Quest Diagnostics Incorporated

Welcome to the Quest Diagnostics fourth quarter and year-end 2025 conference call. At the request of the company, this call is being recorded. The entire contents of the call, including the presentation and the question and answer session that will follow, are the copyrighted property of Quest Diagnostics with all rights reserved. Any redistribution, retransmission, or rebroadcast of this call in any form without the written consent of Quest Diagnostics is strictly prohibited. Now I'd like to introduce Sean Bevick, Vice President of Investor Relations for Quest Diagnostics. Please go ahead.

Thank you and good morning. I'm joined by Jim Davis, our Chairman, Chief Executive Officer and President, and Sam Samad, our Chief Financial Officer. During this call, we may make forward-looking statements and we'll discuss non-GAAP measures. We provide a reconciliation of non-GAAP measures to comparable GAAP measures in the tables to our earnings press release. Actual results may differ materially from those projected. Risks and uncertainties that may affect Quest Diagnostics' future results include, but are not limited to, those described in our most recent annual report on Form 10-K and subsequently filed quarterly reports on Form 10-2 and current reports on Form 8-K. For this call, references to reported EPS refer to reported diluted EPS, and references to adjusted EPS refer to adjusted diluted EPS. Growth rates associated with our long-term outlook projections, including consolidated revenue growth, revenue growth from acquisitions, organic revenue growth, and adjusted earnings growth, are compound annual growth rates. Here's Jim Davis.

Thanks, Dan, and good morning, everyone. With diligent execution of our strategy and a strong fourth quarter, we generated double-digit growth in revenues and earnings per share for the full year. In 2025, we expanded our category-defining clinical innovations to meet robust demand, form strategic collaborations with elite healthcare organizations, and further advanced our position as the premier lab engine powering the wellness industry. We also continue to improve quality, productivity, and the customer and patient experience with process enhancements, AI, and automation. As we look ahead to 2026, our guidance reflects our continued confidence in our business strengths and market fundamentals, which include favorable demographic trends increasing use of blood-based lab diagnostics, and growing interest in preventative health and wellness. Now, before I turn to this year's highlights, I'd like to take a moment to comment on PAMA. Last week, bipartisan legislation was enacted that delays the implementation of PAMA until the end of 2026. This one-year delay in rate cuts was paired with an update to the data collection period to the first half of 2025 from the first half of 2019 based on the data to be supplied by applicable laboratories to CMS later this year. We greatly appreciate Congress for recognizing the need to reform PAMA and for providing this one-year delay of PAMA cuts, which provides meaningful short-term relief. However, these steps do not fix PAMA's structural flaws which include relying on an estimated 10,000 plus labs to self-report data to establish industry representative data for payment rate setting. As a reminder, fewer than 1% of all the clinical laboratories reported commercial payer data to CMS in 2017, resulting in three rounds of excessive rate cuts based on data that did not reflect the market. a different approach is needed to prevent a repeat of excessive rate cuts. The Results Act provides a common-sense, long-term solution that corrects these deficiencies by, for example, eliminating the need for thousands of labs to self-report data and, instead, leveraging an independent third-party database that provides comprehensive and representative data to set accurate market-based rates. We will continue to work with our trade association, ACLA, to build on progress in securing the necessary support in Congress to pass results into law this year. Now, I'll provide more detail on how we executed our strategy across our key customer channels and operations during the quarter and the year. We are focused on delivering solutions that meet the evolving needs of our core clinical customers, physicians and hospitals. as well as customers in the higher growth areas of consumer, life sciences, and data analytics. In the physician channel, we delivered high single-digit organic revenue growth in the fourth quarter on broad-based demand for our clinical solutions, including several areas of advanced diagnostics and from geographic expansion resulting from increased health plan access. We also grew revenues in enterprise accounts as we added new customers and extended business with existing customers. In addition, during the quarter, we scaled our lab testing to serve more than 200,000 patients at Fresenius Medical Care's dialysis centers in the United States. We also added water purity testing capabilities to our menu to support dialysis customers nationwide. In the hospital channel revenues grew low single digits with collaborative lab solutions driving our growth in the quarter. Our co lab solutions furnace our lab and process management expertise to optimize quality and drive cost efficiencies in areas ranging from hospital lab and supply chain management to analytics and blood utilization. At the start of 2026, we began to scale our CoLab solutions across all 21 hospitals of Corwell Health, a leading health system in Michigan, and our largest implementation of these solutions to date. We expect CoLab solutions to generate approximately $1 billion in annual revenues in 2026. Additionally, we recently finalized our laboratory joint venture with Corwell Health, and are jointly constructing a state-of-the-art laboratory in Southeast Michigan from which we plan to serve the state in 2027. Hospitals value our flexible solutions for accessing expertise, innovation, and capital. We are pursuing several potential hospital outreach and independent lab acquisitions as well as co-lab opportunities while also continuing to integrate and generate value from our recent transactions. In the consumer channel, we are leveraging our diagnostics expertise and technology to drive growth through our consumer-initiated test platform, questhealth.com, as well as through collaborations with industry-leading wellness and wearables companies. In the fourth quarter, we expanded questhealth.com to offer more than 150 tests, including our new 85-biomarker Elite Health Profile. Our innovation, quality, and technology integration into existing apps and experiences make us the clear choice for organizations seeking to add diagnostic insights to their offerings, and we added new consumer brands to our extensive roster of collaborations in the fourth quarter. At our investor day in March last year, we said that we would expect consumer-initiated testing to generate revenue growth in excess of 20%. and we exceeded that growth rate in 2025. Across the consumer channel, we delivered nearly $250 million in revenues for the full year. We enable growth across our customer channels through faster-growing advanced diagnostics in five key clinical areas, advanced cardiometabolic and endocrine, autoimmune, brain health, oncology, and women's and reproductive health. During the quarter and full year, we delivered double-digit revenue growth across several clinical areas of our advanced portfolio. I'd like to highlight a couple of these innovations today. Our analyzer solution provides a comprehensive yet simple approach for aiding the diagnosis of the eight most common autoimmune disorders. About 24 million Americans suffer from at least one of over 100 autoimmune disorders. Because symptoms of these disorders often overlap and a shortage of rheumatologists exists nationwide, patients may go for years before receiving the correct diagnosis. Analyzer helps primary care clinicians identify the likely category of disease affecting the patient and thereby speeding referral to the right specialist for faster diagnosis and treatment. In brain health, our portfolio of Quest AD Detect blood tests for Alzheimer's disease extended its year-long double-digit growth momentum into the fourth quarter as providers increasingly adopted the high-quality blood-based biomarker tests for the most prevalent type of dementia. A recent study by our scientific team suggests that blood tests, like our newest AD Detect panel, which fulfills guideline criteria for confirmatory blood testing, could decrease cost to the healthcare system by reducing the use of higher-cost PET-CT imaging for diagnosis, improving access and affordability. In oncology, we continue to build our presence in blood-based minimal residual disease testing. New research presented at ASCO GI in early January highlighted the strong clinical value of our Haystack MRD test in monitoring for colorectal cancer. We further expanded in the MRD space with the launch last week of our cutting edge flow MRD test for blood-based cancer myeloma. This test enables ultra-sensitive detection of residual disease in a blood specimen, sparing patients the pain and complications of conventional testing of bone marrow biopsies. Along with driving top line growth across our business, we are focused on delivering operational excellence with enhanced processes and strategic implementation of automation, AI, and other advanced technologies. Through our Invigorate program, we achieved our full year target of 3% annual cost savings and productivity improvements in 2025. Inside our labs, we deployed automated sample processing across our network and collaborative accessioning at multiple sites to streamline and optimize our processes. We also implemented the WholeLogic Genius digital diagnostic system at two of our laboratories and look forward to scaling the solution for enhancing quality and productivity in cervical cancer screenings at several of our labs this year. Outside the lab, we're using AI to make the customer and employee experiences easier, faster, and more insightful. For example, our virtual AI agent has reduced routine logistics calls by up to 50%, and we expect a new AI logistics tool will help us reduce courier transportation times as we roll it out this year. And now, Sam will provide more details on our performance and our 2026 guidance. Sam? Thanks, Jim.