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Quest Diagnostics aims to stoke shareholder value via higher growth and operational enhancements

Published 11/11/2016, 08:06 AM
Quest Diagnostics aims to stoke shareholder value via higher growth and operational enhancements
DGX
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  • At is Investor Day today, Quest Diagnostics (NYSE:DGX) will present its two-point plan to build shareholder value via ramping up growth and driving operational improvements. It expects to increase its annual top line growth to 3 - 5% for the period 2017 - 2020 with mid-to-high single digit earnings growth. A 12.5% dividend raise ($1.80 annually) underscores management's bullishness.
  • The company intends to accelerate annual revenue growth 1 - 2% organically and via strategic acquisitions. Other key initiatives include partnering with health plans and hospital systems to increase Quest's addressable market, expanding advanced diagnostics through R&D, increasing its retail presence, driven mainly by its presence in Safeway stores and the initiation of direct access testing in two states, and building a business in population health supported by data analytics and extended care services.
  • It operational initiatives include driving $1.1B in cost savings this year and $1.3B by the end of next year, reduce denials by payers, reduce bad debt expense and standardize/optimize laboratory and operational processes including digitizing processes related to the customer experience (i.e., appointment scheduling, check-in registration, test results reporting).
  • The company also intends to complete six asset sales which are expected to generate gross proceeds of more than $1B as it refocuses on diagnostic information services.
  • 2016 Guidance: Revenues: ~$7.51B; non-GAAP EPS: $5.07 - 5.12.

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