What changed in this filing

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Item 1. Business

2022-02-28 compared with 2021-02-22 · 323 added, 289 removed, 616 unchanged (50% of the section changed)

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improving medical quality and the patient experience while reducing the cost of care.

In 2020, Quest Diagnostics was at the forefront of the response to the COVID-19 pandemic, playing a pivotal role to broaden access to laboratory insights to help people lead healthier and safer lives.

We provided both molecular diagnostic and antibody serology tests to aid in the diagnosis of COVID-19 and the detection of immune response to the virus, and performed over 30 million of these tests.

Beginning in March 2020, we worked closely with federal, state and local governments, healthcare organizations, payers, suppliers, retailers, trade associations and other laboratories in the effort to bring as much COVID-19 testing as possible to the American people.

We also provided data on COVID-19 testing that we conducted to federal, state and local public health authorities, including the federal Centers for Disease Control and Prevention, and participated in studies with government and private institutions, aiding COVID-19 public health response and research.

All of our employees, including our dedicated laboratory professionals, phlebotomists, air fleet team, and couriers take tremendous pride in the role we played and worked tirelessly to help patients and communities access quality COVID-19 testing.

During 2020, we also saw how underserved communities were disproportionately impacted by COVID-19 with tragic consequences.

With the Quest Diagnostics Foundation, we launched Quest for Health Equity, a $100 million-plus initiative to reduce health disparities in underserved communities.

This multi-year initiative, which will focus on people of color, elderly and homeless populations in locations throughout the United States, will provide a combination of testing services, education programs, alliances and financial support to efforts seeking to find new ways to address health disparities.

Our approach to fighting the pandemic has been rooted in our vision of empowering better health through diagnostic insights.

Quest Diagnostics is at the forefront of the response to the COVID-19 pandemic, playing a pivotal role to broaden access to laboratory insights to help people lead healthier and safer lives.

We provide both molecular diagnostic and antibody serology tests to aid in the diagnosis of COVID-19 and the detection of immune response to the virus, and have performed approximately 63 million of these tests.

We have built up and maintain the testing capacity to handle surges in COVID-19 testing demands, including using our national courier, air fleet and logistics network to balance volume across approximately two dozen COVID-19 testing laboratories, and also through our laboratory referral partner program.

We are working with federal, state and local governments, healthcare organizations, payers, suppliers, retailers, trade associations and other laboratories in the effort to bring as much COVID-19 testing as possible to the American people.

We are also providing data on COVID-19 testing that we conduct to federal, state and local public health authorities, including the federal Centers for Disease Control and Prevention, and participate in studies with government and private institutions, aiding COVID-19 public health response and research.

All of our employees, including our dedicated laboratory professionals, phlebotomists, air fleet team, and couriers take tremendous pride in the role we play and work tirelessly to help patients and communities access quality COVID-19 testing.

We have seen how underserved communities are being disproportionately impacted by COVID-19 with tragic consequences.

With the Quest Diagnostics Foundation, we launched Quest for Health Equity, an initiative to reduce health disparities in underserved communities in the U.S.

This initiative is providing a combination of testing services, education programs, alliances and financial support to efforts to address health disparities.

Since its inception, we have launched over 25 programs across the U.S.

and Puerto Rico, including supporting COVID-19 testing and vaccination events, educating young students on healthy nutrition choices and expanding research and mentorship opportunities for black and Hispanic scholars.

Our approach to fighting the COVID-19 pandemic has been rooted in our vision of empowering better health through diagnostic insights.

We believe that the challenges we are facing from the COVID-19 pandemic have brought us together, made us a stronger company and will help us capture the substantial opportunities in front of us.

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Approaches to Accelerate Growth (Table 2)

Delivering a compound annual revenue growth rate of more than 2% through accretive, strategic acquisitions

Delivering annual revenue growth of more than 2% through accretive, strategic acquisitions

Plus organic growth through:

Partnering with health plans, IDNs and other risk bearing entities

Offering the broadest access to diagnostic innovation

Being recognized as the consumer-friendly provider of choice of diagnostic information services

Supporting population health with data analytics and extended care services

Capitalizing on increased health plan access

Increasing share with IDNs

Growing Advanced Diagnostics

Building consumer-initiated testing

Growing through acquisitions.

We have maintained a strategy since November 2018 to grow revenue each year by more than 2% compound annual growth rate through accretive, strategic acquisitions.

Although the merger and acquisition environment significantly slowed in 2020 due to the COVID-19 pandemic, we were able to consummate important acquisitions during 2020.

Our approach to acquisitions is discussed below under the heading Deliver disciplined capital deployment .

Partnering with health plans, IDNs and other risk bearing entities.

To help accelerate growth, we focus on large opportunities to partner with outside entities.

We strengthen our relationships with health plans and increase the volume of our services for their members by driving value with employers and providing strong value propositions for members and clinicians.

This includes building an information platform to help health plans manage utilization and population health, and enhancing processes to help health plans keep laboratory testing in network.

For example, in 2020 we established a strategic relationship with Anthem to collaborate on a variety of outcomes-based programs designed to create an improved healthcare

experience for consumers and healthcare providers, and we advanced our position with UnitedHealthcare in its Preferred Lab Network.

We believe that the growing market challenges faced by IDNs, including continued price transparency, cost and utilization pressure, evolving healthcare payment models, capital needs, changing technology and limited resources, provides us with an opportunity to more effectively partner with them as they consider their laboratory testing strategy and will drive demand for our expertise.

We have deployed a dedicated health systems team to strengthen our relationships with IDNs, including with respect to their reference testing.

We provide reference testing for approximately half of the hospitals in the U.S., and are the leading provider of this testing in the country.

In 2020, we logged a record amount of new Professional Laboratory Services business, representing larger and longer term agreements than in the past, and implemented new relationships with, among others, Memorial Hermann Health System, Hackensack Meridian Health, Montefiore Nyack Hospital and Goshen Hospital.

Our industry-leading Professional Laboratory Services suite of solutions help IDNs build and execute their laboratory strategy, improve quality, reduce the cost of care and focus on core competencies.

We endeavor to grow revenue each year by more than 2% through accretive, strategic acquisitions (our target is based on our revenues excluding the revenues from our COVID -19 testing).

Acquisition opportunities may include IDN outreach businesses, regional laboratory consolidation and businesses that will provide us with new capabilities.

Our approach to acquisitions, and the key acquisitions we consummated during 2021, are discussed below under the heading Deliver disciplined capital deployment .

Capitalizing on increased health plan access.

We are focused on opportunities to partner with health plans.

We strengthen our relationships with health plans and increase the volume of our services for their members by focusing on driving value and providing strong value propositions for members and clinicians.

This includes working with payers to reduce the cost of care, improve the customer experience and drive better outcomes for populations.

For example, we strive to build information platforms to help health plans manage utilization and population health, keep laboratory testing in network and provide an alternative to high-cost labs.

We also offer extended care services to help close gaps in care designed to be attractive to payers, for example through our Quest HealthConnect offerings.

In 2021, we made progress with value-based programs with UnitedHealthcare and broadened redirection and network leakage efforts with Anthem.

We also renewed our longstanding

relationships with Aetna (remaining a preferred laboratory provider and partner in Aetna's network) and EmblemHealth (one of the nation's largest non-profit health insurers).

In addition, we expanded access, including with Highmark Delaware and other plans.

Increasing share with IDNs.

We believe that the growing market challenges faced by IDNs, including continued consolidation, price transparency, cost and utilization pressure, evolving healthcare payment models, capital needs, changing technology and limited resources, provide us with an opportunity to partner with them more effectively as they consider their laboratory testing strategy and drive demand for our expertise.

We have deployed a dedicated team to strengthen our relationships with IDNs, including with respect to their reference testing.

We target three specific segments:

reference testing, outreach testing and lab management.

We provide reference testing for approximately half of the hospitals in the U.S.

and are a leading provider of this testing in the country.

Our industry-leading Professional Laboratory Services, highlighted in Table 3, provides a suite of solutions to help IDNs build and execute their laboratory strategy, improve quality, reduce the cost of care and focus on core competencies.

We purchase outreach testing businesses from IDNs that decide to exit that business.

In 2021, we recorded our highest level of Professional Laboratory Services revenues to date and, as discussed below under the heading Deliver disciplined capital deployment, acquired the outreach testing business of Mercy.

Key Professional Laboratory Services Offerings (Table 3)

Lab management outsourcing Advanced data solutions

Joint venture Reference testing, including advanced diagnostics

Outreach acquisition Supply chain management and purchasing

Test menu optimization and spend consolidation Blood utilization management

Offering the broadest access to diagnostic innovation.

Our diagnostic solutions deliver high clinical value to the medical community nationwide.

We create value through scientific and product innovation and solution delivery for major clinical opportunities.

Starting with a clinical focus on a specific disease state or clinical problem, we take advantage of advanced technology for more precise, comprehensive and actionable information, and deliver the information to the medical community in a meaningful way.

We make innovative diagnostic solutions available to community physicians through our connectivity solutions, operational footprint and by making complex results actionable.

We plan to expand our innovative diagnostic solutions through research and development, as well as partnerships with academic institutions, other technology and healthcare leaders and public health agencies.

In 2020, our approach delivered numerous innovations, including those discussed below under the headings "Innovation" (page 9), "Collaboration" (page 10), "Medical and Scientific Expertise" (page 10) and "Health Information Technology Solutions and Information Assets" (page 10).

Our clinical franchises enable us to perform like a boutique while maintaining our scale advantages, and work with our research and development and commercial organizations to identify/deliver new and improved solutions.

Clinical Franchises (Table 4)

Cardiovascular, Metabolic and Endocrinology Cancer Diagnostics

General Health and Wellness Drug Monitoring and Toxicology

Infectious Diseases and Immunology Sports Science and Human Performance

Neurology Women’s and Reproductive Health

The performance in 2020 of our Infectious Disease and Immunology franchise, which was leading our COVID-19 pandemic response, is an example of the power of our franchises.

Being recognized as the consumer-friendly provider of choice of diagnostic information services .

We are focused on the consumer.

The Company has a long history of focusing on consumer interests, and continues to focus on improving the consumer experience, including through improved digitization and other enhancements of our operations.

Examples of our strong consumer focus during 2020 include the strong growth in our QuestDirect TM consumer-initiated testing and establishing special hours at our patient service centers for non-COVID-19 testing to accommodate the needs of older and highly vulnerable patients.

Our industry-leading Net Promoter Scores reflect our consumer focus.

Test menu optimization and spend consolidation Reference testing, including advanced diagnostics

Supply chain management and purchasing Blood utilization management

Growing Advanced Diagnostics.

We are a leading provider of Advanced Diagnostics, with an array of offerings across the spectrum.

We aim to accelerate the growth of our Advanced Diagnostics offerings to a growth rate of at least 8% per year.

We have been investing in our Advanced Diagnostics offerings, including to enhance our innovation capabilities and to strengthen our service offering and sales force, to make our Advanced Diagnostics offerings more attractive and accessible to IDNs and clinicians.

In addition, we have invested in reducing the cost of next-generation sequencing and combining that with the power of our Blueprint Genetics ® data analytics capabilities.

We are seeking to apply the capabilities gained by these efforts to other areas where we can make a meaningful difference in health care, including consumer genetics and offerings to pharmaceutical companies, IDNs and health plans.

In 2021, we expanded our offerings with the addition of Biocept Inc.'s liquid biopsy test for non-small cell lung cancer.

We also saw strong growth in non-invasive prenatal testing and a solid contribution in specialty genetics from Blueprint Genetics.

Building consumer-initiated testing.

For many years, we have been focused on the consumer, and have taken strong steps to be recognized as the consumer-friendly provider of choice of diagnostic information services.

Our strong consumer focus is highlighted in Table 4.

We will continue to focus on improving the consumer experience, including through improved digitization and other enhancements of our operations.

For example, in 2021 we improved the functionality of our MyQuest ® app, taking into account consumer feedback.

Increasing consumer expectations inform our design for our consumer experience.

Consumer-Centric Initiatives (Table 4)

Consumer reminders • Consumers whose physicians have ordered a test for them electronically can receive email reminders to complete the test.

Connectivity and access to information • >21.5 million registered users in our MyQuest ® health portal and mobile connectivity solution, up nearly 7 million from a year ago.

• Quest lab results available for Android users through the CommonHealth app.

• MyQuest ® supports Health Records using the Apple Health app.

• Using MyQuest, ® consumers can manage healthcare for a group of individuals.

Reminders • Consumers whose physicians have ordered a test for them electronically can receive email reminders to complete the test.

• Consumers who have made appointments can receive appointment reminders via text messaging.

Enhanced consumer experience • Electronic check-in at patient service centers.

Enhanced experience • Electronic check-in at patient service centers.

• Improved on-line pre-registration and appointment scheduling.

• Real-time payment determination for payers.

Convenient access • Partnerships with Walmart and Safeway to expand convenient access to testing services at select Walmart and Safeway locations across the United States (>200 locations at year end).

Consumer-initiated testing • QuestDirect TM , our consumer-initiated testing service, is available in nearly all states.

• Consumers can choose from test packages ( e.g.

, general health, men's and women's health, digestive health, heart health, infectious disease, sexually transmitted disease), which expanded in 2020 to include testing for COVID-19 with at-home specimen collection.

Consumer connectivity and access to information • >14.5 million registered users in our MyQuest ® health portal and mobile connectivity solution.

• During 2020, partnered with The Commons Project to make Quest lab results available for Android users through the CommonHealth app.

• MyQuest ® supports Health Records using the Apple Health app.

• Using MyQuest, ® consumers can manage healthcare for a group of individuals.

Convenient access • Partnerships with Walmart and Safeway to expand convenient access to testing services at select Walmart and Safeway locations across the United States (approximately 230 locations at year end).

Expanded access to basic healthcare services • Partnership with Walmart to expand access to basic healthcare services.

Self-collection technology • Proprietary, consumer-friendly self-collection technology offered to consumers at home.

Consumer satisfaction • We are measuring consumer satisfaction, including Net Promoter Score based on experience at our patient service centers.

Supporting population health with data analytics and extended care services.

We support population health by offering services ( e.g ., home-based health risk assessments and related services) designed to identify gaps in care in a population, provide clinical solutions to close the gaps and foster consumer engagement with a solution.

Our services help healthcare providers, health plans, sponsors and IDNs deliver better care to their patient populations by identifying and filling gaps in care for their patient populations and by enabling them to deliver the most effective healthcare to the right populations and individuals.

Our offerings leverage the power of our assets and capabilities ( e.g ., call centers;

patient service centers;

and mobile workforce, including professionals) and integrate our extensive clinical data, and include data analytics and extended care services.

For example, Quest Lab Stewardship TM employs machine learning to help optimize laboratory test utilization.

Satisfaction • We are measuring consumer satisfaction, including Net Promoter Score.

In 2018, we launched QuestDirect ® , our consumer-initiated testing offering that permits consumers to request their own lab tests, to allow consumers to take control of their health and to better understand their own health through access to personal diagnostic information.

In an evolving healthcare environment, consumers are increasingly engaged in their health care and want control, a dynamic experience and convenience.

We believe that by building on the foundation of our strong consumer focus we can capture growing opportunities in consumer-initiated testing.

In 2021, we continued the strong growth in QuestDirect ® and launched our comprehensive consumer health profile, which offers consumers a picture of their own health through a battery of tests and biometric measurements that provides a personalized health quotient score that can be used to track health progress over time.

We also are extensively engaged with telehealth providers, supporting their offerings as a diagnostic information services provider.

We are focusing on consumer interest to experience health care in a different way

and empowering consumers to make important decisions about their health

Consumer-Initiated Testing (Table 5)

Consumer-initiated testing • Consumers can choose from approximately 50 different test packages focused on consumer interests, such as general health, men's and women's health, digestive health, heart health, infectious disease, sexually transmitted disease, COVID-19 and Lyme disease.

In 2021, we expanded our offerings to include Insure ® ONE TM for colorectal cancer screening.

Self-collection technology • In 2021, we expanded our proprietary, consumer-friendly self-collection technology offered to consumers at home.

Convenient access • Access to services in our patient service centers and in select Walmart stores

Convenient payment • Introduced flexible payment options in 2021

Drive operational excellence

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We are guided by a service dashboard that focuses throughout our operations on quality for consumers, healthcare providers and employees, including medical quality, on-time delivery, competitive costs and employee safety.

During 2020, our focus on and strength in operational excellence enabled us to rapidly scale up COVID-19 testing capacity without sacrificing our other test offerings.

We also made strong progress on our improvement initiatives.

For example, we continued (i) consolidating and simplifying our immunoassay platforms, moving to a single supplier to provide greater throughput, autonomy and a more efficient footprint and (ii) optimizing our lab network through investments in our new 250,000 square foot flagship laboratory in Clifton, New Jersey, which we opened early in 2021 and will provide greater capacity, increased throughput and improved productivity.

Our cost excellence program, Invigorate, includes structured plans to drive savings and improve performance across the value chain, including in such areas as revenue services, information technology and procurement.

We currently aim annually to save approximately 3% of our costs.

In 2020, we achieved our goal;

our Invigorate program delivered approximately $200 million of cost savings.

During 2021, we made strong progress on our improvement initiatives.

We completed the consolidation and integration of Northeast U.S.

regional operations into our new 250,000 square foot, highly automated, flagship laboratory in Clifton, New Jersey.

We also commenced consolidation of our urinalysis testing onto a new highly automated platform that we expect will generate substantial savings once implemented.

We are taking advantage of robotic process automation technologies.

In addition, we also increased patient use of appointment scheduling, reduced payor denials and improved patient collection at the time of service.

We also are seeing increased patient and physician acceptance of the digitization of our service offerings, with more self-service options and a greater percentage of our volume moving to digital, paperless transactions.

Our cost excellence program, Invigorate, includes structured plans to drive savings and improve productivity across the value chain, including in such areas as revenue services, information technology and procurement.

We currently aim annually to achieve savings and productivity improvements of 3% of our costs.

In 2021, we exceeded our goal.

OUR STRENGTHS

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This system provides a foundation for day-to-day management, and includes best-in-class business performance tools to help develop new capabilities to improve our Company.

The system enables us to run the Company with a common language, approach and philosophy, and supports our efforts as we build a high-performance culture, with employees focused on behaviors to make us more agile, transparent, customer-focused, collaborative and performance oriented.

The system enables us to run the Company with a common language, approach and philosophy, and supports our efforts to maintain a high-performance culture, with employees focused on behaviors to foster our agility, transparency, customer focus, collaboration and performance orientation.

Remain focused on diagnostic information services.

We maintain a sharp focus on providing diagnostic information services.

During 2021, we sold to IQVIA Holdings Inc.

our 40% minority stake in Q 2 Solutions, ® our clinical trials central laboratory services joint venture, and in connection with the sale we entered a multi-year agreement to continue to support Q 2 Solutions as its strategic preferred laboratory partner.

Deliver disciplined capital deployment.

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Consistent with that expectation, in February 2022 we announced that we increased our quarterly common stock cash dividend by approximately 6.5%, from $0.62 per common share to $0.66 per common share.

This represents our tenth increase in the dividend since 2011.

This represents our eleventh increase in the dividend since 2011.

For many years, we have maintained a common stock repurchase program.

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Our share repurchases, dividends and capital expenditures in each of the last three years are presented in our consolidated financial statements (Part II, Item 8 of this Report).

For most of 2020, we suspended our share repurchase program due to the challenges and uncertainty associated with the COVID-19 pandemic.

The Company's strategy includes generating growth through value-creating, strategically-aligned acquisitions using disciplined investment criteria.

We screen potential acquisitions using guidelines that assess strategic fit and financial considerations, including value creation, return on invested capital and impact on our earnings.

In 2020, we consummated the acquisition of Blueprint Genetics, acquired substantially all the operations of Memorial Hermann Diagnostics Laboratories, the outreach laboratory division of Memorial Hermann Health System, and acquired from our joint venture partners the remaining 56% interest in Mid America Clinical Laboratories, LLC.

Our material acquisitions in each of the last three years are further discussed in Note 6 to the audited consolidated financial statements (Part II, Item 8 of this Report).

In 2021, we consummated the acquisition of the outreach laboratory services business of Mercy, one of the most highly-integrated, multi-state health care systems, with operations serving providers and patients in Arkansas, Kansas, Missouri and Oklahoma.

We also acquired assets of Labtech Diagnostics LLC, an independent clinical laboratory serving physicians and patients primarily in South Carolina, North Carolina, Georgia and Florida, and a couple of other small independent regional labs.

Our significant acquisitions in each of the last three years are further discussed in Note 5 to the audited consolidated financial statements (Part II, Item 8 of this Report).

We will continue to invest in our business in a disciplined manner, including focusing on enhancing our solid foundation of strategic assets and capabilities, accelerating growth and driving operational excellence.

Our near-term investments in growth are likely to focus on the strategies to accelerate growth set forth in table 2 above.

Our near-term

investments to drive operational excellence are likely to focus on improving the customer experience and gaining efficiency, systems standardization, digital enablement of our processes and footprint optimization.

Our near-term investments in growth are likely to focus on the approaches to accelerate growth set forth in table 2 above.

Our near-term investments to drive operational excellence are likely to focus on improving the customer experience and gaining efficiency, systems standardization, digital enablement of our processes and footprint optimization.

Assets and capabilities to deliver value

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Assets and Capabilities (Table 8)

Connectivity ● Provide healthcare connectivity solutions to >406,000 clinician and hospital accounts and interface with approximately 760 electronic health records systems

Connectivity ● Provide healthcare connectivity solutions to >445,000 clinician and IDN accounts and interface with >800 electronic health records systems

Data ● The largest private database of de-identifiable laboratory test results:

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Logistics ● Strong logistics capabilities

• make approximately 72,000 stops daily

• make >75,000 stops daily

• approximately 4,000 courier vehicles

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● One of the largest medical and scientific staffs in the industry to provide interpretive consultation

• >600 M.D.s and Ph.Ds, many of whom are recognized leaders in their field

• >650 M.D.s and Ph.D.s, many of whom are recognized leaders in their field

• Genetic counselors

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● Industry-leading test menu across clinical sub-specialty areas and diagnostic technologies

● Own or control approximately 1,100 issued and 450 pending patents worldwide in 2020

● Own or control approximately 1,100 issued and over 450 pending patents worldwide in 2021

We are a leading innovator in diagnostic information services.

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network, we believe we are the distribution channel of choice for developers of new solutions.

We seek innovations and solutions that help healthcare providers care for their patients through better testing for predisposition, screening, monitoring, diagnosis, prognosis and treatment choices, and that will reduce the overall cost of healthcare.

Clinical Franchises (Table 9)

Cardiovascular, Metabolic and Endocrinology Cancer Diagnostics

General Health and Wellness Drug Monitoring and Toxicology

Infectious Diseases and Immunology Sports Science and Human Performance

Neurology Women’s and Reproductive Health

We seek innovations and solutions that help healthcare providers, IDNs, health plans and other healthcare market participants care for their patients through better testing for predisposition, screening, monitoring, diagnosis, prognosis and treatment choices, and that deliver high clinical value to the medical community and reduce the overall cost of healthcare.

Starting with a clinical focus on a specific disease state or clinical problem, we take advantage of advanced technology for more precise, comprehensive and actionable information.

We seek to develop innovations and solutions that help to determine a patient's genotype or gene expression profile relative to a particular disease and its potential therapies, because they can help healthcare providers to determine a patient's susceptibility to disease or to tailor medical care to an individual's needs.

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We endeavor to improve test processes, including through increased automation.

In addition, we aim to develop holistic solutions responsive to challenges that healthcare providers and patients face, by developing solutions of tests, information and services focused on specific clinical challenges, and taking advantage of the latest informatics capabilities.

We also look for innovations and solutions that are less invasive than currently available options, to increase the choices that healthcare providers and patients have for the collection of diagnostic samples.

We additionally seek innovation in the ways we bring solutions to customers, and in the customer experience, including enhanced services and end-to-end solutions for convenience and support.

seek innovative solutions to other challenges related to diagnostics information services faced by IDNs, health plans and other healthcare market participants.

In 2020, we secured Emergency Use Authorization from the FDA for pooled specimen testing in connection with molecular diagnostic COVID-19 testing.

We also developed and launched new test offerings to educational institutions, such as colleges and universities, to help facilitate the return to classrooms.

In addition, we launched automated next generation genetic sequencing, which will enable genetic screening faster and at much lower cost.

With government and private sector partners, we developed and built "pop-up" COVID-19 testing sites that offered a new, efficient model for consumer access to testing.

These initiatives, along with other 2020 developments highlighted below under the headings "Collaboration," Medical and Scientific Expertise," and "Healthcare Information Technology Solutions and Information Assets," demonstrated our strength in innovation during 2020.

We also look for innovations and solutions that are less invasive than currently available options, and to increase the choices that healthcare providers and patients have for the collection of diagnostic samples.

We seek innovation in the ways we bring solutions to customers, and in the customer experience, including enhanced services and end-to-end solutions for convenience and support.

We make innovative solutions available to community physicians through our connectivity solutions, operational footprint and by making complex results actionable.

We plan to expand our innovative solutions through research and development, as well as partnerships with academic institutions, other technology and healthcare leaders and public health agencies.

Since the beginning of the COVID-19 pandemic, we have secured an Emergency Use Authorization from the FDA for pooled specimen testing in connection with molecular diagnostic COVID-19 testing.

With government and private sector partners, we developed and built "pop-up" COVID-19 testing sites that offered a new, efficient model for consumer access to testing at a critical time.

During 2021, we introduced a new COVID-19 semi-quantitative serology test service that aids in providing insight into an individual's immune response as a result of a recent or prior infection with SARS-CoV-2, including assessing blood levels of antibodies.

In addition, we licensed the patented ceramide-analysis technology of Zora Biosciences Oy and announced plans to develop, and offer through our Cardiometabolic Center of Excellence at Cleveland Heartlab, a test service as an aid in identifying patients at risk for cardiovascular-related disease and death.

These initiatives, along with other developments highlighted below under the headings "Collaboration," Medical and Scientific Expertise," and "Healthcare Information Technology Solutions and Information Assets," demonstrate our agility and strength in innovation.

Collaboration

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We plan to continue to pursue strategic relationships to help accelerate growth and drive operational excellence.

Our collaborations with CVS Health, Walmart and other partners regarding expanding access to COVID-19 testing during 2020 demonstrate this strength.

In 2021, we announced our collaboration with Paige to unlock the potential of artificial intelligence to improve and speed the diagnosis of cancer and other diseases that rely on pathologic assessment.

We also collaborated with CIC Health, Ginko Bioworks and Battelle Memorial Institute to develop solutions to make testing easy, fast and affordable for school systems and other group settings ( e.g ., the travel and entertainment industry) across the country.

Medical and Scientific Expertise

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For over 30 years, the Company has published the Quest Diagnostics Drug Testing Index, TM a series of reports on national workplace drug positivity trends based on the Company's employer workplace drug testing data, that is widely cited by employers, the federal government and the media to help identify and quantify drug abuse among the nation's workforce.

The Company also publishes Quest Diagnostics Health Trends, TM a series of scientific reports that provide insights into health topics, based on analysis of objective clinical laboratory data, to empower better patient care, population health management and public health policy.

The Company also publishes Quest Diagnostics Health Trends, ® a series of scientific reports that provide insights into health topics, based on analysis of objective clinical laboratory data, to empower better patient care, population health management and public health policy.

Our role at the forefront of the response to the COVID-19 pandemic demonstrated this strength.

We secured numerous Emergency Use Authorizations from the FDA for innovations in connection with COVID-19 testing and specimen collection, including regarding unobserved nasal specimen self-collection, combined COVID-19 and respiratory virus tests, COVID-19 testing ordered by consumers, and methods to increase testing capacity and expand the testing supply base.

We also published over ten Health Trends reports on COVID-19 during 2020, including reports addressing the "hidden pandemic":

reduced hemoglobin A1c diabetes monitoring as a consequence of the COVID-19 pandemic;

a 46% decrease in newly identified cancer patients during the COVID-19 pandemic;

and drug testing decreased by as much as 70%, while drug positivity rates increased ( e.g ., 35% increase for non-prescribed fentanyl;

44% increase for heroin), during the COVID-19 pandemic.

We have secured over 20 Emergency Use Authorizations from the FDA for innovations in connection with COVID-19 testing and specimen collection, including regarding unobserved nasal specimen self-collection, combined COVID-19 and respiratory virus tests, COVID-19 at-home specimen collection by consumers, and methods to increase testing capacity and expand the testing supply base.

In addition to a Health Trends ® report on children in the U.S.

with detectable levels of lead in their blood, we published numerous Health Trends ® reports on COVID-19, including during 2021 additional reports addressing the "hidden pandemic":

signs of addiction missed during the pandemic;

the sharp decline in cancer diagnoses during the first year of the pandemic;

decreases in hepatitis C testing and treatment during the first months of the pandemic;

and Blacks and Hispanic/Latinx less confident in their ability to access COVID-19 vaccines, treatment and healthcare than white Americans.

We also expanded our engagement with the Centers for Disease Control and Prevention to provide genomic sequencing of emerging COVID-19 variants, to aid public health response to COVID-19.

Health Information Technology Solutions and Information Assets

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We were the first national diagnostic information services provider to offer online patient appointment scheduling and a patient connectivity solution.

Our MyQuest ® patient healthcare portal, with over 14.5 million registered users at year-end 2020, enables patients to manage healthcare and medical information for themselves and a circle of others and, among other things, use their smartphone or computer to order a test, find a Quest Diagnostics location, schedule appointments, receive appointment reminders, and receive and archive their test resul ts.

During 2020, we collaborated with CLEAR to integrate CLEAR's safe and secure "Health Pass" technology with the Company's advanced COVID-19 testing capabilities to foster safer public environments and help reduce public health risk.

Our MyQuest ® patient healthcare portal, with 21.5 million registered users at year-end 2021, enables patients to manage healthcare and medical information for themselves and a circle of others and, among other things, use their smartphone or computer to order a test, find a Quest Diagnostics location, schedule appointments, receive appointment reminders, and receive and archive their test resul ts.

During the COVID-19 pandemic, we collaborated with CLEAR to integrate CLEAR's safe and secure "Health Pass" technology with the Company's advanced COVID-19 testing capabilities to foster safer public environments and help reduce public health risk.

We also are a founding member of the Synaptic Healthcare Alliance, which is working to create a platform, powered by blockchain technology, that enables a culture of innovation, removes friction and solves shared challenges impacting constituents across healthcare today.

We also have significant information assets and offer a robust portfolio of powerful analytics that inspire action and deliver value to an array of customers.

We offer an array of Quanum ® solutions based on data insights, including retrospective analytics solutions for healthcare professionals and practices, health plans, IDNs, pharmaceutical companies and public health.

We believe that solutions can tap the potential of large amounts of clinical information to:

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Customer Focus

Our brand -- Action from Insight ® -- reflects our commitment to a superior customer experience.

Our brand idea -- Action from Insight ® -- reflects our commitment to a superior customer experience.

The customer is at the center of everything we do;

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Diagnostic Information Services and Diagnostic Solutions.

Our Diagnostic Information Services business develops and delivers diagnostic information services, providing insights that empower and enable a broad range of customers, including patients, clinicians, hospitals, IDNs, health plans, employers, ACOs and DCEs.

Our Diagnostic Solutions group includes our risk assessment services business, which offers solutions for insurers, and our healthcare information technology businesses, which offers solutions for healthcare providers.

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We see opportunities to bring our experience and expertise in diagnostic information services to markets outside the United States, including leveraging existing facilities to serve new markets.

We have laboratory facilities in Mexico and Puerto Rico.

We have laboratory facilities in Finland, Mexico and Puerto Rico.

We are a founding member, with other leading diagnostic laboratories outside the United States, of the Global Diagnostics Network, TM a strategic working group of diagnostic laboratories committed to unleashing and sharing local innovation to increase global access to diagnostic science, information and services and generating enhanced diagnostic insights to improve the delivery of global healthcare.

During 2020, COVID-19 was a key focus area for the Global Diagnostics Network, as members shared experiences and best practices regarding COVID-19 testing.

The Company and fellow members of the Network are focused on response to the COVID-19 pandemic and preparedness for future global infectious diseases.

Diagnostic Information Services

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Clinical testing is an essential element in the delivery of healthcare services.

Clinicians use clinical testing for predisposition, screening, monitoring, diagnosis, prognosis and treatment choices of diseases and other medical conditions.

Clinical testing is used for predisposition, screening, monitoring, diagnosis, prognosis and treatment choices of diseases and other medical conditions.

Clinical testing is generally categorized as clinical laboratory testing and anatomic pathology services.

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Commonly ordered routine tests include blood chemistries, urinalysis, allergy tests and complete blood cell counts.

Non-routine tests may require professional “hands-on” attention from highly-skilled technical personnel, generally require more sophisticated informatics, technology, equipment or materials, may be performed less frequently than routine tests and may be reimbursed at higher levels than routine tests.

It may not be practical, from a cost-effectiveness or infrastructure perspective, for many hospitals, IDNs, ACOs, DCEs, commercial laboratories or physician office laboratories to develop and perform a broad menu of non-routine tests, or to perform low-volume non-routine testing in-house.

Non-routine tests may require professional “hands-on” attention from highly-skilled technical personnel, generally require more sophisticated data analysis, technology, equipment or materials, may be performed less frequently than routine tests and may be reimbursed at higher levels than routine tests.

It may not be practical, from a cost-effectiveness or infrastructure perspective, for many IDNs, ACOs, DCEs, commercial laboratories or physician office laboratories to develop and perform a broad menu of non-routine tests, or to perform low-volume non-routine testing in-house.

Such tests generally are outsourced to a clinical testing laboratory which can perform these non-routine tests.

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Our large in-house staff of medical and scientific experts, including medical directors, scientific directors, genetic counselors and board-certified geneticists, provide medical and scientific consultation to healthcare providers and patients regarding our tests and test results, and help them best utilize our services to improve outcomes and enhance satisfaction.

We also provide testing (including anatomic pathology) services and medical director services at hospital laboratories.

We also provide testing (including anatomic pathology) services and medical director services at IDN laboratories.

We are a leading provider of diagnostic information services for infectious disease, such as COVID-19 (including molecular diagnostic and serology antibody offerings), tuberculosis ( e.g.

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We strive to be the first to provide diagnostic solutions for emerging infectious diseases ( e.g ., our offerings for Zika, West Nile Virus, SARS and Influenza A H1N1).

We have leading positions in drug monitoring and toxicology, in neurology diagnostics, in advanced cardiovascular diagnostic information services ( e.g ., our CardioIQ ® and Cleveland HeartLab ® offerings), and in cancer diagnostics ( e.g ., our QuestVantage ® and Med Fusion TM offerings).

We have leading positions in drug monitoring and toxicology, in neurology diagnostics, in advanced cardiovascular diagnostic information services ( e.g ., our CardioIQ ® and Cleveland HeartLab ® offerings through our Cardiometabolic Center of Excellence TM ), and in cancer diagnostics ( e.g ., our QuestVantage ® and Med Fusion TM offerings).

We are a leader in providing testing for the detection of employee use of drugs of abuse, offering a full range of solutions, including urine, hair, blood and oral fluid tests.

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Our offerings include connecting participants to the right care at the right time, such as (i) a program designed to prevent diabetes and other chronic conditions, (ii) a program that enables participants to engage with a board-certified physician about their results and to be guided about actions based on those results and (iii) a mental health assessment program that links participants to virtual support.

We also collaborate with Catapult Health, the leading national provider of employer-sponsored preventative checkups, to help organizations facilitate virtual telehealth access to clinical services for their employees and adult dependents, with emphasis on reducing risks related to preventable chronic diseases.

These services are sold directly to employers and through reseller partnerships with health plans.

During 2020, in response to the COVID-19 pandemic, we developed and offered to employers COVID-19 Return to Work services, to assist organizations develop plans for safer workplaces.

We also collaborated with Catapult Health, the leading national provider of employer-sponsored preventative checkups, to help organizations facilitate virtual telehealth access to clinical services for their employees and adult dependents, with emphasis on reducing risks related to preventable chronic diseases.

In response to the COVID-19 pandemic, we developed and offered COVID-19 return to work services, to assist organizations as they developed plans for safer workplaces.

We offer Quanum ® health information technology solutions, including our products and national healthcare provider network, to help healthcare organizations and clinicians empower better health by leveraging the power of our significant information assets, including many years of test result data, and our technology prowess, including our history of providing leading information technology for diagnostic information services.

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They can enter, share and access clinical information without costly information technology implementation or significant workflow disruption.

We offer an array of population health solutions.

Our services build on the power of our information assets and data capabilities and help clinicians, health plans, sponsors and IDNs deliver better care to their patient populations by identifying gaps in care in a population, providing clinical solutions to close the gaps and fostering consumer engagement with a solution.

Our extended care services, including home-based health risk assessments and related services, leverage our assets and capabilities ( e.g ., call centers, patient service centers and mobile workforce, including professionals) and focus on extending the reach of clinician offices beyond their traditional four walls to assess the health of their populations, and doing so when and where it is convenient for consumers.

We offer an array of population health solutions to clinicians, health plans, and IDNs.

Our services build on the power of our information assets and data capabilities and help our customers deliver better care to their patient populations by identifying gaps in care in a population, providing clinical solutions to close the gaps and fostering consumer engagement with a solution.

For example, Quest Lab Stewardship TM employs machine learning to help optimize medically-appropriate laboratory test utilization.

Our extended care services, including home-based health risk assessments and related services, help deliver better care to their patient populations by identifying and filling gaps in care for their patient populations and by enabling them to deliver the most effective healthcare to the right populations and individuals.

These services leverage the power of our assets ( e.g ., our extensive clinical data and data analytics services) and capabilities ( e.g ., call centers, patient service centers and mobile workforce, including professionals) and focus on extending the reach of clinician offices beyond their traditional four walls to assess the health of their populations, and doing so when and where it is convenient for consumers.

Once gaps are identified, we engage patients in our retail sites, in home or by telephone, including through our call centers and our mobile base capabilities, including highly-trained healthcare professionals.

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We have expertise in developing laboratory tests for FDA submission as companion diagnostics and laboratory developed tests for complementary diagnostics, and offer an array of assets and services to support the development of companion diagnostics, including our robust data set and patient services network.

For example, in 2021, we introduced Ki-67 IHC MIB-1 pharmDx, the first companion diagnostic for Eli Lilly and Company's Verzenio ® (abemaciclib), a CDK4/6 inhibitor for certain people with HR+HER2- High Risk early breast cancer.

We also offer Quest Clinical Trials Connect TM to help accelerate clinical trials (and thus the speed of drugs to market) through better patient recruitment, involvement and management, and improved physician outreach.

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This service provides the context for athletes to consider performance variables holistically, including nutritional education and intervention, maximum fitness, injury assessment and training load monitoring as well as sophisticated biometric analysis.

During 2020 we also expanded our test offerings for athletes to include COVID-19 testing, to foster the country's return to athletic fields.

During the COVID-19 pandemic, we also expanded our test offerings for athletes to include COVID-19 testing, to foster the country's return to athletic fields.

Diagnostic Solutions

We are the leading provider of risk assessment services for the life insurance industry.

In addition, we offer healthcare organizations and clinicians robust health information technology solutions.

Risk Assessment Services.

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Healthcare Information Technology.

Our healthcare information technology offerings, including Quanum ® Practice Solutions, our Electronic Health Record, Practice Management and Revenue Cycle Management Solutions for healthcare providers, and our award-winning Quanum ® Enterprise Content Solutions for hospitals and IDNs, connect data to decision-making and help clinicians advance clinical and operational strategies.

Healthcare organizations have contracted for the use of Quanum ® Enterprise Content Solutions at over 375 sites in North America.

We offer healthcare organizations and clinicians robust health information technology solutions.

Our healthcare information technology offerings, including Quanum ® Practice Solutions, our Electronic Health Record, Practice Management and Revenue Cycle Management Solutions for healthcare providers, and our award-winning Quanum ® Enterprise Content Solutions for IDNs, connect data to decision-making and help clinicians advance clinical and operational strategies.

Healthcare organizations use Quanum ® Enterprise Content Solutions at over 375 sites in North America.

Our Quanum ® Electronic Health Record is a cloud-based, mobile-accessible offering that enables clinicians to generate a complete record of a clinical patient encounter, automates and streamlines the clinician's workflow, provides clinical decision support tools, captures patient encounter notes and lab and radiology results and enables secure communication with patients and other clinicians.

Q 2 Solutions, ® our joint venture with IQVIA Holdings Inc., is the second largest central laboratory services company in the world and provides services to customers across all segments of the biopharmaceutical industry.

Central laboratory testing services are critical to advances in genomics, precision medicine and drug development.

We own a minority interest in Q 2 Solutions, which has helped develop many of the oncology precision medicine drugs approved by the FDA in recent years.

THE CLINICAL TESTING INDUSTRY

Our estimate in table 10 does not include the impact of COVID-19 testing.

The healthcare system in the United States is evolving;

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In addition, we believe that the clinical testing market continued with fundamental changes in 2021.

First, we believe that PAMA-driven reimbursement pressure is negatively impacting access to care and hurting the clinical testing industry, and remains a catalyst for structural change in the market.

First, we believe that PAMA-driven reimbursement pressure is a catalyst for structural change in the market.

Second, we believe that health plans increasingly are focusing on driving better value in laboratory testing services.

Third, we believe that ongoing consumerization in healthcare, with increased cost being borne by consumers, is sharpening focus on price disparities.

We believe that these changing market fundamentals will benefit low-cost, high-value providers like Quest and that we are well positioned to grow from the changing market conditions and benefit from the long-term growth expected in the industry.

Third, we believe that ongoing consumerization in healthcare, with increased cost being borne by consumers, is changing consumption of healthcare services.

We believe that these changing market fundamentals will benefit lower-cost, high-value providers like Quest and that we are well positioned to grow from the changing market conditions and benefit from the long-term growth expected in the industry.

Key Trends (Table 11)

PAMA-driven reimbursement pressure Pursuant to PAMA, reimbursement rates for many clinical laboratory tests provided under Medicare were reduced in 2018, 2019 and 2020.

PAMA-driven reimbursement pressure Pursuant to PAMA, reimbursement rates for many clinical laboratory tests provided under Medicare were reduced during 2018 - 2020.

PAMA calls for further revision of the Medicare Clinical Laboratory Fee Schedule for years after 2020, based on future surveys of market rates;

reimbursement rate reduction from 2023-25 is capped by PAMA at 15% annually.

The LAB Act provided an opportunity for reforms to PAMA by delaying PAMA's next data collection and reporting period until January 1, 2021 and by ordering a study to determine ways to improve future collection of more representative market rate data under PAMA.

The CARES Act, adopted in early 2020 in response to the COVID-19 pandemic, suspended the PAMA reimbursement rate cuts that had been scheduled for 2021 and delayed PAMA's next data collection and reporting period until January 1, 2022.

PAMA's next data collection and reporting period have been delayed, most recently by federal legislation adopted in December 2021, which further delayed the reimbursement rate reductions and reporting requirements until January 1, 2023.

The American Clinical Laboratory Association, of which the Company is a member, initiated a lawsuit charging that in implementing PAMA, CMS failed to follow a Congressional directive to implement a market-based laboratory payment system.

The lawsuit is pending.

We believe that PAMA is negatively impacting participants in the laboratory testing industry generally, including hospitals as well as independent clinical laboratories.

Health plans driving value in lab spending Hospitals, which provide outreach testing and may encourage clinicians to send their outreach testing volume to the hospital's laboratory, historically were able to negotiate higher reimbursement rates with health plans than commercial clinical laboratories for comparable services.

Health plans driving value in lab spending IDNs, which provide outreach testing and may encourage clinicians to send their outreach testing volume to the IDN's laboratory, historically were able to negotiate higher reimbursement rates with health plans than commercial clinical laboratories for comparable services.

In addition, health plans generally reimburse non-participating laboratory testing providers at higher out-of-network rates.

We are finding increased interest among health plans in driving better value in spending for laboratory testing.

Health plans increasingly are taking steps to encourage the movement of testing volume to high value, low cost providers like our Company, including by identifying preferred provider partners, plan design changes ( e.g ., zero-dollar out-of-pocket costs for members using preferred providers) and better aligning reimbursement rates for hospital-based providers and independent commercial laboratories.

The UnitedHealthcare Preferred Lab Network, in which we were chosen to participate, is a recent example of a health plan taking these steps.

Health plans also are increasingly adopting policies, practices and procedures based on requirements imposed by government payers such as Medicare and Medicaid.

These policies, practices and procedures are subject to change, and may be changed without notice to us.

Health plans increasingly are taking steps to encourage the movement of testing volume to high value, lower cost providers like our Company, including by identifying preferred provider partners, plan design changes ( e.g ., zero-dollar out-of-pocket costs for members using preferred providers) and better aligning reimbursement rates for IDN-based providers and independent commercial laboratories.

The UnitedHealthcare Preferred Lab Network, which chose us to participate, is a recent example of a health plan taking these steps.

Health plans also are increasingly adopting policies, practices and procedures based on requirements imposed by government payers such as Medicare and Medicaid in order to influence the utilization and reimbursement of testing services.

These policies, practices and procedures are subject to change without notice.

Consumerization Consumers are our customers.

Increasingly, consumers are engaged in their own healthcare, being empowered to understand and manage their healthcare.

Consumers are taking increased interest in and responsibility for their healthcare, their expectations of healthcare providers are increasing and they are becoming more sophisticated regarding healthcare.

Some patients are interested in selecting their own diagnostics tests, rather than relying upon a healthcare professional to select the tests.

Increasingly, consumers are engaged and interested in, and empowered to manage and take direct responsibility for, their own healthcare.

As a result, they are more sophisticated in their understanding of their healthcare needs and their expectations of healthcare providers.

Some consumers are interested in selecting their own diagnostics tests, rather than relying upon a healthcare professional to select the tests.

In addition, consumers often are bearing increased financial responsibility for their healthcare ( e.g ., high deductible health plans;

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and to be empowered to make their own healthcare decisions.

During the COVID-19 pandemic, we saw consumers increase their use of telemedicine capabilities, increase their responsibility for their own healthcare ( e.g.

During the COVID-19 pandemic, we are seeing consumers increase their use of telemedicine capabilities, increase their responsibility for their own healthcare ( e.g.

, increased consumer-initiated testing;

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In addition, consumers are seeking prompt, direct access to their test results.

Increasingly, consumers are motivated to find high quality service providers with strong digital experience delivery engines, accessible customer service and low prices, like our Company.

Increasingly, consumers are motivated to find high quality service providers with strong digital experience delivery engines, accessible customer service and lower prices, like our Company.

Prevention and wellness We believe that the value of detection, prevention, wellness and personalized care is well recognized.

Consumers, employers, ACOs, IDNs, health plans and government agencies increasingly focus on helping the healthy stay healthy, detecting symptoms among those at risk and providing preventive insight and care that helps avoid disease.

Government agencies and other customers discussed in table 13 increasingly focus on helping the healthy stay healthy, detecting symptoms among those at risk and providing preventive insight and care that helps avoid disease.

Medical innovation Medical advances allow for more accurate and earlier diagnosis and treatment of diseases.

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There is increasing focus on access to patient data and data-driven insights.

Healthcare industry evolution Clinicians, health plans, IDNs, ACOs, employers and others, have been consolidating, converging and diversifying.

For example, a number of hospital systems are considering establishing or have established health insurance plans, and health insurance plans are considering providing or are providing healthcare services.

Healthcare industry evolution Customers discussed in table 13 and other healthcare system participants have been consolidating, converging and diversifying.

For example, a number of IDNs are considering establishing or have established health insurance plans, and health insurance providers are considering providing or are providing healthcare services.

In recent years, a leading provider of retail medical clinics and pharmacy benefits management services has acquired a leading health insurance provider, a leading health insurance provider has acquired a leading pharmacy benefits manager, and the corporate parent of a leading health insurance company provides a wide array of healthcare services through its non-insurance company subsidiaries.

Health plans are entering agreements with other providers of healthcare services, including laboratory testing services providers, to partner on value-based approaches to delivering healthcare to populations.

DCEs have been established.

Consolidation is increasing pricing transparency and bargaining power, and may encourage internalization of clinical testing.

Physicians frequently now are employed by hospital systems, IDNs, ACOs, DCEs or large group practices integrated with healthcare systems, instead of organizing physician-owned practices, which is impacting the dynamics for whether clinical testing is performed in or outside of a hospital.

Physicians frequently now are employed by IDNs, ACOs, DCEs or large group practices integrated with IDNs, instead of organizing physician-owned practices, which is impacting the dynamics for whether clinical testing is performed in or outside of an IDN.

Physicians and other clinicians also increasingly are being employed by health plans or their affiliates.

Value-based reimbursement is contributing to changes in the healthcare system.

ACOs and patient-centered medical homes have grown as a means to deliver patient care.

ACOs, DCEs and patient-centered medical homes have grown as a means to deliver patient care.

Healthcare services increasingly are being provided by non-traditional providers ( e.g.

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, telemedicine, digital pathology).

In addition the ACA continues to result in changes in the way that some healthcare services are purchased and delivered in the United States.

Hospitals and IDNs are under significant pressure, and are evolving.

Changes are taking place in the way that some healthcare services are purchased and delivered in the United States.

IDNs are under significant pressure, and are evolving.

Pricing transparency There has been a trend toward greater pricing transparency in healthcare, including in the laboratory testing marketplace.

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For example, Massachusetts launched a website to help consumers understand the wide variation in healthcare costs.

Federal laws effective January 1, 2022 require health care providers to provide good faith estimates of costs to self-pay patients, and provide rights and protections for consumers against surprise billing or balance billing.

In addition, the federal government requires providers of COVID-19 testing to post on their websites information regarding test pricing, and has adopted new legislation and issued new regulations designed to increase transparency regarding pricing and quality in healthcare, including requiring providers, group health plans and insurers to disclose cost information to consumers in advance of care being provided.

Increased price transparency, combined with increased patient financial responsibility for medical care, is enhancing purchasing sophistication and fostering changes in behavior in the healthcare marketplace.

We believe that increased price transparency should benefit low cost, high value providers like our Company.

We believe that increased price transparency should benefit lower cost, high value providers like our Company.

Competition The diagnostic information services industry remains fragmented, is highly competitive and is subject to new competition.

Competition is emerging from new technologies ( e.g ., digital pathology) and growing from non-traditional competitors ( e.g ., a government agency or employer establishing its own clinical laboratory for testing).

Increased hospital acquisitions of physician practices may enhance clinician ties to hospital-affiliated laboratories and may strengthen their competitive position.

However, in light of other trends, including continued reimbursement pressure, hospitals may change their approach to providing clinical testing services.

Competition is emerging from new technologies ( e.g ., digital pathology) and growing from non-traditional competitors ( e.g ., a government agency or an employer establishing its own clinical laboratory for testing;

providers of consumer-initiated testing).

Increased IDN acquisitions of physician practices may enhance clinician ties to IDN-affiliated laboratories and may strengthen their competitive position.

However, in light of other trends, including continued reimbursement pressure, IDNs may change their approach to providing clinical testing services.

New industry entrants with extensive resources may make acquisitions or expand into our traditional areas of operations.

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These factors include, without limitation, the economy, healthcare benefits design, patients delaying medical care (e.g., due to the COVID-19 pandemic), and increased consumer financial responsibility for, interest in and control of their healthcare.

The ACA contained provisions eliminating patient cost-sharing for preventative services, and additional provisions that we believe increased the number of patients that have health insurance, including Medicaid, and thus better access to diagnostic testing.

Reimbursement pressure;

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The rising cost of healthcare in the United States was a key driver for the formation of this alliance.

In 2018, a trio of high profile U.S.

corporations, citing rising healthcare costs, announced plans to reduce their workers' healthcare costs by forming a non-profit venture that would provide simplified, high-quality healthcare for their workers.

Although the venture announced in early 2021 that it was disbanding, we believe that there will be other initiatives to transform healthcare.

While pressure to control healthcare costs poses a risk to our Company, it also creates opportunities, such as an opportunity for increased proper utilization of testing as an efficient means to manage the total cost of healthcare.

We believe that it also creates greater opportunities for consolidation and gaining share for high value, low-cost providers, like our Company, as compared to other providers.

We believe that it also creates greater opportunities for consolidation and gaining share for high value, lower-cost providers, like our Company, as compared to other providers.

Legislative, regulatory and policy environment Government oversight of and attention to the healthcare industry in the United States is significant and increasing;

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New competitors may enter the industry, and competition may come in new forms.

The ACA has created significant uncertainty as healthcare markets react to changes.

For example, more than half of the states have opted in to Medicaid expansion and employers may discontinue offering group health insurance to their employees, shifting more people to exchange products.

Certain aspects of the ACA have been repealed, delayed or modified ( e.g ., the medical device excise tax).

The scope and timing of any further legislation to repeal, amend, replace, or reform the rest of the ACA is uncertain, but if such legislation were to become law, it could have a significant impact on the U.S.

healthcare system.

In addition, uncertainty regarding the status of the ACA prior to any such repeal, amendment, replacement or reform could create uncertainty generally in the healthcare market.

Several federal courts have recently issued determinations that portions of the ACA are unconstitutional;

those rulings are not yet final, with appeals pending at the U.S.

Supreme Court.

privacy concerns The increased availability of healthcare data, including data made available as a result of next generation DNA sequencing, and the increased ability to effectively analyze that data at population and patient levels, is impacting healthcare practices.

Use of healthcare data;

technology The increased availability of healthcare data, including data made available as a result of next generation DNA sequencing, and the increased ability to effectively analyze that data at population and patient levels, is impacting healthcare practices.

It is anticipated that the increased use of data in healthcare, coupled with mobile healthcare IT solutions for doctors and patients, will help to improve patient outcomes and reduce overall healthcare costs.

In 2020, we launched automated next generation genetic sequencing, which will enable genetic screening faster and at much lower cost.

Informatics, including integrated diagnostic and decision support solutions, predictive analytics, use of population data and healthcare information technology, is spurring advances in precision medicine, including medical decision making and value, for populations and individuals.

We provide automated next generation genetic sequencing, which will enable genetic screening faster and at lower cost.

Use of healthcare data, including integrated diagnostic and decision support solutions, predictive analytics, and healthcare information technology, is spurring advances in precision medicine, including medical decision making and value, for populations and individuals.

The increased focus on data and its use is increasing focus on maintaining the privacy of patient data.

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These developments are creating new opportunities and new challenges and disrupting the healthcare environment.

For example, during 2020, telemedicine practices became more commonly used;

For example, during the COVID-19 pandemic, telemedicine practices became more commonly used;

digital pathology is an emerging technology that may change the practice of pathology.

Information technology that includes self-learning or "artificial intelligence" features is growing and may impact the healthcare industry.

Healthcare market participants, including pharmaceutical companies, health plans, clinicians, ACOs and IDNs, are striving to leverage interoperability, informatics and analytics to positively influence the health of patient populations while maintaining patient privacy.

Healthcare market participants, including many of our customers discussed in table 13, are striving to leverage interoperability and healthcare data analysis to positively influence the health of patient populations while maintaining patient privacy.

Chronic diseases and conditions;

gaps in care We believe that the cost and challenges of identifying, treating and controlling chronic diseases and conditions such as diabetes and heart disease are now well recognized.

The COVID-19 pandemic called attention to gaps in care in underserved populations.

As a result of multiple factors, including increased focus on population health management and pressure to reduce the systemic costs associated with such diseases and conditions, there is increased focus on better identifying and attempting to reduce or eliminate the gaps in care historically associated with these diseases and conditions.

Healthcare market participants are developing new approaches for this purpose.

We believe that there also is increased focus on reducing or eliminating gaps in care in underserved populations.

Healthcare services delivery Healthcare delivery is moving out of hospitals, doctor offices and other traditional locations in which it had been provided.

As a result of the COVID-19 pandemic, there has been an increase in delays in diagnosis and treatment of chronic diseases and conditions, particularly in underserved communities, increasing potential gaps in care.

The COVID-19 pandemic called attention to gaps in care of these conditions in underserved populations;

we believe that there also is increased focus on reducing or eliminating these gaps in care.

Healthcare services delivery Healthcare delivery is moving out of hospitals, clinician offices and other traditional locations in which it had been provided.

Care is increasingly being provided in new settings, such as outpatient, consumer-focused and home settings.

In response to the COVID-19 pandemic, telemedicine practices became more commonly used during 2020.

In response to the COVID-19 pandemic, telemedicine practices became more commonly used.

In addition, see the discussion of Emerging Retail Healthcare Providers in table 13.

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The Value of Diagnostic Information Services

As noted in table 11, there is an increased focus on the affordability of healthcare.

There also is increased focus on a disease-oriented approach to diagnostics, treatment and management.

There is an increased focus on the affordability of healthcare and on a disease-oriented approach to diagnostics, treatment and management.

Healthcare providers, consumers and payers increasingly recognize the value of diagnostic information services as a means to improve health and reduce the overall cost of healthcare through early detection, prevention and treatment.

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• Identifying treatment-related side effects

• Early assessment of the efficacy of a therapy, enabling changes or discontinuation of ineffective therapies

• Enabling population health management by utilizing diagnostic information, identifying gaps in care and delivering targeted solutions to individuals who need care

• Identification and proactive management of individuals at risk for developing chronic diseases, to decrease progression and associated costs and morbidity

• Assessing early the efficacy of a therapy, enabling changes or discontinuation of ineffective therapies

• Enabling population health management by identifying gaps in care and delivery of targeted solutions to individuals who need care

• Identifying and proactively managing individuals at risk for chronic diseases, to decrease progression and associated costs and morbidity

• Providing telemedicine services along with laboratory testing to help individuals interpret and obtain appropriate advice and referrals into needed care

We provide diagnostic information services to a broad range of customers, including those discussed below.

We provide diagnostic information services to a broad range of customers, including those discussed in table 13.

As discussed in table 11 above, customers are consolidating, converging and diversifying.

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Increasingly, patients are bearing greater responsibility for some portion of the payment for the services we provide to them, even if a third party is primarily responsible for payment.

In addition, patients are more frequently taking advantage of offerings like the Company's QuestDirect offering, and requesting and paying for tests themselves.

In addition, consumers are more frequently taking advantage of offerings like the Company's QuestDirect ® offering, and requesting and paying for tests themselves.

Customers (Table 13)

Health plans including managed care organizations and other health insurance providers These customers typically reimburse us as a contracted (or out-of-network) provider on behalf of their members.

In certain locations, health plans may delegate to IPAs or other alternative delivery systems ( e.g ., physician hospital organizations, ACOs, patient-centered medical homes) the ability to negotiate for diagnostic information services on behalf of certain members.

Health plans including managed care organizations and other health insurance providers These customers typically reimburse us as a contracted (or out-of-network) provider for services rendered to their members.

In certain locations, health plans may delegate to IPAs or other alternative delivery systems ( e.g ., physician IDN organizations, ACOs, DCEs, patient-centered medical homes) the ability to negotiate for diagnostic information services on behalf of certain members.

Health plans and IPAs often require that diagnostic information services providers accept discounted fee structures or assume all or a portion of the financial risk associated with providing such services through capitated payment arrangements.

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Some health plans also have narrowed their provider networks.

In addition, some health plans have established "preferred provider" networks within their broader networks, in effect distinguishing among contracted providers.

We are also sometimes a member of a “complementary network.” A complementary network generally is a set of contractual arrangements that a third party will maintain with various providers that provide discounted fees for the benefit of its customers.

In addition, some health plans have established "preferred provider" networks within their broader networks (e.g., UnitedHealthcare's Preferred Lab Network), in effect distinguishing among contracted providers.

We are also sometimes a member of a “complementary network.” A complementary network generally is a set of contractual arrangements that a third party maintains with various providers that provide discounted fees for the benefit of its customers.

A member of a health plan may choose to access a non-contracted provider that is a member of a complementary network;

if so, the provider will be reimbursed at a rate negotiated by the complementary network.

We offer to health plans services and programs that leverage our Company's expertise and resources, including our superior access, extensive test menu, medical staff, data, information technology solutions, and wellness and population health management capabilities.

We offer to health plans services and programs that leverage our Company's expertise and resources, including our superior patient access, extensive test menu, medical staff, data, information technology solutions, and wellness and population health management capabilities.

Since the beginning of 2019, the Company has had access to a very high percentage of the insured lives in the U.S., including very strong access in key high-population states.

This is the best access to health plan members that we have had in over a decade.

We believe that this strong access increases our attractiveness to other customer groups, including clinicians, patients and employers.

Clinicians Clinicians, including primary care physicians, specialists and physician assistants, requiring diagnostic information services for patients are the primary referral source for our services when patients choose their diagnostic information services provider.

In recent years, there has been a marked increase in the number of physician practices owned by IDNs and hospital systems.

In recent years, there has been a marked increase in the number of physician practices owned by IDNs.

There also has been a notable increase in some branches of medicine of the establishment of very large "rolled-up" specialty physician practice groups.

Hospitals that own physician practices may encourage or require the practices to refer outreach testing to the hospital's affiliated laboratory.

IDNs that own physician practices may encourage or require the practices to refer outreach testing to the IDN's affiliated laboratory.

Large specialty physician groups may encourage their members to refer testing to other members of the group.

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Clinicians determine which laboratory to recommend or use based on a variety of factors, including those set forth in table 14.

Hospitals We believe that we are the industry's leader in servicing hospitals.

We provide services to hospitals throughout the United States, including advanced testing services, in some cases helping manage their laboratories and serving as the medical directors of the hospital's histology or clinical laboratory, including through our Professional Laboratory Services offerings (our industry-leading Professional Lab Services offering is discussed in table 3 above).

Hospitals generally maintain an on-site laboratory to perform the significant majority of clinical testing for their patients (inpatients and outpatients) and refer certain testing to outside service providers, which typically charge the hospitals on a negotiated fee-for-service basis.

Fee schedules for hospital reference testing services often are negotiated on behalf of hospitals by group purchasing organizations.

We also have joint venture arrangements with leading hospitals or IDNs in several metropolitan areas.

These joint venture arrangements, which provide diagnostic information services for affiliated hospitals as well as for unaffiliated clinicians and other local healthcare providers, serve as our principal facilities in their service areas.

IDNs We believe that we are an industry leader in servicing hospitals.

We provide services to IDNs throughout the United States, including advanced testing services, in some cases managing or serving as the medical directors of their laboratories (including through our industry-leading Professional Lab Services offering discussed in table 3 above).

IDNs generally maintain an on-site laboratory to perform the significant majority of clinical testing for their patients (inpatients and outpatients) and refer certain testing to outside service providers, which typically charge the IDNs on a negotiated fee-for-service basis.

Fee schedules for IDN reference testing services often are negotiated on behalf of IDNs by group purchasing organizations.

We also have joint venture arrangements with leading IDNs in several metropolitan areas.

These joint venture arrangements, which provide diagnostic information services for affiliated IDNs as well as for unaffiliated clinicians and other local healthcare providers, serve as our principal facilities in their service areas.

Typically, we have either a majority ownership interest in, or day-to-day management responsibilities for, our joint venture relationships.

In light of continued pressure to reduce systemic healthcare costs, hospitals may change their approach to providing clinical testing services, including by insourcing tests, seeking ways to improve profitability or to better utilize their laboratory capacity.

We believe that our combination of services positions us to be an attractive partner for hospitals, offering a full range of strategic relationships.

ACOs, DCEs and IDNs An ACO is a network of providers and facilities that share financial risk in providing or arranging for the provision of healthcare.

A DCE is a healthcare provider that agrees to assume some level of financial risk for providing Medicare services.

An IDN is a network of providers and facilities working together in providing or arranging for the provision of healthcare.

ACOs, DCEs and IDNs have increased in number;

In light of continued pressure to reduce systemic healthcare costs, IDNs may change their approach to providing clinical testing services, including by insourcing tests, seeking ways to improve profitability or to better utilize their laboratory capacity.

We believe that our combination of services positions us to be an attractive partner for IDNs, offering a full range of strategic relationships.

ACOs and DCEs An ACO is a network of providers and facilities that share financial risk in providing or arranging for the provision of healthcare.

A DCE is a healthcare provider that is contracted directly with Medicare and agrees to assume some level of financial risk for providing Medicare services.

ACOs and DCEs have increased in number;

their impact on the provision of healthcare services to date has varied.

ACOs, DCEs and IDNs may exercise operational and financial control over providers across the continuum of care, and may function as a payer.

Thus, they may be able to manage the health of a population group within a defined geography, and also may be able to influence the cost and quality of healthcare delivery, for example through owned entities and through ancillary services.

ACOs and DCEs may exercise operational and financial control over providers across the continuum of care, and may function as a payer.

Thus, they may be able to manage the health of a population group within a defined geography, and also may be able to influence the cost and quality of healthcare delivery.

They may be encouraged to consider exclusive arrangements with healthcare providers, or to limit service providers.

We are actively engaging with ACOs, DCEs and IDNs to demonstrate the value of our services.

We are actively engaging with ACOs and DCEs to demonstrate the value of our services.

Employers Employers use tests for drugs of abuse to determine an individual's employability and his or her “fitness for duty.” Companies with high levels of employee hiring, safety conscious environments or regulatory testing requirements provide the highest volumes of testing.

Factors such as the general economy, the job market and changes in the legal environment ( e.g ., marijuana decriminalization) can impact the utilization of drugs-of-abuse testing.

Some employers retain third party administrators to handle such testing and related services;

we support the needs of third party administrators as well as employers who retain us directly.

Employers also are investing in population health services.

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These providers include "big-box" retailers, pharmacy chains, supermarkets, urgent care centers and Internet-based service providers.

We are taking advantage of opportunities to work with these providers, not only to offer new access points for our services ( e.g ., our collaboration with Safeway), but also to grow our business by expanding our service offerings ( e.g ., our joint venture with Walmart).

We are taking advantage of opportunities to work with these providers, not only to offer new access partners (e.g., CVS retail locations) and new access points for our services ( e.g ., our collaboration with Safeway), but also to grow our business by expanding our service offerings ( e.g ., our joint venture with Walmart).

See the discussion of our consumer strategy at page 5.

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States also have mandated that Medicaid beneficiaries enroll in private managed care arrangements.

During 2020, we provided additional services to and in conjunction with government agencies across the United States in connection with the COVID-19 pandemic.

During the COVID-19 pandemic, we provided additional services to and in conjunction with government agencies across the United States in connection with the COVID-19 pandemic.

Pharmaceutical companies We have expertise with laboratory developed tests for companion and complementary diagnostics, and offer an array of assets and services to support the development of companion diagnostics, including our robust data set and patient services network.

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We primarily compete with three types of clinical testing providers:

commercial clinical laboratories, hospital-affiliated laboratories and physician-office laboratories.

commercial clinical laboratories, IDN-affiliated laboratories and physician-office laboratories.

Our largest commercial clinical laboratory competitor is Laboratory Corporation of America Holdings, Inc.

In addition, we compete with many smaller regional and local commercial clinical laboratories and specialized advanced laboratories.

In addition, we compete with many smaller regional and local commercial clinical laboratories, specialized advanced laboratories and providers of consumer-initiated testing.

In anatomic pathology, we compete with anatomic pathology practices, including those in academic institutions and large physician group practices, and providers of emerging digital pathology solutions.

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We believe that providing the most attractive service offering in the industry, including the most comprehensive test menu, innovative test offerings, a positive customer experience, a staff including medical and scientific experts, strong quality, unparalleled access and distribution, and data-powered integrated information technology solutions provide us with a competitive advantage.

We believe that large diagnostic information services providers have a competitive advantage due to their large networks and lower cost structures, including as a result of PAMA.

These advantages should enable larger providers to more effectively serve customers.

We believe that large diagnostic information services providers have a competitive advantage due to their large networks and lower cost structures.

These advantages should enable larger providers to serve customers more effectively.

In addition, we believe that consolidation in the diagnostic information services industry will continue.

However, a significant portion of clinical testing is likely to continue to be performed by hospitals, which generally have affiliations with community clinicians and may have more, or more convenient, locations in a market.

As a result, we compete against hospital-affiliated laboratories primarily on the basis of service capability, quality and pricing.

However, a significant portion of clinical testing is likely to continue to be performed by IDNs, which generally have affiliations with community clinicians and may have more, or more convenient, locations in a market.

As a result, we compete against IDN-affiliated laboratories primarily on the basis of service capability, quality and pricing.

In addition, market activity may increase the competitive environment.

For example, hospital ownership of physician practices may enhance the ties of the clinicians to hospital-affiliated laboratories, enhancing the competitive position of hospital-affiliated laboratories.

ACOs, DCEs and IDNs, and their approach to contracts with healthcare providers, in addition to the impact of informatics, also may impact competition to provide diagnostic information services.

For example, IDN ownership of physician practices may enhance the ties of the clinicians to IDN-affiliated laboratories, enhancing the competitive position of IDN-affiliated laboratories.

ACOs and DCEs and their approach to contracts with healthcare providers also may impact competition to provide diagnostic information services.

The diagnostic information services industry is faced with changing technology, new product introductions and new service offerings.

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Competitors also may offer testing to be performed outside of a commercial clinical laboratory, such as (1) point-of-care testing that can be performed by physicians in their offices;

(2) testing that can be performed by hospitals in their own laboratories;

(2) testing that can be performed by IDNs in their own laboratories;

and (3) home testing that can be carried out without requiring the services of outside providers.

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Creating an inspiring workplace is one of our three corporate goals, and this goal drives our approach to human capital management.

Effectively managing our human capital resources is a priority with key components that include culture, safety and well-being programs, employee engagement, and development and succession planning.

Effectively managing our human capital resources is a priority with key components that include culture, safety and well-being programs, employee engagement, and training, development and succession planning.

Our Board of Directors actively engages in oversight of our human capital management, including by receiving management reports on key areas, strategies and initiatives.

Additional information about our human capital management strategies and initiatives is available in our annual corporate responsibility report.

As of January 4, 2021, we have approximately 49,000 employees, of whom approximately 40,000 are full-time and the remainder are part-time or on-call.

As of December 31, 2021, we have approximately 49,000 employees, of whom approximately 40,000 are full-time and the remainder are part-time or on-call.

Our employee population is more diverse than the U.S.

workforce, taken as a whole.

Approximately 72% of our employees globally are women;

Approximately 71% of our employees globally identify as women;

approximately 51% of our U.S.

employees are people of color.

employees identify as people of color.

A majority of our employees work directly with our customers or in our laboratories.

Fewer than 1% of our employees are represented by a union.

We believe that our overall relations with our employees are good.

We strive to foster a strong culture, built on our Code of Ethics, which reinforces our commitment to integrity and aligns with our vision, values, goals and brand.

We are focused on building and maintaining a culture in which all employees are empowered to raise and discuss difficult issues and valued for their strengths, experience and unique perspectives.

Our Quest Management System, discussed above at page 8, supports our effort to maintain a focus on high performance.

We also focus on building and maintaining a collaborative, diverse and inclusive culture in which all employees are empowered to raise and discuss difficult issues and valued for their strengths, experience and unique perspectives (our focus on diversity and inclusion is discussed further below).

We encourage our employees to actively participate in their communities, and support their participation, including offering incentives for participation.

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the program is integrated into performance assessments and frontline employee behavioral standards.

Our Recognition Quest Program reinforces our commitment to recognize above and beyond contributions and to demonstrating how much we value, care for and appreciate one another by regularly celebrating and rewarding one another as we work together.

Safety and Well-Being .

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We have a comprehensive curriculum of annual safety training, as well as training for new employees.

In 2020, our cross-functional Safely Working Together Steering Committee designed and implemented tactics, techniques and procedures to enable our colleagues to continue to work safely during the COVID-19 pandemic.

As part of our comprehensive and competitive compensation and benefits program, we also offer innovative initiatives to support the well-being of our employees and their families through our HealthyQuest program.

The cornerstone of our HealthyQuest program is our Blueprint for

Wellness program, which empowers our employees and their dependents with health insights based on lab and biometric data and invites them each year to take the initiative to improve their physical and mental health.

During the COVID-19 pandemic, our cross-functional Safely Working Together Steering Committee designed and implemented tactics, techniques and procedures to enable our colleagues to continue to work safely.

As part of our comprehensive and competitive compensation and benefits program, we also offer innovative initiatives to support the well-being of our employees and their

families through our HealthyQuest program.

The cornerstone of HealthyQuest is our Blueprint for Wellness program, which empowers our employees and their dependents with health insights based on lab and biometric data and invites them each year to take the initiative to improve their physical and mental health.

We also offer other programs designed to engage employees in managing their health, including access to medical expertise and support programs tailored to their individual needs, helping them to adopt healthier behaviors and access better care at lower costs.

These include customized programs for conditions such as type 2 diabetes management, chronic kidney disease, cardiovascular disease, zero-cost lab testing and specialty drugs, advocacy for mental health concerns and special support for orthopedic surgery and for cancer and other serious diagnoses.

In 2020, The Health Project named Quest Diagnostics the sole winner of the prestigious C.

Everett Koop National Health Award, which is given to health programs that deliver significant health improvements and business results.

These include customized programs for conditions such as type 2 diabetes management, chronic kidney disease, cardiovascular disease, zero-cost lab testing and specialty drugs, and special support for orthopedic surgery and for cancer and other serious diagnoses.

For 2022, we enhanced our mental health offering for employees.

Inclusion and Diversity .

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We aim to harness the unique mix of capabilities, talents, cultures, beliefs and experience of our employees and create a workforce that is demographically diverse at all levels of the organization.

In 2020, in light of societal issues raised around us, our leadership and employees engaged squarely on the issue of racial equality in our country and the workplace.

Several hundred leaders participated in a session on the topic, received a toolkit to help simulate thinking and action and how to address these issues and held dozens of meetings and panels with their teams to talk about racial inequities.

We also launched, with the Quest Diagnostics Foundation, Quest for Health Equity, a multi-year, $100 million-plus initiative to help reduce health disparities in underserved communities.

Since 1997, we have sought to foster the engagement and enablement of our employees, and have regularly surveyed our employees to gauge their engagement.

Through our CTC Framework (focusing on Culture, Talent and Community), we prioritize diversity across the entire talent lifecycle, with the goals of supporting employees throughout their careers at Quest, ensuring transparency and identifying opportunities for action.

In 2021, we continued to focus on inclusion and diversity issues through additional training for leaders and other employees.

We also continued, with the Quest Diagnostics Foundation, Quest for Health Equity, our initiative to help reduce health disparities in underserved communities.

Since 1997, we have sought to foster the engagement and enablement of our employees, and have regularly surveyed our employees to assess their engagement.

Employee engagement has been a metric in the annual incentive plan for our executive officers since 2013.

During 2020, we increased our engagement efforts, including by shifting to an approach of surveying employees more frequently and, during the COVID-19 pandemic, holding near-weekly meetings among hundreds of company leaders to foster increased communication across the company regarding topics of concern to employees.

Development and Succession Planning .

We provide training on a wide array of topics to our employees.

We also offer a number of development opportunities for our employees, such as training, mentoring and education programs, including a higher education tuition reimbursement program.

In addition, we offer leadership training programs for employees at different levels, including programs designed to strengthen our more senior employee leaders to create a high-performance culture and sharpen the capabilities needed to lead our organization.

We regularly engage in succession planning for our talent, including at the most senior levels.

In 2020, we launched a new strategy for gathering employee feedback that utilizes more frequent employee surveys.

This approach is designed to build an agile culture, based on continuous feedback that fuels ongoing conversations about priorities, performance, opportunities and growth, to result in a higher performing organization and committed employees.

In addition, throughout the COVID-19 pandemic, we have held weekly or bi-weekly meetings among hundreds of company leaders to foster increased communication across the company regarding topics of concern to employees.

Training, Development and Succession Planning .

We provide training on a wide array of topics to our employees through live and online formats, including opportunities that can be accessed through their mobile devices.

We also offer a number of development opportunities for our employees, such as mentoring and education programs, including a higher education tuition reimbursement or assistance program.

In addition, we provide leadership training opportunities for employees at all levels, including a manager essentials curriculum, our Leading Quest Supervisor and Manager Core Program, coaching programs and trainings to strengthen critical leadership skills.

We also deliver a number of programs tailored to specific functions to drive a high-performance culture and sharpen the capabilities needed to lead our organization (e.g., our Commercial, Finance, Pathology, R&D, and Product Management Leadership Programs).

We have a robust talent assessment and succession planning process to promote business continuity, including at the most senior levels;

this planning is linked to our engagement and inclusion and diversity initiatives, to foster those efforts.

Sales and Marketing.

Our Diagnostic Information Services business has a unified commercial organization focused on the sale of most of our services.

It coordinates closely with our clinical franchises (discussed above under the heading Our Strategy ) and marketing organization.

It coordinates closely with our clinical franchises (discussed above under the heading I nnovation ) and marketing organization.

The commercial organization is centrally led, and is organized regionally, in conjunction with our operations organization, to focus on local customer needs and to ensure aligned delivery for our customers.

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We also maintain distinct sales and marketing organizations for our offerings in Diagnostic Solutions and our employer drugs-of-abuse testing services.

In 2021, we launched a new marketing campaign designed to remind customers of the value that we bring to healthcare.

Our "Powering Affordable Care" campaign speaks about our leadership in clinical innovation, our ability to enable better clinical outcomes, our improved patient experience and our ability to reduce the cost of care.

Information Technology.

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We have made significant progress implementing common systems in our regional laboratories, and we continue to standardize laboratory information and billing systems across our operations.

We expect that our standardization efforts will take several more years to complete, and will result in significantly more centralized systems, improved operating efficiency, more positive customer experiences and enhanced control over our operational environment.

Even after we complete our efforts to standardize our historic systems, we will need to focus on standardizing systems in connection with future business acquisitions.

We expect that our standardization efforts will

take several more years to complete, and will result in significantly more centralized systems, improved operating efficiency, more positive customer experiences and enhanced control over our operational environment.

Even after we complete our efforts to standardize our legacy systems, we will need to focus on standardizing systems in connection with future business acquisitions.

Quality Assurance.

As discussed further under the heading Quality on page 7, our goal is to provide every patient with services and products of superior quality, and to meet that goal we have adopted the Quest Diagnostics Quality Program System.

Employing root cause analysis, process improvements and rigorous tracking and measuring, we continuously seek to

enhance quality, reduce defects, further increase the efficacy and efficiency of our operations and processes, eliminate waste and help standardize operations across our Company.

In our laboratory operations, our quality assurance efforts focus on pre-analytic, analytic and post-analytic processes, including positive patient identification of specimens, appropriate specimen transport, analysis and report accuracy, proficiency testing, reference range relevance, process audits, statistical process control and personnel training for all of our laboratories and patient service centers.

As part of our quality assurance program, we utilize internal and external proficiency testing, comprehensive quality control and rigorous process audits.

We monitor test results to identify trends, biases or imprecision in our analytical processes.

As discussed further under the heading Quality on page 7, our goal is to provide every patient with services and products of superior quality, and to meet that goal we employ the Quest Management System.

Employing root cause analysis, process improvements and rigorous tracking and measuring, we continuously seek to enhance quality, reduce defects, further increase the efficacy and efficiency of our operations and processes, eliminate waste and help standardize operations across our Company.

In our laboratory operations, our quality assurance efforts focus on pre-analytic, analytic and post-analytic processes, including positive patient identification of specimens, appropriate specimen transport, analysis and report accuracy, reference interval establishment and review, statistical process control and personnel training for all of our laboratories and patient service centers.

As part of our quality assurance program, we utilize internal proficiency testing, comprehensive quality control and rigorous process audits.

We have introduced comprehensive and digitized data analytics software that implements advanced automated quality control procedures, offering both real-time and post-analytic analysis of data at the laboratory and corporate level.

We monitor test results to identify trends, biases, instrument failures and population shifts through digitization and data analytics.

We also focus on the licensing, credentialing, training and competence of our professional and technical staff.

In addition, we have accreditation or licenses for our clinical laboratory operations from various regulatory agencies or accrediting organizations, such as CMS, CAP and certain states.

For example, our cytotechnologists and pathologists participate in an internal peer-review evaluation and one or more external individual proficiency testing programs.

We have accreditation or licenses for our clinical laboratory operations from various regulatory agencies or accrediting organizations, such as CMS, CAP and certain states.

All of our laboratories participate in external quality surveillance programs, including proficiency testing programs administered by CAP and several state agencies.

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Accreditation includes on-site inspections and participation in the CAP (or equivalent) proficiency testing program.

Also, our cytotechnologists and pathologists participate in an internal peer-review evaluation and one or more external individual proficiency testing programs.

In addition, some of our laboratories also have International Organization for Standardization certification for their quality management systems.

For additional information about our commitment to quality, see "Our Strengths - Quality " on page 7.

In addition, some of our laboratories also have International Organization for Standardization (ISO) certification for their quality management systems.

We maintain a robust Supplier Quality Program designed to ensure a high quality supplier network and to raise the bar of quality expectation across that network.

We expect suppliers to provide the highest quality products and services and to embrace an ethic of transparent quality collaboration.

In our program, we aim to ensure and improve the quality of purchased products and services.

Our suppliers are expected to operate under quality management principles that meet industry standards, strive for zero defect manufacturing, use statistical analysis to reduce variation and meet applicable regulatory standards.

In choosing suppliers, we evaluate their quality systems and quality performance metrics.

Our supplier qualification process is risk-based, with assessments and on-site audits based on risk tiers.

Contracts with our suppliers include specific quality, compliance, and change management provisions as appropriate.

We use supplier quality engineers who are trained to audit on ISO standards and FDA regulations applicable to suppliers’ processes, and a procurement engineering team to assist with qualification and validation of new supplies and products.

We actively manage supplier performance, utilizing a problem reporting and resolution process designed to drive to root cause and corrective actions.

We maintain a continuous improvement dialogue with our suppliers, and with operationally critical suppliers deliver a supplier scorecard that supports continuous improvement.

We also maintain quality assurance programs for IDN laboratories that we manage, and for our services offerings outside laboratories.

Intellectual Property Rights.

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We maintain an enterprise risk management program designed to promote a culture of risk awareness throughout the Company's key business, operations and support functions.

Our program, which is integrated with the Company’s governance, performance management and internal control frameworks, entails a formal continuous process that identifies, assesses, mitigates and manages the risks from both internal and external conditions that could significantly impact the Company and influence its business strategy and performance.

Our program, which is

integrated with the Company’s governance, performance management and internal control frameworks, entails a formal continuous process that identifies, assesses, mitigates and manages the risks from both internal and external conditions that could significantly impact the Company and influence its business strategy and performance.

The program is based on the most recent framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, which focuses on the following risk types:

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As part of our program, we routinely assess our enterprise level risks, emerging risks, overall Company-level risk tolerance and the effectiveness of risk management, and monitor the progress of and resources applied to risk mitigation;

Board of Directors actively oversees our program.

our Board of Directors actively oversees our program.

Our primary risk factors are discussed in Risk Factors beginning on page 32 .

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The types of fee schedules are:

• “Client” fees charged to physicians, hospitals and institutions for which services are performed on a wholesale basis and which are billed on a monthly basis.

• “Client” fees charged to physicians, IDNs and institutions for which services are performed on a wholesale basis and which are billed on a monthly basis.

• “Patient” fees charged to individual patients and certain third-party payers on a claim-by-claim basis.

Billing for diagnostic information services is very complicated.

Patients, insurance companies, Medicare, Medicaid, physicians, hospitals, IDNs, ACOs, DCEs and employer groups all have different billing requirements.

Our customers, discussed in table 13, have different billing requirements.

Some billing arrangements require us to bill multiple payers, and there are several other factors that complicate billing ( e.g ., disparity in coverage and information requirements among payers;

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Historically, the Medicare Clinical Laboratory Fee Schedule and the Medicare Physician Fee Schedule established under that program have been subject to change, including each year.

Pursuant to PAMA, reimbursement rates for many clinical laboratory tests provided under Medicare were reduced in 2018, 2019 and 2020.

Pursuant to PAMA, reimbursement rates for many clinical laboratory tests provided under Medicare were reduced from 2018 - 2020.

PAMA calls for further revision of the Medicare Clinical Laboratory Fee Schedule for years after 2020, based on future surveys of market rates;

reimbursement reduction from 2023-25 is capped by PAMA at 15% annually.

The CARES Act, adopted in early 2020 in response to the COVID-19 pandemic, suspended the PAMA price cuts that had been scheduled for 2021 and delayed PAMA's next data collection and reporting period until January 1, 2022.

Our net revenues reimbursed under Medicare and Medicaid in 2020 were lower as a percentage of our consolidated net revenues than in recent years as a result of revenues attributable to COVID-19 testing.

Excluding revenues attributable to COVID-19 testing, our net revenues reimbursed under Medicare and Medicaid in 2020 were comparable, as a percentage of our consolidated net revenues, to recent years.

Our net revenues reimbursed under Medicare and Medicaid in 2021 were lower as a percentage of our consolidated net revenues than in recent years (excluding 2020, when we also experienced significant COVID-19 testing).

Excluding revenues attributable to COVID-19 testing, approximately 13% of our net revenues were reimbursed under Medicare and Medicaid in 2021, compared to approximately 15% in 2019.

We are subject to extensive and frequently changing laws and regulations in the United States (at both the federal and state levels) and other jurisdictions in which we conduct business, and to government inspections and audits.

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In addition, federal and state anti-self-referral laws generally prohibit Medicare and Medicaid payments for clinical tests referred by physicians who have an ownership or investment interest in, or a compensation arrangement with, the testing laboratory, unless specific exceptions are met.

Federal substance abuse legislation enacted in 2018 contains anti-kickback provisions that are, by their terms, applicable to laboratory testing paid for by all payers.

We are attempting to clarify the application of that legislation.

Some states have similar laws that are not limited in applicability to only Medicare and Medicaid referrals and could also affect tests that are paid for by health plans and other non-governmental payers.

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It has been used by the FDA, in part, to assert authority over the annotation software aspects of pharmacogenetic testing services.

In addition, the FDA continued during 2020 to work on a pre-certification program to help software developers have a speedier and less restrictive path to clearance or approval of their software.

Legislation introduced in Congress would enable the FDA to regulate LDTs, in vitro diagnostics, software and other items used in the diagnosis of disease.

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(a) the federal Health Insurance Portability and Accountability Act and the regulations thereunder, which establish (i) a complex regulatory framework including requirements for safeguarding protected health information and (ii) comprehensive federal standards regarding the uses and disclosures of protected health information;

(b) state laws, including the California Consumer Privacy Act;

(b) state laws, including the California Consumer Privacy Act and similar laws in other states ;

and (c) laws outside the U.S., including the European Union's General Data Protection Regulation.

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We strive to conduct our business in compliance with all applicable laws and regulations.

We license and maintain appropriate accreditations for all of our laboratories and, where applicable, patient service centers, as required by the appropriate federal and state agencies.

We license and maintain appropriate accreditations for all of our laboratories and, where applicable, patient service centers, as required by federal and state agencies.

We have a long-standing and well-established compliance program.

The Quality, Safety and Compliance Committee of our Board of Directors oversees, and receives periodic management reports regarding, our compliance program.

The Quality and Compliance Committee of our Board of Directors oversees, and receives periodic management reports regarding, our compliance program.

Our program includes detailed policies and procedures and training programs intended to ensure the implementation and observance of all applicable laws and regulations (including regarding billing and reimbursement, and privacy of protected health information and personally identifiable information) and Company policies.

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Our internet address is www.QuestDiagnostics.com.

You can access our Investor Relations webpage at www.QuestDiagnostics.com/investor.

The information on our website is not incorporated by reference into this Report.

We make available free of charge, on or through our Investor Relations webpage, our proxy statements, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practical after such material is filed with, or furnished to, the SEC.

The information on or accessible through our website is not part of and is not incorporated by reference into this Report.

We make available free of charge, on or through our Investor Relations webpage (www.QuestDiagnostics.com/investor), our proxy statements, Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or furnished pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as soon as reasonably practical after such material is filed with, or furnished to, the SEC.

www.QuestDiagnostics.com/investor provides information about our corporate governance.

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• Certificate of Incorporation

• Charters for the standing committees of our Board of Directors

• Charters for the committees of our Board of Directors

• Information about our corporate political contributions

• Statements of beneficial ownership of our equity securities filed by our directors, officers and others under Section 16 of the Exchange Act

We also maintain a Corporate Responsibility webpage that provides information about our corporate responsibility program, including our focus on environmental, social and governance issues and our annual Corporate Responsibility Report.

www.QuestDiagnostics.com/our-company/corporate-responsibility provides information about our corporate responsibility program.

Information Available at Our Corporate Responsibility Webpage (Table 18)

• Corporate Responsibility Reports

• Quest for Health Equity

• Information about our corporate political contributions

• Quest Diagnostics Foundation

• Environmental, social and governance resources

• Sustainability

• Governance, ethics and values

• Community giving

INFORMATION ABOUT OUR EXECUTIVE OFFICERS

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Previously, he was CEO of the Imaging Systems business of Royal Phillips Electronics.

On February 3, 2022, the Company announced that, as part of its ongoing leadership succession planning, effective November 1, 2022, Mr.

Rusckowski would step down as Chief Executive Officer and President, and become Executive Chairman and continue to serve on the Company's Board of Directors through March 2023.

Before joining Philips in 2001, Mr.

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Rusckowski served as Chairman of the American Clinical Laboratory Association from 2014 to 2017.

Executive Vice President, General Diagnostics In January 2017, Mr.

Davis became Executive Vice President, General Diagnostics;

previously he was Senior Vice President and Group Executive - Regional Businesses.

Executive Vice President, General Diagnostics;

Chief Executive Officer - Elect In January 2017, he became Executive Vice President, General Diagnostics;

previously Mr.

Davis was Senior Vice President and Group Executive - Regional Businesses.

In January 2015, he assumed responsibility for the general management of the Company's regional Diagnostic Information Services business.

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From February 2014 to January 2015, he was responsible for operations for the Company's Diagnostic Information Services business.

He joined Quest Diagnostics in April 2013 as Senior Vice President, Diagnostics Solutions, with responsibility for the healthcare information technology, risk assessment, clinical trials, diagnostic products and employer solutions businesses.

Davis joined Quest Diagnostics in April 2013 as Senior Vice President, Diagnostics Solutions, with responsibility for the healthcare information technology, risk assessment, clinical trials, diagnostic products and employer solutions businesses.

On February 3, 2022, the Company announced that Mr.

Davis was appointed Chief Executive Officer - Elect, effective immediately, and that he would become Chief Executive Officer effective November 1, 2022.

Prior to joining Quest Diagnostics, from March 2012 to April 2013, Mr.

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since July 2018.

On February 3, 2022, the Company announced that Mr.

Guinan would retire in 2022.

Previously, he had served in a number of finance and operations roles in a long career at Johnson & Johnson including 2009 to 2010 as Vice President, Chief Procurement Officer, and 2005 to 2009 as Vice President, Group Finance Pharmaceuticals.

Before joining Johnson & Johnson in 1997, he held a number of financial roles at Procter & Gamble.

Senior Vice President, Chief Commercial Officer Mr.

Mendez is responsible for the commercial organization for the Company's Diagnostic Information Services business.

Prior to joining the Company in October 2019, Mr.

Méndez was Senior Vice President, Global Commercial Operations at QIAGEN, a worldwide provider of molecular sample and assay technologies, where he helped accelerate growth and led a global commercial team.

From 2010-2014, Mr.

Mendez served as Executive Vice President Americas for bioMérieux.

Previously, he held a variety of sales, marketing and general management roles with Abbott Laboratories, Thermo Fisher Scientific and OraSure Technologies - with leadership positions in the United States, Latin America, Europe and Asian markets.

Prevoznik (60)

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business