What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-02-22 compared with 2023-02-21 · 409 added, 405 removed, 1656 unchanged (33% of the section changed)

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Other Information

During February 2023, the Company announced that its Board of Directors increased the Company's share repurchase authorization by $1 billion.

The increased authority is in addition to the $0.3 billion that was available as of December 31, 2022 under the Company's share repurchase program.

(b) Rule 10b5-1 and Non-Rule 10b5-1 Trading Arrangements by Our Directors and Officers

Our directors and officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934, as amended) adopted , terminated or modified the Rule 10b5-1 trading arrangements (as defined in Item 408 of Regulation S-K) set forth in the table below.

No non-Rule 10b5-1 trading arrangements were adopted , modified or terminated by any director or officer during the period covered by this report.

Name Title Type of Trading Arrangement Security Action Date of Action Duration of Trading Arrangement Aggregate Number of Securities Covered

Karthikeyan Kuppusamy

SVP, Clinical Solutions

Rule 10b5-1 plan to sell Common Stock Adoption November 16, 2023 November 16, 2023 to November 13, 2024*

Up to 1,760 *

Catherine Doherty

SVP, Regional Businesses

Rule 10b5-1 plan to sell Common Stock Adoption August 29, 2023 August 29, 2023 to August 9, 2024*

Up to 8,723 *

* Includes shares of common stock to be released from (a) stock options and/or restricted stock units that are expected to vest and/or (b) performance share awards that may vest, subject to the satisfaction of the applicable performance metrics.

The actual number of shares of common stock that will be released is not yet determinable and the actual number of shares of common stock that will be sold will be net of the number of shares withheld to satisfy employee tax withholding obligations.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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Notes to Consolidated Financial Statements

Financial Statement Schedules

3.1 Restated Certificate of Incorporation (filed as an Exhibit to the Company's quarterly report on Form 10-Q for the quarter ended September 30, 2022 and incorporated herein by reference) (Commission File Number 001-12215)

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May 11, 2020) and incorporated herein by reference) (Commission File Number 001-12215)

4.10 Form of 6.400% Senior Note due 2033 (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report October 30, 2023) and incorporated herein by reference) (Commission File Number 001-12215)

4.11 Indenture dated as of June 27, 2001, among the Company, the Subsidiary Guarantors, and The Bank of New York (filed as an Exhibit to the Company's current report on Form 8-K (Date of Report:

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May 11, 2020) and incorporated herein by reference) (Commission File Number 001-12215)

4.32* Description of Securities

10.1‡ Amended and Restated Employee Stock Purchase Plan, as amended, effective February 18, 2019 (filed as an Exhibit to the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2019 and incorporated herein by reference) (Commission File Number 001-12215)

10.2‡ Amended and Restated Quest Diagnostics Incorporated Employee Long-Term Incentive Plan as amended May 14, 2019 (filed as an Exhibit to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2019 and incorporated herein by reference) (Commission File Number 001-12215)

10.3‡ Form of Equity Award Agreement dated as of February ___, 2021 (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2021 and incorporated herein by reference) (Commission File Number 001-12215)

4.33 Twenty-Second Supplemental Indenture dated as of November 1, 2023, between the Company and The Bank of New York Mellon (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report:

October 30, 2023) and incorporated herein by reference) (Commission File Number 001-12215)

4.34 Description of Securities (filed as an Exhibit to the Company's 2022 annual report on Form 10-K and incorporated herein by reference) (Commission File Number 001-12215)

10.1‡ Amended and Restated Employee Stock Purchase Plan, as amended, effective as of May 16, 2023 (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2023 and incorporated herein by reference) (Commission File Number 001-12215)

10.2‡ Amended and Restated Quest Diagnostics Incorporated Employee Long-Term Incentive Plan as amended March 31, 2023 (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2023 and incorporated herein by reference) (Commission File Number 001-12215)

10.3‡ Quest Diagnostics Incorporated Form of 2021 Equity Award Agreement (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2021 and incorporated herein by reference) (Commission File Number 001-12215)

10.4‡ Quest Diagnostics Supplemental Deferred Compensation Plan (Post 2004) amended and restated as of December 1, 2020 (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ending September 30, 2021 and incorporated herein by reference) (Commission File Number 001-12215)

10.5‡ Amendment No.

1 to Quest Diagnostics Supplemental Deferred Compensation Plan (Post 2004) (as amended and restated December 1, 2020), dated as of November 29, 2022.

1 to Quest Diagnostics Supplemental Deferred Compensation Plan (Post 2004) (as amended and restated December 1, 2020), dated as of November 29, 2022 (filed as an Exhibit to the Company’s 2022 annual report on Form 10-K and incorporated herein by reference) (Commission File Number 001-12215)

10.6‡ Quest Diagnostics Supplemental Deferred Compensation Plan (Pre-2005) amended and restated December 1, 2020 (filed as an Exhibit to the Company’s 2020 annual report on Form 10-K and incorporated herein by reference) (Commission File Number 001-12215)

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November 14, 2022) and incorporated herein by reference) (Commission File Number 001-12215)

10.9‡ The Quest Diagnostics Incorporated Profit Sharing Plan (Amendment and Restatement, effective as of August 15, 2021) (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ending September 30, 2021 and incorporated herein by reference) (Commission File Number 001-12215)

10.10‡* Amendment No.

1 To the Quest Diagnostics Profit Sharing Plan (as amended and restated effective August 15, 2021) dated as of December 5, 2022.

10.9‡* The Quest Diagnostics Profit Sharing Plan (Amendment and Restatement, effective as of September 1 4 , 202 3 )

10.10‡ Quest Diagnostics Incorporated Amended and Restated Deferred Compensation Plan For Directors as amended effective February 18, 2020 (filed as an Exhibit to the Company’s 2019 annual report on Form 10-K and incorporated herein by reference) (Commission File Number 001-12215)

10.12‡ Amended and Restated Quest Diagnostics Incorporated Long-Term Incentive Plan for Non-Employee Directors, as amended and restated as of November 18, 2020 (filed as an Exhibit to the Company’s 2020 annual report on Form 10-K and incorporated herein by reference) (Commission File Number 001-12215)

10.13‡ Form of Non-Employee Director Equity Award Agreement (filed as an Exhibit to the Company's 2011 annual report on Form 10-K and incorporated herein by reference) (Commission File Number 001-12215)

10.14‡ Form of Non-Employee Director Equity Award Agreement dated May 15, 2015 (filed as an Exhibit to the Company’s 2015 annual report on Form 10-K and incorporated herein by reference) (Commission File Number 001-12215)

10.15‡ Form of Non-Employee Director Elective Option Award Agreement (filed as an Exhibit to the Company's 2011 annual report on Form 10-K and incorporated herein by reference) (Commission File Number 001-12215)

10.16‡ Employment Agreement between Stephen H.

Rusckowski and Quest Diagnostics Incorporated, dated April 3, 2012 (filed as an Exhibit to the Company's current report on Form 8-K (Date of Report:

April 9, 2012) and incorporated herein by reference) (Commission File Number 001-12215)

10.17‡ Amendment to Employment Agreement between Stephen H.

Rusckowski and Quest Diagnostics Incorporated, dated June 11, 2015 (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report:

June 11, 2015) and incorporated herein by reference) (Commission File Number 001-12215)

10.18‡ Aircraft Timesharing Agreement dated as of December 17, 2013 between Quest Diagnostics Incorporated and Stephen H.

Rusckowski (filed as an Exhibit to the Company’s 2013 annual report on Form 10-K and incorporated herein by reference) (Commission File Number 001-12215)

10.19‡ Assignment and Amendment No.

1 to Aircraft Timesharing Agreement dated as of May 29, 2019 between Quest Diagnostics Incorporated and Stephen H.

Rusckowski (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2019 and incorporated herein by reference) (Commission File Number 001-12215)

10.20‡* Aircraft Time Sharing Agreement dated as of February 16, 2023 between Quest Diagnostics Incorporated and James E.

10.11‡ Amended and Restated Quest Diagnostics Incorporated Long-Term Incentive Plan for Non-Employee Directors (as amended November 18, 2020) (filed as an Exhibit to the Company’s 2020 annual report on Form 10-K and incorporated herein by reference) (Commission File Number 001-12215)

10.12‡ Quest Diagnostics Incorporated Form of Non-Employee Director Equity Award Certificate (filed as an Exhibit to the Company’s 2015 annual report on Form 10-K and incorporated herein by reference) (Commission File Number 001-12215)

10.13‡ Aircraft Time Sharing Agreement dated as of February 16, 2023 between Quest Diagnostics Clinical Laboratories, Inc.

Davis (filed as an Exhibit to the Company's 2022 annual report on Form 10-K and incorporated herein by reference) (Commission File Number 001-12215)

21.1* Subsidiaries of Quest Diagnostics Incorporated

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32.2** Section 1350 Certification of Chief Financial Officer

97.1* Quest Diagnostics Incorporated Dodd-Frank Clawback Policy, adopted November 13, 2023

99.1 Fourth Amended and Restated Receivables Sale Agreement, dated as of October 28, 2015, between Quest Diagnostics Incorporated and the subsidiaries party thereto from time to time, as Sellers, and Quest Diagnostics Receivables Inc., as Buyer (filed as an Exhibit to the Company’s current report on Form 8-K (Date of Report:

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May 4, 2020) and incorporated herein by reference) (Commission File Number 001-12215)

99.3 Amendment No.

2 to Fourth Amended and Restated Receivables Sale Agreement, dated as of October 19, 2023 (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2023 and incorporated herein by reference) (Commission File Number 001-12215)

99.4 Sixth Amended and Restated Credit and Security Agreement, dated as of October 27, 2017 among Quest Diagnostics Receivables Inc., as Borrower, Quest Diagnostics Incorporated, as Initial Servicer, MUFG Bank, Ltd.

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99.8 Amendment No.

4 to Sixth Amended and Restated Credit and Security Agreement, dated as of October 22, 2020 (filed as an Exhibit to the Company's 2020 annual report of Form 10-K and incorporated herein by reference) (Commission File Number 001-12215)

4 to Sixth Amended and Restated Credit and Security Agreement, dated as of October 22, 2020 (filed as an Exhibit to the Company's 2020 annual report on Form 10-K and incorporated herein by reference) (Commission File Number 001-12215)

99.9 Amendment No.

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99.11 Amendment No.

7 to Sixth Amended and Restated Credit and Security Agreement, dated as of October 20, 2022

7 to Sixth Amended and Restated Credit and Security Agreement, dated as of October 20, 2022 (filed as an Exhibit to the Company's 2022 annual report on Form 10-K and incorporated herein by reference) (Commission File Number 001-12215)

99.12 Amendment No.

8 to Sixth Amended and Restated Credit and Security Agreement, dated as of October 19, 2023 (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended September 30, 2023 and incorporated herein by reference) (Commission File Number 001-12215)

99.13 Amendment and Restatement Agreement, dated as of November 23, 2021, relating to the Second Amended and Restated Credit Agreement, dated as of March 22, 2018, among Quest Diagnostics Incorporated, as Borrower, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and other agents party thereto and which includes, as Exhibit A, the Third Restated Credit Agreement (filed as an Exhibit to the Company's 2021 annual report on Form 10-K and incorporated herein by reference) (Commission File Number 001-12215)

99.12* Group Joinder Agreement, among Reprosource Fertility Diagnostics, Inc., Blueprint Genetics, Inc., and Mid America Clinical Laboratories, LLC, dated as of August 13, 2021, related to the Fourth Amended and Restated Receivables Sales Agreement, dated October 28, 2015, among Quest Diagnostics Incorporated and certain of its subsidiaries

99.14 Amendment No.

1, dated as of March 31, 2023, relating to the Third Amended and Restated Credit Agreement, dated as of November 23, 2021, among Quest Diagnostics Incorporated, as Borrower, the lenders party thereto, JPMorgan Chase Bank, N.A., as Administrative Agent, and other agents party thereto and which includes, as Exhibit A, the Third Amended and Restated Credit Agreement (filed as an Exhibit to the Company’s quarterly report on Form 10-Q for the quarter ended March 31, 2023 and incorporated herein by reference) (Commission File Number 001-12215)

99.15 Group Joinder Agreement, among Reprosource Fertility Diagnostics, Inc., Blueprint Genetics, Inc., and Mid America Clinical Laboratories, LLC, dated as of August 13, 2021, related to the Fourth Amended and Restated Receivables Sales Agreement, dated October 28, 2015, among Quest Diagnostics Incorporated and certain of its subsidiaries ( f iled as an Exhibit to the Company’s 2022 annual report on Form 10-K and incorporated herein by reference)(Commission File Number 001-12215)

101.INS Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

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QUEST DIAGNOSTICS INCORPORATED

Chief Executive Officer and President

Chairman, Chief Executive Officer and President

Each individual whose signature appears below constitutes and appoints Michael E.

Prevoznik and William J.

O'Shaughnessy, Jr., and each of them singly, his or her true and lawful attorneys-in-fact and agents with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K filed with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorneys-in-fact and agents or any of them or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Prevoznik and Sean D.

Mersten, and each of them singly, his or her true and lawful attorneys-in-fact and agents with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K filed with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all the said attorneys-in-fact and agents or any of them or their or his or her substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on February 22, 2024.

Signature Capacity

Chief Executive Officer and President;

Chairman, Chief Executive Officer and President;

(Principal Executive Officer)

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/s/Timothy M.

/s/Stephen H.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

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Diagnostic Information Services

Quest Diagnostics empowers people to take action to improve health outcomes.

We use our extensive database of clinical lab results to derive diagnostic insights that reveal new avenues to identify and treat disease, inspire healthy behaviors and improve healthcare management.

Our diagnostic information services business ("DIS") provides information and insights based on an industry-leading menu of routine, non-routine and advanced clinical testing and anatomic pathology testing, and other diagnostic information services.

We provide services to a broad range of customers, including patients, clinicians, hospitals, independent delivery networks ("IDNs"), health plans, employers, consumers, and accountable care organizations ("ACOs").

We offer the broadest access in the United States to diagnostic information services through our nationwide network of laboratories, patient service centers and phlebotomists in physician offices and our connectivity resources, including call centers and mobile paramedics, nurses and other health and wellness professionals.

We are the world's leading provider of diagnostic information services.

We provide interpretive consultation with one of the largest medical and scientific staffs in the industry.

Our DIS business makes up greater than 95% of our consolidated net revenues.

Quest Diagnostics works across the healthcare ecosystem to create a healthier world, one life at a time.

Our diagnostic information services ("DIS") business provides diagnostic insights from the results of our laboratory testing to empower people, physicians, and organizations to take action to improve health outcomes.

Derived from one of the world's largest databases of de-identifiable clinical lab results, our diagnostic insights reveal new avenues to identify and treat disease, inspire healthy behaviors and improve healthcare management.

In the right hands and with the right context, our diagnostic insights can inspire actions that transform lives and create a healthier world.

We provide services to a broad range of customers within our primary customer channels - physicians (including those associated with accountable care organizations ("ACOs") and Federally Qualified Health Centers ("FQHCs")), hospitals, and patients and consumers.

Our other customers include health plans, employers, emerging retail healthcare providers, government agencies, pharmaceutical companies and other commercial clinical laboratories.

We offer broad access to clinical testing through a nationwide network of laboratories, patient service centers, phlebotomists in physician offices, and our connectivity resources, including call centers and mobile phlebotomists, nurses and other health and wellness professionals.

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.

During 2023, we processed approximately 206 million test requisitions through our extensive laboratory network.

The clinical testing that we perform 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.

The United States clinical testing industry consists of two segments.

One segment includes hospital inpatient and outpatient testing.

The second segment includes testing of persons who are not hospital patients, including testing done in commercial clinical laboratories, physician-office laboratories and other locations, as well as hospital outreach (non-hospital patients) and consumer-initiated testing.

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

Clinical testing is used for predisposition, screening, monitoring, diagnosis, prognosis and treatment choices of diseases and other medical conditions.We primarily compete with three types of clinical testing providers:

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

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

The clinical testing industry is subject to seasonal fluctuations in operating results and cash flows.

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Testing volume is also subject to declines due to severe weather or other events (such as public health emergencies and health pandemics), which can deter patients from having testing performed and which can vary in duration and severity from year to year.

Additionally, orders for clinical testing generated from clinician offices, hospitals, employers and consumers can be affected by factors such as changes in the United States economy and regulatory environment, which affect the number of unemployed and uninsured, and design changes in healthcare plans, which affect utilization as well as patient responsibility for healthcare costs.

We assess our revenue performance for the DIS business based upon, among other factors, volume (measured by test requisitions) and revenue per requisition.

Each requisition accompanies patient specimens, indicating the test(s) to be performed and the party to be billed for the test(s).

Revenue per requisition is impacted by various factors, including, among other items, the impact of fee schedule changes (i.e.

unit price), test mix, payer mix, and the number of tests per requisition.

Additionally, orders for clinical testing generated from customers, including physicians, hospitals, and consumers, can be affected by factors such as changes in the United States economy and regulatory environment, which affect the number of unemployed and uninsured, and design changes in healthcare plans, which affect utilization as well as patient responsibility for healthcare costs.

We assess our revenue performance for our DIS business based upon, among other factors, volume (measured by test requisitions) and revenue per requisition.

Each test requisition accompanies patient specimens, indicating the test(s) to be performed and the party to be billed for the test(s).

Revenue per requisition is impacted by various factors, including, among other items, the impact of fee schedule changes (i.e., unit price), test mix, payer mix, business mix, and the number of tests per requisition.

Management uses number of requisitions and revenue per requisition data to assist with assessing the growth and performance of the business, including understanding trends affecting number of requisitions, pricing and test mix.

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Diagnostic Solutions

In our Diagnostic Solutions ("DS") businesses, which represent the balance of our consolidated net revenues, we offer a variety of solutions for life insurers and healthcare organizations and clinicians.

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

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

Our Diagnostic Solutions ("DS") group, which represents the balance of our consolidated net revenues, includes our risk assessment services business, which offers solutions for insurers, and our healthcare information technology businesses, which offer solutions for healthcare providers and payers.

2023 Highlights

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(a) Excludes COVID-19 testing.

The impact that the COVID-19 pandemic had on our DIS revenues, including requisition volume and revenue per requisition are discussed further below under "Impact of COVID-19" and "Results of Operations".

The impact that the COVID-19 pandemic had on our DIS revenues, including requisition volume and revenue per requisition, are discussed further below under "Results of Operations".

For further discussion of the year-over-year changes for the year ended December 31, 2023 compared to the year ended December 31, 2022, see "Results of Operations" below.

Impact of COVID-19

Since 2020, a novel strain of coronavirus has impacted the economy of the United States and other countries around the world.

As a result of the pandemic, we have made substantial investments to expand and maintain the amount of COVID-19 testing available to the country.

We have been effectively managing challenges in the global supply chain and, at this point, we have sufficient supplies to conduct our business.

As the impact of COVID-19 moderates, we remain active in the continued response to COVID-19.

Due to the pandemic, since 2020 we have experienced significant volatility, including periods of material decline compared to prior year periods in testing volume in our base business (which excludes COVID-19 testing) and periods of significant demand for COVID-19 testing services.

Additionally, compared to pre-2020 historical levels, our revenue per requisition has been positively impacted by COVID-19 molecular testing.

Two Point Strategy

Our two point strategy and our operating principles are described in detail in " Item 1.

We continued to execute our strategy and leverage our operating principles during 2022 as follows:

Acquisition of Pack Health, LLC ("Pack Health")

On February 1, 2022, we completed the acquisition of Pack Health, a patient engagement company that helps individuals adopt healthier behaviors to improve outcomes, in an all cash transaction for $123 million, net of $4 million cash acquired, which consisted of cash consideration of $105 million and contingent consideration initially estimated at $18 million.

Acquisition of select assets of the laboratory services business of New York-Presbyterian

On April 17, 2023, we completed the acquisition of select assets of the laboratory services business of New York-Presbyterian, which serves providers and patients in New York, as well as the tri-state area and beyond, in an all cash transaction for $275 million.

The acquired business is included in our DIS business.

For further details, see Note 6 to the audited consolidated financial statements.

Acquisition of Haystack Oncology, Inc.

On June 20, 2023, we acquired Haystack Oncology, Inc., an early-stage oncology company focused on minimal residual disease testing to aid in the detection of residual or recurring cancer and better inform therapy decisions.

The acquisition was an all-cash transaction for $392 million, net of $1 million of cash acquired, which consisted of cash consideration of $304 million and contingent consideration initially estimated at $88 million.

Under the contingent consideration obligation, the seller can receive up to $100 million of additional consideration dependent upon the achievement of certain revenue benchmarks through 2028 and up to an additional $50 million of consideration dependent upon us receiving reimbursement coverage from the Centers for Medicare and Medicaid Services.

The acquired business is included in our DIS business.

For further details, see Notes 6 and 8 to the audited consolidated financial statements.

Senior Notes Offering

During November 2023, we completed a senior notes offering, consisting of $750 million aggregate principal amount of 6.40% senior notes due November 2033 (the "2033 Senior Notes").

We expect to use the net proceeds from the offering for general corporate purposes, which may include the redemption or repayment of indebtedness, including our $300 million aggregate principal amount of 4.25% senior notes due April 2024.

For further details regarding our debt, see Note 14 to the audited consolidated financial statements.

Invigorate Program

We are engaged in a multi-year program called Invigorate, which is designed to reduce our cost structure and improve our performance.

We currently aim annually to achieve savings and productivity improvements of approximately 3% of our costs, which we believe will help offset pressures from the current inflationary environment.

Invigorate has consisted of several flagship programs, with structured plans in each, to drive savings and improve performance across the customer value chain.

These flagship programs include:

organization excellence;

information technology excellence;

procurement excellence;

field and customer service excellence;

lab excellence;

and revenue services excellence.

In addition to these programs, we have identified key themes to change how we operate including reducing denials and patient price concessions;

further digitizing our business;

standardization;

optimization and selecting and retaining talent.

We believe that our efforts to standardize our information technology systems, equipment and data also foster our efforts to strengthen our foundation for growth and support the value creation initiatives of our clinical franchises by enhancing our operational flexibility, empowering and enhancing the customer experience, facilitating the delivery of actionable insights and bolstering our large data platform.

For the year ended December 31, 2022, we incurred $88 million of pre-tax charges in connection with our Invigorate program and other restructuring activities, including $55 million of employee separation costs, with the remainder primarily consisting of systems conversion and integration costs.

We are engaged in a multi-year program called Invigorate, which includes structured plans to drive savings and improve productivity across the value chain, including in such areas as patient services, logistics and laboratory operations, revenue services, information technology and procurement.

The Invigorate program aims to deliver 3% annual cost savings and productivity improvements to partially offset pressures from the current inflationary environment, including labor and benefit cost increases and reimbursement pressures.

We are leveraging automation and artificial intelligence to improve productivity and also improve quality across our entire value chain, not just in the laboratory.

Other areas of focus include reducing denials and patient concessions, enhancing the digital experience, and selecting and retaining talent.

For the year ended December 31, 2023, we incurred $43 million of pre-tax charges in connection with our Invigorate program and other restructuring activities, including $25 million of employee separation costs, with the remainder primarily consisting of integration costs.

Most of the charges will result in cash expenditures.

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Outlook and Trends

The healthcare system in the United States is evolving.

We expect that the evolution of the healthcare industry, including impacts of the COVID-19 pandemic, which include the increased adoption of telemedicine, will continue, and that industry change is likely to be extensive.

There are a number of key trends that we expect will continue to have a significant impact on the diagnostic information services business in the United States and on our business.

We believe that several of the trends, including increased focus on value, consolidation, price transparency and consumerization, are favorable to our business.

Healthcare market participants, including governments, are focusing on controlling costs, including potentially by reducing reimbursement for healthcare services, changing reimbursement for healthcare services (including but not limited to a shift from fee-for-service to capitation), changing medical coverage policies ( e.g ., healthcare benefits design), denying coverage for services, requiring preauthorization of laboratory testing, requiring co-pays, introducing laboratory spend management utilities and payment and patient care innovations such as ACOs and patient-centered medical homes.

In recent years, there has been an ongoing trend of rising patient responsibility (including attributable to payer denials) which has resulted in an increase in our reserves for patient price concessions.

The healthcare system in the United States continues to evolve and industry change is likely to be extensive.

Because diagnostic information services is an essential healthcare service, we believe that the industry will continue to grow over the long term.

There are a number of key trends that we expect will continue to have a significant impact on the growth and the nature of the diagnostic information services business in the United States and on our business.

These trends present both opportunities and risks.

Healthcare market participants, including health plans and governments, are focusing on controlling costs, including potentially by reducing reimbursement for healthcare services, changing reimbursement for healthcare services (including but not limited to a shift from fee-for-service to capitation), changing medical coverage policies ( e.g ., healthcare benefits design), denying coverage for services, requiring preauthorization of laboratory testing, requiring co-pays, introducing laboratory spend management utilities and payment and patient care innovations such as ACOs and patient-centered medical homes.

In recent years, there has been an ongoing trend of rising patient responsibility which has resulted in an increase in our reserves for patient price concessions.

As health plans and government programs require greater levels of patient cost-sharing, our patient price concessions may continue to be negatively impacted and adversely impact our results of operations.

As previously mentioned, there could be a shift to capitation arrangements where we agree to a predetermined monthly reimbursement rate for each member enrolled in a restricted plan, generally regardless of the number or cost of services provided by us.

There could be a shift to capitation arrangements where we agree to a predetermined monthly reimbursement rate for each member enrolled in a restricted plan, generally regardless of the number or cost of services provided by us.

In both 2023 and 2022, we derived approximately 3% of our consolidated net revenues from capitated payment arrangements.

In both 2022 and 2021, we derived approximately 8% of our testing volume from capitated payment arrangements.

In 2023 and 2022, we derived approximately 9% and 8%, respectively, of our testing volume from capitated payment arrangements.

Historically, the Medicare Clinical Laboratory Fee Schedule ("CLFS") and the Medicare Physician Fee Schedule established under Part B of the Medicare program have been subject to change, including each year.

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reimbursement reduction from 2025 - 2027 is capped by PAMA at 15% annually.

PAMA's next data collection and reporting period have been delayed, most recently by federal legislation adopted in December 2022, which further delayed the reimbursement rate reductions and reporting requirements until January 1, 2024.

In addition, the trend of consolidating, converging and diversifying among our customers, payers and other healthcare industry participants has continued and may result in increased price transparency and bargaining power, and may encourage internalization of clinical testing.

We also believe that PAMA, among other factors, may be a further catalyst for consolidation as diagnostic information services providers realize lower Medicare reimbursement rates and large diagnostic information services providers may be able to increase their share of the overall diagnostic information services industry due to their large networks and lower cost structures.

For a discussion of the impact of the COVID-19 pandemic on our business, see " Impact of COVID-19" above.

PAMA's next data collection and reporting period have been delayed, most recently by federal legislation adopted in 2023, which further delayed the reimbursement rate reductions and reporting requirements until January 1, 2025.

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

Consolidation in the healthcare industry has continued at a rapid pace, including among our customer base.

Certain of our customers are seeking to diversify their service offerings and to partner with other providers to offer value-based care alternatives.

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

Recent and potentially on-going inflationary pressures have resulted in increases in the cost of our operations, including the costs of testing equipment, supplies and other goods and services we purchase from manufacturers, suppliers and others.

Inflationary pressures, along with the competition for labor, have also resulted in a rise of our labor costs, which include the costs of compensation, benefits and recruiting and training new hires.

Our Invigorate program is designed to, among other things, partially offset these impacts.

For additional information on our key trends, which present both opportunities and risks, see " Item 1.

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The process for estimating revenues and the ultimate collection of receivables associated with our DIS business involves significant assumptions and judgments.

We recognize as revenue the amount of consideration to which we expect to be entitled primarily upon completion of the testing process (when results are reported) or when services have been rendered.

We estimate the amount of consideration we expect to be entitled to receive from customer groups in exchange for providing services using the portfolio approach.

We recognize revenues primarily upon completion of the testing process (when results are reported) or when services have been rendered.

We estimate the amount of consideration we expect to be entitled to receive from payer customer groups in exchange for providing services using the portfolio approach.

These estimates include the impact of contractual allowances (including payer denials), and patient price concessions, as discussed below.

The portfolios determined using the portfolio approach consist of the following customers:

• Healthcare Insurers

The portfolios determined using the portfolio approach consist of the following payer customers:

• Healthcare Insurers/Health Plans

• Government Payers

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However, changes to our estimate of the impact of contractual allowances (including payer denials) and patient price concessions could have a material impact on our results of operations and financial condition in the period that the estimates are adjusted.

The following table shows the approximate percentage of our total requisition volume and net revenues associated with our DIS business during 2022 applicable to each customer group:

Total Consolidated

The following table shows the approximate percentage of our total requisition volume and net revenues associated with our DIS business during 2023 applicable to each payer customer group:

Total DIS Consolidated

Volume Net Revenues

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but volume associated with such revenue is reported under Healthcare insurers.

The following table shows net accounts receivable as of December 31, 2022 applicable to each customer group:

The following table shows net accounts receivable as of December 31, 2023 applicable to each payer customer group:

Healthcare insurers 24%

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Total DIS 96%

Healthcare insurers

Healthcare insurers/ Health Plans

Reimbursements from healthcare insurers are based on fee-for-service schedules and on capitated payment rates.

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Client payers

Client payers include physicians, hospitals, ACOs, IDNs, employers, other commercial laboratories and institutions for which services are performed on a wholesale basis, and are billed based on a negotiated fee schedule.

Client payers include physicians, hospitals, employers, emerging retail healthcare providers, pharmaceutical companies and other commercial clinical laboratories and institutions for which services are performed on a wholesale basis, and are billed based on a negotiated fee schedule.

Credit risk and ability to pay are more of a consideration for these payers than healthcare insurers and government payers.

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The discounted cash flows analysis includes several unobservable inputs related to our own assumptions.

The assumptions and estimates used in the discounted cash flows model are based upon the best available information in the circumstances and include a forecast of expected future cash flows, long-term growth rates, discount rates that are commensurate with economic risks, assumed income tax rates and

estimates of capital expenditures and working capital.

The assumptions and estimates used in the discounted cash flows model are based upon the best available information in the circumstances and include a forecast of expected future

cash flows, long-term growth rates, discount rates that are commensurate with economic risks, assumed income tax rates and estimates of capital expenditures and working capital.

The fair values of the reporting units could be different if, for example, forecasted revenue growth rates, economic conditions, government regulations or actions by payers to control utilization of or reimbursement for healthcare services, turn out to be different than our assumptions or estimates.

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We perform our annual impairment test during the fourth quarter of the fiscal year.

For the year ended December 31, 2022, we performed a qualitative assessment for our DIS reporting unit.

Based on the totality of the information available for the DIS reporting unit, we concluded that it was more likely than not that the estimated fair value was greater than the carrying value of the reporting unit, and as such, no further analysis was required.

As a sensitivity, in conjunction with the most recent quantitative test performed for the year ended December 31, 2020, if the estimated fair value of the DIS reporting unit decreased by 10%, we would have still concluded that the goodwill for our DIS reporting unit was not impaired.

For the year ended December 31, 2022, we updated the fair value calculation for our risk assessment reporting unit, performed a quantitative impairment test and concluded that goodwill for the reporting unit was not impaired.

As a sensitivity, if the estimated fair value of the risk assessment reporting unit decreased by 10%, we would have still concluded that the goodwill for the reporting unit was not impaired.

For the year ended December 31, 2023, in accordance with our policy to perform the quantitative test on a periodic basis, we updated the fair value calculation of our reporting units, performed the quantitative impairment test and concluded that goodwill was not impaired.

As a sensitivity, if the estimated fair value of each of our reporting units decreased by 10%, we still would have concluded that the goodwill for the reporting unit was not impaired.

Results of Operations

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Amortization of intangible assets 108 120 (12) (9.8)

Other operating expense (income), net 11 (2) 13 NM

Other operating expense, net 41 11 30 NM

Total operating costs and expenses, net $ 7,990 $ 8,455 $ (465) (5.5) %

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$ (152) $ (138) $ (14) 9.6 %

Other (expense) income, net (55) 369 (424) NM

Other income (expense), net 20 (55) 75 NM

Total non-operating (expense) income, net $ (132) $ (193) $ 61 NM

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• pre-tax amortization expense of $108 million recorded in amortization of intangible assets or $0.70 per diluted share;

• pre-tax charges of $44 million ($5 million in selling, general and administrative expenses and $39 million in other operating expense (income), net), or $0.31 per diluted share, primarily representing a $29 million impairment charge on certain long-lived assets related to the shutdown of a business and, to a lesser extent, an $11 million loss associated with the increase in the fair value of the contingent consideration accrual associated with previous acquisitions;

• pre-tax charges of $43 million ($16 million recorded in cost of services and $27 million recorded in selling, general and administrative expenses), or $0.29 per diluted share, primarily associated with workforce reductions and integration costs incurred in connection with further restructuring and integrating our business;

• pre-tax charges of $3 million in equity in earnings of equity method investees, net of tax, or $0.02 per diluted share, representing net losses associated with changes in the carrying value of our strategic investments ;

partially offset by

• excess tax benefits associated with stock-based compensation arrangements of $11 million, or $0.10 per diluted share, recorded in income tax expense.

For the year ended December 31, 2023, the year-over-year change in diluted weighted average common shares outstanding was principally driven by share repurchases, which positively benefited the year-over-year comparison of diluted earnings per share.

Results for the year ended December 31, 2022 were affected by certain items that on a net basis decreased diluted earnings per share by $1.98 as follows:

• pre-tax amortization expense of $120 million recorded in amortization of intangible assets or $0.74 per diluted share;

• pre-tax charges of $93 million recorded in selling, general and administrative expenses, or $0.59 per diluted share, representing costs associated with donations, contributions and other financial support through Quest for Health Equity (our initiative with the Quest Diagnostics Foundation to reduce health disparities in underserved communities);

• pre-tax charges of $88 million ($32 million recorded in cost of services and $56 million recorded in selling, general and administrative expenses), or $0.56 per diluted share, primarily associated with workforce reductions, systems conversions and integration incurred in connection with further restructuring and integrating our business;

• pre-tax charges of $42 million ($30 million recorded in other (expense) income, net, and $12 million recorded in equity in earnings of equity method investees), or $0.26 per diluted share, representing net losses associated with changes in the carrying value of our strategic investments ;

• pre-tax charges of $42 million ($30 million recorded in other income (expense), net, and $12 million recorded in equity in earnings of equity method investees, net of tax), or $0.26 per diluted share, representing net losses associated with changes in the carrying value of our strategic investments ;

• net pre-tax charges of $13 million ($2 million recorded in cost of services and $11 million recorded in other operating expense (income), net), or $0.09 per diluted share, primarily representing a $14 million impairment charge on certain property, plant and equipment and a $5 million loss associated with the increase in the fair value of the contingent consideration accrual associated with previous acquisitions, partially offset by a $10 million gain from a payroll tax credit under the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") associated with the retention of employees;

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• excess tax benefits associated with stock-based compensation arrangements of $14 million, or $0.12 per diluted share, recorded in income tax expense.

For the year ended December 31, 2022, diluted earnings per share benefited from the impact of share repurchases, including under accelerated share repurchase agreements ("ASRs") entered into in April 2021 to repurchase $1.5 billion of our common stock, on our weighted average shares outstanding as compared to the prior year.

Results for the year ended December 31, 2021 were affected by certain items that on a net basis increased diluted earnings per share by $1.31 as follows:

• a pre-tax gain recorded in other (expense) income, net of $314 million, or $2.02 per diluted share, on the sale of our 40% ownership interest in Q 2 Solutions ® ("Q 2 Solutions"), our clinical trials central laboratory services joint venture, to IQVIA Holdings, Inc.

("IQVIA"), our joint venture partner (see Note 7 to the audited consolidated financial statements);

• a net pre-tax gain of $39 million recorded in other (expense) income, net, or $0.24 per diluted share, primarily due to gains associated with changes in the carrying value of our strategic investments, partially offset by a non-cash impairment charge to the carrying value of an equity method investment;

• excess tax benefits associated with stock-based compensation arrangements of $19 million, or $0.14 per diluted share, recorded in income tax expense;

partially offset by

• pre-tax amortization expense of $105 million ($103 million recorded in amortization of intangible assets and $2 million recorded in equity in earnings of equity method investees, net of taxes) or $0.62 per diluted share;

• pre-tax charges of $61 million ($30 million recorded in cost of services and $31 million recorded in selling, general and administrative expenses), or $0.36 per diluted share, primarily associated with systems conversions and integration incurred in connection with further restructuring and integrating our business;

• pre-tax charges of $16 million recorded in selling, general and administrative expenses, or $0.08 per diluted share, primarily due to costs associated with donations, contributions and other financial support through Quest for Health Equity;

• pre-tax charges of $4 million recorded in cost of services, or $0.03 per diluted share, representing the impact of certain items resulting from the COVID-19 pandemic, including incremental costs incurred to protect the health and safety of our employees and customers.

Net revenues for the year ended December 31, 2023 decreased by 6.4% compared to the prior year.

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For the year ended December 31, 2023:

• The decrease in revenue compared to the prior year was driven by a decrease in COVID-19 testing, partially offset by growth in the base business and the impact of recent acquisitions.

• The decrease in revenue compared to the prior year was driven by a decrease in COVID-19 testing, partially offset by growth in the base business and, to a lesser extent, the impact of recent acquisitions.

For the year ended December 31, 2023, recent acquisitions contributed approximately 0.5% to DIS revenues.

• DIS volume decreased by 4.5% compared to the prior year driven by a decrease in COVID-19 testing, partially offset by growth in the base business and the impact of recent acquisitions, which contributed approximately 0.6% to DIS volume.

• Revenue per requisition decreased by 4.5% compared to the prior year driven in large part by the decrease in COVID-19 molecular testing and unit price pressure of approximately 0.5%, partially offset by favorable mix.

• Revenues in the base business (including the impact of recent acquisitions) increased by 5.6% compared to the prior year.

• DIS volume decreased by 0.6% compared to the prior year driven by a decrease in COVID-19 testing, substantially offset by growth in the base business and the impact of recent acquisitions, which contributed approximately 0.4% to DIS volume.

• Revenue per requisition decreased by 5.9% compared to the prior year driven by the decrease in COVID-19 molecular testing.

• DIS revenues in the base business (including the impact of recent acquisitions) increased by 7.3% compared to the prior year.

• Testing volume in the base business (including the impact of recent acquisitions) was up 6.5% compared to the prior year.

• Revenue per requisition in the base business increased by 3.0% compared to the prior year primarily due to favorable test and payer mix.

DS revenues for the year ended December 31, 2022 decreased by 7.0% compared to the prior year primarily due to lower revenues associated with our risk assessment services offered to the life insurance industry.

• Revenue per requisition in the base business increased by 1.1% compared to the prior year principally due to an increase in the number of tests per requisition, business mix, and an increase in unit price, partially offset by growth in our Professional Laboratory Services engagements (which carry a lower revenue per requisition than the remainder of DIS).

DS revenues for the year ended December 31, 2023 increased by 0.7% compared to the prior year primarily due to higher revenues associated with our risk assessment services offered to the life insurance industry.

Cost of Services

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Cost of services decreased by $251 million for the year ended December 31, 2023 compared to the prior year.

The decrease was primarily driven by lower supplies and collection expenses associated with reduced COVID-19 testing volumes, partially offset by higher compensation and benefits costs (primarily related to wage increases) and additional costs associated with our acquisitions.

The decrease was primarily driven by lower collection and supplies expenses associated with reduced COVID-19 testing volumes and, to a lesser extent, lower performance-based compensation, partially offset by wage and benefits increases.

Selling, General and Administrative Expenses ("SG&A")

SG&A consists principally of the costs associated with our sales and marketing efforts, billing operations, credit loss expense and general management and administrative support, as well as administrative facility costs.

SG&A increased by $147 million for the year ended December 31, 2022, compared to the prior year, primarily driven by additional costs associated with investments in our strategic growth initiatives, costs associated with donations, contributions and other financial support through Quest for Health Equity, and higher compensation and benefits costs (including headcount and wage increases), partially offset by $42 million of lower costs associated with changes in the value of our deferred compensation obligations.

The changes in the value of our deferred compensation obligations is largely offset by changes in the value of the associated investments, which are recorded in other (expense) income, net.

SG&A decreased by $232 million for the year ended December 31, 2023, compared to the prior year, primarily driven by lower contributions and other financial support through Quest for Health Equity, lower compensation costs (including a reduction in headcount and performance-based compensation, partially offset by wage increases) and lower marketing expenses, partially offset by $45 million of higher costs associated with changes in the value of our deferred compensation obligations.

The changes in the value of our deferred compensation obligations is largely offset by changes in the value of the associated investments, which are recorded in other income (expense), net.

For further details regarding our deferred compensation plans, see Note 18 to the audited consolidated financial statements.

Amortization of Intangible Assets

For the year ended December 31, 2022, amortization expense increased by $17 million compared to the prior year primarily due to an adjustment to the useful life of a customer-related intangible asset and, to a lesser extent, the impact of recent acquisitions.

Other Operating Expense (Income), Net

Other operating expense (income), net includes miscellaneous income and expense items and other charges related to operating activities.

For the year ended December 31, 2022, other operating expense (income), net includes a $14 million impairment charge on certain property, plant and equipment and a $5 million loss associated with the increase in the fair value of the contingent consideration accrual associated with previous acquisitions, partially offset by a $10 million gain from a payroll tax credit under the CARES Act associated with the retention of employees.

For the year ended December 31, 2023, amortization expense was $12 million lower than the prior year primarily due to the prior year including an adjustment to the useful life of a customer-related intangible asset.

Other Operating Expense, Net

Other operating expense, net includes miscellaneous income and expense items and other charges related to operating activities.

For the year ended December 31, 2023, other operating expense, net principally includes a $29 million impairment charge on certain long-lived assets related to the shutdown of a business and, to a lesser extent, an $11 million loss associated with the increase in the fair value of the contingent consideration accrual associated with previous acquisitions.

For the year ended December 31, 2022, other operating expense, net includes a $14 million impairment charge on certain property, plant and equipment and a $5 million loss associated with the increase in the fair value of the contingent consideration accrual associated with previous acquisitions, partially offset by a $10 million gain from a payroll tax credit under the CARES Act associated with the retention of employees.

Interest Expense, Net

Interest expense, net decreased by $13 million for the year ended December 31, 2022 compared to the prior year, primarily due to increased interest income resulting from the impact of rising interest rates on our cash and cash equivalents.

Other (Expense) Income, Net

Other income, net represents miscellaneous income and expense items related to non-operating activities, such as gains and losses associated with investments and other non-operating assets.

For the year ended December 31, 2022, other (expense) income, net included $30 million of losses associated with changes in the carrying value of our strategic investments and $25 million of losses associated with investments in our deferred compensation plans.

For the year ended December 31, 2021, other (expense) income, net included a $314 million pre-tax gain on the sale of our 40% ownership interest in Q 2 Solutions, our clinical trials central laboratory services joint venture, to IQVIA, our joint venture partner (see Note 7 to the audited consolidated financial statements), $39 million in gains associated with changes in the carrying value of our strategic investments, and $17 million in gains associated with investments in our deferred compensation plans.

Interest expense, net increased by $14 million for the year ended December 31, 2023 compared to the prior year, primarily due to increased borrowings associated with the issuance of the 2033 Senior Notes (see "2023 Highlights" above) and our secured receivables credit facility.

Other Income (Expense), Net

Other income (expense), net represents miscellaneous income and expense items related to non-operating activities, such as gains and losses associated with investments and other non-operating assets.

For the year ended December 31, 2023, other income (expense), net included $20 million of gains associated with investments in our deferred compensation plans.

For the year ended December 31, 2022, other income (expense), net included $30 million of losses associated with changes in the carrying value of our strategic investments and $25 million of losses associated with investments in our deferred compensation plans.

Income Tax Expense

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The year ended December 31, 2022 includes an $18 million income tax benefit due to a cumulative adjustment to state deferred tax liabilities related to depreciation expense, which impacted the effective income tax rate by 1.5%.

The effective income tax rate for the year ended December 31, 2021 benefited from a lower effective income tax rate, 17.6%, on the gain on the sale of our 40% ownership interest in Q 2 Solutions.

In addition, the effective income tax rates benefited from $11 million and $14 million of excess tax benefits associated with stock-based compensation arrangements for the years ended December 31, 2023 and 2022, respectively.

Equity in Earnings of Equity Method Investees, Net of Taxes

For the year ended December 31, 2022, there was a $34 million decrease in equity in earnings of equity method investees, net of taxes, compared to the prior year primarily due to $21 million of lower equity earnings in the current year period associated with changes in the carrying value of strategic investments of an equity method investee and lower demand for COVID-19 testing services at our diagnostic information services joint venture, partially offset by a non-cash impairment to the carrying value of an equity method investment of $8 million in the prior year period.

For the year ended December 31, 2023, there was a $18 million decrease in equity in earnings of equity method investees, net of taxes, compared to the prior year primarily due to lower demand for COVID-19 testing services at our diagnostic information services joint venture.

Quantitative and Qualitative Disclosures About Market Risk

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As of December 31, 2023 and 2022, the fair value of our debt was estimated at approximately $4.6 billion and $3.7 billion, respectively, principally using quoted prices in active markets and yields for the same or similar types of borrowings, taking into account the underlying terms of the debt instruments.

As of December 31, 2022 and 2021, the estimated fair value (was less than) exceeded the carrying value of the debt by $(318) million and $403 million, respectively.

As of December 31, 2023 and 2022, the estimated fair value was less than the carrying value of the debt by $127 million and $318 million, respectively.

A hypothetical 10% increase in interest rates (representing 50 basis points as of December 31, 2023 and 51 basis points as of December 31, 2022) would potentially reduce the estimated fair value of our debt by approximately $139 million and $120 million as of December 31, 2023 and 2022, respectively.

Borrowings under our secured receivables credit facility and our senior unsecured revolving credit facility are subject to variable interest rates.

Interest on our secured receivables credit facility is based on either commercial paper rates for highly-rated issuers or the Term Secured Overnight Financing Rate ("Term SOFR"), plus a spread.

Interest on our secured receivables credit facility is based on either commercial paper rates for highly rated issuers or the adjusted Term Secured Overnight Financing Rate ("Term SOFR"), plus a spread.

Interest on our senior unsecured revolving credit facility is based on certain published rates plus an applicable margin based on changes in our public debt ratings.

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As of December 31, 2023, the borrowing rates under these debt instruments were:

for our secured receivables credit facility, commercial paper rates for highly-rated issuers or the Term SOFR, plus a spread of 0.725 % to 0.80 %;

and for our senior unsecured revolving credit facility, London Interbank Offered Rate ("LIBOR"), plus 1.00 %.

for our secured receivables credit facility, commercial paper rates for highly rated issuers or the adjusted Term SOFR, plus a spread of 0.80%;

and for our senior unsecured revolving credit facility, the adjusted Term SOFR, plus 1.00%.

As of December 31, 2023, there were no borrowings outstanding under either our $525 million secured receivables credit facility or our $750 million senior unsecured revolving credit facility.

During the fourth quarter of 2023, we entered into forward-starting interest rate swap agreements with several financial institutions for a total notional amount of $500 million.

The agreements were entered into to hedge a portion of our interest rate exposure associated with variability in future cash flows attributable to changes in interest rates over a ten-year period related to an anticipated issuance of debt and were accounted for as cash flow hedges.

In connection with the issuance of the 2033 Senior Notes, these agreements were settled and we received $1 million.

These gains are deferred in stockholders' equity, net of taxes, as a component of accumulated other comprehensive loss, and amortized as an adjustment to interest expense, net over a ten-year period.

A hypothetical 10% change to the variable rate component of our variable rate indebtedness would not materially change our annual interest expense.

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Net cash provided by operating activities $ 1,272 $ 1,718 $ (446)

Net cash (used in) provided by investing activities (543) 21 (564)

Net cash used in financing activities (1,732) (2,540) 808

Net cash used in investing activities (1,061) (543) (518)

Net cash provided by (used in) financing activities 160 (1,732) 1,892

Net change in cash and cash equivalents and restricted cash $ 371 $ (557) $ 928

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• lower operating income in 2023 as compared to 2022;

partially offset by

• a $426 million decrease in income tax payments in 2022 as compared to 2021.

• a year-over-year change in the timing and extent of the collection of COVID-19 testing revenues.

Days sales outstanding ("DSO"), a measure of billing and collection efficiency, was 50 days as of December 31, 2023 and 47 days as of December 31, 2022.

Cash Flows from Investing Activities

Net cash used in investing activities for the year ended December 31, 2022 was $543 million, compared to net cash provided by investing activities of $21 million for the year ended December 31, 2021.

This $564 million change in cash (used in) provided by investing activities was primarily a result of $755 million of net cash proceeds received in 2021 from the sale of our 40% ownership interest in Q 2 Solutions, partially offset by a $187 million decrease in net cash paid for acquisitions.

Net cash used in investing activities for the years ended December 31, 2023 and 2022 was $1,061 million and $543 million, respectively.

The $518 million increase in net cash used in investing activities for the year ended December 31, 2023 compared to the prior year period was primarily a result of increased cash used for business acquisitions (see "2023 Highlights" for further discussion).

Cash Flows from Financing Activities

Net cash used in financing activities for the year ended December 31, 2022 was $1,732 million, compared to $2,540 million for the year ended December 31, 2021.

This $808 million decrease in cash used in financing activities was primarily a result of:

• a $791 million decrease in repurchases of our common stock (see "Share Repurchases" for further details);

and, to a lesser extent,

• a $26 million decrease in distributions to noncontrolling interest partners.

During the years ended December 31, 2022 and 2021, there were no borrowings or repayments under our secured receivables credit facility or our senior unsecured revolving credit facility.

Net cash provided by (used in) financing activities for the year ended December 31, 2023 was $160 million, compared to $(1,732) million for the year ended December 31, 2022.

The $1,892 million change in net cash provided by (used in) financing activities was primarily a result of a $1,133 million decrease in share repurchases and, to a lesser extent, 2023 including $750 million of proceeds from the issuance of the 2033 Senior Notes (see "2023 Highlights" for further discussion).

During the year ended December 31, 2023, we borrowed $1.7 billion under our secured receivables credit facility, which was repaid prior to December 31, 2023.

Additionally, during the year ended December 31, 2023, we borrowed $125 million under our senior unsecured revolving credit facility, which was repaid prior to December 31, 2023.

During the year ended December 31, 2022, there were no borrowings or repayments under our secured receivables credit facility or our senior unsecured revolving credit facility.

For details regarding our debt and related transactions, see Note 14 to the audited consolidated financial statements.

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As of December 31, 2023, $1.0 billion remained available under our share repurchase authorization.

In February 2023, we announced that our Board of Directors authorized us to repurchase an additional $1 billion of our common stock.

The share repurchase authorization has no set expiration or termination date.

For the year ended December 31, 2023, we repurchased 2.0 million shares of our common stock for $276 million.

For the year ended December 31, 2022, we repurchased 10.1 million shares of our common stock for $1.4 billion.

For the year ended December 31, 2021, we repurchased 16.0 million shares of our common stock for $2.2 billion, including 10.7 million shares repurchased under ASRs.

For further details regarding our share repurchases, see Note 17 to the audited consolidated financial statements.

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We estimate that we will invest approximately $420 million during 2024 for capital expenditures to support and grow our existing operations, principally related to investments in laboratory equipment and facilities, including laboratory automations and information technology to support our diagnostic offerings.

During October 2023, we amended our secured receivables credit facility.

Subsequent to the amendment, the entire $525 million facility can be used for borrowings.

Additionally, we can choose to utilize up to $150 million of such capacity to issue letters of credit (see Note 19).

Issued letters of credit reduce the available borrowing capacity under the facility.

Further, the amended facility includes an additional $75 million uncommitted accordion which, if utilized, brings the total capacity under the facility to $600 million.

The amendment extended the maturity of the entire facility to October 2025.

Subsequent to the amendment, interest on borrowings under the facility will be based on either commercial paper rates for highly-rated issuers or adjusted Term SOFR, plus a spread of 0.80%.

For further details regarding our credit facilities, see Note 14 to the audited consolidated financial statements.

As of December 31, 2023, we had $1.2 billion of borrowing capacity available under our existing credit facilities, including $453 million available under our secured receivables credit facility and $750 million available under our senior unsecured revolving credit facility.

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In support of our risk management program, $72 million in letters of credit under the secured receivables credit facility were outstanding as of December 31, 2023.

During October 2022, we amended our secured receivables credit facility and decreased the aggregate borrowing capacity under the secured receivables credit facility to $525 million.

The amended secured receivables credit facility includes a $425 million loan commitment, half of which matures in October 2023 and half of which matures in October 2024.

Additionally, the amended secured receivables credit facility includes a $100 million letter of credit facility which matures in October 2024.

The senior unsecured revolving credit facility matures in November 2026.

For further details regarding our credit facilities, see Note 14 to the audited consolidated financial statements.

Our secured receivables credit facility is subject to customary affirmative and negative covenants, and certain financial covenants with respect to the receivables that comprise the borrowing base and secure the borrowings under the facility.

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As of December 31, 2023, we were in compliance with all such applicable financial covenants.

We have assessed the impact of the cessation of LIBOR and have identified and evaluated financial instruments and other contracts that refer to LIBOR.

Our underlying exposure to LIBOR includes our senior unsecured revolving credit facility (see discussion above) under which we had no outstanding borrowings as of December 31, 2022.

We expect to be able to transition all LIBOR based instruments and contracts to an alternative reference rate on or before the cessation of LIBOR and we do not believe that the cessation of LIBOR, or its replacement with an alternative reference rate or rates, will have a material impact on us.

We believe that our cash and cash equivalents and cash from operations, together with our borrowing capacity under our credit facilities, will provide sufficient financial flexibility to fund seasonal and other working capital requirements, capital expenditures, debt service requirements and other obligations, cash dividends on common shares, share repurchases and additional growth opportunities for the foreseeable future.

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Treasury stock, at cost;

51 and 43 shares as of December 31, 2022 and 2021, respectively

51 shares as of both December 31, 2023 and 2022

( 4,826 ) ( 4,673 )

19 unchanged sentences

Interest expense, net ( 152 ) ( 138 ) ( 151 )

Other (expense) income, net ( 55 ) 369 76

Other income (expense), net 20 ( 55 ) 369

Total non-operating (expense) income, net ( 132 ) ( 193 ) 218

18 unchanged sentences

Net change in available-for-sale debt securities, net of taxes — — ( 7 )

Net deferred gain on cash flow hedges, net of taxes 1 1 3

Other comprehensive (loss) income ( 7 ) 7 18

Net deferred gains on cash flow hedges, net of taxes 2 1 1

Other comprehensive income (loss) 7 ( 7 ) 7

Comprehensive income 915 1,008 2,087

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Provision for credit losses 1 3 4

Deferred income tax provision (benefit) 1 ( 57 ) 85

Deferred income tax (benefit) provision ( 49 ) 1 ( 57 )

Stock-based compensation expense 77 77 79

5 unchanged sentences

Income taxes payable ( 2 ) ( 31 ) ( 20 )

Termination of interest rate swap agreements — — 40

Other assets and liabilities, net ( 73 ) 53 ( 9 )

4 unchanged sentences

Capital expenditures ( 408 ) ( 404 ) ( 403 )

Decrease (increase) in investments and other assets, net 5 — ( 24 )

(Increase) decrease in investments and other assets, net ( 42 ) 5 —

Net cash (used in) provided by investing activities ( 1,061 ) ( 543 ) 21

9 unchanged sentences

Other financing activities, net 14 ( 39 ) ( 38 )

Net cash used in financing activities ( 1,732 ) ( 2,540 ) ( 1,267 )

Net cash provided by (used in) financing activities 160 ( 1,732 ) ( 2,540 )

Net change in cash and cash equivalents and restricted cash 371 ( 557 ) ( 286 )

26 unchanged sentences

( 10 ) ( 12 ) ( 22 )

Purchases of treasury stock ( 3 ) ( 325 ) ( 325 )

Purchase of treasury stock ( 16 ) ( 2,222 ) ( 2,222 )

Retirement of treasury stock ( 649 ) ( 3,342 ) 3,991 —

Balance, December 31, 2021 119 $ 2 $ 2,260 $ 7,649 $ ( 14 ) $ ( 3,453 ) $ 39 $ 6,483 $ 79

Net income 946 62 1,008 7

Other comprehensive income, net of tax 7 7

Other comprehensive loss, net of tax ( 7 ) ( 7 )

Dividends declared ( 305 ) ( 305 )

2 unchanged sentences

Issuance of common stock under benefit plans

1 ( 36 ) 64 28

Stock-based compensation expense

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Purchases of treasury stock ( 10 ) ( 1,385 ) ( 1,385 )

Retirement of treasury stock ( 649 ) ( 3,342 ) 3,991 —

Balance, December 31, 2022 111 $ 2 $ 2,295 $ 8,290 $ ( 21 ) $ ( 4,673 ) $ 37 $ 5,930 $ 77

946 62 1,008 7

Other comprehensive loss, net of tax ( 7 ) ( 7 )

Other comprehensive income, net of tax 7 7

Dividends declared

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Exercise of stock options

1 ( 3 ) 75 72

Shares to cover employee payroll tax withholdings on stock issued under stock-based compensation plans

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DESCRIPTION OF BUSINESS

Quest Diagnostics Incorporated and its subsidiaries ("Quest Diagnostics" or the "Company") empower people to take action to improve health outcomes.

The Company uses its extensive database of clinical lab results to derive diagnostic insights that reveal new avenues to identify and treat disease, inspire healthy behaviors and improve healthcare management.

The Company's diagnostic information services business ("DIS") provides information and insights based on an industry-leading menu of routine, non-routine and advanced clinical testing and anatomic pathology testing, and other diagnostic information services.

The Company provides services to a broad range of customers, including patients, clinicians, hospitals, independent delivery networks ("IDNs"), health plans, employers, consumers, and accountable care organizations ("ACOs").

The Company offers the broadest access in the United States to diagnostic information services through its nationwide network of laboratories, patient service centers and phlebotomists in physician offices and the Company's connectivity resources, including call centers and mobile paramedics, nurses and other health and wellness professionals.

The Company is the world's leading provider of diagnostic information services.

The Company provides interpretive consultation with one of the largest medical and scientific staffs in the industry.

The Company's Diagnostic Solutions businesses ("DS") are the leading provider of risk assessment services for the life insurance industry and offer healthcare organizations and clinicians robust information technology solutions.

Quest Diagnostics Incorporated and its subsidiaries ("Quest Diagnostics" or the "Company") work across the healthcare ecosystem to create a healthier world, one life at a time.

The Company's diagnostic information services ("DIS") business provides diagnostic insights from the results of its laboratory testing to empower people, physicians, and organizations to take action to improve health outcomes.

Derived from one of the world's largest databases of de-identifiable clinical lab results, the diagnostic insights reveal new avenues to identify and treat disease, inspire healthy behaviors and improve healthcare management.

In the right hands and with the right context, the diagnostic insights can inspire actions that transform lives and create a healthier world.

The Company provides services to a broad range of customers within its primary customer channels - physicians (including those associated with accountable care organizations ("ACOs") and Federally Qualified Health Centers ("FQHCs")), hospitals, and patients and consumers.

Other customers include health plans, employers, emerging retail healthcare providers, government agencies, pharmaceutical companies and other commercial clinical laboratories.

The Company offers broad access to clinical testing through a nationwide network of laboratories, patient service centers, phlebotomists in physician offices, and connectivity resources, including call centers and mobile phlebotomists, nurses and other health and wellness professionals.

The Company's 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 the Company's tests and test results, and help them best utilize Quest Diagnostics' services to improve outcomes and enhance satisfaction.

The Company's Diagnostic Solutions ("DS") group, which represents the balance of the Company's consolidated net revenues, includes the Company's risk assessment services business, which offers solutions for insurers, and the Company's healthcare information technology businesses, which offer solutions for healthcare providers and payers.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Income attributable to the minority interest in the Company's majority owned and controlled consolidated subsidiaries is recorded as net income attributable to noncontrolling interests in the consolidated statements of operations and the noncontrolling interest is reflected as a separate component of consolidated stockholders' equity in the consolidated balance sheet.

Reclassifications

Certain amounts in the prior period financial statements have been reclassified to conform to the presentation of the current period financial statements.

Equity Method Investments

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While the Company has receivables due from federal and state governmental agencies, the Company does not believe that such receivables represent a credit risk since the related healthcare programs are funded by federal and state governments, and payment is primarily dependent on submitting appropriate documentation timely.

As of both December 31, 2022 and 2021, receivables due from government payers under the Medicare and Medicaid programs represented approximately 6 % of the Company's consolidated net accounts receivable.

As of December 31, 2023 and 2022, receivables due from government payers under the Medicare and Medicaid programs represented approximately 7 % and 6 %, respectively, of the Company's consolidated net accounts receivable.

The portion of the Company's accounts receivable due from patients comprises the largest portion of credit risk.

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Capitalized interest is added to the cost of the underlying assets and is amortized over the expected useful lives of the assets.

Depreciation and amortization are provided on the straight-line method over expected useful asset lives as of December 31, 2022 as follows:

Depreciation and amortization are principally provided on the straight-line method over expected useful asset lives as of December 31, 2023 as follows:

• buildings and improvements, ranging up to thirty-one and a half years;

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The Company performs its annual impairment test during the fourth quarter of the fiscal year.

For the years ended December 31, 2022 and 2021, the Company performed a qualitative impairment test for its DIS reporting unit and, based on the totality of information available, the Company concluded that it was more-likely-than-not that the estimated fair value of its DIS reporting unit was greater than the carrying value of the reporting unit and, as such, no further analysis was required.

For the year ended December 31, 2022, the Company updated the fair value calculation of its risk assessment services reporting unit, performed the quantitative impairment test and concluded that goodwill for the reporting unit was not impaired.

For the year ended December 31, 2021, the Company performed a qualitative impairment test for its risk assessment reporting unit and, based on the totality of information available, the Company concluded that it was more-likely-than-not that the estimated fair value of the reporting unit was greater than the carrying value of the reporting unit and, as such, no further analysis was required.

For the year ended December 31, 2023, in accordance with its policy to perform the quantitative test on a periodic basis, the Company updated the fair value calculation of its reporting units, performed the quantitative impairment test and concluded that goodwill was no t impaired.

For the year ended December 31, 2022, the Company performed a qualitative impairment test for its DIS reporting unit and, based on the totality of information available, the Company concluded that it was more-likely-than-not that the estimated fair value of its DIS reporting unit was greater than the carrying value of the reporting unit and, as such, no further analysis was required.

Intangible Assets

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The indefinite-lived intangible asset impairment test is performed at least annually, or more frequently in the case of other events that indicate a potential impairment.

Based upon the Company’s most recent annual impairment tests completed during the fourth quarters of the years ended December 31, 2022 and 2021, the Company concluded that indefinite-lived intangible assets were not impaired.

Based upon the Company’s most recent annual impairment tests completed during the fourth quarter of the years ended December 31, 2023 and 2022, the Company concluded that indefinite-lived intangible assets were not impaired.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

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If these cash flows are less than the carrying amount of such asset, an impairment loss is recognized for the difference between the estimated fair value and carrying amount of the asset.

During the fourth quarter of the year ended December 31, 2023, the Company recorded a $ 29 million impairment charge on certain long-lived assets related to the shutdown of a business.

See Note 5 for further discussion.

The Company's investments (except for those accounted for under the equity method of accounting) include:

• Equity investments with readily determinable fair values, including investments comprised mostly of strategic holdings in companies concentrated in the life sciences and healthcare industries (such investments, which previously did not have readily determinable fair values, became publicly-traded during the year ended December 31, 2021);

• Equity investments with readily determinable fair values, including investments comprised mostly of strategic holdings in companies concentrated in the life sciences and healthcare industries;

as well as participant-directed investments of deferred employee compensation and related Company matching contributions held in trusts pursuant to the Company's supplemental deferred compensation plans (see Note 18).

These investments are measured at fair value with both realized and unrealized gains and losses recorded in current earnings within other (expense) income, net in the consolidated statements of operations.

For the years ended December 31, 2022, 2021 and 2020, (losses)/gains from all equity investments with readily determinable fair values totaled $( 55 ) million, $ 56 million, and $ 8 million, respectively.

These investments are measured at fair value with both realized and unrealized gains and losses recorded in current earnings within other income (expense), net in the consolidated statements of operations.

For the years ended December 31, 2023, 2022 and 2021, gains/(losses) from all equity investments with readily determinable fair values totaled $ 20 million, $( 55 ) million, and $ 56 million, respectively.

See Note 8 for a discussion of the fair value of such investments.

• Equity investments that do not have readily determinable fair values, which consist of investments in preferred and common shares of privately held companies.

• Equity investments that do not have readily determinable fair values consist of investments in preferred and common shares of privately held companies.

These investments are measured at cost minus impairment, if any, plus or minus changes resulting from observable price changes.

1 unchanged sentence

no impairment charges were recognized related to these investments for the years ended December 31, 2023, 2022 and 2021.

The carrying value of these investments was $ 4 million at both December 31, 2022 and 2021.

The carrying value of these investments was $ 18 million and $ 4 million as of December 31, 2023 and 2022, respectively.

Such amounts were included in other assets in the consolidated balance sheet.

• Available-for-sale debt securities of privately-held companies.

These investments are measured at fair value with unrealized gains and losses presented in other comprehensive (loss) income.

The carrying amount of these investments was $ 2 million and $ 1 million at December 31, 2022 and 2021, respectively.

These investments are measured at fair value with unrealized gains and losses presented in other comprehensive income (loss).

The carrying amount of these investments was $ 2 million as of both December 31, 2023 and 2022.

See Note 8 for a discussion of the fair value of such investments.

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Net settlements between the counterparties are recognized as an adjustment to interest expense, net.

The Company accounts for these derivatives as either an asset or liability measured at its fair value.

The fair value is based upon model-derived valuations in which all significant inputs are observable in active markets including certain financial

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

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(in millions unless otherwise indicated)

information and certain assumptions regarding past, present and future market conditions.

For a derivative instrument that has been formally designated as a fair value hedge, fair value gains or losses on the derivative instrument along with offsetting fair value gains or losses on the hedged item that are attributable to the risk being hedged are reported in other (expense) income, net in the consolidated statements of operations.

The Company accounts for these derivatives as either an asset or liability measured at its fair value.

The fair value is based upon model-derived valuations in which all significant inputs are observable in active markets including certain financial information and certain assumptions regarding past, present and future market conditions.

For a derivative instrument that has been formally designated as a fair value hedge, fair value gains or losses on the derivative instrument along with offsetting fair value gains or losses on the hedged item that are attributable to the risk being hedged are reported in other income (expense), net in the consolidated statements of operations.

For derivatives that have been formally designated as a cash flow hedge, the change in the fair value of the derivatives is recorded in accumulated other comprehensive loss.

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New Accounting Standards

New Accounting Standards To Be Adopted

In March 2020, the Financial Accounting Standards Board ("FASB") issued a new accounting standard which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform due to the risk of cessation of the London Interbank Offered Rate ("LIBOR").

The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform.

The pronouncement was effective immediately and, due to an accounting standards update which the FASB issued in December 2022, can be applied to contract modifications through December 31, 2024.

To the extent that, prior to December 31, 2024, the Company enters into any contract modifications for which the optional expedients are applied, the adoption of this standard is not expected to have a material impact on the Company’s consolidated results of operations, financial position or cash flows.

In March 2020, the Financial Accounting Standards Board ("FASB") issued a new accounting standard which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform due to the cessation of the London Interbank Offered Rate ("LIBOR").

The amendments apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate which was discontinued because of reference rate reform.

The pronouncement was effective immediately and, due to an accounting update which the FASB issued in December 2022, can be applied to contract modifications through December 31, 2024.

The adoption of this standard did not have a material impact on the Company’s consolidated results of operations, financial position or cash flows.

In November 2023, the FASB issued a new accounting standard which will require companies to disclose significant segment expenses that are regularly provided to the chief operating decision maker ("CODM").

The pronouncement is effective for annual filings for the year ended December 31, 2024.

The Company does not expect the adoption of this standard to have a material impact on its results of operations, financial position or cash flows.

In December 2023, the FASB issued a new accounting standard which will require companies to make additional income tax disclosures.

The pronouncement is effective for annual filings for the year ended December 31, 2025.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

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(in millions unless otherwise indicated)

Company does not expect the adoption of this standard to have a material impact on its results of operations, financial position or cash flows.

REVENUE RECOGNITION

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The DIS business, which provides clinical testing services and other services, satisfies its performance obligation and recognizes revenues primarily upon completion of the testing process (when results are reported) or when services have been rendered.

The Company estimates the amount of consideration it expects to be entitled to receive from customer groups in exchange for providing services using the portfolio approach.

The Company estimates the amount of consideration it expects to be entitled to receive from payer customer groups in exchange for providing services using the portfolio approach.

These estimates include the impact of contractual allowances (including payer denials), and patient price concessions, as discussed below.

The portfolios determined using the portfolio approach consist of the following groups of customers:

The portfolios determined using the portfolio approach consist of the following groups of payer customers:

healthcare insurers, government payers (Medicare and Medicaid programs), client payers and patients.

Contracts with customers in the DIS business do not contain significant financing components based on the typical period of time between performance of services and collection of consideration.

Contracts in the DIS business do not contain significant financing components based on the typical period of time between performance of services and collection of consideration.

The process for estimating revenues and the ultimate collection of accounts receivable involves significant judgment and estimation.

2 unchanged sentences

The following are descriptions of the DIS business’ portfolios:

Healthcare Insurers

Healthcare Insurers/Health Plans

Reimbursements from healthcare insurers are based on negotiated fee-for-service schedules and on capitated payment rates.

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Client Payers

Credit risk and ability to pay are more of a consideration for these payers than healthcare insurers and government payers.

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(in millions unless otherwise indicated)

The approximate percentage of net revenues by type of customer was as follows:

The approximate percentage of net revenues by type of payer customer was as follows:

Year Ended December 31,

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For the years ended December 31, 2023, 2022 and 2021, substantially all of the Company’s services were provided within the United States, see Note 20.

The approximate percentage of net accounts receivable by type of customer as of December 31, 2022 and 2021 was as follows:

The approximate percentage of net accounts receivable by type of payer customer as of December 31, 2023 and 2022 was as follows:

Healthcare insurers 24 % 28 %

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EARNINGS PER SHARE

The computation of basic and diluted earnings per common share is as follows (in millions, except per share data):

The computation of basic and diluted earnings per common share for the years ended December 31, 2023, 2022 and 2021 is as follows (in millions, except per share data):

2023 2022 2021

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Diluted $ 7.49 $ 7.97 $ 15.55

The following securities were not included in the calculation of diluted earnings per share due to their antidilutive effect:

2022 2021 2020

Stock options and performance share units — — 1

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

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(in millions unless otherwise indicated)

RESTRUCTURING ACTIVITIES

RESTRUCTURING ACTIVITIES AND IMPAIRMENT CHARGES

Invigorate Program

The Company is committed to a program called Invigorate which is designed to reduce its cost structure and improve performance.

Invigorate consists of several flagship programs, with structured plans in each, to drive savings and improve performance across the customer value chain.

These flagship programs include:

organization excellence;

information technology excellence;

procurement excellence;

field and customer service excellence;

lab excellence;

and revenue services excellence.

In addition to these programs, the Company identified key themes to change how it operates including reducing denials and patient price concessions;

further digitizing the business;

standardization;

optimization and selecting and retaining talent.

The Invigorate program is intended to offset reimbursement pressures and labor and benefit cost increases;

free up additional resources to invest in innovation and other growth initiatives;

and enable the Company to improve service quality and operating profitability.

Restructuring Charges

The following table provides a summary of the Company's pre-tax restructuring charges for the years ended December 31, 2022, 2021 and 2020:

The Company is engaged in a multi-year program called Invigorate, which includes structured plans to drive savings and improve productivity across the value chain, including in such areas as patient services, logistics and laboratory operations, revenue services, information technology and procurement.

The Invigorate program aims to deliver 3 % annual cost savings and productivity improvements to partially offset pressures from the current inflationary environment, including labor and benefit cost increases and reimbursement pressures.

The Company is leveraging automation and artificial intelligence to improve productivity and also improve quality across the entire value chain, not just in the laboratory.

Other areas of focus include reducing denials and patient concessions, enhancing the digital experience, and selecting and retaining talent.

Restructuring and Impairment Charges

The following table provides a summary of the Company's pre-tax restructuring and impairment charges for the years ended December 31, 2023, 2022 and 2021:

2023 2022 2021

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Asset impairment charges 29 14 —

Total restructuring charges $ 69 $ 12 $ 14

The restructuring charges incurred for the years ended December 31, 2022, 2021 and 2020 were primarily associated with various workforce reduction initiatives as the Company continued to restructure its organization.

Additionally, during the year ended December 31, 2022, the Company fully impaired certain property, plant and equipment (see Note 8).

Of the total restructuring charges incurred during the year ended December 31, 2022, $ 19 million, $ 36 million and $ 14 million were recorded in cost of services, selling, general and administrative expenses and other operating expense (income), net, respectively.

Of the total restructuring charges incurred during the year ended December 31, 2021, $ 8 million and $ 4 million were recorded in cost of services and selling, general and administrative expenses, respectively.

Total restructuring and impairment charges $ 54 $ 69 $ 12

The restructuring charges incurred for the years ended December 31, 2023, 2022 and 2021 were partially associated with various workforce reduction initiatives as the Company continued to restructure its organization.

Additionally, during the year ended December 31, 2023, the Company recorded an impairment charge on certain long-lived assets related to the shutdown of a business and, during the year ended December 31, 2022, the Company recorded an impairment charge on certain property, plant and equipment.

Of the total restructuring and impairment charges incurred during the year ended December 31, 2023, $ 13 million, $ 12 million and $ 29 million were recorded in cost of services, selling, general and administrative expenses and other operating expense (income), net, respectively.

Of the total restructuring and impairment charges incurred during the year ended December 31, 2022, $ 19 million, $ 36 million and $ 14 million were recorded in cost of services, selling, general and administrative expenses and other operating expense (income), net, respectively.

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The following table summarizes the activity of the restructuring liability during 2023 and 2022, which is included in accrued expenses in Note 13:

Employee Separation Costs Facility-Related Costs Total

Employee Separation Costs

Balance, December 31, 2021

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Balance, December 31, 2023

$ 44 $ — $ 44

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

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2023 Acquisitions

During 2022, the Company completed acquisitions for an aggregate purchase price of $ 162 million, net of cash acquired, including the acquisition discussed below.

During 2023, the Company completed acquisitions for an aggregate purchase price of $ 699 million (including contingent consideration initially estimated at $ 88 million), net of cash acquired, including the acquisitions discussed below.

The acquisitions preliminarily resulted in goodwill of $ 511 million, of which $ 244 million is deductible for tax purposes.

The acquisitions also preliminarily resulted in $ 145 million of technology-related intangible assets and $ 63 million of customer-related intangible assets.

Acquisition of select assets of the laboratory services business of New York-Presbyterian

On April 17, 2023, the Company completed the acquisition of select assets of the laboratory services business of New York-Presbyterian, which serves providers and patients in New York, as well as the tri-state area and beyond, in an all-cash transaction for $ 275 million.

Based on the purchase price allocation, the assets acquired primarily consist of $ 222 million of tax-deductible goodwill and $ 53 million of customer-related intangible assets.

The intangible assets are being amortized over a useful life of 15 years.

Acquisition of Haystack Oncology, Inc.

On June 20, 2023, the Company acquired Haystack Oncology, Inc.

("Haystack"), an early-stage oncology company focused on minimal residual disease testing to aid in the detection of residual or recurring cancer and better inform therapy decisions.

The acquisition was an all-cash transaction for $ 392 million, net of $ 1 million of cash acquired, which consisted of cash consideration of $ 304 million and contingent consideration initially estimated at $ 88 million.

Under the contingent consideration obligation, the seller can receive up to $ 100 million of additional consideration dependent upon the achievement of certain revenue benchmarks through 2028 and up to an additional $ 50 million of consideration dependent upon the Company receiving reimbursement coverage from the Centers for Medicare and Medicaid Services ("CMS").

Based on the preliminary purchase price allocation, which may be revised as additional information becomes available during the measurement period, the assets acquired and liabilities assumed consist of $ 267 million of goodwill (none of which is tax-deductible), $ 145 million of technology-related intangible assets, $ 23 million of deferred income tax liabilities, $ 8 million of operating lease right-of-use assets and related operating lease liabilities, and $ 3 million of property, plant and equipment.

The intangible assets are being amortized over a useful life of 15 years.

For further details regarding the fair value of the Company's contingent consideration, see Note 8.

2022 Acquisitions

During 2022, the Company completed acquisitions for an aggregate purchase price of $ 162 million (including contingent consideration initially estimated at $ 18 million), net of cash acquired, including the acquisition discussed below.

The 2022 acquisitions resulted in goodwill of $ 121 million, of which $ 103 million is deductible for tax purposes.

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On February 1, 2022, the Company acquired Pack Health, LLC ("Pack Health"), a patient engagement company that helps individuals adopt healthier behaviors to improve outcomes, in an all cash transaction for $ 123 million, net of $ 4 million cash acquired, which consisted of cash consideration of $ 105 million and contingent consideration initially estimated at $ 18 million.

The contingent consideration arrangement was dependent upon the achievement of certain revenue benchmarks.

Based on the purchase price allocation, the assets acquired and liabilities assumed consist of $ 96 million of goodwill (of which $ 78 million was tax-deductible on the acquisition date), $ 30 million of intangible assets, $ 5 million of operating lease right-of-use assets, $ 5 million of operating lease liabilities and $( 3 ) million of working capital.

The intangible assets consist primarily of customer-related assets which are being amortized over a useful life of 15 years.

For further details regarding the fair value of the contingent consideration, see Note 8.

2021 Acquisitions

During 2021, the Company completed acquisitions for an aggregate purchase price of $ 346 million, net of cash acquired, including the acquisitions discussed below.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(in millions unless otherwise indicated)

During 2021, the Company completed acquisitions for an aggregate purchase price of $ 346 million (including contingent consideration initially estimated at $ 15 million), net of cash acquired, including the acquisitions discussed below.

The 2021 acquisitions resulted in goodwill of $ 236 million, of which $ 221 million is deductible for tax purposes.

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Acquisition of the outreach laboratory services business of Mercy Health

On June 1, 2021, the Company completed the acquisition of the outreach laboratory services business of Mercy Health ("Mercy Health"), which serves providers and patients in Arkansas, Kansas, Missouri and Oklahoma, in an all-cash transaction for $ 225 million.

On June 1, 2021, the Company completed the acquisition of the outreach laboratory services business of Mercy Health, which serves providers and patients in Arkansas, Kansas, Missouri and Oklahoma, in an all-cash transaction for $ 225 million.

Based on the purchase price allocation, the assets acquired primarily consist of $ 171 million of tax-deductible goodwill and $ 54 million of customer-related intangible assets.

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Acquisition of assets of Labtech Diagnostics, LLC

On December 13, 2021, the Company completed the acquisition of assets of Labtech Diagnostics, LLC ("Labtech"), an independent clinical diagnostic laboratory provider serving physicians and patients primarily in South Carolina, North Carolina, Florida and Georgia, in an all cash transaction for $ 95 million, which consisted of cash consideration of $ 80 million and contingent consideration estimated at $ 15 million.

The contingent consideration arrangement was dependent upon the achievement of certain testing volume benchmarks.

Based on the purchase price allocation, which was finalized during the three months ended March 31, 2022, the assets acquired and liabilities assumed consist of $ 48 million of goodwill (of which $ 33 million was tax deductible on the acquisition date), $ 44 million of intangible assets, $ 11 million of property, plant and equipment, $ 9 million of finance lease liabilities, $ 6 million of operating lease right-of-use assets, $ 6 million of operating lease liabilities, and $ 1 million of inventories.

Based on the purchase price allocation, the assets acquired and liabilities assumed consist of $ 48 million of goodwill (of which $ 33 million was tax deductible on the acquisition date), $ 44 million of intangible assets, $ 11 million of property, plant and equipment, $ 9 million of finance lease liabilities, $ 6 million of operating lease right-of-use assets, $ 6 million of operating lease liabilities, and $ 1 million of inventories.

The intangible assets consist primarily of customer-related assets which are being amortized over a useful life of 15 years.

For further details regarding the fair value of the contingent consideration, see Note 8.

2020 Acquisitions

During 2020, the Company completed acquisitions for an aggregate purchase price of $ 330 million, net of cash acquired, including the acquisitions discussed below.

The 2020 acquisitions resulted in goodwill of $ 247 million, of which $ 210 million is deductible for tax purposes.

These acquisitions also resulted in $ 146 million of intangible assets, principally comprised of customer-related and technology intangible assets.

Net revenues attributable to the 2020 acquisitions were $ 127 million for the year ended December 31, 2020.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(in millions unless otherwise indicated)

Acquisition of Blueprint Genetics Oy

On January 21, 2020, the Company completed the acquisition of Blueprint Genetics Oy ("Blueprint Genetics"), in an all cash transaction for $ 108 million, net of $ 3 million cash acquired.

Blueprint Genetics is a leading specialty genetic testing company with expertise in gene variant interpretation based on next generation sequencing and proprietary bioinformatics.

Through the acquisition, the Company acquired all of Blueprint Genetics' operations.

Based on the purchase price allocation, the assets acquired and liabilities assumed primarily consist of $ 66 million of tax-deductible goodwill, $ 43 million of intangible assets, and $ 2 million of property, plant and equipment and working capital.

The intangible assets primarily consist of technology and customer-related assets which are being amortized over a useful life of 10 years and 15 years, respectively.

Acquisition of the Outreach Laboratory Services Business of Memorial Hermann Health System

On April 6, 2020, the Company completed the acquisition of select assets which constitute substantially all of the operations of Memorial Hermann Diagnostic Laboratories, the outreach laboratory division of Memorial Hermann Health System ("Memorial Hermann"), in an all cash transaction for $ 120 million.

Memorial Hermann is a not-for-profit health system in Southeast Texas.

Based on the purchase price allocation, the assets acquired primarily consist of $ 93 million of tax-deductible goodwill and $ 27 million of customer-related intangible assets.

The intangible assets are being amortized over a useful life of 15 years.

Acquisition of the Remaining 56 % Interest in Mid America Clinical Laboratories, LLC

On August 1, 2020, the Company completed the acquisition of the remaining 56 % interest in Mid America Clinical Laboratories, LLC ("MACL") from its joint venture partners in an all cash transaction for $ 93 million, net of $ 18 million cash acquired.

MACL was the largest independent clinical laboratory provider in Indiana.

Prior to the acquisition, the Company accounted for its 44 % interest in MACL as an equity method investment, which was remeasured to its fair value of $ 87 million on the acquisition date, resulting in a gain of $ 70 million that was recognized in other (expense) income, net in the consolidated statements of operations.

The fair value of the previously held equity interest was determined using a discounted cash flow analysis that took into account, among other items, MACL's expected future cash flows, long-term growth rate ( 1.5 %), and a discount rate commensurate with economic risk ( 7.5 %).

Based on the purchase price allocation, the assets acquired and liabilities assumed consist of $ 84 million of goodwill (of which $ 47 million is tax-deductible), $ 74 million of intangible assets, $ 11 million of working capital and $ 11 million of property, plant and equipment.

The intangible assets consist of customer-related assets which are being amortized over a useful life of 15 years.

As a result of the acquisition, MACL became a wholly owned subsidiary of the Company.

General Information

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Prior to the transaction, the Company accounted for its minority interest as an equity method investment.

As a result of the transaction, during the year ended December 31, 2021, the Company recorded a $ 314 million pre-tax gain in other (expense) income, net in the consolidated statement of operations based on the difference between the net sales proceeds and the carrying value of the investment, including $ 20 million of cumulative translation losses which were previously recorded in accumulated other comprehensive loss.

During the year ended December 31, 2021, the Company also recorded $ 55 million

As a result of the transaction, during the year ended December 31, 2021, the Company recorded a $ 314 million pre-tax gain in other income (expense), net in the consolidated statement of operations based on the difference between the net sales proceeds and the carrying value of the investment, including $ 20 million of cumulative translation losses which were previously recorded in accumulated other comprehensive loss.

During the year ended December 31, 2021, the Company also recorded $ 55 million of income tax expense related to the gain, consisting of $ 127 million of current income tax expense, partially offset by $ 72 million of deferred income tax benefit.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

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(in millions unless otherwise indicated)

of income tax expense related to the gain, consisting of $ 127 million of current income tax expense, partially offset by $ 72 million of deferred income tax benefit.

FAIR VALUE MEASUREMENTS

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Cash surrender value of life insurance policies 46 — 46 —

Equity investments 44 44 — —

Available-for-sale debt securities 2 — — 2

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The deferred compensation liabilities are classified within Level 2 of the fair value hierarchy because their inputs are derived principally from observable market data by correlation to the trading securities.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(in millions unless otherwise indicated)

The Company offers certain employees the opportunity to participate in a non-qualified deferred compensation program.

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The Company purchases life insurance policies, with the Company named as beneficiary of the policies, for the purpose of funding the program's liability.

Changes in the cash surrender value of the life insurance policies are based upon earnings and changes in the value of the underlying investments.

Changes in the cash

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(in millions unless otherwise indicated)

surrender value of the life insurance policies are based upon earnings and changes in the value of the underlying investments.

Changes in the fair value of the deferred compensation obligation are derived using quoted prices in active markets based on the market price per unit multiplied by the number of units.

1 unchanged sentence

Deferrals under the plan currently may only be made by participants who made deferrals under the plan in 2017.

The Company's investment portfolio primarily includes equity investments comprised mostly of strategic holdings in companies concentrated in the life sciences and healthcare industries.

Equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) with readily determinable fair values are measured at fair value in prepaid expenses and other current assets in the Company's consolidated balance sheet.

Such equity investments are classified within Level 1 of the fair value hierarchy because the changes in the fair values of the securities are measured using quoted prices in active markets based on the market price per share multiplied by the number of shares held, exclusive of any transaction costs.

The Company's available-for-sale debt securities are measured at fair value using discounted cash flows.

2 unchanged sentences

The investments are recorded in other assets in the Company's consolidated balance sheet.

In connection with the acquisitions of Pack Health and Labtech (see Note 6), the Company has contingent consideration obligations, with a potential maximum aggregate payment of $ 40 million, that are to be paid based on the achievement of certain testing volume or revenue benchmarks.

Contingent consideration accruals are measured at fair value using either an option-pricing method or a Monte Carlo method and are classified within Level 3 of the fair value hierarchy as the fair value is determined based on significant inputs that are not observable.

Significant inputs include management’s estimate of volume or revenue and other market inputs, including comparable company revenue volatility ( 7.5 %) and a discount rate (ranging from 2.5 % to 3.0 %).

In connection with the acquisition of Haystack (see Note 6 for further discussion), there is a contingent consideration obligation under which the seller can receive up to $ 100 million of additional consideration dependent upon the achievement of certain revenue benchmarks through 2028 and up to an additional $ 50 million of consideration dependent upon the Company receiving reimbursement coverage from the CMS.

The portion of the contingent consideration obligation which is dependent upon the achievement of certain revenue benchmarks was measured at fair value using a Monte Carlo method and is classified within Level 3 of the fair value hierarchy as the fair value is determined based on significant inputs that are not observable.

Significant inputs include management’s estimate of revenue and other market inputs, including comparable company revenue volatility ( 40 %) and a discount rate ( 10.5 %).

The portion of the contingent consideration obligation which is dependent upon the Company receiving reimbursement coverage from the CMS is also classified within Level 3 of the fair value hierarchy as the fair value is principally determined based on management's estimate, which is a significant input that is not observable.

Additionally, the fair value of the entire contingent consideration obligation was also impacted by a market discount rate ( 5 %) which adjusted the estimated payments to present value.

Such discount rate decreased the initial aggregate fair value of the contingent consideration obligation by $ 21 million.

The fair value of the contingent consideration obligation is not overly sensitive to movements in the comparable company revenue volatility or the discount rate used for the portion of the obligation that is dependent upon the achievement of certain revenue benchmarks.

For example, changing the comparable company revenue volatility from 40 % to 30 % impacts the fair value by $ 7 million (assuming no other inputs are modified) and changing the discount rate from 10.5 % to 7.0 % impacts the fair value by $ 4 million (assuming no other inputs are modified).

Additionally, in connection with previous acquisitions, the Company had contingent consideration obligations based on the achievement of certain testing volume and revenue benchmarks during 2022.

The following table provides a reconciliation of the beginning and ending balances of liabilities using significant unobservable inputs (Level 3):

2 unchanged sentences

Purchases, additions and issuances 28

Settlements ( 15 )

Total fair value adjustments included in earnings - realized/unrealized 5

Balance, December 31, 2022 23

3 unchanged sentences

Balance, December 31, 2023 $ 104

The $ 5 million net loss included in earnings associated with the change in the fair value of contingent consideration for the year ended December 31, 2022 is reported in other operating expense (income), net.

In connection with the sale of an 18.9 % noncontrolling interest in a subsidiary to UMass Memorial Medical Center ("UMass") on July 1, 2015, the Company granted UMass the right to require the Company to purchase all of its interest in the subsidiary at fair value commencing July 1, 2020.

As of December 31, 2022, the redeemable noncontrolling interest was presented at its fair value.

The fair value measurement of the redeemable noncontrolling interest is classified within Level 3 of the fair value hierarchy because the fair value is based on a discounted cash flow analysis that takes into account, among other items, the joint venture's expected future cash flows, long-term growth rates, and a discount rate commensurate with economic risk.

The $ 11 million and $ 5 million net losses included in earnings associated with the changes in the fair value of contingent consideration obligation for the years ended December 31, 2023 and 2022, respectively, are reported in other operating expense (income), net.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

1 unchanged sentence

(in millions unless otherwise indicated)

During the year ended December 31, 2022, the Company recorded a $ 14 million impairment charge, which is included in other operating expense (income), net, in order to fully impair certain property, plant and equipment.

The fair value measurement was classified within Level 3 of the fair value hierarchy as it was based on significant inputs that are not observable, including cash flow projections.

Of the aggregate $ 104 million contingent consideration obligation as of December 31, 2023, $ 99 million and $ 5 million were included in other liabilities and accounts payable and accrued expenses, respectively, in the Company's consolidated balance sheet.

The entire $ 23 million contingent consideration obligation as of December 31, 2022 was included in accounts payable and accrued expenses in the Company's consolidated balance sheet.

As of December 31, 2023, the redeemable noncontrolling interest was presented at its fair value.

During the year ended December 31, 2023, the Company recorded a $ 29 million impairment charge on certain long-lived assets related to the shutdown of a business and, during the year ended December 31, 2022, the Company recorded a $ 14 million impairment charge on certain property, plant and equipment.

The fair value measurements were classified within Level 3 of the fair value hierarchy as they were based on significant inputs that are not observable, including cash flow projections.

The carrying amounts of cash and cash equivalents, accounts receivable and accounts payable and accrued expenses approximate fair value based on the short maturities of these instruments.

3 unchanged sentences

The Company's pre-tax income before equity in earnings of equity method investees consisted of approximately $ 1.1 billion, $ 1.2 billion and $ 2.5 billion from U.S.

operations and pre-tax income (loss) of $ 2 million, $ 148 million and $( 7 ) million from foreign operations for the years ended December 31, 2022, 2021 and 2020, respectively.

operations and pre-tax income of $ 7 million, $ 2 million and $ 148 million from foreign operations for the years ended December 31, 2023, 2022 and 2021, respectively.

The components of income tax expense (benefit) for 2023, 2022 and 2021 were as follows:

7 unchanged sentences

Total $ 248 $ 264 $ 597

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(in millions unless otherwise indicated)

A reconciliation of the federal statutory income tax rate to the Company's effective income tax rate for 2023, 2022 and 2021 was as follows:

8 unchanged sentences

Changes in reserves for uncertain tax positions 0.9 0.7 0.4

Change in valuation allowances associated with certain net operating losses — — 0.2

Income tax credits ( 1.2 ) ( 0.9 ) ( 0.4 )

Other, net 0.2 0.3 ( 0.4 )

1 unchanged sentence

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets (liabilities) as of December 31, 2023 and 2022 were as follows:

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(in millions unless otherwise indicated)

Non-current deferred tax assets (liabilities):

11 unchanged sentences

Estimated net operating loss carryforwards for foreign income tax purposes are $ 77 million as of December 31, 2023, some of which can be carried forward indefinitely while others expire at various dates through 2033.

As of December 31, 2023, the Company had capital loss carryforwards of $ 17 million.

As of December 31, 2023 and 2022, deferred tax assets associated with net operating loss carryforwards of $ 79 million and $ 77 million, respectively, have each been reduced by valuation allowances of $ 31 million and $ 28 million, respectively.

1 unchanged sentence

Prepaid income taxes were $ 48 million and $ 26 million as of December 31, 2023 and 2022, respectively, and were recorded in prepaid expenses and other current assets in the consolidated balance sheet.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(in millions unless otherwise indicated)

The total amount of unrecognized tax benefits as of and for the years ended December 31, 2023, 2022 and 2021 consisted of the following:

10 unchanged sentences

Based upon the expiration of statutes of limitations, settlements and/or the conclusion of tax examinations, the Company believes it is reasonably possible that the total amount of unrecognized tax benefits may decrease by up to $ 12 million within the next twelve months.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(in millions unless otherwise indicated)

Accruals for interest expense on contingent tax liabilities are classified in income tax expense in the consolidated statements of operations.

42 unchanged sentences

Leased assets obtained in exchange for new operating lease liabilities $ 181 $ 154 $ 150

During the year ended December 31, 2022, the Company amended a real estate lease and, based on the updated terms, the classification of the lease changed from a finance lease to an operating lease.

As a result, the Company recorded a $ 31 million operating lease right-of-use asset.

During the years ended December 31, 2023, 2022 and 2021, costs associated with donations, contributions, and other financial support through Quest for Health Equity, the Company's initiative with the Quest Diagnostics Foundation to reduce health disparities in underserved communities, were $ — million , $ 93 million and $ 16 million, respectively.

21 unchanged sentences

Principally all of the Company’s goodwill as of December 31, 2023 and 2022 was associated with its DIS business.

For the year ended December 31, 2023, goodwill acquired was principally associated with the acquisitions of Haystack and select assets of the laboratory services business of New York-Presbyterian (see Note 6).

For the year ended December 31, 2023, adjustments to goodwill related to foreign currency translation.

For the year ended December 31, 2022, goodwill acquired was principally associated with the acquisition of Pack Health (see Note 6).

For the year ended December 31, 2022, adjustments to goodwill related to an adjustment of the purchase price allocation for Labtech, partially offset by foreign currency translation.

For the year ended December 31, 2021, goodwill acquired was principally associated with the acquisitions of the assets of the outreach laboratory business of Mercy Health and the assets of Labtech (see Note 6).

For the year ended December 31, 2021, adjustments to goodwill related to foreign currency translation.

Intangible assets as of December 31, 2023 and 2022 consisted of the following:

8 unchanged sentences

Customer-related 17 $ 1,656 $ ( 924 ) $ 732 $ 1,623 $ ( 832 ) $ 791

Non-compete agreements 10 3 ( 3 ) — 3 ( 2 ) 1

Technology 15 284 ( 90 ) 194 138 ( 81 ) 57

6 unchanged sentences

$ 2,290 $ ( 1,124 ) $ 1,166 $ 2,111 $ ( 1,019 ) $ 1,092

During the fourth quarter of the year ended December 31, 2023, the Company recorded a $ 29 million impairment charge on certain long-lived assets related to the shutdown of a business.

Such charge principally related to customer-related intangible assets.

See Note 5 for further discussion.

The estimated amortization expense related to amortizable intangible assets for each of the five succeeding fiscal years and thereafter as of December 31, 2023 is as follows:

4 unchanged sentences

Accrued wages and benefits (including incentive compensation) $ 381 $ 428

Accrued expenses 392 460

Trade accounts payable 378 324

Accrued expenses 287 392

Overdrafts 129 92

Dividend payable 79 74

Accrued insurance 35 34

Accrued interest 64 26

Accrued insurance 36 35

Merger consideration payable 5 23

11 unchanged sentences

2.80 % Senior Notes due June 2031

6.40 % Senior Notes due November 2033

6.95 % Senior Notes due July 2037

5 unchanged sentences

Total long-term debt, net of current portion $ 4,410 $ 3,978

Finance Lease

During the year ended December 31, 2022, the Company amended a real estate lease and, based on the updated terms, the classification of the lease changed from a finance lease to an operating lease.

As of December 31, 2021, the $ 25 million carrying value of the finance lease was included in "other" in the table above.

Secured Receivables Credit Facility

During October 2022, the Company amended its secured receivables credit facility (the “Secured Receivables Credit Facility”), previously amended in October 2021, to extend the maturity dates for each underlying commitment by one year , while decreasing the aggregate borrowing capacity under the facility from $ 600 million to $ 525 million.

Under the Secured Receivables Credit Facility, the Company can borrow against a $ 425 million loan commitment, half of which matures in October 2023 and half of which matures in October 2024.

Additionally, the Company can issue up to $ 100 million of letters of credit (see Note 19) through October 2024.

The Company is party to a $ 525 million secured receivables credit facility (the “Secured Receivables Credit Facility”), which it amended in October 2023.

Subsequent to the amendment, the entire $ 525 million facility can be used for borrowings.

Additionally, the Company can choose to utilize up to $ 150 million of such capacity to issue letters of credit (see Note 19).

Issued letters of credit reduce the available borrowing capacity under the facility.

Further, the amended facility includes an additional $ 75 million uncommitted accordion which, if utilized, brings the total capacity under the facility to $ 600 million.

The amendment extended the maturity of the entire facility to October 2025.

Subsequent to the amendment, interest on borrowings under the facility will be based on either commercial paper rates for highly-rated issuers or the adjusted Term Secured Overnight Financing Rate ("Term SOFR"), plus a spread of 0.80 %.

Borrowings under the Secured Receivables Credit Facility are collateralized by certain domestic receivables.

Interest on borrowings under the facility is based on either commercial paper rates for highly-rated issuers or the Term Secured Overnight Financing Rate, plus a spread of 0.725 % to 0.80 %.

The Secured Receivables Credit Facility is subject to customary affirmative and negative covenants and certain financial covenants with respect to the receivables that comprise the borrowing base and secure the borrowings under the facility.

As of both December 31, 2023 and 2022, there were no outstanding borrowings under the Secured Receivables Credit Facility.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(in millions unless otherwise indicated)

Senior Unsecured Revolving Credit Facility

2 unchanged sentences

Issued letters of credit reduce the available borrowing capacity under the Credit Facility.

Additionally, the Credit Facility includes an additional $ 500 million uncommitted accordion which, if utilized, brings the total capacity under the facility to $ 1.3 billion.

Interest on the Credit Facility is based on certain published rates plus an applicable margin based on changes in the Company's public debt ratings.

At the option of the Company, it may elect to lock into LIBOR-based interest rates for periods up to six months.

Interest on any outstanding amounts not covered under LIBOR-based interest rate contracts is based on an alternate base rate, which is calculated by reference to the prime rate, the federal funds rate or an adjusted LIBOR rate.

As of December 31, 2022, the Company's borrowing rate for LIBOR-based loans under the Credit Facility was LIBOR plus 1.00 %.

The Credit Facility was amended during March 2023.

Subsequent to such amendment, at the option of the Company, it may elect to lock into Term SOFR-based interest rate contracts for periods up to six months.

For interest on any U.S.

Dollar-denominated outstanding amounts not covered under Term SOFR-based interest rate contracts, the Company can opt for an alternate base rate, which is calculated by reference to the prime rate, the federal funds rate or an adjusted Term SOFR rate.

The Company also has the option to borrow in other currencies.

As of December 31, 2023 , the Company's borrowing rate for Term SOFR-based loans under the Credit Facility was adjusted Term SOFR plus 1.00 %.

The Credit Facility contains various covenants, including the maintenance of a financial leverage ratio, which could impact the Company's ability to, among other things, incur additional indebtedness.

As of both December 31, 2022 and 2021, there were no outstanding borrowings under the Senior Unsecured Revolving Credit Facility.

As of both December 31, 2023 and 2022, there were no outstanding borrowings under the Senior Unsecured Revolving Credit Fa cility.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(in millions unless otherwise indicated)

In November 2023, the Company completed a senior notes offering, consisting of $ 750 million aggregate principal amount of 6.40 % senior notes due November 2033 (the "2033 Senior Notes").

The Company incurred $ 7 million of debt issuance costs associated with the 2033 Senior Notes, which are included as a reduction of the carrying amount of long-term debt and which are being amortized over the term of the related debt.

The Company expects to use the net proceeds from the offering for general corporate purposes, which may include the redemption or repayment of indebtedness including the Company's Senior Notes due April 2024.

All of the senior notes are unsecured obligations of the Company and rank equally with the Company's other senior unsecured obligations.

27 unchanged sentences

The Company has lease agreements with (i) right-of-use asset payments and (ii) non-lease components (i.e., payments related to maintenance fees, utilities, etc.) which have been combined and accounted for as a single lease component.

The Company's leases have remaining terms of less than 1 year to 15 years, some of which include options to extend the leases for up to 15 years.

The Company's leases have remaining terms of less than 1 year to 14 years, some of which include options to extend the leases for up to approximately 20 years.

The Company's lease terms may include renewal options that are reasonably certain to be exercised and termination options that are reasonably certain not to be exercised.

1 unchanged sentence

Certain of the Company's lease agreements include rental payments adjusted periodically for inflation or a market rate which are included in the lease liabilities.

During the year ended December 31, 2022, the Company amended a real estate lease and, based on the updated terms, the classification of the lease changed from a finance lease to an operating lease.

As a result, the Company recorded a $ 31 million operating lease right-of-use asset.

The Company's assets and liabilities for its lease agreements as of December 31, 2023 and 2022 were as follows:

45 unchanged sentences

From time to time, the Company has entered into various interest rate lock agreements and forward-starting interest rate swap agreements to hedge part of the Company's interest rate exposure associated with the variability in future cash flows attributable to changes in interest rates.

During the year ended December 31, 2023, the Company entered into forward-starting interest rate swap agreements with several financial institutions for a total notional amount of $ 500 million, which were accounted for as cash flow hedges.

The agreements were entered into in order to hedge a portion of the Company's interest rate exposure associated with variability in future cash flows attributable to changes in interest rates over a ten-year period related to an anticipated issuance of debt.

In connection with the issuance of the 2033 Senior Notes (see Note 14), these agreements were settled and the Company received $ 1 million.

These gains are deferred in stockholders' equity, net of taxes, as a component of accumulated other comprehensive loss, and amortized as an adjustment to interest expense, net over a ten-year period.

Interest Rate Derivatives – Fair Value Hedges

6 unchanged sentences

(a) As of both December 31, 2023 and 2022, the entire balance is associated with remaining unamortized hedging adjustments on discontinued relationships.

The following table presents the effect of fair value hedge accounting on the consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020, respectively:

2022 2021 2020

Other (expense) income, net Other (expense) income, net Other (expense) income, net

Total for line item in which the effects of fair value hedges are recorded $ ( 55 ) $ 369 $ 76

Gain (loss) on fair value hedging relationships:

Hedged items (Long-term debt) $ — $ — $ ( 68 )

Derivatives designated as hedging instruments $ — $ — $ 68

STOCKHOLDERS’ EQUITY AND REDEEMABLE NONCONTROLLING INTEREST

5 unchanged sentences

Under the Company's Restated Certificate of Incorporation the number of authorized shares of common stock, par value $ 0.01 per share, is 600 million shares.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(in millions unless otherwise indicated)

Changes in Accumulated Other Comprehensive Loss by Component

1 unchanged sentence

• Foreign currency translation adjustments;

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(in millions unless otherwise indicated)

• Net deferred gains (losses) on cash flow hedges, which represent deferred gains (losses), net of tax, on interest rate-related derivative financial instruments designated as cash flow hedges, net of amounts reclassified to interest expense (see Note 16);

4 unchanged sentences

The changes in accumulated other comprehensive loss by component for 2023, 2022 and 2021 were as follows:

Adjustments Net Changes in Available-for-Sale Debt Securities Net Deferred Losses on Cash Flow Hedges, net of tax Other Accumulated Other Comprehensive Loss

Balance, December 31, 2019 $ ( 42 ) $ 8 $ ( 4 ) $ ( 1 ) $ ( 39 )

Other comprehensive income before reclassifications 12 — 1 — 13

Amounts reclassified from accumulated other comprehensive loss

Net current period other comprehensive income 15 — 3 — 18

Adjustments Net Changes in Available-for-Sale Debt Securities Net Deferred Gains on Cash Flow Hedges, net of tax Other Accumulated Other Comprehensive Loss

Balance, December 31, 2020 $ ( 27 ) $ 8 $ ( 1 ) $ ( 1 ) $ ( 21 )

7 unchanged sentences

Balance, December 31, 2022 ( 22 ) 1 1 ( 1 ) ( 21 )

Other comprehensive income before reclassifications 5 — 1 — 6

Amounts reclassified from accumulated other comprehensive loss — — 1 — 1

Net current period other comprehensive income 5 — 2 — 7

Balance, December 31, 2023 $ ( 17 ) $ 1 $ 3 $ ( 1 ) $ ( 14 )

On April 1, 2021, the Company sold its 40 % ownership interest in Q 2 Solutions, its clinical trials central laboratory services joint venture, to IQVIA, its joint venture partner.

As a result of the transaction, during the year ended December 31, 2021, $ 20 million of cumulative translation losses were reclassified from accumulated other comprehensive loss to other (expense) income, net.

See Note 7 for further details.

Additionally, for the year ended December 31, 2020, $ 3 million of cumulative translation losses were reclassified from accumulated other comprehensive loss to other operating expense (income), net as a result of the sale of foreign subsidiaries.

For the years ended December 31, 2023, 2022 and 2021, the gross deferred gains (losses) on cash flow hedges were reclassified from accumulated other comprehensive loss to interest expense, net.

Dividend Program

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

1 unchanged sentence

(in millions unless otherwise indicated)

For the years ended December 31, 2022, 2021 and 2020, the gross deferred losses on cash flow hedges were reclassified from accumulated other comprehensive loss to interest expense, net.

Dividend Program

During each of the four quarters of 2023, the Company's Board of Directors declared a quarterly cash dividend of $ 0.71 per common share.

5 unchanged sentences

As of December 31, 2023, $ 1.0 billion remained available under the Company's share repurchase authorization.

In February 2023, the Company announced that its Board of Directors authorized the Company to repurchase an additional $ 1 billion of the Company's common stock.

The share repurchase authorization has no set expiration or termination date.

Share Repurchases

For the year ended December 31, 2023, the Company repurchased 2.0 million shares of its common stock for $ 276 million.

For the year ended December 31, 2022, the Company repurchased 10.1 million shares of its common stock for $ 1.4 billion.

5 unchanged sentences

During the year ended December 31, 2021, the Company paid $ 1.5 billion to the financial institutions and received 10.7 million shares of its common stock under the ASRs.

For the year ended December 31, 2020, the Company repurchased 2.7 million shares of its common stock for $ 325 million.

Shares Reissued from Treasury Stock

For the years ended December 31, 2022, 2021 and 2020, the Company reissued 2 million shares, 2 million shares and 3 million shares, respectively, from treasury stock for shares issued under the Employee Stock Purchase Plan ("ESPP") and stock-based compensation program.

For each of the years ended December 31, 2023, 2022 and 2021, the Company reissued 2 million shares from treasury stock for shares issued under the Employee Stock Purchase Plan ("ESPP") and stock-based compensation program.

Treasury Stock Retirement

1 unchanged sentence

In accordance with the Company's policy, the amount paid to repurchase the shares in excess of par value was allocated between retained earnings and additional paid-in capital based on a pro-rata allocation of additional paid-in capital at the time of the share retirement.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(in millions unless otherwise indicated)

Redeemable Noncontrolling Interest

4 unchanged sentences

As of December 31, 2023 and 2022, the redeemable noncontrolling interest was $ 76 million and $ 77 million, respectively, and was presented at its fair value.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(in millions unless otherwise indicated)

STOCK OWNERSHIP AND COMPENSATION PLANS

18 unchanged sentences

For the years ended December 31, 2023, 2022 and 2021, grants under the DLTIP totaled 12 thousand shares, 10 thousand shares and 12 thousand shares, respectively.

The Company's practice had been to issue shares related to its stock-based compensation program from shares of its common stock held in treasury or by issuing new shares of its common stock.

In January 2021, the Company began to issue shares related to its ESPP and stock-based compensation program solely from common stock held in treasury.

The Company's practice is to issue shares related to its ESPP and stock-based compensation program solely from common stock held in treasury.

See Note 17 for further information regarding the Company's share repurchase program.

6 unchanged sentences

The Black-Scholes option-valuation model also incorporates the average market price of the Company's common stock at the date of grant.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(in millions unless otherwise indicated)

The weighted average assumptions used in valuing stock options granted in the periods presented were:

5 unchanged sentences

Expected holding period, in years 4.9 4.9 4.8

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(in millions unless otherwise indicated)

The following summarizes the activity relative to stock option awards for 2023:

52 unchanged sentences

The maximum Company matching contribution is 5 % of eligible employee compensation.

During 2020, the Company temporarily suspended matching contributions for certain qualified defined contribution plans;

matching contributions were reinstated in the third quarter of 2020.

The Company's expense for contributions to its defined contribution plans aggregated $ 96 million, $ 95 million and $ 93 million for 2023, 2022 and 2021, respectively.

10 unchanged sentences

The Company also offers certain employees the opportunity to participate in a non-qualified deferred compensation program.

The Company matches employee contributions equal to 25 %, up to a maximum of $ 5 thousand per plan year.

The Company matches employee contributions equal to 25 %, up to a maximum of five thousand dollars per plan year.

A participant's deferrals, together with Company matching credits, are “invested” at the direction of the employee in a hypothetical portfolio of investments which are tracked by an administrator.

12 unchanged sentences

As of December 31, 2023, the approximate total future purchase commitments are $ 793 million, of which $ 214 million are expected to be incurred in 2024, $ 352 million are expected to be incurred in 2025 through 2026 and the balance thereafter.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(in millions unless otherwise indicated)

Billing and Collection Agreement

2 unchanged sentences

The agreement includes an annual fee, which is subject to adjustment based on certain changes in the Company's requisition volume and the achievement of various performance metrics.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

(in millions unless otherwise indicated)

Contingent Lease Obligations

10 unchanged sentences

subject to deductible) for certain potential costs and liabilities related to these proceedings and investigations.

401(k) Plan Lawsuit

In 2020, two putative class action lawsuits were filed in the U.S.

4 unchanged sentences

In May 2021, the court denied the Company's motion to dismiss the complaint.

Discovery is proceeding.

AMCA Data Security Incident

Discovery has been completed.

Plaintiffs' motion for class certification and the Company's motion for summary judgment are pending.

On June 3, 2019, the Company reported that Retrieval-Masters Creditors Bureau, Inc./American Medical Collection Agency (“AMCA”) had informed the Company and Optum360 LLC that an unauthorized user had access to AMCA’s system between August 1, 2018 and March 30, 2019 (the “AMCA Data Security Incident”).

17 unchanged sentences

the motion to dismiss was granted in part and denied in part.

Plaintiffs filed an amended complaint, which the Company also moved to dismiss.

The motion was granted in part and denied in part.

Discovery is proceeding.

In addition, the Company has been notified that numerous state attorney general offices were investigating or otherwise seeking information and/or documents, and that certain U.S.

senators were seeking information, from the Company related to the AMCA Data Security Incident.

In addition, a group of state attorney general offices are investigating the Company in connection with the AMCA Data Security Incident.

The Company is cooperating with the investigation.

ReproSource Fertility Diagnostics, Inc.

(“ReproSource”), a subsidiary of the Company, is subject to two putative class action lawsuits related to a data security incident that occurred in August 2021 in which plaintiffs allege that an unauthorized party accessed or acquired protected health information and personally identifiable information of ReproSource patients.

ReproSource Fertility Diagnostics, Inc.

(“ReproSource”), a subsidiary of the Company, is subject to two putative class action lawsuits in the U.S.

District Court for Massachusetts:

is pending in the U.S.

District Court for the District of Massachusetts, and Trouville v.

ReproSource Fertility Diagnostics, Inc.

and Gordon v.

is pending in the U.S.

District Court for the Eastern District of California.

A third case filed in the U.S.

District Court for the District of Massachusetts, Gordon v.

ReproSource Fertility Diagnostics, Inc.

The class actions are related to a data security incident that occurred in August 2021 in which an unauthorized party may have accessed or acquired protected health information and personally identifiable information of ReproSource patients.

The complaints generally allege that ReproSource, among other claims, failed to adequately safeguard customers’ private information.

ReproSource has moved to dismiss both complaints.

A third putative class action pertaining to the same data security incident, Trouville v.

ReproSource Fertility Diagnostics, Inc., was filed in California state court.

The Company removed the case to federal court and moved to dismiss and/or transfer it to U.S.

District Court for Massachusetts.

Quest Diagnostics Incorporated

, was consolidated into the Bickham case.

The Bickham and Trouville complaints seek to represent a class of all individuals potentially impacted by the August 2021 data security incident, and generally allege that ReproSource, among other claims, failed to adequately safeguard patients’ private information.

On January 10, 2024, ReproSource agreed to settle the Bickham case on a class-wide basis.

The settlement is pending approval by the District Court.

If approved, ReproSource will receive a full release for all claims that the settlement class might possess arising out of the August 2021 data security incident.

A motion to dismiss, stay, or transfer the Trouville case to the U.S.

District Court for the District of Massachusetts remains pending.

The Company is subject to a putative class action entitled Cole, et al.

4 unchanged sentences

District Court for New Jersey.

Subsequently, plaintiffs filed an amended complaint.

Subsequently, plaintiffs filed an amended complaint, which the Company also moved to dismiss.

The Company's motion to transfer the case was granted.

The Company has refiled its motion to dismiss with the New Jersey District Court.

As previously disclosed, in August 2011, the Company had received a subpoena from the U.S.

Attorney for the Northern District of Georgia seeking various business records, including records related to the Company's compliance program, certain marketing materials, certain product offerings, and certain test ordering and other policies.

The Company cooperated with the request.

In 2021, a third amended complaint in a qui tam action filed in the U.S.

District Court for the Northern District of Georgia was unsealed, which is related to the matter underlying the August 2011 subpoena.

Both the U.S.

Department of Justice and the State of Georgia declined to intervene in the action.

The Company moved to dismiss the complaint and the complaint was dismissed without prejudice in August 2022.

The relator subsequently filed a fourth amended complaint.

The Company has moved to dismiss the fourth amended complaint.

The Company also received subpoenas from the U.S.

Attorney for the District of New Jersey.

The subpoenas seek various records relating to the Company’s relationship with the New York Giants and adherence to certain company policies and federal laws.

The Company is cooperating with the investigation.

Other Legal Matters

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These actions could involve claims for substantial compensatory and/or punitive damages or claims for indeterminate amounts of damages, and could have an adverse impact on the Company's client base and reputation.

The Company is also involved, from time to time, in other reviews, investigations and proceedings by governmental agencies regarding the Company's business which may result in adverse judgments, settlements, fines, penalties, injunctions or other relief.

In addition, certain federal and state statutes, including the qui tam provisions of the federal False Claims Act, allow private individuals to bring lawsuits against healthcare companies on behalf of the government or private payers.

The Company is aware of lawsuits, and from time to time has received subpoenas, related to billing or other practices based on the False Claims Act or other federal and state statutes, regulations or other laws.

The Company understands that there may be other pending qui tam claims brought by former employees or other "whistle blowers" as to which the Company cannot determine the extent of any potential liability.

QUEST DIAGNOSTICS INCORPORATED AND SUBSIDIARIES

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(in millions unless otherwise indicated)

The federal or state governments may bring claims based on the Company's current practices, which it believes are lawful.

The Company understands that there may be other pending qui tam claims brought by former employees or other "whistleblowers" as to which the Company cannot determine the extent of any potential liability.

Management cannot predict the outcome of such matters.

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BUSINESS SEGMENT INFORMATION

The Company's DIS business is the only reportable segment based on the manner in which the Chief Executive Officer, who is the Company's chief operating decision maker ("CODM"), assesses performance and allocates resources across the organization.

The DIS business provides diagnostic information services to a broad range of customers, including patients, clinicians, hospitals, IDNs, health plans, employers, consumers, and ACOs.

The Company is the world's leading provider of diagnostic information services, which includes providing information and insights based on an industry-leading menu of routine, non-routine and advanced clinical testing and anatomic pathology testing, and other diagnostic information services.

The Company's DIS business is the only reportable segment based on the manner in which the Chief Executive Officer, who is the Company's CODM, assesses performance and allocates resources across the organization.

The DIS business provides diagnostic information services to a broad range of customers within its primary customer channels - physicians, hospitals, and patients and consumers.

The DIS business accounted for greater than 95 % of net revenues in 2023, 2022 and 2021.

All other operating segments include the Company's DS businesses, which consist of its risk assessment services and healthcare information technology businesses.

The Company's DS businesses are the leading provider of risk assessment services for the life insurance industry and offer healthcare organizations and clinicians robust information technology solutions.

The Company's DS businesses offer solutions for insurers and offer solutions for healthcare providers and payers.

As of December 31, 2023, substantially all of the Company’s services were provided within the United States, and substantially all of the Company’s assets were located within the United States.

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Net revenues 100 % 100 % 100 %

The approximate percentage of net revenues by customer channel for the years ended December 31, 2023, 2022 and 2021 was as follows:

2023 2022 2021

Physician lab services 66 % 68 % 69 %

Hospital lab services 21 18 17

Other DIS 10 11 11

Total DIS revenues 97 97 97

DS revenues 3 3 3

Total net revenues 100 % 100 % 100 %

Physician lab services includes net revenues for physicians including those associated with ACOs and FQHCs.

SUBSEQUENT EVENTS

During February 2023, the Company announced that it had entered into a definitive agreement to acquire select assets of the laboratory services business of New York-Presbyterian, which serves providers and patients in New York, as well as the Tri-State Area and beyond.

The transaction, which is expected to close during the three months ended June 30, 2023, remains subject to customary closing conditions.

During February 2024, the Company acquired the assets of Lenco Diagnostics Laboratories, Inc., an independent clinical diagnostic laboratory provider serving physicians in New York, in an all-cash transaction for $ 111 million.

The acquisition will be accounted for as a business combination.

The Company is in the process of completing the preliminary purchase price allocation of the assets acquired and liabilities assumed.

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 9A. Controls and Procedures