Welcome to the Quest Diagnostics second quarter 2015 conference call. At the request of the company, this call is being recorded. The entire contents of the call, including the presentation and question-and-answer session that will follow, are the copyrighted property of Quest Diagnostics with all rights reserved. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of Quest Diagnostics is strictly prohibited. Now, I would like to introduce Dan Haemmerle, Executive Director of Investor Relations for Quest Diagnostics. Go ahead, please.

Thank you, and good morning. I'm here with Steve Rusckowski, our President and Chief Executive Officer; and Mark Guinan, our Chief Financial Officer. During this call, we may make forward-looking statements and also discuss non-GAAP measures. Actual results may differ materially from those projected. Risks and uncertainties that may affect Quest Diagnostics' future results include, but are not limited to, those described in Quest Diagnostics' 2014 annual report on Form 10-K, quarterly reports on Form 10-Q, and current reports on Form 8-K. Our earnings press release is available and the text of our prepared remarks will be available later today in the Investor Relations' Quarterly Updates section of our website at www.questdiagnostics.com. A PowerPoint presentation and spreadsheet with our results and supplemental analysis are also available on the website. Now, here's Steve Rusckowski. Stephen H. Rusckowski - President, Chief Executive Officer & Director: Thanks, Dan, and thanks, everyone, for joining us today. This morning, we'll provide you with highlights of the quarter, share industry trends, and also review progress we are making, executing our five-point strategy. Then Mark will provide more detail on the results and take you through guidance. Well, we grew revenues, margins, and earnings in the second quarter, and made progress executing our strategy. Revenues grew 1% to $1.9 billion. Adjusted operating income grew 9%, adjusted net income grew more than 8%, and adjusted EPS increased 5% to $1.25. This was the second consecutive quarter in which operating income grew faster than revenues. This underscores what we've been doing with executing our five-point strategy. We are not just interested in growth at any cost, we are focused on driving profitable growth. And I'll speak about this more in a minute. Before we get into our strategy, I would like to spend some time on industry dynamics. After…

Thank you. We will now open it up to questions. Our first question comes from Glen Santangelo from Credit Suisse. Sir, your line is open. Glen J. Santangelo - Credit Suisse Securities (USA) LLC (Broker): Yeah, thanks and good morning. Steve, just wanted to talk to you about volumes in the quarter. They were probably a little bit slower than what we would have estimated. I'm just kind of curious to get your perspective. If you think there's -- are you seeing any type of slowdown in the market or maybe is it more difficult comps from the ACA comparisons from last year or does it perhaps maybe reflect some business that maybe you've walked away from that you deemed to be less profitable? Any sort of color on underlying market trends would be helpful. Stephen H. Rusckowski - President, Chief Executive Officer & Director: Sure. Let me start and then I'm going to pass it to Mark. Well, first of all, what I said in the opening remarks is we do this analysis where we look at our stable accounts, and we call it a same provider, same store analysis, and year-on-year what we said they were consistent with the prior years. So on an existing basis, we feel utilization is stable versus the prior year. So that's point number one. Point number two, as I said in our introductory remarks, we continue to steer our resources, our energy around the higher profit portion of the marketplace, whether that's with better solutions and we've gotten some growth. As a matter of fact, you see our growth in our higher end portion of our portfolio growing faster than our top-line growth. So that focus is paying off. And then it's also paying off in better revenue per requisition and, obviously,…

Thank you. Our next question comes from A. J. Rice of UBS. Sir, your line is open.

Hi, everybody. Just thought I might ask, Steve, you mentioned in your prepared remarks about what's happening in Arizona with the direct access to tests, the legislation and I'm curious. I'm not sure I've heard you guys opine on that. What's your view about that? Is that something that you would promote in other states? And then more broadly, because Theranos has been in the news and I know they were also part of seeing that legislation pass, any update in your thinking about them or whether you're seeing anything from them competitively? Stephen H. Rusckowski - President, Chief Executive Officer & Director: Yes, thanks for the question. First of all, we continue to look at the best way to engage with the healthcare marketplace by state. Arizona was notable because of the new law, and we're actively participating in that. I think some portion of all markets will access the healthcare system this way, not all, and it will be a growing trend with, as I said, the trend around the consumer and that's become an increasingly important part of our business. We also have been offering, A. J., access to our Blueprint for Wellness online. That's accessible beyond Arizona. And, as I said, we're expanding that with the Blueprint for Athletes offering. So as far as we're concerned, we're going to continue to evaluate where we get more aggressive in certain starts, where it makes sense, where we can still do it. As you know, all states are not created equal here. Arizona was very strong in this regard. We are trying to see how Arizona goes. As I said, we're actually encouraged by the initial results from what we see in Arizona and we do believe this is a trend we're on top of, and we're very…

That's great. I appreciate that. Thanks. Stephen H. Rusckowski - President, Chief Executive Officer & Director: Thanks, A.J.

Thank you. Our next question comes from Jack Meehan of Barclays. Sir, your line is open.

Hi, thanks, and good morning.

Hi, Jack. Stephen H. Rusckowski - President, Chief Executive Officer & Director: Hi, Jack.

Hello. Just wanted to ask, you mentioned the growth in Medicaid and managed Medicaid in the quarter, and starting to see, potentially, some signs from health reforms starting to come through. I was wondering if you could just maybe parse that out and help us better understand because I think the belief was that new patients were coming through the emergency department. Do you think you're actually beginning to start to see some managed care come through the physician office? And then maybe states that have expanded versus states not expanded, if you've seen some sort of trend there. Thanks. Stephen H. Rusckowski - President, Chief Executive Officer & Director: Yeah, well, first of all, and again, I'll start and Mark will add to it. On the managed Medicaid side, we are seeing increased volumes. It is in the states that have expanded Medicaid, to your question. As you mentioned, you can read and what we have heard is those states have seen an increase in those lives entering the system through hospitals. So there's some growth in volumes there. And also, you probably have seen in the last half, we published a study where we looked at diagnosis of diabetes in those states that expanded Medicaid versus those states that did not, and we actually saw an increase in the diagnosis of diabetes with those states that have expanded Medicaid. So the data is out there that expansion for the low-income portion of our population continues to gain momentum. For all intents and purposes, it's the lives increase that we have seen, and for all intents and purposes, it's hard to track this, as you know. It is the reduction we see in some portion of our uninsured patient volumes. So we think the momentum is building. The momentum…

Got it. Great. Thanks.

Thank you. Our next question comes from Amanda Murphy of William Blair. Ma'am, your line is open. Stephen H. Rusckowski - President, Chief Executive Officer & Director: Good morning, Amanda. Amanda L. Murphy - William Blair & Co. LLC: Hey, good morning. I just had a question on the JV with Quintiles. So I'm just curious. I know it's been – you only recently closed, but wondering if you could share just a general reaction from your side of the world, from clients, as well as if Quintiles might have shared any initial reactions on their side. And then I know you have a temporary agreement to share data, but any updates on how a relationship might work between you and Quintiles more broadly than the central lab? Thinking about economics of sharing data, and then potentially any revenue synergies that might come out of that data sharing. Stephen H. Rusckowski - President, Chief Executive Officer & Director: Yeah, sure. First of all, our initial reaction from customers is quite good. We continue to build volume in the business that we moved over to the JV. When I say volume, I mean revenue and profit, and you saw that in some of our numbers, and then that's now part of the JV. So that's a strong combination with their strong business. We're doing this, as I said in my remarks, to build a stronger business when we put both resources together. And this is both in terms of addressing the market, so growing faster, and also taking some cost out. So we're going to be more profitable, and that's why we did it. So, reactions from those customers that we've gone out and spoke about how we're going to act together with Q2 Solutions has been quite good, and we're…

Thank you . Our next question comes from Lisa Gill of JPMorgan. Ma'am, your line is open. Stephen H. Rusckowski - President, Chief Executive Officer & Director: Hey, Lisa.

Hi, Steve, how are you? Stephen H. Rusckowski - President, Chief Executive Officer & Director: Hey, good morning. Doing well.

Good morning. Thanks. I just had a couple quick questions here. I guess my first question would just be around PAMA. Do you have any thoughts or insights into the timing? I think that many of us are tired of sitting and waiting for it to come, but just wondering if you are hearing anything out of Washington, as far as the timing of that? Stephen H. Rusckowski - President, Chief Executive Officer & Director: Yeah, well, we continue to share the information we have with you all. As we shared, we said the goal was to have the draft guidance out in June. Well, we're past that date. But we continue to hear that we're going to be seeing something, not in the distant future, but hopefully in the near future. They're not specific on timing. And as I said in my remarks, it's because it is a very complex task that we're all taking on. We're all engaged. We're working proactively with them. Our trade association, ACLA, which I'm the chairman of, is actively engaged with them. So, we're entering this with the spirit of making sure we get the data we need to have to rebase the clinical schedule in 2017. And, again, we want to make sure it's a full view of the market, which includes all laboratories we compete with, and obviously that includes small independents, large nationals and hospital outreach labs because that's a big part of this market, as you all know. So we know what we have shared and we continue to be anxiously waiting, as you, for the guidelines. We'll have time to comment on that. We have a lot of data to collect in 2016 to get the refresh done in 2017. So that's the schedule we have.

Is there anything that's changed your view that the full view of the market would be included based on any discussions that you've had in your role? Stephen H. Rusckowski - President, Chief Executive Officer & Director: No, no, not at all. As a matter of fact, we've shared precisely what we shared with you, as far as the market – the competition in the market, which includes about a third of the market being hospital outreach. As you know, when you buy a hospital outreach business we have to go through antitrust reviews so, by definition, if you have to go through antitrust review, they are our competitor, and therefore they should be part of a full view of the market. So we haven't got any kind of push-back on that at all. So we continue to believe that we will be included because they should be included.

Okay. Great thank you. Stephen H. Rusckowski - President, Chief Executive Officer & Director: Thank you.

Thank you. Our next question comes from Bill Bonello of Craig-Hallum. Sir, your line is open.

Great. Stephen H. Rusckowski - President, Chief Executive Officer & Director: Good morning, Bill.

Hey, good morning. Thanks a lot for taking my call. Sort of a big picture question here on the hospital strategy. I'm just wondering if there's any metrics at all that you can share with us to give us some indication of how those deals are going. I don't know if there's a growth metric at what you've acquired or partnered with or a profit improvement or just something that gives us a sense of how that strategy is going and then just your thoughts on continued activity there going forward. Stephen H. Rusckowski - President, Chief Executive Officer & Director: Yeah, yeah. Well first of all, we continue to be very encouraged. I would say that the interest on the lab strategy for hospitals and integrated delivery systems continues to grow. As I said in my comments, we are very encouraged by our funnel and our discussions. When you enter into discussions with large organizations, it takes a longer time to come to conclusion, but we're making progress on some bigger prospects that hopefully we will be sharing with you in the second half. With all that said, we've talked about us closing on a number ever opportunities already, and what I'll share with you in the back half, you'll see some more. We have not broken it out because typically what we do, Bill, is we take these opportunities and we fold those into our regions and that's how we can get synergies and we can have advantages for hospital systems working with us. In some cases, we offload some of the hospital test menu and we move them into our closely located laboratories, which allows them to benefit from our effectiveness and our cost structure within that hospital environment. So it's more difficult to tease it out, but we are encouraged by the trend and we think this is something that we've invested in as part of our growth strategy. We feel good that we've put our bets in a good place and there will be more to come on this in the quarters to come.

Thank you very much. Mark J. Guinan - Chief Financial Officer & Senior Vice President: Bill, as we shared, the six deals we closed in the prior year, were about worth $40 million in revenue. I will also mention that some of the first teals we did were smaller. It was kind of our proof point. So you shouldn't assume that that's the average deal we might close going forward. So as we've gotten more learning, we got more confident. We've engaged actually with some deals with the potential to be much larger than the average we've closed thus far.

Oh, very helpful. Thank you. Stephen H. Rusckowski - President, Chief Executive Officer & Director: Thanks, Bill.

Thank you. Our next question comes from Gary Lieberman of Wells Fargo. Sir, your line is open.

Good morning. Thanks for taking the question. Just looking at the detailed EPS guidance in the press release. The overall number, the $470 million to $485 million is the same. The components moved around somewhat. Would it be possible just to go through those and sort of get some color on what each line item is moving around for?

Yes, typically in the press release tables, we update some of the line items around restructuring and some of the adjustments just for the year-to-date impact as much as anything else.

Okay. So for the restructuring we should expect, I guess, that to continue to increase and then the -

That will increase as we move throughout the year with those adjustments, yeah.

And the diluted EPS, I guess, will be offset by that? So sort of assuming all else being equal, the total number to remain unchanged but the components to move around?

That's fair.

Okay. Any reason you guys do it that way and not sort of put the restructuring where you would expect the spending should be?

Not particularly. I mean, this is how we've done it historically and it's just based on our latest updates and latest actual results at that point. Mark J. Guinan - Chief Financial Officer & Senior Vice President: Yeah, Gary, as I mentioned earlier, we anticipate a significant gain on the creation of the joint venture, so that will be an adjustment in the other direction. What we also have mentioned is our attempt is to provide better information. That's why we do these adjustments and if you look at a three-year period, from 2012 through 2014, actually adjusted earnings and GAAP earnings are very, very close. So we have adjustments up, we have adjustments down. We're trying to provide clarity and to Dan's point, the reason we do the tables we have, is not that we're wed to anything specifically, but we're trying to be consistent to make it easier and clearer on our stakeholders.

Okay, that's helpful. And then maybe one follow-up, just on pricing, what are you seeing from competitors? Going back to Theranos, Theranos has put out sort of their very specific test menu with prices. Is that having any impact in your conversation with payers? Stephen H. Rusckowski - President, Chief Executive Officer & Director: Well, we're tracking to where we expect it to be for this year and also over the last three years. We have shared our guidance about three years ago, as far as what we expect to be seeing for price impact. We're in that envelope. So we feel good about our visibility on that. We've delivered on what we said it would be to you all. So you should have confidence we have a good handle on this. As far as pricing is concerned for 2016, what we shared is we see less pressure on the government side, based upon what we know about the clinical ad fee schedule and the physician fee schedule. So that's encouraging. And then we already got the question on PAMA what's happening in 2017 and beyond. We'll keep you abreast of what happens there. As far as visibility and pricing in the marketplace, as you know, the way patients and consumers engage with the marketplace, the question is, when do they actually have the out-of-pocket cost? And yes, we have published our own prices in Arizona and we think those prices are very competitive. When you look at our average price per requisition, if you were just to go through our 10-K and you just make an assumption around test per requisition, you see a very strong value proposition from Quest Diagnostics in the marketplace and as you know, most people in this country have insurance. That's a growing percentage…

Got it. Thanks very much.

Thank you. Our next question comes from Michael Cherny of Evercore ISI. Sir, your line is open.

Good morning, guys. Stephen H. Rusckowski - President, Chief Executive Officer & Director: Hey, Michael. Mark J. Guinan - Chief Financial Officer & Senior Vice President: Good morning, Michael.

So, just one quick housekeeping question. I apologize if I missed this. Did you give the acquisition contribution specifically related to volume in the quarter? Mark J. Guinan - Chief Financial Officer & Senior Vice President: We did not because the acquisitions pretty much – (49:19) anniversaried in Q1 and Summit was at the very beginning of April. So it's just inconsequential, so we didn't tease that out.

Perfect. That's helpful. I just want to type the model there. And then, you talked a lot about the pipeline related to the hospital businesses, and obviously, also, your M&A strategy. As you think about the moving pieces related to regulatory changes between SCOTUS finally being decided, the upcoming pending decision on PAMA, whichever way that's going to shake out, how does that impact the M&A environment? How does it impact the discussions you're having as part of that pipeline? Is there a rush to get deals done in the face of uncertainty related to the moving piece? Is there a wait and see until we get particularly something like PAMA out of the way? So I would think that either way, whichever way PAMA shakes out, it would probably open up some opportunities in terms of closing down or closing out deals in the pipeline versus what you may have right now. So I'm just trying to get a sense of how that's changed the discussion, if anything, if that's had any impact as well on the types of multiples that sellers want from you. Stephen H. Rusckowski - President, Chief Executive Officer & Director: Yeah. Well, we just say, in general, it's not changing our pace of our acquisition portion of our strategy. We have always had and will continue to have going forward, as a portion of our Restore growth strategy, of having about 1% to 2% top-line growth from acquisitions. So our growth strategy is both organic and through acquisitions. So, it's an important part of our strategy. And because of that, we've been actively engaged on it. We announced the Memorial deal already. We said that we have more in our pipeline, so you should expect that there will be something else to come. As far as the deals itself, we continue to be very disciplined with how an acquisition would fit into our strategy, it has to be strategically aligned, and we have to meet our financial thresholds. And when we look at that, we continue to be prospective on what we think might happen with payment going forward. And you did mention PAMA and what could happen with the clinical lab fee schedule, but it is an unknown for the whole industry. So, I would say in general, that's not an active consideration right now, and just what's happening in the general environment is not changing our pace or perspective on any of this right now.

Great. Thanks, Steve. Stephen H. Rusckowski - President, Chief Executive Officer & Director: Thanks.

Thank you. Our next question comes from Whit Mayo of Robert Baird. Sir, your line is open. Whit Mayo - Robert W. Baird & Co., Inc. (Broker): Hey, thanks. Good morning. Mark J. Guinan - Chief Financial Officer & Senior Vice President: Good morning. Stephen H. Rusckowski - President, Chief Executive Officer & Director: Hey, good morning. Whit Mayo - Robert W. Baird & Co., Inc. (Broker): Mark, can you just give us a sense of maybe where you are on Invigorate in terms of realized savings at this point halfway through the year, and what you expect for all of 2015? And then maybe just qualitatively, give us a sense of where you see some of the savings coming from. Mark J. Guinan - Chief Financial Officer & Senior Vice President: Yes, so we haven't broken out the incremental $600 million that we talked about, taking us from over $700 million at the end of 2014 to $1.3 billion over the next several years. So we haven't broken that down by year, having suggested that it's proportional. However, obviously, you can see, as we committed, that some of that Invigorate is now starting to help us to actually grow profitability and not just to offset some of the headwinds. So we haven't teased out the exact numbers at this point, Whit, but you shouldn't expect that it should be skewed heavily in one direction or another. The $600 million is going to be fairly steady over the next couple of years. Whit Mayo - Robert W. Baird & Co., Inc. (Broker): Okay. And then maybe just qualitatively, just maybe where do you see a lot of the savings coming from at this point? Mark J. Guinan - Chief Financial Officer & Senior Vice President: Yeah, so it's the things…

Thank you. Our next question comes from Brian Tanquilut of Jefferies. Sir, your line is open.

Hey, guys, this is Jason Plagman on for Brian. A question on – so your organic volume growth has been around flat for the last year or so. Are you seeing anything in the market that would lead you to believe that'll change significantly in either the second half of 2015 or 2016? Stephen H. Rusckowski - President, Chief Executive Officer & Director: Yeah, well, what we have shared is that some portion of that organic volume for us is related to decisions we have made. And some of those are strategic as far as where we're focusing our energy in the higher end portion of our portfolio, and some of it is around customers. And we also have shared in the back half, some of that becomes an easier comp for us. And, Mark, why don't you just share perspective on what we've talked about in the last three quarters or four quarters and then what will happen in the back half with our organic performance on volumes and revenue? Mark J. Guinan - Chief Financial Officer & Senior Vice President: Yeah, well, as I noted before, you've seen that despite some volume declines, we've actually been able to grow revenue the last several quarters. So first off, I want to mention that. But yes, as Steve mentioned, we did have some of that volume, less profitable volume that we walked away from, and that's gotten behind us. And then we did also cite some competitive losses, Department of Defense was one of them that was a while back. A lot of the implementation really happened over the last 12 months. And then there was a large Blue's plan in Philadelphia, Independence Blue Cross, where we were at par with our chief competitor, and they negotiated a rate to…

Thanks, guys. Stephen H. Rusckowski - President, Chief Executive Officer & Director: Thanks.

Thank you. Our last question comes from Ricky Goldwasser of Morgan Stanley. Ma'am, your line is open. Stephen H. Rusckowski - President, Chief Executive Officer & Director: Hey, Ricky. Mark J. Guinan - Chief Financial Officer & Senior Vice President: Good morning, Ricky. Ricky Goldwasser - Morgan Stanley & Co. LLC: Yeah, hi. Good morning, and thank you for squeezing me in. So, a couple of questions, follow-up questions here. First of all, Mark, you highlight the fact that test volumes were actually up despite requisition coming down. So, can you just give us a little bit more detail on, on average, how many tests per requisition you're seeing now, and how does this compares to kind of maybe last quarter or last year? And then also, how does this go over to pricing? I mean, obviously, that should be positive for average revenue per requisition, but just that we get a sense because pricing was positive for the first time in a very long time. I know you talked about esoteric is a positive trend, but if you can just help us kind of like think about number of tests per requisition versus test mix. Stephen H. Rusckowski - President, Chief Executive Officer & Director: So, Ricky, your first question, we have provided some visibility on our requisition volume over the years and also what tests we have seen annually. And, Dan, why don't you share those numbers we've shared in the past?

Yeah, so what we said is in terms of requisitions, we said last year was requisition count was about $156 million. We said that in general, we see, on average, about three to four tests per requisition. When you think about that and on your question about the revenue per requisition growth, just keep in mind, that's a combination of both the pricing and reimbursement pressure that we're seeing, as well as the benefits of some of the test and business mix shifts. So when you think about pure pricing, the reimbursement pressure is a little bit less than 1% for the quarter. And so, how we got to that favorable revenue per acquisition overall is really being driven by favorable test and business mix shifts. Steve and Mark both mentioned gene-based and esoteric testing had – grew very nicely in the second quarter, grew in the first quarter as well. And so, some of the benefits of those additional tests on requisitions, as well as a richer test in some of the things that we are selling, has benefited that revenue per requisition calculation. Ricky Goldwasser - Morgan Stanley & Co. LLC: Okay. Thank you. That's helpful. Stephen H. Rusckowski - President, Chief Executive Officer & Director: And that outcome is not a coincidence. It is a consequence of our strategy, to steer a larger portion of our portfolio to where we can make more money and where we can deliver value. Ricky Goldwasser - Morgan Stanley & Co. LLC: Okay. And then, Steve, a follow-up question on – just to get your market perspective. In the past, the number of tests that are offered on a menu has been, I think, a limiting factor or a critical factor for a lab to penetrate the provider segment, whether it's…

Thank you for participating in the Quest Diagnostics second quarter 2015 conference call. A transcript of prepared remarks on this call will be posted later today on Quest Diagnostics' website at www.questdiagnostics.com. A replay of the call may be accessed online at www.questdiagnostics.com/investor or by phone at 800-677-4302 for domestic callers or 402-998-0977 for international callers. Telephone replays will be available from 10:30 a.m. Eastern Time today until midnight Eastern Time on August 21, 2015. Good-bye.