of net revenues	95.00%	95.00%
All other operating segments | DS Businesses
Segment Reporting Information [Line Items]
Percentage of net revenues	4.00%	4.00%

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TAXES ON INCOME (Details) - USD ($) $ in Millions	3 Months Ended
	Mar. 31, 2019	Mar. 31, 2018
Income Tax Disclosure [Abstract]
Effective income tax rate	23.70%	22.50%
Share-based compensation, excess tax benefit, amount	$ 3	$ 8

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Label	Element	Value
Restricted Cash	us-gaap_RestrictedCash	$ 0
Restricted Cash	us-gaap_RestrictedCash	$ 0