Welcome to the Quest Diagnostics Q2 2021 conference call. At the request of the company, this call is being recorded. The entire contents of the call, including the presentation and 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 Shawn Bevec, Vice President of Investor Relations for the Quest Diagnostics Incorporated. Go ahead, please. Thank you. Good morning. I'm here with Steve Rusckowski, our Chairman, Chief Executive Officer, and President, and Mark Guinan, 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, including the impact of the COVID-19 pandemic 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-Q and current reports on Form 8-K. The company continues to believe that the impact of the COVID-19 pandemic on future operating results, cash flows, and/or its financial condition will be primarily driven by the pandemic's severity and duration, healthcare insurer, government, and clients payer reimbursement rates for COVID-19 molecular tests, the pandemic's impact on the U.S. healthcare system and the U.S. economy, and the timing, scope, and effectiveness of federal, state, and local governmental responses to the pandemic, including the impact of vaccination efforts, which are drivers beyond the company's knowledge and control. For this call, references to reported EPS refer to reported diluted EPS, and references to adjusted EPS refer to adjusted diluted EPS. Any references to base business, testing, revenues, or volumes refer to the performance of our business excluding COVID-19 testing. 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. Now, here's Steve Rusckowski. Thanks, Shawn, and thanks, everyone, for joining us today. We had another strong quarter and continue to build momentum, thanks to faster-than-expected recovery in our base business. Organic base testing revenues grew compared to 2019 levels in the quarter. This is the Q1 since 2019 that organic base testing revenues grew. The growth was driven by contributions from new hospital lab management contracts, as well as people returning to healthcare systems. We are well-positioned to continue our momentum and support the return to healthcare in the coming months, which is reflected in the outlook we have provided for the remainder of 2021. This morning, I'll discuss our performance for the Q2 of 2021, provide perspective on industry dynamics, and update you on our base business. Mark will provide more detail on our financial results and talk about our outlook and underlying assumptions. First, with regard to COVID-19 testing, we are closely watching the rapid spread of the Delta variant, where our testing continues to help control the spread of the virus. In recent weeks, we have seen PCR volumes stabilize and begin to increase modestly. Positivity rates have increased in all geographies served by our performing laboratories over the last two weeks. COVID-19 testing also remains critical as employees return to the workplace and students return to the classroom in a few weeks. Unless we experience another lockdown, we expect people to return to pre-pandemic healthcare and, in some cases, catch up with healthcare they might have postponed during the pandemic. Turning to PAMA and the recent MedPAC report mandated under the LAB Act. We were pleased that MedPAC found it feasible to change the CMS data collection process to a statistically valid sample of private payer rates for independent labs, hospital labs, and physician office labs. This approach would produce an accurate, representative market view of laboratory rates while reducing the burden on reporting laboratories, which is consistent with the charge of the LAB Act and the original intent of PAMA. The MedPAC report estimates that Medicare spending for the top 100 tests on the Clinical Laboratory Fee Schedule could increase by 10%-15% over current rates based on certain rate and volume assumptions. Separately, our trade association recently appealed its legal challenge to PAMA, which was dismissed by a U.S. district court in late March. The ACLA has asserted its right to challenge the regulatory overreach by HHS in the implementation of PAMA. Trade Association, we will continue to work with policymakers to establish a Clinical Laboratory Fee Schedule that is truly representative of the market and supports continued innovation and access to vital laboratory services for Medicare beneficiaries, as Congress originally intended. Now is the time to strengthen our laboratory infrastructure and support continued access to high-quality lab services that patients depend on. Turning to our results for the Q2. Total revenues grew by nearly 40% to $2.6 billion. Earnings per share increased by more than 264% on a reported basis to $4.96. Nearly 124% on an adjusted basis to $3.18. Cash provided by operations increased by more than 30% to $460 million. In the Q2, we continued to see a better-than-expected recovery in our base business, with organic base testing revenues essentially returning to pre-pandemic levels in June. We are seeing strong recovery in most of the country and a slower recovery in the Northeast. Demand for our COVID-19 testing slowed in the quarter as expected, reflecting an industry-wide trend, though in the last few weeks of June, demand stabilized and has since increased modestly, which we believe is attributable to some extent to the emergence of the Delta variant. We performed an average of 57,000 COVID-19 molecular tests a day in the Q2, well below our current capacity of approximately 300,000 tests per day. We have engaged with businesses in the travel and entertainment sectors in the quarter and are working with partners to support a safe return of students to the classroom. We're also collaborating with CIC Health, Ginkgo Bioworks, Battelle Memorial Institute to make testing easy, fast, and affordable for school systems and other group settings across the country. We continue to make progress on our two-point strategy to accelerate growth and drive operational excellence. Here are some highlights from the Q2. We continue to execute on our M&A strategy. In June, we announced the completion of our acquisition of an outreach laboratory services business of Mercy, one of the nation's most highly integrated multi-state healthcare systems, with providers and patients in Arkansas, Kansas, Missouri, and Oklahoma. With this acquisition, we are on our way to grow our base business revenues approximately 2% from accretive strategic acquisitions this year and with additional M&A opportunities in the H2 of the year. We continue to grow our health plan business and made progress in the quarter with value-based programs with UnitedHealthcare and Anthem. Our volumes to these health plans are growing faster than the company average. We have also invested in additional employee headcount to better support these important relationships. During the quarter, we were also pleased to renew our longstanding contractual relationship with one of our largest health plan customers, Aetna. We remain a preferred laboratory provider and partner of Aetna's network. In addition, for the first time in over a decade, Quest is one of Highmark Delaware's in-network, non-hospital-affiliated preferred labs, serving more than 450,000 members. It's good to be back in the market, competing on the basis of quality, service, and value. We're helping all of us be focused on healthcare's triple aim of improving population health, enhancing the patient experience, and reducing costs. Towards that end, we are launching a new campaign designed to remind customers of the value that Quest brings to healthcare. Our Powering Affordable Care campaign speaks about our leadership in clinical innovation, our ability to enable better clinical outcomes through quality, speed, and accuracy of test results, our improved patient experience with accessible, easy-to-use patient resources, and finally, our ability to reduce cost of care. Base consumer-initiated testing revenues continued to grow in the quarter. Today, more than 17 million patients have an account on the MyQuest app and patient portal, with nearly 100,000 patients enrolling each week. Finally, in advanced diagnostics, we're pleased to see full recovery in the growth drivers we're investing in, which we discussed at our recent Investor Day and are tracking to accelerate growth. Turning to our second strategy. We made progress driving operational excellence. We're on schedule to complete the full transition to our new flagship laboratory in Clifton, New Jersey next month. This highly automated facility has consolidated testing previously performed in Teterboro, Baltimore, and Philadelphia. There continues to be intense effort and energy around our Invigorate productivity initiatives, and we are on track to deliver our targeted 3% improvement across the business. We are focused on getting paid for what we do, and have made steady progress in reducing payer denials. Also, patient concessions for our base revenues were down in the Q2 to 2019 levels, driven by a focus on collection improvements. One positive outcome of the pandemic has been the patient and physician acceptance of the digitization of our experience. We are more customer-focused and efficient today with more self-serve options for customers, and we have moved a greater percentage of volumes to digital paperless transactions. I'd like to turn it over to Mark to provide more details on our financial performance and our outlook for the remainder of 2021. Mark? Thanks, Steve. In the Q2, consolidated revenues were $2.55 billion, up approximately 40% versus the prior year. Revenues for Diagnostic Information Services grew 40.2% compared to the prior year, which reflected the strong recovery in our base testing revenue, slightly offset by lower revenue from COVID-19 testing services versus the Q2 of last year. Compared to 2019, our base DIS revenue grew nearly 5% in the Q2. It was up more than 1%, excluding acquisitions. Volume, measured by the number of requisitions, increased 45.2% versus the prior year, with acquisitions contributing approximately 5%. Compared to our Q2 2019 baseline, total base testing volumes increased nearly 7%. Excluding acquisitions, total base testing volumes grew approximately 2% and benefited from new PLS contracts that have ramped up over the last year. Importantly, compared to our 2019 baseline, our base testing volumes were nearly fully recovered in June. However, as Steve noted earlier, the geographic recovery continues to be somewhat uneven, with positive growth across most of the U.S., except in the Northeast, which remains below the 2019 baseline. With that said, we continue to see steady recovery in the Northeast. COVID-19 testing volumes continue to decline as expected in Q2, in line with broader trends across the industry. We resulted approximately 5.2 million molecular tests and nearly 700,000 serology tests in the Q2. COVID-19 testing volumes stabilized over the last several weeks, and we averaged approximately 43,000 COVID-19 molecular tests and 7,000 serology tests per day in the last two weeks of June. Revenue per requisition declined 3.6% versus the prior year, driven largely by recent PLN wins and acquisitions. Combined, these two factors amounted to a decline of nearly 5% in revenue per req in the quarter. Unit price headwinds remained modest and in line with expectations. Reported operating income in the Q2 was $533 million, or 20.9% of revenues, compared to $283 million or 15.5% of revenues last year. On an adjusted basis, operating income in Q2 was $584 million, or 22.9% of revenues, compared to $294 million or 16.1% of revenues last year. The year-over-year increase in operating margin was driven by the strong revenue growth in the Q2, due primarily to the ongoing recovery in our base business. Reported EPS was $4.96 in the quarter, compared to $1.36 a year ago. The Q2 of 2021 benefited from the gain on the sale of our minority ownership interest in Q2 Solutions in April. Adjusted EPS was $3.18 compared to $1.42 last year. Cash provided by operations was $1.2 billion through June year- to- date, versus $602 million in the same period last year, which included $65 million from the CARES Act funding that we eventually returned to the government later in 2020. Turning to guidance, we have established our full- year 2021 outlook as follows. Revenue is expected to be between $9.54 and $9.79 billion, an increase of approximately 1%-4% versus the prior year. Reported EPS expected to be in a range of $11.48 and $12.18, and adjusted EPS to be in a range of $10.65 and $11.35. Cash provided by operations is expected to be at least $1.9 billion, and capital expenditures are expected to be approximately $400 million. Before concluding, I'll briefly review some assumptions embedded in our outlook for the remainder of 2021. Our outlook continues to assume a decline in clinical demand for COVID-19 molecular testing throughout the back half of the year. Return-to-life testing, such as the K-12 school testing program, could partially offset declining clinical demand later in the year. Reimbursement for clinical COVID-19 molecular testing continues to hold relatively steady. We currently expect this trend to continue, assuming the public health emergency is extended throughout 2021. However, average reimbursement is likely to trend lower in the H2 as our mix of COVID-19 molecular volume shifts from clinical diagnostic testing to return-to-life surveillance testing. As you consider the EPS outlook we have shared today, keep in mind the following. At our Investor Day in March, we discussed making approximately $75 million in targeted investments to support our long-term strategies to accelerate growth. These investments are ramping, with $50 million expected to fall in the H2. We also continue to incur expenses to comply with CDC guidelines, address supply chain challenges, and maintain staffing levels to ensure high levels of service and quality as the base business recovers faster than expected. We forecast these expenses to be approximately $30 million in the back half of the year. Finally, the low end of our outlook assumes an average of at least 20,000 COVID-19 molecular tests per day and 3,000 serology tests per day. It also assumes low single-digit revenue growth in our base business in the H2 of 2021 versus 2019. The midpoint of our guidance assumes slightly stronger COVID-19 molecular testing volumes and a modestly faster recovery of the base business. The high end of our guidance assumes both a greater level of COVID-19 testing and a strong continued recovery in the base business. I will now turn it back to Steve. Thanks, Mark. Well, to summarize, we had another strong quarter with a faster-than-expected recovery in our base business. We are well-positioned to continue our momentum and support the return to health care in coming months. Finally, I'd like to thank all Quest employees who continue to serve the needs of people who rely on Quest every day. We'd be happy to take any of your questions. Operator? We'll now open it up to questions. At the request of the company, we ask that you limit yourself to one question. If you have additional questions, we ask that you fall back in the queue. To be placed in queue, please press star one from your phone. To withdraw, press star two. Again, to ask a question, please press star one. Our first question from Ann Hynes, Mizuho Securities. Your line is open, ma'am. Morning, Ann. Hi. Good morning. I just have a question on, I think you just said your guidance assumes about 20,000 molecular tests per day. Is that average for the entire H2, or is that exiting the year? Also, can you just talk about what your guidance assumes for any kind of labor and inflation pressures for the H2? Do you see those getting worse, or are they stable throughout the year? Thanks. Mark? Ann, that 20,000 is not the exit rate. It is the average for the back half. The 20,000 was the baseline for the low end of guidance. To get to the middle part of guidance, we would expect somewhat stronger than 20,000. Of course, there's moving pieces because it's also dependent on how the base business moves. The high end of guidance would be significantly more COVID-19 testing and then the stronger base business recovery, more in the mid-single-digits revenue. That's how we tried to dimensionalize the range for you. In terms of labor pressure, we certainly saw some of that, and we responded to it. That is built into the whole year. It's not accelerating at this point in our outlook in the back half. We have a process where we make annual salary and wage adjustments that was implemented earlier in the year. We certainly make some market adjustments periodically, which we've done. That's not unusual. There's nothing extraordinary in the back half of the year in terms of labor inflation. All right. Thanks. Our next question is from Brian Tanquilut with Jefferies. Your line is open, sir. Thanks, Brian. Hi, good morning, and congrats on a good quarter. I guess my question for you, Steve, as we think about the PLN and the preferred networks, it sounds like we're seeing some progress there. Any color you can give us on the recovery and the uptake and the traction you're getting there, especially as we exit the COVID-19 drag? We're feeling good about the programs we've put in place over the last couple of years, Brian. We started these with United as you know. We mentioned that we have a program that we're working with Anthem across the country we feel good about. We continue to work other programs with other payers that see this as an opportunity as well. What I said in my remarks, we do see those payers and the volume going through those payers growing faster than our other base recovery. We feel we're actually getting some traction with everything we've put in place. I can tell you the engagement between us and those organizations are quite good. I've said before in my remarks, we see an opportunity to get a variation of the group with a high quality, low cost, high value laboratory like Quest Diagnostics, then tighten up the network to what we describe as the Preferred Lab Network. It's really all about what we've talked about in my remarks around the triple aim and Powering Affordable Care. Good progress. What we've done already is making a dent in the opportunity, and we see more opportunities in front of us. Awesome. Thanks, Steve. Sure. Our next question is from Jack Meehan with Nephron Research. Your line is open. Hey, Jack. Good morning. Hey, good morning. I wanted to dig in a little bit more on the base business recovery. Was it fairly linear since the end of March to the commentary you made around June? I was curious if you're seeing any sort of pent-up demand and whether you thought that might have helped the trajectory. Any commentary around tests per requisition, that would be helpful. We are seeing a nice step-by-step improvement in base business. I would say it's been a nice recovery over the sequence of the H1. You remember we entered the half with our base business being down somewhat around high single- digits and kind of improved throughout Q1, and that continued into Q2. There's different ways we look at it. One is the clinical cut, and we actually see good recovery in our general health business, our cardiometabolic business. I mentioned in my remarks, our advanced diagnostics business, which includes a portion of cancer and genetic and molecular testing, good recovery. We still see our prescription drug monitoring and toxicology business being somewhat a little laggard, but that actually is starting to recover, not back to '19 levels, but it's coming along. The geographic basis, we do see much of the country back to '19 levels. As we said before, the Northeast is stubborn. We see New England starting to move in the right direction, Massachusetts and Connecticut, and New York City being the slowest recoverer, if you will. That's all boroughs, not just Manhattan. We're hopeful, as the opening continues, and as people get back into life within Manhattan and New York, that that will recover as well. To answer your question you started with, it has been more of a nice, steady progression clinically and also geographically. Mark, anything you'd like to add to that? Yeah, the only thing I'll add, Jack, is it is somewhat uneven, even though it has been steady nationally, and we do have two regions that are actually back to the volume growth we had in those first two months of 2020 before the pandemic. That's why we're feeling good not just about utilization recovery, but we're feeling good about getting back and working on the things with our key partners such as the PLN, other relationships that we've called out with some of the payers around value-based contracting. Really continuing to have our strong relationships with hospital systems, and we've talked about how much progress we've made around PLS. The good news is that things are open for business. We're able to go back into the offices, not completely, but much more than we were over the last 12+ months, and therefore, we're getting back to what we were doing before the pandemic started. Great. Was there anything related to pent-up demand that you saw? It's hard to tease out. What we talk about in our calculation of revenue per req is that we are seeing more tests per requisition. One could assume that some of that is a tag on a test because the patient shows back up in the office, and they haven't been there for 16 months. Hard to tell. You got to believe there's a little bit of that. It's in my prepared remarks as people return and catch up on pre-pandemic levels. We've also, to Mark's point, we're better than 2019, but remember, when we started 2020, we had some nice growth in the first couple of months, and so we've got more opportunities in front of us to continue the recovery and also build on top of what we see to gain that share we're planning for. Thank you. Thank you. Our next question is from Ricky Goldwasser with Morgan Stanley. Your line is now open. Sure. Yeah, thank you, and hey, good morning. My question, let me just, a quick follow-up and then sort of my main question. Just on the follow-up, you mentioned that you renewed the Aetna contract. Just wanted to understand how should we think when we model, how should we think about the pricing impact for the next 12 months? When we think about the value-based programs that you're now signing with payers, I think, Steve, you mentioned that it's actually growing faster than the rest of your book. Can you maybe give us some color on where are you seeing these value-based relationships, and mostly focused on commercial versus Medicare? Also, what's the framework? Are you sharing upside from the savings or are these more sort of fixed price contracts with some downside protection? Yeah. Mark, do you want to talk about what's in our-? Yeah. First off, the Aetna contract was extended. It will be invisible to you because there was no significant changing in pricing. In that contract, we continue to build stronger elements of what we call value-based programs, and I'll touch on that in a minute, Ricky. It's more focused on commercial, although obviously, Medicare Advantage as well. There's certain things you can do in the purely commercial that are harder to do in Medicare Advantage because some of the rules around that program. The framing is not us sharing our upside with them, but really they're sharing their upside with us. We win together. As we show greater value for their membership by getting more work to a better value lab like ourselves relative to out-of-network providers, or in some cases, other high-cost providers in-network. Obviously, their members or for their fully insured books, they themselves save money, and then we earn upside to a base level contract. That base level contract is not at a discount. It's really been kind of the historical level. We didn't have to give up in order to gain, but it was really more about the case that we've been making for years that's getting more and more buy-in from the payers that we're part of the solution. Working with us and not focusing on our price, but focusing on what we can do to drive better quality, better service, and better value for their members is good for everybody in that ecosystem. That's really the elements we've shared, steerage where they give us lists of accounts where a lot of lab work's going to out-of-network or higher cost providers. We go in with their support to call those physicians, educate for the people who have high deductible plans, co-insurance, et cetera. The patients are bearing some of that higher cost, which obviously has more influence than if they're fully covered by the payer in terms of the doctor. Then, we talked about M&A incentives where, in the past, when we would buy hospital outreach, as soon as we start billing it would fall to our price, obviously, and huge windfall for the payers. That it's good for them if we buy outreach, and therefore, instead of taking that hit immediately, maybe a step down in those rates, and we share some of those savings over those first couple of years. That's an element we've gotten into just about every one of the major payer contracts. It's things like that, Ricky, where we've made the case, and they're finally buying in that when we're successful and they're successful, together we can do more of that, and therefore, there's upside that in the past we didn't see that now we have a chance to earn when we prove that we've actually saved them money and driven improvement for their members. Just one follow-up on the upside payment to base levels. Should we think about that now that sort of at the end of the year, as you calculate the upside, we could see upside to numbers from payments at the end of the year? Is this something that would just kind of flow through on a quarterly basis? Well, I'll address the two examples I gave. In the steerage one, where we're moving work, it's really more quarterly, so it's a constant look at that. We have a formula for doing that. We're reimbursed more regularly. It's not a once a year catch up, that's much better for us for a lot of reasons, not just for more regular rev rec, but also for accounting purposes and so on. For both of us, that's a better approach. On the M&A, obviously, that would be somewhat invisible to you because when we do a deal, what it just means is that we get paid more than we would've historically, a little sum of a premium over what our negotiated rates would be for the volume that clearly has moved from that hospital system to us, the hospital outreach business. You're not going to really see that. Again, that's going to be a regular monthly, quarterly thing, not a catch up. Thank you. Thank you. Our next question now is from Ralph Giacobbe with Citi. Sir, your line is open. Hey, Ralph. Hey, good morning. Thanks. You mentioned PAMA in the prepared remarks, and looks like the cuts are likely to restart next year. Maybe just remind us the headwind. At your Analyst Day, you suggested an EPS range for 2022 and kind of pointed to the higher end, I think closer to an $8 number. Wanted to confirm that that assumed PAMA was coming back. Your comments on incremental investments that you talked about in the back half. Wondering, does that change anything related to that $8 number that we should be thinking about for 2022? Thanks. Let me start with PAMA. Remember, as I said in our remarks, we're fighting hard to get a better answer on PAMA. Hopefully that was clear in the remarks. We do believe that the MedPAC report does give us some data that suggests that we were right with saying that if you collected all the data and it was representative, that there'd be a 10%-15% reduction in the rates versus what we see now. We obviously have some work to work with a reduction in the price cost, not a reduction in the Clinical Laboratory Fee Schedule, make that clear. Okay? An increase of 10%-15%, right? In that regard, we have some work to do to get that through Congress because it's going to take a legislative fix. We're going to keep on pushing at that. With all that said, what we keep on saying is we're assuming worst case in our outlook that in fact in 2022, we'll see another cut. Okay. That's clear. Mark, you want to touch a little bit. Yeah the range and where we pointed to at Investor Day? Sure. What I did was I laid out the CAGRs from 2018 and said, obviously the pandemic has clouded issues with the base business, and at some point, we all hope COVID-19 is a much smaller piece of our revenues. The base business CAGR that we laid out would've suggested $740-$8. What we were saying is based on a base business being fully recovered by the end of the year and everything else that we were confident we should be in that range. Yes, we felt because of everything we knew at that point, that it should be in the upper end of that $740-$8. PAMA was absolutely included in that. As I shared, that at this point, if nothing changes, should be the last year of the sizable reductions that we've had since PAMA was implemented. Based on the current fee schedule and the current methodology, there can be a 15% cut on any CPT code, next year. We estimate our overall book of business is going to be somewhere between 10% to 15%, so higher than 10%, but less than 15%, based on what we can see. However, because that traditional Medicare book of business is much smaller than it was when we started, the dollar impact is actually going to be similar to what it was in the first couple of years of PAMA. Still a large number, somewhere around 1% of our overall revenues. Then once you get beyond that, even if PAMA isn't fixed, based on our understanding of commercial pricing, and we don't know everything, but certainly we know our prices, and we've shared that we've really stabilized commercial pricing combined with some competitive intelligence of a marketplace. We feel that while there might be some cuts with a recalculation, they're going to be relatively small compared to what we incurred for several years. We continue to feel good about the investments we're allowed to make with the additional resources. We talked about at Investor Day, about $75 million worth of investments. We talked today that continues in the back half of the year. That's dialed into the outlook or the guidance we provided, and it's entirely consistent with what we teed up at Investor Day around our growth platforms. We're investing in those health plans relationships, those hospital opportunities we see. We see opportunities to accelerate advanced diagnostics, and we feel good about the recovery we've seen there. Also the opportunity we see around the consumer and consumer-initiated testing. Our performance is allowing us to make these investments, to accelerate growth, to get to that outlook that we provided to you for 2022 and beyond, which is 4%-5% top-line growth and high single-digit earnings growth. We feel good about our ability to make those investments, and we are making them. We're hiring the people, we're spending the money, and it's included in the guidance in the back half. In the revenue as well. Some of these are several years in the coming in terms of the return, and some of them you get much more immediate. On consumer, we talked about a potential quarter-billion dollar business by 2025. That's coming from $small millions before the pandemic, you can imagine that with some of the things we're doing, we're going to be building significant incremental revenue to get to that $250 million over the next two years. It's not going to all come in the last year or something like that. We're getting revenue growth upside as well for those investments, not just incremental expense. Very helpful. Thank you. Thanks. Thank you. Our next question is from Pito Chickering with Deutsche Bank. Your line is now open. Hi, Pito. Hey, good morning, guys. Two quick follow-up questions here. On the 2021 guidance, you quantified the COVID-19 assumptions and the base business assumptions for the low end of guidance. Can you quantify the same levels for the mid-range and the high range of guidance? Just to clarify on that last question, the investments that you're making this year, do those continue into 2022 and beyond? Are they one-time in nature, or do you believe you'll have to add additional investments next year? Thanks so much. I didn't intend to quantify with specificity the mid and high end because it's a multi-variable equation. What I wanted to do was make clear the low end, for a lot of reasons you can imagine. We wanted to make people understand how we might get to that low end. It's not a base business recovery that stalls or goes backwards. It's really a much slower than what we've seen and that we would expect. We don't think there's a high probability for that, but one thing we've learned in this pandemic is all these things are somewhat volatile and hard to predict. If you saw a lot of retrenchment across the country because of the Delta variant or other things that might cause geographies to shut down. We want to make sure that we provide you guidance that are 95%+ deliverable or even more. Once you get beyond the floor, there's so many different moving parts that could go in opposite directions. It's hard to give you a point estimate. We wanted to make sure that people also understood that the COVID-19 average per day we're anticipating for the balance of the year significantly lower than we're getting right now. As you might imagine, we've been working on this outlook for a while. The recent news with, obviously Delta driving up the positivity rate cases, obviously our volume's increasing. One thing we've also learned is not to overreact to short- term. We're very transparent, so we give you those volumes every two weeks. We felt that if we can build a reasonably deliverable, highly deliverable outlook, make clear what those assumptions are, and especially around the COVID-19 volumes, you're going to see that every two weeks. You're going to know where we're going in terms of that outlook range that I laid out this morning. As far as the investments, some of the investments are temporal within 2021, but as you would expect, we're investing in long-term capabilities that will continue into 2022. Rest assured, the applied business case and the revenues associated would be there as well. Yes, we will have the outlook assumptions, we'll have some portion of these investments continue into 2022, and trust that those investments are good investments for us to do that. Back to Ralph's question again, I want to emphasize, those were built into the outlook that I provided in Investor Day. We've tried to make clear that we see these growth opportunities, the COVID revenue upside has given us an opportunity not just to deliver some record earnings over the last couple of quarters, but actually to invest and accelerate the long-term prospects for our base business. When I gave you that multi-year outlook, four years, and then when I framed 2022, those all fully contemplated these investments. Just on that one, is it fair to say that you are reiterating the number today of 2022? Yeah. Nothing's changed. Yeah. We would feel compelled if there was something over the last six months that would cause us to feel that that range was no longer appropriate. We would say something, absolutely. Right. Thanks so much. Our next question now is from Dan Leonard with Wells Fargo. Your line is now open. Hi, Dan. Hi, this is actually Tim Daley on for Dan. Thanks for the time. I just wanted to dig a bit more on Pito's question. I believe the back-to-school COVID opportunity was framed as upside, in relation to the guidance for the H2 of the year. First, I just wanted to clarify, is there any back-to-school testing baked into the COVID guidance or company-level ranges discussed? Secondly, given we are kind of weeks away from kids heading back to school, I'm sure there's been some discussions, but could you give us some insight into the internal or on-the-ground discussions happening, like are there broad-based general screening plans for back to school? Maybe a big one-off push at the start of the year, just any more additional color there would be really helpful. As Mark just laid out of the expectations around COVID testing, we did assume that the clinical testing would come down and the return to life testing would go up. A portion of that return to life testing has to do with back-to-school programs. What we highlighted is we've been working with the different partners with two programs that are funded with the funding for testing. One is the $600 million program for return to school programs, where we have partners to help us with that, and school systems throughout the U.S. could apply for that money and get the money to reimburse for whatever program come up. There's a larger program for about $10 billion. As you can understand, every school system throughout the U.S. is going to have its own plan. They're going to start ramping up soon, getting into the month of August and then September. I think there is going to be a fair amount of variance across the United States of who does what and when. I do believe that given what we see now with the Delta variant, I'm sure that'll have some bearing on the need for testing to make sure that we're safe when kids return back to school. Also return to office programs. We do expect that there will be more returning to the workplace, those people that have been working remotely. I think clearly there's going to be a heightened level of safety with that happening, and as I said in my earlier remarks, testing is vital for that. We've embedded that in our expectation as well. We assumed that clinical testing would come down. We believe that a lot of our capacity is not used for the hospital portion of COVID testing, as in the early days of COVID testing. Some of it, the recent increase that we've seen, has been related to some of the effects we see from the Delta variant so far in the last week or two. Hopefully, that provides some color of what's assumed in the guidance so far. Yeah, I just want to remind everybody how that surveillance testing works. It's very different than our clinical testing. If you think about the PCR tests today, where we're averaging over $90 per test, that's not economical for surveillance. What we have come up with, and others have as well, but our methodology is a heavily pooled approach. We pool a handful of samples today when we're testing in low positivity regions, for economic reasons. It's our responsibility if we have a positive to retest those individual samples. You don't want to pool too many because the math suggests that you're going to be retesting a lot of samples. When you go to surveillance, the assumption is that nobody has it, and so therefore, you're going to do a lot less retesting. Actually, in this case, we're not obligated to do it because they're not even identified. What happens is the collection's done, the entity, in this case, a school knows whose 10 samples, let's say, are in that specimen collection device. It's not shared with us. All we do is test it, and we say, "This group is negative," hopefully. In the case where it's positive, then they, the administrators, know which students need to be retested. That's a separate order, that's a separate payment, et cetera. The reason that's important is that in order to make this economic and because the economies of scale you get with this huge pooling, we have to do approximately 10 specimens to equate to a single one for our core PCR business. The volumes have to be tenfold to have the same dollar value to our top line. Yeah, there's absolutely some contracts we won. We've got some of that volume. To really move the needle, it'd have to be really broadly endorsed and embraced. While the funding's there, to this point we've seen some momentum, but not enough to be significant at this point and really move the needle to offset the decline in the clinical testing we've seen over the last several months. Good. That was extremely helpful. Thank you for the time. Yep. Thank you. Our next question now is from Derik de Bruin with Bank of America. Your line is open. Hey, Derik. Hi, good morning. Hey, two quick questions. Just a little bit more color on the recovery in the base business. Just are you seeing anything in particular in terms of oncology and esoteric versus routine testing? Just a little bit more color on that. You gave some geographical differences, but I'd love some mix differences. Another question that keeps coming up, in contrast to where you're guiding to, we just got off the Danaher call, and they're talking about they went from 10 million point of care tests in the Q1 to 14 million point of care tests in the Q2. One of the questions we continually get on the central labs is the impact longer- term on the business on point of care testing. Is this trend going to continue? Particularly given the number of players that are sort of entering this market from the point of care and at-home space. I'd love sort of your general thoughts on volume shifts for certain applications into the point of care market. Thank you. Let me start with the first one. What we said is our general health and our cardiometabolic testing, which is sometimes referred to by us as our general diagnostics, and I would say the industry sometimes says routine, has recovered nicely. That's throughout the U.S., a nice recovery there. Second, as you asked about oncology, we've seen good recovery in our AP business and our pathology business. As I said in my remarks, our advanced diagnostics business is our definition of a sometimes called esoteric, has actually recovered nicely, and we are making investments there, and we think we're tracking well against our investment accelerated growth plan. We feel good about that. The second question, which has to do with point of care, and when I say point of care, it is the PCR point of care and then also the antigen test. We do believe that some portion of the testing demand, if you will, that's taking place with these new approaches. We do believe there is a place, specifically with return to work programs for antigen testing in some of the point of care applications. Equally, what you see with our volumes, what's somewhat stabilized, as you saw in the second quarter when we report our numbers and then the modest increase you just saw, is PCR continues to be the gold standard. In many cases, they do reflex back to the PCR testing when there is a positive for sure and a questionable negative to make sure it's not a false negative. We do believe we sit in a kind of good place in the marketplace, and we do believe there is a place for the point of care devices, including antigen as well as PCR going forward. Thank you. Thank you. Our next question from Tycho Peterson with J.P. Morgan. Ma'am, your line is open. Hi, Tycho. Good morning. This is Julia for Tycho today. Thanks for the time here. A lot of my questions have been answered already. Just following up on an earlier question about your payer programs. It's great to see that you're having success with United and Anthem and recently renewed contract with Aetna as well. You previously said the volumes through these relationships are growing faster than the rest of the book. Just curious if you can provide some additional color on how much faster these volumes are growing and what kind of investments you are making to capitalize on these opportunities. Thank you. Mark, you want to take that? Yeah. As you might imagine, there's not an answer to how much faster because they're not all equal, and also each of them have more concentration in certain geographies. As we shared, the Northeast and specifically New York City is growing at a different rate. You'd assume that payers that have more membership there, we might have a different answer than the payers that are in Texas or Florida, let's say, or even California. We've looked at, because it's one of our key, we have a process we call the Hoshins, and we have these breakthrough objectives. One of them is growing our share in these health plans, and we look at it regularly, and we share information back and forth to understand kind of our share of wallet with those. We have a chance to see as they themselves also are recovering in terms of the volume that's going through their membership, whether we seem to be growing at the same pace in that recovery. That's the basis for us saying that we're growing faster. In this business, a couple of hundred basis points is a big difference. It's not going to be 10% or double digit kind of differential. A couple of hundred basis points of share growth is meaningful. That's clearly what we saw before the pandemic started, as you look back to our 2019 performance, what we shared in the first two months of 2020. Once the business utilization becomes fully recovered, we're confident that we'll get back to that, not just historical growth with market, but finally getting to growth above that by share gains. That's what we laid out in our multi-year outlook at Investor Day. Yeah. As far as investments, what Mark said is every one of these plans have a detailed plan of what we're going to do to gain that share. Some of it happens nationally, some of it happens locally, and some of it happens by line of business. For instance, we do have some programs that go with the payer to their national accounts and their plan sponsors, the important plan sponsors. A lot of that is local. You ask the question, where are we making the investments? We'll put those investment dollars where we think we need extra capacity to drive those programs by payer. There's a lot of variation around where those opportunities are by payer. That detail is what we're speaking to when we talk about investments in the health plans. Yeah. I'll just give you one other example, which we've shared in the past, but it's really expanded broadly. Take toxicology or prescription drug monitoring. As that was starting to grow and there was some concern on the payer's part around the behavior of some of the providers, they put in some really onerous rules in place, such as pre-authorization and so on. Of course, that impacts everybody, including the people like ourselves, who are very responsible around our panels and how we conduct ourselves. We went to some of the payers, talked to them about that and said, "Hey, not only is that not right for us, it's not right for the patients because it can make it more difficult for them to get testing they need. Also, if you got rid of that, you would actually steer more work to the good labs. When I say it's not just us. Certainly our Chief Competitor and some others are just like us. We're very responsible. We do good work in toxicology prescription drug monitoring. They've put in rules in place where we're actually exempted from pre-auth. That's another example where it's really not an investment, it's an investment of time to work with them, to get them to understand and get them to change some of these rules and behaviors. Again, it's an example where we're benefiting, but so are the patients and a lot of other people because it's a more thoughtful approach to rules around lab testing. Very helpful. Thank you. Thank you. Our last question now is from Matt Larew with William Blair. Your line is now open. Hey, Matt. Hi, good morning. The Clifton Lab went live in January, and Steve, I think you said that the consolidation from the other two labs will wrap up here next month. In the past, you've talked about sort of doubling throughput, 30% more capacity, I think 15% increase in productivity. Just curious if there are any data points to share so far on how the consolidation is going and how we should think about the impact to margins as volume is consolidated into Clifton. Thanks. We're pleased with what we're able to do. It's pretty remarkable that we built this facility in the middle of a pandemic. For all intents and purposes, we're on track, and it's up and running. We bring in this facility to do that consolidation, we have to continue our program around harmonization of processes and harmonization around systems to get them all on the same platform within the new facility. We're on the final strokes of that implementation. We feel good about it. In that facility, we have implemented a lot of the new systems. We've put in place our new immunoassay platform from Siemens we've talked about, which is a big investment for us. We are getting some pretty good gains from that and more to come. Secondly, we put in place new front-end automation and through the lab automation with our partner, Beckman Coulter, and actually Siemens is on the systems integration with that as well. We are pleased with the progress made so far, and we're looking forward to more productivity from that going forward as we continue to burn in systems and work out some of the early details. Those improvements are already part of the 3% productivity gains that we have in our Invigorate program. They're already included in our outlook that we provided at Investor Day. All right. Thanks. Thank you, everyone, for this call, and we appreciate your continued support. You have a great day. Thank you for participating in the Quest Diagnostics Q2 2021 conference call. A transcript of prepared remarks on this call will be posted later today on Quest Diagnostics' website at www.questdiagnostics.com. A replay of the call may be accessed online at www.questdiagnostics.com/investor, or by phone at 866-360-3307 for domestic callers, or 203-369-0162 for international callers. Telephone replays will be available from approximately 10:30 A.M. Eastern Time on July 22nd, 2021, until midnight Eastern Time August 5th, 2021. Goodbye.