Welcome to the Quest Diagnostics First Quarter 2026 Conference Call. At the request of the company, this call is being recorded. The entire contents of this call, including the presentation and question- and- answer session that will follow, are the copyrighted property of Quest Diagnostics with all rights reserved. Any redistribution, retransmission, or rebroadcast of this call in any form without written consent of Quest Diagnostics is strictly prohibited. Now I'd like to turn the conference over to Dan Haemmerle, Interim Vice President of Investor Relations for Quest Diagnostics. Please go ahead. Thank you, and good morning. I'm joined by Jim Davis, our Chairman, Chief Executive Officer, and President, and Sam Samad, our Chief Financial Officer. During this call, we may make forward-looking statements and 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 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 quarterly filed 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. Growth rates associated with our long-term outlook projections, including consolidated revenue growth, revenue growth from acquisitions, organic revenue growth, and adjusted earnings growth, are compound annual growth rates. Now, here's Jim Davis. Thanks, Dan, and good morning, everyone. Our strong first quarter performance reflects a focused business delivering innovative solutions that meet our customers' evolving needs for lab insights. During the first quarter, we grew revenues over 9%, almost entirely from organic revenue growth on broad-based demand for our clinical innovations, expansion into new clinical areas, and collaborations with elite healthcare and consumer health organizations. In addition, we grew adjusted diluted earnings per share by approximately 13%, supported by productivity gains from our deployment of automation and AI across our operations, both in and outside our labs. Given our strong first quarter momentum and continued strategic focus, we are raising our revenue and EPS guidance for the year. Now I'll provide more detail on how we executed our strategy across key customer channels and operations during the quarter. Quest operates at the center of healthcare, delivering solutions that make testing simpler and smarter for our core clinical customers, physicians, and hospitals, as well as customers in higher growth areas of consumer health, life sciences, and data analytics. In the physician channel, we delivered high single-digit revenue growth in the first quarter on strong demand for our clinical innovations, geographic expansion from greater health plan access, and increased volume from our growing business in enterprise accounts. We are also pleased with our growth during the quarter in end-stage renal disease, a new clinical area for us, focused on lab testing for dialysis patients. In addition to volume from serving thousands of dialysis clinics operated by Fresenius Medical Care nationwide, we also added independent dialysis clinics and other providers as clients of our lab and water purity testing. In the hospital channel, we grew revenues at a double-digit rate, with the majority of this growth coming from our collaborative lab solutions for Corewell Health, a leading health system in Michigan. Our Co-Lab solutions combine our scale, clinical depth, and operational excellence to improve quality and cost efficiencies. Our implementation with Corewell Health is proceeding smoothly. We are also advancing our joint venture with Corewell Health, with plans to open a state-of-the-art lab in Southeast Michigan next year. Hospitals value our flexible solutions that enable them to free up capital while benefiting from our expertise and innovation. Our pipeline of potential Co-Lab collaborations, as well as potential outreach and independent acquisitions, remain strong. In the consumer channel, we deliver solutions that empower people to own their health. Similar to recent quarters, we generated significant revenue growth during the quarter, both from questhealth.com and from our portfolio of top consumer health collaborations. Growth from questhealth.com featured robust double-digit customer repeat rates and notable demand for new solutions, such as our Elite Health Profile and autoimmune and hormone tests. Quest is a trusted healthcare brand with broad reach, which enables us to drive efficient customer acquisition for questhealth.com. In addition, we are the preferred lab engine for top consumer health brands, and a key part of our growth this quarter was due to consumers accessing our lab insights within the apps and wearables of our collaborators. Our customer channels are also growing as we continue to deliver advanced diagnostics in five key clinical areas, advanced cardiometabolic and endocrine, autoimmune, brain health, oncology, and women's and reproductive health. We delivered double-digit revenue growth across several of these areas in the first quarter. I'll comment briefly on a couple of examples. In the areas of brain health, Alzheimer's disease is a progressive dementia that affects over 7 million people in the U.S. and is expected to affect nearly 13 million Americans by 2050. For several quarters, we've spoken about delivering double-digit revenue growth from our AD-Detect blood test for Alzheimer's disease, a trend that continued in the first quarter. To understand this growth, consider that until recently, clinicians typically diagnosed Alzheimer's using PET CT scans, which are costly and inaccessible for many. While these scans are highly accurate at identifying mid- and late-stage disease, they are less sensitive at detecting Alzheimer's in the early stages before major impairment has occurred. Years ago, we recognized the power of blood testing to reveal disease earlier and more affordably so more patients could benefit from the emerging therapies with potential to slow progression sooner. Today, Quest provides a range of tests under the AD-Detect brand, featuring sensitive mass spec tests for amyloid beta and ApoE, a genetic risk marker to complement p-tau217 and p-tau181. We also developed a proprietary algorithm that combines multiple biomarker results to establish Alzheimer's pathology with sensitivity and specificity of 90% or greater. At the same time, we are seeing that physicians are becoming more confident using blood tests to aid diagnosis and guide pharmaceutical treatment decisions often in lieu of imaging. As blood tests are increasingly used both in primary and specialty care, we expect to remain a leading source of diagnostic innovation and insights for managing this disease. In other areas, we drove double-digit revenue growth across much of our cardiometabolic and endocrine portfolio, including for tests for Lp(a) and ApoB, as well as for kidney, liver, and reproductive hormones. New guidelines from the American Heart Association recommend Lp(a) and ApoB testing for the first time, underscoring the clinical value of these important biomarkers. We are also encouraged that the guidelines now recommend screening for high cholesterol at young ages, as new research has found dangerous cardiovascular events are increasingly occurring in young adults. In oncology, we recently announced a research collaboration with City of Hope, a cancer research and treatment organization, to study the use of our Haystack MRD test to aid recurrence monitoring and treatment decisions in clinical trial participants with solid tumor cancers across 14 U.S. sites. In addition to driving top-line growth through innovation and collaborations, our focus on operational excellence aims to improve productivity as well as quality and the patient experiences. Through our Invigorate program, we expect to continue to deliver 3% in annual cost savings and productivity improvements. We have spoken in the past about our growing use of AI and automation in our labs, and while that continues to be a major focus in the first quarter, we stepped up our deployment of these technologies in several other areas. As one example, we boosted productivity by 40% in the first quarter among customer service agents that used AI to triage and route customer emails to speed responses. We are also deploying AI to make testing simpler and smarter for everyone, including our patients. Our new Quest AI Companion transforms complex biomarker data and reference ranges on test reports into clear, plain language. By empowering patients with lab insights, our AI tool, which is powered by Google Gemini, can help shift the doctor-patient relationship to be focused on shared decision-making instead of data-gathering, potentially improving care outcomes. Patients have engaged Quest AI Companion approximately 350,000 times since we rolled it out to users of our myQuest app in the first quarter. Lastly, we are scaling the planning and design work for Project Nova, our multi-year initiative to transform our order-to-cash processes and systems and are on track to implement our first wave of solutions in the fall of 2027. Now Sam will provide more details on our performance and 2026 guidance. Sam? Thanks, Jim. As Jim mentioned, our solid first quarter results reflect the disciplined execution of our strategy. Consolidated revenues were $2.9 billion, up 9.2% versus the prior year, and consolidated organic revenues grew by 9% in the quarter. Revenues for diagnostic information services were up 9.4% compared to the prior year, reflecting strong organic growth in our physician, hospital, and consumer channels. Our total volume measured by the number of requisitions increased 10.9% versus the first quarter of 2025, with organic volume up by 10.8%. Fresenius Medical Care and Corewell Health contributed approximately 7% to organic volume growth in the quarter. Our organic volume growth in the quarter was 3.8%, excluding the favorable impact from these two relationships. As expected, Fresenius Medical Care and Corewell Health's business mix impacted total revenue per requisition, which was down 1.3% compared to the prior year. As a reminder, the business mix from these two collaborations includes a greater proportion of routine tests than most of our clinical testing. Excluding this business mix impact, total revenue per requisition increased by approximately 2.5%. Unit price reimbursement was relatively flat, consistent with our expectations. Reported operating income in the first quarter was $399 million, or 13.8% of revenues, compared to $346 million, or 13% of revenues last year. On an adjusted basis, operating income was $447 million, or 15.4% of revenues, compared to $406 million, or 15.3% of revenues last year. This increase in operating income was primarily due to organic revenue growth and increased productivity, partially offset by the impact of wage increases and, to a lesser extent weather. Reported EPS was $2.24 in the quarter, compared to $1.94 a year ago. Adjusted EPS was $2.50 versus $2.21 a year ago. Adjusted EPS grew in the first quarter versus the prior year, largely due to organic revenue growth, increased productivity, and lower interest expense, partially offset by the impact of wage increases and weather. Cash from operations was $278 million in the first quarter versus $314 million in the prior year. Cash from operations was lower than a year ago due to the timing of operating receipts and disbursements and higher bonus payments in the current period versus a year ago, partially offset by an increase in operating income. Turning now to our updated full year 2026 guidance. Given the solid performance in the first quarter, we are raising our full year revenue and EPS estimates. We now expect revenues to be between $11.78 billion and $11.9 billion, a growth rate of 6.8%-7.8%. Reported EPS to be in a range of $9.58-$9.78, and adjusted EPS in a range of $10.63-$10.83. Cash from operations to be approximately $1.75 billion, capital expenditures to be approximately $550 million, share count and interest expense to be consistent with 2025, and our 2026 guidance reflects the following considerations. Our revenue guide does not include any contribution from prospective M&A. Operating margin is expected to expand versus the prior year. With that, I will now turn it back to Jim. Thanks, Sam. We are very pleased with our start to the year. More than ever, people are turning to our lab insights to illuminate their path to better health. In summary, our first quarter results reflect a strong, focused business delivering innovative diagnostic solutions to meet our customers' evolving needs for lab insights. We grew the top line on broad-based demand for our clinical innovations, expansion into new clinical areas, and collaborations with elite healthcare and consumer health organizations. We also grew the bottom line with productivity benefits from automation and AI. Given our first quarter momentum, we are raising our guidance for the full year. I'd like to thank each of my nearly 57,000 Quest colleagues for living our purpose every day, working together to create a healthier world one life at a time. Your passion and commitment are the engine that empowers Quest to deliver diagnostic insights that improve health and transform lives. Now we'd be happy to take your questions. Operator? 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 call back in the queue. To be placed in the queue, please press star one from your phone. To withdraw your question, you may press star two. Again, to ask a question, please press star one. Our first question comes from Michael Cherny with Leerink Partners. Your line is open. You may ask your question. Good morning. Thanks for taking the question. Congrats on a nice quarter. If it's possible to unpack the organic volume dynamics a bit, clearly that was a standout, especially against a broader macro backdrop. How should we think about the impact of mix, the impact of commercial activities on your part, and if you can you just reaffirm the same expected contribution from Corewell and Fresenius relative to what was embedded in your guidance to start the year? Yeah, sure, Michael, and good morning. Hey, this is Sam. Let me just start with some of the facts about Q1 that we talked about in the prepared remarks. Organic volume growth was 10.8% in the quarter. Total volume growth was 10.9%. The contribution to volume from Fresenius and Corewell was about 7%. If you exclude those from organic volume growth, the organic volume growth excluding those two was 3.8%. The revenue per requisition in total was down 1.3%. If you exclude the impact of Corewell and Fresenius, it was actually up 2.5%. A solid revenue per requisition. If you look at the impacts within that revenue per requisition excluding Corewell and Fresenius impact, if you look at what's driving that 2.5%, which is a really strong revenue per req, I would say tests per requisition was really the key driver. We continue to see a step up in terms of the number of tests per requisition. This is being driven by a lot of the things that we have shared over the course of last year and this year, more advanced diagnostics testing, more early detection options and screening options, our consumer business contributing to it as well. We continue to expect that test per req continues to be solid and has benefited Q1 rev per req significantly. Now, I think your other question was how should we think about the balance of the year? As we think about Q2 to Q4, we're looking at continued growth in terms of organic utilization. A continued impact, I would say, on revenues from Fresenius. We said it was about a $250 million impact for the year, in terms of revenue growth impact from Corewell. That's, I think, what you should be thinking about in terms of the impact of Corewell. Fresenius would be an additional roughly, let's call it between $80 million and $100 million on top of that. Between those two, it's about a 3.3% increase to our revenue that's embedded in the guide, and we expect an impact on volume. I would say somewhat consistent with what you saw in Q1. Still expect very strong utilization as we go forward and expect strong revenue per requisition excluding the impact of those two businesses. Jim had a couple of comments. Yeah. Hey, Mike. The mix impact has really benefited our business from an organic revenue standpoint. Specifically, our commitment to consumer health and wellness and these partnerships in the wellness industry have really helped us nicely. There's really two things there. It's both the absolute test per req, which has a big impact, mixes this up from a test per req standpoint, and then the advanced types of tests that are being ordered on these panels, from advanced cardiovascular tests to autoimmune testing to hormone testing. Then the last thing, and this comes mostly from our physician channel, both neurologists and primary care physicians, as I mentioned in the script, our Alzheimer's book of testing more than doubled year-over-year. We're really, really seeing nice lift from our Alzheimer's set of tests. All of those things together, Mike, is what's really driving this nice organic test mix. Great. Operator, next question. Thank you. Our next question comes from Elizabeth Anderson with Evercore ISI. Your line is open. You may ask your question. Hi, guys. Thanks so much for the question. I guess on just a couple of things on a short-term basis, can you talk about sort of any embedded weather and sort of flu expectations for the short term in the quarter? If we think about going forward for the rest of the year, can you talk about sort of any other expectations in terms of puts or takes on timing for the quarter? Thank you so much for your help, in particular regards to margins on that second part of the question. Thank you. Hey, Liz. On the weather, I'll take that first, and Sam can comment on the second part. If we look at it on a year-over-year basis, it was like a $9 million revenue impact, $7 million operating income. That's on a year-over-year basis. Now, we know in January it was a rough month. We had some weather in February. Honestly, what we did see in March is that the people who canceled appointments during those bad weather events, about 70% of them made appointments and came back to Quest. The follow-on from canceled appointments was really good, and that only comes from us emailing out to patients, texting patients, and really trying to encourage patients to come back from missed visits. Yeah, with regards to the weather, as Jim said, we had some impact in the quarter, some negative impact year-over-year, but a good recovery in the last month of the quarter. Now, I think the second part of your question, Elizabeth, was on the go forward, what should we expect. If you think about at least from a year-over-year compare, we are expecting in the second half of the year this year that we're going to have some negative weather, which we usually have. Usually in the summer, we'll have the hurricane season and some negative weather. That's embedded in our guide expectation. If you compare it to last year, last year was actually a very mild weather season in the summer from, I think we virtually had very little to no hurricanes in the summer of last year. There is some embedded expectation of some more negative weather in the next, let's call it, in the summer versus what we saw. In terms of the cadence over the next three quarters, I think you should expect that similar cadence to last year to some extent, with maybe more of a contribution in the first half than what you saw last year than in the second half. I would call it. Just over 49% of our revenue and EPS in the first half, just over 50% in the second half. That's kind of a cadence to think about also, to give you more precision on how to think about revenue and EPS. Operator, next question. Thank you. Our next question comes from Patrick Donnelly with Citi. Your line is open. You may ask your question. Hey, thanks guys. Maybe similar, Sam, on some of the moving pieces on the cost. Can you just talk about the Project Nova piece, how the investments are progressing there? Wondering if potentially higher expenses tied to some of the macro conflicts caused you to move those investments around at all. I think it was $0.25 dilution. Is that still the right way to think about it? And again, where those investments are kind of heading and when we see the fruit of those would be helpful. Thank you, guys. Yeah, thanks, Patrick. Let me break down some of the impacts that you mentioned. Yeah, Nova expectations are still $0.25 for the year, as we shared last quarter. In terms of the cadence of those expenses, slightly changed from my comments on the Q4 call. I think we're expecting now more of those expenses to happen in the second half of the year than in the first half of the year. We had some expenses in Q1. That's going to ramp in Q2. I'd say we're going to see probably more than 60% of those expenses be in the second half of the year. That's one portion in terms of just thinking about the cadence of the year. I think it goes back to also the question that Elizabeth asked. If you think about the macro, we're impacted by obviously fuel costs. We have a fleet of transportation vehicles. We have a fleet of planes. We have some fuel expenses that we're going to be impacted by the higher fuel costs. That, I will size it for you at somewhere in the $7 million-$10 million range, and it's embedded in our guidance. Our expectation is that fuel costs will continue to be elevated somewhere at the $4 per gallon and above. That embedded in guidance is somewhere in the $7 million-$10 million of fuel costs that will impact the next three quarters. We've sized it, we've included it. It's not that significant, but it's still somewhere between $0.05-$0.07 of EPS. Operator, next question. Thank you. Our next question comes from Ann Hynes with Mizuho Securities. Your line is open. You may ask your question. Good morning. Thank you for the question. Just on the organic volume front, was there anything that came in better or worse than your expectations? Maybe just on the ACA, I know the subsidies ran out in December. Did you see any meaningful impact versus what's embedded in your guidance in Q1? We did, Ann, on the ACA subsidies. I think it's too early to tell. As we've said in the past as well, we can't tell 100% with every requisition, is it an ACA req or not? Not all the commercial plans code the reqs that way. But we think about 60% of our reqs we know discrete are ACA, and so based on that, we're not seeing any impact to date. On the organic growth, it was strong across the board. Our hospital reference business up 3%. It was very strong. Our Co-Lab business, obviously with Corewell, was up significantly, double-digit growth. Our physician business, organically, was high single digits, as we indicated on the call. It's broad-based. Obviously the contribution from all the consumer health in both our direct channel plus our partnerships were strong double-digit growth in that area. It was pretty broad-based and across all segments that we serve. Just one clarification, Ann, on the ACA, to add to Jim's comments. We have built in our guide still the expectation that we do see a 30 basis point impact to revenues as a result of ACA disenrollments or higher subsidies. The enrollments have been good in Q1. We just need to validate that actually the enrollments lead to utilization and some people don't drop off. We kept the assumption in our guide of 30 basis point impact. To Jim's comment, we haven't seen really that negative impact in Q1. Operator, next question. Thank you. The next question comes from Jack Meehan with Nephron. You may ask your question. Your line is open. Morning, guys. I wanted to ask you about PAMA. The survey kicks off in 10 days or so. How's your prep work in terms of participating in that? Just your latest thoughts on how you think the Medicare rates for 2027 will shake out, that whole process. Thank you. Yeah. Hey, Jack. We're ready. Obviously, we submitted last time. We're going to submit this time. That's the law, and we're going to abide by the law and submit the data after May 1st of this year. I think the period is open basically till the end of July. As you know, Medicare actually this year provided some guidance as to what labs need to submit. Anybody that makes more than $25,000 a year from a revenue standpoint from Medicare requisitions is supposed to submit. That would really say there's over 2,600 hospital labs that are going to need to submit. Now, whether that happens or not, we can't tell. We'll have to wait and see. CMS also came out again and said, "If you don't submit, there's potential fines of upwards of $10,000 per day to those that don't submit data." Now, they didn't collect those fines last time, so again, it remains to be seen. At the same time, we're going to drive the RESULTS Act as fast and furious as we can. There's a few things that still have to be completed in order for the bill to get through this year. Number one, there has to be a tech assessment done. CMS does that. That is underway. Then second is the CBO scoring. We think that process is underway as well. There's over 80 co-sponsors for the bill. There was a hearing already this year in the Health Subcommittee of Energy and Commerce. It was a good hearing, very positive. We're hopeful, but we're also mindful of the fact that there's summer vacations coming up, and then obviously elections. There's a lot to get done before the end of this year, especially with those two things coming up. Now, in terms of rates for 2027, I think it's too early to speculate. If RESULTS Act gets done, it would keep rates as is for 2027. If the RESULTS Act does not get done, and we rely on this data collection process, if everybody submits, Jack, we're hopeful that the data will come out and show that our rates should actually go up. If you think about it this way, the last time there was a data submission, there were probably two companies that submitted over 80% of the data. The two companies probably, and we're one of them, and our nearest competitor is the second one, we probably have, at best, 17%-20% share of the Medicare market. We're disproportionately lower in that portion of our business than in other segments because it's any willing provider. When only two providers submit, basically two providers submit 80% of the data, and you have less than 20% of the market, it's obviously going to lead to a very skewed data set. We're hopeful that the other 80% submit. We know that that other 80% is paid 2x-3x Medicare rates by most health plans. You put all that together, Jack, and it should indicate a price increase. Operator, next question. Thank you. Our next question comes from Luke Sergott with Barclays. Your line is open. You may ask your question. Hi, guys, this is Anna Krasensky on for Luke. Thank you for taking our questions. We were hoping to hear more about the consumer business and how that momentum has been building with your recent partnerships. We saw that Function Health acquired a mobile lab testing company during the quarter. Just any color on how you're thinking about that potentially impacting volumes to Quest. Thank you. Yeah. Our consumer business, again, we think of it in two segments. Our own questhealth.com, our direct-to-consumer business, that grew very nicely in the quarter. Let's just call it somewhere between in the high 20s%, and then all of our partnerships. We have value-added resellers that we provide lab testing to. These include two of the wearable companies that we've talked about in the past. I would just say that the growth in that combined non-Quest direct is even stronger than our own direct channel in the quarter. Yes, Function Health did acquire GetLabs. We think that's a real positive for Function Health. There's many parts of the country where even though we have 2,000 patient service centers to conduct blood draws and urine collections, there's parts of the country where we simply don't have some of the coverage, and that includes areas in the Upper Midwest, the Great Plains. We also know that there's a segment of customers that would prefer a home draw. Function having this capability now, Get Labs will acquire the specimens, bring them to our Quest PSC, or have them transported direct, and we'll continue to do that lab testing. We think it's a positive. The one addition I'd make to Jim's comments is the growth that we're seeing from some of the collaborations that we have, the wellness companies that we're partnering with, is broad-based. We're seeing a lot of growth from different players and a broad ecosystem that we're very encouraged about. Operator, next question. Thank you. Our next question comes from Eric Coldwell with Baird. Your line is open. You may ask your question. Thanks very much. A couple of weeks ago, we had this odd day in the market where labs were getting hit, and on a Friday afternoon, I think it was, and apparently there were rumblings or rumors going around about some impact from the CMS CRUSH RFI. I don't think that's a big deal, but I'd love you to put that in perspective and maybe talk through what you see happening in the government in terms of various fraud, waste, and abuse initiatives, and then your exposure to any tests that are in question, and what potential impacts, positive or negative, may come out of this in the future. Thanks very much. Yeah. Thanks, Eric. We're glad you don't think it has an impact because we don't think it does either. Just for those who may not have heard of CRUSH, it stands for Comprehensive Regulations to Uncover Suspicious Healthcare. First of all, I want to say, we applaud the government's efforts to crack down on any fraud, waste or abuse. Certainly applaud those efforts. The second thing I'd say is if you look at the tests, first of all, it came out of an OIG report. There was an OIG report that looked at 2024 Medicare lab spending, and the report noted that lab spending was up 5%. As you know, Medicare enrollees are probably flat to down. Why would it be going up 5% if pricing stayed flat across the industry? What the report noted is that there were 10 tests that drove the majority of the increase. Now, seven of those 10 tests were PLA codes, meaning they're very proprietary tests to individual laboratories. We had nothing in those categories. Okay? The other three categories were genetic or molecular-based tests. When we look at our billing or our revenue from those tests, it was de minimis. Okay? It really, really wasn't a factor at all. We don't put Quest in the bucket of driving that 5% increase in Medicare spend. Now, the last thing I'd say about the report is that we all ought to be concerned about this. If you looked at that report, it did show that routine and wellness tests that are critical to preventative health and wellness, critical to making the country healthy again, those test categories were actually down. What I'm talking about is basic CBC panels, CMP panels, those panels and information that really illuminate chronic care conditions, progress towards those conditions, or people that aren't making progress. Those are absolutely the kinds of tests that we want to see growing across the Medicare population in order to make sure that people's chronic conditions aren't worsening and become a bigger cost and health burden to the country. In summary, Eric, we don't think it's an issue, and thank you for asking the question. Great. Operator, next question. Thank you. Our next question comes from Erin Wright with Morgan Stanley. Your line is open. You may ask your question. Great. Thanks. On consumer, I have a follow-up. I understand there's a broad range of types of partnerships that you're engaged in, and the economics may vary, but can you speak to the overall margin profile outside of the Quest Direct business? And how should we think about the pipeline of future partnerships, like do you have, are you talking with several different types of platforms or wellness or wearable standpoint? And then a follow-up, just a broader question. You gave some interesting stats on AI and automation and just, how do we think about your targets or your goals on that front from an efficiency gain standpoint, and what you can leverage from an AI use case? Thanks. Yeah. Hi, good morning, Erin. This is Sam. I'll take the first question around the margin profile, and then I'll hand it over to Jim, who'll talk about the pipeline and AI. I'll keep it simple. The margin on these deals, both in terms of the deals and collaborations that we have, whether they're wearables collaborations, whether they're wellness companies, but also the margin profile on the questhealth.com business is on par, if not slightly better than our overall enterprise average. These are tests that are out-of-pocket, at least on questhealth.com, and then it's a client bill business with the wellness companies that we engage with. It's all cash pay, so there's no denials, there's no patient concessions. It's clean business in terms of just at least the complexity, or the lack thereof. It provides a really good margin profile for us. Yeah. Erin, yes, we continue to pursue other partnerships. It's part of our goal. As we've said before, we're trying to empower people to own their own health. We want people to be the CEO of their own healthcare. If we find other partnerships out there that meet our brand criteria, that are in line with the mission of our company, then we'll certainly support it. There's others out there that we continue to talk to. We're encouraged by the growth in both our direct channel, as well as the growth that we're getting through these partnerships. In terms of AI and automation, certainly, we continue, I would say 60%-70% of our efforts are in the four walls of our laboratory, because that's where still opportunity exists. Anytime we see somebody looking through a microscope, we ask the question, "Is what you're looking at, can we digitize that image?" If you can digitize an image, you can apply algorithms to that image, and if you can apply algorithms to that image, it can assist whoever is reading that image, and make a higher quality diagnosis as well as improve the productivity. There are still plenty of areas in our laboratory where we have laboratory technicians or MDs looking at data or looking at slides or looking at pathology, and we know there's ways to automate that. We've made tremendous progress in cytology. We've made great progress in microbiology, hematology, and there's still other areas for us to go. Outside of the laboratory, as I mentioned in the script, we've deployed some tools in our call centers. Our call centers are a big part of our operations. Anything we can do to improve the productivity of the call centers, as well as emails and text messages that come into the company, we're certainly going to drive that. The last thing I'd mention is we did put that Quest AI Companion out on our myQuest application. This empowers people to now ask questions about the lab results that we've just provided to you, and we were pleasantly surprised by the use of that AI tool for people trying to decipher what all of these 40, 50, 60 analytes could possibly mean. We think it's a great way to educate patients so that patients can have more proactive discussions with their clinicians, and we think it's a win-win for the industry. Great. Operator, next question. Thank you. This question comes from Kevin Caliendo with UBS. Your line is open. You may ask your question. Thanks, and thanks for taking my question. Sam, if I'm taking your comments correctly, it sounds like the north of 49% comment for the first half of the year is pretty consistent with what you said before. You also commented that you're pushing maybe more of the Project Nova expenses to the second half. There's some higher fuel costs that are going to be impacting the second half of the year. Within your guidance, what's the offset that makes the second half a little bit better? Just one quick follow-up to Eric's question on CRUSH. Part of the proposal talked about prior authorizations and looking at that. Can you discuss that aspect of it, which isn't necessarily just on the molecular test, but I don't know if they're talking more broadly about how prior authorizations might be handled and if there's anything we should think about with regards to that part of the proposal. Thanks, guys. Yeah. Thanks, Kevin. Let me start with the second half, first half comment. I would say some of the fuel costs that I mentioned, they basically start now, right? It's not like just the second half that you have to phase those across. Again, I don't want to make too much of them because it's $7 million-$10 million of additional fuel costs. It's not that significant, but I was just giving it for completeness and to give a full view as to EPS. They do start now, and they impact Q2, and they impact the second half. Nova steps up in the second quarter, but obviously the first half, because Q1 was lower in terms of Nova spend, the second half is going to be over 60% of the Nova expenses. It does step up in the second quarter. In terms of why we see the contribution being over 50% in the second half, I think it's really primarily the margin profile across, again, those two partnerships, those two important partnerships that we have, Corewell and Fresenius. That margin profile improves in the second half, notably for Fresenius, as that business ramps. I've said before that that business a year in starts to approach the average enterprise margin. It's just the ramp up. There's some ramp-up costs that initially impact us. So I think you start to see some improvement in the margin profile of those businesses, and then just the normal seasonality of the business with the strength of utilization. That's really what I'd point to. Yeah. Kevin, in terms of your questions on CRUSH, again, I'll remind you that there were 10 tests that contributed to the vast majority of the growth in the spend. Seven of those 10 tests we have no participation in, and three of those 10 tests, it's de minimis. Really, Quest was not a driver of those increased costs. In terms of pre-authorization, CMS did put out a request for information, a response. They asked people to comment on the CRUSH initiative. Our trade association did that. I can tell you that pre-authorization is not something we would ask for. Rather, I think what's appropriate is CMS ought to require some type of certificate of accreditation for the labs that are performing these higher complexity tests. That's a way to ensure that those labs that are producing these tests, and some of these tests are absolutely necessary in healthcare today, that you know they're being done by certified labs with good quality and a commitment to science, technology, and excellence. Great. Operator, next question. Thank you. This question comes from Andrew Brackmann with William Blair. Your line is open. You may ask your question. Hi, guys. Thanks for taking the question, and good morning. Jim, I want to ask on the advanced diagnostic strengths and all the color that you gave on that business. Can you maybe just sort of talk about any specific investments that are going to those areas in 2026 or in 2027? Just sort of anything to call out with respect to maybe specific clinical trials in some of those areas where your sales team increases. I really just sort of want to get a sense of the opportunities that might exist there to maybe further accelerate that growth. Thanks. Yeah. Thanks, Andrew. Yes, again, some of these advanced diagnostic tests were certainly a strong contributor to the mix that we saw in the quarter in the organic price increase of 2.5% that Sam cited. The biggest area, again, is brain health. As I indicated, the business more than doubled from Q1 of last year to Q1 of this year. We are committed to the space. There are other biomarkers that we are investing in and doing research on in addition to the Aβ42/40, in addition to the ApoE, NfL, and then commercially, we procure the p-tau181 and p-tau217 assays. There's other biomarkers we're working on. We're in constant discussions with the therapy makers who are collaborating with us on looking at different biomarkers that help identify the disease at the earliest possible point. We continue to invest in advanced cardiometabolic testing in various biomarkers. One specifically in the HDL arena that goes beyond just the basic HDL test and then obviously I'd be remiss if I didn't talk about Haystack. We continue to invest in the space. We've made progress quarter-over-quarter. As we discussed in the script, we have a great partnership now with City of Hope, which is a leading cancer detection and treatment center on the West Coast. There's all types of clinical partnerships that we have there. We've discussed a few in the past, Rutgers and MGH. We continue to invest in that area and continue to make progress. Yeah. Andrew, maybe to add to Jim's comments, a healthy portion of our $550 million capital investment goes towards our esoteric labs to drive capacity upgrades, given the growth that we're seeing in that business, in that advanced diagnostics business. I'd be remiss if I didn't mention that as well, because in addition to the investments that Jim talked about, which are more on the business side, that we do have a significant portion of capital investments going towards those tests as well. Okay. Operator, next question. Thank you. Our next question comes from Tycho Peterson with Jefferies. Your line is open. You may ask your question. Hi, team, this is Noah on for Tycho. I wanted to ask a few on oncology. I believe the partnership with Guardant Health Shield went live about a month ago, if you could speak to early adoption there. Just on Haystack, what should we be expecting in terms of the phasing of EPS contribution throughout the year and kind of getting to breakeven? Thanks. Thanks, Noah. We announced a partnership to do blood collections for the Guardant Health Shield test, and so it started in the quarter. We are listing the test on our test menu so that Quest physicians can order that test in patients, regardless if it came from a Quest physician or another physician, patients can bring that requisition to a Quest PSC and we'll draw the blood and send the specimen on to Guardant's lab. I would say it's early, we just got going in the middle part of the quarter, so, I can't make a comment yet on the volumes, but it's certainly starting to take hold. On the Haystack margin profile, Sam, I'll ask you to comment on that. Yeah. Thanks, Noah. Haystack, listen, we're making some really good progress on the test with regards to the order experience, the commercial, both ramp in terms of resources and the uptake in terms of tests ordered. I think oncologists are starting to recognize just the impressive profile of the test with its low limits of detection. Making good progress on the reimbursement front. We have submitted to MolDX, the technical assessment to get Medicare Advantage reimbursement. We have PLA codes now that are basically priced at $3,900 baseline and an $800 monitoring reimbursed price. We're making really good progress. It's early days to talk about EPS ramp in terms of the dilution or the improvement over the course of the year. We'll provide updates as we go. Again, it's a test, and we have many tests in our portfolio, both in terms of AD, advanced diagnostics and routine tests. I don't want to be overly focused on just one test, but obviously it's an important business for us and we're making good progress on it. Operator, next question. Thank you. Our next question comes from Lisa Gill with JP Morgan. Your line is open. You may ask your question. Thanks very much and good morning. I just was wondering the current M&A environment. I appreciate that there's nothing in your guidance for 2026, but are you seeing anything different? Are you seeing any incremental opportunities in the market? I heard your comments earlier around hospitals and their need to submit their rates. Is that changing any of their views around the potential for reimbursement cuts for Medicare going forward? Just anything on an update on the M&A side would be helpful. Thank you. Yeah. Thanks, Lisa. The M&A funnel is good. We have a mix of various health system outreach types of deals that are there. There's not a ton, as you know, of remaining independent labs across the country, but there's still some out there, and we still take a look and sometimes they proactively come to us. I don't think that the Medicare reimbursement changes are affecting a hospital's view of their outreach business. You got to remember, in general, Medicare is our best payer here at Quest Diagnostics, and in general, it's the worst payer for a health system. If the worst payer goes down a little bit in pricing, I don't think that affects their viewpoint on outreach. What I do think affects their viewpoint on outreach is the commercial view of the lab market and the lab industry. I think you got a lot of really smart health plans that are starting to wake up and say, "Hey, why am I paying these health system labs 2%-300% of what we pay two of the leading independents across the country?" Furthermore, that 2%-300% price premium that they get, it affects patients. It affects copays, it affects deductibles. It affects employers who are paying for this healthcare. There's nothing easier to get a quick hit a quick win, from an employer standpoint, from a patient standpoint, is to normalize these rates. We strongly advocate that health plans ought to pay all labs the same amount of money for outreach work. It doesn't do anyone any good to penalize patients and penalize employers who are paying for the majority of the healthcare costs in this country to reimburse some labs 200%-300% of what the two leading independents are getting paid. Operator, next question. Thank you. Our last question comes from David Westenberg with Piper Sandler. Your line is open. You may ask your question. Hi. Thanks for taking my question. I wanted to talk about the convergence of multiple factors, AI, wearables, consumer-initiated testing. Just given the fact that these AI wearables, et cetera, and consumer-initiated testing gamify longitudinal testing, it seems like there would be an increase in longitudinal testing. Am I thinking about this the right way? How should we think about tests per patient right now and where it could go in the next 5-10 years? Are you monitoring tests per patient right now and is it trending indeed the right way? Maybe one of the things I might want to look at is something like, are the Function Health people, for example, also doing their annual labs and is that increasing? I mean, where's the momentum going with this? Thank you. Yeah. That's a great question, David. Look, we continue to think that this convergence of consumer health, wellness, wearables, and AI are going to have a profound impact on how people think about their healthcare going forward. I don't think the physical of today, where you go see a doctor, they do a physical in the office, they order labs generally after they've done the physical, and then the information flows back to the physician, back to the patient, and maybe somebody calls the patient and says, "Here's a few things that are out of range and here's what you should do about it." I honestly think the physical of the future is going to be really before you ever see the doctor, you're going to download your wearable information, you're going to get your lab work done ahead of time, and all that information is going to be fed into an AI engine and is going to provide you, the patient, with a report. It's going to provide the physician with a report. When you actually go and see the physician, the physical exam itself is informed by all of that information. It becomes more of a discussion between you and the physician on the things that you really need to work on from a biometric standpoint, sleep, diet, heart rate variability, blood pressure, stress, the things that you really need to work on to improve your biomarkers. This linkage between biomarkers and biometrics is so incredibly important. Just this past March, I believe it was March 13th, there was a really interesting article written in "Nature," some work that Google Health did. It was a study between us, Google Health, and Fitbit that really highlighted the linkage between biometrics and biomarkers and the use of artificial intelligence to actually calculate some of these biomarkers in between lab tests. What we're actually seeing is, I think this trend that you check your biomarkers, combine it with your wearable data, combine it with artificial intelligence, it's just making people more and more conscious of what's going on inside their body. I think as you indicated, we're likely to see an increased trend of consumers continuing to test certain biomarkers to check to make sure that the things that they're working on, the things they're trying to optimize are actually improving. Great. Okay, operator, I think that wraps up today's call. I want to thank everyone for joining our call today. We certainly appreciate your continued support. Have a great day, everyone, and good health to all of you. Thank you for participating in the Quest Diagnostics First Quarter 2026 Conference Call. A transcript of prepared remarks on this call will be posted later today on Quest Diagnostics website at www.questdiagnostics.com. A replay of the call may be accessed online at www.questdiagnostics.com/investor, or by phone at 866-388-5361 for domestic callers, or 203-369-0416 for international callers. Telephone replays will be available from approximately 10:30 A.M. Eastern Time on April 21st, 2026, until midnight Eastern Time, May 5th, 2026. Goodbye.