UNITED STATES
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SECURITIES AND EXCHANGE COMMISSION
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WASHINGTON, DC 20549
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Large accelerated filer
x
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Accelerated filer
o
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Non-accelerated filer
o
(Do not check if a smaller reporting company)
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Smaller reporting company
o
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Page
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Item 1. Financial Statements
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Index to unaudited consolidated financial statements filed as part of this report:
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Three Months Ended June 30,
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Six Months Ended June 30,
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||||||||||||
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2016
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2015
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2016
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2015
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||||||||
Net revenues
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$
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1,906
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$
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1,925
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$
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3,769
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$
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3,764
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Operating costs, expenses and other income:
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Cost of services
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1,155
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1,182
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2,299
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2,345
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Selling, general and administrative
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430
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429
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872
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848
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Amortization of intangible assets
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17
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20
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36
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41
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Gain on disposition of business
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(118
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)
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—
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(118
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)
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—
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Other operating (income) expense, net
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—
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(7
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)
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1
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1
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Total operating costs, expenses and other income, net
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1,484
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1,624
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3,090
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3,235
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Operating income
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422
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301
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679
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529
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Other income (expense):
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Interest expense, net
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(34
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)
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(37
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)
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(70
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)
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(82
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)
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Other expense, net
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(5
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)
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(64
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)
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(54
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)
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(142
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)
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Total non-operating expenses, net
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(39
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)
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(101
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)
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(124
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)
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(224
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)
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Income before income taxes and equity in earnings of equity method investees
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383
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200
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555
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305
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Income tax expense
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(183
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)
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(78
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)
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(250
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)
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(120
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)
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Equity in earnings of equity method investees, net of taxes
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9
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7
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19
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14
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Net income
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209
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129
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324
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199
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Less: Net income attributable to noncontrolling interests
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14
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11
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26
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20
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Net income attributable to Quest Diagnostics
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$
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195
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$
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118
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$
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298
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$
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179
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Earnings per share attributable to Quest Diagnostics’ common stockholders:
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Basic
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$
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1.38
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$
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0.82
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$
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2.10
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$
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1.24
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Diluted
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$
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1.37
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$
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0.81
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$
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2.08
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$
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1.23
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Weighted average common shares outstanding:
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Basic
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140
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144
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141
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144
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Diluted
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142
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145
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143
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145
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Dividends per common share
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$
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0.40
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$
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0.38
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$
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0.80
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$
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0.76
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Three Months Ended June 30,
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Six Months Ended June 30,
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||||||||||||
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2016
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2015
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2016
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|
2015
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Net income
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$
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209
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$
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129
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$
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324
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$
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199
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Other comprehensive (loss) income:
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Currency translation
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(15
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)
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4
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(18
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)
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(2
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)
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Market valuation, net of taxes
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(1
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)
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—
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(1
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)
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2
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Net deferred loss on cash flow hedges, net of taxes
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—
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1
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1
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2
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Other comprehensive (loss) income
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(16
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)
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5
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(18
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)
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2
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Comprehensive income
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193
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134
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306
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201
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Less: Comprehensive income attributable to noncontrolling interests
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14
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11
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26
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20
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Comprehensive income attributable to Quest Diagnostics
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$
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179
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$
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123
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$
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280
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$
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181
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June 30,
2016 |
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December 31,
2015 |
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Assets
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Current assets:
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Cash and cash equivalents
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$
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283
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$
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133
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Accounts receivable, net of allowance for doubtful accounts of $289 and $254 at June 30, 2016 and December 31, 2015, respectively
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975
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901
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Inventories
|
80
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84
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Prepaid expenses and other current assets
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163
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207
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Assets held for sale
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9
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176
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Total current assets
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1,510
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1,501
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Property, plant and equipment, net
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937
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925
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Goodwill
|
5,996
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5,905
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Intangible assets, net
|
990
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984
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Investment in equity method investees
|
453
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473
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Other assets
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223
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|
174
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Total assets
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$
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10,109
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$
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9,962
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Liabilities and Stockholders’ Equity
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Current liabilities:
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Accounts payable and accrued expenses
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$
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1,104
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$
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1,014
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Current portion of long-term debt
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7
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159
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Total current liabilities
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1,111
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1,173
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Long-term debt
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3,835
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3,492
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Other liabilities
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520
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514
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Redeemable noncontrolling interest
|
74
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70
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Stockholders’ equity:
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Quest Diagnostics stockholders’ equity:
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Common stock, par value $0.01 per share; 600 shares authorized at both June 30, 2016 and December 31, 2015; 216 shares issued at both June 30, 2016 and December 31, 2015
|
2
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|
|
2
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Additional paid-in capital
|
2,472
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|
|
2,481
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Retained earnings
|
6,384
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|
6,199
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Accumulated other comprehensive loss
|
(56
|
)
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|
(38
|
)
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Treasury stock, at cost; 77 shares and 73 shares at June 30, 2016 and December 31, 2015, respectively
|
(4,265
|
)
|
|
(3,960
|
)
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Total Quest Diagnostics stockholders’ equity
|
4,537
|
|
|
4,684
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Noncontrolling interests
|
32
|
|
|
29
|
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||
Total stockholders’ equity
|
4,569
|
|
|
4,713
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Total liabilities and stockholders’ equity
|
$
|
10,109
|
|
|
$
|
9,962
|
|
|
Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net income
|
$
|
324
|
|
|
$
|
199
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
123
|
|
|
153
|
|
||
Provision for doubtful accounts
|
167
|
|
|
158
|
|
||
Deferred income tax benefit
|
(4
|
)
|
|
(5
|
)
|
||
Stock-based compensation expense
|
36
|
|
|
27
|
|
||
Gain on disposition of business
|
(118
|
)
|
|
—
|
|
||
Other, net
|
9
|
|
|
(5
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable
|
(249
|
)
|
|
(163
|
)
|
||
Accounts payable and accrued expenses
|
23
|
|
|
(42
|
)
|
||
Income taxes payable
|
141
|
|
|
17
|
|
||
Other assets and liabilities, net
|
12
|
|
|
(2
|
)
|
||
Net cash provided by operating activities
|
464
|
|
|
337
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
||
Business acquisitions, net of cash acquired
|
(135
|
)
|
|
(6
|
)
|
||
Proceeds from sale of businesses
|
275
|
|
|
—
|
|
||
Capital expenditures
|
(104
|
)
|
|
(117
|
)
|
||
Increase in investments and other assets
|
(9
|
)
|
|
—
|
|
||
Net cash provided by (used in) investing activities
|
27
|
|
|
(123
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
||
Proceeds from borrowings
|
1,869
|
|
|
1,829
|
|
||
Repayments of debt
|
(1,720
|
)
|
|
(1,821
|
)
|
||
Purchases of treasury stock
|
(390
|
)
|
|
(149
|
)
|
||
Exercise of stock options
|
38
|
|
|
55
|
|
||
Employee payroll tax withholdings on stock issued under stock-based compensation plans
|
(9
|
)
|
|
(6
|
)
|
||
Dividends paid
|
(111
|
)
|
|
(103
|
)
|
||
Distributions to noncontrolling interests
|
(19
|
)
|
|
(19
|
)
|
||
Other financing activities, net
|
1
|
|
|
(42
|
)
|
||
Net cash used in financing activities
|
(341
|
)
|
|
(256
|
)
|
||
|
|
|
|
||||
Net change in cash and cash equivalents
|
150
|
|
|
(42
|
)
|
||
Cash and cash equivalents, beginning of period
|
133
|
|
|
192
|
|
||
Cash and cash equivalents, end of period
|
$
|
283
|
|
|
$
|
150
|
|
|
|
|
Quest Diagnostics Stockholders’ Equity
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
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Shares of
Common Stock Outstanding |
|
Common
Stock
|
|
Additional
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Compre-
hensive Loss
|
|
Treasury
Stock, at
Cost
|
|
Non-
controlling
Interests
|
|
Total
Stock-
holders’
Equity
|
|
|
Redeemable Non-controlling Interest
|
|||||||||||||||||
Balance, December 31, 2015
|
143
|
|
|
$
|
2
|
|
|
$
|
2,481
|
|
|
$
|
6,199
|
|
|
$
|
(38
|
)
|
|
$
|
(3,960
|
)
|
|
$
|
29
|
|
|
$
|
4,713
|
|
|
|
$
|
70
|
|
Net income
|
|
|
|
|
|
|
|
|
|
298
|
|
|
|
|
|
|
|
|
22
|
|
|
320
|
|
|
|
4
|
|
||||||||
Other comprehensive loss, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
(18
|
)
|
|
|
|
|
|
|
|
(18
|
)
|
|
|
|
|||||||||
Dividends declared
|
|
|
|
|
|
|
|
|
|
(113
|
)
|
|
|
|
|
|
|
|
|
|
|
(113
|
)
|
|
|
|
|||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19
|
)
|
|
(19
|
)
|
|
|
|
|
||||||||
Issuance of common stock under benefit plans
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
8
|
|
|
|
|
|
11
|
|
|
|
|
|||||||||
Stock-based compensation expense
|
|
|
|
|
|
|
34
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
36
|
|
|
|
|
|||||||||
Exercise of stock options
|
1
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
37
|
|
|
|
|
|
38
|
|
|
|
|
|||||||||
Shares to cover employee payroll tax withholdings on stock issued under stock-based compensation plans
|
|
|
|
|
|
|
(9
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(9
|
)
|
|
|
|
|||||||||
Purchases of treasury stock
|
(5
|
)
|
|
|
|
|
(38
|
)
|
|
|
|
|
|
|
|
(352
|
)
|
|
|
|
|
(390
|
)
|
|
|
|
|||||||||
Balance, June 30, 2016
|
139
|
|
|
$
|
2
|
|
|
$
|
2,472
|
|
|
$
|
6,384
|
|
|
$
|
(56
|
)
|
|
$
|
(4,265
|
)
|
|
$
|
32
|
|
|
$
|
4,569
|
|
|
|
$
|
74
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance, December 31, 2014
|
144
|
|
|
$
|
2
|
|
|
$
|
2,418
|
|
|
$
|
5,723
|
|
|
$
|
(27
|
)
|
|
$
|
(3,815
|
)
|
|
$
|
29
|
|
|
$
|
4,330
|
|
|
|
$
|
—
|
|
Net income
|
|
|
|
|
|
|
|
|
|
179
|
|
|
|
|
|
|
|
|
20
|
|
|
199
|
|
|
|
|
|
||||||||
Other comprehensive income, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|||||||||
Dividends declared
|
|
|
|
|
|
|
|
|
|
(109
|
)
|
|
|
|
|
|
|
|
|
|
|
(109
|
)
|
|
|
|
|||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(19
|
)
|
|
(19
|
)
|
|
|
|
|
||||||||
Issuance of common stock under benefit plans
|
1
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
7
|
|
|
|
|
|
11
|
|
|
|
|
|||||||||
Stock-based compensation expense
|
|
|
|
|
|
|
25
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
27
|
|
|
|
|
|||||||||
Exercise of stock options
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
55
|
|
|
|
|
|
55
|
|
|
|
|
|||||||||
Shares to cover employee payroll tax withholdings on stock issued under stock-based compensation plans
|
|
|
|
|
|
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6
|
)
|
|
|
|
|||||||||
Tax benefits associated with stock-based compensation plans
|
|
|
|
|
|
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|||||||||
Purchases of treasury stock
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(149
|
)
|
|
|
|
|
(149
|
)
|
|
|
|
|||||||||
Balance, June 30, 2015
|
144
|
|
|
$
|
2
|
|
|
$
|
2,444
|
|
|
$
|
5,793
|
|
|
$
|
(25
|
)
|
|
$
|
(3,900
|
)
|
|
$
|
30
|
|
|
$
|
4,344
|
|
|
|
$
|
—
|
|
•
|
Excess income tax benefits and deficiencies from stock-based compensation arrangements are recognized as a discrete item within income tax expense, rather than additional paid-in capital. The adoption of this provision, which was done on a prospective basis, resulted in the classification of
$2 million
and
$4 million
of tax benefits in income tax expense for the three and six months ended June 30, 2016, respectively.
|
•
|
Excess income tax benefits from stock-based compensation arrangements are classified as an operating activity and cash paid for employee payroll tax withholdings by directly withholding shares are classified as a financing activity in the consolidated statements of cash flows. The adoption of these provisions, which was done on a retrospective basis, resulted in the reclassification of
$3 million
of excess tax benefits related to the settlement of stock-based compensation awards from financing to operating activities and
$6 million
of taxes paid related to employee payroll tax withholdings on stock issued under stock-based compensation plans from operating to financing activities for the six months ended June 30, 2015.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Amounts attributable to Quest Diagnostics’ stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to Quest Diagnostics
|
$
|
195
|
|
|
$
|
118
|
|
|
$
|
298
|
|
|
$
|
179
|
|
Less: Earnings allocated to participating securities
|
1
|
|
|
1
|
|
|
1
|
|
|
1
|
|
||||
Earnings available to Quest Diagnostics’ common stockholders – basic and diluted
|
$
|
194
|
|
|
$
|
117
|
|
|
$
|
297
|
|
|
$
|
178
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding – basic
|
140
|
|
|
144
|
|
|
141
|
|
|
144
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock options and performance share units
|
2
|
|
|
1
|
|
|
2
|
|
|
1
|
|
||||
Weighted average common shares outstanding – diluted
|
142
|
|
|
145
|
|
|
143
|
|
|
145
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings per share attributable to Quest Diagnostics’ common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
1.38
|
|
|
$
|
0.82
|
|
|
$
|
2.10
|
|
|
$
|
1.24
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted
|
$
|
1.37
|
|
|
$
|
0.81
|
|
|
$
|
2.08
|
|
|
$
|
1.23
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Stock options and performance share units
|
—
|
|
|
2
|
|
|
2
|
|
|
2
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Employee separation costs
|
$
|
3
|
|
|
$
|
6
|
|
|
$
|
6
|
|
|
$
|
21
|
|
|
|
|
Basis of Fair Value Measurements
|
||||||||||||
|
|
|
Quoted
Prices in
Active
Markets for
Identical
Assets /
Liabilities
|
|
Significant
Other
Observable
Inputs
|
|
Significant
Unobservable
Inputs
|
||||||||
June 30, 2016
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest rate swaps
|
$
|
66
|
|
|
$
|
—
|
|
|
$
|
66
|
|
|
$
|
—
|
|
Trading securities
|
48
|
|
|
48
|
|
|
—
|
|
|
—
|
|
||||
Cash surrender value of life insurance policies
|
30
|
|
|
—
|
|
|
30
|
|
|
—
|
|
||||
Available-for-sale equity securities
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
148
|
|
|
$
|
52
|
|
|
$
|
96
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred compensation liabilities
|
$
|
85
|
|
|
$
|
—
|
|
|
$
|
85
|
|
|
$
|
—
|
|
Contingent consideration
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Total
|
$
|
88
|
|
|
$
|
—
|
|
|
$
|
85
|
|
|
$
|
3
|
|
|
|
|
Basis of Fair Value Measurements
|
||||||||||||
December 31, 2015
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trading securities
|
$
|
49
|
|
|
$
|
49
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cash surrender value of life insurance policies
|
29
|
|
|
—
|
|
|
29
|
|
|
—
|
|
||||
Interest rate swaps
|
23
|
|
|
—
|
|
|
23
|
|
|
—
|
|
||||
Available-for-sale equity securities
|
6
|
|
|
6
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
107
|
|
|
$
|
55
|
|
|
$
|
52
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred compensation liabilities
|
$
|
85
|
|
|
$
|
—
|
|
|
$
|
85
|
|
|
$
|
—
|
|
Interest rate swaps
|
6
|
|
|
—
|
|
|
6
|
|
|
—
|
|
||||
Contingent consideration
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Total
|
$
|
94
|
|
|
$
|
—
|
|
|
$
|
91
|
|
|
$
|
3
|
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
Balance, beginning of period
|
$
|
5,905
|
|
|
$
|
6,032
|
|
Goodwill acquired during the period
|
91
|
|
|
33
|
|
||
Reclassification to assets held for sale
|
—
|
|
|
(160
|
)
|
||
Balance, end of period
|
$
|
5,996
|
|
|
$
|
5,905
|
|
|
Weighted
Average
Amortization
Period
(in years)
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net
|
|||||||||||||
Amortizing intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Customer-related
|
18
|
|
$
|
977
|
|
|
$
|
(322
|
)
|
|
$
|
655
|
|
|
$
|
936
|
|
|
$
|
(296
|
)
|
|
$
|
640
|
|
Non-compete agreements
|
6
|
|
6
|
|
|
(3
|
)
|
|
3
|
|
|
6
|
|
|
(3
|
)
|
|
3
|
|
||||||
Technology
|
18
|
|
93
|
|
|
(38
|
)
|
|
55
|
|
|
93
|
|
|
(35
|
)
|
|
58
|
|
||||||
Other
|
9
|
|
106
|
|
|
(65
|
)
|
|
41
|
|
|
106
|
|
|
(59
|
)
|
|
47
|
|
||||||
Total
|
18
|
|
1,182
|
|
|
(428
|
)
|
|
754
|
|
|
1,141
|
|
|
(393
|
)
|
|
748
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Trade names
|
|
|
235
|
|
|
—
|
|
|
235
|
|
|
235
|
|
|
—
|
|
|
235
|
|
||||||
Other
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Total intangible assets
|
|
|
$
|
1,418
|
|
|
$
|
(428
|
)
|
|
$
|
990
|
|
|
$
|
1,377
|
|
|
$
|
(393
|
)
|
|
$
|
984
|
|
Year Ending December 31,
|
|
|
|
Remainder of 2016
|
$
|
36
|
|
2017
|
69
|
|
|
2018
|
65
|
|
|
2019
|
65
|
|
|
2020
|
65
|
|
|
2021
|
58
|
|
|
Thereafter
|
396
|
|
|
Total
|
$
|
754
|
|
|
June 30,
2016 |
|
December 31,
2015 |
||||
|
|
|
|
||||
3.20% Senior Notes due April 2016
|
$
|
—
|
|
|
$
|
150
|
|
2.70% Senior Notes due April 2019
|
300
|
|
|
300
|
|
||
4.75% Senior Notes due January 2020
|
528
|
|
|
522
|
|
||
2.50% Senior Notes due March 2020
|
299
|
|
|
299
|
|
||
4.70% Senior Notes due April 2021
|
567
|
|
|
554
|
|
||
4.25% Senior Notes due April 2024
|
326
|
|
|
313
|
|
||
3.50% Senior Notes due March 2025
|
614
|
|
|
601
|
|
||
3.45% Senior Notes due June 2026
|
499
|
|
|
—
|
|
||
6.95% Senior Notes due July 2037
|
174
|
|
|
247
|
|
||
5.75% Senior Notes due January 2040
|
244
|
|
|
368
|
|
||
4.70% Senior Notes due March 2045
|
300
|
|
|
300
|
|
||
Other
|
17
|
|
|
22
|
|
||
Debt issuance costs
|
(26
|
)
|
|
(25
|
)
|
||
Total long-term debt
|
3,842
|
|
|
3,651
|
|
||
Less: Current portion of long-term debt
|
7
|
|
|
159
|
|
||
Total long-term debt, net of current portion
|
$
|
3,835
|
|
|
$
|
3,492
|
|
Year Ending December 31,
|
|
||
Remainder of 2016
|
$
|
4
|
|
2017
|
6
|
|
|
2018
|
4
|
|
|
2019
|
302
|
|
|
2020
|
801
|
|
|
2021
|
550
|
|
|
Thereafter
|
2,125
|
|
|
Total maturities of long-term debt
|
3,792
|
|
|
Unamortized discount
|
(14
|
)
|
|
Debt issuance costs
|
(26
|
)
|
|
Fair value basis adjustments attributable to hedged debt
|
90
|
|
|
Total long-term debt
|
3,842
|
|
|
Less: Current portion of long-term debt
|
7
|
|
|
Total long-term debt, net of current portion
|
$
|
3,835
|
|
|
|
|
|
Notional Amount
|
||||||
Debt Instrument
|
|
Floating Rate Paid by the Company
|
|
June 30, 2016
|
|
December 31, 2015
|
||||
|
|
|
|
|
|
|
||||
4.75% Senior Notes due January 2020
|
|
One-month LIBOR plus a 3.6% spread
|
|
350
|
|
|
350
|
|
||
4.70% Senior Notes due April 2021
|
|
One-month LIBOR plus a 2.45% to 3.39% spread
|
|
400
|
|
|
400
|
|
||
4.25% Senior Notes due April 2024
|
|
One-month LIBOR plus a 1.54% to 1.59% spread
|
|
250
|
|
|
250
|
|
||
3.50% Senior Notes due March 2025
|
|
One-month LIBOR plus a 1.44% spread
|
|
200
|
|
|
200
|
|
||
|
|
|
|
$
|
1,200
|
|
|
$
|
1,200
|
|
|
June 30, 2016
|
|
December 31, 2015
|
||||||||
|
Balance Sheet
Classification
|
|
Fair Value
|
|
Balance Sheet
Classification
|
|
Fair Value
|
||||
Derivatives Designated as Hedging Instruments
|
|
|
|
|
|
|
|
|
|
||
Asset Derivatives:
|
|
|
|
|
|
|
|
|
|
||
Interest rate swaps
|
Other assets
|
|
$
|
66
|
|
|
Other assets
|
|
$
|
23
|
|
|
|
|
|
|
|
|
|
||||
Liability Derivatives:
|
|
|
|
|
|
|
|
||||
Interest rate swaps
|
|
|
—
|
|
|
Other liabilities
|
|
6
|
|
||
|
|
|
|
|
|
|
|
||||
Total Net Derivatives Assets
|
|
|
$
|
66
|
|
|
|
|
$
|
17
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Depreciation expense
|
$
|
44
|
|
|
$
|
55
|
|
|
$
|
87
|
|
|
$
|
112
|
|
Amortization expense
|
17
|
|
|
20
|
|
|
36
|
|
|
41
|
|
||||
Depreciation and amortization expense
|
$
|
61
|
|
|
$
|
75
|
|
|
$
|
123
|
|
|
$
|
153
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
$
|
(35
|
)
|
|
$
|
(37
|
)
|
|
$
|
(71
|
)
|
|
$
|
(83
|
)
|
Interest income
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Interest expense, net
|
$
|
(34
|
)
|
|
$
|
(37
|
)
|
|
$
|
(70
|
)
|
|
$
|
(82
|
)
|
|
|
|
|
|
|
|
|
||||||||
Interest paid
|
$
|
22
|
|
|
$
|
45
|
|
|
$
|
75
|
|
|
$
|
99
|
|
Income taxes paid
|
$
|
117
|
|
|
$
|
90
|
|
|
$
|
121
|
|
|
$
|
109
|
|
|
|
|
|
|
|
|
|
||||||||
Assets acquired under capital leases
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Accounts payable associated with capital expenditures
|
12
|
|
|
9
|
|
|
12
|
|
|
9
|
|
||||
Dividends payable
|
$
|
56
|
|
|
$
|
55
|
|
|
$
|
56
|
|
|
$
|
55
|
|
|
|
|
|
|
|
|
|
||||||||
Businesses acquired:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fair value of assets acquired
|
$
|
—
|
|
|
$
|
2
|
|
|
$
|
135
|
|
|
$
|
2
|
|
Fair value of liabilities assumed
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Fair value of net assets acquired
|
—
|
|
|
2
|
|
|
135
|
|
|
2
|
|
||||
Merger consideration paid (payable), net
|
—
|
|
|
4
|
|
|
—
|
|
|
4
|
|
||||
Cash paid for business acquisitions
|
—
|
|
|
6
|
|
|
135
|
|
|
6
|
|
||||
Less: Cash acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Business acquisitions, net of cash acquired
|
$
|
—
|
|
|
$
|
6
|
|
|
$
|
135
|
|
|
$
|
6
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||
DIS business
|
$
|
1,809
|
|
|
$
|
1,771
|
|
|
$
|
3,565
|
|
|
$
|
3,463
|
|
All other operating segments
|
97
|
|
|
154
|
|
|
204
|
|
|
301
|
|
||||
Total net revenues
|
$
|
1,906
|
|
|
$
|
1,925
|
|
|
$
|
3,769
|
|
|
$
|
3,764
|
|
|
|
|
|
|
|
|
|
||||||||
Operating earnings (loss):
|
|
|
|
|
|
|
|
|
|
|
|
||||
DIS business
|
$
|
328
|
|
|
$
|
302
|
|
|
$
|
606
|
|
|
$
|
544
|
|
All other operating segments
|
17
|
|
|
30
|
|
|
38
|
|
|
56
|
|
||||
General corporate activities
|
77
|
|
|
(31
|
)
|
|
35
|
|
|
(71
|
)
|
||||
Total operating income
|
422
|
|
|
301
|
|
|
679
|
|
|
529
|
|
||||
Non-operating expenses, net
|
(39
|
)
|
|
(101
|
)
|
|
(124
|
)
|
|
(224
|
)
|
||||
Income before income taxes and equity in earnings of equity method investees
|
383
|
|
|
200
|
|
|
555
|
|
|
305
|
|
||||
Income tax expense
|
(183
|
)
|
|
(78
|
)
|
|
(250
|
)
|
|
(120
|
)
|
||||
Equity in earnings of equity method investees, net of taxes
|
9
|
|
|
7
|
|
|
19
|
|
|
14
|
|
||||
Net income
|
209
|
|
|
129
|
|
|
324
|
|
|
199
|
|
||||
Less: Net income attributable to noncontrolling interests
|
14
|
|
|
11
|
|
|
26
|
|
|
20
|
|
||||
Net income attributable to Quest Diagnostics
|
$
|
195
|
|
|
$
|
118
|
|
|
$
|
298
|
|
|
$
|
179
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Our total net revenues of
$1.9 billion
were
1.0%
below the prior year period. The Clinical Trials Contribution, Focus Sale, and winding down of our Celera products business ("Celera Products") negatively impacted net revenues by
3.4%
.
|
•
|
DIS revenues of
$1.8 billion
increased by
2.2%
compared to the prior year period. DIS volume, measured by the number of requisitions, increased
1.9%
compared to the prior year period. Revenue per requisition increased
0.2%
compared to the prior year period.
|
•
|
DS revenues of
$97 million
were
37.1%
below the prior year period due to the Clinical Trials Contribution, Focus Sale and the winding down of Celera Products.
|
•
|
Net income attributable to Quest Diagnostics' stockholders was
$195 million
, or
$1.37
per diluted share.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
Increase
(Decrease) |
|
% Increase
(Decrease) |
|
2016
|
|
2015
|
|
Increase
(Decrease) |
|
% Increase
(Decrease) |
||||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
DIS business
|
$
|
1,809
|
|
|
$
|
1,771
|
|
|
$
|
38
|
|
|
2.2
|
%
|
|
$
|
3,565
|
|
|
$
|
3,463
|
|
|
$
|
102
|
|
|
2.9
|
%
|
DS businesses
|
97
|
|
|
154
|
|
|
(57
|
)
|
|
(37.1
|
)
|
|
204
|
|
|
301
|
|
|
(97
|
)
|
|
(32.1
|
)
|
||||||
Total net revenues
|
$
|
1,906
|
|
|
$
|
1,925
|
|
|
$
|
(19
|
)
|
|
(1.0
|
)%
|
|
$
|
3,769
|
|
|
$
|
3,764
|
|
|
$
|
5
|
|
|
0.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating costs, expenses and other income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of services
|
$
|
1,155
|
|
|
$
|
1,182
|
|
|
$
|
(27
|
)
|
|
(2.3
|
)%
|
|
$
|
2,299
|
|
|
$
|
2,345
|
|
|
$
|
(46
|
)
|
|
(1.9
|
)%
|
Selling, general and administrative
|
430
|
|
|
429
|
|
|
1
|
|
|
0.3
|
|
|
872
|
|
|
848
|
|
|
24
|
|
|
2.8
|
|
||||||
Amortization of intangible assets
|
17
|
|
|
20
|
|
|
(3
|
)
|
|
(11.0
|
)
|
|
36
|
|
|
41
|
|
|
(5
|
)
|
|
(11.8
|
)
|
||||||
Gain on disposition of business
|
(118
|
)
|
|
—
|
|
|
118
|
|
|
NM
|
|
|
(118
|
)
|
|
—
|
|
|
118
|
|
|
NM
|
|
||||||
Other operating (income) expense, net
|
—
|
|
|
(7
|
)
|
|
(7
|
)
|
|
NM
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
NM
|
|
||||||
Total operating costs, expenses and other income, net
|
$
|
1,484
|
|
|
$
|
1,624
|
|
|
$
|
(140
|
)
|
|
(8.6
|
)%
|
|
$
|
3,090
|
|
|
$
|
3,235
|
|
|
$
|
(145
|
)
|
|
(4.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating income
|
$
|
422
|
|
|
$
|
301
|
|
|
$
|
121
|
|
|
40.0
|
%
|
|
$
|
679
|
|
|
$
|
529
|
|
|
$
|
150
|
|
|
28.3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
NM - Not Meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
Increase
(Decrease) |
|
% Increase
(Decrease) |
|
2016
|
|
2015
|
|
Increase
(Decrease) |
|
% Increase
(Decrease) |
||||||||||||||
|
(dollars in millions, except per share amounts)
|
||||||||||||||||||||||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Interest expense, net
|
$
|
(34
|
)
|
|
$
|
(37
|
)
|
|
$
|
(3
|
)
|
|
(9.0
|
)%
|
|
$
|
(70
|
)
|
|
$
|
(82
|
)
|
|
$
|
(12
|
)
|
|
(14.5
|
)%
|
Other expense, net
|
(5
|
)
|
|
(64
|
)
|
|
(59
|
)
|
|
NM
|
|
|
(54
|
)
|
|
(142
|
)
|
|
(88
|
)
|
|
NM
|
|
||||||
Total non-operating expenses, net
|
$
|
(39
|
)
|
|
$
|
(101
|
)
|
|
$
|
(62
|
)
|
|
(62.2
|
)%
|
|
$
|
(124
|
)
|
|
$
|
(224
|
)
|
|
$
|
(100
|
)
|
|
(44.7
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Income tax expense
|
$
|
(183
|
)
|
|
$
|
(78
|
)
|
|
$
|
105
|
|
|
134.8
|
%
|
|
$
|
(250
|
)
|
|
$
|
(120
|
)
|
|
$
|
130
|
|
|
108.5
|
%
|
Effective income tax rate
|
47.7
|
%
|
|
38.9
|
%
|
|
8.8
|
%
|
|
NM
|
|
|
45.0
|
%
|
|
39.2
|
%
|
|
5.8
|
%
|
|
NM
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Equity in earnings of equity method investees, net of taxes
|
$
|
9
|
|
|
$
|
7
|
|
|
$
|
2
|
|
|
16.7
|
%
|
|
$
|
19
|
|
|
$
|
14
|
|
|
$
|
5
|
|
|
36.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income attributable to Quest Diagnostics
|
$
|
195
|
|
|
$
|
118
|
|
|
$
|
77
|
|
|
64.9
|
%
|
|
$
|
298
|
|
|
$
|
179
|
|
|
$
|
119
|
|
|
66.4
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Diluted earnings per common share attributable to Quest Diagnostics’ common stockholders
|
$
|
1.37
|
|
|
$
|
0.81
|
|
|
$
|
0.56
|
|
|
69.1
|
%
|
|
$
|
2.08
|
|
|
$
|
1.23
|
|
|
$
|
0.85
|
|
|
69.1
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
NM - Not Meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Net revenues:
|
|
|
|
|
|
|
|
||||
DIS business
|
94.9
|
%
|
|
92.0
|
%
|
|
94.6
|
%
|
|
92.0
|
%
|
DS businesses
|
5.1
|
|
|
8.0
|
|
|
5.4
|
|
|
8.0
|
|
Total net revenues
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||
Operating costs, expenses and other income:
|
|
|
|
|
|
|
|
|
|
||
Cost of services
|
60.6
|
%
|
|
61.4
|
%
|
|
61.0
|
%
|
|
62.3
|
%
|
Selling, general and administrative
|
22.6
|
|
|
22.3
|
|
|
23.1
|
|
|
22.5
|
|
Amortization of intangible assets
|
0.9
|
|
|
1.0
|
|
|
1.0
|
|
|
1.1
|
|
Gain on disposition of business
|
(6.2
|
)
|
|
—
|
|
|
(3.1
|
)
|
|
—
|
|
Other operating (income) expense, net
|
—
|
|
|
(0.3
|
)
|
|
—
|
|
|
—
|
|
Total operating costs, expenses and other income, net
|
77.9
|
%
|
|
84.4
|
%
|
|
82.0
|
%
|
|
85.9
|
%
|
|
|
|
|
|
|
|
|
||||
Operating income
|
22.1
|
%
|
|
15.6
|
%
|
|
18.0
|
%
|
|
14.1
|
%
|
|
|
|
|
|
|
|
|
||||
Bad debt expense
|
4.2
|
%
|
|
4.1
|
%
|
|
4.4
|
%
|
|
4.2
|
%
|
•
|
pre-tax gain of $118 million, or $0.24 per diluted share, related to the Focus Sale recorded in gain on disposition of business;
|
•
|
pre-tax charges of $19 million ($10 million in cost of services, $8 million in selling, general and administrative expenses and $1 million in equity in earnings of equity method investees, net of taxes), or $0.08 per diluted share, primarily associated with systems conversions and integration costs in connection with further restructuring and integrating our business; and
|
•
|
net pre-tax costs of $8 million ($3 million in selling, general and administrative expenses, $(1) million in other operating (income) expense, net and $6 million in other expense, net), or $0.04 per diluted share, related to winding down subsidiaries, non-cash asset impairment charges and costs incurred related to certain legal matters.
|
•
|
pre-tax gain of $118 million, or $0.24 per diluted share, related to the Focus Sale recorded in gain on disposition of business;
|
•
|
pre-tax charges of $48 million, or $0.21 per diluted share, related to the 2016 Tender Offer recorded in other expense, net;
|
•
|
pre-tax charges of $40 million ($17 million in cost of services, $20 million in selling, general and administrative expenses and $3 million in equity in earnings of equity method investees, net of taxes), or $0.17 per diluted share, primarily associated with systems conversions and integration costs in connection with further restructuring and integrating our business; and
|
•
|
net pre-tax costs of $14 million ($6 million in selling, general and administrative expenses, $1 million in other operating (income) expense, net and $7 million in other expense, net), or $0.06 per diluted share, related to winding down subsidiaries, non-cash asset impairment charges and costs incurred related to certain legal matters.
|
•
|
pre-tax charges of $66 million ($1 million in interest expense, net and $65 million in other expense, net), or $0.28 per diluted share, related to the loss on early retirement of debt and related refinancing charges in connection with the April 2015 redemption ("2015 Redemption"), in which we redeemed all of our $500 million Senior Notes due November 2015, $150 million, or 50%, of our Senior Notes due April 2016 and all of our $375 million Senior Notes due July 2017;
|
•
|
pre-tax charges of $23 million ($11 million in cost of services and $12 million in selling, general and administrative expenses), or $0.10 per diluted share, primarily associated with workforce reductions and professional fees incurred in connection with further restructuring and integrating our business; and
|
•
|
net pre-tax gain of $3 million ($5 million in selling, general and administrative expenses and $(8) million in other operating (income) expense, net), or $0.02 per diluted share, primarily associated with a gain of $13 million associated with a decrease in the fair value of the contingent consideration accrual associated with our Summit Health acquisition, which was partially offset by costs incurred related to certain legal matters and non-cash asset impairment charges.
|
•
|
pre-tax charges of $150 million ($6 million in interest expense, net and $144 million in other expense, net), or $0.64 per diluted share, related to the loss on early retirement of debt and related refinancing charges in connection with the 2015 Redemption and the March 2015 cash tender offer ("2015 Tender Offer"), in which we purchased $250 million aggregate principal amount of our Senior Notes due 2037 and Senior Notes due 2040.
|
•
|
pre-tax charges of $54 million ($31 million in cost of services and $23 million in selling, general and administrative expenses), or $0.22 per diluted share, primarily associated with workforce reductions and professional fees incurred in connection with further restructuring and integrating our business; and
|
•
|
net pre-tax charges of $7 million ($7 million in selling, general and administrative expenses and $0 net impact on other operating (income) expense, net), or $0.04 per diluted share, primarily associated with non-cash asset impairment charges associated with Celera Products and costs incurred related to certain legal matters, partially offset by a gain of $13 million associated with a decrease in the fair value of the contingent consideration accrual associated with our Summit Health acquisition.
|
|
Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
|
(dollars in millions)
|
||||||
Net cash provided by operating activities
|
$
|
464
|
|
|
$
|
337
|
|
Net cash provided by (used in) investing activities
|
27
|
|
|
(123
|
)
|
||
Net cash used in financing activities
|
(341
|
)
|
|
(256
|
)
|
||
Net change in cash and cash equivalents
|
$
|
150
|
|
|
$
|
(42
|
)
|
|
|
Payments due by period
|
||||||||||||||||||
|
|
(in millions)
|
||||||||||||||||||
Contractual Obligations
|
|
Total
|
|
Remainder of 2016
|
|
1-3 years
|
|
3-5 years
|
|
After 5 years
|
||||||||||
Outstanding debt
|
|
$
|
3,775
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,100
|
|
|
$
|
2,675
|
|
Capital lease obligations
|
|
17
|
|
|
4
|
|
|
10
|
|
|
3
|
|
|
—
|
|
|||||
Interest payments on outstanding debt
|
|
1,648
|
|
|
70
|
|
|
281
|
|
|
254
|
|
|
1,043
|
|
|||||
Operating leases
|
|
701
|
|
|
96
|
|
|
274
|
|
|
139
|
|
|
192
|
|
|||||
Purchase obligations
|
|
198
|
|
|
57
|
|
|
97
|
|
|
23
|
|
|
21
|
|
|||||
Merger consideration obligations
|
|
4
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual obligations
|
|
$
|
6,343
|
|
|
$
|
229
|
|
|
$
|
664
|
|
|
$
|
1,519
|
|
|
$
|
3,931
|
|
ISSUER PURCHASES OF EQUITY SECURITIES
|
|
||||||||||||||
Period
|
|
Total Number of
Shares
Purchased
|
|
Average Price
Paid per Share
|
|
Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs
|
|
Approximate
Dollar Value of
Shares that May
Yet Be Purchased
Under the Plans
or Programs
(in thousands)
|
|
||||||
April 1, 2016 – April 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Share Repurchase Program (A)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
857,116
|
|
|
Employee Transactions (B)
|
|
—
|
|
|
$
|
—
|
|
|
N/A
|
|
|
N/A
|
|
|
|
May 1, 2016 – May 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Share Repurchase Program (A)
|
|
3,122,332
|
|
|
$
|
76.06
|
|
|
3,122,332
|
|
|
$
|
619,616
|
|
(C)
|
Employee Transactions (B)
|
|
8,342
|
|
|
$
|
76.31
|
|
|
N/A
|
|
|
N/A
|
|
|
|
June 1, 2016 – June 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Share Repurchase Program (A)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
619,616
|
|
(C)
|
Employee Transactions (B)
|
|
186
|
|
|
$
|
77.66
|
|
|
N/A
|
|
|
N/A
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Share Repurchase Program (A)
|
|
3,122,332
|
|
|
$
|
76.06
|
|
|
3,122,332
|
|
|
$
|
619,616
|
|
(C)
|
Employee Transactions (B)
|
|
8,528
|
|
|
$
|
76.34
|
|
|
N/A
|
|
|
N/A
|
|
|
(A)
|
Since the share repurchase program’s inception in May 2003, our Board of Directors has authorized $7 billion of share repurchases of our common stock through
June 30, 2016
. The share repurchase authorization has no set expiration or termination date.
|
(B)
|
Includes: (1) shares delivered or attested to in satisfaction of the exercise price and/or tax withholding obligations by holders of stock options (granted under the Company’s Amended and Restated Employee Long-Term Incentive Plan and its Amended and Restated Non-Employee Director Long-Term Incentive Plan) who exercised options; and (2) shares withheld (under the terms of grants under the Amended and Restated Employee Long-Term Incentive Plan) to offset tax withholding obligations that occur upon the delivery of common shares underlying restricted stock units and performance share units.
|
(C)
|
Does not include the second quarter of 2016 payment of $38 million associated with the May 2016 accelerated share repurchase agreement ("ASR"), which represents 15% percent of the total value of shares expected to be repurchased under the ASR in the third quarter of 2016. See Note 11 to the interim consolidated financial statements for further information regarding the ASR.
|
Item 6.
|
Exhibits
|
10.1
|
Amended and Restated Employee Stock Purchase Plan (As amended effective as of May 18, 2016)
|
|
|
31.1
|
Rule 13a-14(a) Certification of Chief Executive Officer
|
|
|
31.2
|
Rule 13a-14(a) Certification of Chief Financial Officer
|
|
|
32.1
|
Section 1350 Certification of Chief Executive Officer
|
|
|
32.2
|
Section 1350 Certification of Chief Financial Officer
|
|
|
101.INS
|
dgx-20160630.xml
|
|
|
101.SCH
|
dgx-20160630.xsd
|
|
|
101.CAL
|
dgx-20160630_cal.xml
|
|
|
101.DEF
|
dgx-20160630_def.xml
|
|
|
101.LAB
|
dgx-20160630_lab.xml
|
|
|
101.PRE
|
dgx-20160630_pre.xml
|
|
|
|
|
By
|
/s/ Stephen H. Rusckowski
|
|
|
Stephen H. Rusckowski
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
By
|
/s/ Mark J. Guinan
|
|
|
Mark J. Guinan
|
|
|
Senior Vice President and Chief Financial Officer
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Quest Diagnostics Incorporated;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By
|
/s/ Stephen H. Rusckowski
|
|
|
|
Stephen H. Rusckowski
|
|
President and Chief Executive Officer
|
|
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Quest Diagnostics Incorporated;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
By
|
/s/ Mark J. Guinan
|
|
|
|
Mark J. Guinan
|
|
Senior Vice President and
|
|
Chief Financial Officer
|
Dated:
|
July 25, 2016
|
|
/s/ Stephen H. Rusckowski
|
|
|
|
|
|
|
|
|
|
Stephen H. Rusckowski
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
Dated:
|
July 25, 2016
|
|
/s/ Mark J. Guinan
|
|
|
|
|
|
|
|
|
|
Mark J. Guinan
|
|
|
|
|
Senior Vice President and
|
|
|
|
|
Chief Financial Officer
|
|