UNITED STATES | ||
SECURITIES AND EXCHANGE COMMISSION | ||
WASHINGTON, DC 20549 | ||
(State of Incorporation) | (I.R.S. Employer Identification Number) | ||||||||||||||||
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
☒ | Accelerated filer | ☐ | |||||||||
Non-accelerated filer | ☐ | Smaller reporting company | |||||||||
Emerging growth company |
Page | ||||||||
Item 1. Financial Statements (unaudited) | ||||||||
Index to unaudited consolidated financial statements filed as part of this report: | ||||||||
Notes to Consolidated Financial Statements (unaudited) | ||||||||
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Net revenues | $ | $ | |||||||||
Operating costs and expenses and other operating income: | |||||||||||
Cost of services | |||||||||||
Selling, general and administrative | |||||||||||
Amortization of intangible assets | |||||||||||
Other operating expense, net | |||||||||||
Total operating costs and expenses, net | |||||||||||
Operating income | |||||||||||
Other income (expense): | |||||||||||
Interest expense, net | ( | ( | |||||||||
Other income (expense), net | ( | ||||||||||
Total non-operating expense, net | ( | ( | |||||||||
Income before income taxes and equity in earnings of equity method investees | |||||||||||
Income tax expense | ( | ( | |||||||||
Equity in earnings of equity method investees, net of taxes | |||||||||||
Net income | |||||||||||
Less: Net income attributable to noncontrolling interests | |||||||||||
Net income attributable to Quest Diagnostics | $ | $ | |||||||||
Earnings per share attributable to Quest Diagnostics’ common stockholders: | |||||||||||
Basic | $ | $ | |||||||||
Diluted | $ | $ | |||||||||
Weighted average common shares outstanding: | |||||||||||
Basic | |||||||||||
Diluted | |||||||||||
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Net income | $ | $ | |||||||||
Other comprehensive loss: | |||||||||||
Foreign currency translation adjustment | ( | ( | |||||||||
Net change in available-for-sale debt securities, net of taxes | ( | ||||||||||
Other comprehensive loss | ( | ( | |||||||||
Comprehensive income | |||||||||||
Less: Comprehensive income attributable to noncontrolling interests | |||||||||||
Comprehensive income attributable to Quest Diagnostics | $ | $ |
March 31, 2021 | December 31, 2020 | ||||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | $ | |||||||||
Accounts receivable, net of allowance for credit losses of $ | |||||||||||
Inventories | |||||||||||
Prepaid expenses and other current assets | |||||||||||
Total current assets | |||||||||||
Property, plant and equipment, net | |||||||||||
Operating lease right-of-use assets | |||||||||||
Goodwill | |||||||||||
Intangible assets, net | |||||||||||
Investments in equity method investees | |||||||||||
Other assets | |||||||||||
Total assets | $ | $ | |||||||||
Liabilities and Stockholders’ Equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable and accrued expenses | $ | $ | |||||||||
Current portion of long-term debt | |||||||||||
Current portion of long-term operating lease liabilities | |||||||||||
Total current liabilities | |||||||||||
Long-term debt | |||||||||||
Long-term operating lease liabilities | |||||||||||
Other liabilities | |||||||||||
Commitments and contingencies | |||||||||||
Redeemable noncontrolling interest | |||||||||||
Stockholders’ equity: | |||||||||||
Quest Diagnostics stockholders’ equity: | |||||||||||
Common stock, par value $ | |||||||||||
Additional paid-in capital | |||||||||||
Retained earnings | |||||||||||
Accumulated other comprehensive loss | ( | ( | |||||||||
Treasury stock, at cost; | ( | ( | |||||||||
Total Quest Diagnostics stockholders’ equity | |||||||||||
Noncontrolling interests | |||||||||||
Total stockholders’ equity | |||||||||||
Total liabilities and stockholders’ equity | $ | $ |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Cash flows from operating activities: | |||||||||||
Net income | $ | $ | |||||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | |||||||||||
Provision for credit losses | |||||||||||
Deferred income tax (benefit) provision | ( | ||||||||||
Stock-based compensation expense | |||||||||||
Other, net | ( | ( | |||||||||
Changes in operating assets and liabilities: | |||||||||||
Accounts receivable | |||||||||||
Accounts payable and accrued expenses | ( | ( | |||||||||
Income taxes payable | ( | ||||||||||
Other assets and liabilities, net | ( | ||||||||||
Net cash provided by operating activities | |||||||||||
Cash flows from investing activities: | |||||||||||
Business acquisitions, net of cash acquired | ( | ||||||||||
Capital expenditures | ( | ( | |||||||||
Increase in investments and other assets | ( | ( | |||||||||
Net cash used in investing activities | ( | ( | |||||||||
Cash flows from financing activities: | |||||||||||
Repayments of debt | ( | ( | |||||||||
Purchases of treasury stock | ( | ( | |||||||||
Exercise of stock options | |||||||||||
Employee payroll tax withholdings on stock issued under stock-based compensation plans | ( | ( | |||||||||
Dividends paid | ( | ( | |||||||||
Distributions to noncontrolling interest partners | ( | ( | |||||||||
Other financing activities, net | ( | ( | |||||||||
Net cash used in financing activities | ( | ( | |||||||||
Net change in cash and cash equivalents and restricted cash | ( | ||||||||||
Cash and cash equivalents and restricted cash, beginning of period | |||||||||||
Cash and cash equivalents and restricted cash, end of period | $ | $ | |||||||||
For the Three Months Ended March 31, 2021 | 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, 2020 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of taxes | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interest partners | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under benefit plans | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares to cover employee payroll tax withholdings on stock issued under stock-based compensation plans | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases of treasury stock | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2021 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
For the Three Months Ended March 31, 2020 | 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, 2019 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Net income | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Other comprehensive loss, net of taxes | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends declared | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Distributions to noncontrolling interest partners | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Issuance of common stock under benefit plans | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Exercise of stock options | |||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares to cover employee payroll tax withholdings on stock issued under stock-based compensation plans | ( | ( | |||||||||||||||||||||||||||||||||||||||||||||||||||
Purchases of treasury stock | ( | ( | ( | ||||||||||||||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2020 | $ | $ | $ | $ | ( | $ | ( | $ | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Amounts attributable to Quest Diagnostics’ common stockholders: | |||||||||||
Net income attributable to Quest Diagnostics | $ | $ | |||||||||
Less: Earnings allocated to participating securities | |||||||||||
Earnings available to Quest Diagnostics’ common stockholders – basic and diluted | $ | $ | |||||||||
Weighted average common shares outstanding – basic | |||||||||||
Effect of dilutive securities: | |||||||||||
Stock options and performance share units | |||||||||||
Weighted average common shares outstanding – diluted | |||||||||||
Earnings per share attributable to Quest Diagnostics’ common stockholders: | |||||||||||
Basic | $ | $ | |||||||||
Diluted | $ | $ | |||||||||
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Stock options and performance share units |
Basis of Fair Value Measurements | |||||||||||||||||||||||
Quoted Prices in Active Markets for Identical Assets/Liabilities | Significant Other Observable Inputs | Significant Unobservable Inputs | |||||||||||||||||||||
March 31, 2021 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
Assets: | |||||||||||||||||||||||
Trading securities | $ | $ | $ | $ | |||||||||||||||||||
Cash surrender value of life insurance policies | |||||||||||||||||||||||
Available-for-sale debt securities | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Liabilities: | |||||||||||||||||||||||
Deferred compensation liabilities | $ | $ | $ | $ | |||||||||||||||||||
Redeemable noncontrolling interest | $ | $ | $ | — | $ |
Basis of Fair Value Measurements | |||||||||||||||||||||||
December 31, 2020 | Total | Level 1 | Level 2 | Level 3 | |||||||||||||||||||
Assets: | |||||||||||||||||||||||
Trading securities | $ | $ | $ | $ | |||||||||||||||||||
Cash surrender value of life insurance policies | |||||||||||||||||||||||
Available-for-sale debt securities | |||||||||||||||||||||||
Total | $ | $ | $ | $ | |||||||||||||||||||
Liabilities: | |||||||||||||||||||||||
Deferred compensation liabilities | $ | $ | $ | $ | |||||||||||||||||||
Redeemable noncontrolling interest | $ | $ | $ | — | $ |
March 31, 2021 | December 31, 2020 | ||||||||||
Balance, beginning of period | $ | $ | |||||||||
Goodwill acquired during the period | |||||||||||
Adjustments to goodwill | ( | ||||||||||
Balance, end of period | $ | $ |
Weighted Average Amortization Period (in years) | March 31, 2021 | December 31, 2020 | |||||||||||||||||||||||||||||||||||||||
Cost | Accumulated Amortization | Net | Cost | Accumulated Amortization | Net | ||||||||||||||||||||||||||||||||||||
Amortizing intangible assets: | |||||||||||||||||||||||||||||||||||||||||
Customer-related | $ | $ | ( | $ | $ | $ | ( | $ | |||||||||||||||||||||||||||||||||
Non-compete agreements | ( | ( | |||||||||||||||||||||||||||||||||||||||
Technology | ( | ( | |||||||||||||||||||||||||||||||||||||||
Other | ( | ( | |||||||||||||||||||||||||||||||||||||||
Total | ( | ( | |||||||||||||||||||||||||||||||||||||||
Intangible assets not subject to amortization: | |||||||||||||||||||||||||||||||||||||||||
Trade names | — | — | |||||||||||||||||||||||||||||||||||||||
Other | — | — | |||||||||||||||||||||||||||||||||||||||
Total intangible assets | $ | $ | ( | $ | $ | $ | ( | $ |
Year Ending December 31, | |||||
Remainder of 2021 | $ | ||||
2022 | |||||
2023 | |||||
2024 | |||||
2025 | |||||
2026 | |||||
Thereafter | |||||
Total | $ |
Hedge Accounting Basis Adjustment (a) | |||||||||||||||||
Balance Sheet Classification | March 31, 2021 | December 31, 2020 | |||||||||||||||
Long-term debt | $ | $ |
Three Months Ended March 31, | |||||||||||||||||
2021 | 2020 | ||||||||||||||||
Other income (expense), net | Other income (expense), net | ||||||||||||||||
Total for line item in which the effects of fair value hedges are recorded | $ | $ | ( | ||||||||||||||
Gain (loss) on fair value hedging relationships: | |||||||||||||||||
Hedged items (Long-term debt) | $ | $ | ( | ||||||||||||||
Derivatives designated as hedging instruments | $ | $ |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Depreciation expense | $ | $ | |||||||||
Amortization expense | |||||||||||
Depreciation and amortization expense | $ | $ | |||||||||
Interest expense | $ | ( | $ | ( | |||||||
Interest income | |||||||||||
Interest expense, net | $ | ( | $ | ( | |||||||
Interest paid | $ | $ | |||||||||
Income taxes paid | $ | $ | |||||||||
Accounts payable associated with capital expenditures | $ | $ | |||||||||
Dividends payable | $ | $ | |||||||||
Businesses acquired: | |||||||||||
Fair value of assets acquired | $ | $ | |||||||||
Fair value of liabilities assumed | ( | ||||||||||
Fair value of net assets acquired | |||||||||||
Less: Cash acquired | |||||||||||
Business acquisitions, net of cash acquired | $ | $ | |||||||||
Leases: | |||||||||||
Leased assets obtained in exchange for new operating lease liabilities | $ | $ | |||||||||
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Net revenues: | |||||||||||
DIS business | $ | $ | |||||||||
All other operating segments | |||||||||||
Total net revenues | $ | $ | |||||||||
Operating earnings (loss): | |||||||||||
DIS business | $ | $ | |||||||||
All other operating segments | |||||||||||
General corporate activities | ( | ( | |||||||||
Total operating income | |||||||||||
Non-operating expense, net | ( | ( | |||||||||
Income before income taxes and equity in earnings of equity method investees | |||||||||||
Income tax expense | ( | ( | |||||||||
Equity in earnings of equity method investees, net of taxes | |||||||||||
Net income | |||||||||||
Less: Net income attributable to noncontrolling interests | |||||||||||
Net income attributable to Quest Diagnostics | $ | $ |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Routine clinical testing services | $ | $ | |||||||||
COVID-19 testing services | |||||||||||
Gene-based and esoteric (including advanced diagnostics) testing services | |||||||||||
Anatomic pathology testing services | |||||||||||
All other | |||||||||||
Total net revenues | $ | $ |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Healthcare insurers: | |||||||||||
Fee-for-service | % | % | |||||||||
Capitated | |||||||||||
Total healthcare insurers | |||||||||||
Government payers | |||||||||||
Client payers | |||||||||||
Patients | |||||||||||
Total DIS | |||||||||||
DS | |||||||||||
Net revenues | % | % |
March 31, 2021 | December 31, 2020 | ||||||||||
Healthcare Insurers | % | % | |||||||||
Government Payers | |||||||||||
Client Payers | |||||||||||
Patients (including coinsurance and deductible responsibilities) | |||||||||||
Total DIS | |||||||||||
DS | |||||||||||
Net accounts receivable | % | % |
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
(dollars in millions, except per share data) | |||||||||||
Net revenues | $2,720 | $1,822 | |||||||||
DIS revenues | $2,643 | $1,744 | |||||||||
Revenue per requisition change | 20.5% | (1.2)% | |||||||||
Requisition volume change | 25.6% | (2.4)% | |||||||||
Organic requisition volume change | 21.6% | (2.7)% | |||||||||
DS revenues | $77 | $78 | |||||||||
Net income attributable to Quest Diagnostics | $469 | $99 | |||||||||
Diluted earnings per share | $3.46 | $0.73 | |||||||||
Net cash provided by operating activities | $731 | $247 |
Three Months Ended March 31, | |||||||||||||||||||||||
2021 | 2020 | $ Change | % Change | ||||||||||||||||||||
(dollars in millions, except per share amounts) | |||||||||||||||||||||||
Net revenues: | |||||||||||||||||||||||
DIS business | $ | 2,643 | $ | 1,744 | $ | 899 | 51.5 | % | |||||||||||||||
DS businesses | 77 | 78 | (1) | (1.0) | |||||||||||||||||||
Total net revenues | $ | 2,720 | $ | 1,822 | $ | 898 | 49.3 | % | |||||||||||||||
Operating costs and expenses and other operating income: | |||||||||||||||||||||||
Cost of services | $ | 1,626 | $ | 1,270 | $ | 356 | 28.0 | % | |||||||||||||||
Selling, general and administrative | 407 | 347 | 60 | 17.1 | |||||||||||||||||||
Amortization of intangible assets | 27 | 25 | 2 | 8.2 | |||||||||||||||||||
Other operating expense, net | — | 5 | (5) | NM | |||||||||||||||||||
Total operating costs and expenses, net | $ | 2,060 | $ | 1,647 | $ | 413 | 25.1 | % | |||||||||||||||
Operating income | $ | 660 | $ | 175 | $ | 485 | 277.2 | % | |||||||||||||||
Other income (expense): | |||||||||||||||||||||||
Interest expense, net | $ | (38) | $ | (41) | $ | 3 | (8.1) | % | |||||||||||||||
Other income (expense), net | 4 | (16) | 20 | NM | |||||||||||||||||||
Total non-operating expense, net | $ | (34) | $ | (57) | $ | 23 | NM | ||||||||||||||||
Income tax expense | $ | (153) | $ | (26) | $ | (127) | 493.3 | % | |||||||||||||||
Effective income tax rate | 24.6 | % | 22.0 | % | |||||||||||||||||||
Equity in earnings of equity method investees, net of taxes | $ | 17 | $ | 14 | $ | 3 | 22.3 | % | |||||||||||||||
Net income attributable to Quest Diagnostics | $ | 469 | $ | 99 | $ | 370 | 374.3 | % | |||||||||||||||
Diluted earnings per common share attributable to Quest Diagnostics' common stockholders | $ | 3.46 | $ | 0.73 | $ | 2.73 | 375.8 | % | |||||||||||||||
NM - Not Meaningful | |||||||||||||||||||||||
Three Months Ended March 31, | |||||||||||
2021 | 2020 | ||||||||||
Net revenues: | |||||||||||
DIS business | 97.2 | % | 95.7 | % | |||||||
DS businesses | 2.8 | 4.3 | |||||||||
Total net revenues | 100.0 | % | 100.0 | % | |||||||
Operating costs and expenses and other operating income: | |||||||||||
Cost of services | 59.8 | % | 69.7 | % | |||||||
Selling, general and administrative | 14.9 | 19.0 | |||||||||
Amortization of intangible assets | 1.0 | 1.4 | |||||||||
Other operating expense, net | — | 0.3 | |||||||||
Total operating costs and expenses, net | 75.7 | % | 90.4 | % | |||||||
Operating income | 24.3 | % | 9.6 | % | |||||||
Three Months Ended March 31, | Change | ||||||||||||||||
2021 | 2020 | ||||||||||||||||
(dollars in millions) | |||||||||||||||||
Net cash provided by operating activities | $ | 731 | $ | 247 | $ | 484 | |||||||||||
Net cash used in investing activities | (93) | (206) | 113 | ||||||||||||||
Net cash used in financing activities | (566) | (891) | 325 | ||||||||||||||
Net change in cash and cash equivalents and restricted cash | $ | 72 | $ | (850) | $ | 922 |
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, 2021 – January 31, 2021 | ||||||||||||||||||||||||||
Share Repurchase Program (A) | — | $ | — | — | $ | 917,139 | ||||||||||||||||||||
Employee Transactions (B) | 2,815 | $ | 119.45 | N/A | N/A | |||||||||||||||||||||
February 1, 2021 – February 28, 2021 | ||||||||||||||||||||||||||
Share Repurchase Program (A) | 1,383,227 | $ | 120.11 | 1,383,227 | $ | 1,751,000 | ||||||||||||||||||||
Employee Transactions (B) | 78,541 | $ | 121.25 | N/A | N/A | |||||||||||||||||||||
March 1, 2021 – March 31, 2021 | ||||||||||||||||||||||||||
Share Repurchase Program (A) | 1,994,788 | $ | 122.57 | 1,994,788 | $ | 2,506,502 | ||||||||||||||||||||
Employee Transactions (B) | 102,538 | $ | 115.42 | N/A | N/A | |||||||||||||||||||||
Total | ||||||||||||||||||||||||||
Share Repurchase Program (A) | 3,378,015 | $ | 121.56 | 3,378,015 | $ | 2,506,502 | ||||||||||||||||||||
Employee Transactions (B) | 183,894 | $ | 117.97 | N/A | N/A |
31.1 | |||||
31.2 | |||||
32.1 | |||||
32.2 | |||||
10.1 | |||||
101.INS | Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document | ||||
101.SCH | Inline XBRL Taxonomy Extension Schema Document - dgx-20210331.xsd | ||||
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document - dgx-20210331_cal.xml | ||||
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document - dgx-20210331_def.xml | ||||
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document - dgx-20210331_lab.xml | ||||
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document - dgx-20210331_pre.xml | ||||
104 | Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101) | ||||
By | /s/ Stephen H. Rusckowski | ||||
Stephen H. Rusckowski | |||||
Chairman, Chief Executive Officer | |||||
and President | |||||
By | /s/ Mark J. Guinan | ||||
Mark J. Guinan | |||||
Executive Vice President and | |||||
Chief Financial Officer |
Annual Compounded Base Business Revenue Growth* | “Earnings Multiple”* multiplied by 35% of Target Performance Shares = Earned Performance Shares | ||||
Greater Than or Equal to % Greater Than or Equal to % but Less Than or Equal to %…………………………………... | 2 x 35% x Target Performance Shares 1 x 35% x Target Performance Shares | ||||
Equal to % | 0.25 x 35% x Target Performance Shares | ||||
Less Than % | 0 x 35% x Target Performance Shares |
COVID-19 Net Revenue (mm)* | “Earnings Multiple”* multiplied by 15% of Target Performance Shares = Earned Performance Shares | ||||
Greater Than or Equal to $ Equal to $………………………………… | 2 x 15% x Target Performance Shares 1 x 15% x Target Performance Shares | ||||
Equal to $ | 0.25 x 15% x Target Performance Shares | ||||
Less Than $ | 0 x 15% x Target Performance Shares |
Average ROIC* | “Earnings Multiple”* multiplied by 30% of Target Performance Shares = Earned Performance Shares | ||||
Greater Than or Equal to % Greater Than or Equal to % but Less Than or Equal to %…………………………... | 2 x 30% x Target Performance Shares 1 x 30% x Target Performance Shares | ||||
Equal to % | 0.25 x 30% x Target Performance Shares | ||||
Less Than % | 0 x 30% x Target Performance Shares |
Relative TSR* | “Earnings Multiple”* multiplied by 20% of Target Performance Shares = Earned Performance Shares | ||||
Greater Than or Equal to Percentile | 2 x 20% x Target Performance Shares | ||||
Equal to Percentile | 1 x 20% x Target Performance Shares | ||||
Equal to Percentile | 0.5 x 20% x Target Performance Shares | ||||
Less Than Percentile | 0 x 20% x Target Performance Shares |
By | /s/ Stephen H. Rusckowski | ||||
Stephen H. Rusckowski | |||||
Chairman, Chief Executive Officer and | |||||
President |
By | /s/ Mark J. Guinan | ||||
Mark J. Guinan | |||||
Executive Vice President and | |||||
Chief Financial Officer |
Dated: | April 23, 2021 | /s/ Stephen H. Rusckowski | ||||||||||||
Stephen H. Rusckowski | ||||||||||||||
Chairman, Chief Executive Officer and | ||||||||||||||
President |
Dated: | April 23, 2021 | /s/ Mark J. Guinan | ||||||||||||
Mark J. Guinan | ||||||||||||||
Executive Vice President and | ||||||||||||||
Chief Financial Officer |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Millions |
3 Months Ended | |
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Mar. 31, 2021 |
Mar. 31, 2020 |
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Statement of Comprehensive Income [Abstract] | ||
Net income | $ 490 | $ 106 |
Other comprehensive loss: | ||
Foreign currency translation adjustment | (3) | (19) |
Net change in available-for-sale debt securities, net of taxes | (7) | 0 |
Other comprehensive loss | (10) | (19) |
Comprehensive income | 480 | 87 |
Less: Comprehensive income attributable to noncontrolling interests | 21 | 7 |
Comprehensive income attributable to Quest Diagnostics | $ 459 | $ 80 |
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) shares in Millions, $ in Millions |
Mar. 31, 2021 |
Dec. 31, 2020 |
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Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 29 | $ 28 |
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) | 86 | 84 |
DESCRIPTION OF BUSINESS |
3 Months Ended |
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Mar. 31, 2021 | |
Description of Business (Abstract) | |
DESCRIPTION OF BUSINESS | DESCRIPTION OF BUSINESS Background |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended |
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Mar. 31, 2021 | |
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 2020 Annual Report on Form 10-K. The year-end balance sheet data was derived from the audited consolidated financial statements as of December 31, 2020, 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 audited consolidated financial statements contained in the Company’s 2020 Annual Report on Form 10-K. A novel strain of coronavirus (“COVID-19”) continues to spread and severely impact the economy of the United States and other countries around the world. The Company's testing volume and revenues have been materially impacted by the COVID-19 pandemic, including periods of decline in testing volume in the Company's base business (which excludes COVID-19 testing) compared to historical 2019 levels and periods of significant demand for COVID-19 testing. As a result, operating results for the three months ended March 31, 2021 may not be indicative of the results that may be expected for the full year. 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 attributable to Quest Diagnostics, 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 attributable to Quest Diagnostics, 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 Standards to be Adopted In March 2020, the Financial Accounting Standards Board issued a new accounting standard which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform due to the risk of cessation of the London Interbank Offered Rate ("LIBOR"). The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The pronouncement is effective immediately and can be applied through December 31, 2022. The adoption of this standard is not expected to have a material impact on the Company’s consolidated results of operations, financial position or cash flows.
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EARNINGS PER SHARE |
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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 (in millions, except per share data):
The following securities were not included in the calculation of diluted earnings per share due to their antidilutive effect:
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BUSINESS ACQUISITIONS |
3 Months Ended |
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Mar. 31, 2021 | |
Business Combinations [Abstract] | |
BUSINESS ACQUISITIONS | BUSINESS ACQUISITIONS On March 6, 2021, the Company entered into a definitive agreement to acquire the outreach laboratory services business of Mercy Health, which serves providers and patients in Arkansas, Kansas, Missouri and Oklahoma. The transaction, which is expected to close in mid-2021, remains subject to customary closing conditions. For details regarding the Company's 2020 acquisitions, see Note 6 to the audited consolidated financial statements in the Company's 2020 Annual Report on Form 10-K. |
FAIR VALUE MEASUREMENTS |
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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:
A detailed description regarding the Company's fair value measurements is contained in Note 7 to the audited consolidated financial statements in the Company's 2020 Annual Report on Form 10-K. The Company offers certain employees the opportunity to participate in a non-qualified supplemental deferred compensation plan. 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 of the fair value hierarchy 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 of the fair value hierarchy 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 obligation are classified within Level 2 of the fair value hierarchy 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 Company's available-for-sale debt securities are measured at fair value based on estimated future cash flows. These fair value measurements are classified within Level 3 of the fair value hierarchy as the fair value is based on significant inputs that are not observable, including cash flow projections. 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. As of March 31, 2021, 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. During the three months ended March 31, 2021, the Company recorded an $8 million impairment charge, which is included in equity in earnings of equity method investees, net of taxes, in order to adjust to fair value an investment that is accounted for under the equity method of accounting. Following the impairment charge, the carrying value of the investment is not material. The fair value measurement was classified within Level 3 of the fair value hierarchy as it was based on significant inputs that are not observable, including cash flow projections. 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, 2021 and December 31, 2020, the fair value of the Company’s debt was estimated at $4.4 billion and $4.6 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 |
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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, 2021 and for the year ended December 31, 2020 were as follows:
Principally all of the Company’s goodwill as of March 31, 2021 and December 31, 2020 was associated with its DIS business. For the three months ended March 31, 2021, adjustments to goodwill primarily related to foreign currency translation. For the year ended December 31, 2020, goodwill acquired was principally associated with the acquisitions of Blueprint Genetics Oy, Memorial Hermann Diagnostic Laboratories, the outreach laboratory division of Memorial Hermann Health System; and the remaining 56% interest in Mid America Clinical Laboratories, LLC (see Note 6 to the audited consolidated financial statements in the Company's 2020 Annual Report on Form 10-K). For the year ended December 31, 2020, adjustments to goodwill primarily related to foreign currency translation. Intangible assets as of March 31, 2021 and December 31, 2020 consisted of the following:
The estimated amortization expense related to amortizable intangible assets for each of the five succeeding fiscal years and thereafter as of March 31, 2021 is as follows:
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FINANCIAL INSTRUMENTS |
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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, interest rate 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 historically entered into interest rate swap agreements. 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. The total net loss, net of taxes, recognized in accumulated other comprehensive loss, related to the Company's cash flow hedges was $1 million as of both March 31, 2021 and December 31, 2020. 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 $1 million. Interest Rate Derivatives – Fair Value Hedges Historically, the Company has entered into various fixed-to-variable interest rate swap agreements in order to convert a portion of the Company's long-term debt into variable interest rate debt. All such fixed-to-variable interest rate swap agreements have been terminated and proceeds from the terminations have been reflected as basis adjustments to the hedged debt instruments and are being amortized as a reduction of interest expense, net over the remaining terms of such debt instruments. As of March 31, 2021 and December 31, 2020, the following amounts were recorded on the consolidated balance sheets related to cumulative basis adjustments for fair value hedges included in the carrying amount of long-term debt:
(a) As of both March 31, 2021 and December 31, 2020, the entire balance is associated with remaining unamortized hedging adjustments on discontinued relationships. The following table presents the effect of fair value hedge accounting on the consolidated statements of operations for the three months ended March 31, 2021 and 2020:
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STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST |
3 Months Ended |
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Mar. 31, 2021 | |
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 Loss by Component Comprehensive income (loss) includes: •Foreign currency translation adjustments; •Net deferred gains (losses) on cash flow hedges, which represent deferred gains (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 7); and •Net changes in available-for-sale debt securities, which represent unrealized holding gains (losses), net of tax on available-for-sale debt securities. For the three months ended March 31, 2021 and 2020, the tax effects related to the deferred gains (losses) on cash flow hedges and net changes in available-for-sale debt securities 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 2021, the Company's Board of Directors declared a quarterly cash dividend of $0.62 per common share. During each of the four quarters of 2020, the Company's Board of Directors declared a quarterly cash dividend of $0.56 per common share. Share Repurchase Program In each of February and March 2021, the Company's Board of Directors increased the size of its share repurchase program by $1 billion. As of March 31, 2021, $2.5 billion remained available under the Company’s share repurchase authorization. The share repurchase authorization has no set expiration or termination date. Share Repurchases For the three months ended March 31, 2021, the Company repurchased 3.4 million shares of its common stock for $410 million. For the three months ended March 31, 2020, the Company repurchased 0.7 million shares of its common stock for $75 million. Shares Reissued from Treasury Stock The Company's practice has been to issue shares related to its Employee Stock Purchase Plan ("ESPP") and its stock-based compensation program from shares of its common stock held in treasury or by issuing new shares of its common stock. In January 2021, the Company began to issue shares related to its ESPP and stock-based compensation program solely from common stock held in treasury. For the three months ended March 31, 2021 and 2020, the Company reissued 0.6 million shares and 1.1 million shares, respectively from treasury stock. For details regarding the Company's stock ownership and compensation plans, see Note 17 to the audited consolidated financial statements in the Company's 2020 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 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. As of March 31, 2021 and December 31, 2020, the redeemable noncontrolling interest was presented at its fair value. For further information regarding the fair value of the redeemable noncontrolling interest, see Note 5.
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SUPPLEMENTAL CASH FLOW & OTHER DATA |
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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, 2021 and 2020 was as follows:
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COMMITMENTS AND CONTINGENCIES |
3 Months Ended |
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Mar. 31, 2021 | |
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 $600 million secured receivables credit facility and $150 million under its $750 million senior unsecured revolving credit facility. For further discussion regarding the Company's secured receivables credit facility and senior unsecured revolving credit facility, see Note 13 to the audited consolidated financial statements in the Company's 2020 Annual Report on Form 10-K. In support of its risk management program, to ensure the Company’s performance or payment to third parties, $70 million in letters of credit under the secured receivables credit facility were outstanding as of March 31, 2021. 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 audited consolidated financial statements in the Company’s 2020 Annual Report on Form 10-K. Certain Legal Matters The Company may incur losses associated with these proceedings and investigations, but it is not possible to estimate the amount of loss or range of loss, if any, that might result from adverse judgments, settlements, fines, penalties, or other resolution of these proceedings and investigations based on the stage of these proceedings and investigations, the absence of specific allegations as to alleged damages, the uncertainty as to the certification of a class or classes and the size of any certified class, if applicable, and/or the lack of resolution of significant factual and legal issues. The Company has insurance coverage rights in place (limited in amount; subject to deductible) for certain potential costs and liabilities related to these proceedings and investigations. 401(k) Plan Lawsuit In 2020, two putative class action lawsuits were filed in the U.S. District Court for New Jersey against the Company and other defendants with respect to the Company’s 401(k) plan. The complaint alleges, among other things, that the fiduciaries of the 401(k) plan breached their duties by failing to disclose the expenses and risks of plan investment options, allowing unreasonable administration expenses to be charged to plan participants, and selecting and retaining high cost and poor performing investments. In October 2020, the court consolidated the two lawsuits under the caption In re: Quest Diagnostics ERISA Litigation and plaintiffs filed a consolidated amended complaint. The Company plans to vigorously defend this matter and has filed a motion to dismiss the complaint. AMCA Data Security Incident On June 3, 2019, the Company reported that Retrieval-Masters Creditors Bureau, Inc./American Medical Collection Agency (“AMCA”) had informed the Company and Optum360 LLC that an unauthorized user had access to AMCA’s system between August 1, 2018 and March 30, 2019 (the “AMCA Data Security Incident”). Optum360 provides revenue management services to the Company, and AMCA provided debt collection services to Optum360. AMCA first informed the Company of the AMCA Data Security Incident on May 14, 2019. AMCA’s affected system included financial information (e.g., credit card numbers and bank account information), medical information and other personal information (e.g., social security numbers). Test results were not included. Neither Optum360’s nor the Company’s systems or databases were involved in the incident. AMCA also informed the Company that information pertaining to other laboratories’ customers was also affected. Following announcement of the AMCA Data Security Incident, AMCA sought protection under the U.S. bankruptcy laws. The bankruptcy proceeding has been dismissed. Numerous putative class action lawsuits were filed against the Company related to the AMCA Data Security Incident. The U.S. Judicial Panel on Multidistrict Litigation transferred the cases still pending to, and consolidated them for pre-trial proceedings in, the U.S. District Court for New Jersey. In November 2019, the plaintiffs in the multidistrict proceeding filed a consolidated putative class action complaint against the Company and Optum360 that named additional individuals as plaintiffs and that asserted a variety of common law and statutory claims in connection with the AMCA Data Security Incident. In January 2020, the Company moved to dismiss the consolidated complaint; the motion to dismiss is pending. In addition, certain federal and state governmental authorities are investigating, or otherwise seeking information and/or documents from the Company related to the AMCA Data Security Incident and related matters, including the Office for Civil Rights of the U.S. Department of Health and Human Services, Attorneys General offices from numerous states and the District of Columbia, and certain U.S. senators. Other Legal Matters 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 which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief. 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 consolidated 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, 2021, the Company does not believe that material losses related to legal matters are probable. Reserves for legal matters totaled $2 million and $1 million as of March 31, 2021 and December 31, 2020, respectively. 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 $142 million and $138 million as of March 31, 2021 and December 31, 2020, respectively. Management believes that established reserves and present insurance coverage are sufficient to cover currently estimated exposures.
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BUSINESS SEGMENT INFORMATION |
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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, ACOs and DCEs. 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 2021 and 2020. 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, 2021, 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, 2021 and 2020. 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 intangible 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 audited consolidated financial statements contained in the Company’s 2020 Annual Report on Form 10-K and Note 2 to the interim unaudited consolidated financial statements.
Net revenues by major service were as follows:
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RELATED PARTIES |
3 Months Ended |
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Mar. 31, 2021 | |
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 (see Note 14), a diagnostic information services joint venture, and an investment in a fund that purchases strategic holdings in private companies in the healthcare industry. During the three months ended March 31, 2021 and 2020, the Company recognized net revenues of $5 million and $9 million, respectively, associated with diagnostic information services provided to its equity method investees. As of March 31, 2021 and December 31, 2020, there was $5 million and $3 million, respectively, of accounts receivable from equity method investees related to such services. During the three months ended March 31, 2021 and 2020, the Company recognized income of $3 million and $4 million, respectively, 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, 2021 and December 31, 2020, there was $1 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, 2021 and December 31, 2020 included $1 million due to equity method investees. During the three months ended March 31, 2021 and 2020, the Company received dividends from its equity method investees of $16 million and $5 million, respectively.
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REVENUE RECOGNITION AND ALLOWANCE FOR CREDIT LOSSES |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
REVENUE RECOGITION AND ALLOWANCE FOR CREDIT LOSSES | REVENUE RECOGNITION 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, 2021 and 2020 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 primarily 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 in exchange for providing services using the portfolio approach. These estimates include the impact of contractual allowances (including payer denials), and patient price concessions. The portfolios determined using the portfolio approach consist of the following groups of customers: healthcare insurers, government payers (Medicare and Medicaid programs), client payers and patients. For further details regarding revenue recognition in the Company's DIS business, see Note 3 to the audited consolidated financial statements in the Company's 2020 Annual Report on Form 10-K. 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:
The approximate percentage of net accounts receivable by type of customer was as follows:
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SUBSEQUENT EVENT |
3 Months Ended |
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Mar. 31, 2021 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS On April 1, 2021, the Company sold its 40% ownership interest in Q2 Solutions® ("Q2 Solutions"), its clinical trials central laboratory services joint venture, to IQVIA Holdings, Inc. ("IQVIA"), its joint venture partner for $760 million in an all-cash transaction. Prior to the transaction, the Company accounted for its minority interest as an equity method investment. As a result of the transaction, the Company expects to record a pre-tax gain during the second quarter of 2021 of approximately $310 million. Under a multi-year agreement, the Company will remain the strategic preferred laboratory provider for Q2 Solutions' clients, providing a range of complementary lab testing capabilities to augment Q2 Solutions' core offerings and extend its industry leading suite of services.
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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
3 Months Ended |
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Mar. 31, 2021 | |
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 2020 Annual Report on Form 10-K. The year-end balance sheet data was derived from the audited consolidated financial statements as of December 31, 2020, 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 attributable to Quest Diagnostics, 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 attributable to Quest Diagnostics, 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 Standards to be Adopted | In March 2020, the Financial Accounting Standards Board issued a new accounting standard which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform due to the risk of cessation of the London Interbank Offered Rate ("LIBOR"). The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform. The pronouncement is effective immediately and can be applied through December 31, 2022. The adoption of this standard is not expected to have a material impact on the Company’s consolidated results of operations, financial position or 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, interest rate 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 historically entered into interest rate swap agreements. 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 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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 (in millions, except per share data):
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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:
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FAIR VALUE MEASUREMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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:
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GOODWILL AND INTANGIBLE ASSETS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Changes in Goodwill, Net | The changes in goodwill for the three months ended March 31, 2021 and for the year ended December 31, 2020 were as follows:
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Intangible Assets Excluding Goodwill | Intangible assets as of March 31, 2021 and December 31, 2020 consisted of the following:
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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, 2021 is as follows:
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FINANCIAL INSTRUMENTS (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Debt Instrument Fair Value Basis Adjustment Attributable to Hedged Debt | As of March 31, 2021 and December 31, 2020, the following amounts were recorded on the consolidated balance sheets related to cumulative basis adjustments for fair value hedges included in the carrying amount of long-term debt:
(a) As of both March 31, 2021 and December 31, 2020, the entire balance is associated with remaining unamortized hedging adjustments on discontinued relationships.
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Schedule of Fair Value Hedge Accounting on the Statement of Operations | The following table presents the effect of fair value hedge accounting on the consolidated statements of operations for the three months ended March 31, 2021 and 2020:
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SUPPLEMENTAL CASH FLOW & OTHER DATA (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow Elements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Cash Flow and Other Data | Supplemental cash flow and other data for the three months ended March 31, 2021 and 2020 was as follows:
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BUSINESS SEGMENT INFORMATION (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2021 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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, 2021 and 2020. 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 intangible 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 audited consolidated financial statements contained in the Company’s 2020 Annual Report on Form 10-K and Note 2 to the interim unaudited consolidated financial statements.
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Schedule of Revenues by Major Service | Net revenues by major service were as follows:
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REVENUE RECOGNITION AND ALLOWANCE FOR CREDIT LOSSES (Tables) |
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Revenue from Contract with Customer [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disaggregation of Revenue | The approximate percentage of net revenue by type of customer was as follows:
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Accounts Receivable Disaggregation | The approximate percentage of net accounts receivable by type of customer was as follows:
|
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, shares in Millions, $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Amounts attributable to Quest Diagnostics’ common stockholders: | ||
Net income attributable to Quest Diagnostics | $ 469 | $ 99 |
Less: Earnings allocated to participating securities | 1 | 0 |
Earnings available to Quest Diagnostics’ common stockholders – basic and diluted | $ 468 | $ 99 |
Weighted average common shares outstanding - basic | 133 | 134 |
Stock options and performance share units | 2 | 1 |
Weighted average common shares outstanding - diluted | 135 | 135 |
Basic(in dollars per share) | $ 3.52 | $ 0.74 |
Diluted (in dollars per share) | $ 3.46 | $ 0.73 |
Stock options and performance share units | 1 | 2 |
FAIR VALUE MEASUREMENTS (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Dec. 31, 2020 |
Jul. 01, 2015 |
|
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Fair value of debt | $ 4,400 | $ 4,600 | |
Fair Value, Inputs, Level 3 | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Impairment of equity method investment | $ 8 | ||
UMass Joint Venture | |||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | |||
Ownership percentage by noncontrolling owners | 18.90% |
GOODWILL AND INTANGIBLE ASSETS (Goodwill) (Details) - USD ($) $ in Millions |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2021 |
Dec. 31, 2020 |
|
Goodwill [Roll Forward] | ||
Goodwill, Balance at beginning of period | $ 6,873 | $ 6,619 |
Goodwill acquired during the period | 0 | 247 |
Adjustments to goodwill | (3) | 7 |
Goodwill, Balance at end of period | $ 6,870 | $ 6,873 |
MACL | ||
Business Acquisition [Line Items] | ||
Percentage of interests acquired | 56.00% |
FINANCIAL INSTRUMENTS (Narrative) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Dec. 31, 2020 |
|
Derivative [Line Items] | ||
Accumulated other comprehensive loss | $ (31) | $ (21) |
Net amount of deferred gains and losses on cash flow hedges that is expected to be reclassified within the next 12 months | 1 | |
Cash Flow Hedging | ||
Derivative [Line Items] | ||
Accumulated other comprehensive loss | $ 1 | $ 1 |
FINANCIAL INSTRUMENTS (Balance Sheets) (Details) - USD ($) $ in Millions |
Mar. 31, 2021 |
Dec. 31, 2020 |
---|---|---|
Long-term Debt | Fair Value Hedging | ||
Derivative [Line Items] | ||
Hedge Accounting Basis Adjustment | $ 48 | $ 51 |
FINANCIAL INSTRUMENTS (Income Statement) (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Derivative [Line Items] | ||
Other income (expense), net | $ 4 | $ (16) |
Other Nonoperating Income (Expense) | ||
Derivative [Line Items] | ||
Hedged items (Long-term debt) | 0 | (69) |
Other Nonoperating Income (Expense) | Fair Value Hedging | ||
Derivative [Line Items] | ||
Derivatives designated as hedging instruments | $ 0 | $ 69 |
SUPPLEMENTAL CASH FLOW & OTHER DATA (Details) - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
|
Supplemental Cash Flow Elements [Abstract] | ||
Depreciation expense | $ 74 | $ 60 |
Amortization expense | 27 | 25 |
Depreciation and amortization expense | 101 | 85 |
Interest expense | (38) | (42) |
Interest income | 0 | 1 |
Interest expense, net | (38) | (41) |
Interest paid | 32 | 48 |
Income taxes paid | 7 | 18 |
Accounts payable associated with capital expenditures | 30 | 11 |
Dividends payable | 82 | 75 |
Fair value of assets acquired | 0 | 131 |
Fair value of liabilities assumed | 0 | (20) |
Fair value of net assets acquired | 0 | 111 |
Less: Cash acquired | 0 | 3 |
Business acquisitions, net of cash acquired | 0 | 108 |
Leases: | ||
Leased assets obtained in exchange for new operating lease liabilities | $ 36 | $ 32 |
COMMITMENTS AND CONTINGENCIES (Details) |
Mar. 31, 2021
USD ($)
|
Dec. 31, 2020
USD ($)
claim
|
Oct. 31, 2020
claim
|
---|---|---|---|
Debt Instrument [Line Items] | |||
Self-insurance reserves | $ 142,000,000 | $ 138,000,000 | |
Class action lawsuits | claim | 2 | 2 | |
Secured Receivables Credit Facility | |||
Debt Instrument [Line Items] | |||
Credit facility capacity | 600,000,000 | ||
Letters of credit outstanding, amount | 70,000,000 | ||
Secured Receivables Credit Facility | Letter of Credit | |||
Debt Instrument [Line Items] | |||
Credit facility capacity | 100,000,000 | ||
Revolving Credit Facility | Letter of Credit | |||
Debt Instrument [Line Items] | |||
Credit facility capacity | 150,000,000 | ||
Senior Unsecured Revolving Credit Facility | |||
Debt Instrument [Line Items] | |||
Remaining borrowing capacity | 750,000,000 | ||
Excludes general and professional liability claims | |||
Loss Contingencies [Line Items] | |||
Litigation reserves | $ 2,000,000 | $ 1,000,000 |
RELATED PARTIES (Details) - Equity Method Investee - USD ($) $ in Millions |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2021 |
Mar. 31, 2020 |
Dec. 31, 2020 |
|
Related Party Transaction [Line Items] | |||
Revenues | $ 5 | $ 9 | |
Receivables | 5 | $ 3 | |
Accounts payable, related parties | 1 | 1 | |
Dividends received | 16 | 5 | |
Prepaid expenses and other current assets | |||
Related Party Transaction [Line Items] | |||
Other accounts receivable, related parties | 1 | $ 3 | |
Selling, general and administrative | |||
Related Party Transaction [Line Items] | |||
Income from related party recognized | $ 3 | $ 4 |
SUBSEQUENT EVENT (Details) - Q2 Solutions - USD ($) $ in Millions |
3 Months Ended | |
---|---|---|
Jun. 30, 2021 |
Apr. 01, 2021 |
|
Scenario, Forecast | ||
Subsequent Event [Line Items] | ||
Gain on sale of investment, before tax | $ 310 | |
Subsequent Event | ||
Subsequent Event [Line Items] | ||
Percent of ownership interest sold | 40.00% | |
Consideration | $ 760 |
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