Hey. Good morning, everyone. My name is Eric Coldwell. It's really a great pleasure to have Quest Diagnostics with us here today. Jim has been incredibly gracious over the last couple of years. Last few years now, I guess. Where are we? Time runs together. Year four. Gosh. Hard to believe. Yes. Year four. Hard to believe. We knew each other for a long time before that, though. We did. Really gracious with his time. Great leadership example at the company. The performance at Quest has been exceptionally strong the last few years, and it has been a lot of fun covering this space, which used to be a bit of a stable, but maybe some would say boring industry. There is not much boring to it anymore. So it has been— Boring and good results are okay. —yeah. Boring with good results. Stable and good growth. Yep. Of course, Jim, President and CEO. We have Damini and Dan still gracing us from the IR team here. Dan, I bet you can't wait to go on to new pastures, and Damini's getting up to speed quickly. We're not going to do a slideshow. We're going to jump straight into Q&A, but I don't know if you have 30 seconds of prepared remarks or even want to go off the cuff, or I can just jump. Why don't we just jump right in? Right in. We've got some great questions. Awesome. Thanks. All right. Well, I wanted to tee this up or start this off with a bit of a report card. You had an Investor Day couple of years back, and you laid out some long range plans, and you've done incredibly well versus those plans, tracking very nicely. But how you're getting there is a little different than what was set up, how this was staged. For example, I believe the original target was $1.5 billion of M&A, and you've done maybe a couple of hundred million of M&A 2/3 of the way through. Yeah. What really happened or changed versus that, if you can set yourself back in time, versus that original LRP, the plan to get more of your growth through M&A, to spend more on M&A. In fact, it's been more partnership. It's been more organic. Yeah. What really changed, number one and number two, should we read into that anything about, hey, you don't like the pipeline that's out there, or there were better alternatives to go after or is there a big chunk you've got to— Yeah. —to hit your target. You got to spend $1.3 billion in the next year. Yeah. I kind of doubt that's going to happen. But you— Probably not. —steer me in the right direction. Yeah. First of all, the guidance we put out there, 4%-5% revenue growth. We thought 1%-2% would come from acquisition, and I think we said 7%-9% EPS growth. In 2025, our revenue growth was just north of 10%. I'm sorry, it was more 12%. Revenue growth of 12%, earnings growth of just north of 10%. This year we've guided to revenue growth of close to 8% and earnings growth of north of 13%, closer to 14%. Yes, we're beating that long range plan. Most of this year's growth, it's primarily all organic. Now, I would say that the funnel has changed. The funnel still looks good. If you back up one year, the numbers are, w e've deployed, since 2024, $2.8 billion worth of capital in M&A. 2024 was a heavy year from an acquisition standpoint, with LifeLabs out of Canada, three large substantial outreach deals, including Allina Health, OhioHealth, and University Hospitals, a very large physician group in the metropolitan New York area that shut down their lab and we purchased that outreach, and a few others. In 2025 and even into this year, we had to digest all of that. It's a lot of organizational capacity devoted to integrating these things. Also in 2026, it started in the back half of 2025. It wasn't M&A, but taking on Corewell Health, the Co-Lab arrangement, a $250 million business, and then taking on their Fresenius laboratory testing. Fresenius shut down their labs, and all of the laboratories testing associated with these dialysis patients now comes to Quest Diagnostics. It's another hundred million dollar book of business. They're not acquisitions, Eric, but they take substantial organizational time. Now, the funnel's still good. There's not that many substantial regional labs left out there. The ones that are out there, I can tell you, they're in some way, shape, or form impaired. If they're for sale, they're largely impaired. They're melting ice cream cones. We have a 10% ROIC target after year three. We're picky. We're choosy. But the funnel is still there, and there's still some active things going on. When you think about, you've already highlighted the unique nature of Fresenius and Corewell and how that stated what is reported as organic growth because you bought little pieces, but a lot of this was customer onboarding. Yes. Regardless of how you define it, you're putting up solid mid-single digit growth rates, even excluding those. What part of that would you define as structural, whether that be a permanent reset in the number of tests per requisition, or just the volume of new lab tests, the utilization of lab tests in general, things like that, versus maybe things that were a little more company specific or transitory, like picking up some new lives with Centene or— Yeah. —Elevance, getting back into some states with Elevance. Yeah. Maybe you could parse that for us and what I'm really going to drive to, put you on the spot, and you'll find a great way to deny me. But you're going to have another LRP at some point. You're going to have another Investor Day where you're going to lay out a new plan. Are we walking into a plan, at least at this juncture, where you'd say, Look, maybe we could be a little more optimistic on organic growth the next time? Yeah. Let me start with some of the drivers, and then we'll talk about our next Investor Day, March of next year. First of all, the physician, our core book of business, right? A $12 billion company, about $9 billion comes from physician offices, all types, general practitioners, internists, cardiologists. Every ologist orders lab work. That is still structurally sound, stronger than it was post-COVID than it was pre-COVID. Why is that? The first thing I would tell you is the country's not really getting healthier at this point, okay? When we look at rates of diabetes, rates of cardiovascular disease, liver disease, you name it's not declining. The aging of the population, continued chronic care. By the way, how do we know this? We're going to test 250 million people this year. 250 million. Unique, it's probably 110 million-120 million people. We have our hands and arms around the health of the U.S. population. When we look at things like LDL, A1c, insulin resistance, other liver function, kidney function, we do not see a decline in these chronic conditions. That seems stable, and it is different. Now, why is it different as well? There are new tests added into the portfolio. Lp(a), ApoB, insulin resistance are now common tests ordered by physicians. Second is the whole brain health phenomenon, the Alzheimer's testing. These blood-based biomarkers are Aβ42/40, a proprietary test, p-tau217, proprietary algorithm that helps assess. Originally positioned for neurologists, these tests are actually taking off in primary care. Primary care are using these tests to then make decisions, do we refer to a neurologist or not? These are some of the things that are driving the growth on our core physician business. Now, we all know at the other end of the spectrum, this wellness phenomena that is— Yeah. —taking off. Our belief right now is this is sustainable. This is a sustainable segment of the population. It is people aged, people born in, let us say, late 1980s, all the way through the Gen Z, 2012. People are owning their health. This model of let us go to a primary care doctor, let us see what the primary care doctor says. Maybe they will order lab work. That model is being turned upside down. People are proactively getting lab work. They are checking their biomarkers. I have a WHOOP on my hand. You combine these biomarkers with your biometrics. You feed it into an AI engine. You get a wonderful report, and now you make a decision whether I need to see a physician or not. So it is proactive. It is sustainable. You have to remember, wellness is not the absence of sickness. People that want to stay well are becoming much more proactive about it, and we are seeing it. Our own questhealth.com business, a direct business, plus the partnerships that we have formed with Function Health, Junction Health, Hims & Hers, Hone Health, WHOOP, Oura, and most recently, Apple Health. Now, Apple Health not yet contributing. It will not start till December, but all of these are contributing to both the volume growth as well as the mix up from a test per req and a test mix standpoint. Let's stick with consumer for a second. You opened the door there for me. Was there an updated comment on sizing of that business, made at another event yesterday? I do not know if Sam gave some update of it. What we said is at the end of last year, it was a $250 million book of business growing at a minimum of 30% this year. Sam may have said it had an exit rate of $300 million or something. I am not 100% sure. But it is a fast-growing portion of our portfolio. The margin rate on this business is accretive to the company average. We like the partnerships that we have formed. These are strong, sustainable brands that are in the marketplace, and we have been very pleased with the progress. Have you seen price per partner, what they offer, the pricing they are offering consumers and their battery? Have you seen that pricing being reduced? We have not. Originally, Function Health, when they first launched the company, I think had a price of north of $400. But now they are advertising a dollar a day, $365 for one large wellness panel, and then a check, a smaller panel later in the year. So no, we do not see people pricing against each other. WHOOP and Oura and the rest are about the same. I know some of these. I've seen tests advertised that have 500 markers. That's not the norm, but I've seen some pretty enormous ones. Most are dozens or maybe 100, 200 tests. What are you seeing as an average? Yeah, there's a lot of confusion between some will advertise analytes, some will advertise tests, and there's a difference. A CBC, complete blood chemistry, has a lot of analytes. Yeah. That is really, we consider that one test. Yeah. There's a lot of, I would just say marketing practices. Some talk analytes, some talk tests, some don't know the difference. All I can say is versus a physician office rec, which averages north of four tests per rec, these are obviously up in the 10- 12 and sometimes north of that. When you explode 10 tests into analytes, yes, it can quickly add up to hundreds of analytes. One of the pushbacks I have heard from, let us just say, others on why they may not want to be as exposed here is that there is a view that perhaps over time, a very crowded market, a lot of players, the pricing comes down, the battery of tests that are offered or need to be offered to engage consumers to choose one versus the other have to go up. Is this not a price erosion category over time? How do you outperform on margin versus the overall book? Well, remember, we have two approaches to the market, questhealth.com, consumers come direct to us. I think our pricing has been very, very stable there. Remember, there is a wholesale price from us to them, and there is their retail price. Their pricing can go up and down all day long. Our wholesale prices to them are staying relatively steady. I think the other important thing to know about this segment is it is cash pay. There are no denials. 12% of the work we do for physician offices is denied at first pass. We ultimately work that back to about 7%. Patient concessions still running at about 4%. In the consumer health business, it is all cash pay, it is all direct. There are no denials. There are no patient concessions. By the way, when you think about it, they are all coming to our patient service center. They now know who we are. They know who the Quest brand is, and there is no real incremental logistics cost. I have to send a courier to these patient service centers every single day. Whether they pick up 100 recs or 120 recs, there is no incremental cost. We are largely leveraging the fixed cost base that we have in the company as we grow this consumer health segment, which is why I said that the average margin in this business segment is accretive to the overall company average. Going back briefly, we won't stick here the whole time, but I do want to keep hitting on this volume and your performance over the last several years. At the last IR day, you highlighted, you put up a map, you said 50 MSAs. You highlighted 14 where you were previously unexposed, not unexposed, but underexposed. Low. Low relative mix. Yep. You were going to go after those. Is there an update on those 14 MSAs and how they've done? I will tell you with three of them, we went after, and it started with an acquisition of the outreach business. Our market share in Minneapolis, our market share in Cleveland, Ohio, our market share in Columbus, Ohio, and the characteristics of those markets. In Minneapolis, three very large health systems that own probably 80%-85% of all the primary care docs. Cleveland, Ohio, dominated by two large health systems, University Hospitals, Cleveland Clinic. In Columbus, Ohio, largely driven by OhioHealth and then The Ohio State health system. We simply did not have access. There is just not a lot of independent physicians in those markets. They are owned by the health systems. Health system physicians use health system laboratories. We built relationships with three large health systems in each of those markets, and we purchased that book of business, and now we start to see growth rates well beyond what we purchased. Because now we are in the market. You see Quest people, Quest logistics, Quest patient service centers, and we can grow the books of business from there. Those are ways you enter. There are some geographies where it is structurally disadvantaged to the independent labs, and sometimes the only way in is to go and do a deal with a health system, and then you grow it out from there. I want to talk about your team, people, a couple of people questions. You had, I would consider what I would say would be two larger changes or hires over the last several months. A new SVP, Chief Strategy and M&A Officer. Ben started in February. I know Dermot was retiring, but Ben has a bit of an interesting background. CDMO, some diagnostics, some specialty pharma. Obviously great to get a healthcare guy, probably just a natural fit, but is there something more to read in terms of the nature of that hire, what his background was in terms of how you're thinking about growing the company, the strategy philosophy on what markets you're going after? Yeah, I wouldn't read too much into it. Ben was a seasoned strategy M&A person. He knew healthcare wasn't in our space per se on the service side. But he came from Danaher. Danaher, as you know, is a great company, very polished from an M&A standpoint, integration standpoint. I would even argue they bring lean processes to M&A transactions. So really, that's why we hired him, his experience, his strategy experience, and a lot of respect for the work he did at Danaher. You've already hit on this, so I don't want to beat a dead horse, but going back to that comment that M&A was a couple hundred million versus a $1.5 billion target, was a retirement and a transition part of being a little less, or was it just, hey, we're so busy with Corewell and Fresenius and other things that. It was more of the latter. Yeah. Dermot is still with us in many ways as a consultant. Yeah. There's been a very smooth transition. Again, the funnel looks good. It's just some of these take time, and we're more discerning, or very discerning. Then on the board, Tim Wentworth. On one hand, interesting because your top competitor has probably 500 or 600 access points inside of the pharmacy that Tim most recently ran, but he also brings not only that retail and pharmacy experience, but also a deep insurance PBM background as well. Right. How's he helping you the most? Yeah. First of all, we brought him onto the board after he had completely left— Yeah. —Walgreens. They broke the company up. Right. Of course. As you know. Yeah. We have a presence in CVS stores. Yes, nearest competitor more in Walgreens. I can tell you though, while we value the presence in those settings, those settings are not what I would call the optimal settings to place patient service centers, because they're small spaces, you can generally only have two draw rooms. And we prefer larger patient service centers where you have some scale. We certainly didn't hire Tim to try to get us into Walgreens. He's just genuine. We like former CEOs that have been in healthcare. He's got great retail experience, great consumer experience. His payer experience is terrific. And Tim started out as an HR professional in his career, and that was a skill set that we wanted on the board as well. On the two big partnerships, which are arguably getting one of them in particular should be the next year, should have a lot of margin enhancement in it. But talk about Corewell and Fresenius. Corewell entering at a low single digit margin, working up to low double digits. Fresenius starting out very strong. I think you've made some positive comments on where that is today. Any change in your outlook on timeline to getting to those margin profiles? Any certain circumstances over the next year opening the Michigan lab with Corewell? Does that cause any kind of a gyration in profitability, even if it's a quarter or two phasing difference? Yeah. I know we're going to move on to the next deal eventually, but these— Yeah. —are the ones in the moment that Just to remind everyone, Corewell Health— Yeah. —very large health system in Michigan. 21 hospitals, adding about $250 million of revenue. This year, we're just running the Corewell laboratories inside those 21 hospitals. Why is the margin rate low when you initially start these things? Because we have to, over time, bring Quest equipment with our preferred suppliers, Quest reagents, and that's how we bring them savings. That's how we accrue better margins, is when we use the relationships that we have established from a supply-based standpoint to bring the supply-based savings. You don't change out all the equipment overnight. That takes time. It's a three-year pathway to do that. Next year, all the work from an outreach perspective that flows into those 21 laboratories will now flow into one central lab that we're building with Corewell. It's a joint venture in Southfield, Michigan. When you do that, you're taking a lot of work out of the hospital labs, moving into one central lab, and you get scale economies benefits from that. We put our Michigan book of business in there, the legacy Quest business, and now you have a substantial laboratory that is now going to compete for all other work in the state of Michigan. It will be the largest laboratory in the state, and we're damn proud to be partnered with Corewell, and we'll have a commercial team, logistics team. It'll be like a standalone business. Fresenius, hundred million dollar book of business. By the fourth quarter of this year, it'll start to achieve the average margin rate in the company. It's been improving each quarter. And next year should be accretive to the average margin rate of the company. Got a question from the audience on sticking with partnership deals, which could include M&A, of course, but may just be coming in to help with management in those facilities. What are the largest challenges that the health systems are facing today, and how do you differentiate yourself when you're going after that business? How do you differentiate yourself versus your arguably one competitor that can compete everywhere, maybe a couple of others who could do some deals in some regions, but how do you differentiate? When a customer says, "I want to outsource, or, I want to sell my outreach business," et cetera, how are you differentiating in that conversation? Yeah. Let me just first touch on the structural— Yeah, structural. —changes, some of the things that health systems. Look, their environment is obviously tougher because of the changes in Medicaid, and the changes in the exchange plan. To the extent these health systems were serving more of a Medicaid population, had more exchange lives, it certainly creates a more difficult operating environment for them. Laboratory is one area, it is a substantial expense within a health system, and to the extent an independent lab can come in and bring our scale, our economies, our procurement synergies. We can generally save them 15% in terms of running their hospitals. Why are some of them, in addition to us running the labs, some of them sell their outreach book of business? It could be a couple things. One, they have come to the conclusion that they are really not making money on it, just probably getting paid higher rates but still not making money on it. Two is they see the writing on the wall in terms of health plans starting to bring their rates down and not paying 200% of Medicare, 300% of Medicare. Three is sometimes they just need the capital. They need the capital infusion. Having said that, NewYork-Presbyterian, right here in town, they sold us their outreach book of business. Honestly, for them, it was more a judgment of where is their next dollar of capital best spent. Neurosurgery, cardiology, oncology, and at the end of the day, their returns in these other areas were stronger, and they said, we do not need to be in the outreach business. So what differentiates us? Look, in some cases, it can be, honestly, location. Proximity to a nearest central lab. Where we have a large central lab in New Jersey, Hackensack Meridian Health has hospitals all around that. It makes moving that work from the hospitals into our core lab really, really simple. So proximity matters. Some of the other service elements can be around data. Helping the health systems manage utilization, especially on the inpatient side. Remember, inpatient lab work, you do not get paid for. It is part of a DRG. To the extent you can help physicians reduce the utilization of the lab work, it actually brings savings beyond just our supply cost savings. So, we think we are very, very good at helping health systems manage utilization. We think our service levels are very good. We think our people's skills when we run our patient service centers, and we think our MyQuest application and some of the AI things that we have added to that are differentiating. I actually hate asking the PAMA question at the end of a great session, but I will be left out of the room if I do not. So we are sitting here a few months away from having an answer, one way or the other. We could get a delay. Technically, we could get RESULTS Act passed by the end of the year. I personally feel like that is going to be pretty tough. I want your perspective on that. But I think the other part, which is a bit different this year than the past, is that CBO recent, not only are we doing a new data run and we are waiting on those answers, possibly in the next, who knows, 20 days or so, we could possibly be getting some answers. How many hospitals participated, et cetera. What is different this year is that unlike prior delays that were implemented, almost effectively another version of Doc Fix that lasted forever, we had PAMA delayed 6x here. CBO actually scored enacting or coming back to PAMA as a budget saver for 2027 and beyond as opposed to a budget cost. Yeah. A lot of stuff to throw at you with 2.5 minutes left, but where do we sit on this? Yeah. What is the real gut feeling on what's going to happen and when we're going to actually have some better answers? Yep. There's a lot of balls in the air right now with respect to PAMA. The things that we do know is a data collection process was conducted. We have no idea how many labs reported. Remember last time when the data collection process occurred in 2016, less than 1% of all eligible labs sent data in. We know we sent data in, we know our nearest competitor did, and a few other labs. It largely became a price profile established by less than 1% of all the labs. The data collection process has stopped. CMS has said end of September, early October, they would give a view of the data. We hope that they'll provide the number of labs that reported. I can tell you, if it's anything less than 95%, 90% of all the labs, we're going to throw the challenge flag. And we're prepared to do that. Our trade association is prepared to do that because it's a volume weighted median calculation. To the extent that you're throwing out a lot of hospital labs that we know are priced at 200%-300% of Medicare, it simply won't be fair. And so we're prepared. We'll see what comes back, but we're going to be prepared. At the same time, we are pushing hard and furious for the RESULTS Act. We think it is a fair approach. We think it's the right way to collect the data. It simplifies the data collection process, and it'll provide a more accurate view of market-based pricing. We've got 130 co-sponsors. It's bipartisan. Now, the problem. Congress basically leaves town at the end of this week. They go back, they campaign, they come back into session post-election in November. There's a lot to get done between that date and the end of the year. I do believe there'll be some type of healthcare package. In the past, delays have been part of that healthcare package. We're going to push hard to get results as part of that package. It's gone through House Energy and Commerce. They had a hearing on it. It was a very positive hearing. The bill sits in Senate Finance. It sits in the other House Ways and Means. They have a view of that as well. And so we're going to continue to push hard. Congress doesn't want to have to keep dealing with the structural flaws that are part of PAMA today. They would like a long-term fix, just like we would. I can't give you a probability on what will happen here. I don't think a delay is the highest probability. All right. We just hit time, but I have to squeeze this in. Your competitor had an Investor Day a week ago. They came out and said, we really don't know, but $100 million, give or take, is our best guess on where we should start with a potential gross and net headwind, pre-tax headwind. And we'd hope to offset some of that if PAMA came into effect. Are you comfortable even putting a number out there when you don't know how many hospitals reported, you haven't seen the data yet? Well, what we do know is there's a max cap of 15%. Yep. So worst case scenario, it is about 8% of our revenue. By the way, it has been falling. I know it is always said 8%, but if you look at 8%, we do not give the decimal point. But I think we all know lives are shifting from Medicare into Medicare Advantage plans. When I came into the business, it was 65% Medicare, 35% Medicare Advantage. Today, it is less than 50% Medicare and more than 50% Medicare Advantage. So that book of business has not grown substantially. It has grown a lot less than our normal business because lives are shifting. So, the max exposure, if every test went down by 15%, I do not think that would happen, but if every single test went down by 15%, yeah, max exposure, 8% of $12 billion times 15%, you get something a little north of $100 million. But that is kind of the worst case sizing of it and we are going to push hard for a fair and equitable solution. Really appreciate your time today. Yeah. Thank you, Eric. Thank you so much. Thank you. Everyone, please join me in thanking Jim, and great story here.