Quest Diagnostics 2008 Annual Report Download - page 3
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2008 ANNUAL REPORT
01
To Our Shareholders, Employees and Customers:
Today, Quest Diagnostics is the clear leader in an attractive
industry that provides an essential healthcare service—
diagnostic testing. We are differentiating ourselves from our
competitors by implementing a strategy that emphasizes
providing superior service to our patients; making continuous
improvements in quality by applying Lean Six Sigma principles;
prudently investing to drive science and innovation; and
relentlessly focusing on building an unparalleled set of assets
and capabilities.
While no company is immune to the effects of the worldwide
economic downturn, we believe the opportunities before us far
outweigh the challenges. Our company is strong operationally
and financially. We are bifocal in our approach—doing what is
right in the short term and reshaping our business to position
us well for long-term success.
Strong Financial Performance
We reported outstanding financial results for 2008.
•Revenuesgrew8%to$7.2billion.
•Earningspershareincreased14%to$3.23.
•Operating income increased to $1.2 billion, or 16.9%
of revenues.
•Cashflowexceeded$1billion.
We exceeded our commitment for earnings in 2008, despite
the challenging economic environment. One important
driver of this earnings improvement was the growth of
our business. Demand for diagnostic testing has continued
to increase in all three of our key service offerings—routine
testing, esoteric and gene-based testing, and anatomic
pathology. In our two businesses that have been most affected
by a slowing economy—pre-employment drug testing and
risk assessment of candidates for life insurance—
we are taking actions to mitigate their impact to
our earnings growth, and also to position them for
accelerating growth when the economy rebounds.
In addition, higher earnings were also driven by a
company-wide initiative we launched more than
two years ago to reshape, remake and re-energize
our company. This program is well underway and is
focused on streamlining and simplifying processes
to make us even more effective, while also improv-
ing efficiency and reducing costs. To date, this
initiative, focused on driving continuous improve-
ment,hasremovedmorethan$300millionfrom
our cost structure. By the end of 2009, we will
havereducedourcoststructureby$500million.
Positioned for Continued Growth
At a time of economic uncertainty, Quest
Diagnostics is financially strong and positioned
well for continued growth. We are executing our strategic
plan and see opportunities to further strengthen our com-
petitive position during these challenging times for the fol-
lowing reasons:
•Diagnostic testing is an essential medical service, and is
becoming increasingly recognized for being as critical to
NET REVENUES
($ in billions)
’04
$5.1
’05
$5.5
’06
$6.3
’07
$6.7
’08
$7.2
2008 was a year of solid performance, and our business is healthy and growing.
Despite the economic environment, we generated strong revenues and earnings,
and we expect continued growth in 2009.
Surya N. Mohapatra, Ph.D.