Quest Diagnostics 2006 Annual Report Download - page 21

TABLE OF CONTENTS
Item Page
Item 1. Business . .................................................................................. 1
Overview .................................................................................. 1
The United States Clinical Laboratory Testing Market. . . ..................................... 1
Corporate Strategy and Growth Opportunities . . .............................................. 2
Recent Acquisitions ........................................................................ 4
Recent Changes in Payer Relationships ...................................................... 5
Our Services ............................................................................... 6
Routine Testing ........................................................................ 6
Esoteric Testing ....................................................................... 7
New Test Introductions................................................................. 7
Anatomic Pathology.................................................................... 9
Risk Assessment Services ............................................................... 9
Clinical Trials Testing ................................................................. 9
Other Services and Products ........................................................... 9
Payers and Customers ...................................................................... 10
Sales and Marketing........................................................................ 12
Information Systems........................................................................ 13
Billing. . . .................................................................................. 13
Competition................................................................................ 14
Quality Assurance . ......................................................................... 15
Regulation of Clinical Laboratory Operations . . .............................................. 15
Healthcare Information Technology. . . ....................................................... 17
Privacy and Security of Health Information; Standard Transactions............................ 17
Regulation of Reimbursement for Clinical Laboratory Services................................ 18
Government Investigations and Related Claims. .............................................. 22
Compliance Program ....................................................................... 23
Intellectual Property Rights . ................................................................ 24
Insurance .................................................................................. 24
Employees ................................................................................. 24
Item 1A. Risk Factors ............................................................................... 25
Cautionary Statement For Purposes Of The “Safe Harbor” Provisions Of The Private Securities
Litigation Reform Act Of 1995 ........................................................... 32
Item 1B. Unresolved Staff Comments ................................................................ 33
Item 2. Properties .................................................................................. 34
Item 3. Legal Proceedings . ......................................................................... 35
Item 4. Submission of Matters to a Vote of Security Holders......................................... 35
Item 5. Market for Registrant’s Common Stock, Related Stockholder Matters and Issuer Purchases of
Equity Securities ......................................................................... 36
Item 6. Selected Financial Data..................................................................... 37
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ...... 37
Item 7A. Quantitative and Qualitative Disclosures About Market Risk .................................. 37
Item 8. Financial Statements and Supplementary Data. . .............................................. 37
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ...... 37
Item 9A. Controls and Procedures .................................................................... 38
Item 9B. Other Information . ......................................................................... 38
Item 10. Directors, Executive Officers and Corporate Governance. ..................................... 39
Item 11. Executive Compensation .................................................................... 40
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholders’
Matters .................................................................................. 40
Item 13. Certain Relationships and Related Transactions, and Director Independence. ................... 40
Item 14. Principal Accounting Fees and Services ..................................................... 40
Item 15. Exhibits, Financial Statement Schedules ..................................................... 40
Selected Historical Financial Data of Our Company ..................................................... 46
Management’s Discussion and Analysis of Financial Condition and Results of Operations ................. 48
Report of Management on Internal Control Over Financial Reporting..................................... 66
Report of Independent Registered Public Accounting Firm . .............................................. F-1
Consolidated Financial Statements and Related Notes.................................................... F-3
Supplementary Data: Quarterly Operating Results (unaudited) ............................................ F-39
Schedule II – Valuation Accounts and Reserves. . ....................................................... F-41
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