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UNITED STATES
|
SECURITIES AND EXCHANGE COMMISSION
|
WASHINGTON, DC 20549
|
|
Large accelerated filer
x
|
Accelerated filer
o
|
Non-accelerated filer
o
(Do not check if a smaller reporting company)
|
Smaller reporting company
o
|
|
|
Page
|
Item 1. Financial Statements
|
|
|
|
|
|
|
Index to unaudited consolidated financial statements filed as part of this report:
|
|
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
||
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net revenues
|
$
|
1,885
|
|
|
$
|
1,880
|
|
|
$
|
5,654
|
|
|
$
|
5,644
|
|
|
|
|
|
|
|
|
|
||||||||
Operating costs, expenses and other income:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Cost of services
|
1,157
|
|
|
1,162
|
|
|
3,456
|
|
|
3,507
|
|
||||
Selling, general and administrative
|
409
|
|
|
402
|
|
|
1,281
|
|
|
1,250
|
|
||||
Amortization of intangible assets
|
18
|
|
|
20
|
|
|
54
|
|
|
61
|
|
||||
Gain on disposition of business
|
—
|
|
|
(334
|
)
|
|
(118
|
)
|
|
(334
|
)
|
||||
Other operating income, net
|
(21
|
)
|
|
(1
|
)
|
|
(20
|
)
|
|
—
|
|
||||
Total operating costs, expenses and other income, net
|
1,563
|
|
|
1,249
|
|
|
4,653
|
|
|
4,484
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Operating income
|
322
|
|
|
631
|
|
|
1,001
|
|
|
1,160
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other income (expense):
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense, net
|
(37
|
)
|
|
(35
|
)
|
|
(107
|
)
|
|
(117
|
)
|
||||
Other income (expense), net
|
4
|
|
|
(4
|
)
|
|
(50
|
)
|
|
(146
|
)
|
||||
Total non-operating expenses, net
|
(33
|
)
|
|
(39
|
)
|
|
(157
|
)
|
|
(263
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Income before income taxes and equity in earnings of equity method investees
|
289
|
|
|
592
|
|
|
844
|
|
|
897
|
|
||||
Income tax expense
|
(95
|
)
|
|
(239
|
)
|
|
(345
|
)
|
|
(359
|
)
|
||||
Equity in earnings of equity method investees, net of taxes
|
11
|
|
|
1
|
|
|
30
|
|
|
15
|
|
||||
Net income
|
205
|
|
|
354
|
|
|
529
|
|
|
553
|
|
||||
Less: Net income attributable to noncontrolling interests
|
13
|
|
|
12
|
|
|
39
|
|
|
32
|
|
||||
Net income attributable to Quest Diagnostics
|
$
|
192
|
|
|
$
|
342
|
|
|
$
|
490
|
|
|
$
|
521
|
|
|
|
|
|
|
|
|
|
||||||||
Earnings per share attributable to Quest Diagnostics’ common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
1.37
|
|
|
$
|
2.37
|
|
|
$
|
3.46
|
|
|
$
|
3.61
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted
|
$
|
1.34
|
|
|
$
|
2.35
|
|
|
$
|
3.42
|
|
|
$
|
3.58
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
139
|
|
|
144
|
|
|
141
|
|
|
144
|
|
||||
Diluted
|
142
|
|
|
145
|
|
|
143
|
|
|
145
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Dividends per common share
|
$
|
0.40
|
|
|
$
|
0.38
|
|
|
$
|
1.20
|
|
|
$
|
1.14
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income
|
$
|
205
|
|
|
$
|
354
|
|
|
$
|
529
|
|
|
$
|
553
|
|
|
|
|
|
|
|
|
|
||||||||
Other comprehensive (loss) income:
|
|
|
|
|
|
|
|
||||||||
Currency translation
|
(5
|
)
|
|
(5
|
)
|
|
(23
|
)
|
|
(7
|
)
|
||||
Market valuation, net of taxes
|
—
|
|
|
(2
|
)
|
|
(1
|
)
|
|
—
|
|
||||
Net deferred loss on cash flow hedges, net of taxes
|
—
|
|
|
1
|
|
|
1
|
|
|
3
|
|
||||
Other comprehensive loss
|
(5
|
)
|
|
(6
|
)
|
|
(23
|
)
|
|
(4
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Comprehensive income
|
200
|
|
|
348
|
|
|
506
|
|
|
549
|
|
||||
Less: Comprehensive income attributable to noncontrolling interests
|
13
|
|
|
12
|
|
|
39
|
|
|
32
|
|
||||
Comprehensive income attributable to Quest Diagnostics
|
$
|
187
|
|
|
$
|
336
|
|
|
$
|
467
|
|
|
$
|
517
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Assets
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
406
|
|
|
$
|
133
|
|
Accounts receivable, net of allowance for doubtful accounts of $284 and $254 at September 30, 2016 and December 31, 2015, respectively
|
966
|
|
|
901
|
|
||
Inventories
|
82
|
|
|
84
|
|
||
Prepaid expenses and other current assets
|
179
|
|
|
207
|
|
||
Assets held for sale
|
9
|
|
|
176
|
|
||
Total current assets
|
1,642
|
|
|
1,501
|
|
||
Property, plant and equipment, net
|
952
|
|
|
925
|
|
||
Goodwill
|
6,000
|
|
|
5,905
|
|
||
Intangible assets, net
|
972
|
|
|
984
|
|
||
Investment in equity method investees
|
452
|
|
|
473
|
|
||
Other assets
|
155
|
|
|
174
|
|
||
Total assets
|
$
|
10,173
|
|
|
$
|
9,962
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Accounts payable and accrued expenses
|
$
|
1,039
|
|
|
$
|
1,014
|
|
Current portion of long-term debt
|
7
|
|
|
159
|
|
||
Total current liabilities
|
1,046
|
|
|
1,173
|
|
||
Long-term debt
|
3,815
|
|
|
3,492
|
|
||
Other liabilities
|
542
|
|
|
514
|
|
||
Commitments and contingencies
|
|
|
|
|
|
||
Redeemable noncontrolling interest
|
76
|
|
|
70
|
|
||
Stockholders’ equity:
|
|
|
|
|
|
||
Quest Diagnostics stockholders’ equity:
|
|
|
|
|
|
||
Common stock, par value $0.01 per share; 600 shares authorized at both September 30, 2016 and December 31, 2015; 216 shares issued at both September 30, 2016 and December 31, 2015
|
2
|
|
|
2
|
|
||
Additional paid-in capital
|
2,526
|
|
|
2,481
|
|
||
Retained earnings
|
6,520
|
|
|
6,199
|
|
||
Accumulated other comprehensive loss
|
(61
|
)
|
|
(38
|
)
|
||
Treasury stock, at cost; 77 shares and 73 shares at September 30, 2016 and December 31, 2015, respectively
|
(4,324
|
)
|
|
(3,960
|
)
|
||
Total Quest Diagnostics stockholders’ equity
|
4,663
|
|
|
4,684
|
|
||
Noncontrolling interests
|
31
|
|
|
29
|
|
||
Total stockholders’ equity
|
4,694
|
|
|
4,713
|
|
||
Total liabilities and stockholders’ equity
|
$
|
10,173
|
|
|
$
|
9,962
|
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
Cash flows from operating activities:
|
|
|
|
|
|
||
Net income
|
$
|
529
|
|
|
$
|
553
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
186
|
|
|
230
|
|
||
Provision for doubtful accounts
|
242
|
|
|
232
|
|
||
Deferred income tax provision
|
19
|
|
|
138
|
|
||
Stock-based compensation expense
|
52
|
|
|
39
|
|
||
Gain on disposition of business
|
(118
|
)
|
|
(334
|
)
|
||
Other, net
|
(15
|
)
|
|
(4
|
)
|
||
Changes in operating assets and liabilities:
|
|
|
|
|
|
||
Accounts receivable
|
(316
|
)
|
|
(214
|
)
|
||
Accounts payable and accrued expenses
|
43
|
|
|
(35
|
)
|
||
Income taxes payable
|
74
|
|
|
(15
|
)
|
||
Termination of interest rate swap agreements
|
54
|
|
|
—
|
|
||
Other assets and liabilities, net
|
15
|
|
|
(41
|
)
|
||
Net cash provided by operating activities
|
765
|
|
|
549
|
|
||
|
|
|
|
||||
Cash flows from investing activities:
|
|
|
|
|
|
||
Business acquisitions, net of cash acquired
|
(139
|
)
|
|
(41
|
)
|
||
Proceeds from disposition of businesses
|
270
|
|
|
—
|
|
||
Capital expenditures
|
(165
|
)
|
|
(169
|
)
|
||
Investment in equity method investee
|
—
|
|
|
(37
|
)
|
||
(Increase) decrease in investments and other assets
|
(11
|
)
|
|
10
|
|
||
Net cash used in investing activities
|
(45
|
)
|
|
(237
|
)
|
||
|
|
|
|
||||
Cash flows from financing activities:
|
|
|
|
|
|
||
Proceeds from borrowings
|
1,869
|
|
|
2,214
|
|
||
Repayments of debt
|
(1,722
|
)
|
|
(2,235
|
)
|
||
Purchases of treasury stock
|
(440
|
)
|
|
(174
|
)
|
||
Exercise of stock options
|
63
|
|
|
58
|
|
||
Employee payroll tax withholdings on stock issued under stock-based compensation plans
|
(10
|
)
|
|
(6
|
)
|
||
Dividends paid
|
(168
|
)
|
|
(158
|
)
|
||
Distributions to noncontrolling interests
|
(31
|
)
|
|
(28
|
)
|
||
Sale of noncontrolling interest in subsidiary
|
—
|
|
|
51
|
|
||
Payment of deferred business acquisition consideration
|
—
|
|
|
(51
|
)
|
||
Other financing activities, net
|
(8
|
)
|
|
(52
|
)
|
||
Net cash used in financing activities
|
(447
|
)
|
|
(381
|
)
|
||
|
|
|
|
||||
Net change in cash and cash equivalents
|
273
|
|
|
(69
|
)
|
||
Cash and cash equivalents, beginning of period
|
133
|
|
|
192
|
|
||
Cash and cash equivalents, end of period
|
$
|
406
|
|
|
$
|
123
|
|
|
|
|
Quest Diagnostics Stockholders’ Equity
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
|
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
|
|
|
|
|
|
|
|
|
|
490
|
|
|
|
|
|
|
|
|
33
|
|
|
523
|
|
|
|
6
|
|
||||||||
Other comprehensive loss, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
(23
|
)
|
|
|
|
|
|
|
|
(23
|
)
|
|
|
|
|||||||||
Dividends declared
|
|
|
|
|
|
|
|
|
|
(169
|
)
|
|
|
|
|
|
|
|
|
|
|
(169
|
)
|
|
|
|
|||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(31
|
)
|
|
(31
|
)
|
|
|
|
|
||||||||
Issuance of common stock under benefit plans
|
1
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
11
|
|
|
|
|
|
16
|
|
|
|
|
|||||||||
Stock-based compensation expense
|
|
|
|
|
|
|
49
|
|
|
|
|
|
|
|
|
3
|
|
|
|
|
|
52
|
|
|
|
|
|||||||||
Exercise of stock options
|
1
|
|
|
|
|
|
1
|
|
|
|
|
|
|
|
|
62
|
|
|
|
|
|
63
|
|
|
|
|
|||||||||
Shares to cover employee payroll tax withholdings on stock issued under stock-based compensation plans
|
|
|
|
|
|
|
(10
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(10
|
)
|
|
|
|
|||||||||
Purchases of treasury stock
|
(6
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(440
|
)
|
|
|
|
|
(440
|
)
|
|
|
|
|||||||||
Balance, September 30, 2016
|
139
|
|
|
$
|
2
|
|
|
$
|
2,526
|
|
|
$
|
6,520
|
|
|
$
|
(61
|
)
|
|
$
|
(4,324
|
)
|
|
$
|
31
|
|
|
$
|
4,694
|
|
|
|
$
|
76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance, December 31, 2014
|
144
|
|
|
$
|
2
|
|
|
$
|
2,418
|
|
|
$
|
5,723
|
|
|
$
|
(27
|
)
|
|
$
|
(3,815
|
)
|
|
$
|
29
|
|
|
$
|
4,330
|
|
|
|
$
|
—
|
|
Net income
|
|
|
|
|
|
|
|
|
|
521
|
|
|
|
|
|
|
|
|
31
|
|
|
552
|
|
|
|
1
|
|
||||||||
Other comprehensive loss, net of taxes
|
|
|
|
|
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|
|
|
|
(4
|
)
|
|
|
|
|||||||||
Dividends declared
|
|
|
|
|
|
|
|
|
|
(164
|
)
|
|
|
|
|
|
|
|
|
|
|
(164
|
)
|
|
|
|
|||||||||
Distributions to noncontrolling interests
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(28
|
)
|
|
(28
|
)
|
|
|
|
|
||||||||
Issuance of common stock under benefit plans
|
1
|
|
|
|
|
|
5
|
|
|
|
|
|
|
|
|
12
|
|
|
|
|
|
17
|
|
|
|
|
|||||||||
Stock-based compensation expense
|
|
|
|
|
|
|
37
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
39
|
|
|
|
|
|||||||||
Exercise of stock options
|
1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
58
|
|
|
|
|
|
58
|
|
|
|
|
|||||||||
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
|
|
|
|
|
|
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4
|
|
|
|
|
|||||||||
Purchases of treasury stock
|
(2
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(174
|
)
|
|
|
|
|
(174
|
)
|
|
|
|
|||||||||
Sale of redeembable noncontrolling interest
|
|
|
|
|
11
|
|
|
|
|
|
|
|
|
|
|
11
|
|
|
|
54
|
|
||||||||||||||
Adjustment to fair value
|
|
|
|
|
|
|
(14
|
)
|
|
|
|
|
|
|
|
(14
|
)
|
|
|
14
|
|
||||||||||||||
Balance, September 30, 2015
|
144
|
|
|
$
|
2
|
|
|
$
|
2,469
|
|
|
$
|
6,066
|
|
|
$
|
(31
|
)
|
|
$
|
(3,917
|
)
|
|
$
|
32
|
|
|
$
|
4,621
|
|
|
|
$
|
69
|
|
•
|
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
$3 million
and
$7 million
of tax benefits in income tax expense for the
three and nine
months ended September 30, 2016, respectively. In addition, excess income tax benefits and deficiencies are no longer considered when applying the treasury stock method for computing the effect of dilutive securities, which resulted in an increase in the effect of the dilutive securities for both the three and nine months ended September 30, 2016.
|
•
|
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
$4 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 nine months ended September 30, 2015.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Amounts attributable to Quest Diagnostics’ stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to Quest Diagnostics
|
$
|
192
|
|
|
$
|
342
|
|
|
$
|
490
|
|
|
$
|
521
|
|
Less: Earnings allocated to participating securities
|
2
|
|
|
2
|
|
|
3
|
|
|
3
|
|
||||
Earnings available to Quest Diagnostics’ common stockholders – basic and diluted
|
$
|
190
|
|
|
$
|
340
|
|
|
$
|
487
|
|
|
$
|
518
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding – basic
|
139
|
|
|
144
|
|
|
141
|
|
|
144
|
|
||||
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Stock options and performance share units
|
3
|
|
|
1
|
|
|
2
|
|
|
1
|
|
||||
Weighted average common shares outstanding – diluted
|
142
|
|
|
145
|
|
|
143
|
|
|
145
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Earnings per share attributable to Quest Diagnostics’ common stockholders:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic
|
$
|
1.37
|
|
|
$
|
2.37
|
|
|
$
|
3.46
|
|
|
$
|
3.61
|
|
|
|
|
|
|
|
|
|
||||||||
Diluted
|
$
|
1.34
|
|
|
$
|
2.35
|
|
|
$
|
3.42
|
|
|
$
|
3.58
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Stock options and performance share units
|
—
|
|
|
2
|
|
|
1
|
|
|
2
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Employee separation costs
|
$
|
1
|
|
|
$
|
14
|
|
|
$
|
7
|
|
|
$
|
35
|
|
Facility-related costs
|
2
|
|
|
1
|
|
|
2
|
|
|
1
|
|
||||
Total restructuring charges
|
$
|
3
|
|
|
$
|
15
|
|
|
$
|
9
|
|
|
$
|
36
|
|
|
|
|
Basis of Fair Value Measurements
|
||||||||||||
|
|
|
Quoted
Prices in
Active
Markets for
Identical
Assets /
Liabilities
|
|
Significant
Other
Observable
Inputs
|
|
Significant
Unobservable
Inputs
|
||||||||
September 30, 2016
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Trading securities
|
$
|
50
|
|
|
$
|
50
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Cash surrender value of life insurance policies
|
31
|
|
|
—
|
|
|
31
|
|
|
—
|
|
||||
Available-for-sale equity securities
|
4
|
|
|
4
|
|
|
—
|
|
|
—
|
|
||||
Total
|
$
|
85
|
|
|
$
|
54
|
|
|
$
|
31
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Deferred compensation liabilities
|
$
|
89
|
|
|
$
|
—
|
|
|
$
|
89
|
|
|
$
|
—
|
|
Interest rate swaps
|
5
|
|
|
—
|
|
|
5
|
|
|
—
|
|
||||
Contingent consideration
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
||||
Total
|
$
|
97
|
|
|
$
|
—
|
|
|
$
|
94
|
|
|
$
|
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
|
|
|
September 30,
2016 |
|
December 31,
2015 |
||||
Balance, beginning of period
|
$
|
5,905
|
|
|
$
|
6,032
|
|
Goodwill acquired during the period
|
95
|
|
|
33
|
|
||
Reclassification to assets held for sale
|
—
|
|
|
(160
|
)
|
||
Balance, end of period
|
$
|
6,000
|
|
|
$
|
5,905
|
|
|
Weighted
Average
Amortization
Period
(in years)
|
|
September 30, 2016
|
|
December 31, 2015
|
||||||||||||||||||||
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net
|
|
Cost
|
|
Accumulated
Amortization
|
|
Net
|
|||||||||||||
Amortizing intangible assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Customer-related
|
18
|
|
$
|
978
|
|
|
$
|
(336
|
)
|
|
$
|
642
|
|
|
$
|
936
|
|
|
$
|
(296
|
)
|
|
$
|
640
|
|
Non-compete agreements
|
6
|
|
6
|
|
|
(4
|
)
|
|
2
|
|
|
6
|
|
|
(3
|
)
|
|
3
|
|
||||||
Technology
|
18
|
|
93
|
|
|
(39
|
)
|
|
54
|
|
|
93
|
|
|
(35
|
)
|
|
58
|
|
||||||
Other
|
9
|
|
106
|
|
|
(68
|
)
|
|
38
|
|
|
106
|
|
|
(59
|
)
|
|
47
|
|
||||||
Total
|
18
|
|
1,183
|
|
|
(447
|
)
|
|
736
|
|
|
1,141
|
|
|
(393
|
)
|
|
748
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Intangible assets not subject to amortization:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Trade names
|
|
|
235
|
|
|
—
|
|
|
235
|
|
|
235
|
|
|
—
|
|
|
235
|
|
||||||
Other
|
|
|
1
|
|
|
—
|
|
|
1
|
|
|
1
|
|
|
—
|
|
|
1
|
|
||||||
Total intangible assets
|
|
|
$
|
1,419
|
|
|
$
|
(447
|
)
|
|
$
|
972
|
|
|
$
|
1,377
|
|
|
$
|
(393
|
)
|
|
$
|
984
|
|
Year Ending December 31,
|
|
|
|
Remainder of 2016
|
$
|
18
|
|
2017
|
69
|
|
|
2018
|
65
|
|
|
2019
|
65
|
|
|
2020
|
65
|
|
|
2021
|
58
|
|
|
Thereafter
|
396
|
|
|
Total
|
$
|
736
|
|
|
September 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
|
523
|
|
|
522
|
|
||
2.50% Senior Notes due March 2020
|
299
|
|
|
299
|
|
||
4.70% Senior Notes due April 2021
|
564
|
|
|
554
|
|
||
4.25% Senior Notes due April 2024
|
323
|
|
|
313
|
|
||
3.50% Senior Notes due March 2025
|
608
|
|
|
601
|
|
||
3.45% Senior Notes due June 2026
|
497
|
|
|
—
|
|
||
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
|
15
|
|
|
22
|
|
||
Debt issuance costs
|
(25
|
)
|
|
(25
|
)
|
||
Total long-term debt
|
3,822
|
|
|
3,651
|
|
||
Less: Current portion of long-term debt
|
7
|
|
|
159
|
|
||
Total long-term debt, net of current portion
|
$
|
3,815
|
|
|
$
|
3,492
|
|
Year Ending December 31,
|
|
||
Remainder of 2016
|
$
|
2
|
|
2017
|
6
|
|
|
2018
|
4
|
|
|
2019
|
302
|
|
|
2020
|
801
|
|
|
2021
|
550
|
|
|
Thereafter
|
2,125
|
|
|
Total maturities of long-term debt
|
3,790
|
|
|
Unamortized discount
|
(13
|
)
|
|
Debt issuance costs
|
(25
|
)
|
|
Fair value basis adjustments attributable to hedged debt
|
70
|
|
|
Total long-term debt
|
3,822
|
|
|
Less: Current portion of long-term debt
|
7
|
|
|
Total long-term debt, net of current portion
|
$
|
3,815
|
|
|
|
|
|
Notional Amount
|
||||||
Debt Instrument
|
|
Floating Rate Paid by the Company as of September 30, 2016
|
|
September 30, 2016
|
|
December 31, 2015
|
||||
|
|
|
|
|
|
|
||||
4.75% Senior Notes due January 2020
|
|
|
|
$
|
—
|
|
|
$
|
350
|
|
4.70% Senior Notes due April 2021
|
|
|
|
—
|
|
|
400
|
|
||
4.25% Senior Notes due April 2024
|
|
One-month LIBOR plus a 3.02% spread
|
|
250
|
|
|
250
|
|
||
3.50% Senior Notes due March 2025
|
|
One-month LIBOR plus a 2.24% to 2.28% spread
|
|
600
|
|
|
200
|
|
||
3.45% Senior Notes due June 2026
|
|
One-month LIBOR plus a 2.15% spread
|
|
350
|
|
|
—
|
|
||
|
|
|
|
$
|
1,200
|
|
|
$
|
1,200
|
|
|
September 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
|
|
$
|
23
|
|
|
|
|
|
|
|
|
|
||||
Liability Derivatives:
|
|
|
|
|
|
|
|
||||
Interest rate swaps
|
Other liabilities
|
|
5
|
|
|
Other liabilities
|
|
6
|
|
||
|
|
|
|
|
|
|
|
||||
Total Net Derivatives (Liabilities) Assets
|
|
|
$
|
(5
|
)
|
|
|
|
$
|
17
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Depreciation expense
|
$
|
45
|
|
|
$
|
57
|
|
|
$
|
132
|
|
|
$
|
169
|
|
Amortization expense
|
18
|
|
|
20
|
|
|
54
|
|
|
61
|
|
||||
Depreciation and amortization expense
|
$
|
63
|
|
|
$
|
77
|
|
|
$
|
186
|
|
|
$
|
230
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense
|
$
|
(37
|
)
|
|
$
|
(35
|
)
|
|
$
|
(108
|
)
|
|
$
|
(118
|
)
|
Interest income
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Interest expense, net
|
$
|
(37
|
)
|
|
$
|
(35
|
)
|
|
$
|
(107
|
)
|
|
$
|
(117
|
)
|
|
|
|
|
|
|
|
|
||||||||
Interest paid
|
$
|
41
|
|
|
$
|
52
|
|
|
$
|
116
|
|
|
$
|
151
|
|
Income taxes paid
|
$
|
141
|
|
|
$
|
140
|
|
|
$
|
262
|
|
|
$
|
249
|
|
|
|
|
|
|
|
|
|
||||||||
Assets acquired under capital leases
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2
|
|
Accounts payable associated with capital expenditures
|
$
|
11
|
|
|
$
|
11
|
|
|
$
|
11
|
|
|
$
|
11
|
|
Dividends payable
|
$
|
56
|
|
|
$
|
55
|
|
|
$
|
56
|
|
|
$
|
55
|
|
|
|
|
|
|
|
|
|
||||||||
Businesses acquired:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Fair value of assets acquired
|
$
|
4
|
|
|
$
|
35
|
|
|
$
|
139
|
|
|
$
|
37
|
|
Fair value of liabilities assumed
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Fair value of net assets acquired
|
4
|
|
|
35
|
|
|
139
|
|
|
37
|
|
||||
Merger consideration paid (payable), net
|
—
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Cash paid for business acquisitions
|
4
|
|
|
35
|
|
|
139
|
|
|
41
|
|
||||
Less: Cash acquired
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Business acquisitions, net of cash acquired
|
$
|
4
|
|
|
$
|
35
|
|
|
$
|
139
|
|
|
$
|
41
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
||||
DIS business
|
$
|
1,800
|
|
|
$
|
1,764
|
|
|
$
|
5,365
|
|
|
$
|
5,227
|
|
All other operating segments
|
85
|
|
|
116
|
|
|
289
|
|
|
417
|
|
||||
Total net revenues
|
$
|
1,885
|
|
|
$
|
1,880
|
|
|
$
|
5,654
|
|
|
$
|
5,644
|
|
|
|
|
|
|
|
|
|
||||||||
Operating earnings (loss):
|
|
|
|
|
|
|
|
|
|
|
|
||||
DIS business
|
$
|
329
|
|
|
$
|
294
|
|
|
$
|
935
|
|
|
$
|
838
|
|
All other operating segments
|
12
|
|
|
30
|
|
|
50
|
|
|
86
|
|
||||
General corporate activities
|
(19
|
)
|
|
307
|
|
|
16
|
|
|
236
|
|
||||
Total operating income
|
322
|
|
|
631
|
|
|
1,001
|
|
|
1,160
|
|
||||
Non-operating expenses, net
|
(33
|
)
|
|
(39
|
)
|
|
(157
|
)
|
|
(263
|
)
|
||||
Income before income taxes and equity in earnings of equity method investees
|
289
|
|
|
592
|
|
|
844
|
|
|
897
|
|
||||
Income tax expense
|
(95
|
)
|
|
(239
|
)
|
|
(345
|
)
|
|
(359
|
)
|
||||
Equity in earnings of equity method investees, net of taxes
|
11
|
|
|
1
|
|
|
30
|
|
|
15
|
|
||||
Net income
|
205
|
|
|
354
|
|
|
529
|
|
|
553
|
|
||||
Less: Net income attributable to noncontrolling interests
|
13
|
|
|
12
|
|
|
39
|
|
|
32
|
|
||||
Net income attributable to Quest Diagnostics
|
$
|
192
|
|
|
$
|
342
|
|
|
$
|
490
|
|
|
$
|
521
|
|
Item 2.
|
Management’s Discussion and Analysis of Financial Condition and Results of Operations
|
•
|
Our total net revenues of
$1.89 billion
were
0.3%
above the prior year period. The Focus Sale and winding down of our Celera products business ("Celera Products") negatively impacted revenue growth by
1.8%
.
|
•
|
DIS revenues of
$1.8 billion
increased by
2.1%
compared to the prior year period. DIS volume, measured by the number of requisitions, increased
2.0%
compared to the prior year period. Revenue per requisition was flat compared to the prior year period.
|
•
|
DS revenues of
$85 million
were
27.1%
below the prior year period due to the Focus Sale and winding down of Celera Products.
|
•
|
Net income attributable to Quest Diagnostics' stockholders was
$192 million
, or
$1.34
per diluted share.
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||||||||||||||||||||
|
2016
|
|
2015
|
|
Increase
(Decrease) |
|
% Increase
(Decrease) |
|
2016
|
|
2015
|
|
Increase
(Decrease) |
|
% Increase
(Decrease) |
||||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||||||||
Net revenues:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
DIS business
|
$
|
1,800
|
|
|
$
|
1,764
|
|
|
$
|
36
|
|
|
2.1
|
%
|
|
$
|
5,365
|
|
|
$
|
5,227
|
|
|
$
|
138
|
|
|
2.7
|
%
|
DS businesses
|
85
|
|
|
116
|
|
|
(31
|
)
|
|
(27.1
|
)
|
|
289
|
|
|
417
|
|
|
(128
|
)
|
|
(30.7
|
)
|
||||||
Total net revenues
|
$
|
1,885
|
|
|
$
|
1,880
|
|
|
$
|
5
|
|
|
0.3
|
%
|
|
$
|
5,654
|
|
|
$
|
5,644
|
|
|
$
|
10
|
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating costs, expenses and other income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Cost of services
|
$
|
1,157
|
|
|
$
|
1,162
|
|
|
$
|
(5
|
)
|
|
(0.5
|
)%
|
|
$
|
3,456
|
|
|
$
|
3,507
|
|
|
$
|
(51
|
)
|
|
(1.5
|
)%
|
Selling, general and administrative
|
409
|
|
|
402
|
|
|
7
|
|
|
1.8
|
|
|
1,281
|
|
|
1,250
|
|
|
31
|
|
|
2.5
|
|
||||||
Amortization of intangible assets
|
18
|
|
|
20
|
|
|
(2
|
)
|
|
(11.2
|
)
|
|
54
|
|
|
61
|
|
|
(7
|
)
|
|
(11.6
|
)
|
||||||
Gain on disposition of business
|
—
|
|
|
(334
|
)
|
|
(334
|
)
|
|
NM
|
|
|
(118
|
)
|
|
(334
|
)
|
|
(216
|
)
|
|
NM
|
|
||||||
Other operating income, net
|
(21
|
)
|
|
(1
|
)
|
|
20
|
|
|
NM
|
|
|
(20
|
)
|
|
—
|
|
|
20
|
|
|
NM
|
|
||||||
Total operating costs, expenses and other income, net
|
$
|
1,563
|
|
|
$
|
1,249
|
|
|
$
|
314
|
|
|
25.1
|
%
|
|
$
|
4,653
|
|
|
$
|
4,484
|
|
|
$
|
169
|
|
|
3.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Operating income
|
$
|
322
|
|
|
$
|
631
|
|
|
$
|
(309
|
)
|
|
(48.9
|
)%
|
|
$
|
1,001
|
|
|
$
|
1,160
|
|
|
$
|
(159
|
)
|
|
(13.6
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
NM - Not Meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 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
|
$
|
(37
|
)
|
|
$
|
(35
|
)
|
|
$
|
2
|
|
|
4.4
|
%
|
|
$
|
(107
|
)
|
|
$
|
(117
|
)
|
|
$
|
(10
|
)
|
|
(8.9
|
)%
|
Other income (expense), net
|
4
|
|
|
(4
|
)
|
|
8
|
|
|
NM
|
|
|
(50
|
)
|
|
(146
|
)
|
|
(96
|
)
|
|
NM
|
|
||||||
Total non-operating expenses, net
|
$
|
(33
|
)
|
|
$
|
(39
|
)
|
|
$
|
(6
|
)
|
|
(13.3
|
)%
|
|
$
|
(157
|
)
|
|
$
|
(263
|
)
|
|
$
|
(106
|
)
|
|
(40.0
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Income tax expense
|
$
|
(95
|
)
|
|
$
|
(239
|
)
|
|
$
|
(144
|
)
|
|
(60.1
|
)%
|
|
$
|
(345
|
)
|
|
$
|
(359
|
)
|
|
$
|
(14
|
)
|
|
(3.8
|
)%
|
Effective income tax rate
|
33.1
|
%
|
|
40.4
|
%
|
|
(7.3
|
)%
|
|
NM
|
|
|
40.9
|
%
|
|
40.0
|
%
|
|
0.9
|
%
|
|
NM
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Equity in earnings of equity method investees, net of taxes
|
$
|
11
|
|
|
$
|
1
|
|
|
$
|
10
|
|
|
NM
|
|
|
$
|
30
|
|
|
$
|
15
|
|
|
$
|
15
|
|
|
95.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Net income attributable to Quest Diagnostics
|
$
|
192
|
|
|
$
|
342
|
|
|
$
|
(150
|
)
|
|
(44.0
|
)%
|
|
$
|
490
|
|
|
$
|
521
|
|
|
$
|
(31
|
)
|
|
(6.1
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Diluted earnings per common share attributable to Quest Diagnostics’ common stockholders
|
$
|
1.34
|
|
|
$
|
2.35
|
|
|
$
|
(1.01
|
)
|
|
(43.0
|
)%
|
|
$
|
3.42
|
|
|
$
|
3.58
|
|
|
$
|
(0.16
|
)
|
|
(4.5
|
)%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
NM - Not Meaningful
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
Nine Months Ended September 30,
|
||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||
Net revenues:
|
|
|
|
|
|
|
|
||||
DIS business
|
95.5
|
%
|
|
93.8
|
%
|
|
94.9
|
%
|
|
92.6
|
%
|
DS businesses
|
4.5
|
|
|
6.2
|
|
|
5.1
|
|
|
7.4
|
|
Total net revenues
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
||||
Operating costs, expenses and other income:
|
|
|
|
|
|
|
|
|
|
||
Cost of services
|
61.4
|
%
|
|
61.8
|
%
|
|
61.1
|
%
|
|
62.1
|
%
|
Selling, general and administrative
|
21.7
|
|
|
21.4
|
|
|
22.7
|
|
|
22.2
|
|
Amortization of intangible assets
|
0.9
|
|
|
1.1
|
|
|
0.9
|
|
|
1.1
|
|
Gain on disposition of business
|
—
|
|
|
(17.8
|
)
|
|
(2.1
|
)
|
|
(5.9
|
)
|
Other operating income, net
|
(1.1
|
)
|
|
(0.1
|
)
|
|
(0.3
|
)
|
|
—
|
|
Total operating costs, expenses and other income, net
|
82.9
|
%
|
|
66.4
|
%
|
|
82.3
|
%
|
|
79.5
|
%
|
|
|
|
|
|
|
|
|
||||
Operating income
|
17.1
|
%
|
|
33.6
|
%
|
|
17.7
|
%
|
|
20.5
|
%
|
|
|
|
|
|
|
|
|
||||
Bad debt expense
|
4.0
|
%
|
|
3.9
|
%
|
|
4.3
|
%
|
|
4.1
|
%
|
•
|
pre-tax charges of $18 million ($8 million in cost of services and $10 million in selling, general and administrative expenses), 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 gain of $20 million in other operating income, net, or $0.15 per diluted share, primarily a result of a gain on an escrow recovery associated with an acquisition.
|
•
|
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 $58 million ($25 million in cost of services, $30 million in selling, general and administrative expenses and $3 million in equity in earnings of equity method investees, net of taxes), or $0.25 per diluted share, primarily associated with systems conversions and integration costs in connection with further restructuring and integrating our business;
|
•
|
pre-tax charges of $48 million, or $0.21 per diluted share, related to the 2016 Tender Offer recorded in other income (expense), net; and
|
•
|
net pre-tax gain of $6 million (costs of $6 million in selling, general and administrative expenses, net gain of $19 million in other operating income, net and costs of $7 million in other income (expense), net), or $0.09 per diluted share, primarily a result of a gain on an escrow recovery associated with an acquisition, partially offset by costs associated with winding down subsidiaries, non-cash asset impairment charges and costs incurred related to certain legal matters.
|
•
|
pre-tax gain of $334 million, or $1.30 per diluted share, related to the Clinical Trials Contribution recorded in gain on disposition of business.
|
•
|
pre-tax charges of $34 million ($20 million in cost of services, $9 million in selling, general and administrative expenses and $5 million in equity in earnings of equity method investees, net of taxes), or $0.14 per diluted share, primarily associated with workforce reductions and professional fees incurred in connection with further restructuring and integrating our business;
|
•
|
net pre-tax gain of $1 million recorded in other operating income, net; and
|
•
|
income tax benefit of $2 million, or $0.01 per diluted share, related to the March 2015 cash tender offer and April 2015 redemption.
|
•
|
pre-tax gain of $334 million, or $1.30 per diluted share, related to the Clinical Trials Contribution recorded in gain on disposition of business.
|
•
|
pre-tax charges of $150 million ($6 million in interest expense, net and $144 million in other income (expense), net), or $0.63 per diluted share, related to the loss on retirement of debt and related refinancing charges in connection with 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; and 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 $88 million ($51 million in cost of services, $32 million in selling, general and administrative expenses and $5 million in equity in earnings of equity method investees, net of taxes), or $0.37 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 $6 million (costs of $7 million in selling, general and administrative expenses and a gain of $1 million in other operating income, net), or $0.03 per diluted share, primarily associated with non-
|
|
Nine Months Ended September 30,
|
||||||
|
2016
|
|
2015
|
||||
|
(dollars in millions)
|
||||||
Net cash provided by operating activities
|
$
|
765
|
|
|
$
|
549
|
|
Net cash used in investing activities
|
(45
|
)
|
|
(237
|
)
|
||
Net cash used in financing activities
|
(447
|
)
|
|
(381
|
)
|
||
Net change in cash and cash equivalents
|
$
|
273
|
|
|
$
|
(69
|
)
|
•
|
a $99 million decrease in pre-tax cash charges ($69 million after the related cash tax benefits) associated with the 2016 Tender Offer as compared to the 2015 Tender Offer and 2015 Redemption;
|
•
|
an additional payroll cycle in the first quarter of 2015;
|
•
|
$54 million of proceeds received in the third quarter of 2016 from the termination of interest rate swap agreements; and
|
•
|
a $35 million decrease in interest paid.
|
•
|
a
$270 million
increase in proceeds from the disposition of businesses, principally related to the Focus Sale; and
|
•
|
a $37 million decrease in investment in equity method investee, related to cash included in our contribution to Q
2
Solutions in 2015.
|
•
|
a
$266 million
increase in repurchases of our common stock (see "
Share Repurchases
" for further details); and
|
•
|
a $51 million decrease in proceeds from the sale of a noncontrolling interest in a subsidiary, as a result of the sale of a noncontrolling interest in a subsidiary to UMass in 2015.
|
•
|
a
$168 million
net increase in net borrowings (proceeds from borrowings less repayments of debt);
|
•
|
a $51 million decrease in payment of deferred acquisition consideration, principally a result of a payment to UMass Memorial Medical Center ("UMass") in 2015 related to the business acquisition in 2013; and
|
•
|
a
$44 million
decrease in other financing activities, net.
|
|
|
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
|
|
15
|
|
|
2
|
|
|
10
|
|
|
3
|
|
|
—
|
|
|||||
Interest payments on outstanding debt
|
|
1,635
|
|
|
30
|
|
|
297
|
|
|
269
|
|
|
1,039
|
|
|||||
Operating leases
|
|
711
|
|
|
53
|
|
|
301
|
|
|
155
|
|
|
202
|
|
|||||
Purchase obligations
|
|
2,153
|
|
|
52
|
|
|
538
|
|
|
432
|
|
|
1,131
|
|
|||||
Merger consideration obligations
|
|
4
|
|
|
2
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|||||
Total contractual obligations
|
|
$
|
8,293
|
|
|
$
|
139
|
|
|
$
|
1,148
|
|
|
$
|
1,959
|
|
|
$
|
5,047
|
|
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)
|
|
||||||
July 1, 2016 – July 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Share Repurchase Program (A)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
619,616
|
|
|
Employee Transactions (B)
|
|
—
|
|
|
$
|
—
|
|
|
N/A
|
|
|
N/A
|
|
|
|
August 1, 2016 – August 31, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Share Repurchase Program (A)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
619,616
|
|
|
Employee Transactions (B)
|
|
9,788
|
|
|
$
|
84.63
|
|
|
N/A
|
|
|
N/A
|
|
|
|
September 1, 2016 – September 30, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Share Repurchase Program (A)
|
|
892,396
|
|
|
$
|
98.05
|
|
|
892,396
|
|
|
$
|
532,116
|
|
(C)
|
Employee Transactions (B)
|
|
402
|
|
|
$
|
82.59
|
|
|
N/A
|
|
|
N/A
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||
Share Repurchase Program (A)
|
|
892,396
|
|
|
$
|
98.05
|
|
|
892,396
|
|
|
$
|
532,116
|
|
(C)
|
Employee Transactions (B)
|
|
10,190
|
|
|
$
|
84.55
|
|
|
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
September 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)
|
Includes the reclassification of $38 million from additional paid-in capital to treasury stock and the final delivery of 294,729 shares associated with the completion of the May 2016 accelerated share repurchase agreement ("ASR"). See Note 11 to the interim consolidated financial statements for further information regarding the ASR.
|
Item 6.
|
Exhibits
|
31.1
|
Rule 13a-14(a) Certification of Chief Executive Officer
|
|
|
31.2
|
Rule 13a-14(a) Certification of Chief Financial Officer
|
|
|
32.1
|
Section 1350 Certification of Chief Executive Officer
|
|
|
32.2
|
Section 1350 Certification of Chief Financial Officer
|
|
|
101.INS
|
dgx-20160930.xml
|
|
|
101.SCH
|
dgx-20160930.xsd
|
|
|
101.CAL
|
dgx-20160930_cal.xml
|
|
|
101.DEF
|
dgx-20160930_def.xml
|
|
|
101.LAB
|
dgx-20160930_lab.xml
|
|
|
101.PRE
|
dgx-20160930_pre.xml
|
|
|
|
|
By
|
/s/ Stephen H. Rusckowski
|
|
|
Stephen H. Rusckowski
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
By
|
/s/ Mark J. Guinan
|
|
|
Mark J. Guinan
|
|
|
Senior Vice President and Chief Financial Officer
|
|
No information found
* THE VALUE IS THE MARKET VALUE AS OF THE LAST DAY OF THE QUARTER FOR WHICH THE 13F WAS FILED.
FUND | NUMBER OF SHARES | VALUE ($) | PUT OR CALL |
---|
DIRECTORS | AGE | BIO | OTHER DIRECTOR MEMBERSHIPS |
---|
No information found
No Customers Found
Price
Yield
Owner | Position | Direct Shares | Indirect Shares |
---|