Quest Diagnostics Incorporated (DGX) Earnings Call Transcript & Summary

Good morning. I'm Shawn Bevec, Vice President of Investor Relations here at Quest. I'm happy to welcome you to our 2021 Virtual Investor Day. Before we begin, let me first remind you of our safe harbor disclosure. During this presentation, we will be making forward-looking statements and will discuss non-GAAP measures. We will provide a reconciliation of non-GAAP measures to comparable GAAP measures in this morning's press release and will be included in presentations posted on our IR page. Actual results may differ materially from those projected. Risks and uncertainties, including the impact of the COVID-19 pandemic, that may affect Quest Diagnostics' future results include, but are not limited to, those set forth on the screen and in our press release this morning, and described in our most recent annual report on Form 10-K and subsequently filed quarterly reports on Form 10-Q, current reports on Form 8-K and those shown here. For this presentation, references to adjusted EPS refer to adjusted diluted EPS from continuing operations. References to base testing volumes or base business refer to testing volumes, excluding COVID-19 molecular and serology testing volumes. Growth rates associated with our long-term outlook projections, including total revenue growth, revenue growth from acquisitions, organic revenue growth and adjusted earnings growth are compound annual growth rates. Finally, revenue growth rates from acquisitions will be measured against our base business. With that aside, I'd like to briefly review our agenda for today. Our Chairman, CEO and President, Steve Rusckowski will kick us off and tell you why Quest Diagnostics is poised for growth in a post pandemic world. Then you'll hear from EVP of General Diagnostics, Jim Davis, who will provide an update on COVID testing, both past and future, and share details on how we continue to drive operational excellence. Following Jim, SVP of Clinical Franchise Solutions and Marketing, Cathy Doherty, will discuss how the pandemic has accelerated consumer trends and share why Quest can win in the direct-to-consumer testing opportunity. And finally, CFO, Mark Guinan, will take us home with a financial update, including capital deployment priorities, and the assumptions that underpin our long-term outlook. We'll wrap up with Q&A and have allowed plenty of time to take your questions. I'd now like to introduce Steve Rusckowski, our Chairman, President and CEO.

Welcome to the Quest Diagnostics 2021 Investor Day. It's great to be with you, and we typically do this in the fall, we decided to take a few more months where we have a little more visibility in 2021 and deal with you today. So thank you for joining. The title of our presentation today is Poised for Growth in a Post-Pandemic World. And we're excited to share with you our thoughts about what's happened in the past 12 months, but also, more importantly, what's going to happen going forward. So what you're going to hear from me this morning is, first of all, our continued role in really diagnostic information services and how we're a clear leader that provides so much value in this country each day. Second is we'll give you our latest perspective on COVID-19 testing, what we've done in the past, but more importantly, what we see as an opportunity in the future. We'll talk about our growth drivers, both organically and through acquisition. And then when you put that together, we will provide you a long-term outlook for 2022 and beyond. So to remind you, we are the leader in what we refer to as diagnostic information services. Yes, we are the world's largest laboratory, but we're much more than a lab. We connect all that lab information with information in general and then provide useful services to really make a difference in health care. Now we do this for about 50% of health care delivery, 50% of physicians and 50% of hospital systems, the large presence in the United States. We serve 1 out of 3 adult Americans in the course of every year. And over 3 years, about 50% of adult Americans see us. Now this affords us a brilliant opportunity to keep all this data. We have over 56 billion test results that we keep for a number of years. And in that, we deliver that service through an incredible network of individuals that work at Quest Diagnostics. We have over 6,800 phlebotomists either in patient service centers or physicians' offices. We have 2,300 (sic) [ 23,000 ] health care workers, which include those phlebotomists that are serving patients every day. And it affords us an opportunity to do close to 2 million tests per day. So clearly, broad reach throughout the United States. Now that has afforded us an opportunity in 2020 to deliver about $9.4 billion in revenues last year. It was a record year for us. Now, hopefully, many of you are familiar with the slide because this is what we refer to as our one paid strategy. As I said earlier, yes, we're the world's largest lab but we're much more than that. Our vision is to empower better health with diagnostic insight. We believe by taking that content and that information and providing services, we could really make it useful in changing health care. And therefore, that vision allows us to focus on 3 goals. One is to make a difference in health care. Second is to do a better job with our stakeholders. Obviously, one of our very important stakeholders are investors. And what we believe, if we change health care and if we take care of our stakeholders, then the 50,000 of us that work at Quest Diagnostics are going to be more and more inspired every day. Now in the center is where we're going to spend time with you today. We, in 2016, rolled out, what we call a 2-point strategy. The first is to continue to push on accelerated growth, both organically and through acquisitions. And then parallel with that, continue to focus on operational excellence. And we believe these do go hand-in-hand. It would be very difficult for us to grow unless it's on the foundation of a strong operating platform [Technical Difficulty]

Please stand by as we correct the technical issues.

About a $50 billion market. They've been at a turbulent marketplace, it's becoming more and more turbulent. First of all, the consolidation will continue. We believe their margin pressure will build. We believe COVID-19 will not go away and it's providing pressure points with many delivery systems and it's forcing them the continuation of the trend, to move more and more care outside of the acute care environment to outpatient care. So when they're thinking about their environment, they're thinking about what they need to do from a lab-strategy perspective. And they're thinking about broader care imperatives, they're thinking about investments they need to make broadly throughout their enterprise, and specifically what this lab portion of their portfolio will force them to do. They're thinking about the need to make price more transparent. We know there's wide variation in pricing, and we know in the past, there's been higher prices in the hospital outreach than the commercial laboratories. That's going to become much more visible. So therefore, many hospital systems are thinking about the logic of staying in this business, and in many cases, are looking to Quest Diagnostics to be the partner. Great example of us delivering on this is at Memorial Hermann. It is a great example of those 3 legs of the stool. Sometimes we refer to it as the trifecta, where we bought their outreach business. We're helping them with their laboratory inside the hospital to make it more efficient and we're providing that sophisticated reference testing. That Professional Laboratory Services business, I recall, something we've been talking to you about for some time. We've built up over a $0.5 business. This isn't something that we do one-off for hospital systems. We now have a referenceable group of clients that our clients will call to talk about what they've done with Quest Diagnostics in the past. We develop capabilities, and we have a methodology set that now makes it very obvious that we can be a successful provider of these services. And 2020 was a very strong year from us. What you see on this chart is we booked over $2 billion worth of bookings. The largest being an engagement in the end of last year with Hackensack Meridian Health system, but you see 6 other clients, and this is a business that's growing double digits, and it's an opportunity in the past for growth, particularly in '21 for growth, but also we see this accelerating going forward. Now the third growth strategy is to continue to invest in strengthening our advanced diagnostics business. We've been growing well, faster than an overall portfolio at 3%, but we think we can do better than that. And so we've put investment dollars into accelerated growth last year, and we'll continue to do that going forward, and get to at least a market growth of 8%. We believe we have a unique opportunity to take advantage of innovation. We've invested in the past of bringing down the cost of Next-Gen Sequencing to less than $100. So example of how that would work. If you think about Next-Gen Sequencing at very low cost, less than $100, what we will do is apply that data to the information. And a great example of the information to find that insight is the acquisition we did with Blueprint Genetics. And then finally, apply it to those areas that it has meaningful difference in health care, where we can really find that insight and deliver on that vision of empowering better health with diagnostic insight. And so the first place we'll start is in consumer genetic screening. And then over time, we'll move to pharma and health systems, eventually health plans. But we think we have a fabulous opportunity to take advantage of this innovation that we've invested in over the last several years to achieve that goal of growing at least with the marketplace in advanced diagnostics. And finally, we'll spend some more time on this later, we see this unique opportunity to take advantage of the change we see happening in health care. We believe the direct-to-consumer testing market is already about a $2 billion market and growing rapidly. We believe all of health care is going through a digital transformation. We believe that consumers and patients want to experience their health care in a different way. And some of that will happen through retailers, and some of that will happen in the home. And they want to be engaged with health care, just like they're engaged with other parts of their life as a consumer. And that's quite a change. Now this is an area we've been investing, again, for many years. But fortunately, with the pandemic, we do see a catalyst that will accelerate the opportunity in front of us. So you take those 4 organic growth strategies and you combine it with the opportunity we still see in front of us for acquisitions that affords us to lay out that long-term outlook for you. To give you a little bit of a history of how we've done since we promised you that we would grow greater than 2% through acquisitions, we see our acquisitions really in 3 areas. First is a hospital outreach. We already spoke about Memorial Hermann. We're thrilled that this week, we actually announced another deal, which is with Mercy health care system in the Midwest. And we also announced earlier in the year an opportunity where we had a minority interest in an organization, which we call MACL, but it's really associated with the delivery systems in Indiana, and we brought that into the Quest family as well. So we've executed on a number of these transactions, particularly recently. And so we do see the cadence and the pacing of all this accelerating. In parallel with that, we continue to look for consolidation opportunity regionally, and we continue to look for opportunities to bring in capabilities, and I already mentioned Blueprint Genetics is one of those opportunities that we brought that also into the Quest family. So we do see prospectively an opportunity for us to grow both organically and through acquisitions. And this is not possible unless it's underpinned with strong operational performance. It's the 2-point strategy. We're going to accelerate growth, but at the same time, drive operational excellence. It's all about quality. It's all about service levels. It's about that patient experience. And at the same time, we've become more and more productive. If you recall back years ago, we had a goal. And in 2017, we achieved the goal, about $1.3 billion savings from 2012. We actually said, rather than have a goal, we want to move you to thinking about 3% productivity case, just as a long-term perspective that we're going to continue to work. And we have a number of areas that Jim Davis will shortly go through with you to share with you, we still see opportunities in front of us for us to get better. So in closing, what we've shared with you, and I want you to take away is first of all, as COVID-19 testing will continue in '21, it will decline slowly over the course of this year and will move from a clinical application or use to what we're referring to is return to life. Second is the pandemic was a challenge for all of us. We had to run those facelifts, at the same time, bring up COVID testing. But it allowed us to really show that we can be agile and it also provided us capabilities and resources. So during the course of 2020 and into '21 and beyond, we are investing in these 4 organic strategies, which you'll see the growth coming from this year, but also in that '22-and-beyond CAGR that we provided to you. We believe the base business will recover. And by the end of '21, we'll be back to '19 levels. And we'll grow from there. What I just described to you, our 4 growth strategies organically that we've been working on for a number of years, we have solid momentum. And so it's the continuation of the build with those growth strategies. At the same time, we're putting more resources because we're afforded that opportunity because of the pandemic. And to remind you, what I shared with you is the long-term outlook is to grow from 22% to 24% or 4% to 5%. And we believe that the bottom line growth or adjusted EPS will grow 7% to 9%, commensurate with the top line growth. So with that, I'd like to turn it over to Jim Davis, who'll bring you through a little more detail on our COVID-19 testing, and at the same time, talk about our operational excellence program. Jim?

So thank you, Steve, and good morning. So as Steve mentioned, I wanted to chat for a few minutes this morning about what operations is doing to optimize growth in the company and how we continue to drive savings across the Quest Diagnostics enterprise. So really, 4 topics today. You heard Steve touch on a little bit about our response during the pandemic. And I'm going to talk about the role we played, more importantly, about the role we will continue to play going forward over the next many months. Second, I'm going to talk about operations excellence and how that leads to improved health outcomes, and it generates savings across the enterprise. Third is I'm going to talk about the enhancements to the consumer and provider journey that we're making. And I use the word consumer and not patient because we believe consumer is broader than patient. Patients implies a doctor's order, consumer implies both that plus consumers who come to us directly. And you're going to hear from Cathy Doherty a little bit later about what we're doing to capitalize on that opportunity to serve consumers directly. And then fourth, I'll talk about the opportunities to continue to generate the 3% annual savings that we've had a history of generating going all the way back really to 2012. So let me start first with our COVID response. And it was almost 1 year ago this week that we launched our first test. In fact, it was this week, March 9. And we launched that test out in San Juan Capistrano, out in California. And you can see how we've grown over time. If you would have asked me back in March or April, did I think we would do 40 million tests over the following 12 months, I wouldn't have said that. And really, that represented about 15% to 17% of our total testing volume in 2020. And you can see there's really some important milestones here along the way. We launched our serology test very quickly, in the mid-April time frame. We formed partnerships with Walmart, CVS and HHS to help us offer testing in the broadest possible way that we could. We were the first company to introduce pooling, and we did that in the July time frame. That helped us reach more patients and make as much capacity available as we possibly could. In the August time frame, we worked with universities around the country. And we're proud to say that we've helped over 100,000 university students not only get back to campus, but actually stay on campus in a very safe way. Our capacity back in September, about 200,000 tests per day. We've upped that to about 250,000 tests per day. And if needed, we can quickly bring on additional capacity should there be a fourth or fifth wave during this pandemic. Now our initial focus was largely on physicians and health systems, health systems taking care of very sick patients in ICUs during the early stages of the pandemic. And I would say that was largely our focus through the May, June, July time frame. But as we got into the early fall, we really began to focus on broadly consumers. And whether those consumers were going back to school, as I mentioned, the university setting, whether it's consumers who wanted to partake in travel, entertainment, go to sporting events, or whether it's consumers, or we call them employees, who really just wanted to get back to working again and doing so in a very safe environment. So all of these return-to-life segments are really where we're focused. And we're focused from a surveillance standpoint. And surveillance means you need to do it quickly, and you need to do it cost effectively. Now one program I'll just talk about here rather briefly is, we launched this week in New York City and more broadly, New York state, 12 locations where a consumer can come in, get a rapid antigen test, be cleared within 30 minutes so that if they want to go to an art museum, a play, a musical or a sporting event, they now have a passport to be able to go to those venues. And we're going to take this offering and launch it in other cities where travel and entertainment is a big portion of their economy. So Las Vegas, Orlando, Miami, Washington, D.C., any city where travel and entertainment is a major portion of their economic activity. So let me spend a few moments on the K-12 return-to-school segment because this has been in the press frequently over the last 30 days. So earlier this month, the Biden administration approved about $650 million to start testing of the K-8 students across roughly 13,000, 14,000 school districts in this country. With the passage of the stimulus bill, there's $130 billion earmarked for the safe return of K-8 students. And that $130 billion, it won't all be spent on testing. It's really some of it on testing, but just to protect the safety and health of our K-8 students. And so across diagnostics, we've developed a unique solution, where we can bring affordable testing, great turnaround times to these school systems. We'll bring kits to the schools. The kids can swab themselves or do it under nursing supervision. And the kids will swab themselves and we'll put 10 of these swabs in a big tube. We'll bring that tube into a Quest Diagnostics laboratory. And that tube itself will be tested. If the tube and that test is clean, then all 10-kids are clean. If the tube comes back positive, then all 10-kids will have to go get an individual PCR test. But it allows us to quickly test students, surveillance testing of a large number of students, rapid turnaround times at a very, very affordable price. Now along the way, we had to invest, obviously, in new equipment capital to take on this COVID testing that we did. And along the way, we made investments of about $40 million. Now in the scope of enabling over $2.7 billion worth of revenue, it really wasn't that big of an investment. But the question is, what do we do with the equipment that we've assembled along the way? And how will this serve us productively going forward? So just really briefly, we have 2 automated solutions, the Roche Cobas, whether it's a 6800 or 8800, the Hologic Panther, and then the equipment on the right was really used for our own Quest LDT. And that LDT now operates in 5 laboratories, and we had to purchase extraction equipment from Hamilton in Roche and then the Thermo Fisher ABI unit. And so we have a lot of opportunity to use this equipment on a go-forward basis. First, on the Hologic Panther. Today in Quest Diagnostics, we do 95% of the women's health care testing on the Hologic Tigris platform. There's about 80 of those. We were intending to retire that platform over the next 2 years anyways. Why? Because Hologic end-of-life to the platform, it had incredibly high maintenance costs. It broke down frequently. And so the Panther was going to naturally replace that anyways. So the 85-plus Panthers that we took on are just going to naturally flow out. They're already in our regional laboratories. And it will just simply replace those Tigress units that are out there. The Roche Cobas systems, we originally had a fleet. Those systems are used for viral load testing, and they can also be used for some women's health care testing for those clinicians that prefer the Roche HPV DNA approach. And so we're now able to deploy those Cobas systems across many of our regional labs. Before we had them clustered in a few labs, we can now deploy them across regional labs which will allow us to really reduce turnaround times on these vitally important viral load tests for HIV, hepatitis C, and other molecular tests. Finally, the Roche MagnaPure, Hamilton, those extraction pieces of equipment, again, while centered in 4 or 5 of our largest esoteric sites, we can start to deploy those units out into the regions as well, which will allow us to accomplish other molecular testing that we do on an LDT basis in the regions. And again, to deliver to customers much greater turnaround times and more affordable testing as well. All right. I'd like to now move to the Drive framework that Steve introduced earlier this morning. Drive has always been and will always be around 2 principal things. First, we are always attempting to enhance the patient, consumer and physician experience, and at the same time, to drive productivity across the Quest Diagnostics enterprise. So since we last spoke to you in November of 2018, just a few brief updates on what we accomplished. We talked a lot in 2018 about the digitization processes and improvements that we are making across Quest Diagnostics. First, we've driven the electronic order rate from 72% to over 80% over the last 2.5 years. How did we do that? Working with physician offices to get them to use their EMRs, to get them to install EMRs and, where necessary, to use the Quest interface to allow them to order directly from a Quest system into our laboratory systems. And why is this important? First and foremost, it helps us improve quality. I've shown you some ugly paper reqs in the past, but digital reqs, we know the task. We can read them. The rate of missing information is also about 1/2 on a digital req versus a paper req. And then finally, we don't have to enter that data when that paper req comes into our laboratory. So better quality, convenience for the patient, convenience for the physician and significantly lower cost. We've achieved over $10 million to $11 million of run rate savings from that 8-point improvement over the last 2.5 years. Moving to the right, serving our patients. In 2018, only about 20% of the patients made an appointment to come visit our PSC. Now during the pandemic, we saw a significant increase, up to 45%, and I'm convinced that it's here to stay. And why does that help us? First, it helps our patients. If you make an appointment at Quest Diagnostics, we guarantee that we'll see it within 5 minutes. And last year, even during the pandemic, we held that metric 95% of the time. Second is we are able to just better match the supply of our phlebotomists, our workforce to the demand, if we can look out during the week, during the month and know when those patients are going to see us. It improves our quality, it helps our phlebotomists, and it certainly helps reduce patient wait time for those individuals. Our digital engagement on the lower left, and the number of MyQuest users. We had 6.5 million in 2018. As you can see, we more than doubled that as we moved through the pandemic to 15 million users. Again, why is this important? First, it provides instant results to the patient. When you have a MyQuest account, the minute those results are released on the machine, it goes out to the physician and it goes out to the patient at the same time. And so that patient doesn't have to call the physician. The patient doesn't have to call us. And we also hear from our physicians that the physician doesn't have to call the patient on normal results, which really saves them a lot of time and energy. And then finally, on the right, our experience in delivering savings across the enterprise, $219 million in 2018. We had $242 million in 2019. And we still delivered a significant amount of savings last year, $211 million, despite what I would call the really intense focus from an operations standpoint and really just bringing up the COVID testing across the enterprise. So despite all that focus, we were still able to generate significant savings for the enterprise in 2020. I also chatted in 2018 about our Clifton laboratory. At that point, Clifton was nothing more than this. It was a vision of schematic that looked good. We had some goals for Clifton. We were going to consolidate 3 regional laboratories, Teterboro. We had a lab in Philadelphia, a lab in Baltimore. And we consolidated that down to 1 lab in Clifton, New Jersey. It's the old Hoffmann-La Roche Campus, if you know it, on Highway 3 just outside, just not far from our Teterboro laboratory. The other promises is when we looked at those 3 labs compared it to this 1, we would increase our productivity about 15%. We would double our throughput. And all-in, when we looked at the 3 labs versus this 1, we would add about 30% capacity into the region for future growth. And so while that was a vision, and we started the ground digging, if you will, on March 6, 2019, here it is today. And today, this is a snowy day from just a few weeks ago. The laboratories finish. We processed the first specimen on January 4 this year, which was our promise/commit date. But what's really impressive is not just the outside of the building, but what's inside this building. And I know many of you have been to our Marlborough facility, where you saw the first end-to-end automation with the help of our automation supplier, Inpeco. And Clifton is really about 2.5x the size of the Marlborough facility. And we learned a lot from our Marlborough experience that helped shape this laboratory from an automation standpoint and make it even better. And when I say better, it's better from a patient standpoint as it improves our throughput, better from a physician standpoint because it improves our quality and better from a consumer standpoint because it improves our quality and again, gets quicker turnaround times on many of the tests that will pass through here. And I know we'd be delighted to host you on visits once we get through the COVID pandemic and once the lab is up and running, and Sean and I really look forward to hosting you in the very near future. Okay. I now want to move to what we're doing in Quest Diagnostics to really enhance both the consumer and the provider journey. And why do we do this first? We're trying to streamline the process as a consumer moves through this journey. And we're also trying to provide insights along the way during this journey so that the patient, consumer and the physician understand what's going on from order all the way to collection. And so while this first step may prove a little bit trivial, we simply welcome Ms. Williams, in this case, to Quest Diagnostics. Today, we don't proactively reach out to a patient to have them schedule an appointment. We wait for the patient to come to us. But the minute we get that electronic order from the physician, we can ping the patient. We know their e-mail address, we know their cell phone, we can ping the patient, welcome them to Quest Diagnostics and offer them a chance to make an appointment. And in fact, because I know the tests that are on that requisition, because I know where Ms. Williams lives, I can actually recommend a PSC, and I recommend a time that she comes to visit. And in this case, I knew that a lipid panel was being offered. We knew she had to fast, so we recommended an early morning appointment. Now we get on that requisition, generally insurance information from the physician's office. But at least 5% of the time that insurance information is old. And why is that? Well, the physician may not have asked the patient for their updated insurance information. So what we're going to do during the registration process, we're going to ask Ms. Williams, can you kindly just take a look at the information provided, and please verify it, so that we can check and see, by the way, is there going to be any out-of-pocket expense? Because we know patients don't like surprises. Neither do the physicians because when the patient gets a surprise, they call the physician and express their anger at the tests that were ordered. In this case, we estimated that Ms. Williams owes us a small balance. We ask for her credit card number so that when the claim is processed, we can conveniently just charge the credit card. Now along the way, the day before the visit, we're going to text Ms. Williams and ask if Friday at 8:00 is still convenient. If it's not, we offer the patient the opportunity to click and change that appointment. We remind them that they need to fast if there's tests that require fasting. Now Ms. Williams came to see us at 8:00 on Friday morning. Later that afternoon, we let Ms. Williams know that her specimen arrived in the Clifton laboratory and that we're going to begin testing. We'll ask Ms. Williams if she wants to fill out a survey to let us know how we did during that patient services experience. Later that night or early the next morning, we let Ms. Williams know that the tests were completed, to please click on our MyQuest app. If she doesn't have one, we'll send a link to create a MyQuest account because as soon as those tests are available off the machine, we let the patient know concurrent with us notifying the physician for those results as well. And then finally, hopefully, a few days later, after we've submitted the claim to the health plan, the health plan responds, lets us know that they paid us $78 and Ms. Williams owes us a $12 balance and that we conveniently then just charge the credit card that the patient has given us. So a very streamlined process. It's all digital. And again, we're trying to provide some very useful insights to the patient along the way. Now on the same time as the patient is going through that journey, there's a physician in their office and their administrative staff that is also going through that journey. And I'm not going to walk through the details of this entire process. But really, there's 4 key things that the physician's office wants to know from Quest Diagnostics. Number one, did you get my order? Did it come through electronically? Number two, is it a clean order? And in this case, we're suggesting that 1 of the 4 tests ordered was missing a diagnostic code. And we provide a link back to the physician where they can update that requisition. It's a really important step because we find 3% of our digital orders are still missing information that don't allow us to either complete a test or complete it all the way and bill the payer. Next, what the physician office really wants to know is if the patient is coming through a Quest PSC, they want to know, did the patient complete the order. And there is a significant amount of lab orders that never go fulfill. And the physician will call our call center because they don't see the results, but the results aren't there because the patient actually never fulfilled the lab order. And the physician office doesn't know that. So we simply provide the physician office with the knowledge that their patient made an appointment and that they fulfilled the appointment. And then down on the lower left there, you see when the tester results are ready. We'll supply those test results right out to the physician, concurrent with the patient. And then increasingly, we're now able to provide some value-added medical and clinical guidance to the physician. And in this case, I just used a simple example of a glucose test that had a high reading and that the physician may want to consider an A1c test in the future. Again, it's all about providing insights and useful information as that consumer patient goes through the journey and as the physician goes through the journey at the same point. Right, I'd now like to turn to our Drive framework and talk a little bit about what we are doing over the next 2 to 3 years to continue to generate that 3% savings goal that we've set for ourselves. So first on the topic of reducing denials and patient concessions. I think, as you know, reducing denials and patient concessions is actually revenue enhancing. And so we fight hard every year on testing that we believe should be approved. We fight medical policies with the payers on what we believe is appropriate testing with the appropriate clinical guidelines. In terms of enhancing our digital experience, I talked about what we're doing for the patient, consumer and for the provider. But there's many other examples in Quest Diagnostics where we're really working hard to digitize old paper experiences. Those could be as simply as requesting a Quest courier to come to pick up a specimen. You really don't need to call us for that, just order it online like you would an Uber vehicle. So many of our physicians' offices sending us paper requests, paper faxes to order supplies. We've digitized those processes, and I'm happy to report that over 70% are making use of that, but we can go further. On the standardize, optimize and automate, obviously, we have a lot of work to finish the consolidation of our Clifton laboratory and to get to that 15% productivity that I talked about. A couple of years ago, we talked about the consolidation on our immunoassays from 7 platforms down to 1 platform, and that we had chosen the Siemens Atellica platform. Well, I'm happy to report we have all 15 of our regional labs that we had intended to run that single platform. The Atellica systems are installed in all 15 laboratories. But we've really just begun to move those assays from those 7 distinct platforms down to the 1. And in 2020, we did 2 of the higher-volume assays. We generated over $10 million of run rate savings. But we have at least 5 to 6 more assays to go, which will take us throughout 2021 and into '22 before we complete that work. And then finally, the continuous improvement initiative, part of our Quest Management System in Quest Diagnostics really is paying dividends. And this is really all bringing a continuous improvement mentality, tool set and processes to the thousands of Quest Diagnostic workers in our laboratories, patient service centers, our logistics and all across our enterprise to look for opportunities to improve processes. And when we do that, we know we improve our quality, we know we improve our throughput, and we know we bring savings to Quest Diagnostics. So finally, I'd be remiss if I didn't mention for a moment, Quest's commitment to our ESG effort that we started several years ago. And our commitment is to reduce water, reduce waste and to reduce energy usage in our laboratories, in our patient service centers and our fleet of over 4,000 vehicles. But we look at every step in this process, from order to collection, to transport to the testing in our laboratories. And I can assure you, we're finding opportunities, and we'll continue to find opportunities at every step of the way, to reduce energy consumption, reduce the amount of freshwater that's needed in the testing process and reduce, more importantly, the amount of medical waste that is generated throughout this process. So with that, I'd like to summarize the following. First, I hope you've seen the key role that Quest has played during the pandemic over the last 12 months, and the opportunities that are still in front of us over the next 12 and maybe more months marching forward. Second is the investments we've made in COVID-19, about $40 million, I can assure you, will continue to pay dividends for us as we go into the future. For women's health care testing, for other molecular testing, it will help us improve turnaround time. It will reduce service and maintenance costs. And we're going to be deploying this throughout our regional labs, this equipment throughout our regional labs in the network. Third is we continue to invest in the consumer and provider journeys. Operational excellence leads to growth by creating journeys that are both insightful, lean and meaningful to the consumer and to the provider. And then finally, going back to 2012, we've achieved about 3% annual savings year in and year out. And I can assure you, there's still plenty of opportunity ahead for us to go after that target at least over the next 3 to 5 years as we look out into the future. So with that, I would like to now introduce Cathy Doherty, who will talk about our direct-to-consumer opportunity ahead. Thank you.

Thanks, Jim, and good morning, everyone. I'm going to talk to you today about how Quest is well positioned to accelerate growth in the consumer-initiated testing market through QuestDirect. You'll hear about how consumers are increasingly engaged in their health, including diagnostics. You'll hear how the consumer-initiated testing market is positioned for breakout growth, and how QuestDirect is a robust dynamic offering that can capture this opportunity than how targeted marketing and enhanced digital experience will drive performance. Our consumer vision at Quest Diagnostics is to become the laboratory provider of choice amongst consumers and to lead the way in personal diagnostics. As you know, today, 70% of all health care decisions are based on diagnostics, and that power is moving into the hands of the consumer. As you heard earlier during Steve's presentation, trends show that consumers are increasingly informed and engaged, especially in the online space. Consumers expect high levels of convenience, transparency and choice. And they bring the same expectations around digital brand engagement to their health care experience. They also want more accessible channels and locations, such as big-box retailers, which attract large numbers of consumers. Most importantly though, they want to be empowered to make important decisions about their health and well-being, and this is the power that consumer-initiated testing like QuestDirect provides, it allows consumers to take control of their health by ordering their own lab tests to better understand their health through personal diagnostics. Now COVID-19 has certainly mainstream telehealth. And if you look to the left of this slide, reported telehealth usage has gone from about 8% in early 2019, to nearly 50% by the summer of last year. But more importantly, 82% report liking it and 80% say that it's here to stay beyond the pandemic. If you look to the right of this slide, at the same time, there has been an acceleration in e-commerce adoption. It took 10 years for e-commerce to increase more than 10 percentage points. And in an 8-week period during the height of the pandemic, it increased a further 11 percentage points. That bodes very well for QuestDirect. Quest is the leader in the world of diagnostics by any number of measures. More than 1 in 4 people in the U.S. recall Quest when asked about lab test providers. We're also ahead on NPS, which measures the consumer experience. The public now recognizes Quest as much more than just a lab company, and this is going to help us lead the way in personal diagnostics. The consumer-initiated testing market is positioned for breakout growth. We're expecting that the market will continue to evolve and grow over the next 5 years. But what I can say is that the size of the market is not entirely clear, but we've done our best to size it. We estimate that we're looking at about a $2 billion market, and this market includes consumer genetics, which for us will be powered by our breakthrough capability and sequencing that Steve referenced earlier. And as the industry leader, we believe we can capture $250 million of this opportunity. Factors such as the engagement of big-box retailers could drive further market expansion. And we've already seen Walgreens, CVS and Walmart getting involved in this space. What's also interesting is that health plans are now covering consumer-initiated testing for COVID-19. Pre pandemic, I don't think any of us could have ever imagined that a health plan would pay for a consumer-initiated test. And if health plans support were to expand beyond COVID, this could also be a catalyst for the market to be even bigger. Remember, we launched QuestDirect back in 2018. So we've been at this for more than 2 years. And of course, the pandemic has accelerated growth of this market. QuestDirect enables consumer testing with the click of a button or a tap of the screen. We've built a compelling product offering because it was built around what matters to consumers, a great product, a dynamic experience and convenience with a trusted provider. Consumers can conveniently shop online and choose their own lab tests. We've partnered with a telehealth provider that provides oversight and reviews the results. Consumers can schedule an appointment for their blood draw online, and they receive their results online. They can also seek a physician consultation and treatment online with our telehealth partner, and they can have kits delivered straight to their home, such as our COVID-19 active infection kit. And I think you know, traditionally, Quest has been a B2B company, focused on health plans, health systems and health care providers as our customers. QuestDirect, however, has required us to invest in consumer marketing. QuestDirect's success has been fueled by an omnichannel marketing strategy. We target consumers broadly through traditional advertising like ads on television, radio and streaming services, and we micro target consumers online through digital advertising based on their digital profiles. And of course, behind the scenes, what's powering this omnichannel strategy is an analytics engine that's focused on layered targeting, and it's working. Through QuestDirect, we've been able to drive impressive growth and not just with COVID. We've more than doubled our non-COVID revenue coming out of 2020, and it's 8x higher with COVID revenue factored in. We have more than 15 million MyQuest users. And this has more than doubled between 2019 and 2020. There were over 30,000 active infection kits ordered since September, 280,000 antibody tests since April, and we're generating about 1,000 orders per day for the consumer-initiated insurance pay product offering that we launched in early December. Now how did we get here? Well, our strategy has included a continual stream of enhancements to deliver the most complete solution on the market. In 2018, QuestDirect launched with 30 tests available for purchase without a doctor's visit. And we've grown that test catalog to nearly 50 today. We want a closed loop model so that if you suspect you have an illness, you can get tested, you can get a consult, and then you can get a script for treatment. In 2019, we enabled treatment for positive STD testing, and this was really good for our privacy seekers. Since then, we've enabled treatment for a number of other tests like Lyme, UTI, and in 2021, HIV prevention with PrEP. It's been a steady evolution. We launched with the ability to schedule an appointment at a PSC and since then, we've added home collection and an enhanced experience through our MyQuest app. And we're not going to stop there. This year, we have a number of things on the docket to help us drive growth. One, we're expanding our home kit collection offering. This month, we'll be launching InSure ONE for colorectal cancer with kits shipped straight to the consumer's door for collection in the privacy of their home; two, we're going to be implementing flexible payment options an expectation from consumers; and three, we'll also leverage large partnerships as an additional distribution channel to drive growth and brand awareness. And of course, with such high expectations in the digital space, the consumer experience is absolutely critical to our success. We're launching an update to the MyQuest app, giving it a more contemporary look and an enhanced user experience. QuestDirect is dynamic, robust and a versatile offering that's well positioned to lead. And our consumers agree. Here are some of the words they use to describe QuestDirect: reliable and innovative; experienced and trustworthy; reputable; helpful; affordable; but most importantly, convenient. We've seen unprecedented consumer engagement over the past few years, and we've got a strong plan in place to capture this momentum. This market is positioned for breakout growth and we estimate it to be about a $2 billion market by 2025. QuestDirect has a track record of success, and we are poised to capture $250 million of this opportunity. Micro-targeted marketing and enhanced digital experience is accelerating growth and will continue to do so. And Quest is the leader in diagnostics and QuestDirect is positioned to lead in personal diagnostics. Thank you. And now I'm going to turn it over to Mark Guinan, who will take you through the numbers.

Good morning. I get to close out today's prepared remarks with the financial portion of our Investor Day. What you'll hear from me today is a walk-through, a review of our 2018 to 2020 performance. I'll spend some time on our capital deployment, look at our past and talk to you about what to expect in the future, also set a baseline for 2022 and beyond. And I think it's really important to spend some time on 2022 because, as everyone knows, we expect COVID revenues to significantly decline between this year and next year. And from 2022 beyond, you would expect us to get back to more of our normal base business rhythm of growth. I'm going to then go to framing some of the assumptions for beyond 2022 and then finally, spend some time on the numbers themselves. In 2018, we gave you a view of a 4-year outlook, where we expected our top line revenue to grow 3% to 5%, and we expected our bottom line to grow 4% to 6%. Obviously, we well outperformed that due to the COVID pandemic and the associated testing we've had with that pandemic. If you look at our performance over the last 2 years, we got off to a really, really good start in 2019. And we would have expected to continue on a path to deliver that 3% to 5% and 4% to 6%. In 2019, we were at the lower end of the range. On the revenue side, it was more impacted by the timing of M&A, but we were off to a good start and expected that to continue. And then as you see, because of the revenues from COVID testing, we greatly exceeded that performance, growing almost 12% on the top line and over 33% on the bottom line. I'll spend some time now on capital deployment. Since Steve joined in 2012, we've generated over $12 billion in cash flow, most of that through operations and some of it through some divestitures. Since then, we've deployed $11 billion of that. As you know, we have over $1 billion on the balance sheet at year-end. But of the $11 billion that we've deployed, it's almost been evenly split between being returned to shareholders and some of that being invested within the company. Of the money that we returned to the shareholders, $3.6 billion has come through share repurchases, $2 billion through our dividend. And internally, it's evenly split between cap expense and also through M&A. If you look at history and the commitment we made to, to return majority of our free cash flow to you, you see that every year until 2020, we made that commitment. And I'll touch on 2020 in just a moment. You see that of the other 50% that we don't commit, depending on M&A opportunities in that year, some years we spent almost all of that on M&A, such as 2014, and then there's other years where we didn't have an opportunity that we saw a clear path to value creation. And therefore, we bought back more shares, such as in 2016, when we returned almost 100% of our cash flow. In 2020, because of the suspension of our share repurchases early in the year before we had the confidence in our cash flow generation, you know that we weren't able to return the full 50%. But we're certainly going to make up for that in 2021. If you look at what we've done since 2013, when I joined, we bought back $3.4 billion worth of shares. And importantly for you, we recently almost more than doubled our authorization to $1.9 billion, and I'll touch on a minute what our plans are for that. We've just recently increased our dividend by 11%, that puts it at about a 2% yield. While we don't have a specific yield target, we certainly see a 2% yield for a health care services company as being very much within the market. And we've increased that dividend 10x since 2011, growing at a 20% annual compound annual growth rate. I'm very happy to tell you that we plan to buy back $900 million worth of shares in the first half of the year. We started doing so in the open market immediately after our earnings call. And we would expect to proceed on and buy back at least $900 million by the end of June. And in addition to that, I'm here to reconfirm that our capital deployment strategy that we started back in 2012 will continue. That's the commitment to return the majority of our free cash flow to you through dividends and share buybacks. But importantly, we're also going to reinvest in the business. We're going to capitalize on those growth opportunities that Steve highlighted around health plans, hospital health systems, advanced diagnostics and direct-to-consumer. And as Steve referenced, we've already invested around $75 million in those opportunities, things that we may not have been able to do if it were not for the COVID testing revenue and contribution margin. Some of that has been in capital, and some of it has actually been in the P&L. And that will continue through 2021 at least. We also continue to deliver M&A at around 200 basis points of growth per year. As you know, we're able to afford those acquisitions through operating cash flow without leveraging ourselves up at all. Certainly, if we had enough opportunity that we saw the need to leverage in a short window, we would do so. But we've been able to grow at that 2% annual basis for several years, funded through our operating cash flow. And then finally, as I mentioned a moment ago, you can expect that we will raise the dividend consistently over time, while aiming for a market-based yield. I want to take a moment just to walk through the 2021 cash expectations. So as I mentioned a minute ago, we started the year with over $1 billion of cash on the balance sheet. If you look at our guidance for the first 6 months of the year, between $800 million of operating cash flow and $200 million worth of capital spend, that would imply around $600 million of free cash flow. If you then take the $900 million that I said we would do share buybacks with in the first half and our dividend expense in the first half, you see that, that would leave us with about $700 million after we deploy $1.1 billion back to you, our shareholders, in the first half of the year. In the back half, we haven't projected where our operating cash flow would be. But if you set that aside for a moment, just between the cash we would expect to have a midyear, plus our access to our credit facilities, you can see that we almost have $2 billion worth of access to do additional M&A or share buybacks, should we decide to do so in the back half. So some of that $2 billion has already been allocated to that Mercy Health acquisition. Moving away from capital for a moment. As I said, it's really important to think about 2022 and to ground you on what you should expect from us. Back in 2018, between the low and high end of the range, you would have expected somewhere between $8.5 billion and $9.1 billion of revenue and $7.40 and $8 in earnings per share. So now I'm going to walk you through some of the key assumptions for Quest in 2022. So first off, as I acknowledged previously, and as all you're expecting, we do see COVID-19 testing revenue stepping down meaningfully in 2022 from their level in 2021. A large part of that is going to come from volume. But we also are expecting a lower molecular reimbursement rate than current levels next year. Now you know that previously, CMS published a rate of $51. That was done via crosswalk to Zika. We don't think that was the correct way to do it. Obviously, the PCR molecular test that we're doing for COVID is much more complicated than what we do for Zika. So our trade association is actually working with CMS right now to see if there's a better crosswalk to be done, and we'll see where that comes out. So while we certainly hope that the reimbursement rate won't drop down to $51, and we're going to fight hard to get what we think we deserve to be paid, for conservatism at this point, we're going to assume it drops down to that NLA that was previously published. On the base business, we're expecting the revenues to be fully recovered by the end of this year back to the levels of 2019 and to grow from there. We do have 1 more year of significant PAMA cuts that we expect to be more than 1% of our base business revenues in 2022. If you recall, this was delayed by 1 year because of the CARES Act. So we're not getting a reduction in 2021. That reduction will instead come into 2022. But I have good news. In a minute, I'll talk to you about what to expect from PAMA beyond 2022. And on the bottom line, you can assume that our base business operating margin will be back to the 2019 levels, inclusive of that PAMA cut that I just went through. And importantly, we had to make some assumptions around how much COVID testing would be around in 2022 and what the recovery and growth of the base business is. And as I said, we expect to be back to the 2019 levels for the base business by the end of this year. However, it could certainly be stronger than that. And the good news is that the models that we put together, there's an equal trade-off between $1 of COVID testing revenue and a $1 of base business. So there's no mix trade-off between the 2. So if we call COVID either too high or too low, it's likely that the base business will largely offset in the other direction, and there shouldn't be any earnings impact from that assumption. At this point, we're assuming the tax rate is stable. We all know that there is some likelihood of tax reform on the corporate tax rate. We'll update you as we learn more. But for modeling purposes, and when I talk about the EPS expected, going forward, we're assuming that stable corporate tax rate. We will certainly benefit from a WASO perspective from the share buybacks that I just talked about in the first half of 2021. Those will impact the full year WASO for 2022. That will give us an earnings tailwind in 2022. But then beyond 2022, we're assuming that there's stable share count. So back to what we said in 2018 and after I walked through those assumptions for 2022, what you should expect. With those assumptions, we believe that, that $8.4 billion, $8.5 billion of revenue on the low end of that CAGR would be the baseline. And we certainly have an opportunity to be higher than that. So the good news is we still expect to be where we projected in 2018, in 2022, despite the tremendous changes that have taken place over the last year plus. And then on an EPS side, we also expect to be within that range. But actually, with the benefit of the cash we got from COVID and the WASO reduction and therefore, implied EPS lift, we actually think it's likely we'll be at that higher end, closer to the $8 versus the $7.40. So certainly a different path to get there. But the good news is what we told you in 2018, we still expect for 2022 that we should be in the same area, both for the revenue and for earnings per share. Now there's an important consideration for the market beyond 2022. So before I get to what you should expect from Quest, I want to talk a little bit about the lab market. Now as you recall, in our first couple of investor days in 2014 and 2016, we talked about a market that was growing 2% to 3%. And we said that the hospitals were on the high end because of their ability to price, and the independent labs went in the lower end of that 2% to 3%. We then got the PAMA. PAMA created about 100 basis points or so headwind for the total industry. Certainly, Quest experienced that as well. So we projected a slowing of that market to 1% to 2% versus the 2% to 3% that we had talked about for several years. Obviously, with the pandemic, when you look at the base business, we've had even a slower rate of growth. So right now, as we project what we expect in 2022, it looks like maybe about a 1% CAGR from 2018 to 2022. Now when you go forward from 2022, we see the market rebounding to where it was in that pre-PAMA growth rate. And the reason for that is, as you're familiar with the next stage of PAMA, is a data collection, there'll be a recalculation in the prices, and those will determine what further cuts there might be beyond the current cuts we're experiencing in 2022. We don't have perfect information, but based on our knowledge of the market, I can tell you that what people were really concerned about, the doomsday scenario of the vicious cycle between Medicare reimbursement coming down, pressure on our commercial rates, those commercial rates then put further pressure on PAMA and so on and so forth, that has not played out. So actually, the commercial prices have been fairly stable throughout the last several years. And so when that data is calculated, while, there's certainly some potential for further price reductions from PAMA, we're confident that it will be nowhere near the magnitude that it was for the first several years. And in fact, even in the first year, we expect it to be significantly lower than it would be in 2022. So because of that, we see the market growing at 100 basis points faster on both the low end and the high end of the market, going from 1% to 2% to more like 2% to 3%. And that is certainly before we consider Quest and our ability to gain share through some of the things that Steve and Jim and Cathy have talked about for the last hour or so. Key assumptions for the long-term outlook is that we believe we can move our base business revenue growth up to 4% to 5% versus that 3% to 5% we talked about. And that's really mostly just driven by fewer headwinds from PAMA. So we feel quite comfortable that, that 4% to 5% is realistic without getting overly ambitious or aggressive about our assumptions on share growth or some of the other drivers that we walked through over the last hour. We expect 2% to 3% of that to come organically. Certainly, PLS will be a key contributor. Steve talked about the Hackensack Meridian deal. That is an excellent revenue growth driver. We expect to see more deals like that over the next couple of years. And that'll help us. And then our core business through the other 3 growth pillars will help us to get the other 1% to 2%. Continue to get about 200 basis points of acquisitions, so between 2% to 3% in organic and 200 basis points of acquisitions, moving that long-term outlook up to 4% to 5% from 3% to 5%. On an EPS perspective, we expect to get even further leverage. So the 4% to 5%, we see us translate into 7% to 9%. Now I do want to point out a difference: whereas in the base business, the revenue growth is on the base business, the earnings growth is actually for the enterprise. And the reason for that is because there will continue to be a declining contribution from COVID-19 testing on the top line, which will offset some of the base business growth, but from an earnings perspective, we're very confident that we still will be in that range of 7% to 9%. And as we've said in the past, we have an excellent ability to generate cash. As we grow that -- those earnings per share, you should expect to see commensurate growth in our free cash flow. So finally, what I would hope you would take away from today is that we will continue with our strategy of returning the majority of our free cash flow to shareholders through dividends and buybacks. The COVID-19 testing has been and is enabling us to invest in the growth priorities and increase share repurchases. So 2 things in our tool chest that we didn't expect when we were last with you in 2018. We expect to execute at least $900 million in share repurchases in the first half of 2021. We expect to deliver at least 2% revenue CAGR from acquisitions. And finally, as we said in our press release this morning, as Steve walked through and I'll reiterate, our long-term outlook from 2022 forward is the CAGR on the top line of 4% to 5% and earnings for the enterprise of 7% to 9%. Thank you for your time. We're going to take a short pause now as we get ready for the Q&A. [Break]

Welcome back. We're now ready to take your questions. Operator, can you please go to our first question?

[Operator Instructions] The first question is coming from Jack Meehan, Nephron Research.

Mark, I wanted to start with the guidance commentary looking forward. Can you give us some color as to what you're assuming around commercial reimbursement with I think the idea is, given now you have much broader network access, do you think the commercial outlook for pricing can be stronger than what you had been seeing the last few years?

Thanks for the question, Jack. As I said in my prepared remarks, pricing has been fairly stable, actually, with the commercial payers. Certainly, you go back several years, and there was more price compression. But we've certainly strengthened our relationships with all of the national payers and with most of the regional payers as well, to the point where they're looking for value creation out of us in other ways than the historical price compression. They also have come to understand that PAMA will set the market rate. We've got acknowledgment from several of them around that. They can get comfortable with where their rates are by looking at PAMA. And the notion that somehow commercial pricing should be below or significantly below PAMA rates going forward versus where it was historically, obviously, is not something that's realistic. So we're partnering with these payers in a way to create value to move work out of high-cost providers, to give them data and other things to help them with their Triple Aim that creates value for them. And all the things that you heard Steve and Jim and Cathy talk about where the payers are benefiting from the things we do, from the superior quality that we offer and really getting that focus away from price. So my assumptions in that outlook, call it, versus guidance, Jack, is that commercial pricing is stable.

The next question is coming from Dan Leonard of Wells Fargo.

Just a question on the 2020 base. So possibly you could better frame what is the COVID volume assumption you're making to get to that 2020 base number? And how sensitive that is to your COVID assumption?

You're talking about 2020 or 2022?

I'm sorry, 2022.

Yes. So as I said, we had to I'll call it a guesstimate, make a guesstimate of where COVID testing volumes are going to be in 2022. Certainly, there's a lot of risk around that upside, downside. So in order to get comfortable with the bottom line numbers, we made some assumptions around the reimbursement level for that testing. It puts it at a margin level that we feel comfortable doesn't put us at risk because, as we said, for the COVID revenue be higher than we've modeled, it would mean a resurgence of the virus, likely a depression in the base business, again, certainly not to the extent we saw earlier in 2020, but to some extent, as we've seen the spikes. And then if the COVID volume is lower than we've placed in that model, then we expect the base business to be stronger. So while not perfect, we think we've modeled it in a way that protects ourselves against our inability to precisely size that COVID volume and revenue in 2022.

The next question is coming from Erin Wright of Credit Suisse.

A 2-part question. One, I guess, has anything changed in terms of the competitive landscape in your view that changes your view on the consolidation opportunity for you near term? And do you think that there's meaningful upside potential to the 2 percentage points from acquisitions going forward? And then my second question is more on the advanced diagnostics business. It's a nice acceleration that you anticipate there to 8% growth in line with the market. I guess, what does that entail in terms of incremental investments to get there at this point? And what does that mean for also potential partnerships down the road in terms of expanding into kind of pharma partnerships or CRO relationships, going forward?

Yes. So I'll take this one. And to come back to your question, competitiveness, in my prepared remarks, you heard what we believe is happening in the hospital market. And what you've seen from us over the past 6 months is really an acceleration of the number of deals. If you look at the cadence of deals we've done over the last 6 months, despite the pandemic, it's pretty remarkable. So we see that portion of the market in hospital outreach is a sizable portion of the marketplace. So we do see a change. And you couple that with what we talked about with health plans and what Mark just spoke about in terms of our competitiveness, we really are trying to power affordable care. And I think we're a poster company for that. Frankly, we have outstanding quality, great service. We've been working on our customer experience for years and at price points that are really competitive. And that's why we were chosen 2 years ago to be one of the preferred lab network provides for UnitedHealthcare. So that is putting pressure on everything I talked around health plans and what we talked about consolidation of the hospitals because people do want to buy the best value in any market. And in my mind, obviously, I believe, we're the best value, but it shows up in our brand results that Cathy spoke to in our presentation, our Net Promoter Score, people are seeing us emerging as really 1 of the preeminent providers of what we do every day. So that is really important. And advanced diagnostic underpins so much of what we talked about today. We talk about our hospital strategy. We talk about health plans. We talk about the consumer. And what we described as advanced diagnostics, really will have a prominent role in all of that. And consumer genetics, in terms of screening, is an important part of that. So investing in that over the last several years has been important to us to accelerate the growth. And so I mentioned that we have put investments in, in the past, and that's allowed us to get our cost down for Next-Gen Sequencing. But also we invested in 2020, and that was afforded to us by the pandemic, and we're putting more money in '21 in our plan, and that will allow us to accelerate growth. And where is that money going? It's where you expect it would go. It's for R&D, our innovation, it's for the sales force. And it's for capabilities of operationally how we run the business. So we're really increasing the overall resources in that business, and that will help us perform again, at the market level. We're not looking to knock it out of the park in our aspirations. We're actually looking at getting back to those market segments that are growing faster and doing much better than what we've done before.

The next question is coming from Ricky Goldwasser of Morgan Stanley.

When I think about your 4 pillars of growth, sort of the health plans, health system, advanced diagnostic and DTC, should we assume that the health system growth is really going to come from that 2% acquisitions and then the rest of your top line growth is going to come from the 3 other levers? And then as we think about the DTC business, I mean, you talk about corporate structural change, right, more outsourcing from hospitals, more DTC and utilization back to steady state, are you thinking DTC will cannibalize the base core business? And if so, how should we think about sort of DTC margin and profits versus core?

Let's start with the first point. We've talked about the 4 areas for organic growth. We talked about hospital growth. So the outreach opportunities will help us with a 2% growth from acquisition. But we do see opportunities for organic growth with the hospitals. And it comes really in 2 areas. One is that Professional Laboratory Service business that we have been growing, it's a $0.5 billion business for us. It's growing strong double digits. You'll see it in our numbers this year with the Hackensack deal, there will be other deals that are coming that will help accelerate growth. So it is an accretive portion of portfolio that will show up as inorganic growth. And then equally, if you look at the reference testing, again this the third piece of what we offer hospitals, we are planning in our aspirations that we will pick up share. And some portion of that share will be picked up because we're going to be stronger in advanced diagnostics than before. So it is providing both organic growth as well as growth from acquisitions. And as far as direct-to-consumers, this does touch on the whole field of telemedicine. And we are deeply engaged with all the telemedicine providers. And we were engaged with these providers before the pandemic. So this is not like we're starting from scratch. We had great relationships. When you think about telehealth providers, whether they're in the providing business or the providing a tool stat, they can only work with so many service providers. And therefore, you want to have in your network, if you will, of a telehealth provider a Quest Diagnostics in their network just like health insurance companies would. And so therefore, it gets down to how you receive your office visit, whether it's in the physician brick-and-mortar office or whether it's through a telehealth platform, and as your integrated delivery systems are also looking at trading off between those brick-and-mortar visits. So really, Ricky, it gets back to how many doc visits will there be. And we think we're very well positioned, given our precedence in the past and currently with our investments. When that market starts to shift away from brick-and-mortar, classic physician visits to what we're talking about with direct-to-consumer and potentially with the telemedicine opportunities, we see more opportunity to serve a larger portion of the marketplace and gain share.

Yes. The way you might think about it, Ricky, and the way I think about it is kind of like our retail strategy. I don't know how much of it is incremental. Clearly, not all of it is. But I'm confident that some of it is. And most importantly, if we don't move to where the market is going and where our consumer/patients wanted to go, then we're going to fall behind. And if we move more quickly and we have a better offering, then we'll have a chance to gain share regardless of whether that is cannibalizing classical clinical testing or if it's truly incremental to the market, we've really worked hard to have an outstanding offering and that's going to benefit Quest.

The next question is coming from Derik De Bruin, Bank of America.

This is Ivy on for Derik today. Thank you very much for all the details. That's very helpful. Two questions. So one, wanted to touch on the mass screening opportunity, definitely very encouraged to hear about the return-to-school opportunity. I just wanted to see if you could flesh that out a little bit, like any early signs of schools where employers started to engage or any conversations with state or federal developments in that front? And would appreciate if you could talk more about the turnaround time and details around that. And second, I wanted to touch on the DTC and [indiscernible]. Did you see opportunity a little bit more? I wanted to see if you could share more on the screening opportunity in that front.

So why don't we break this in two pieces? Jim, why don't you start with K-12? Jim and Cathy both work on these hand-in-hand. And then Cathy, you add to what Jim says there and then get into the direct-to-consumer piece of this. So I wanted to share where we are. And just by way of your backdrop, remember, what we're talking about is we do believe COVID is going to be with us through '21 and into '22 and to be with us, we think, for extended period of time. And we're moving away from clinical applications of what we're testing for to more what we described of return to life. And the K-12 program is just a great example, where getting our kids back-to-school is great work that we could do. So Jim?

Yes. Thanks. So first of all, we certainly have not been waiting for the stimulus package. We've been out serving school districts today. I mentioned in my presentation that we've served well over 100,000 university students. So we're familiar with the space. Now the stimulus package should be signed tomorrow by the Biden administration. And I mentioned again $130 billion of funds there, not all that will be used for testing, but we think a good chunk of it will. The way HHS is thinking about this program right now is they're going to divide the country into 4 quadrants. They call them hubs. There's going to be a hub coordinator that is going to essentially match demand and supply. So demand coming from the school systems with laboratories in those 4 quadrants. Of course, given our national footprint, we expect to play on a national basis. We expect to play in all 4 quadrants. Now who's going to run these quadrants? There's many companies that are bidding on doing the program management activities. And we're going to be aligned with all of the companies that are bidding on these quadrants to play that program management role. So we expect the program to really start in the mid-April, late April time frame. Obviously, school systems go through the late May into June and then they'll restart in the late July, August in the South, Southwest and then August, September throughout the rest of the country. It's an asymptomatic surveillance approach, as I mentioned in the presentation. Kids will be brought to the school. Kids will swab themselves, put it in a tube, tube comes back to the lab and we [ pipe ] pads and test out of that tube. So it's an affordable program, 24-hour turnaround times because it's important to get that information back quick. We've got the capacity, plenty of capacity to serve a lot of school districts. And we can add capacity as we need to meet the demand.

I think -- and maybe to add to that, today, we're going to be announcing that we're going to be participating in the New York Forward Program that provides rapid antigen testing for consumers pay out of pocket, but to enable the state of New York to actually open back up. And we think that opportunity exists in other states. As you can imagine, we're also playing in the space to get fans back in the stands. And just yesterday, we announced that we'll be doing the testing for the Buffalo Sabres, the hockey team up in Buffalo. So those are the kinds of things that we're seeing materialize as the national economy looks to reopen. And then Ivy, I know you asked the question around direct-to-consumer, but I actually didn't catch the end of your question, if you could repeat that.

We may have lost, Ivy. Operator, we'll go to the next question. And Ivy, if you're listening, please queue back in.

The next question is coming from Ralph Giacobbe of Citi.

Just wanted to go back to the guidance. And I just wanted to clarify, the $8 EPS base for 2022, it sounded like that's inclusive of PAMA cuts. But I wasn't sure, is that exclusive of any COVID testing? Or do you have some COVID testing in there? And then growing 7% and 9% ex repurchase beyond the $900 million for 2021, so just some clarifying things there. And then second piece is just the 3% to 5% going to 4% to 5% top line growth is certainly good to see. And it sounds like that's just PAMA-related. So is there any way to frame what the incremental opportunity could be, given the payer dynamics, the advanced diagnostics, the DTC. Is that all upside? Or is that embedded in growth?

So starting with 2022, thanks, Ralph, for the question. It does include some PAMA revenue, as I said, at a lower reimbursement rate and therefore a margin that is much less impactful if we're, call it, too high or too low relative to what it would have been this year or certainly last year. And as I said, we would expect, if we call that wrong and then there's either more or less, that to a large extent, the base business will offset that in the other direction. That number does include the $900 million in share buybacks. Recall not all of that $900 million is going to reduce WASO because we've got an employee equity plan. So to prevent dilution, we've got to buy back shares to start. But that is inclusive in 2022. And then going forward from 2022, the 7% to 9% is not counting on any additional WASO reduction. So that's on a constant share count.

Just to clarify, that was COVID revenue, not payment revenue.

I'm sorry, COVID revenue. And in terms of potential upside, Steve?

Yes. So on the growth rate comment, as we said, we see our market improving, starting in '22. And '22 is a good baseline number for us to also think about. Because as we said, as we get through '21 by the end of this year, we expect that we're going to get back to '19 levels and we'll start to grow from there. So yes, the market is growing at 2% to 3%. And that's better than what we projected in the past. And one of the benefits of the PAMA discussion that Mark guided us through that, that will help reduce the headwind. So hopefully, that's clear. So we have got a better market prospective than we had before. If you look at it historically, if you go back and look at our historical growth rates, organic plus acquisitions, we've been in that 2% to 3% range. So if you think about just the market change, then we should be able to get to the low end of what we're sharing. And at the same time, what I discussed with the organic opportunities is those 4 opportunities are not new. We've got good momentum. And in the case of health plans, as I said, we're halfway through, we've got more opportunities to grow from there. And the same is true for the other 3. So a lot of opportunities. And they're going to grow at different rates. So that's what we do believe that will help us. And then the acquisition growth, and remember back in 2018, because before we used to guide that we're going to grow 1% to 2% through acquisitions, we see -- we said back then that we actually see more opportunity for consolidation. And we moved it to be greater than 2% and we've delivered against that. So if you couple it better market performance in momentum with our organic programs and then finalize it with the opportunities we see around consolidation, we think that 4% to 5% is a good guidance for '22 and beyond. And we'll see as we get into that period of time how these start to pan out and where the opportunities show themselves.

The next question is coming from Donald Hooker of KeyBanc.

I'll just ask one kind of question here. I was impressed, I think, earlier in the slide deck, you talked about the advances you had made with regards to the new managed care relationships. I guess, particularly with UnitedHealth, I think you talked about market share growing, correct me if I'm wrong, from like 5% in 2018 to 13%-plus in 2020. Just curious, was that -- was that in line with your expectations previously pre COVID? Or did COVID have any kind of slowing effect there such that we might expect that market share to pop in 2022 perhaps or something of that nature? Can you kind of think about how that market share might pace?

Yes, I appreciate the comment. So remember, when we sized this for you back in 2018, we said the new access changes afford us about a $4 billion market opportunity for which we should get about 25%. And that's where the $1 billion comes from. The largest portion of that is from United. And United was in the $4 billion. But also, we have Horizon in New Jersey and the Anthem in Georgia was in that $4 billion and then also the opportunity around $1 billion. So even though it's not precisely all United, a large part of it is United and we have made good progress. The second part of your question, did the pandemic effect the implementation? What I'll share with you, we continue to work on programs in the course of '20 with United. But you would expect, given docs' offices being closed and our sales reps not being able to go into docs' offices, it clearly had some impact of slowing down the rate. But it doesn't change the opportunity. And it did not change our activity. So yes, it had some modest impact. But as I said in my introductory comments, the good news is we've got momentum. And the good news is we've got more opportunity in front of us.

And then I would just add that, as Steve also mentioned, we've expanded our relationship with Anthem. So back in 2018, it was Anthem Georgia. But now we've got a broad book of businesses with Anthem, and we're really partnering them more nationally than we have in the past. And it's a different type. And I would call it more of a risk-sharing relationship, so where we'll win together. And so the alignment between us and Anthem is miles ahead of where it had been historically. And so we're also very, very optimistic about our ability to grow share with them as well. And that's really in addition to what we talked about in 2018.

Yes. And I'll just close with saying, as you know, the health insurance companies are becoming much more diversified and much more broadly defined in our markets. And so in the past, we talked about our relationship with Optum as part of the UnitedHealthcare. That relationship continues to build. Actually, last week, Jim and I were meeting with the Optum United team talking about our relationship. We use them and they use us in various aspects of Optum. And they're acquiring quite a few of our physician customers with OptumCare. So therefore, that working relationship is very important. And it only helps us going forward. And when you think about what I talked about with COVID, one of our great partners with COVID was CVS. A large percentage of our drive-through volume came through the relationship with CVS. And the relationship with Aetna has always been strong. And so as they bring together CVS Health, we're closely working with them on how we can contribute as a broader [indiscernible] and classically what you thought about as a laboratory. So as they continue to emerge and develop their strategies, so this reinforces the need for more strategic relationships. And we've been hard at work at that. And it really serves us well going forward.

The next question is coming from Pito Chickering, Deutsche Bank.

On the [ 2020 ] margin assumptions, the cost walkout for 2019 looked as if there's decent margin expansion despite PAMA pressure and spot pricing. As you progress past PAMA cuts, is it fair to think about margin growth accelerating from those levels?

Pito, can you please repeat the beginning of your question? You broke up a little bit.

Just talking about the margin assumption, this cost walkout from 2019, it does look like a decent margin expansion built-in despite PAMA pressure and spot pricing. So as we progress past PAMA cuts, is it fair to think about margin growth accelerating from those levels?

Right. So I picked up pieces of that, Pito. And I apologies, I didn't pick up all of it. So I'll talk about margin directionally. Certainly, when you look at '18, '19 and '20 having significant PAMA cuts, and certainly '19 and '20 were the most severe, put pressure on margin. And fortunately, we've had our drive productivity programs to offset that and also paid for the annual wage inflation that we have in our salary and benefits. Having a year this year and having no PAMA cuts, and adding to that, as we talked about stability in the commercial rates, has changed our projection for where margins might go going forward. So that's a driver. And then accelerating growth is a significant driver. As we've talked about in the past, when we grow organically, the margin drop-through is not at a fully rated margin. It's at a much higher level. When you look at our fixed infrastructure in certainly a short window, if not a longer window, if you have a phlebotomist doing 1 or 2 extra draws, we don't really typically have to add any cost, so we fully leverage it out. The logistics drivers picks up that draw sample. It's really not much incremental cost. We worked very hard at the center to leverage and not increase cost in terms of overhead. And so largely, it's the reagent cost when you look at organic growth, which has a much higher drop-through on a contribution margin basis than a fully loaded margin. So I would point to all of those things as reasons that our margin opportunity going forward will improve and will get stronger. But obviously, there's many moving pieces on this. So we, like we have in the past, have scenarios in top line and cost structure and various other things. And that's why we give a range, and -- but we're comfortable that when we consider all those variables that, that range is realistic.

The next question is coming from Eugene Kim, Wolfe Research.

I guess just a quick follow-up for Ralph's question earlier. If you have no repurchasing in your 7% to 9% guide, are you assuming you don't fully deploy the free cash flow you expect to generate over that period? Or does that 2% plus acquisition growth require you to deploy most of your free cash flow post dividend? And secondly, can you share the latest trends on COVID testing volume and pricing and more importantly the base business recovery compared to what you had assumed in your first half guidance provided in early February?

Sure. So first off, I can assure you we will deploy our free cash flow. We don't have the precise way we're going to do it right now. I talked about the fact that the dividend is likely to increase to get to that majority or 50% commitment. Historically, it didn't take a lot of share repurchases. Going forward with our projections, it may require more share repurchases. So in no way are we speaking to a suspension of share repurchases or having to use all of our free cash flow on M&A. That 2% has always been affordable within the half of our free cash flow that's not committed to you. So that's consistent with what we've done in the past at our Investor Days. So we always have talked about an EPS growth with constant share count, not because that's what necessarily is going to happen, but just because in a complicated thing that we have to communicate about, that's the simplest way to talk about it. So don't know where the share count will be exactly, not sure exactly what the split will be between M&A and share repurchases. But I will tell you that we absolutely do not need go into the commitment, which we just reasserted of half that free cash flow to you, the shareholders, in order to get that 200 basis points of top line growth.

And Mark, do you want to touch on the recent trends? He asked about outlook.

Yes. So in terms of recent trends, you've seen the market go from a testing level that's about $2 million down to about $1.3 million. So it's dropped off significantly. We've been very transparent. We've reported our volumes. And you've seen them move directionally in a similar way since the beginning of January, when they were at their peak. We spoke at our earnings call around an expectation of about $100,000 a day for Quest through the first half of the year. To this point, we're above that level. Certainly, we don't know where things are going to go. But if they continue in the same trend, we could fall below that. But we also have seen a significant recovery in the base business that's better than our expectation. Now there's one other thing I would like to add, which we actually have spoken about before, but I want to remind people. That base business recovery took a temporary hit in February. We had one of the most severe weather months across the country that we've experienced. And certainly, that impacted our base business and our COVID testing as well. So when we look at our calculation of the impact of weather in February, it was the worst month we've had in the history of Quest. The good news is now that the weather has passed, it appears that, that base business recovery is back on track. And it is stronger than we had projected. So it's a partial offset certainly to where that COVID testing might go.

And remind you back in February, and I said at my presentation this morning, we do expect that volumes will come down for COVID. But it's going to change from clinical users to return to life activities. And Cathy and Jim spoke to some of those, particularly the return to school. So we'll see how this pans out. There's a lot of uncertainty, which we talked about in our earnings call for the fourth quarter in February. And so we're working through that uncertainty. And we think what we provided so far is reasonable based on what we know right now.

The next question is coming from Kevin Caliendo of UBS.

I have two questions actually. The first one is really just about your top line growth expectations. If we think about the fact you're doing well with PLS, you're growing inside United and doing stuff with Anthem and Aetna, the advanced diagnostics, is there -- you're basically talking about ex M&A, still in line with sort of market growth. Is there any offsets we should be thinking about that? Or is market growth just not that sort of historical 2% to 3%, which we always expected? Even your comments around pricing have been pretty bullish. And so I'm just wondering if there's anything we should be contemplating around the core business as a potential offset on the top line.

Well, I think you hit on why we think we've got a nice opportunity to grow. And yes, we are seeing the market is going to grow faster. And yes, when you take the M&A out of there, which has been tracking in the 2%, that 4% to 5% looks like we're growing with the market. So that's what we've indicated in our guidance so far. And we think it's strongly underpinned with what we've described to you. We provided a range and we provided that these aren't new initiatives. We're well along with many of these initiatives. And we invested in '20 and also in '21 with more resources to really put our foot on the accelerator to keep going with these. And they're going to hit us at different times. And what we described with the 4. The hospital business, those deals sometimes are lumpy, okay? They come in and they work for our numbers. If you look at what we're doing with advanced diagnostics, that will be one [indiscernible] growth. If you look at the direct-to-consumer opportunity, it's small today. But it will become substantial, what Cathy described as the opportunity in front of us. So those are later in the range in terms of providing growth. You put those pieces together and we think the guidance we provided is prudent at this point. But we do feel optimistic about the opportunities in front of us, given what we've done before and then what we see as prospective growth through the market.

The other thing to remember, we don't know where hospital outreach pricing is going to go. But historically, hospitals were getting increases. So that 2% to 3%, they were at that higher end because they were getting price and historically, unfortunately, we were giving price. We're talking about getting back to price stability. We're not talking about us getting price increases. So the fact that we can grow with the market suggests that we're doing better than we have historically because there's a reasonable chance that those hospitals may still get those price increases. So it actually is a better story than it was historically, where it had been appeared that on the surface.

Next question is coming from Brian Tanquilut of Jefferies.

We've got a few follow-up questions from investors, just on the gross margin or the margin outlook for 2022 and beyond. It sounds like between direct-to-consumer and all the efficiency initiatives that Jim laid out that there are opportunities to improve margin versus, say, 2019 baseline. So how should we be thinking about that, especially with PAMA cuts kind of tapering off?

I think the easiest way to think about it is if we grow the top line 4% to 5% and we grow earnings, not earnings per share. So we're growing earnings because it's a constant share count. At 7% to 9%, you can see what that implies in terms of margin expansion.

And you've got to remember, too, that we're getting back to '19 levels of volume by the end of this year. And so you think about the base business, what you've seen from us, we shrank last year. We're going to have nice recovery this year to exit the '21 time frame with us getting back to '19 levels and then we grow from there. And as Mark described, we're redeploying that cash that we've received from the COVID opportunity in 2021 wisely, what supports the '21 guidance -- '22 guidance that we're providing you. But there's a couple of puts and takes if you think about that. So the growth makes sense, starting from '22. But remember, we're just getting back to the '19 levels as we exit this year.

[Operator Instructions] The next question is coming from Ivy Ma of Bank of America.

So on DTC, I wanted to ask if you could expand on the colorectal cancer screening offering you mentioned earlier. And more broadly, could you talk more about what drives you to grow shares in the DTC market?and if there's any M&A opportunities? And then also, I wanted to follow up on mass screening opportunities for COVID-19, definitely appreciate all the color there. So could you talk more about the competitive landscape there? Who are you competing against in the screening market and what type of testing, et cetera?

So thanks, Ivy. So relative to the colorectal cancer InSure ONE product that we're launching this month, so we are launching it this month. It is an at-home kit that gets shipped straight to the consumers' door for them to collect in the privacy of their own home. It's a screening, which is absolutely fantastic. And we're pricing it at only $89, so really excited about that opportunity. We know that colorectal cancer is one of the cancers that when caught early is absolutely curable. And this is a tool to help enable that. So again, really excited. We think the market is big. I mentioned that it was about a $2 billion market, that includes consumer genetics. And as we think about our ability to win in that market, as we've gone out and talked to consumers, they've told us that they wanted a trusted partner. And as Steve mentioned even earlier, more than 1 in 4 people in the U.S. recall Quest when asked about a lab provider. So that really bodes well for us. They also want convenience. And so when we think about convenience, we're the only direct-to-consumer provider that acts -- that offers 2 modalities when it comes to collecting a specimen. We have the at-home kit collection as well as our PSC. And when we talk to consumers, although they love the concept of that at-home kit, when it comes time to maybe prick their finger, oftentimes, they prefer the patient service center. And then lastly, the consumers are looking for the ability to take action from the insight that we're providing. And what we're doing with QuestDirect is we're offering an entire solution that, in some instances, comes with the ability to get a consult and get treatment. But with all opportunities are all testing in our offering, that consumer has the ability to have a physician consult. And we think that really differentiates us. As I mentioned earlier, we have more than 15 million MyQuest users. And that is an awesome platform or set of consumers that we have the ability to interact with, so really excited about that.

The screening? COVID, I assume the question is around COVID screening.

Yes. So from a COVID screening perspective, relative to QuestDirect, we offer both the COVID active infection home self-collection kit as well as an ability to go to Walmart and get it curbside or go through the drive-in. And we also have the antibody test as well that requires an individual to visit one of our patient service centers to get drawn. So we were one of the first to offer the antibody and in the fall of last year, brought the active infection screening test to the marketplace.

You also asked about competition we're seeing in the space we call return to life, whether that's education, travel and entertainment or returning workers to the workplace. And I think you know who those competitors are. It's the traditional lab companies plus many of the genetics companies that had molecular PCR capability, went after that market. But what I would tell you, it's really a lot more than having lab equipment and the ability to test in order to win in this space. What it really takes is a front-end system to be able to register the kids, number one. Second is there's 14,000 school districts out there. We have a fleet of over 4,000 couriers to work the logistics route. It also takes, in many cases, mobile resources. Many of these school systems or workplaces want people on-site to help administer the program. I think, as you know, we have well over 12,000 phlebotomists and thousands of other mobile resources to bring to bear here. So we do believe we're uniquely positioned here to win in this return-to-life space, given our logistics, our mobile resources, our front-end IT systems and processes. And then of course, we have the lab capacity to handle it.

And the last question is coming from Matt Larew of William Blair.

This is actually Max on for Matt. Just a quick one for me. I wanted to follow up on an earlier question around what you're seeing in terms of price per test on the COVID front. And I know last quarter, or at the end of the fourth quarter, you talked about the average revenue per molecular test coming down a little bit from greater than $90 to maybe the $51 that you talked about today, the CMS published rate. But just trying to get a sense for how we should think about the rate of decline from the $90 per test that you recognized in the fourth quarter to the $51 per test that you discussed as a baseline today.

Yes. So at this point, we've seen pretty stable reimbursement on the COVID PCR test. So we really haven't seen significant erosion to this point. We've only given guidance to the first half of the year. We're certainly not envisioning a step down to that $51 in the first half of the year in those assumptions. So that would come later. Exactly when, we're not sure. What I did comment on is that for 2022, for modeling purposes, that's what we've assumed. And we're doing everything we can to drive that to a higher level because we think it should be at a higher level. So I can't tell you exactly when that change might take place, sometime between the midpoint of 2021, possibly in 2022 or maybe it won't happen at all if we're successful through our trade association. So stable pricing to this point, we've not seen a huge step-down from a Quest perspective in terms of what we're getting paid for our PCR COVID testing.

Steve, you can close us out.

Well, thanks. Well, thanks to Shawn, and thanks for all your questions, and thanks for joining us today at this first virtual Investor Day. We'd be looking forward to hearing your feedback. It'll help us [indiscernible] for you. And we appreciate obviously your time and interest in Quest Diagnostics. And we all are looking forward to getting back to life, and we look forward to seeing you as we get out into our travels and visit you. So have a great day.

A reply of the call may be accessed online at www.questdiagnostics.com/investor or by phone at 1 (800) 759-1637 for domestic callers or 1 (203) 369-3019 for international callers. Telephone replays will be available approximately 10:30 a.m. Eastern Standard Time on March 11, 2021, until midnight Eastern Time, April 8, 2021. Goodbye.