Welcome to the Quest Diagnostics fourth quarter and full year 2022 conference call. At the request of the company, this call is being recorded. The entire contents of the call, including the presentation and question answer session that will follow, are copyrighted property of Quest Diagnostics with all rights reserved. Any redistribution or retransmission of the 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, Investor Relations for Quest Diagnostics. Please go ahead, please. Thank you and good morning. I'm joined by Jim Davis, our Chief Executive Officer and President, and Sam Samad, our Chief Financial Officer. During this call, we may make forward-looking statements, and we'll discuss non-GAAP measures. We provide a reconciliation of non-GAAP measures to comparable GAAP measures in the tables to our earnings press release. Actual results may differ materially from those projected. Risks and uncertainties, 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. 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 Jim Davis. Thanks, Shawn, good morning, everyone. Quest had a strong year in 2022, with base business revenues growing more than 6% in the fourth quarter and 5% for the full year. As we expected, COVID-19 testing revenues declined but still exceeded $1.4 billion in 2022. Our strong performance over the last several years would not have been possible without the commitment and compassion of our nearly 50,000 colleagues who rose to the challenge of COVID-19 while growing our base business. I am incredibly proud of how this team has worked together during an unprecedented period in the lab industry to deliver insights to help create a healthier world. This morning, I'll discuss our performance for the fourth quarter and full year 2022. Sam will provide more detail on our financial results and discuss our 2023 guidance. In the fourth quarter, total revenues were $2.3 billion. Earnings per share were $0.87 on a reported basis and $1.98 on an adjusted basis. Cash from operations was $334 million. For the full year 2022, total revenues were $9.9 billion, including more than $8.4 billion in base business revenue. Earnings per share were $7.97 on a reported basis and $9.95 on an adjusted basis. Cash from operations was $1.7 billion. As you saw this morning, we increased our quarterly dividend approximately 8% to $0.71 per share and increased our share repurchase authorization by $1 billion. Before discussing additional highlights for 2022, I'd like to share some recent positive regulatory updates. First, Congress delayed Medicare reimbursement cuts under PAMA that were scheduled to take place in 2023, which would have impacted our revenue between approximately $80 million and $85 million. While we are pleased with the delay, we continue to work closely with our trade association to seek a permanent fix to PAMA. Second, CMS increased Medicare reimbursement for specimen collection fees for the first time in nearly 40 years. This could provide Quest with a benefit of approximately $35 million to $40 million this year. Regarding COVID-19 testing revenues, while we did see a steady ramp upward in COVID-19 volume throughout Q4, our volumes have steadily declined since late December. We expect our COVID-19 revenues to be significantly lower in 2023 compared to 2022. We have lowered our prior COVID-19 volume expectations in 2023 from 10,000-15,000 molecular tests per day to 5,000-10,000 tests per day. We continue to negotiate coverage and reimbursement policies with commercial payers following the end of the PHE in May. I will now share some recent highlights on how we are growing this business. In the fourth quarter, we completed our acquisition of the outreach laboratory services business of Summa Health, a large integrated health system serving communities in northeastern Ohio. We also entered into an agreement to acquire select assets of Northern Light Health's Outreach Laboratory Services business located in Maine. We will also provide professional laboratory management services for nine of Northern Light's hospital laboratories, along with its cancer center lab. Our M&A pipeline is strong, including potential deals with health systems, small regional labs, and other capability-building assets. In particular, the funnel of opportunities with health systems which are facing major margin pressures due to labor challenges and mix shift from inpatient to outpatient care is very active. Quest can help through lab management, population health analytics, mobile services, and or by monetizing their outreach business. Health plans, we continue to gain traction with value-based contracts where we see meaningfully higher growth than with traditional contracts. We've started to benefit from incentives related to these value-based contracts, which helps demonstrate the value of these strategic relationships. With CMS's recent increase in Medicare reimbursement for specimen collections, we've begun discussions with our health plan customers about getting paid appropriately for the phlebotomy services we provide to their members. Higher specimen collection fees enable us to make continuous investment in patient services their members continue to have the broadest access to high quality and low-cost lab testing. In advanced diagnostics, we generated strong double-digit growth in prenatal genetics and pharma services in 2022. In 2022, we also launched a solid tumor expanded panel as a laboratory-developed test. This 523- gene test relies upon the Illumina TruSight Oncology 500 Assay to help oncologists with therapy selection by providing comprehensive genomic profiling of a patient's tumor. This test extends our capabilities beyond tissue pathology to offer faster turnaround time from cancer diagnosis to therapy selection. Throughout 2022, we continued to make investments to strengthen our bioinformatics capabilities, which supports some of the faster-growing opportunities of our portfolio, like genomic sequencing services, prenatal and hereditary genetic testing, and pharma services. We also invested in our women's health sales force, which will position us well for continued strong growth in prenatal genetics. We continue to make progress executing our consumer-initiated testing strategy. Last year, we recorded approximately $96 million of both base and COVID-19 consumer testing. In the fall of 2022, we launched our new digital platform, questhealth.com. Consumers have found this to be a simpler, more intuitive way to order lab tests. Following the launch of our new consumer site, we began ramping up marketing spend through the fourth quarter. We saw some of the strongest order volumes to date following some Cyber Monday promotional advertising. We are encouraged by the acceleration of growth in base testing in December. Shifting to operational excellence, in 2022, we approached our goal of 3% productivity improvements and savings through our Invigorate program. Those savings and productivity improvements did not completely offset the inflationary pressures in our business, as well as the impact of a modest unit price declines. Following the pandemic, we, like many companies, have faced significant inflation and wage pressures. We are increasing our efforts to drive productivity and expand margins in our base business. We continue to drive additional productivity improvements with lab platform consolidation and greater use of automation and artificial intelligence. Last year, we began a new automation conversion project in our Lenexa laboratory. This new project builds on what work we've done in our Marlboro and Clifton labs. We've introduced a new microbiology platform that is highly automated and makes use of artificial intelligence to assist with sample analysis. We've begun to realize savings from the urinalysis platform conversion that we announced early last year. Filling and retaining our frontline positions continues to be a key priority for us. Although we have experienced higher than average turnover in some of our job categories, we have taken actions to stabilize our workforce and improve frontline employee engagement and retention. We expect these actions to help enhance our productivity in 2023. We have also taken actions to reduce our SG&A by approximately $100 million in 2023, including workforce reductions of approximately 1.5%, primarily in corporate support functions. With that, I'll turn it over to Sam to provide more details on our performance and our 2023 guidance. Sam? Thanks, Jim. In the fourth quarter, consolidated revenues were $2.33 billion, down 15% versus the prior year. Base business revenues grew 6.3% to $2.15 billion, while COVID-19 testing revenues declined 75% to $184 million. Revenues for Diagnostic Information Services declined 15.3% compared to the prior year, reflecting lower revenue from COVID-19 testing services versus the fourth quarter of 2021, partially offset by strong growth in our base testing revenue. Total volume measured by the number of requisitions declined 11.2% versus the fourth quarter of 2021, with acquisitions contributing 20 basis points to total volume. For the quarter, total base testing volumes declined 0.6% versus the prior year. The year-over-year decline was primarily related to lower employer drug testing volume and adverse weather events during the quarter, which together represented a volume headwind of more than 1.5%. COVID-19 testing volumes contributed to decline during the fourth quarter. We resulted approximately 1.9 million molecular tests in the quarter. This was down 1.2 million tests versus the third quarter and down approximately 5.4 million tests versus Q4 of 2021. After rising modestly throughout the fourth quarter, our COVID-19 molecular volumes declined to an average of roughly 17,000 tests per day in January and currently make up less than 3% of our daily volumes. In the fourth quarter, revenue per requisition declined 5.1% versus the prior year, driven primarily by lower COVID-19 molecular volumes. Base business revenue per req was up 6.8%. This strong increase in revenue per req was driven by a number of factors, including test and payer mix, the more favorable pricing environment with health plans, including incentives under our value-based contracts and lower patient concessions. Unit price reimbursement pressure remained consistent with our expectations at approximately 50 basis points in the quarter. Reported operating income in the fourth quarter was $135 million or 5.8% of revenues, compared to $536 million or 19.5% of revenues last year. On an adjusted basis, operating income was $330 million or 14.2% of revenues, compared to $579 million or 21.1% of revenues last year. The year-over-year decline in adjusted operating income is related primarily to lower COVID-19 testing revenues and, to a lesser extent, a negative impact of adverse weather on our volume, as well as higher investments to accelerate growth in our base business. Additionally, in the fourth quarter, we experienced a significant increase in employee healthcare costs. Reported EPS was $0.87 in the fourth quarter compared to $3.12 a year ago. Adjusted EPS was $1.98 compared to $3.33 last year. Cash from operations was $1.72 billion for full year 2022 versus $2.23 billion in the prior year period. Turning to our full year 2023 guidance. Revenues are expected to be between $8.83 billion and $9.03 billion. Base business revenues are expected to be between $8.65 billion and $8.75 billion. COVID-19 testing revenues are expected to be between $175 million and $275 million. Reported EPS expected to be in a range of $7.61-$8.21, and adjusted EPS to be in a range of $8.40-$9.00. Cash from operations is expected to be at least $1.3 billion, and capital expenditures are expected to be approximately $400 million. For our 2023 guidance, please consider the following. As Jim highlighted, we are now assuming COVID-19 molecular volumes to average roughly 5,000-10,000 tests per day for the full year. Expect volumes to continue to decline through the spring and summer, but could see a modest uptick during respiratory season in Q4. We assume average reimbursement for COVID-19 molecular testing to continue near recent levels through the end of the PHE. CMS has indicated that reimbursement will be $51 when the PHE expires in May. We continue to negotiate with health plans regarding coverage policies and reimbursement for COVID-19 testing post-PHE. Note that our COVID-19 testing revenue guidance for 2023 is approximately $150 million lower than the expectations we had back in October. With COVID-19 testing becoming a significantly smaller portion of our overall business, we expect an earnings cadence that is more in line with pre-pandemic seasonality this year, with Q1 typically being the lowest quarter of the year at roughly 22%-23% of full-year earnings. We have also taken actions to reduce our SG&A by approximately $100 million in 2023, including workforce reductions of approximately 1.5%, primarily in corporate support functions. The benefit of these actions will be modest in Q1 and will expand in the second quarter. I will now turn it back to Jim. Thanks, Sam. To summarize, we delivered strong growth of 5% in our base business in 2022. COVID testing revenues, as expected, declined last year and will represent a significantly smaller portion of our business going forward. We are increasing our efforts to drive productivity and expand margins in our base business. We look forward to sharing more of our strategy during our upcoming Investor Day on March 16th at the New York Stock Exchange. Look for an announcement soon with more details on this event. Now we'd be happy to take your questions. Operator? Thank you. We will now be open up for 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 in the queue. To be placed in the queue, please press star one from your phone. To withdraw, press star two. Again, to ask a question, please press star one. The first question in the queue is from Ann Hynes with Mizuho Securities. Your line is now open. Hi. Good morning. Thank you. Maybe if we talk about major assumptions, in the low end of guidance versus what's embedded in the high end of guidance. Can you also discuss the incremental $115 million-$125 million that is now benefiting 2023 versus when you reiterated that mid $8 range back in Q3 earnings? How much has fallen to the bottom line, and how much do you expect to be invested in the business? Thanks. Yeah. Let me just speak first about, you know, the revenue guidance. As we indicated in the remarks, our COVID guidance, which had originally been 10,000-15,000 requisitions per day in 2023, we've revised that downward to 5,000-10,000 per day. It's really just based on the trends we're seeing. It peaked in December. We averaged, you know, roughly 17,000 a day here in January, but that's had a downward slope. We continue to expect COVID volumes to decline, and that's really had about a $150 million change in revenue versus what we thought last fall. Again, the guidance we've suggested, you know, a midpoint of about $225 million in COVID revenue for the year. On the base business, you know, without acquisition help, we've assumed, you know, a 2.5%-3% revenue growth on the total base business. Really that's the, you know, that's the explanation on the revenue side. Yeah. Maybe I'll add a couple of comments, Ann, and thank you for the question. This is Sam. You know, versus what we shared back when we talked about in Q3 of 2022 around the fact that, you know, we were somewhere in that $850 range. Obviously, some positives that you mentioned, which is, I think what you're referring to is the $115 million-$125 million, which includes the PAMA delay, which includes also the reimbursement of the specimen collection fees, which we now benefit from. There are a couple of things also that have changed to the negative, really the key one being, or just one thing really that's changed to the negative, I should say, which is COVID. You know, the COVID assumptions that we had back then were, as Jim just said, 10,000-15,000 a day. Now we're seeing volumes, as we mentioned on the prepared remarks, 17,000 a day in January, and January is typically around the peak of the respiratory season, and then it starts to come down from there. You know, our expectations of 10,000-15,000 a day for the year are, I would say, realistic. You know, in terms of the range itself and what differentiates the bottom versus the top, I think it's gonna be really around the COVID assumptions. Again, keep in mind, we've taken COVID down by $150 million in terms of total revenues versus what we really shared back in October when we expected 10-15. We've also, from the benefit itself, you know, the $115-$125 that you referenced, we've also carved out a small amount for investments in the business, strategic investments that as we said, you know, a couple of months ago, we said we will reserve some of that benefit to invest in the business for long-term growth. Great. Thanks. Our next question is from Patrick Donnelly with Citi. Your line is now open. Hey, good morning, guys. Thanks for taking the questions. Sam, maybe one for you. You know, margins came in a little light of where we were expecting in 4Q. Can you just talk about the puts and takes there between DTC growth investments, inflation, pricing? Going into 2023, it seems like the base business margins need to step up. You know, you called out the $100 million SG&A cut. Are you guys changing any plans for DTC investments? Just wanna get comfortable with that margin bridge from the lower 4Q number and the moving pieces. Thank you. Sure, Patrick. Thank you for the question. Let me talk a little bit about Q4 and the margin rate in Q4, the 14.2%. Here are some of the headwinds, some of which we were seeing throughout the year, but obviously we also had a drop in COVID revenues in Q4, which was significant versus Q3 at least sequentially, which impacted the margin as well. In terms of the margin rate itself, we had inflation, you know, I would say per expectations, but still elevated. We had growth investments of roughly about $40 million that impacted Q4, which were fairly in line with Q3, what we had in terms of investments. Not necessarily a sequential driver. One driver in Q4 that impacted our margin rate was a higher employee healthcare cost. That was higher than our expectations and some of it driven by higher utilization, especially towards the end of the year after employees have met their deductibles, but also higher cost of healthcare in general. That was about 80 basis points of impact on the quarter in terms of negative rate impact. That was another thing. I talked about obviously, if you're looking at things sequentially, you have to factor in that COVID revenues were $184 million roughly versus approximately $313 million in Q3. A big drop in COVID revenues. If you look prospectively in 2023, here are some of the things that obviously give us confidence that we can achieve the rate that we have in our projections, and that's factored into the guidance that we gave. We have taken $100 million in SG&A reductions. I would say 90% of those have already been implemented. You won't see the benefits starting in Q1. You'll probably see it in the latter part of Q1, really taking effect in Q2 more fully. That's $100 million in SG&A reductions that we expect to see over the course of this year. In terms of investments, you referenced that, we expect investments to be less dilutive in 2023 versus 2022 because we start to see the benefit from some of these investments towards the growth of our business. Then finally, you know, obviously the margin rate's gonna benefit from the specimen collection fee reimbursement that we have. You know, we have a volume growth assumption as well and a revenue growth assumption that at the midpoint of the guidance range is, you know, on the base business, approximately 3%. That's gonna drive also additional margin improvement based on the drop down from those from those revenues. That's helpful. Thanks, Sam. You're welcome. Next question is from Jack Meehan with Nephron Research. Your line is open. Thank you. Good morning. I had a few questions on Quest Health. First, of the $96 million you talked about of sales, is there a rough breakdown you can share of COVID versus base? Second, on the base sales, how did that ramp after the fall push? Finally, just what are your expectations for consumer-initiated testing revenue and investment for 2023? Jack, let me start. On CIT, our consumer-initiated testing business, the total $96 million, more of it was COVID than our base business. However, our base business, once we launched the new platform, once we launched the marketing spend, actually performed as expected, in November and December. We got significant growth year-over-year, over 50% growth in the month of December based on the initiatives we put in place. As we've said, this year, we expect that business to be less dilutive versus more versus 2022. In terms of the total revenue projection, you know, for CIT, you know, we'll give you something at Investor Day. Obviously, the COVID will significantly ramp down, but we expect our base to significantly ramp up. We'll give you a better view of that at Investor Day. Great. One follow-up on COVID. If we do a look back on 2022, is it possible to call out how much of the sales came from serology, your CDC contract, or anything kind of outside of the core molecular and just what you're assuming there for 2023? Here, here's what I say. You know, as we indicated, the volume is coming down, right? We said 10%-15% last fall. We now expect 5%-10% for the year. The one thing I'll say on serology, we had a significant contract with the CDC. It was simply a test add on seroprevalence study. That contract, as expected, ended in December. The CDC just doesn't need that information anymore. What does remain, in addition to the PCR volume is, you know, we've got a roughly $25 million contract with the CDC to do continuous sequencing work of the positive cases to help inform the CDC and others, about the spread or the development of new, you know, of new variants that continue to pop up. Super. Thank you, Jim. You're welcome. Next question is from A.J. Rice with Credit Suisse. Your line is now open. Yes. Hi, everybody. Thanks. Obviously, it continues to be a steady pipeline of hospital-related deals. Can you tell us whether I know your closest peer is announcing transactions too. Do you see any change in the competitive landscape for those deals on the terms on which those deals are being done? You also mentioned seeing some more activity in small regional labs. What do you attribute that to? Is the COVID testing running off? Are you seeing some of the regional labs express more interest in potentially aligning with you? Yeah. A.J., thanks for the question. I would tell you no, there's no real change in the competitive dynamic in terms of pursuit of these hospital outreach deals or professional lab services types of engagements. What I would tell you is the funnel is as big as it's ever been. We expect to close several deals here in the first half of the year, so still feel very good about that. In terms of small regional labs that are out there, you know, first I'd say there's not that many left out there that are of significant size. Certainly, those that participated in COVID testing, and now that that volume is declining, yeah, we are seeing a few raise their hands and put up the retirement flag and, you know, potentially sell out. We look at each and every one of them. If we think it adds to our competitive position in a certain geographic marketplace, you know, we'll look at it. If we don't think we need it from a competitive standpoint, then, you know, we take a buy on those. Okay, thanks a lot. You're welcome. Next question is from Pito Chickering with Deutsche Bank. Your line is now open. Hey. Good morning, guys. Thanks for taking my questions. Quest has a very long track record of finding costs via like efficiencies through Invigorate. I'm curious how the SG&A cost cutting of $100 million compares to what Invigorate usually finds in SG&A or most cost savings via like Invigorate usually done in cost of services and fixed cost leverage on volume? Yeah. First, the $100 million cost takeout is incremental to our Invigorate plan for 2023. With our Invigorate plan, we target roughly 3% of our entire cost base for the company. Call that, $6.4-ish billion, 3%, call it $180 million-$190 million a year. You know, we actually got very close to that target in 2022. As we said in the prepared remarks, it did not completely offset wage inflation, and, you know, the slight price headwind that we did see, along with just other non-labor inflationary pressures. As we go into 2023, you know, we've got a full funnel of productivity ideas, productivity initiatives that we're driving through the company. I would say the other thing that we think will really help us in 2023 is simply the stabilization of our workforce. attrition has a really a major impact on your productivity when you're constantly churning phlebotomists, logistics, and specimen processing. That has stabilized. It's coming down. We feel good about it, and we feel good about the overall productivity plan in terms of offsetting inflation, which we expect to be slightly softer, easier in 2023. We expect price all in across Quest Diagnostics to actually be a positive for 2023. Just at the risk of being redundant here, I'm still gonna repeat something from what Jim said at the beginning, because it's really important for all your assumptions is the productivity improvements and the Invigorate actions, which is the 3% that we expect to get. That's in addition on top of the $100 million of SG&A reductions that we've already taken for the most part. Got it. Then sort of two quick follow-ups. You talked about a phlebotomist. I was just curious, you know, where the phlebotomist hourly wage is today and kind of if you think that is sort of the right levels to compete against retail channels? Second one is the public labs like omics have been talking about pricing for a while. Just curious, as one of the large labs in the U.S., what you assume for supply inflation for 2023, or can you offset that inflation simply by changing vendors and/or leveraging your scale? You know, our phlebotomy rates, you know, vary by region of the country. What I would tell you is, our increase in wages for phlebotomy, we're certainly in line with the 3%-4% wage impact that we saw last year. It's what we're planning for 2023. As I indicated, you know, our retention has improved. Our attrition has certainly stabilized and declined. We feel good about that. On the supply inflation, just curious. Yeah, I'm sorry, the supply inflation. Again, you know, 70% of what we purchase each year is under contract. When those contracts come up, they generally represent an opportunity for deflation, meaning, we're gonna run a competition between the vendors and, you know, we look for improvements, you know, from a cost quality and turnaround time perspective. You know, where the inflation hit us in 2022 is really on some of the non-supplies, the reagents and things like that. Some of that could have been pre-analytical supplies, masks, gowns, things like that, as well as just the normal inflation that you all see in your businesses, which could be hotels, air travel, and things like that. Now, again, we think that's softening here as we get into 2023, and we certainly, you know, put guardrails on travel and living and expenses and things like that. Great. Thanks so much. Yep. Next question is from Brian Tanquilut with Jefferies. Your line is now open. Hey, good morning, guys. Jim, just a quick question on rates from payers. I think in the past you've expressed some optimism in seeing a little bit of rate improvement on the commercial side. I think in your prepared remarks, you called out a little bit of reimbursement pressure at, you know, 60 basis points or so. Just curious, how, you know, how do we reconcile that and maybe just, you know, broadly speaking, what you're seeing in terms of payer receptivity to increasing rates on the reimbursement front. Thanks. Yeah. I think we said in the prepared remarks that our pricing was down about 50 basis points, which actually represents the best that I've seen in my time with Quest Diagnostics. We feel good about that. We've also said that as we renegotiate new contracts, and every one of these contracts is four to five years in length, so you can expect that 20%-25% will renew this year, which they will. The preponderance of those contracts, we've seen rate increases at a minimum rate, holding rate flat to prior contracts. We view that as very positive. We've also said is, look, we got a $35 million-$40 million rate increase through Medicare draw fees increases. Today, you know, we get reimbursed on roughly 25% of the commercial draws that we do. We're gonna push hard not only to expand that 25%, but those that do reimburse us to take those rates up as well. We are pushing hard, you know, at every turn to increase prices across this business. The last thing I'd say is, look, there's a portfolio of $700 million-$800 million of other businesses in Quest Diagnostics. That can be our ExamOne business, our employer solutions business, our employee population health business. We've pushed for 2%-3% price increases on that portfolio of business, and we've largely gotten those in place for 2023. Again, this is the most optimistic price outlook that we've put forward, since, you know, I joined Quest in 2013. Yeah, maybe just to put, you know, maybe a couple of points of emphasis around it. In the prepared remarks, we talked about a price impact in Q4 of roughly 50 basis points year-over-year price headwind. As we look towards 2023, what's reflected in our guidance right now is actually a positive price impact year-over-year. Obviously, that's benefited from the reimbursement of the specimen collection fee. You know, it's definitely a positive. We've managed to really make some good progress in terms of our pricing. The other thing, I wanna mention is, you know, we've talked about these value-based contracts, over 30% of our health plan contracts have some type of incentive for us to earn additional value, which we actually don't put into the price equation, but it's really good payer mix. These incentives could be based on share of spend with Quest Diagnostics. It could be based on leakage. It could be based on the movement of requisitions from high-priced hospital labs into laboratories like Quest Diagnostics. Those value-based incentives are an important part of our business. As we succeed in achieving that value for the health plans, there's rewards that come back to us. Brian, this is Sam. Just one last thing I wanted to add. You know, most of the price impact that we saw in 2022 was largely driven by some of the client bill, you know, largely with the hospitals. The health plan book was actually pretty good, pretty stable. Got it. Very helpful. Thank you. The next question is from Kevin Caliendo with UBS. Your line is open. Hi. Thanks for taking my question. I'm really just trying to understand all these puts and takes a little bit. I guess my first one is the $100 million of SG&A, it's incremental. You know, Invigorate typically offsets in other inflationary pressures, labor costs and the like. Is this $100 million incremental such that it drops to the bottom line, or is there other offsets there? Two, is there any change with the pricing benefit that you're talking about? Better pricing is certainly a tailwind, I would think, for 2023. How do we think about that in terms of? Or is there an offset there on mix on the margin for, you know, basically your volume mix, something to that effect? Just trying to understand the puts and takes. Yeah. Yep. Yep. Again, the $100 million, it is incremental to our Invigorate plan of record, yes, it drops right to the bottom line. In terms of pricing, no, the improvement drops to the bottom line as well. We're not suggesting any other offset at this point. Obviously, we had strong rev rev per req both in Q4 and for the year. That benefit, you know, we would put in three buckets: test mix, which was very positive for the year. You know, we saw a big surge of flu and RSV testing, along with COVID, you know, flu and RSV that came in Q4 that has since moderated. Then, you know, our business mix was good in terms of payer mix. Then finally, year over year, we made nice improvements in patient concessions. So our ability to collect, our ability to reduce denials, and get paid for the work we do was certainly a positive tailwind for us in 2022. If I can just ask one quick follow-up. Should we assume in our models the billion-dollar buyback gets used in 2023? No, Kevin. Sorry, the billion-dollar share authorization increase, that's in addition to the $311 million that we currently have on the previous authorization. You should not expect that that is what's assumed in the guidance. What we've assumed actually is that any share buybacks we do are to offset equity dilution. Essentially the share count is roughly flat with where we are at the end of the year. Don't assume the $1 billion to be built into the projections. Very helpful. Thank you, guys. You're welcome. Next question is from Andrew Brackmann with William Blair. Your line is open. Hey, guys. Good morning. Thanks for taking the questions. Maybe as it relates specifically to the COVID test reimbursement with the PHE ending, can you maybe just give us a little bit more detail on how those conversations with commercial payers are trending and how we should be thinking about expectations there? I guess just relatedly to that, how are you thinking about any permanent changes to your respiratory testing portfolio broadly now that we've lived through sort of three years of COVID? Thanks. Yeah. Again, CMS, and we've had direct discussions with them, is very clear that once the public health emergency ends, the rate will go to $51. We are certainly expecting and driving those discussions with commercial payers that we expect that rate to be $51 as well. It's a new test that should be treated as such. Some may have a slightly different opinion on that, Andrew, that's where we negotiate. In addition to that, you know, there's coverage policy decisions that all need to be worked out as well, asymptomatic versus symptomatic testing. We're bullish that, you know, the country needs these tests, commercial payers need these tests, and we're gonna drive these discussions in the most favorable way that we can. In terms of respiratory panels, obviously with COVID still out there, it's not gonna go away in 2023. When patients presented in the fall, winter, and here in January with respiratory symptoms, some physicians ordered three tests, some physicians ordered one and then reflexed to others, depending on if the first one turned out to be negative. There were a variety of patterns that were out there. We don't expect COVID to go away in 2023. Whether RSV and flu tick up like they did in 2022 remains to be seen. We'll just have to see how it plays out in the late fall, early winter. The next question is from Derik de Bruin with Bank of America. Your line is open. Hey, good morning. Thank you for taking my question. one quick housekeeping question and then a follow-up. The housekeeping question, just expectations for net interest expense for the year. How should we think about the M&A contribution that's embedded in your revenue and your volume growth and in the 23 guide? Should we still think about that 2% bogey? As the way to look at it for going forward on the revenue contribution. Thanks. Okay. I'll handle the questions, but I missed the part on the expense. What type of expense? I'm sorry, net interest expense. Oh, net interest expense. Okay. That's roughly flat, I'd say year-over-year in terms of 2022 to 2023, Derik. Yes the assumption to take there. In terms of M&A, what we have assumed in our guide for 2023 is really no material prospective M&A. Essentially, what's closed already, what was included in 2023 in terms of deals that have been made, any outreach, for instance, hospital deals that have already closed in 2022, those, you know, you'll see a benefit from in 2023, but there is no prospective M&A included. You know, when you think about our long-term target that we have talked about, around 2% contribution from M&A, we have not assumed any prospective M&A, in 2023 on top of our base revenue growth. All right. with completed M&A then what's the contribution for 2023? It's not significant. We're not gonna give the exact contribution, but it's really not that material in terms of, you know, what we have, what we have this year that carries into next year. Derik, we had, you know, one month of Pack Health because that's what closed last year in, at the end of January. Then the Summa Health and the Northern Light outreach acquisitions, those were pretty small. Great. Thank you. The last question in the queue is from Elizabeth Anderson with Evercore ISI. Your line is open. Hi, guys. Thanks so much for the question. I had a question about advanced diagnostics and sort of your assumptions for 2023, including sort of contribution and then more specifically on the positive impact in pricing and any kind of incremental investments that you think specifically for 2023, will be necessary to sort of sustain that growth, accelerate it? Yeah. We've talked about our investments in, you know, really three categories. First, consumer-initiated testing, which we've covered. That business will continue to grow on the base side of our testing in 2023. As we've indicated, it'll certainly be less dilutive than it was in 2022. The second very big area of investments has been in oncology and what we call genomic sequencing services, and really building out what we call our integrated genomics platform. As I mentioned in the prepared remarks, you know, we brought up a new LDT in Q4 using the Illumina platform. It's referred to as a TSO 500, it is a Quest LDT, and is really important in therapy selection decisions for cancer. We're really happy about that. We brought it up at our SJC facility, and we'll be expanding that to a second facility here in early 2023. We certainly expect that business to grow. On this in-integrated genomics platform, it, you know, Look, the world has moved from microarray testing to whole exome to whole transcriptome, and now moving quickly to whole genome testing. We expect with this platform to have, you know, a really good sample to, you know, complete information platform, low cost, high throughput, really good turnaround time, and we'll update you more about that at our upcoming Investor Day. The final thing is, you know, we refer to it as pharma services, which grew over 15% last year. This is Quest, this is us participating in companion diagnostics. We participate in phase I clinical trials, either from a pharma company or from a CRO. Then, we do a lot of testing and validation work for our IVD partners in the industry, and that business continues to grow as well. The last thing I'd say is, look, we felt really good about our growth in prenatal, testing this year and other, you know, rare, genetic disorders. It's a business that continues to grow in the high single, low double digits for Quest Diagnostics. There is one more question that popped in the queue from Rachel Vatnsdal with JP Morgan. Your line is open. Perfect. Thanks, guys, for taking the question. First up, you previously talked about some of the uneven recoveries by geography. Last quarter, you noted that New York City was still not fully recovered. Can you just give us the latest update on the recovery there in New York? My follow-up is just on the Analyst Day this March. Can you walk us through some of the topics that you plan on hitting on and any expectations for that? Thanks. Yeah. In terms of, Thank you, Rachel, for the question. This is Sam. In terms of the geography, I think it's consistent with what we said before. Let me repeat what we said, you know, because we haven't seen a really major change in the dynamic yet. We are back to pre-pandemic levels across, and above, across most geographies. The exception, notable exception being the East, where in New York City, I think we've seen roughly 3%-5% outflow from the city in terms of population, 3%-5% of the population leaving the city. You know, we haven't seen that fully come back yet, even though, you know, the city is much more vibrant and there's more activity. I don't think in terms of people coming back and getting healthcare in New York City, I don't think it's back to where it was pre-pandemic by any means. The other thing we look at is ridership on public transportation as an indicator, as a key metric to see how is that also coming back. You know, it's still about 35% or so below pre-pandemic levels in terms of ridership based on the last data points that we got. You know, the punchline here being that the East is still lagging, but everywhere else is above pre-pandemic levels in terms of utilization. Yeah. Rachel, yeah, thanks for the question on Investor Day. I think there's really four, you know, broad topics that we're going to talk about. First, around growth. We'll go deep on what we're doing from an oncology and genomic sequencing standpoint. We'll give you a lot more color on our consumer-initiated testing business, the progress we're making and why we continue to be excited about that. We'll also address, you know, the core part of this business, which is serving physicians, serving health systems, and what we're doing to continue to drive growth in those segments. You know, finally, and as always, you know, we'll address, you know, what we're doing to improve the customer experience and drive productivity in this business. It's a never-ending part of what we do, and we continue to drive productivity and we'll give you our plans for 2023 and beyond. Finally, just as a reminder, it is March 16th. It'll be at the New York Stock Exchange, and we'll obviously, you know, provide our long-term outlook as part of that as part of that session. I'm showing no further questions in the queue. Okay. I wanted to thank everybody for joining the call today. We look forward to seeing you all on March 16th at the New York Stock Exchange. Have a great afternoon. Thanks, everyone. Thank you, everybody. Thank you for participating in the Quest Diagnostics fourth quarter and full year 2022 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 203-369-3056 for international callers or 888-566-49...0498 for domestic callers. Telephone replays will be available from approximately 10:30 A.M. Eastern time on February 2, 2023 until midnight Eastern time, February 16, 2023. Goodbye.