Welcome to the Quest Diagnostics fourth quarter and full year 2021 conference call. At the request of this company, the call is being recorded. The entire contents of the call, including the presentation and the question and answer session that will follow, are copyrighted property of Quest Diagnostics with all rights reserved. Any redistribution, retransmission, or rebroadcast of this call in any form without written consent of Quest Diagnostics is strictly prohibited. Now I'd like to introduce Shawn Bevec, Vice President of Investor Relations for Quest Diagnostics. Go ahead, please. Thank you and good morning. I'm joined by Steve Rusckowski, our Chairman, Chief Executive Officer, and President, Mark Guinan, our Chief Financial Officer, and Jim Davis, our Executive Vice President, General Diagnostics and Chief Executive Officer elect. During this call, we may make forward-looking statements and will 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 client payers reimbursement rates for COVID-19 molecular tests, the pandemic's impact on the U.S. healthcare system and 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 is Steve Rusckowski. Thanks, Shawn, and thanks, everyone, for joining us today. You know, over the past two years, our 50,000 Quest employees have risen to the challenge of COVID-19, innovating, persevering, and remaining committed to the patients and customers we serve. While doing so, they also grew our base business by more than 19% in 2021, achieving record levels. I'm extremely proud of what we have accomplished as a team. We have a lot of news to cover this morning and I want to get into that so we can have your questions. Let's get started. First I'll start by sharing some color on the leadership transition we've announced this morning. Then we'll review our performance for the fourth quarter and the full year of 2021. Finally, Mark will provide more detail on our financial results and talk about our financial outlook for 2022. As you have seen in our announcement this morning, we've begun implementing a gradual leadership succession plan under which Jim Davis, Executive Vice President of General Diagnostics, will succeed me to become Chief Executive Officer on November 1, 2022. At that time, I will continue to serve on the Quest Board of Directors as Executive Chairman. Quest Diagnostics is a great company that is well-positioned to continue to deliver shareholder value. As I approach the decade in the role, the board and I determined that now is the right time to begin to turn over the helm to a new leader. Jim Davis is extremely well qualified to be CEO. Having managed a large part of this company's role as Executive Vice President, he has deep knowledge of Quest, the healthcare industry, and the corporate world gained through more than 35 years of business experience. Jim is widely respected and will be a strong CEO. You know, when I took this role nearly 10 years ago, Quest was not growing nor realizing its potential. We launched a new strategy, Our New Quest, to drive transformational change. To drive that change, we built a new leadership team, and Jim has been a key member of that team. We built a business strategy to accelerate growth and drive operational excellence. To drive growth, we focused on improving relationships with health plans and hospital health systems and expanding fast-growing businesses in advanced diagnostics and consumer testing. In addition, we've added about 2% revenue growth on average through accretive strategically aligned acquisitions over the last several years. We have driven operational excellence and our Invigorate program has consistently improved quality and customer experience while generating 3% productivity each year. We've made more inclusive by increasing the diversity on our board and among our management ranks. Finally, we established Quest for Health Equity in 2020, over $100 million committed to reduce healthcare disparities among underserved in the United States, particularly in communities of color. I am very proud of what we have accomplished together. If you consider the opportunities in front of us, in many ways, we're just getting started. We have a strong team, and Jim has been a key leader in our transformation. He runs our General Diagnostics business, which accounts for more than 80% of revenues and three-quarters of our employees. He manages operations, including sales and marketing, patient services, logistics, laboratories, billing, and customer services. He also oversees the Drive Operational Excellence strategy, which includes our Invigorate program. He has provided enterprise oversight for our pandemic response. If that wasn't enough, he's also led the development of Quest ESG strategy. Jim, congratulations. I look forward to working very closely with you through this transition. Hey, thanks, Steve. I really look forward to working closely with you over the next eight months and ensuring a very successful transition. You know, it's a tremendous honor to have the opportunity to succeed you in Quest and lead Quest into the next stage of our growth. We have a very powerful vision at Quest of empowering better health and diagnostic insights. Our business strategy is straightforward and well understood, and our company has never been more central to patients and to the healthcare system as we've seen during this pandemic. I really look forward to working with the management team and all 50,000 employees to build on the strong foundation that Quest has put in place. Quest's future is really bright, and we're extremely well-positioned to continue to create value for our shareholders and all that we serve. Thanks, Jim. Now, at the same time, Mark is planning to retire this year. Mark has been in this role for more than eight years and helped navigate us to the strong position we're in today. We have begun a process in which I will be working closely with Jim to identify Quest's new CFO, and Mark will participate in the selection process and will remain in the role through the transition. Mark, I wanna thank you for your many contributions, your partnership, and your friendship. You've been a key member of our leadership team, and we have transformed Quest and accelerated its growth. Thanks, Steve. I appreciate the kind words. I just wanna take a minute to say that I'm proud to be part of an important company that makes a positive contribution to the country, and I've enjoyed being part of it. Now it's time for me to step back and retire. I'm looking forward to participating in the process to identify my successor who can support Steve and Jim in Quest's next phase of growth. Now turning to our results. We closed out 2021 with another record year of revenue, earnings, and cash from operations. Our base business recovered throughout the year, and we experienced strong demand for COVID-19 testing services. For the full year of 2021, total revenues grew by more than 14% to $10.8 billion. Earnings per share increased by nearly 49% on a reported basis to $58.55 and more than 27% on an adjusted basis to $14.24. Cash provided by operations increased by more than 11% to $2.2 billion. For the fourth quarter, total revenues were $2.7 billion, a decrease of roughly 9% versus 2020, when COVID-19 volumes were surging. Earnings per share were $3.12 on a reported basis and $3.33 on an adjusted basis, both down approximately 26% versus the prior year. I'd like to share some perspective on the role of COVID-19 testing going forward. A lot of progress has been made in the battle against COVID-19, but we believe it isn't going away anytime soon. Our molecular volumes began this year strong, with volumes peaking in mid-January. Testing will continue to play an important part of managing COVID-19, and we believe that molecular testing remains the gold standard. We continued to perform well throughout the surge, maintaining average turnaround times of two days or less for our COVID molecular testing. We will continue to maintain appropriate testing capacities and staffing levels to be prepared for any additional surges throughout this year if they emerge. We also continue to believe there will be a bigger role for serology testing in how we measure COVID-19 protection going forward. Ultimately, we expect COVID-19 testing to eventually be more flu-like and become a permanent part of our portfolio going forward. Now turning to our base business. We continue to make progress executing our two-point strategy to accelerate growth and drive operational excellence. Well, we delivered 2% revenue growth on our base business from acquisitions again last year. In the fourth quarter, we acquired the assets of Labtech Diagnostics, a regional independent laboratory serving physicians and patients, primarily in South and North Carolina, Georgia and Florida. This is the first full-service laboratory owned by Quest in South Carolina. We also recently announced our acquisition of Pack Health, a patient-engagement company that helps individuals adopt healthier behaviors to improve outcomes. This acquisition will bolster our extended care capabilities. You know, since 2012, we have completed more than 40 acquisitions, including outreach laboratories, regional independent laboratories, and capability-enhancing deals. Over the last four years, we've achieved our target of greater than the average of 2% revenue growth on our base business each year from acquisitions. Finally, our M&A funnel remains strong. In 2021, we took full advantage of our strong health plan access, which is approximately 90% of all commercial insured lives in this country. We also made good progress working together with health plans to help companies and their employees save money by reducing denials and out-of-network leakage. Health plans also recognize the value of working with us, and we have grown our health plan revenues faster than our overall revenues to the best level we've ever seen. Hospital health system revenues have grown more than 20% compared to 2019 levels, excluding COVID-19 testing, driven largely by the strength of our professional laboratory and services contract. Our performance in 2021 benefited from our two largest PLS contracts to date, Hackensack Meridian Health and Memorial Hermann. Altogether, our PLS business without COVID-19 exceeded a record $500 million in annual revenue last year. Hospitals have continuously faced pressure throughout the pandemic. Post-pandemic, we believe the same will be true. We believe there will be a continued consolidation and ongoing challenges that afford Quest an opportunity to implement our flexible solutions to help hospitals become more effective and productive. Advanced diagnostics is critical to the future of health care. We're building strong momentum in our key growth drivers, which include consumer and hereditary genetics, oncology, and pharma services. In 2021, these test categories accounted for $several hundred million of advanced diagnostics portfolio, and they're growing more than 25% versus 2020 and nearly 33% versus 2019. We are investing aggressively in areas with potential for future differentiation to grow our advanced diagnostics value proposition, including automated tests, next-gen sequencing, bioinformatics, the sales force, and customer service. We're leveraging our scale and expertise to give patients and providers greater access to important innovations such as liquid biopsy and digital pathology. Advanced diagnostics is one of the faster-growing areas of our portfolio. Our strategy investments in this area will enable us to achieve high single-digit revenue growth going forward. Now, we're equally excited about the opportunities we see in our direct-to-consumer testing business. Revenues for Quest Direct services nearly doubled to more than $70 million in 2021, driven by both the base business growing and COVID-19 testing. We expect the non-COVID consumer diagnostic market will experience double-digit growth over the next several years, and we're on track to build a $250 million direct-to-consumer business by 2025. We're ramping up our investments in the business, launching a new and improved digital experience later this year, and we're also investing in enhancements to the in-person customer experience at our patient service centers. We're off to a good start in 2022. We're building on our long-term relationships with Walmart by recently launching a consumer-initiated laboratory testing on walmart.com through our solution powered by Quest Direct. The MyQuest platform now has nearly 23 million users, up more than three million in the past quarter. We're very excited about our longer-term growth opportunities in advanced diagnostics and direct-to-consumer testing and our increasing investments we made in 2021 to strengthen our business and accelerate growth beyond the pandemic. These investments were made possible with the record cash and earnings we generated over the past two years. Now the second part of our two-point strategy is to drive operational excellence. We remain laser-focused on improving both operation and quality and efficiency, which go hand in hand. During 2021, the Invigorate program exceeded our goal of 3% productivity improvement. We made good progress last year in procurement supply savings, as well as reducing health plan denials and improving patient collections at the time of service. While we faced modest inflationary wage pressure in 2021, on the supply cost side, we have more than offset any increases with cost savings from our suppliers. Historically, our big rate productivity savings have been net of any inflationary increases. Beyond that, we continue to drive additional productivity improvements with platform consolidation and greater use of automation and artificial intelligence. Now turning to our workforce. Quest employees are highly engaged based on results of our quality surveys. In a challenging labor market, we are focused and are still seeing improvement in engagement and retention. Our team has done a lot to create an inspiring workplace, and we continue to do everything we can to attract, recruit, and retain talent. We're entering 2022 in a strong position within the lab industry and more broadly, throughout healthcare. Our base business is poised to build off the record revenues we've achieved last year, and we're investing to accelerate growth. We expect to see continued demand for COVID-19 testing services, albeit at lower levels in the last two years. The delay of the 2022 payment cuts announced last year was a good outcome for our industry and Medicaid beneficiaries. However, we will continue to work hard in 2022 with our trade association and members of Congress with the goal of arriving at a permanent fix to payment. We remain committed to our capital deployment strategy of returning the majority of our free cash flow to our shareholders. This morning, we raised our dividend for the 11 th time since 2011. We expect to have more than $1 billion in cash available this year for M&A and share repurchases. Putting it all together, our 2022 guidance reflects strong momentum and investment in our base business, balanced with the inevitable but expected decline in COVID-19 testing revenues. Before turning it over to Mark, I'd like to recognize and thank once again all of our employees who really have been on the front lines of the pandemic and continue to serve the healthcare needs of patients who depend on Quest every day. Now, Mark will provide more detail on our performance and our 2022 guidance. Mark. Thanks, Steve. In the fourth quarter, consolidated revenues were $2.74 billion, down 8.6% versus the prior year. Revenues for Diagnostic Information Services declined 8.5% compared to the prior year. The decline reflected low revenue from COVID-19 testing services versus the fourth quarter of 2020, partially offset by continued growth in our base testing revenue. Compared to 2019, our base DIS revenue grew approximately 6% in the fourth quarter and was up more than 1% excluding acquisitions. Volume, measured by the number of requisitions, increased 1.3% versus the prior year, with acquisitions contributing 1.1%. Compared to our fourth-quarter 2019 baseline, total base testing volumes increased more than 10%. Excluding acquisitions, total base testing volumes grew approximately 5% versus 2019 and benefited from new POS contracts that have ramped over the last year. The progress we made in our base business throughout 2021 continued in the fourth quarter, and base testing volumes remained consistent with our prior outlook. As many of you know, COVID-19 testing volumes moderated early in the fourth quarter following the peak of the Delta wave in September, but then surged again in early December as the Omicron variant spread across the U.S. Together with our JV partners in Sonora Quest, we resulted approximately 7.9 million molecular tests. Quest alone resulted roughly 7.3 million molecular tests and nearly 730,000 serology tests in the fourth quarter. In January, our COVID-19 molecular volumes averaged approximately 120,000 tests per day, and over 139,000 per day, including Sonora Quest, with volumes peaking in the middle of the month. Revenue per acquisition declined 9.8% versus the prior year, driven primarily by lower COVID-19 molecular volume. In the fourth quarter, increases in our base revenue per acquisition were more than offset by the impact of recent POS wins. Modest unit price headwinds remain consistent with our expectations. Reported operating income in the fourth quarter was $536 million, or 19.5% of revenues, compared to $795 million, or 26.5% of revenues last year. On an adjusted basis, operating income in Q4 was $579 million, or 21.1% of revenues, compared to $860 million or 28.6% of revenues last year. As you may recall, the updated 2021 guidance we shared in October contemplated a lower adjusted operating margin both year-over-year and versus Q3. The year-over-year decline was primarily driven by lower COVID-19 testing revenue and higher COVID-19 testing costs, headcount and wage increases, and ramping strategic growth investments. It's important to note that over time, a growing portion of our COVID-19 molecular testing volumes have come from non-traditional channels, which carry additional expenses and logistics costs. Also, spiking COVID-19 positivity rates across the country in December eliminated our pooling capability, which further increased COVID-19 testing costs late in the quarter. In addition, we also experienced higher than anticipated employee health care costs in the fourth quarter, primarily related to COVID-19. Reported EPS was $3.12 in the quarter compared to $4.21 a year ago. Adjusted EPS was $3.33 compared to $4.48 last year. Cash provided by operations was $2.23 billion in 2021 versus $2.01 billion in the prior year. We completed our $1.5 billion ASR in November and repurchased an additional $310 million in stock in the fourth quarter. This brings total share repurchases to more than $2.2 billion in 2021, and we ended the year with $872 million on the balance sheet. Before turning to guidance, I'd like to comment on recent trends we've seen in our labor costs. As Steve noted, we've been managing through a challenging labor environment. While wage inflation, including our annual merit increase, is expected to be between 3%-4% this year, the increase in our total salaries, wages, and benefits is expected to be below 3% in 2022, given the reset of our annual performance compensation and lower expected overtime. As a reminder, all of our employees are eligible for annual performance comp. Now, turning to guidance. We estimate full year 2022 results as follows. Revenue is expected to be between $9 billion-$9.5 billion, a decline of approximately 12%-17% versus the prior year. Base business revenues are expected to be between $8.3 billion and $8.5 billion, an increase of approximately 3.5%-6%. COVID-19 testing revenues are expected to be between $700 million and $1 billion, a decline of approximately 64%-75%. Reported EPS expected to be in a range of $7.63 and $8.33, and adjusted EPS to be in a range of $8.65-$9.35. Cash provided by operations is expected to be at least $1.6 billion, and capital expenditures are expected to be approximately $400 million. Before concluding, I'll touch on some assumptions embedded in our 2022 guidance. As Steve said, we're entering 2022 in a strong position. Our guidance assumes COVID-19 molecular volumes to average between 65,000-80,000 tests per day in Q1, representing a decline from January levels, and approximately 20,000-30,000 tests per day for the full year. For COVID-19 serology volumes, the guidance assumes approximately 3,000 tests per day for the full year. While our guidance does not currently anticipate another COVID wave, we'll remain ready from an operational standpoint to handle any future surges. Last month, the public health emergency was again extended another 90 days from April. We assume average reimbursement for COVID-19 molecular testing to hold relatively steady through this period. While the public health emergency could continue to get renewed beyond April, additional extensions are not captured in our guidance. The earnings we've generated from COVID-19 testing have afforded us an opportunity to continue to increase investment in our business. As Steve noted earlier, we continue to ramp investment in our growth pillars, particularly the advanced diagnostics and direct-to-consumer testing opportunities. We are planning to invest approximately $160 million in our growth initiatives this year, which represents an additional $90 million in investments in 2022 versus 2021. We also continue to incur higher costs to manage our business through the pandemic, including expenses to comply with CDC guidelines, address ongoing supply chain challenges, and maintain adequate staffing levels. We currently forecast these expenses to be approximately $50 million in 2022. As a reminder, we originally expected PAMA cuts of approximately $80 million in 2022. These cuts were delayed one year until 2023. Finally, we ended 2021 with approximately 124 million diluted shares outstanding. Our guidance assumes no change in our share count in 2022 and only enough share repurchases to offset our employee equity programs and to meet our commitment of the majority of our free cash flow to our shareholders. I will now turn it back to Steve. Thanks, Mark. Well, to summarize, we had another record year providing critical COVID-19 testing for our country and delivered record revenues, earnings, and cash from operations. We also grew our base business to a record level of 19% versus the prior year. Quest is well positioned in 2022 to deliver on its commitments. I'm proud of the incredible accomplishments of our 50,000 Quest employees throughout the pandemic. Finally, our team is strong, the business has good momentum, and Quest's future is bright as we begin a gradual transition to new leadership. Thank you. We'll be happy to take your questions. Thank you. We will now open it up to questions. At the request of the company, we ask that you please limit yourself to one question. If you have additional questions, we ask that you please fall back into the queue. To be placed into the queue, please press star one on your phone. To withdraw, you may press star two. Again, to ask a question, please press star one. The first question is coming from Jack Meehan, Nephron Research. Your line is open. Hey, Jack. Morning, Jack. Hey, good morning. First, I know this isn't the end, but congrats, Steve and Mark, on the retirement. Jim, congrats on earning the big seat. Agreed that this is very well deserved for you. Thank you, Jack. Thanks, Jack. Thanks, Jack. First question, there's been a lot of anxiety around pressures in the lab industry, which I personally find very interesting because historically that's actually been the bull case for Quest. It would just be great to get your thoughts on what you're hearing from hospitals around outsourcing. Have you picked up any new contracts and potential for share gain versus some of these regional and independent labs? Yeah. Thanks, Jack, for the question. You know, there is a lot more pressure in our industry and specifically hitting hurting hospitals. We are seeing, you know, continued interest in our working with hospital systems and helping them become more efficient and productive with our professional lab services business. That continues to be a big opportunity. You saw in our prepared remarks that grew nicely over the last couple of years. We have a half a billion-dollar business, and therefore, as that moves, it moves our enterprise a significant level. That's number one. Number two is, you know, we are very strong, and we continue to drive operational excellence. As you all know, this is not new. It's institutionalized in Quest. We believe we have the cadence and the capabilities to continue to offset any inflationary pressure we have, and we've done that. We did it last year, and we'll continue to do that going forward. As I said in my introductory remarks, you know, already included in Invigorate when we talk about inflationary pressures on our cost of sales. You know, when Invigorate savings, it's a net number, so any increase is offset by the savings, and that's always been positive for us. We're getting more savings than cost increases. Despite, you know, some pressures that we see because of the current times, we're offsetting that. Going forward, we do see that, you know, smaller laboratories will have a tougher time, you know, keeping up with some of these pressures. Therefore, we do have an advantage. We saw, you know, the acquisition we just did with Labtech Diagnostics in South Carolina. We are achieving that 2% growth from acquisitions. Therefore, we believe our strategy has positioned us nicely going forward to take advantage of, you know, the changes in front of us, given this different time than we've ever seen. Mark, anything you'd like to add to that? Yeah, I think the other thing that's evolving, Jack, that you didn't mention, but I'm sure it's on your radar, is moves towards transparency on pricing, whether it's surprise billing. Now, certainly it's complicated, so even for us it's not simple. It depends if you've got commercial insurance, it depends on who your carrier is and so on. So it's not simple to tell people exactly what their cost is. However, it's absolutely an advantage for the national labs and specifically for Quest. So, we're encouraged by some of this. You know, it's kind of one of those secrets that a lot of people aren't aware how much better our value is compared to others. You know, we really see that together with some of the other things you mentioned as another reason that we're gonna continue to pick up share and really return to those growth rates we were having before the pandemic started, you know, with greater access and then all the tools and value that we bring well beyond our price, including our, you know, real-time estimation tools, including our MyQuest app and all the other things that, you know, really enhance the patient experience. Great. As a follow-up, on the disclosures around the fourth quarter detection testing, so 7.9 million total, 7.3 resulted by Quest, there's 600,000 through the referral network. Can you talk about just the profitability on the tests that go through the referral network versus those resulted by Quest? 'Cause I think people are just trying to figure out the relative margin upside versus revenue and wondering if maybe that was a factor we weren't considering. Yeah. To be clear, it's not through a referral network. You know, we you know have a JV with Sonora Quest. You know, we wanted to make sure that people were aware if they were doing some math around rev per req on the testing volumes that, you know, we don't actually record that revenue because we have a minority ownership stake. We get a proportional share of the earnings from Sonora Quest, as we do with our other minority holdings, as we do with our majority holdings through equity earnings. We just wanted to provide that transparency. You know, in terms of the you know pricing and so on and so forth, I won't, you know, comment specifically on Sonora Quest, but it's not dissimilar. It's not a, you know, totally different profit structure than the things that we do ourselves. Yeah. Jack, during the surge, less than 5% of our total volume gets sent out to a referral lab. At this point in time, it's back down to zero. It's only during the surges that we have to rely on these external partner labs to help us. Yeah. What I did refer to, Jack, and maybe that's what you were asking about, was nontraditional channels. That's not where we're sending the work, it's actually how we're getting the specimens. You know, a lot of the work, especially early, was through our traditional channels. Our hospital partners, where we were going anyways, you know, collect specimens. You know, we would leverage all of the Quest logistics. In cases where we had people going to our basic draw centers, we're leveraging that. In this case, you know, we're actually getting it from other providers. You know, CVS is the most notable one. As we do that, we have to have incremental logistics structure. We have to have incremental logistics runs, and then we do pay a fee. You kind of think about it kind of like phlebotomy, but all the work they do to collect the specimen, to engage in the administrative costs of the patient, to give them the results. You know, there is a, I think, a cost that maybe people weren't aware of when we're not getting that specimen through our traditional infrastructure. Great. Thanks for clearing that up. Operator, next question. The next question is coming from Ann Hynes, Mizuho Securities. Your line is open. Good morning, Ann. Good morning, and congratulations to Steve, Mark, and Jim. Thank you. Good morning, Ann. I just wanna ask about margins, because obviously the stock's down or underperforming year to date versus some peers, and I think there's a debate on the Street about the margin profile for Quest ex-COVID. I know you guys incurred margin pressure in Q4. Was it worse than expected? A follow-up to that is, again, you know, you just started 2022. People are really focused on what your margin profile will be in 2023. In your prepared remarks, Mark, you did talk about some growth initiatives that are in 2022, the $160 million, and I think you said $50 million for incremental costs. I guess, like, there's so many moving parts with extra labor costs, extra supply costs. You have these growth investments. I guess if we look out to 2023, not giving guidance, like, what do you think is repeatable and what is not? Maybe if you can just comment on just the health of how you view your base margins in the base business, that'd be great. Yeah. Thanks for the question, Anne. I think it's an important one. First off, we're not deviating from our long-term outlook. We shared a long-term outlook in March of 2021. While the CAGRs are gonna change because we're you know gonna have a stronger year in 2022, and the CAGRs I quoted at that time were from 2022 forward, the absolute numbers we're not deviating from because they're largely the base business. We still assume that you know COVID will materially decline. You know, time will tell. You know, at that point, it's really all around our base business. When people are looking at the current profitability of the base business, and I can understand how this happens, one of the flaws in that is that, you know, there really you can't really do the two in isolation. Let me give some examples. Because we've had such a surprisingly strong year this year relative to what we expected, driven by COVID, we're paying a significantly higher incentive performance bonus, and that's across the whole employee base. You know, right now that would not be expected to be repeated next year. That, quote, inflated our cost. To assign all of that cost against the base business, which is what implicitly is done when you do COVID revenues times a certain margin drop through and then you assume back again to the base business, that's just not accurate. The other thing is we have significant incremental costs related to the pandemic, which I mentioned in the prepared remarks, around $50 million of costs. If COVID really goes away, we would expect those costs will largely go away. Those costs should really be assigned to COVID, not to the base business. We had quite a bit of overtime later in the year, and that was related to employee absences driven by the COVID surge. We spent about $25 million more in 2021 than we historically spent on overtime, and we would expect that would go away as well as COVID, you know, starts to step back. Again, that is implicitly put against the base business when you do the high level math that I've seen a lot of people do. You know, the way to think about the base business is obviously from our guidance, we are, you know, hundreds of millions of dollars above where we were in 2019. We expect to be back to the growth that we were experiencing pre-pandemic. I know it seems like a long time, but if you look at the first two months, and we mentioned this several times, of 2020, before the pandemic started, even after a full year of the network access gains we had in 2019, we were still growing mid-single digits%. We're gonna get back to that growth, okay, on the base business. The profitability of the base business is gonna be similar to what it was before 2019. Hopefully that puts all the pieces together for you. Obviously, if there's anything I didn't, you know, clarify, I'd be happy to take a follow-up. No, that's very helpful. Just, as a follow-up, just to your growth initiatives, like the $90 million incremental in 2022, how should we view that for 2023? Right. Some of those will ramp down because there are, you know, discrete investments to get us where we need to get to. For instance, a big piece of that is building what we need for our consumer-initiated testing. To move from where we were to a, you know, more Amazon-like, and not that we'll get completely there, but experience for patients who wanna find testing, order it, you know, pay their bill, et cetera, is expensive. It takes a lot of work. The marketing analytics to, you know, do the appropriate marketing and understanding of customer preferences and, you know, respond to customers in an appropriate way. You know, there's a lot of IT investment in the near term to get us to that future state. Now, as we're growing that business to a quarter billion, which is what we said we would get to by 2025, there are gonna be some ongoing costs because we're adding people to support that business. It is an incremental business and, you know, there are gonna be some variable costs with that. However, as we grow those businesses, you know, we're gonna grow faster. Some of those ongoing costs are gonna get paid for that faster growth. Then I would say similarly on advanced diagnostics, as we accelerate that growth, some of the resources we're adding today that we're calling out pre that growth are gonna be in the run rate and profitability going forward. The costs don't go away completely, but they will ramp down because some of this is kind of startup expenses. That revenue, obviously, and the margin is gonna pay for those incremental costs over the next several years. Yeah. Let me just add to that. Remember when we talked about this year, these investments really started in the back half of 2020. You know, we talked about an exceptional year in 2020. We talked about an exceptional year in 2021, and therefore, we took advantage of the opportunity and invested in accelerated growth, entirely consistent with what we shared with you as our growth portfolio. What you're seeing in our results already is the benefits of those investments. You're seeing great growth in our focus areas of advanced diagnostics. I've highlighted those areas of our portfolio that we're focused on. These are not insignificant portions of our portfolio. I shared in my introductory remarks, these are several hundred million of dollars of focus for us that are growing strong double digits versus last year and versus 2019. Secondly, our consumer-initiated testing business has grown considerably. We talked about $70 million on this path to $250 million. Therefore, we're already starting to see the benefits. As with any investment, we expect a business return. We're getting some of that business return already, 2021. We'll expect more of it in 2022. When you get into 2023, you gotta track that we're going to start at the beginning. What we're putting our eyes on is exactly what we laid out at Investor Day. That is, we have a baseline coming out of 2022 that we believe in, and what we just shared in our 2022 guidance is entirely consistent with that, in that we will continue to grow our earnings, that high single-digit growth we highlighted 7%-9%, and that will continue into 2023 and then to 2024. We feel what we've done so far and what we've delivered is entirely consistent with what we believe the prospects. We do believe the opportunities in front of us are even more attractive than before because we've had the proceeds from the benefits of COVID to accelerate the growth that we believe is real. Yeah, just one clarification. The 7%-9% was when we thought we would do $7.40-$8 in 2022, and we said we'd be at the upper end of that. You know, you can pick your number between $7.40 and $8, carry it forward 7%-8% through 2023 and 2024. That dollar level of EPS is what we're saying we can still do. Obviously, since 2022 is turning out based on our guidance a lot higher than we said in March, the CAGR is gonna be lower, but the absolute numbers we're still committed to at this point. Operator, we're gonna go to the next question, but I just wanna let everyone know, you know, we will go past the bottom of the hour. We have a lot of folks in queue, but we wanna get to all your questions. Operator? The next question is coming from A.J. Rice of Credit Suisse. Your line is open. Hey, A.J. Morning, A.J. Hello, everybody. Best wishes on the transition to all. Maybe just to ask M&A pipeline, A, any update on what you're seeing out there and what the opportunity set looks like? B, does the management transition cause you in any way to pull back or to pivot in a different direction in organic growth prospects? Just maybe finally on the Pack Health deal. That was obviously not a huge deal, but an interesting one. Does that suggest a pivot, and what's sort of the opportunity there with that acquisition? Well, A.J., thanks. We, you know, continue to, you know, believe that we can continue to deliver that 2% growth off our base business going forward. We've delivered that in the past, and we have every reason to believe that will continue going forward. As I mentioned earlier, we continue to see hospitals looking at what we've done with other hospitals, an opportunity for them to rely on us for their testing. That funnel continues to build, and we continue to look at some outreach purchases with hospitals. Then as I mentioned, LabCorp was a good example of a regional laboratory and a good piece of the United States that we picked up as well. We continue to look at acquisitions that build on our portfolio. Remember, we have this lens of focusing on General Diagnostics, and Jim Davis runs that business. In addition to that, Advanced Diagnostics. The third piece is those services that take the information that we generate, and we provide services, and we do this employer population health, and we've built on that business to work with health plans. I'm helping them manage their risk with the data and providing services that help them with that. Pack Health fits into that direction for the company, and we've done some other acquisitions that help us with that direction as well. You're gonna hear more about our continued investment in that space going forward. Also in your question, does you know the management change slow us down in any way, you know, impair what we might do with acquisition? I would say to the contrary. You know, Jim's been part of the management team for over eight years. He's highly engaged in all acquisitions. He's been instrumental in executing a lot of our acquisitions, and all the businesses that he participated are always part of the funnel building that we have. Jim, any remarks about the 40 acquisitions we've done and your team to find more opportunities? No, A.J., as Steve said, I've been a part of all 40 of those acquisitions, and it's not gonna slow down. We're gonna do smart deals. We're gonna be selective, but we're gonna continue to build our base business. We're gonna continue to find niche applications to build out our advanced diagnostics portfolio, and we're gonna continue to focus on the hospital outreach deals. Those that are willing to get out of the business, we're right there ready to help them. Okay, great. Thanks so much. Thanks, A.J. The next question is coming from Patrick Donnelly of Citi. Your line is open. Hey, Patrick. Thank you. Question. Maybe just one on some recent payer negotiations. Obviously, you guys have talked a lot about inflationary pressures and supply chain things. How much does that come up in kind of the negotiations with payers? Are you able to pass that along? I know you guys are in a pretty good place with payers relative to historic levels. Maybe just talk through some of those conversations and ability to pass price along and price increases in those payer contracts. Yeah. Thanks, Patrick. Well, you know, so, you know, there's a lot of attention these days on inflationary pressures, and we think we've handled those questions. We think it's all very manageable for us, in terms of our operational excellence programs and finding the productivity we need to offset it. That's one piece of the equation. The other piece is what you're bringing up is around pricing. We feel good about what we have delivered in that regard. Matter of fact, if you look at the results for 2021, what you'll find is that there are unit price changes, and this is, you know, freezing everything from volume and mix and just looking at unit price changes, is below that 100 basis points that we typically have guided you to dial into expectations going forward. That's not just for our commercial insurance contract, it's all our businesses, our hospital business, it's our client business, you know, independent of what, who those clients might be, physicians or some other organization we work with. We continue to make progress on that, and we're particularly encouraged by the discussions we're having with health plans. We've shared in the past that actually in the past, you know, several negotiations, we've actually introduced price increases. It is actually helping us that in fact there is inflationary pressure across all of healthcare, so therefore we're not alone since we're a labor-based business, to pass along some of those costs to them. We're making good progress. I'd say the other piece of this, Patrick, is we continue to deliver great value. You know, our quality gets better, our service gets better, and we do that at a very competitive price already. Many of these plans believe that's in the best interest of them and their membership of growing share, is to make sure they rely on a handful of topflight laboratories. In the case of, you know, UnitedHealthcare, they call that the Preferred Lab Network. We had applied to that, and we had to demonstrate with evidence that in fact we have great quality, we have great service, and we're doing that at very competitive prices. That trend will continue. When you talk about value, we're gonna eventually keep on pushing that to deliver more and more value, which helps you in terms of managing your network. We, in many cases, are gonna start looking at some price increases going forward. Good progress there. Thanks for asking the question. Mark, anything you'd like to add? Yeah. I just wanna remind people of what we've talked about over our tenure. We have this Invigorate program, drives about 3% productivity. We call it productivity because some of it is top-line enhancement. It's not all around costs. You know, we've mentioned the fact that we have these pay-fors, and one of them has been price erosion. One of them has been annual labor inflation. You know, we talked about the fact that as we got priced in a better place, that actually it was helping with margin expansion. We had enough productivity to do more than the pay-fors. Now when you look at where we are today, and as Steve mentioned, a much better position. I can't specifically say it's related to inflation, but I can assure you that that is part of the conversation in addition to PAMA and the value that we bring and so on. We've really moved the conversation dramatically from when we started here to more about value. Fortunately for us, you know, I can share that in the last three national payer contracts, all three of them, we got an increase. Now it was modest, but you compare that to where we've been historically, great news. That also means that even if we have a little more inflation, and I think we've talked about this quite a bit, we've got plenty of Invigorate. That Invigorate now, you know, doesn't need to cover as much of the price erosion that we had historically. That price erosion that Steve shared is really heavily in the client bill. As we've talked over the last number of earnings calls, that comes from, you know, both our hospital clients who are under tremendous pressure, and we've shared the reasons for that. Also in some states where physicians can do client bill markup, we have that pressure as well. But really with the commercial payers, we're in a really good place on price lately. That's really helpful. I appreciate it. Just a quick follow-up on COVID, you know, maybe pricing and volume. You know, you mentioned no expectation for the PHE to continue to be extended in the second half, or at least it's not baked in. Sorry. How do you think about the pricing piece, both commercial, you know, will they follow kind of and wait for the PHE? The volume side, are you expecting it to be endemic? A lot of the diagnostic players have obviously talked about multiple years of COVID revenues going out. Just curious on your take there. Thank you. Yeah. What we're assuming in our guidance is, you know, we gave you some ranges of what we think COVID testing will be, and obviously it's gonna start higher in the first quarter, and it's gonna go down as we are hopeful that, you know, this current surge will decline, you know, throughout the spring and into the summer. As you mentioned, we did get the 90-day extension, and then we're not planning in the guidance that that will be extended, but we just don't know. Therefore, we're always assuming, you know, the worst case. If that were to come down, yes, we do believe there'll be some, you know, price changes, if you will, with some of our partners. You know, again, what we've implied in the guidance is decline in volumes and some decline in pricing and also the assumption that we're not gonna get a renewal of the emergency order. Again, we don't know that. Mark, anything like that? Yeah, just a reminder, not that I need to remind you all, but, you know, the rate that CMS determined is $51. While we don't assume post PHE that everything falls immediately there's a pretty steep ramp down. For the volume that is in our guidance beyond the PHE in late April, we're assuming a significantly lower reimbursement than we've experienced to date and that we're expecting through late April. Operator, next question. The next question is coming from Ricky Goldwasser, Morgan Stanley. Your line is open. Go ahead, Ricky. Hey, good morning and best wishes to all of you. Jim, you're gonna be my fourth Quest CEO I'll be working with, so very excited. Thank you. Dating all the way back to Kenneth Freeman's days. I just wanted to go back to sort of what the 2022 baseline is. It seems that this is kind of like really the bulk of the questions we're getting from investors, sort of how should we think about the 2022 normalized baselines that we can build off for 2023? I know that you kind of said in response to one of the questions that in terms of absolute EPS, you are where you expected to be last year, but if maybe you can give us a range. We're getting to somewhere between kind of like $7.60-$7.80. Is a normalized baseline for to. Is it starting point? Just wanted to kind of like see if we're in the ballpark. Off that, maybe just qualitatively, what are the headwinds and tailwinds that we should think about as we think about modeling out to 2023? Sure. Mark? Yeah. Again, I'm sure you understand, Ricky, even if I was willing, I can't really give you an EPS number on the base business. I think the best thing I could do is, you know, point you to pre-pandemic revenue and earnings and tell you that if you look at the growth in the base business based on what we're giving in guidance, the profitability is not dissimilar. You can kind of directionally place where that business might be. The reason I can't really give is back to what I talked about earlier. Where do I assign the, you know, $50 million of, you know, pandemic expense? You know, arguably, if we didn't have COVID testing, we would still have that cost, and you'd say, "Okay, we'll let you go about your base business." The truth is that we also have the COVID testing and revenue, so should it go against the COVID revenue? Should it gonna go into the base business? Importantly, when you talk about headwinds and tailwinds, we would expect that cost to go away. It should be temporary because it is specifically tied to CDC guidelines and other things. You know, we talked about some of the other, you know, some of the things included in there, like supply disruptions. I don't know how long that's gonna last. We all know it's not just in our business. It's, you know, across all aspects of life today. You know, does it go away tomorrow? Does it go away in 12 months? Not sure. That's certainly something. We wanna absolutely make sure that we have what we need, and so we are paying premium, you know, costs right now relative to what we did pre-pandemic to make sure our supplies get to our patient service centers, our laboratories have everything they need. That's really kind of our insurance, which fortunately we can afford to do right now because we also do have that COVID revenue and COVID margin. Really, I think that's the best color I could give you, which is the base business is in good shape. We exited Q4 organically, you know, back to where we were in 2019. We've done significant M&A over the last couple years. We've built the PLS business. Beyond the organic clinical business, you know, we're hundreds of millions of dollars higher. While the profitability and all that may not be precisely the same, directionally, people can feel confident that the profitability has moved, you know, with the revenue growth. I remind you, our base business in 2021 was larger than what we had in 2019, so it has grown. It is recovered, and we're gonna grow on top of that, and that's implied in our guidance for base business. We intentionally broke out base business from COVID assumptions for 2022, so you can kind of dissect, if you will, what's going on with that business. I keep on reminding you that these investments that we're making are part of our base business, and we've started those investments in 2021. They continued in 2022. Therefore, that's gonna help us accelerate growth. As Mark said, we feel very confident about the profitability of our base business. Oh, by the way, what I said in my introductory remarks is we do not believe COVID is gonna entirely go away. It's gonna be part of a permanent part of our portfolio. You should assume there's some COVID testing in 2023 as well. We will continuously play a role with our PCR testing, and we believe there's a growing role for serology, particularly related to our ability to be able to provide some insight around the protection that individuals have in their bodies, and we're gonna have more on that to come. You put it together and we believe, you know, the prospects for 2023 and beyond are quite bright. Thank you. Ricky Goldwasser, I would add one other thing, and that's despite Mark Guinan saying that the base business has recovered to 2019 levels, there's still evidence to suggest in terms of a headwind, that there's still pent-up demand for routine clinical care. If you look at the studies around HIV infection rates, hepatitis C infection rates, the data still indicates that there was a lack of routine clinical care during this pandemic. We do think that should provide some headwinds going into the latter part of this year or next year. Okay. I'm sorry. Operator, next question. The next question is coming from Brian Tanquilut of Jefferies. Your line is open. Hey, good morning, guys, and congratulations all around. I guess I'll follow up to that and last answer that you gave. You know, so as we think about COVID becoming more endemic rather than, you know, what it is today, is it probably more correct to think of this opportunity or this part of your business as something like, say, the flu, the flu test where some of it or most of it is point of care and then, a big, you know, a small chunk of it is sent over to you guys? How should we be thinking about the economics if that was the case? Yeah. Well, let me start, and then my colleagues will round it out, I'm sure. No, this isn't going away anytime soon. I think, you know, all of us believe that we're gonna have COVID in 2023, and we're gonna provide testing around that. As you know, because you're living with it every day like the rest of us, when somebody has some symptoms, you're ruling out COVID. In many cases, that is a PCR test, and that will continue. Therefore, you don't think about it just being flu, but it's any type of respiratory illness, and it could be a common cold or another respiratory illness. There'll be a continuation of that going forward. Also, like, we keep on highlighting the value of serology. We think there is going to be increased role for us to provide insight about how much protection people have from vaccines or from natural immunity. You know, as we know, that's changing over time and people want to have that insight you know, to manage their risk and work with their physician on that. We think there's gonna be increased value in that. We do believe you know, in 2023, this is gonna be a permanent part of our portfolio. It's hard, Brian, right now to scale that, and we'll learn more as we get into 2022. When we think about it, we actually think of it as an additional portion of our product line that we didn't have before the pandemic. We actually find it helpful to achieve the value we think we have. As Jim said, base business continues to be in really strong shape. We crossed the growth of 19 sooner in 2021. We're entering 2022 with great momentum. Our growth prospects there continue to be ones that we continue to work, so that should continue to be a good opportunity for us. We're feeling it fits together well, and COVID's gonna probably provide more fuel for us to make these investments in our base business that help us in 2023. Yes, we're focused on what the costs are, but we only make these investments if, in fact, we expect to get the returns. You'll see those returns both in 2022, but also in 2023 and beyond. Mark, anything you'd like to add to that? Yeah. Thanks, guys. Brian, it's a great question, and we can't, you know, predict with any you know, certainty what's gonna happen. I think the two unknowns are how comfortable will physicians be with, you know, taking the specimen sample themselves in the office going forward? And maybe they'll be very comfortable like they are with the flu, where maybe they'll be like, "No, I'd rather not handle that. I'd rather not do that point-of-care test and all the risks that come with that. I'd rather just send it to a lab." Then the other one, really importantly, is the economics. The payers are gonna have a lot of influence on whether this is done. Now, yes, you know, point-of-care testing, arguably, some people do it for, you know, faster turnaround times, but a lot of it is done because they make money off of it. Depending on what the payers decide around point-of-care reimbursement, that will have a large influence on how much of this work comes to us and how much stays in the office. Let me just add, I'm gonna ask Jim to comment on this. You know, if you look at our volumes, they're impressive. You know, we've had a challenge this year because of the infection rates, and therefore now our ability not to be able to deliver on pooling, which is a smaller capacity and lower cost. That will come back as infection rates drop. As we go forward with this, and we start to see this becoming more of an epidemic and less of a pandemic, then there's a lot of players in this marketplace, and Jim and his team are entirely focused on what do we have for share today and what we could do going forward to gain some share going forward. When you think about the opportunity around COVID, if you look at that market, you think about Quest Diagnostics, you think about the dynamics of the short run, where there's been some opportunistic players. We're not opportunistic. This is gonna be part of a permanent part of our portfolio, and therefore, we also are pushing hard and making sure that we get what we believe we should have for share in the short term, but also in the long term, we think there might be an opportunity as well to pick up some share. Jim, you like that stuff? Yeah. What we did find during this last surge is we had a series of 10-12 partners that we had referred work out to when we couldn't handle the volume, especially during peak nights during the work. At least 50% of those partners had gotten out of the business and decided they just didn't wanna re-ramp their capacity. While there may be the physical capacity out there, you know, some of that physical capacity, especially on the PCR top, the PCR side, returned to the clinical kind of work that those firms were doing, other molecular work. That is, I think, advantages us in the future, you know, if there is another surge here. Operator, next question. The next question is coming from Pito Chickering of Deutsche Bank. Your line is open. Hey, good morning, guys. Thanks for taking my questions. Steve, Mark, it's been a pleasure working with you over the years, and congrats to you, Jim, on this promotion. Thank you, Peter. A lot of questions sort of around the base business, so let me ask this a different way. I believe you have generally blessed sort of an $8.50 EPS range for 2023 with sort of limited COVID earnings. Can you talk about EBIT margins in 2023 versus the 17% range seen in 2019 without COVID? I sort of believe sort of within that guidance range, you're implying potentially flat margins with Invigorate offsetting the inflationary pressures. Is that just the right takeaway that we should be leaving today's call with? Yeah, you know, we intentionally don't really target or comment on margins because, you know, we believe value creation can come at different levels of margin than we've talked about, specifically our PLS business, where it's great growth, great return on invested capital, and those are the two biggest correlators to shareholder value creation, but they come at a lower margin. We don't worry about margin, Pito, per se, but I understand others do. To answer your question, there's a pretty broad range, you know, obviously, one year versus over multiple years when you put a CAGR with a couple hundred basis points differential on the top line and bottom line. There's a lot of different combinations. What I would say is, you know, your EPS number that you mentioned is not unreasonable, and you can figure out the revenue based on what we said, you know, at Investor Day and then what we're guiding to this year in terms of the base business. Yes, you know, at this point, we're not counting on COVID to be significantly larger than, you know, maybe a flu business or something like that. Certainly, we don't know, and there's a chance that it could be larger than that, and that will be determined over, you know, the next 12 months or so. That's about, you know, strongest color I can give you right now is back to what we said. We feel really good about our base business going forward. We're gonna be back to that growth level. I wanna remind everybody that when we grow organically, the drop down is much higher than that 17% or, you know, the 19.5% that we delivered in Q4 and so on. It drops down at a level, you know, 50% or more, depending if it's an existing customer where we're expanding the menu or it's a new customer where we do have to invest a little maybe in logistics and in IT for the interfaces. Growth brings with it margin expansion in addition to Invigorate, and that's why we're confident we can grow earnings faster than top line, you know, from that period forward. Okay. Just to sort of ask the question just a different way and not on the margin side. I mean, as I start thinking about 2023 EBIT versus 2019 sort of, you know, cleaner sort of non-COVID numbers, we should be modeling sort of a low teens EBIT increase in 2023 relative to 2019. I mean, you can do the math. Yes. Okay. To come back to what we said, you know, about our earnings per share, okay, 'cause, you know, Mark just said, what we're saying is we've always provided our outlook and guidance for earnings per share because we do have a mix of business and, you know, we do have some lower margin business that might be a good value-creating opportunity for us, so we're gonna go after it like a PLS business. I think the best guidance when we look at EPS would be expansion of EPS over time, rebasing it, if you will, for these changes that we've seen through the last two years. You know, Mark has reiterated our belief that our base business will fuel, you know, good opportunities for us to continue to deliver against that. You know, by the way, as we continue to gain share, you know, the variable gross margin is quite good. As I said, you know, we also believe there's gonna be some COVID in 2023, and it's hard to size it right now, but it's not gonna go away anytime soon. Yeah. The other thing, Pito, is, I mean, you know, I'm not in any position to provide guidance in 2023, so that's why we're focusing everyone on the base business. However, when you think about what could happen, COVID could be larger. We don't know, and we're not counting it at this point. We did mention we expect to have $1 billion of cash this year. Between, you know, opportunity to do quite a bit of M&A, and we'll see, or do share repurchases, you know, those also aren't specifically contemplated. That's why, like, locking down to a specific number is really difficult and probably not productive. I would point you to what we said at Investor Day and kind of assuming that that's reasonable if these things don't play out significantly differently from our current view of what 2023 might bring. Great. Thanks so much, guys. Operator, next question. Coming from Matt Larew of William Blair, your line is open. Hi, good morning. You know, the 3% Invigorate target has been aided in recent years as you've consolidated a volume onto your two new labs and consolidated onto one immunoassay platform. I'm curious, what are the keys going forward here to keep driving those gains? Then maybe the second piece on costs would be separate from some of the extra costs you've called out today related to COVID. Clearly, you've built up some infrastructure, both personnel and instrumentation for COVID. I'm just curious how much of that do you think goes away as COVID moves to an endemic and perhaps you need less extra capacity? Great. Thanks for the question. I'll start, and then turn to Jim too to add to it. But you know, we've been working on operational excellence for over a decade, and it has become institutionalized in our company culture. It embeds in how we do things. It is a platform for how we're gonna continue to grow. Your comment was around cost, and we don't talk about cost, we talk about productivity. 'Cause there's a lot of aspects of what we do around Invigorate, and some actually helps the top line, some actually helps getting more output with less labor. And yeah, some helps us become more efficient by less input from, you know, some of the materials that we use. We look at it in an aggregate. We continue to be bullish on our prospects. You know, we believe that it is the ingredients for us to continue to deliver great value. That is, when we do this, we improve our quality, our service gets better, and oh, by the way, we become more and more productive to be able to make the investments to fuel the growth. It all fits together. You know, when we talk about this, when we talk about our Investor Day, we see an enormous opportunity for us to continue to digitize and innovate in operational excellence. Some of you have had the opportunity to tour through our latest lab of the future, and that's our new facility in Clifton, New Jersey. Sometime if you come in, you'll see what we've done. We've taken some of the learning out of our Marlborough facility up in the Boston area. We've brought that down to Clifton, and we've built on it. That also uses the advantages of some consolidation with some of our new platforms. You know, Jim and the team are now taking that and thinking about, okay, what's next? Okay? When we think about innovation in our space, yes, there's innovation in terms of testing and as far as diagnostic information and services, but we equally think there's a lot of innovation and opportunity for us to move forward. We continue to invest, and we talk about investments. We talk about the use of cash. As you notice, we've been putting about $400 million a year into our capital budget, which is investments in, frankly, a lot of our innovation that allow us to fuel this productivity gain. Jim, add to that, please. Yeah. I think Steve touched on the three key themes. Automation, the use of artificial intelligence, and then the continued digitization of so many of our manual processes. Marlborough and Clifton are terrific examples of that, but as you know, they're all brand-new laboratories. We've got 20-plus other laboratories in our network, and there's opportunities in every one of those laboratories without building new greenfield sites to continue that automation journey. In particular, in our specimen processing area and in what we call our fluid handling system, you know, handling of blood and urine. On the artificial intelligence side, you know, you're gonna see us move in pathology, cytology, microbiology. We've got some great examples in each of those departments today. We're deploying artificial intelligence systems to help with the readouts of those images. As Steve mentioned, just the continued digitization. Now, beyond the immunoassay platform, where we consolidated around the Atellica, there are still other opportunities like that in our laboratories. We recently ran a competition in urinalysis, selected a new vendor, Sysmex, for that platform. Rolling out those new platforms across all 23+ laboratories is gonna generate a lot of productivity year over year. As long as we have healthy third-party vendors that continue to innovate, those innovations will come to our labs, and we'll continue along that 3% productivity journey. Yeah. We're bullish on the prospects of continuing to drive productivity. I always react to this as a cost-cutting goal, and this is not about cost-cutting goal. This is about working smarter, and this has been a key part of our strategy, and it fuels growth. Jim mentioned some of the areas, AI, NGS, bioinformatics, and also digital pathology, which will revolutionize our ability to diagnose and treat and to do that more productively. Matter of fact, this week, Jim is going out to another laboratory and taking a look at where we're going to make our next investment this year. We're gonna continue to invest in this space, and we think there's a lot more opportunity in front of us, so it's exciting. Yeah. I just wanna add that, remember, this is not just in the lab. There's a lot of productivity that's driven outside and specifically, I'll give you an example of logistics. You know, we really have an incredible ability to be efficient with logistics, and it's continuing to improve. We have, you know, some cases where we have empty pickups, where we have some customers that don't give us specimens all the time. It's periodic. Now we have the ability and technology to not do that empty pickup, so that's an efficiency. We also get requests for what we call stat pickups, where, you know, somebody needs something quick turnaround, et cetera. And so the ability to most efficiently get one of our vehicles there has been enhanced through our technology. The other one is in our patient draw centers. Increasingly move the administrative burdens off the phlebotomist, allow them to do phlebotomy, by getting people to, you know, you know, go to our website, put in their insurance information, everything. If our phlebotomist can spend a couple, you know, less minutes with each patient doing administrative work, doing phlebotomy, we drive up the productivity in our draw center. Those are just a couple examples of productivity gains that aren't really cost reductions, but enhance our ability to do more with the same resources and, drive up our quality and everything else outside the laboratory. Operator, next question, please. The next question is coming from Tycho Peterson of J.P. Morgan. Your line is open. Hi, guys. This is Casey Woodring for Tycho. Congratulations to all. Thanks. Um- Morning. Can you maybe talk to the percentage of COVID testing that was consumer-initiated in 4Q, you know, whether through MyQuest Direct or other non-traditional avenues? How do you see that trending in 2022? You know, you mentioned that there are different costs associated with non-traditional avenues of testing, so maybe can you quantify the difference in margin profiles between traditional and non-traditional? Yeah. What I can share is, you know, if I go back to what we said in the prepared remarks, our consumer business was about $70 million last year between the base and COVID. We did $2.7 billion of COVID revenue. You know, the consumer-initiated COVID testing was very small, you know, at this point. You know, it's strengthening. Again, as I said, we continue to enhance our you know website where people go for that ordering and testing and so on. There's still more to come in terms of enhancing that experience for consumers and maybe in driving awareness for people. You know, as you know, we're competing with a lot of people who see these stand up operations in parking lots and so on and so forth, which draw their attention. You know, we're working on making sure that they know we can do this, that they initiate themselves as opposed to going to a doctor or hospital for this. We expect to get stronger and stronger moving forward as we enhance our overall consumer business through these investments we just mentioned. In terms of the margin profile, it's not all that different between the consumer. Consumer can happen in different ways. They can come to our patient draw center and have it done there. We do have home collection kits where they can be sent to their home. A little different structure, but not materially different in profitability. Operator, next question. The next question is coming from Derik de Bruin of Bank of America. Your line is open. Hey. Hey, great. Thank you for squeezing me in, and I'll just make this quick. Can we talk a little bit about, you know, sort of like the PAMA outlook? So you would assume the $80 million hit again comes back in 2023. I mean, what are the chances that this actually does get resolved, and that the lobbying efforts pay off? I mean, is the current administration a little bit more, or Congress a little bit more willing to sort of listen to this and sort of do with it? I mean, there's a chance that it gets, you know, there's actually some reversion just given what happened? Thanks. Yeah. Before Steve addresses that, I just wanna remind everybody that $80 million was built into our long-term outlook. We just assumed it would happen this year. Again, although it would be a year-on-year hit to us, you know, incrementally in comparison, in the long-term outlook, it was an outlook. It was assumed that we would get that in 2022, so it's already built in. Go ahead, Steve. Thanks for the question. As we said, we were thankful that it was delayed again, the one-year offset, as Mark indicated, to 2023. We think that's good for us because it will gain us some time this year to keep on working on a permanent fix with Congress. We have been very active working with Congress last year. As you know, Congress was very busy with the infrastructure bill and other business, and therefore we're fortunate enough to get the postponement of PAMA. It allows us time this year to keep on working on this to get a permanent fix. We're encouraged by the level of support. You know, the good news about the pandemic has brought front and center the importance of testing, the importance of having a strong industry. We're getting strong, you know, bipartisan support both from the House and from the Senate. We made a proposal of what we think should be changed to improve the data collection process, the sampling of market-based data. We continue to support the notion and the philosophy of PAMA. That is, we should be paid at commercial rates, but we believe that CMS got it wrong. In parallel with the work we're doing with Congress, we continue to have our lawsuits against CMS as a trade association. You know, the judge has heard the arguments. We'll see if we get some indication on a decision on that. Hard to call that, but you know, that's still in the works as well. Our work right now this year is to push for a permanent fix to PAMA, and we're better positioned now because of the pandemic than before the pandemic because of the strength this industry had and full awareness and appreciation of what we've done and the need for a strong laboratory industry going forward. Operator, last question, please. Our last question is coming from Eric Coldwell of Baird. Your line is open. Hey, Eric. Thanks. Hey, good morning. Thank you. Masterful job clearing up some of the overriding concerns on core margin today. Thanks. Thank you. When you went through your list of things that don't repeat or go down significantly as COVID incremental cost over time, staffing challenges, et cetera, go away, you mentioned bonuses. I think it was the one number in the list of call-outs that I didn't hear you quantify. I'm curious if we could get the incremental bonus due to the COVID upside profitability in 2021, how you think that bonus will normalize whether it's 2022 or 2023. My follow-up, I'll just throw it in here. I was hoping we could get average weighted reimbursement in the fourth quarter. I know you said it would be relatively similar through the PHE, but if you could give us a little more specificity on where AWR came out in 4Q on COVID PCR testing, that would be helpful. Thanks. Sure. Let me start with that one, 'cause I think there were some questions around maybe whether turnaround time suffered and we didn't get the $25 fee that comes with some of the government payers, couple of the commercial payers. Actually, not really. AWR in Q4 was absolutely similar to what it has been in the previous quarters, and our turnaround time performance was outstanding. We did in January when the surge came, we did a little bit, you know, we did have a little bit of a hit to our turnaround time. But, you know, obviously that's all contemplated in the guidance that we just provided and everything. It wasn't a huge amount. When you know, back to the early question- Bonuses. On the bonuses. When you look at the bonuses, you know, most of it is really our 50,000 employees. People think about, oh, bonuses must be senior management, but most of the cost is really, you know, we pay 3% bonus to even our wage workers. Then obviously we have other staff members that, you know, have higher targets. Every year we budget for what we call, you know, 1x, whatever that target is. For most of the people, it'd be 3%. You know, based on performance, and we feel we've had, you know, reasonably stretched performances. When you listen historically, you know, we have not paid significantly above 1x, and we've had a number of years where it's been low 1x. The COVID, you know, unpredictability and the surge in revenues, you know, enabled us to pay our employees significant bonuses in 2020 and again in 2021. If you look at, you know, without getting too specific, you know, we've shared a number in the past of $3 billion wage bill, you know, that's gone up in the last couple years as we've grown the company. You can kind of as a floor say 3%, obviously a little higher because there's people on a higher bonus, that's about 1x. You know, we're paying a bonus that's substantially higher than that in 2021 like we did in 2020. The other thing is we did pay out a $500 payment to a majority of our employees to compensate them for COVID expenses. In 2020, we adjusted it out of our adjusted earnings because we were seeing COVID as temporal and extraordinary. Once you get to your second time doing it, you know, even though I still think it's extraordinary, we just decided not to adjust it out. We did have over a $20 million payment, you know, late in the year, $500 to our wage employees and some of our lower compensated professionals as well. Those are a couple things that you know would go away and not be repeated unless somehow we had another surprising COVID year in 2022 like we had in 2020 and 2021. Great, great response. I'm not sure I'm smart enough to do 1x 3% plus and then significant increases. Is there any chance you could frame that as a, you know, incremental $50 million, incremental $100 million? Just directionally, could we get a little closer? Yeah. Let's say it's less than 100, but substantially more than 50. Okay. That's about what I thought. Okay. Thank you very much, guys. Congrats to everyone. Thank you. We done? Very good. Well, thanks. It's been a good session with you all. Thanks for all the great questions. Again, thanks for joining the call today, and we appreciate your support. You guys have a great day. Thank you for participating in the Quest Diagnostics fourth quarter and full year 2021 conference call. A transcript of our prepared remarks on this call will be posted later today on the 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 1-800-839-9317 for domestic callers or 203-369-3605 for international callers. Telephone replays will be available from approximately 10:30 A.M. Eastern time on February 3 until midnight Eastern time February 17, 2022. Goodbye.