Quest Diagnostics 2008 Annual Report Download - page 39

rating agency’s judgment future circumstances relating to the basis of the rating, such as adverse changes in our
Company or our industry, so warrant. If such ratings are lowered, the borrowing costs on our senior unsecured
revolving credit facility, secured receivables facility and term loan would increase. Changes in our credit ratings,
however, do not require repayment or acceleration of any of our debt.
We or our subsidiaries may incur additional indebtedness in the future. Our ability to make principal and
interest payments will depend on our ability to generate cash in the future. If we incur additional debt, a greater
portion of our cash flows may be needed to satisfy our debt service obligations and if we do not generate
sufficient cash to meet our debt service requirements, we may need to seek additional financing. In this case, it
may be more difficult, or we may be unable, to obtain financing on terms that are acceptable to us. As a result,
we would be more vulnerable to general adverse economic, industry and capital markets conditions as well as the
other risks associated with indebtedness.
Our ability to attract and retain qualified employees is critical to the success of our business and the
failure to do so may materially adversely affect our performance.
Our people are a critical resource. The supply of qualified personnel may be limited and competition for
qualified employees is strong. If we were to lose, or to fail to attract and retain, key management personnel or
qualified skilled technical or professional employees at our clinical laboratories, research centers or manufacturing
facilities, our earnings and revenues could be adversely affected. In addition, if we were to lose, or to fail to
attract and retain, skilled pathologists with positive relationships with their respective local medical communities,
particularly those with subspecialties, our earnings and revenues could be adversely affected.
Failure to establish, and perform to, appropriate quality standards to assure that the highest level of
quality is observed in the performance of our testing services and in the design, manufacture and
marketing of our products could adversely affect the results of our operations and adversely impact our
reputation.
The provision of clinical testing services, including anatomic pathology services, and related services, and
the design, manufacture and marketing of diagnostic products involve certain inherent risks. The services that we
provide and the products that we design, manufacture and market are intended to provide information for
healthcare providers in providing patient care. Therefore, users of our services and products may have a greater
sensitivity to errors than the users of services or products that are intended for other purposes.
Manufacturing or design defects, unanticipated use of our products, or inadequate disclosure of risks relating
to the use of the product can lead to injury or other adverse events. These events could lead to recalls or safety
alerts relating to our products (either voluntary or required by governmental authorities) and could result, in
certain cases, in the removal of a product from the market. Any recall could result in significant costs as well as
negative publicity that could reduce demand for our products. Personal injuries relating to the use of our products
can also result in product liability claims being brought against us. In some circumstances, such adverse events
could also cause delays in new product approvals.
Similarly, negligence in performing our services can lead to injury or other adverse events. We may be sued
under physician liability or other liability law for acts or omissions by our pathologists, laboratory personnel and
hospital employees who are under the supervision of our hospital-based pathologists. We are subject to the
attendant risk of substantial damages awards and risk to our reputation.
The failure of our IT systems to keep pace with technological advances may significantly reduce our
revenues or increase our expenses.
Public and private initiatives to create healthcare information technology (HCIT) standards and to mandate
standardized clinical coding systems for the electronic exchange of clinical information, including test results,
could require costly modifications to our existing HCIT systems. While we do not expect HCIT standards to be
adopted or implemented without adequate time to comply, if we fail to adopt or delay in implementing HCIT
standards, we could lose customers and business opportunities.
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